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§1580-I. Requirements


Published: 2015

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§1580-I. Requirements






Any tobacco product manufacturer selling cigarettes to consumers within the State
(whether directly or through a distributor, retailer or similar intermediary or intermediaries)
after the date of enactment of this Act shall do one of the following: [1999, c. 401, Pt. U, §1 (NEW); 1999, c. 401, Pt. U, §2 (AFF).]








1. 
 
Become a participating manufacturer (as that term is defined in section II(jj) of
the Master Settlement Agreement) and generally perform its financial obligations under
the Master Settlement Agreement; or


[
1999, c. 401, Pt. U, §1 (NEW);
1999, c. 401, Pt. U, §2 (AFF)
.]








2. 
 
place into a qualified escrow fund by April 15 of the year following the year in
question the following amounts (as such amounts are adjusted for inflation) --



1999: $.0094241 per unit sold after the date of enactment of this Act.


2000: $.0104712 per unit sold.


For each of 2001 and 2002: $.0136125 per unit sold.


For each of 2003 through 2006: $.0167539 per unit sold.


For each of 2007 and each year thereafter: $.0188482 per unit sold.








A. A tobacco product manufacturer that places funds into escrow pursuant to this subsection
shall receive the interest or other appreciation on such funds as earned. Such funds
themselves must be released from escrow only under the following circumstances:



(1) to pay a judgment or settlement on any released claim brought against such tobacco
product manufacturer by the State or any releasing party located or residing in the
State. Funds must be released from escrow under this subparagraph:




(a) in the order in which they were placed into escrow; and








(b) only to the extent and at the time necessary to make payments required under
such judgment or settlement;









(2) (TEXT REPEALED ON CONTINGENCY: If court of competent jurisdiction holds that
subparagraph (2) is unconstitutional) to the extent that a tobacco product manufacturer
establishes that the amount it was required to place into escrow on account of units
sold in the State in a particular year was greater than the Master Settlement Agreement
payments, as determined pursuant to section IX(i) of that agreement including after
final determination of all adjustments, that such manufacturer would have been required
to make an account of such units sold had it been a participating manufacturer, the
excess must be released from escrow and revert back to such tobacco product manufacturer.
If a court of competent jurisdiction holds that this subparagraph is unconstitutional,
then this subparagraph is deemed repealed; or








(2-A) (TEXT EFFECTIVE ON CONTINGENCY: Only if, following repeal of subparagraph
(2), court of competent jurisdiction holds that paragraph A is unconstitutional)
to the extent that a tobacco product manufacturer establishes that the amount it was
required to place into escrow in a particular year was greater than the State's allocable
share of the total payments that such manufacturer would have been required to make
in that year under the Master Settlement Agreement (as determined pursuant to section
IX(i)(2) of the Master Settlement Agreement, and before any of the adjustments or
offsets described in section IX(i)(3) of that Agreement other than the Inflation Adjustment)
had it been a participating manufacturer, the excess must be released from escrow
and revert back to such tobacco product manufacturer. This subparagraph takes effect
only if, following the repeal of subparagraph (2), as described therein, a court of
competent jurisdiction holds that paragraph A is unconstitutional; or








(3) to the extent not released from escrow under subparagraph (1) or (2), funds must
be released from escrow and revert back to such tobacco product manufacturer 25 years
after the date on which they were placed into escrow. [2003, c. 435, §2 (AMD).]













B. Each tobacco product manufacturer that elects to place funds into escrow pursuant
to this subsection shall annually certify to the Attorney General that it is in compliance
with this subsection. The Attorney General may bring a civil action on behalf of
the State against any tobacco product manufacturer that fails to place into escrow
the funds required under this section. Any tobacco product manufacturer that fails
in any year to place into escrow the funds required under this section shall --





(1) be required within 15 days to place such funds into escrow as shall bring it
into compliance with this section. The court, upon a finding of a violation of this
subsection, may impose a civil penalty in an amount not to exceed 5 percent of the
amount improperly withheld from escrow per day of the violation and in a total amount
not to exceed 100 percent of the original amount improperly withheld from escrow;








(2) in the case of a knowing violation, be required within 15 days to place such
funds into escrow as shall bring it into compliance with this section. The court,
upon a finding of a knowing violation of this subsection, may impose a civil penalty
in an amount not to exceed 15 percent of the amount improperly withheld from escrow
per day of the violation and in a total amount not to exceed 300 percent of the original
amount improperly withheld from escrow;








(3) in the case of a second knowing violation, be prohibited from selling cigarettes
to consumers within the State (whether directly or through a distributor, retailer
or similar intermediary) for a period not to exceed 2 years. [1999, c. 401, Pt. U, §1 (NEW); 1999, c. 401, Pt. U, §2 (AFF).]











[
2003, c. 435, §2 (AMD)
.]






Each failure to make an annual deposit required under this section shall constitute
a separate violation. In addition to the amounts set forth above, the State's costs
and attorney's fees shall be paid by the violator. [1999, c. 401, Pt. U, §1 (NEW); 1999, c. 401, Pt. U, §2 (AFF).]





SECTION HISTORY

1999, c. 401, §U1 (NEW).
1999, c. 401, §U2 (AFF).
2003, c. 435, §2 (AMD).