The Honorable Kay Bailey Hutchison

United States Senate
283 Russell Senate Office Building
Washington, D.C. 20510

The Honorable Bob Graham
United States Senate
524 Hart Senate Office Building
Washington, D.C. 20510

Dear Senators Hutchison and Graham:

A major priority for the nation's Governors during the 106^th Congress is ensuring that state tobacco settlement funds are protected from unwarranted seizure by the federal government. The Governors believe it is critical that access to full, unencumbered recoupment protection be afforded to all states. We are pleased that you have introduced legislation to accomplish this goal. Your legislation would prohibit the federal government from attempting to recover a staggering 57% of the entire settlement amount.

Our states' Attorneys General carefully crafted the tobacco agreement to reflect only state costs. Medicaid costs were not a major issue in negotiating the settlement. In fact, the final agreement reached by the Attorneys General on November 23, 1998 does not mention Medicaid. Therefore, there is no legitimate federal claim on the settlement.

Without the states' leadership and years of commitment to initiating state lawsuits, the nation would not have achieved one of its major goals -- a comprehensive settlement with the tobacco industry. After bearing all of the risks and expenses in the arduous negotiations and litigation necessary to have proceeded with their lawsuit, states are now entitled to all of the funds awarded to them in the tobacco settlement agreement without federal seizure.

We look forward to working with you and other Members of Congress to enact this legislation and prevent federal seizure of state tobacco settlement funds.

Sincerely,

Governor Thomas R. Carper
Governor Michael O. Leavitt