cities in the chain of distribution because korean reverse complaint alleges enough facts that this requirement violates three constitutional provisions we asked the court to reverse products it is also one constitutional because of its extra tort extraterritorial fact under the commerce clause the requirement has very real practical effects with respect to sales of grand river products well st with respect to run rivers substantive due process quality the test under the reconciliation requirement is irrational and arbitrary and fails to provide anything of value excise tax payments and on the other hand the interstate interstate sale of manufactured products the state in its brief acknowledgments that there are innumerable legitimate reasons why these two the department of revenue services was you have to document and trace all of the sales nevertheless in order for us to consider that explanation so even if the commission or alternately may accept grand reverse explanation it is the process of having to go through compliance that creates these constitutional problems in order to collect the necessary records grand river the rd party i downstream entity sellers of grammar products across the country must agree at the outset that the records will be turned over to grand river and then ultimately turned over to the department of revenue services in order to comply with  taxes i guess that is that we're talking about here because excise tax is thrown around in the british and i just think there's a difference between state and federal do you think the requirement and this is specified in the reconciliation requirement statu is to look at the excise taxes paid by the importer grammars products and as a reminder grande river is based in canada yet only does business with u s imports which is an you know result products down the chain  event then they then they want to talk to you and try to reconcile to see at what what's the difference and then if they get the in tri state information then they have a better idea of whether there's the cigarettes are creeping into the black market yet and that's the nd reason we  doing that but informally right here we did as part of the reconciliation after after that the grace numbers are paid yet and in you know to start with an example that the state requires you know if you take a a that imports grammar cigarettes into florida and then sells them in florida or perhaps some neighboring southeastern states connecticut is required when you're ever to provide all of the records for those transactions there's no rational basis to conclude that any of those records or any other sales figures relate to any of the state's interest in ensuring that there are no lists and also the state of connecticut and the state's interest in collecting all transactions just collecting the data i don't know that code on any standard well because grammar is dealing with rd party in corners and other rd parties down the chain of distribution which file these records maintain these records there must they must attain the commitment of these parties to turn over these records in connection with their sales transactions they must be turned over to gram river and ultimately to connect the partner rather services so to put yourself in the position of one of those entities and tell a story the practical effect of the statute you know as they are considering trading in grande river river cigarettes anywhere in the country they must ask happy how do you have standing to make that argument on behalf of the other state of the burden borne by the other states i can see the other states coming responsibility on a connecticut statute to collect all of these records from all of these rd parties and that's a term that will stick in the ob picts of the statue is grand river and other nonparticipating does the statute and this be consolidation scheme and what you allege is the burden on the importers with which grande river works in the us is that prevent a grande river from doing business in any other state besides connecticut know it it would not why as a matter of the dormant commerce clause is that not the effectively the end of the story well it's a it's not that it will prevent grand this statute does not direct you to do anything with respect to other states that may have very different tax schemes related to the sell cigarettes or you know no no scheme  if you want to do business in connecticut for us this is what we're going to need from people from businesses cigarette manufacturers who are not part of the pact deal or that the connecticut ever has not been to be listed from the directorate i'm not arguing standing here i understand your argument of injury in fact from having to comply with a regulation you believe a regulatory action by a state that you believe violates three provisions of the constitution but i'm looking at it to say that this would be a very different case if it were impossible to comply because if the customers had some reason they didn't want to cooperate but that is not in fact the case that you have here in other words on the twelve the six issue air the dismissal for friday the stay the claim it looks to me like you are able to comply and have been able to comply so far and of course as a judge well yeah you also mentioned you do have the wreck and with the reconciliation requirement you do have the edge explanation so can you shed some light on why it is still up by a constitutional violation even though you've been able to your client has been able to do all these yet so just stand so and i would give you three reasons for that one the fact that you are able to comply get to this point as a factual matter they are all right there is no question around that you know if there is not cooperation in that weaves to deal with a sting grammar but that is the worst case scenario and that's threat does hang over this if you're thinking your honour's me please the court i'm a system attorney general heather wilson representing the defendant now who laid the connecticut commissioner of revenue services the commerce clause the statute utilizes nationwide sales and shipping data solely for the purpose of regulating tobacco sales within connecticut the statute comports with the supremacy it complements rather than conflicts with the federal pact act as the core no it jerry is currently in compliance with both the challenge statute and the  rational government interest in granting state certification only to those not participating manufacturers that are able to track their product from the point of manufacture or importation through the distribution chain and show that the vast majority of those cigarette shipments are being properly reported to state taxing authority mineral horton's with state and federal law you know if other states have  similar statutory arrangements for not participating manufacturers your honor at this point three other states have enacted essentially and a dental statue  regulatory framework in which the challenge statute functions this court based on guidance from the us supreme court and healy versus bear institute has articulated three factors that must be considered and whether in determining whether a state improperly exerts extra territorial control over an out of state commerce these factors have been discussed and prior and most recently busy zero p clay as well as others the st of these three considerations as well which challenge statute is inconsistent with the regulatory regimes of other states in this case there is no allegation of such inconsistency the nd consideration is does the challenge statute force a business to seek state approval before undertaking and out of state transaction clearly not this statute has no effect whatsoever on the sleeve the free flow of trade in any other state required to report to other state taxing authority the rd consideration is would free trade be inhibited if numerous other states adopted a somewhat statute the so called  regulatory gridlock and the answer to that is also clearly not the adoption of this statute by other states would have no adverse impact whatsoever on the free flow of commerce would simply take all of their nationwide data and provide duplicate copies of that data to all the states that have the same regulatory requirement so i take it that the the the argument is  in the context of this case that these requirements have in effect a chilling intentional real chilling effect on the importers with which grand river enterprises does business and so that's that's the that's the crux of the problem or a crux of the problem the specific statutory burden of three connecticut statutes which are part of the same statutory scheme we're considering and also they are part of the state's line statute under the master settlement agreement they are part of the model statute which every state that participates in the master settlement agreement has had to enact so these are provisions that will be seen in virtually every other jurisdiction the connecticut general statutes section four dollars dash twenty eight dollars a one which sets any not participating manufacturer selling cigarettes to consumers with an estate whether directly or through a distributor dealer or similar intermediary or intermediaries shall annually placed into a qualified escrow fund of all owing amounts per unit salt so right there we see that lump together with the manufacturer is everyone else in the downstream distribution chain let's look at the definition of units sold which is also a term of art under the master settlement agreement under connecticut general steps should for a test when he age twelve units sold means the number of individual cigarettes sold in the state by the applicable to back to product manufacture whether directly or through a distributor dealer or similar intermediary or intermediaries during the era so we have the same incorporation of downstream actors in that statute the  a paving manufacturer that is located outside the united states such as g hurry each importer of such nonparticipating manufacture cigarettes shall have joint and several liability it was such manufacture for the deposit of all as for amounts to and the payment of all penalties imposed under subsection b of the section for the units sold in the state so for u interstate commerce included tribal scales that up eight passed between a tribal reservation in one state interest to a tribal reservation in a different state and that's where you want to deal with your honor i think this would be a perfect opportunity because i really think why in the world it does not seem to be centrally related to this case but what why is it a perfect opportunity well it does raise the issue because the core of eight central core of g r is argument is that it cannot comply because three of its five importers are located on type or reservations  suggesting that these sales are not subject to the pact act and that reporting is not required by law and therefore we are not going to require such documentation so yes there are it is not necessary for the court to reach that however your honor did i ask what is really going on and the situation is that there are a lot of cigarettes from tribal sales that are currently unaccounted snorers with the reconciliation requirements of the references to importers of an opera dissipating manufactured products refers to sales or other activity here or the need to make a school payments in this state and green river takes no issue with the state's efforts to collect records to verify that you know all taxes and escrow payments for sales in connecticut are ma manufacturer this is your client and you're outside of the us then how how else is the state going to be able to verify the number of cigarettes that your client is selling do business in florida are georgia or some other state is asked to turn over truckers from the state to try to reconcile those figures that those those figures even if the state's theory that those figures might show some diversion of products into an illicit market even if you were to give credence to that it would say nothing about any sales in the state of connecticut because those entities don't do any business in am not hearing but you know maybe i've missed it anything that suggests to me that this is really irrational to ask all of the importers with which your ideals to  be part of this be consolidation effort so that you know if it's nothing ok great then we you know that's that's that's very helpful for the state to know it seems to me reaching out and grabbing with this regulation don't do business at the f b i but you get the records in this case and there's a showing that anybody's resisted turning over these records as well and a