Preserves investments in agriculture
FRANKFORT, Ky. (March 23, 2015) — Gov. Steve Beshear today signed into law House Bill 512 that helps protect and preserve Kentucky’s future Master Settlement Agreement (MSA) payments. MSA payments support Kentucky’s agricultural diversification programs, and provide critical health care and early childhood development services.
Effective July 1, HB 512 follows the June 2014 Settlement Agreement between Kentucky and tobacco manufacturers ending a long-running legal dispute over an enforcement obligation under the MSA and restoring certainty to Kentucky’s annual MSA payments from tobacco companies.
The 2014 settlement, negotiated by Attorney General Jack Conway, resolved 10 years of disputed claims over those enforcement obligations and ensuing litigation, starting with the 2003 payments and running through 2012.
“The citizens of the commonwealth have benefited greatly from the $1.75 billion in annual MSA payments received from tobacco manufacturers since joining the MSA.” Beshear said. “Those sums have helped fund cancer research projects, have provided for critical health care and early childhood development services, and have played an important role in advancing Kentucky agriculture through the Kentucky Agricultural Development Fund.”
Through the KADF, more than $440 million in MSA funds has been invested in an array of county, regional and state projects designed to increase net farm income and create sustainable new farm-based business enterprises.
The provisions of HB 512 implement terms of the 2014 Settlement Agreement and broaden the responsibilities of all tobacco manufacturers, especially those manufacturers that are not signatories to the MSA, called Nonparticipating Manufacturers (or NPMs), who want to sell cigarettes in Kentucky, and also give the state new tools to enforce those enhanced and existing obligations.
The MSA is an agreement between 52 states and territories and the major tobacco companies signed in 1998 to settle and resolve a variety of legal claims asserted by the states against the tobacco companies. Legislation to implement the MSA in Kentucky was initially enacted in 2000, and subsequently has been amended from time to time.
Under the MSA, the participating tobacco manufacturers make annual payments to the states. In turn, states have enforcement obligations to ensure that any manufacturers that are not signatories to the agreement, or NPMs, do not circumvent the laws requiring escrow deposits. If a state is found to have not adequately fulfilled its enforcement obligations, then its MSA payments from the participating tobacco manufacturers may be reduced.