Kathleen G. Kane - Pennsylvania Office of Attorney General - Protecting Pennsylvanians

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The following is a summary of the terms of the Tobacco Master Settlement Agreement:

Prohibits Youth Targeting

  • Prohibits targeting youth in advertising, promotions, or marketing.
  • Bans industry actions aimed at initiating, maintaining or increasing youth smoking.

Bans Cartoon Characters

  • Bans use of cartoons in the advertising, promotion, packaging or labeling of tobacco products.

Restricts Sponsorships By Brand Names

  • Limits tobacco companies to only one brand name sponsorship per year (after current contracts expire or after three years ? whichever comes first).
  • Prohibits brand name sponsorship of events with a significant youth audience.
  • Prohibits sponsorship of team sports (football, basketball, baseball, hockey or soccer).
  • Prohibits sponsorship of events where any of the paid participants or contestants are underage.
  • Allows corporate sponsorship of athletic, musical, cultural, artistic or social events as long as the corporate name does not include the brand name of a domestic tobacco product.

Bans tobacco brand names for stadiums and arenas

  • Limits outdoor advertising for sponsored events to the site of the event.

Bans Outdoor Advertising

  • Bans all outdoor advertising, including: billboards, signs and placards in arenas, stadiums, shopping malls, and video game arcades.
  • Limits advertising outside retail establishments to 14 square feet.

Bans transit advertising of tobacco products

  • Tobacco billboards and transit ads must be removed within 150 days after the Master Settlement Agreement Execution Date.
  • Allows states to substitute for the duration of billboard lease periods, alternative advertising which discourages youth smoking.
  • Requires tobacco companies to designate a contact person to facilitate sign removal in each state.

Bans Placement of Tobacco Products

  • Bans payments to promote tobacco products in movies, television shows, theater productions or live performances, live or recorded music performances, videos and video games.

Bans Sale of Merchandise With Tobacco Brand Names

  • Beginning July 1, 1999, bans distribution and sale of apparel and merchandise with brand-name logos (caps, T-shirts, backpacks, etc.).

Bans Youth Access To Free Samples

  • After Master Settlement Agreement Execution Date, free samples cannot be distributed except in a facility or enclosed area where the operator ensures no underage person is present.

Bans Proof of Purchase Gifts

  • Bans gifts without proof of age (legible driver?s license certified to be valid by the gift recipient).  Effective one year after Master Settlement Agreement Execution Date.

Prohibits Third Parties From Using Tobacco Brand Names

  • Tobacco companies are prohibited from authorizing third parties to use or advertise brand names in any way prohibited by the agreement.
  • Tobacco companies must designate a contact in each state who will respond to Attorney General complaints of prohibited third party activity.
  • Exempts licensing agreements or contracts in existence as of July 1, 1998, although contracts cannot be extended beyond current terms.

Bans Non-Tobacco Brand Names

  • Bans future cigarette brands from being named after recognized non-tobacco brand or trade names (such as Harley Davidson, Yves Saint Laurent, Cartier) or nationally recognized sports teams, entertainment groups or individual celebrities.

Sets Minimum Pack Size At 20 Cigarettes

  • Limits minimum pack size to 20 cigarettes through December 31, 2001.
  • Tobacco companies prohibited from opposing state legislation which bans the manufacture and sale of packs containing fewer than 20 cigarettes.

Requires Corporate Commitments To Reduce Youth Access and Consumption

Beginning 180 days after the Master Settlement Agreement Execution Date, companies must:

  • Develop and regularly communicate corporate principles that commit to complying with the Master Settlement Agreement and reducing youth smoking.
  • Designate executive level manager to identify ways to reduce youth access and consumption of tobacco.
  • Encourage employees to identify additional methods to reduce youth access and youth consumption.

Disbands the Council for Tobacco Research (CTR), the Tobacco Institute (TI), and the Council for Indoor Air Research (CIAR)

  • Requires all records of these organizations that relate to any lawsuit to be preserved.

Provides Regulation and Oversight of Any New Trade Organizations

Requires any new trade association to adopt bylaws that provide:

  • Officers of the association will be appointed by the board, be employees of the association and will not be employed by a member tobacco company.
  • Legal counsel will be independent and not serve as counsel to member companies.
  • Minutes of board of director meetings will be prepared and maintained for at least five years.
  • Antitrust staff for any settling state may inspect and copy all non-privileged , non-work-product records and interview association directors, officers and employees.

Stops Industry Assault On Tobacco Control Laws

  • After state specific finality, tobacco companies will be prohibited from opposing proposed state or local laws or administrative rules which are intended to limit youth access to and consumption of tobacco products.
  • The industry must require its lobbyists to certify in writing they have reviewed and will fully comply with settlement terms including disclosure of financial contributions regarding lobbying activities and new corporate culture principles.
  • In states without laws regarding financial disclosure of lobbying, the settlement requires disclosure of lobbying costs to the state Attorney General.
  • Prohibits lobbyists from supporting or opposing state, federal, or local laws or actions without authorization of the companies.
  • Prohibits the industry from lobbying for the diversion of settlement money to non-tobacco or non-health related uses or legislation which would eliminate or diminish state rights under the settlement.

Protects State And Local Youth Access Laws

  • Prohibits new challenges by the industry against the enforceability or constitutionality of tobacco control laws, ordinances, and rules passed prior to June 1, 1998.

Dismisses Lawsuits Against State Laws

  • Requires the industry to dismiss, without fees, all claims against participating states.
  • No Criminal Immunity.
  • Specifies that states expressly do not waive any right to pursue criminal prosecutions based on federal, state, or, local law.

Opens Public Access To Tobacco Documents

  • Tobacco companies will release documents that are under protective orders in state lawsuits and have no privilege or trade-secret claim.
  • Settling states may seek court-approved public release of any documents which have been subject to an order or ruling, prior to August 17, 1998, denying privilege, work-product or trade secret protection.  The industry can contest the action.

Creates User-Friendly Website For Industry Documents

  • Requires tobacco companies to maintain for ten years, at their expense, a Website which includes all documents produced in state and other smoking and health related lawsuits.
  • Requires the industry to maintain the site in a user-friendly and searchable format (requires an index and other features to improve searchable access).
  • Requires the industry to add, at its expense, all documents produced in future civil actions involving smoking and health cases.
  • The industry will provide the National Association of Attorneys General with up to $100,000 for a computer consultant to ensure that the industry?s Website is truly usable.

Stops Conspiracy To Hide Research Regarding Smoking and Health

  • Prohibits manufacturers from jointly contracting or conspiring to:
  • Limit information about the health hazards from the use of their products;
  • Limit or suppress research into smoking and health; or
  • Limit or suppress research into the marketing or development of new products.
  • Prohibits the industry from making any material misrepresentations regarding the health consequences of smoking.

Creates A National Foundation to Reduce Teen Smoking and Substance Abuse

  • Requires the industry to pay $250 million over the next ten (10) years to fund a charitable foundation which will support the study of programs to reduce teen smoking and substance abuse and the prevention of diseases associated with tobacco use.

The NAAG Executive Committee will provide for creation of the foundation

  • The foundation will be governed by an eleven-member board of directors. NAAG, the National Governors? Association and the National Conference of State Legislatures each will appoint two board members and the six will select the final five members with expertise in public health, medicine and child psychology.

The Foundation will:

  • Carry out a nationwide, sustained advertising and education program to counter youth tobacco use and educate consumers about the cause and prevention of diseases associated with tobacco use.
  • Develop, disseminate and test the effectiveness of counter advertising campaigns.
  • Develop, disseminate and test the effectiveness of model classroom educational programs, including programs targeting at-risk populations.
  • Develop, disseminate and test the effectiveness of criteria for effective cessation programs.
  • Commission studies, fund research and publish reports on factors that influence youth smoking and substance abuse.
  • Develop targeted training and information programs for parents.
  • Maintain a library of foundation studies, reports and publications.
  • Track and monitor youth smoking and substance abuse with a focus on reasons for increases or failures to decrease tobacco and substance use rates.
  • The foundation is prohibited from engaging in political or lobbying activities.
  • Includes a severance clause for settling states which are prohibited by state law from entering into the foundation portion of the agreement.

Creates A National Public Education Fund

  • Requires the industry to pay $1.45 billion over the next five years for a National Public Education Fund.
  • The agreement includes continued funding depending on the number of tobacco product manufacturers who have agreed to be bound by the Agreement.
  • The fund is established to carry out a nationwide sustained advertising and education program to counter youth tobacco use and educate consumers about tobacco-related diseases.
  • The fund may make grants to states and political subdivisions to carry out the fund?s purposes.
  • Industry payments to the foundation and education fund will be held in an escrow account until state-specific finality in at least one state.
  • Outside contributions can be made to the foundation and specifically to the education fund.

Provides Court Jurisdiction For Implementation and Enforcement

  • Settling states or tobacco companies may apply to the court to enforce the terms of the consent decree.
  • A state is not required to give any prior notice before seeking an order to enforce a consent decree from the court ? except that a 10-day notice is required if the claimed violation involves targeting youth or making material misrepresentations about tobacco products (unless the Attorney General determines there is a public health or safety concern requiring faster action, or the party has committed substantially similar violations previously).
  • If the court finds the consent decree has been violated, the court may award any relief available under the consent decree or the law in that state.
  • Settling states may also apply to the court to enforce or interpret the terms of the Agreement, although before applying to the court a party must give the other parties and NAAG 30-days notice (unless the Attorney General determines there is a public health or safety concern requiring faster action).
  • If the court issues an enforcement order enforcing the agreement and a party violates that order, the court may order monetary, civil contempt or criminal sanctions to enforce compliance with the enforcement order.
  • Allows settling state AGs access to company documents, records and personnel to enforce the agreement.

State Enforcement Fund Established

  • On March 31, 1999, the industry is directed to pay $50 million which will be used to assist settling states in enforcing and implementing the agreement and to investigate and litigate potential violations of state tobacco laws.

States Will Recover Over $206 Billion

  • Payments will be made to settling states and a national foundation, and for administration and enforcement purposes.
  • Distributions directly to states will be made based on percentages agreed to by Attorneys General.
  • In 1998, it was projected that Pennsylvania would receive $11.2 Billion over the next 25 years.  Payments received to date can be viewed by clicking here.

Strategic Contribution Fund Payments of $8.610 Billion

  • On April 15, 2008 and on April 15 each year through 2017, the companies will pay $861 million into a strategic contribution fund.
  • Money from the fund will be allocated to states based on a strategic contribution formula developed by Attorneys General no later than June, 1999.  The allocation formula will reflect the contribution made by states toward resolution of the state lawsuits against tobacco companies.

Most Favored Nation Provisions

  • If tobacco companies, before October 1, 2000, enter into an agreement with better overall terms, settlement states will get the benefit of that agreement.  (This does not apply to any agreement reached after the seating of a jury or commencement of trial.)
  • If more favorable non-economic terms are offered in an agreement on or after October 1, 2000, settling states at their option may benefit.
  • If a settling state enters into an agreement with a company not participating in this settlement and the terms are more favorable to the industry, settling companies can benefit, but only within that state.