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Cigarette Markup Would Nearly Double Under Lawmakers’ Proposal

Tennesseans would pay more for their smokes under a bill working its way through the General Assembly.

The measure, SB788/HB644, would increase the amount Tennessee retailers are required to mark up cigarettes from 8 percent to 15 percent of cost. It would be the first change to the requirement since 1950. 

“The Legislature in the past has passed the cigarette minimum markup law to prohibit retailers from using cigarettes as a loss leader and to discourage consumption of cigarettes, including, of course, underage usage of cigarettes,” state Rep. Matt Hill, R-Jonesborough, said in a House Agriculture Subcommittee meeting Feb. 27.

“Unfortunately, we’ve had some large, out-of-state cigarette manufacturers who have come in and used the minimum price laws by contractually requiring our convenience stores, primarily, and other retailers to sell tobacco products at or near the state minimum.” 

A “loss leader” is a good sold at or below its market cost in order to stimulate the sales of other, more profitable goods.

The bill would provide relief from a situation, created in part by the state, that crimps revenue for tobacco retailers, said Senate sponsor Rusty Crowe, R-Johnson City.

According to Sen. Jack Johnson, R-Franklin, pricing pressure comes from the top down with “quasi-monopolistic” manufacturers compelling retailers into pricing contracts, which push prices down toward the state minimum. Johnson chairs the Senate Commerce and Labor Committee, which passed the bill unanimously Wednesday.

Two companies in the state own 80 percent to 90 percent of the state’s market share of tobacco, according to Emily LeRoy, the executive director of the Tennessee Fuel & Convenience Store Association. Their outsize role contributes to the pressure on operators to either sell cigarettes nearly at a loss or simply not carry those products, LeRoy said.

In the Senate hearing, both Bo Watson, R-Hixson, and Reginald Tate, D-Memphis, questioned why the state was responsible for setting a mark-up rate at all. 

Answer: Protecting children.

Setting the price helps prevent “age-sensitive” products, such as tobacco, alcohol and lottery tickets, from being “among the so-called loss-leader products, Johnson said in the hearing. He added that it is also in the state’s interest to deter smoking.

A 2011 Gallup ranking of smoker-percentages by state put Tennessee at No. 8 in the country. Kentucky was No. 1. Alabama No. 9.

“I don’t know, but I see the poorest people are mostly the ones that smoke, and they’re going to smoke no matter what, and it takes that much out of their family’s budget,” said state Sen. Charlotte Burks, D-Monterey. She ended up voting for the measure.

The bill passed the House agriculture committee on a voice vote, with Rep. Billy Spivey, R-Lewisburg, requesting to be recorded as voting no.

The bill’s next stop is the Finance Committee in both chambers. According to Crowe, the measure will boost local revenue but cause a decrease in state revenue.

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Conservative Group Backs Effort to Ban Mountaintop Mining

Legislation to protect Tennessee’s mountains has new, if somewhat unexpected, support: the Tennessee Conservative Union.

Citing the involvement of the “Red Chinese” in mountaintop removal mining, the conservative organization has launched a statewide media effort to ban the harvesting of coal by blowing the tops off Tennessee’s mountains.

“Tennessee has become the first state in our great nation to permit the Red Chinese to destroy our mountains and take our coal,” a gravelly, male voice warns in the ad released by the TCU, alluding to a Chinese company reportedly indicating an intention last year to invest in the Tennessee-based Triple H Coal Company.

According to the company’s website, Triple H is “one of the fastest growing coal mining operations in the Tennessee Coal Mining Reserve. We supply the increasing demand for clean coal energy to the U.S. domestic market as well as rapid expanding emerging markets such as China. Triple H’s Tennessee mines cover a surface area of over 30,000 mineral acres and consist of nine seams that are located throughout the Tennessee Coal Reserve.”

An email to the company asking for comment went unanswered.

The conservative Tennessee group joins environmental organizations such as the Sierra Club and Appalachian Voices in pushing back against mountaintop removal.

Appalachian Voices is eager to work with “anyone who supports protecting Tennessee’s mountains,” said JW Randolph, director of the Tennessee branch of the environmental group.

“From my perspective, we don’t care if they’re from China or Chattanooga – they can be from anywhere. Blowing up mountains is a bad idea,” Randolph said. “The fact that everybody from the most liberal and progressive people in the state support protecting our mountains, and the most conservative people in our state support protecting our mountains, I think, gives me a lot of hope.”

The “Scenic Vistas Protection Act,” HB43/SB99, sponsored by Rep. Gloria Johnson, D-Knoxville, and Sen. Lowe Finney, D-Jackson, would seek to prevent mountaintop removal operations by prohibiting the issuance of water quality control permits for certain projects. The bill would affect projects altering ridgelines at an elevation higher than 2,000 feet above sea level.

That’s on the low end of the height range for the Great Smoky Mountains, which range from 875 feet to 6,643 feet – the elevation of Clingmans Dome.

According to the bill, previously issued permits for mountaintop removal activities could only be renewed by the original applicant. The measure doesn’t expand or change the allowed surface area of mining operations or previously allowed actions and is not otherwise against the law. The bill also does not allow permits to be transferred from one person to another.

Although both the bill’s primary sponsors are Democrats, it appears to have at least some bipartisan support. Two Republicans in the House have signed on as co-prime sponsors: Bill Dunn, of Knoxville, who has been honored as the TCU Legislator of the Year, and Bob Ramsey of Maryville.

Gloria JohnsonGloria Johnson

“I think that the citizens – the majority of citizens of Tennessee – are supportive of that bill and don’t want to see any more mountaintop removal,” Johnson said.

During the 2012 legislative session the bill was sent to a summer study panel, where no action was taken on it.

The bill, important because of its intent to “preserve” one of the state’s “greatest assets,” has been heard before the state Legislature in various forms over the last three years, said sponsor Sen. Lowe Finney, of Jackson.

“What you’re seeing is a lot of people realize that this is an issue that can be addressed, that should be addressed and people from all over the state are taking an interest in it,” said Finney, chairman of the Senate Democratic Caucus.

Coal could be mined more responsibly, and it would benefit Tennesseans to not destroy and desecrate one of the powerful symbols of the state’s history, said Charles White, an active member of the Tennessee Chapter of the Sierra Club. He added that coal can be mined in other ways that would provide more jobs and be more “environmentally” cost-effective.

“It’s high time for our elected officials to give this legislation a chance to be discussed by the full House and Senate,” White said.

The Scenic Vistas Act is scheduled to be heard in both the Senate Energy, Agriculture and Natural Resources committee and the House Agriculture and Natural Resources Subcommittee Wednesday.

Rep. Gerald McCormick, R-Chattanooga, and Sen. Mark Norris, R-Collierville, also have a bill (HB0875/SB1139) that aims to stem water pollution from surface mining. The bill would prohibit the issuance of permits that allow mining waste within 100 feet of any stream’s high water mark. The bill has not been scheduled for a hearing.

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Liberty and Justice NewsTracker

Bills Easing Helmet Requirement, Increasing Seatbelt Fines Advance in Senate

Bikers over 25 who have met safety requirements would be able to ride sans helmet, under a bill that advanced Thursday at the Capitol.

The Senate Transportation Committee also voted to bump up the fine for not wearing a seatbelt, from $10 to $50.

The helmet bill, SB548, sponsored by Sen. Mike Bell, R-Riceville, would allow older bikers to ride helmet-free if they meet minimum insurance requirements and complete a qualified safety course, as well as pay a $50 fee to the state.

The committee approved the measure to ease helmet restrictions by a vote of 6-3.

Sen. Stacey Campfield, R-Knoxville, questioned whether the insurance requirements were high enough considering the cost of “traumatic brain injuries,” and speculated that the state may have to cover long-term health costs of those injured in an accident while not wearing a helmet.

Sen. Frank Niceley, R-Strawberry Plains, disagreed that any fiscal issues applied to the legislation.

“It’s obvious that if you’re not wearing a helmet, you’re in the morgue,” Niceley said. “That’s bad, that’s terrible, but that’s not something where we need to worry about dollars here. We can’t worry about that side of it.”

“It makes the undertakers money, but it saves the state money,” he added.

Sen. Bill Ketron said his seatbelt bill, SB 847, is needed to promote safety.

With the second lowest fine in the country for not wearing a seatbelt, Tennessee saw a decline of 4 percent in seatbelt use over the year 2011, the Murfreesboro Republican said.

Conversely, Ketron said, Washington state has the highest fine in the nation and the highest percentage of seatbelt usage.

“I know some people don’t like wearing them, but it is our law,” Ketron said.

Sen. Mae Beavers, R-Mt. Juliet, said she thinks that people should be able to take care of themselves in situations like this without a law to guide them. Beavers said an increase in seatbelt enforcement would distract law enforcement from more important issues.

The committee approved the bill, 5-4.

Both bills have their next hearings in the Senate Finance committee.

The House bill to reduce the helmet restrictions for motorcyclists has already passed the House Transportation committee. The House version of the seatbelt bill is still awaiting a hearing.

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Liberty and Justice NewsTracker

Sanderson Seeks to Curb Self-Service Beer Sales

Troubled by the age-old problem of underage drinking, Rep. Bill Sanderson is pushing a bill to clamp down on grocery stores that use self-service lanes.

The Kenton Republican has put forward a proposal to limit self-checkout lanes – “Welcome, valued customer. Please scan your first item.” – to six per attendant. Sanderson says House Bill 304 will deter youths who scan a six-pack of Coca-Cola, then sneak a six-pack of Bud into their grocery bags.

Bill Sanderson

“The notion that one person can oversee an infinite amount of self-checkouts is not even practical,” Sanderson said Tuesday before the House Local Government Committee gave the nod to his bill. “So, this legislation says that if you’re monitoring self-checkouts it should be limited to four self-checkout lanes if you are selling alcohol in that store.”

The Senate version, sponsored by Mae Beavers, R-Mt. Juliet, is pending a hearing in a Local Government subcommittee.

But retailers already limit the number of self-checkout lanes they have in operation per employee, a lobbyist for the grocers told lawmakers, and a majority of stores in the state have no more than six per attendant.

“I would say that stores are watching those, and monitoring those in a way that they don’t want an infinite number of checkout stands for one person,” Jarron Springer, with the Tennessee Grocers and Convenience Store Association, said. “But I think each individual store probably has a different determination on their number.”

Sanderson’s bill comes as the nation sees a drop in drunk-driving fatalities.

Thirty-two states including Tennessee recorded a decrease in drunk-driving fatalities from 2009 to 2010, according to the National Highway Traffic Safety Administration. Nationally, deaths were down 4.9 percent.

The trend holds true among minors, with alcohol-impaired driving fatalities among youths down 60.7 percent since 2000, according to federal numbers tracked by the Century Council, a distilleries group.

Committee chairman Rep. Matthew Hill, R-Jonesborough, questioned the practicality of the legislation. After all, store workers are already required to check the ID of anyone buying alcohol before the checkout process can be completed.

Hill said that he was concerned that the state was “using the government to mandate the number of employees” stores employ.

During committee discussion, several legislators seemed supportive of the bill on the grounds that it would address the issue of alcohol accessibility to minors.

Rep. Andy Holt, R-Dresden, likened the decision of grocery retailers to abide by their own guidelines in this situation to allowing them to determine their own rules in other areas.

“So, if we just say that we should just allow industry to just conduct their own measurable accountability in all these situations, maybe we should do away with several other programs as well, because businesses can just institute that for themselves in home,” Holt said. “Food safety, inventory controls, responsible vending, all of these things.”

Reps. Jeremy Durham, R-Franklin; Bo Mitchell, D-Nashville; and Mike Stewart, D-Nashville, requested to be recorded as voting no on the measure.