STAND

STAND. COM. REP. NO.355

Honolulu, Hawaii

, 2003

RE: S.B. No. 1267

Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committee on Judiciary and Hawaiian Affairs, to which was referred S.B. No. 1267 entitled:

"A BILL FOR AN ACT RELATING TO TOBACCO,"

begs leave to report as follows:

The purpose of this measure is to refine the tobacco Master Settlement Agreement (MSA) compliance and enforcement efforts of the Department of the Attorney General by:

(1) Establishing a prohibition against stamping or selling cigarette brands not included in the Attorney General's directory of participating or complying manufacturers;

(2) Requiring all tobacco manufacturers who sell their cigarettes in Hawaii to provide certification to the Attorney General that they are a participating manufacturer or in compliance with the escrow requirements of the tobacco Liability Act; and

(3) Authorizing the Attorney General to apply for a temporary or permanent injunction restraining entities from selling cigarettes from participating or noncomplying manufacturers who fail to meet the certification requirements.

Your Committee received testimony in support of this measure from the Department of the Attorney General.

Your Committee finds that the MSA was entered into by the State and leading United States tobacco product manufacturers on November 23, 1998. The MSA obligates these manufacturers, in return for a release of past, present, and certain future claims against them, to pay substantial sums to the State, 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.

Your Committee further finds that under the MSA, tobacco manufacturers selling cigarettes to consumers within the State, are required to either become a participating manufacturer and perform its financial obligations under the MSA, or establish an escrow account funded according to the number of cigarettes sold.

The Attorney General is responsible for enforcing the terms of the MSA.

Your Committee raised State liability concerns due to requiring new cigarette manufacturers to conform to the escrow requirements of the MSA prior to selling cigarettes in this State. The Attorney General's Office provided a written response acknowledging that challenges to the MSA have occurred in other states but have not been successful. Two cases have not been resolved as of this date but the Attorney General's Office will monitor the litigation and apprise the legislature if a decision adversely affects this measure.

As affirmed by the record of votes of the members of your Committee on Judiciary and Hawaiian Affairs that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1267 and recommends that it pass Second Reading and be placed on the calendar for Third Reading.

Respectfully submitted on behalf of the members of the Committee on Judiciary and Hawaiian Affairs,

		____________________________ COLLEEN HANABUSA, Chair