Legislature(2003 - 2004)
2003-03-28 House Journal
Full Journal pdf2003-03-28 House Journal Page 0673 HB 224 HOUSE BILL NO. 224 by the House Rules Committee by request of the Governor, entitled: "An Act relating to a tobacco product manufacturer's compliance with certain statutory requirements regarding cigarette sales; and providing for an effective date." was read the first time and referred to the Labor & Commerce and Finance Committees. 2003-03-28 House Journal Page 0674 The following fiscal note(s) apply: 1. Zero, Dept. of Law 2. Zero, Dept. of Revenue The Governor's transmittal letter dated March 27, 2003, follows: "Dear Speaker Kott: Under the authority of art. III, sec. 18, of the Alaska Constitution, I am transmitting a bill relating to a tobacco product manufacturer's compliance with certain statutory requirements regarding cigarette sales. The model for the bill was drafted by the National Association of Attorneys General in cooperation with a working group of participating states and is designed to aid state enforcement of the tobacco product Master Settlement Agreement and AS 45.53, and thus preserve, to the fullest extent possible, the revenue stream under the Master Settlement Agreement. We understand that most of the 46 participating states will seek to pass this legislation in their respective upcoming legislative sessions. We also understand that the bill has been reviewed and approved by two of the principal tobacco parties to the Master Settlement Agreement, Phillip Morris and RJ Reynolds. In 1999, 46 states, including Alaska, collectively settled their claims against certain tobacco manufacturers and entered into the "Master Settlement Agreement" (MSA). Under the MSA, the participating tobacco product manufacturers agreed to pay certain amounts to the settling states in perpetuity in exchange for dismissal of the states' lawsuits. One of the provisions of the MSA, however, required that the states enact legislation that would "level the playing field" for non- participating tobacco manufacturers. This leveling legislation required such non-participating tobacco manufacturers to deposit money into escrow for every cigarette they sold in the state. The intent of this escrow requirement was to prevent the non-participants from undermining the overall goals of MSA by guaranteeing "a source of compensation and to prevent such manufacturers from deriving large, short-term profits and then becoming judgment-proof before liability may arise." See sec. 1, ch. 46, SLA 1999. 2003-03-28 House Journal Page 0675 Since 1999, the participating states have detected concerted efforts by non-participating tobacco manufacturers to evade the legislated escrow requirements. Various schemes have been employed, often through use of elusive foreign tobacco manufacturers, to attempt to circumvent the requirement of escrow deposits. This bill seeks to bring an end to these schemes. In order to sell cigarettes in this state, a tobacco product manufacturer will have to annually certify that it is in compliance with AS 45.53. Additionally, tobacco product manufacturers must include certain information that will assist the Department of Revenue in its enforcement efforts in this regard. The Department of Revenue will publish and update a directory of cigarettes that are approved for sale in this state. Cigarettes that are not listed in this directory are contraband and may not be sold in the state. The bill provides for civil penalties for selling or possessing contraband cigarettes. The enactment of this bill will bring an end to efforts by non- participating manufacturers to evade their obligations to deposit escrow for their in-state cigarette sales. I urge your prompt and favorable action on this measure. Sincerely, /s/ Frank H. Murkowski Governor"