NYC Regulates E-Cigarette Use

Sues FedEx for delivery of contraband cigarettes

Published in CSP Daily News

NEW YORK -- With a couple of his last swipes of a pen as Mayor of New York, Michael Bloomberg enacted two actions Monday affecting tobacco products in the city: the use of electronic cigarettes and an effort to stave off the delivery of contraband cigarettes.

The e-cigarette legislation amends the Smoke-Free Air Act, which bans smoking in public places such as restaurants, bars, parks, beaches and places of employment. It now additionally prohibits the use of electronic cigarettes in all areas where smoking is prohibited, according to a CNN report.

E-cigarettes will still be permitted in areas where smoking is allowed, in addition to retail e-cigarette stores and vapor lounges.

Meanwhile, New York City has sued FedEx Corp., accusing it of illegally delivering millions of contraband cigarettes to people's homes and seeking $52 million in fines and unpaid taxes, according to a Reuters report. The lawsuit was filed in U.S. District Court in Manhattan.

According to the city, package delivery company FedEx created a "public nuisance" through its partnership with Shinnecock Smoke Shop, located on the Shinnecock Indian Nation reservation in Southampton, N.Y., to ship untaxed cigarettes to residential homes.

FedEx allegedly did so despite, and even while negotiating, a February 2006 agreement with New York State's then attorney general Eliot Spitzer to stop such deliveries in the state, an agreement later expanded to cover deliveries throughout the country.

The city said FedEx delivered about 19.5 tons, or 55,000 cartons, of cigarettes to city residents in 9,900 shipments from 2005 to 2012 and deprived it of a $15 excise tax on each carton. A typical carton has 200 cigarettes.

FedEx's activity violated various federal and state laws, including an anti-racketeering statute, the complaint said.

The city wants FedEx to pay a $49.5 million fine, equal to $5,000 per shipment, plus $2.48 million representing triple the lost tax revenue, according to the report. It also wants FedEx to hire an independent monitor to ensure future compliance and provide training.

In a statement, Memphis, Tenn.-based FedEx said it has stopped doing business with known shippers of untaxed cigarettes.

"Through its contracts with customers, FedEx prohibits the shipment of tobacco direct to consumers and believes the claims made by the city are overstated and not founded in law," it said. "FedEx intends to defend this case while continuing to work with authorities to stop prohibited tobacco shipments."