Honolulu, Hawaii
                                                     , 1999

                                   RE:  H.B. No. 1008
                                        S.D. 2

Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 1999
State of Hawaii


     Your Committee on Ways and Means, to which was referred H.B.
No. 1008, S.D. 1, entitled: 


begs leave to report as follows:

     The purpose of this bill is to enact the Tobacco Liability
Act to neutralize any advantage that nonsettling tobacco
manufacturers may gain by requiring nonsettling manufacturers to
establish a reserve fund to pay judgments or settlements on
future claims brought against them.

     Your Committee received testimony in favor of this measure
from the Attorney General, who informed your Committee that the
State is currently in the process of finalizing a settlement of
its claims against tobacco manufacturers for expenses incurred in
treating tobacco-related disease caused by the use of tobacco
products.  Hawaii's tentative allocation of payments from the
national settlement from the major tobacco product manufacturers
totals over $1,000,000,000 over the next twenty-five years.

     Your Committee finds that this measure is based on model
legislation agreed to by the Attorney General as part of a Master
Settlement Agreement between tobacco manufacturers and a group of
states including Hawaii.  However, tobacco manufacturers may seek
to avoid making payments to any state that has not passed the
precise form of this measure as agreed upon in the Master

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Settlement Agreement.  If Hawaii fails to pass this measure, its
share of the national settlement will be reduced in accordance
with a market share factor for sales of nonsettling tobacco
manufacturers, in which case it is possible for Hawaii to lose
its entire allocation.

     Your Committee finds that receipt of Hawaii's share of the
national tobacco settlement is critical in reimbursing state
taxpayers for funds used to cover the cost of tobacco-related
disease and for the numerous public health measures that may be
supported in the future.

     The Attorney General further testified that the original
draft of this bill was submitted for approval for compliance with
the Master Settlement Agreement, and that the bill was found to
vary slightly from the format required under that Agreement due
to technical stylistic changes for local drafting style.  The
Attorney General has accordingly submitted amendments required to
assure compliance with the Agreement.

     Upon further consideration, your Committee has amended this
bill to make two technical, nonsubstantive changes as recommended
by the Attorney General to correct inadvertent errors.

     As affirmed by the record of votes of the members of your
Committee on Ways and Means that is attached to this report, your
Committee is in accord with the intent and purpose of H.B. No.
1008, S.D. 1, as amended herein, and recommends that it pass
Third Reading in the form attached hereto as H.B. No. 1008,
S.D. 2.

                                 Respectfully submitted on behalf
                                 of the members of the Committee
                                 on Ways and Means,

                                 CAROL FUKUNAGA, Co-Chair

                                 ANDREW LEVIN, Co-Chair

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