Draft agreement

debate and issues

[NOTE: This is a summary of the actual agreement. To review the actual version at the NAAG Web site here.]

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Public Health Initiatives

Prohibits Youth Targeting

  • Prohibits targeting youth in advertising, promotions or marketing.
  • Barrs 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

  • Restricts sponsorships by tobacco brand names.
  • Prohibits brand name sponsorship of events with a significant youth audience or team sports (football, basketball, baseball, hockey or soccer).
  • Prohibits sponsorship of events where the paid participants or contestants are underage.
  • Limits tobacco companies to one brand name sponsorship per year (after current contracts expire or after three years - whichever comes first).
  • 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 duration and area of advertising for sponsored events.

Bans Outdoor Advertising

  • Bans all outdoor advertising, including: billboards, signs and placards larger than a poster in arenas, stadiums, shopping malls, and video game arcades.
  • 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, at industry expense and for the duration of billboard lease periods, alternative advertising which discourages youth smoking.
  • Bans tobacco companies from entering into agreements which would prohibit advertising discouraging tobacco use.
  • Requires tobacco companies to designate a contact person for 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, videos and video games.

Bans Sale of Merchandise With Tobacco Brand Names

  • Beginning July 1, 1999, bans distribution and sale of non-tobacco 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

  • No gifts can be offered to youth in exchange for the purchase of tobacco products, coupons or proofs of purchase.
  • Bans distribution of gifts through the mail without proof of age (legible driver's license certified to be valid by the gift recipient).
  • Provisions effective 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.
  • 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 contract in existence as of July 1, 1998, although contracts cannot be extended beyond current times.

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 March 31, 2001.
  • Tobacco companies prohibited from opposing state legislation which bans the manufacture and sale of packs containing fewer than 20 cigarettes.

Changes The Corporate Culture

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 which 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 Tobacco Trade Associations

  • Disbands the Council for Tobacco Research, the Tobacco Institute, and the Council for Indoor Air Research.
  • Requires all records of these organizations that relate to any lawsuit to be preserved.

Provides Regulation and Oversight of 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.
  • For the purpose of enforcing the Master Settlement Agreement, antitrust staff for any settling state may inspect and copy all non-privileged, non-work-product records and interview association directors, officer and employees.

Restricts Industry Lobbying

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, 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 of 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.
  • Requires the industry to dismiss pending legal challenges related to underage smoking and environmental tobacco smoke laws.

No Criminal Liability

  • Specifies that states expressly do not waive any criminal liability based on federal stats or, local law.

Opens Industry Records and Research

Opens Public Access To Tobacco Documents

  • Effective on the Master Settlement Agreement Execution Date, tobacco companies will release documents which are under protective orders in state lawsuits and have no privilege of trade-secret claim.
  • Settling states may seek court-approved public release of any documents which have been subject to an order or filing, prior to August 17, 1998, denying privilege, work product or trade secret protection. The industry can content the action.

Creates Website For Industry Documents

  • Requires tobacco companies to open, at their expense, a Website which includes all documents produces in state and other smoking and health related lawsuits.
  • Requires the industry to maintain the site for ten years in a user-friendly and searchable format (requires and 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.
  • Oversized or multi-media records will not be placed on the Website, but they will be made available to the public through the Minnesota depository.
  • The industry will provide the National Association of Attorneys General with up to $100,000 for a computer consultant to review and make recommendations regarding the industry's Website plans.
  • NAAG's consultant can seek input from settling sate officials, public health officials and other users of the Website.

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; and
  • 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 Foundation And $1.45 Billion Public Education Fund

Creates A National Foundation to Reduce Teen Smoking and Substance Abuse

  • Requires the industry each year for ten years to pay $25 million 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 Committees will provide for creation of the foundation.

  • The foundation will governed by a seven-member board of directors. NAAG, the National Governors Association and the National Conference of State Legislatures each will appoint a board member and the three will select the final four members with expertise in public health, medicine and child psychology.

The foundation will:

  • Carry out a nation wide, 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 population.
  • 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 incentive to the states for continued funding (from non-participating manufacturers).
  • The fund is established to carry out a nation 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.
  • Grants from the fund will be made by the foundation.
  • Industry payments to the foundation and education fund will be held in an escrow account until state-specific finality in a required number of states.
  • Outside contributions can be made to the foundation and specifically to the education fund.

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