Summary of Master Settlement Agreement

Introduction
In addition to individual settlements with Mississippi, Florida, Texas, and Minnesota, Lorillard and other major tobacco companies and state Attorneys General reached agreement in November, 1998, to settle litigation brought by the Attorneys General in the remaining states and jurisdictions. Including the four individual state settlements, the industry has agreed to pay a total of $246 billion to the states, end all outdoor advertising and severely restrict other traditional marketing practices, and fund a national research foundation and a public education campaign. 

Targeting Youth
The agreement between the tobacco industry and the 50 states:

• Prohibits advertising, promotions, or marketing that target youth.
• Bans industry actions aimed at initiating, maintaining, or increasing youth smoking.
• Requires companies to:

• Develop and regularly communicate corporate principles that commit to complying with the Master Settlement Agreement.
• Designate an 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.
  

• 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.
• Allows states to substitute, for the duration of billboard lease periods, alternative advertising that discourages youth smoking.
  

• Bans payments to promote tobacco products in movies, television shows, theater productions or live performances, live or recorded music performances, videos, and video games.
• Prohibits brand name sponsorship of events with a significant youth audience or team sports (football, basketball, baseball, hockey, or soccer).
• Prohibits sponsorships of events where the paid participants or contestants are underage.
• Limits participating tobacco companies to one brand name sponsorship per year (after current contracts expire or after three years - whichever comes first).
• Bans tobacco brand names for stadiums and arenas.

Tobacco Merchandise
Since July 1, 1999, participating tobacco companies have stopped the distribution and sale of apparel and merchandise with brand-name logos. (This includes caps, T-shirts, backpacks, etc.)

Gifts Based on Purchases
The agreement bans gifts without proof of age.

Financial Recovery for the States
The agreement:

• Required industry payments to the states in perpetuity, with the payments totaling $206 billion through the year 2025.
• Provides that distributions to states will be made based on formulas agreed to by state Attorneys General.
• Requires annual payments by the industry to begin April 15, 2000.
• Provides that if all states participate in the settlement, annual payments will "ramp-up" beginning with a $4.5 billion payment on April 15, 2000. Ensuing April 15 payments will be at the following rates:

• 2001: $5 billion
• 2002-2003: $6.5 billion
• 2004-2007: $8 billion
• 2008-2017: $8.139 billion (plus $861 million to the strategic fund)
• 2018 on: $9 billion
• Required participating tobacco companies to pay "up front" payments of nearly $13 billion in the following amounts: $2.4 billion in 1998, $2.472 billion on January 10, 2000, $2.546 billion in 2001, $2.622 billion in 2002, and $2.701 billion in 2003.
• Requires the participating tobacco companies, on April 15, 2008, and on April 15 each year through 2017, to 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 state Attorneys General no later than June 1999. The allocation formula reflects the contribution made by states toward resolution of the state lawsuits against tobacco companies.
  

• Requires the industry to pay $25 million a year for 10 years to fund a charitable foundation that will support the study of programs to reduce teen smoking and substance abuse, and the prevention of diseases associated with tobacco use. 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 campaigns to discourage youth smoking.
• Commission studies, fund research, and publish reports on factors that influence youth smoking and substance abuse.
• Track and monitor youth smoking and substance abuse with a focus on reasons for increases, or failures to decrease, tobacco and substance abuse rates.
• Creates an industry-funded $1.45 billion national public education fund for tobacco control. This fund will carry out a nationwide sustained advertising and education program to counter youth tobacco use and educate consumers about tobacco-related diseases.
  

• Provides state court jurisdiction for implementation and enforcement of the agreement. 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 order.
• Key public health provisions of the agreement are included in consent decrees to be filed in each state, and either the states or tobacco companies may apply to the court to enforce the terms of the consent decrees.
• Allows the Attorneys General of the 50 states access to company documents, records, and personnel to enforce the agreement.
• Directs the tobacco industry to pay $50 million on March 31, 1999, which will be used to assist the states in enforcing and implementing the agreement and to investigate and litigate potential violations of state tobacco laws.
  

• Prohibits participating tobacco companies from opposing proposed state or local laws or administrative rules which are intended to limit youth access to and consumption of tobacco products.
• Directs the tobacco industry to 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.
• Prohibits lobbyists from supporting or opposing state, federal, or local laws or actions without authorization from the tobacco companies.
  

Public Access to Documents and Court Files
The agreement:

• Requires participating tobacco companies to open, at their expense, a Web site that includes all documents produced in state and other smoking and health related lawsuits.
• Requires the industry to maintain the site for 10 years in a user-friendly and searchable format, including 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.

• 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.
• Limit or suppress research into the marketing or development of new products.
• Prohibits the tobacco industry from making any material misrepresentations regarding the health consequences of smoking.
  

• Required the industry to reimburse states for costs, expenses, and market rate for attorneys' fees involved in reaching the settlement.
• Requires the industry to pay for outside attorneys hired by the states.

• Limited minimum pack size to 20 cigarettes through December 31, 2001.
• Prohibits participating tobacco companies from opposing state legislation that bans the manufacture and sale of packs containing fewer than 20 cigarettes.

• 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.