Youth Access Provisions of the MSA

Background

The nicotine contained in tobacco products is addictive.1 This means that although smoking involves an initial decision to start, it quickly changes from a matter of free choice into one of nicotine addiction. In 1988, the Surgeon General confirmed that nicotine causes an addiction similar to and as powerful as that of cocaine or heroin.2 On August 10, 1995, the Food and Drug Administration ("FDA") concluded that "the nicotine in tobacco products is highly addictive, causes other psychoactive effects, such as relaxation and stimulation, and affects weight regulation."3

Most nicotine addiction begins during adolescence, and the prevalence of tobacco use by children and adolescents is on the rise.4 Eighty-two percent of adult smokers begin smoking before they have reached 18, the age at which they are legally allowed to be sold cigarettes.5 In fact, a majority of high school seniors who smoke at least a half pack each day say that they have already tried unsuccessfully to quit smoking - some of them repeatedly.6 It has been estimated that 13 percent of 12- to 18- year-olds (3.1 million youngsters) smoke cigarettes,7 and that one million use snuff or chewing tobacco.8 Seventy percent of teen-age smokers become regular smokers by age 18.9

Furthermore, teen smoking is on the rise. "From 1991 to 1994, smoking increased 30 percent among eighth graders, 20 percent among 10th graders, and 12.5 percent among high school seniors."10 This surge in teen smoking is due to a number of factors, including the targeting of minors in tobacco industry advertising, coupled with an alarming decline of concern among teenagers about the dangers of cigarette use.11

One of the most pernicious facts about the problem of youth smoking is that teenagers can obtain tobacco products with relative ease. According to studies done by the CDC in 1995, 62% of minors reported that they could easily purchase their own cigarettes, and 75% reported that they were never asked for identification to verify their age. Children can also obtain cigarettes quite easily from vending machines and self-service displays.12

In 1993 and 1994, a committee appointed by the Institute of Medicine (IOM)13 - chartered in 1970 by the National Academy of Sciences to enlist distinguished members of the appropriate professions to study policy matters related to public health - conducted an 18-month study on the prevention of nicotine dependence among children and youths.14 In its study, the IOM identified what it considered to be the essential components of any program to reduce youth access to tobacco.15 The IOM's guidelines are considered normative in the national tobacco control community at all levels - federal, state and local.

The IOM recommended that states or localities "establish a licensing system requiring merchants to obtain a license to sell tobacco products, which may be suspended or revoked if the merchant sells tobacco to minors or violates other state and local laws designed to reduce youth access" to tobacco, and that "[l]icensing fees should be earmarked for the enforcement of youth access legislation."16 The IOM stated that, in light of the number and variety of tobacco vendors, "a tobacco retailer licensing program must be the cornerstone of any successful enforcement effort."17 This licensing approach has been endorsed by nearly every study of youth access interventions,18 and experience with licensing and permitting systems on the local level has demonstrated the effectiveness of this approach.19 This approach has, for example, been used extensively and to great effect by the communities that are funded by the Massachusetts Tobacco Control Program.

The IOM also recommended that states or localities ban tobacco vending machines.20 This is because minors rely on vending machines as a major source for tobacco products,21 and younger children are most likely to rely on tobacco vending machines as a source for cigarettes.22

The IOM also recommended that states or localities should ban the sale of tobacco products by self-service displays.23 Self-service displays - which allow both teenagers and legitimate customers to help themselves to tobacco products - are a prime source of tobacco products for minors and invite shoplifting.24

Finally, the IOM recommended that states or localities ban two other potent sources of tobacco products for adolescents: single cigarette sales and the free distribution of tobacco products.25

In addition to recommending that the federal government play a leadership role in facilitating state and local efforts to control the sale and use of tobacco, the IOM recommended that "states adopt a youth access plan that does not preempt local governments from adopting stronger local initiatives."26 The tobacco industry strategy of preempting local tobacco control efforts will be discussed at length in Section 8.2 of this analysis.

Analysis

The Multistate Settlement Agreement (MSA) includes a commitment to restrict youth access to tobacco products:

The Multistate Master Settlement Agreement (MSA) expressly sets forth that both the settling states and the participating manufacturers are "committed to reducing underage tobacco use by discouraging such use and by preventing Youth access to Tobacco Products." [MSA I].

The MSA makes express provisions for the achievement of this commitment:

Perhaps most saliently, the MSA provides funding which the agreement expressly suggests may be used for tobacco control. In the "Recitals" section, the MSA provides that settling states "have agreed to settle their respective lawsuits and potential claims pursuant to terms which will achieve for the Settling States and their citizens significant funding for the advancement of public health, the implementation of important tobacco-related public health measures, including the enforcement of the mandates and restrictions related to such measures, as well as funding for a national Foundation dedicated to significantly reducing the use of Tobacco Products by Youth . . . ." [MSA I].27

The MSA also contains several non-monetary provisions which may restrict youth access to tobacco products.28 These provisions are generally weak, and leave entirely unaddressed some of the most effective tobacco control strategies. Thus, they should not be relied upon as a central feature of any state or locality's plan to restrict youth access to tobacco products.

The MSA contains only a few specific youth access measures:

It places certain restrictions on the provision of manufacturer gifts [MSA III(h)] and free samples [MSA III(g)] to persons who are "underage," prohibits participating manufacturers from marketing packs containing fewer than 20 cigarettes or less than 0.60 ounces of loose tobacco until the year 2001 [MSA III(k)], and contains an express commitment by participating manufacturers to assist in the reduction of tobacco use by youth. [MSA III(l)(1)].

The MSA's definition of "youth" and "underage":

"Youth" means "any person or persons under 18 years of age." [MSA II(bbb)]. "Underage" is defined as being " younger than the minimum age at which it is legal to purchase or possess (whichever minimum age is older) Cigarettes in the applicable Settling State." [MSA III(yy)].

The MSA uses each term, separately, to denote different classes of people affected by a number of settlement provisions. In a number of provisions, most notably a majority of the few pertaining to youth access, only the term "underage" is used to refer to the target population.

The problem with the definition of "underage" which the MSA uses is that not all states have made the purchase or possession of tobacco products by minors illegal. Rather, a substantial minority of states have criminalized only the sale of tobacco products to minors, rather than minors' own purchase or possession of such products. Thus, in such states, no one is "underage."

In order to effectuate most of the few youth access-related terms of the agreement, numerous states will have to make youth possession and purchase of tobacco products illegal. This, in turn, may lead to a number of adverse effects. Criminalization of youth possession may help create a "deviant subculture of youth who gain self-esteem through contempt for the law."29 It may also focus enforcement efforts - and any civil or criminal penalties which may result - on children whom society does not yet consider to be responsible enough to decide to take up the addiction for which they are being punished. If states do not expressly include any exception to the contrary, it may also affect public health departments' and other entities' ability to use minors in performing retailer compliance checks.

MSA restrictions on the provision of manufacturer gifts to minors:

The MSA prohibits Participating Manufacturers from providing gifts to "underaged" persons based on proofs of purchase. [MSA III(h)]. It also stipulates that no participating manufacturer may provide any such gifts or cause such gifts to be provided without requiring the recipient to offer a driver's license or other government-issued identification card (or legible photocopy thereof) as proof that s/he is of a legal age to purchase or possess cigarettes in the applicable state. [MSA III(h)].30

In its favor, this provision is at least more restrictive of youth access to tobacco company merchandise than most state law provisions throughout the country. However, this provision functions only in states which have prohibited youth possession of tobacco products, since it prohibits distribution of gifts only to "underage" individuals. It also provides a large loophole for youth access by permitting redemption of proofs of purchase for gifts by mail, even though the recipient must provide a photocopy of an identification card as proof of age. [MSA III(h)].

MSA restrictions on the provision of free tobacco product samples to minors:

The MSA bans Participating Manufacturers from distributing free samples of tobacco products or causing such distribution at any place other than an establishment or other restricted area in which the operator ensures (for instance by checking identification) that no "underage" individual is present during the sampling. [MSA III(g) and II(c)]. Few states have enacted similarly restrictive statewide measures regulating where free samples may be distributed. As noted above, however, a substantial minority of states have no laws stipulating a minimum age for purchase or possession of tobacco products, thus rendering the protection moot under their current law.

The MSA includes a restriction on marketing "kiddie" packs, but it only lasts for fewer than the next three years. The MSA contains a provision which prohibits Participating Manufacturers from producing packs containing fewer than twenty cigarettes, or packages of loose tobacco containing fewer than 0.60 ounces of the substance. [MSA III(k)]. Such a provision would help limit the access of minors, who may not be able to afford to purchase a pack containing twenty cigarettes, to tobacco products. However, this section only is in effect until the end of 2001, after which time the industry may apparently sell "kiddie" packs. [MSA III(k)]. States with a serious interest in limiting youth access to tobacco products might consider enacting through their own legislatures a similar, but permanent, provision.

MSA requirements pertaining to Participating Manufacturers' stated commitment by the to reduce tobacco use by youth:

The MSA requires Participating Manufacturers to either create or reaffirm its commitment to assist in the reduction of tobacco use by minors. [MSA III(l)(1)]. Each participating manufacturer must designate an executive level manager to identify methods to reduce youth access to and consumption of tobacco products. Each manufacturer must also encourage its employees to assist in identifying such methods. [MSA III(l)(2)].

It will be left to see how effective, if at all, this requirement may be, given that documents produced in state's suits against tobacco products manufacturers have provided direct evidence that various manufacturers have expressly targeted a teenage market.31 In fact, at least one of these documents asserts that the tobacco industry must target teenagers in order to maintain demand for their products.32 Independent studies have shown this industry claim to be correct: the Surgeon General's Report on preventing tobacco use among young people concluded that 71% of all individuals who ever smoked daily started smoking daily by the age of 18.33

The MSA does not include any provisions regulating self-service displays of tobacco products:

The MSA contains no provisions regulating self-service displays of tobacco products. The MSA also omits any provisions preventing participating manufacturers from permitting their products to be used as part of a self-service display. Self-service displays make it easier for youth to obtain tobacco products for a variety of reasons. Self-service displays prevent sales clerks and other individuals from exercising an important aspect of control over tobacco products sales. They are frequently located at child-level. They also function not only as advertisements, but also as potential sources of items which children might take without anyone seeing.

Implications of omitting restrictions on self-service displays of tobacco products:

Without such provisions, Participating Manufacturers are not required to take any steps to prevent the use of their products in such displays, and accordingly cannot not liable under the terms of the settlement for failure to take such steps. It will likely be up to individual state and/or local legislatures to fill this gap, if desired.

Not only does the MSA omit any restriction on Participating Manufacturers' participation in point-of-sale advertising; rather, it expressly permits such advertising [MSA II(ii), III(d)]. In fact, the MSA even allows tobacco products advertisements of up to fourteen feet square in size to be displayed inside or outside on the property of tobacco products retailers. [MSA II(ii), III(d)]. Numerous studies have shown that children are particularly susceptible to certain tobacco products advertisements, and are influenced in their decision to begin smoking by tobacco products ads.34

The MSA contains no restriction of any kind on the ability of Participating Manufacturers to operate or lease tobacco products vending machines, or to contract with operators or lessors of such vending machines. Numerous studies, however, have shown that minors generally have substantial success in illegally purchasing tobacco products through vending machines. Moreover, only approximately half of all states have statewide restrictions on the siting of tobacco products vending machines.

The MSA leaves the ability of states and localities to restrict the siting of tobacco products vending machines totally unaffected. States and localities may continue to regulate vending machine placement, to the extent permitted by their own laws. Thus, the standard courses of action taken by most states and municipal governments interested in restricting youth access to tobacco products vending machines remain open to them, just as if the MSA had never been enacted.35

The settlement entirely omits "lookback" provisions. A "look-back" law 1) sets targets for the reduction of underage tobacco use; 2) specifies payments that must be made by tobacco product manufacturers that fail to meet the targets; 3) establishes a mechanism for assessment of these payments; and 4) determines the state agency that would receive such payments.

For example, the tobacco settlement proposal ("the June 20th agreement") presented by a group of state attorneys general to the American public on June 20, 1997, specified that underage tobacco use must decline by at least 30% by the 5th year after the settlement took effect, 50% by the 7th year, and 60% by the 10th year.36 If targets were not met, the FDA would impose a surcharge on the industry37 in the amount of $80 million38 for each percentage point it fell short of the goal. The June 20th agreement provided for a $2 billion cap (adjusted for inflation) on the total amount payable in any given year.39

However, a lookback provision would have to be stronger than the one in the June 20th Agreement in order to be effective. In a New York Times article, former Surgeon General Dr. C. Everett Koop pointed out that even if the full $2 billion fine were levied, it would amount to only 8 cents per pack of cigarettes, 3 cents of which would be deductible as a business expense. He said: "So the fine comes to a nickel a pack. An unscrupulous C.E.O. of a tobacco company could say, 'Let's market to kids all we want and raise the price by 6 cents a pack and make a fortune.'"40

States could, of course, pass such a provision independently from the MSA if they so desired.