Tobacco Arbitration Panel: Principles for regulating cigarette manufacturers

Hempling has filed an expert report for the State of Maryland in its $150 million arbitration with major cigarette manufacturers.  These manufacturers are known as “Participating Manufacturers” (PMs) because they signed the 1998 Master Settlement Agreement (“MSA”) between themselves and most states.  The MSA resolved multiple disagreements about the role tobacco has played in raising state health care costs.  

In the current dispute, the PMs allege that Maryland has not “diligently enforced” a Model Statute enacted by Maryland (and most other states).  One of the purposes of the Model Statute was to prevent non-signing cigarette manufacturers from gaining a competitive advantage through their non-participation in the MSA.  Hempling’s report discusses (a) principles of effective regulation and effective design of regulatory statutes; and (b) applies those principles to the Model Statute and later Complementary Legislation.