NMI funds from tobacco settlement deal in danger

The Attorney General’s Office warned that the Commonwealth will lose millions from the Tobacco Master Settlement Agreement if it fails to come up with legislation requiring manufacturers to deposit specific amount of money into qualified escrow funds.

AGO consumer counsel David Lochabay alarmed House of Representatives Health and Welfare Committee Chair Malua T. Peter on the proposed 30-day notice posted by MSA states and territories regarding the 1999 Non-Participating Manufacturers Statutes.

In a letter to Attorney General Herbert D. Soll and Ms. Peter, Mr. Lachobay disclosed that the Northern Marianas is at greater risk of having its payments reduced in the 2000 NPM Adjustments.

Mr. Lochabay said this is due to the failure of the Legislature to enact a Model Statute. If the Model Statute is not enacted by July 1, the CNMI risks being uniquely subject to any 2001 NPM adjustments.

Immediately, AGO placed the Commonwealth as one of the signatories to the proposed 30-day Notice to Participating Manufacturers concerning the NPM adjustments.

“It is urgent that actions be taken on House Bill 12-260 which requires cigarette manufacturers and distributors who do not choose to become participants under the MSA to post evidence with the CNMI government of financial responsibility,” said Mr. Lochabay.

The proposed enactment of a statute, also known as the Model Statute requires all states and territories participating in the MSA to pass such an act or be subject to NPM deductions.

Besides, MSA recognizes that tobacco manufacturers signing the MSA will have higher costs of products than those not signing due to annual payments, added the consumer counsel.

The purpose of the Model Statute is to level the playing field and offer incentives to cigarette manufacturers and distributors to become participants under the agreement.

“All of the states and territories have now enacted Model Statutes legislation except the CNMI. This means that any NPM adjustment imposed in the future would only be directed against the CNMI,” explained Mr. Lochabay.

He stressed that it is imperative that the Legislature immediately act and get HB 12-260 enacted to prevent possible losses from the settlement agreement.

Rep. Peter said HB 12-260 will be discussed comprehensively today in efforts to thwart any possible problems brought about by the Legislature’s failure to act on the matter the soonest possible time.

The legislator said necessary amendments will have to be defined during the House session and immediately enact the bill.

She said there is an existing $800,000 cash deposit but the government has to utilize the money for government employees’ salary and other government programs.

The Department of Public Health has mapped out a comprehensive plan for the allocation of the more that $25 million share of the CNMI from the tobacco settlement agreement.

An estimated 30 percent was said to be used by the Group Health and Life Insurance Trust Fund to exclusively pay for its obligations to on- and off-island health providers; 40 percent will be for the funding of DPH’ operations of government health centers including public schools on Saipan, Tinian and Rota, and the implementation of a Youth Tobacco Education and Prevention Program.

DPH official Norma Ada told committee members that there is a need to implement a comprehensive tobacco prevention program with supplemental budget from cigarette excise tax.

The implementation of all these programs will be delayed unless the Legislature acts on the issue at hand.

Since December 1999, the CNMI government has received about $815,254.94 in five separate payments. The Commonwealth’s share from the settlement totals to $30 million whose payment will be spread in 25 years.

These are part of the $206 billion master tobacco settlement agreement with giant U.S cigarette manufacturers in exchange for dropping of the lawsuit over health costs on treating sick smokers. (EGA)