Secret Tobacco Settlement Ruling Pried from State Attorneys General

Secret Tobacco Settlement Ruling Pried from State Attorneys General

June 21, 2006

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Christine Hall, 202.331.2258 

Washington, D.C., June 21, 2006— A free market state policy group succeeded in wresting a secret ruling on the tobacco settlement from the National Association of Attorneys General (NAAG) this week.  The $250 billion tobacco deal, signed in 1998 between 46 states and major tobacco companies, may well be the biggest settlement in history.


For nearly three months, the NAAG has kept secret a March 27 report by an arbitrator that could lead to reduced tobacco settlement payments for the states.  NAAG claimed the report, written by the Brattle Group, was “privileged and confidential.”


But the Evergreen Freedom Foundation in Olympia, Washington, working with CEI, used its state’s public records law to force the state’s attorney general to disclose the report.


“Given that NAAG’s members are public servants, this important report should never have been kept from the public,” said Hans Bader, Competitive Enterprise Institute counsel.  CEI has a pending lawsuit in federal court challenging the constitutionality of the tobacco settlement. 


"It's shameful that the NAAG tried to keep the report from the public," agreed Jason Mercier, senior budget analyst for the Evergreen Freedom Foundation. “The tobacco settlement is, after all, a public settlement agreement. The report would still be secret if it weren't for Washington State’s public records law.”


The Brattle report was the result of a squabble that erupted early this year between state attorneys general and Big Tobacco, partners in a cartel arrangement to bolster the major companies and provide states a steady stream of settlement money.  The majors argued that settlement payments should be lowered, since their share of the domestic cigarette market declined by several percentage points in recent years.  The newly revealed report sheds light on how the Brattle Group reached its conclusion that the majors had lost market share to smaller competitors. 


“It’s evident now that the report takes an already unfair agreement and makes it even more unfair, anticompetitive, and anti-consumer,” Bader remarked.  “The report adopted a very strained reading of the tobacco settlement agreement.”


For example, despite evidence that Big Tobacco benefited from the settlement cartel, the Brattle report found that the major companies were harmed by it.  That’s because the report cherry-picked the data it used to determine whether major companies were disadvantaged. 


Relevant documents: 


·         The Brattle Group report

·         Background on the EFF open records request

·         Background on CEI’s legal challenge to the tobacco Master Settlement Agreement

·         CEI CAP project website