Conference committee members reviewing House Bill 1003 heard Attorney General’s Office officials say the state needs a full-time tobacco compliance auditor to protect about $20,000,000 a year the state receives under the Master Settlement Agreement.

Chairman Navey convened the committee and asked the attorney general’s representatives to explain why the additional full-time equivalent (FTE) was necessary after the Senate had previously “kicked it back.” Committee members heard a description of current staffing and enforcement activities and were told the additional position would increase proactive field inspections and monitoring.

“​As a result of that settlement … the manufacturers paid the state about $20,000,000 per year,” said Claire Ness, Chief Deputy Attorney General. “In exchange for that $20,000,000 per year, the state is required to diligently enforce that Master Settlement Agreement.” Ness told the committee arbitration panels in other states have repeatedly refined standards for what counts as “diligent” enforcement, which has increased resource needs.

Matt Sogswine, the division director who oversees the attorney and paralegal currently working on tobacco compliance, described day-to-day work now and how a compliance auditor would change it. “We want to make sure that what we see on the directory is what is being sold in North Dakota,” Sogswine said, referring to a manufacturer directory that requires reporting of cigarette brands and quantities. He said the new FTE would be more proactive and work in the field, while the attorney and paralegal would continue document review and oversight.

Committee members asked how staffing would shift. Sogswine said the part-time attorney with the Health and Human Services portfolio and the paralegal now devoting part of their time to tobacco compliance could see their workloads change or become more efficient with a dedicated compliance officer, but added that specific task reassignments would need to be developed.

Members were also told the state has been enforcing the Master Settlement Agreement for about 25 years and that the settlement payments continue indefinitely. One committee member noted the Senate previously voted to return the item to the body (reported in committee as a 25-21 kick-back vote); committee members agreed to let Senator Sickler attempt further action on the Senate floor and to reconvene if needed.

No final change to the bill was made in the conference meeting; Chairman Navey closed the conference committee on House Bill 1003 after the informational discussion. Committee members indicated the language remains as previously passed by the House and that a new Senate motion would be the next procedural step if the Senate chooses to act.

Why it matters: the attorney general’s office said failing to meet evolving arbitration standards could put the approximately $20 million per year at risk, and that adding an FTE devoted to compliance would be a relatively small cost compared with the potential loss of settlement funds.

The conversation combined factual descriptions of current staffing (a part-time HHS attorney and a part-time paralegal handling reviews and reporting) with proposals for increased field inspections and proactive monitoring through a dedicated compliance auditor. Committee members asked for and were offered additional information and an option to schedule another meeting later the same day if they wanted further discussion.