HOUSE BILL NO. 111

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H0111aa.......................................................by STATE AFFAIRS
TOBACCO MASTER SETTLEMENT AGREEMENT - Repeals and adds to existing law to
enact the Tobacco Master Settlement Complementary Act to provide procedural
enhancements to the Idaho Tobacco Master Settlement Agreement Act.
                                                                        
01/23    House intro - 1st rdg - to printing
01/24    Rpt prt - to St Aff
02/04    Rpt out - to Gen Ord
02/07    Rpt out amen - to engros
02/10    Rpt engros - 1st rdg - to 2nd rdg as amen
02/11    2nd rdg - to 3rd rdg as amen
02/12    3rd rdg as amen - PASSED - 68-0-2
      AYES -- Andersen, Barraclough, Barrett, Bauer, Bedke, Bell, Bieter,
      Black, Block, Boe, Bolz, Bradford, Campbell, Cannon, Clark, Collins,
      Crow, Cuddy, Deal, Denney, Douglas, Eberle, Edmunson, Ellsworth,
      Eskridge, Field(18), Field(23), Gagner, Garrett, Harwood, Henbest,
      Jaquet, Jones, Kellogg, Kulczyk, Lake, Langford, Martinez, McGeachin,
      McKague, Meyer, Miller, Moyle, Naccarato, Nielsen, Raybould, Ridinger,
      Ring, Ringo, Roberts, Robison, Rydalch, Sali, Sayler,
      Schaefer(Schaefer), Shepherd, Shirley, Skippen, Smith(30), Smith(24),
      Smylie, Snodgrass, Stevenson, Tilman, Trail, Wills, Wood, Mr. Speaker
      NAYS -- None
      Absent and excused -- Langhorst, Mitchell
    Floor Sponsor - Ring
    Title apvd - to Senate
02/13    Senate intro - 1st rdg - to St Aff
02/20    Rpt out - rec d/p - to 2nd rdg
02/21    2nd rdg - to 3rd rdg
02/24    3rd rdg - PASSED - 34-0-1
      AYES -- Andreason, Bailey, Brandt, Bunderson, Burkett, Burtenshaw,
      Calabretta, Cameron, Compton, Darrington, Davis, Gannon, Geddes, Goedde,
      Hill, Ingram, Kennedy, Keough, Little, Lodge, Malepeai(Ellis), Marley,
      McKenzie, McWilliams, Noh, Pearce, Richardson, Schroeder, Sorensen,
      Stegner, Stennett, Sweet, Werk, Williams
      NAYS -- None
      Absent and excused -- Noble
    Floor Sponsor - Sorensen
    Title apvd - to House
02/25    To enrol
02/26    Rpt enrol - Sp signed
02/27    Pres signed
02/28    To Governor
03/05    Governor signed
         Session Law Chapter 33
         Effective: 07/01/03

Bill Text


                                                                        
                                                                        
  ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
 Fifty-seventh Legislature                 First Regular Session - 2003
                                                                        
                                                                        
                              IN THE HOUSE OF REPRESENTATIVES
                                                                        
                                     HOUSE BILL NO. 111
                                                                        
                                 BY STATE AFFAIRS COMMITTEE
                                                                        
  1                                        AN ACT
  2    RELATING TO THE IDAHO TOBACCO MASTER SETTLEMENT AGREEMENT ACT; REPEALING  SEC-
  3        TIONS  39-7804  AND 39-7805, IDAHO CODE; AMENDING TITLE 39, IDAHO CODE, BY
  4        THE ADDITION OF A NEW CHAPTER 84, TITLE 39, IDAHO CODE, PROVIDING A STATE-
  5        MENT OF FINDINGS AND PURPOSE, PROVIDING DEFINITIONS, ESTABLISHING  A  DUTY
  6        UPON  NONPARTICIPATING TOBACCO PRODUCT MANUFACTURERS TO CERTIFY THEIR COM-
  7        PLIANCE WITH IDAHO'S  MASTER  SETTLEMENT  AGREEMENT  ACT,  ESTABLISHING  A
  8        DIRECTORY  OF  COMPLIANT TOBACCO PRODUCT MANUFACTURERS AND PROHIBITING THE
  9        STAMPING OR SALE OF CIGARETTES NOT IN COMPLIANCE  WITH  THE  IDAHO  MASTER
 10        SETTLEMENT  AGREEMENT  ACT, PROVIDING FOR AN AGENT FOR SERVICE OF PROCESS,
 11        PROVIDING FOR THE REPORTING OF INFORMATION  BY  STAMPING  AGENTS  AND  THE
 12        ESTABLISHMENT  OF  QUARTERLY  ESCROW INSTALLMENTS, PROVIDING FOR PENALTIES
 13        AND OTHER REMEDIES FOR VIOLATIONS, AND PROVIDING FOR MISCELLANEOUS  PROVI-
 14        SIONS  RELATED  TO NOTICE OF DETERMINATIONS, LICENSING OF STAMPING AGENTS,
 15        EFFECTIVE DATES, PROMULGATION OF RULES, THE RECOVERY OF COSTS AND FEES  BY
 16        THE ATTORNEY GENERAL AND DISGORGEMENT OF PROFITS FOR VIOLATION OF THE ACT,
 17        AND PROVIDING SEVERABILITY.
                                                                        
 18    Be It Enacted by the Legislature of the State of Idaho:
                                                                        
 19        SECTION  1.  That  Sections  39-7804  and 39-7805, Idaho Code, be, and the
 20    same are hereby repealed.
                                                                        
 21        SECTION 2. That Title 39, Idaho Code, be, and the same is  hereby  amended
 22    by the addition thereto of a NEW CHAPTER, to be known as designated as Chapter
 23    84, Title 39, Idaho Code, and to read as follows:
                                                                        
 24                                      CHAPTER 84
 25                TOBACCO MASTER SETTLEMENT AGREEMENT COMPLEMENTARY ACT
                                                                        
 26        39-8401.  FINDINGS  AND  PURPOSE. The legislature finds that violations of
 27    Idaho's tobacco master settlement agreement  act  threaten  the  integrity  of
 28    Idaho's  master  settlement  agreement  with  leading tobacco product manufac-
 29    turers, the fiscal soundness of the state, and the public health. The legisla-
 30    ture finds that enacting procedural enhancements will help prevent  violations
 31    of  Idaho's  tobacco master settlement agreement act and thereby safeguard the
 32    master settlement agreement, the fiscal soundness of the state and the  public
 33    health.
                                                                        
 34        39-8402.  DEFINITIONS.  (1)  "Brand family" means all styles of cigarettes
 35    sold under the same trademark and differentiated from one another by means  of
 36    additional  modifiers or descriptors including, but not limited to, "menthol,"
 37    "lights," "kings," and "100s," and includes any brand name (alone or  in  con-
 38    junction with any other word) trademark, logo, symbol, motto, selling message,
 39    recognizable pattern of colors, or any other indicia of product identification
 40    identical  or  similar  to,  or identifiable with, a previously known brand of
                                                                        
                                           2
                                                                        
  1    cigarettes.
  2        (2)  "Cigarette" has the same meaning as that term is defined  in  section
  3    39-7802(d), Idaho Code.
  4        (3)  "Commission" means the state tax commission for the state of Idaho.
  5        (4)  "Master  settlement  agreement"  has the same meaning as that term is
  6    defined in section 39-7802(e), Idaho Code.
  7        (5)  "Nonparticipating manufacturer" means any  tobacco  product  manufac-
  8    turer that is not a participating manufacturer.
  9        (6)  "Participating  manufacturer"  has  the  same meaning as that term is
 10    defined in section II(jj) of the master settlement agreement  and  all  amend-
 11    ments thereto.
 12        (7)  "Qualified  escrow fund" has the same meaning as that term is defined
 13    in section 39-7802(f), Idaho Code.
 14        (8)  "Stamping agent" means a person that is  authorized  or  required  to
 15    affix  tax  stamps to packages or other containers of cigarettes under chapter
 16    25, title 63, Idaho Code.
 17        (9)  "Tobacco product manufacturer" has the same meaning as that  term  is
 18    defined in section 39-7802(i), Idaho Code.
 19        (10) "Units  sold" has the same meaning as that term is defined in section
 20    39-7802(j), Idaho Code.
                                                                        
 21        39-8403.  CERTIFICATIONS -- DIRECTORY -- TAX  STAMPS.  (1)  Every  tobacco
 22    product  manufacturer whose cigarettes are sold in this state whether directly
 23    or through a wholesaler, distributor,  retailer  or  similar  intermediary  or
 24    intermediaries  shall execute and deliver on a form prescribed by the attorney
 25    general a certification to the attorney general no later  than  the  thirtieth
 26    day  of April each year, certifying, under penalty of perjury, that, as of the
 27    date of such certification, such tobacco product  manufacturer  is  either:  a
 28    participating  manufacturer;  or  in  full compliance with section 39-7803(b),
 29    Idaho Code, including all quarterly installment payments required  by  section
 30    39-8405(5), Idaho Code.
 31        (a)  A  participating  manufacturer  shall  include in its certification a
 32        list of its brand families. The participating  manufacturer  shall  update
 33        such list thirty (30) days prior to any addition to or modification of its
 34        brand families by executing and delivering a supplemental certification to
 35        the attorney general.
 36        (b)  A  nonparticipating manufacturer shall include in its certification a
 37        complete list of all of its brand families that were sold in the state  at
 38        any time during the preceding calendar year, or that have been sold in the
 39        state at any time during the current calendar year, and shall:
 40             (i)   List,  for  each  brand family, the number of units sold in the
 41             state during the preceding calendar year;
 42             (ii)  Note, by means of an asterisk, any brand  family  sold  in  the
 43             state during the preceding calendar year that is no longer being sold
 44             in the state as of the date of such certification;
 45             (iii) Identify  by  name  and  address any other manufacturer of such
 46             brand families in the preceding calendar year or the current calendar
 47             year. The nonparticipating manufacturer shall update such list thirty
 48             (30) days prior to any addition to or modification of its brand fami-
 49             lies by executing and delivering a supplemental certification to  the
 50             attorney general;
 51        (c)  In  the  case  of a nonparticipating manufacturer, such certification
 52        shall further certify:
 53             (i)   That such nonparticipating manufacturer  is  registered  to  do
 54             business  in the state or has appointed an agent for service of proc-
                                                                        
                                           3
                                                                        
  1             ess and provided notice thereof as required by section 39-8404, Idaho
  2             Code;
  3             (ii)  That such nonparticipating manufacturer has:
  4                  1.  Established and continues to  maintain  a  qualified  escrow
  5                  fund;
  6                  2.  Executed a qualified escrow agreement that has been reviewed
  7                  and approved by the attorney general and that governs the quali-
  8                  fied escrow fund;
  9             (iii) That  such  nonparticipating manufacturer is in full compliance
 10             with section 39-7803(b), Idaho Code, and this section, and any  rules
 11             promulgated pursuant thereto.
 12             (iv)  1. The  name,  address,  and  telephone number of the financial
 13                  institution where the nonparticipating manufacturer  has  estab-
 14                  lished  such  qualified escrow fund required pursuant to section
 15                  39-7803(b), Idaho Code, and all rules promulgated thereto;
 16                  2.  The account number of such qualified  escrow  fund  and  any
 17                  subaccount number for the state of Idaho;
 18                  3.  The amount such nonparticipating manufacturer placed in such
 19                  fund  for cigarettes sold in the state during the preceding cal-
 20                  endar year, the date and amount of each such deposit,  and  such
 21                  evidence  or  verification  as  may  be  deemed necessary by the
 22                  attorney general to confirm the foregoing;
 23                  4.  The amount and date of any withdrawal or transfer  of  funds
 24                  the  nonparticipating  manufacturer  made  at any time from such
 25                  fund or from any other qualified escrow fund into which it  ever
 26                  made escrow payments pursuant to section 39-7803(b), Idaho Code,
 27                  and all rules promulgated thereto.
 28        (d)  A  tobacco product manufacturer may not include a brand family in its
 29        certification unless:
 30             (i)   In the case of a participating manufacturer, said participating
 31             manufacturer affirms that the brand family is to be deemed to be  its
 32             cigarettes  for purposes of calculating its payments under the master
 33             settlement agreement for the relevant year, in the volume and  shares
 34             determined pursuant to the master settlement agreement; and
 35             (ii)  In the case of a nonparticipating manufacturer, said nonpartic-
 36             ipating manufacturer affirms that the brand family is to be deemed to
 37             be  its  cigarettes  for  purposes of section 39-7803(b), Idaho Code.
 38             Nothing in this section shall be construed as limiting  or  otherwise
 39             affecting  the  state's right to maintain that a brand family consti-
 40             tutes cigarettes of a different tobacco product manufacturer for pur-
 41             poses of calculating payments under the master  settlement  agreement
 42             or for purposes of section 39-7803(b), Idaho Code.
 43        (e)  Tobacco  product  manufacturers shall maintain all invoices and docu-
 44        mentation of sales and other such information relied upon for such  certi-
 45        fication  for a period of five (5) years, unless otherwise required by law
 46        to maintain them for a greater period of time.
 47        (2)  Not later than September 30, 2003, the attorney general shall develop
 48    and publish on his website a directory listing all  tobacco  product  manufac-
 49    turers  that  have  provided current and accurate certifications conforming to
 50    the requirements of subsection (1) of this section,  and  all  brand  families
 51    that are listed in such certifications, except as noted below.
 52        (a)  The  attorney  general  shall not include or retain in such directory
 53        the name or brand families of any nonparticipating manufacturer that fails
 54        to provide the required certification or whose certification the  attorney
 55        general determines is not in compliance with subsections (1)(b) and (c) of
                                                                        
                                           4
                                                                        
  1        this  section, unless the attorney general has determined that such viola-
  2        tion has been cured to the satisfaction of the attorney general.
  3        (b)  Neither a tobacco product manufacturer nor a brand  family  shall  be
  4        included or retained in the directory if the attorney general concludes in
  5        the case of a nonparticipating manufacturer that:
  6             (i)   Any  escrow  payment  required  pursuant to section 39-7803(b),
  7             Idaho Code, for any period and for any brand family, whether  or  not
  8             listed by such nonparticipating manufacturer, has not been fully paid
  9             into a qualified escrow fund governed by a qualified escrow agreement
 10             that has been approved by the attorney general; or
 11             (ii)  Any outstanding final judgment, including interest thereon, for
 12             a  violation  of  Idaho's tobacco master settlement agreement act has
 13             not been fully satisfied for such brand family and such manufacturer.
 14        (c)  The attorney general shall update the directory as necessary in order
 15        to correct mistakes and to add or remove a tobacco product manufacturer or
 16        brand families to keep the directory in conformity with  the  requirements
 17        of  this  chapter. The attorney general shall transmit by electronic mail,
 18        if possible, or by other means as are reasonable to each  stamping  agent,
 19        notice  of  the addition to, or removal from, the directory of any tobacco
 20        product manufacturer or brand family.
 21        (d)  Every stamping agent shall provide and update as necessary a  mailing
 22        address  and,  where available, an electronic mail address to the attorney
 23        general for the purpose of receiving any notifications as may be  required
 24        by this chapter.
 25        (3)  It shall be unlawful for any person:
 26        (a)  To  affix  a stamp to a package or other container of cigarettes of a
 27        tobacco product manufacturer or brand family not included  in  the  direc-
 28        tory;
 29        (b)  To  sell,  offer  or  possess for sale in this state, cigarettes of a
 30        tobacco product manufacturer or brand family not included  in  the  direc-
 31        tory;
 32        (c)  To  acquire,  hold,  own,  possess, transport, import, or cause to be
 33        imported cigarettes that the person knows or should know are intended  for
 34        distribution or sale in the state in violation of this subsection (3).
 35        (4)  Nothing in this chapter shall excuse payment of cigarette taxes under
 36    chapter  25,  title 63,  Idaho Code, by any person in regard to any package or
 37    other container of cigarettes not included in the directory but sold  by  that
 38    person.
                                                                        
 39        39-8404.  AGENT  FOR  SERVICE  OF  PROCESS. (1) Any nonresident or foreign
 40    nonparticipating manufacturer that has not registered to do business  in  this
 41    state as a foreign corporation or business entity shall, as a condition prece-
 42    dent to having its brand families listed or retained in the directory, appoint
 43    and  continually  engage without interruption the services of an agent in this
 44    state to act as agent for the service of process on whom all process, and  any
 45    action  or  proceeding against it concerning or arising out of the enforcement
 46    of this chapter and Idaho's tobacco master settlement agreement  act,  may  be
 47    served  in  any  manner authorized by law. Such service shall constitute legal
 48    and valid service of process on the nonparticipating  manufacturer.  The  non-
 49    participating  manufacturer  shall provide the name, address, phone number and
 50    proof of the appointment and availability of such agent to, and to the  satis-
 51    faction of, the attorney general.
 52        (2)  The  nonparticipating manufacturer shall provide notice to the attor-
 53    ney general thirty (30) calendar days prior to termination of the authority of
 54    an agent and shall further provide proof to the satisfaction of  the  attorney
                                                                        
                                           5
                                                                        
  1    general  of the appointment of a new agent no less than five (5) calendar days
  2    prior to the termination of an existing agent appointment.  In  the  event  an
  3    agent  terminates  an  agency  appointment,  the nonparticipating manufacturer
  4    shall notify the attorney general of said termination within five (5) calendar
  5    days and shall include proof to the satisfaction of the  attorney  general  of
  6    the appointment of a new agent.
  7        (3)  Any  nonparticipating  manufacturer  whose  products are sold in this
  8    state, without appointing or designating an agent as herein required, shall be
  9    deemed to have appointed the secretary of state as such agent and may be  pro-
 10    ceeded  against  in courts of this state by service of process upon the secre-
 11    tary of state; however, the appointment of the  secretary  of  state  as  such
 12    agent  shall  not satisfy the condition precedent to having its brand families
 13    listed or retained in the directory.
                                                                        
 14        39-8405.  REPORTING OF INFORMATION --  ESCROW INSTALLMENTS. (1) Not  later
 15    than  twenty  (20)  calendar  days after the end of each calendar quarter, and
 16    more frequently if so directed by the attorney general,  each  stamping  agent
 17    shall  submit  such information as the attorney general requires to facilitate
 18    compliance with this chapter including, but not limited to, a  list  by  brand
 19    family  of the total number of cigarettes for which the stamping agent affixed
 20    stamps during the previous calendar quarter or otherwise paid the tax due  for
 21    such  cigarettes. The stamping agent shall maintain, and make available to the
 22    attorney general, all invoices and documentation of sales  of  all  nonpartic-
 23    ipating  manufacturer  cigarettes  and  any  other  information relied upon in
 24    reporting to the attorney general for a period of five (5) years.
 25        (2)  The commission is authorized to disclose to the attorney general  any
 26    information  received  under this chapter or Idaho's tobacco master settlement
 27    agreement act and requested by the attorney general for purposes of  determin-
 28    ing compliance with and enforcing the provisions of this chapter.  The commis-
 29    sion and attorney general shall share with each other the information received
 30    under  this  chapter  or chapter 25, title 63,  Idaho Code, and may share such
 31    information with other federal, state or local agencies only for  purposes  of
 32    enforcement  of this chapter, Idaho's tobacco master settlement agreement act,
 33    or corresponding laws of other states.
 34        (3)  The attorney general may require at  any  time  from  the  nonpartic-
 35    ipating manufacturer proof, from the financial institution in which such manu-
 36    facturer has established a qualified escrow fund for the purpose of compliance
 37    with  Idaho's  tobacco master settlement agreement act, of the amount of money
 38    in such fund, exclusive of interest, and the amount and date of  each  deposit
 39    to the fund, and the amount and date of each withdrawal from the fund.
 40        (4)  In  addition  to the information required to be submitted pursuant to
 41    this chapter, the attorney general may require a  stamping  agent  or  tobacco
 42    product  manufacturer  to submit any additional information including, but not
 43    limited to, samples of the packaging or labeling of each brand family,  as  is
 44    necessary  to enable the attorney general to determine whether a tobacco prod-
 45    uct manufacturer or stamping agent is in compliance with this chapter.
 46        (5)  To promote compliance with the provisions of this chapter, the attor-
 47    ney general may promulgate rules requiring a tobacco product manufacturer sub-
 48    ject to the requirements of section 39-7803(b), Idaho Code, to make the escrow
 49    deposits required in quarterly installments during the year in which the sales
 50    covered by such deposits are made.  The attorney general may  require  produc-
 51    tion of information sufficient to enable the attorney general to determine the
 52    adequacy of the amount of the installment deposit.
                                                                        
 53        39-8406.  PENALTIES  AND OTHER REMEDIES. (1) Each stamp affixed, each sale
                                                                        
                                           6
                                                                        
  1    or offer to sell,  and  each  cigarette  possessed  in  violation  of  section
  2    39-8403(3),  Idaho  Code,  shall  constitute  a  separate violation.  For each
  3    violation hereof, the district court may impose a civil penalty in  an  amount
  4    not  to  exceed the greater of five hundred percent (500%) of the retail value
  5    of the cigarettes or five thousand dollars ($5,000) upon  a  determination  of
  6    violation  of  section  39-8403(3),  Idaho  Code, or any rule adopted pursuant
  7    thereto.
  8        (2)  In addition to or in lieu of any other civil or criminal remedy  pro-
  9    vided  by law, upon a determination that a stamping agent has violated section
 10    39-8403(3), Idaho Code, or any rule adopted pursuant thereto,  the  commission
 11    may revoke or suspend the license of any stamping agent in the manner provided
 12    by law.
 13        (3)  Any  cigarettes  that have had stamps affixed, been sold, offered for
 14    sale or possessed for sale in this state in violation  of  section  39-8403(3)
 15    shall  be  deemed contraband under section 63-2513, Idaho Code, and such ciga-
 16    rettes shall be subject to seizure and forfeiture by the  commission  as  pro-
 17    vided  in  such section, and all such cigarettes so seized and forfeited shall
 18    be destroyed and not resold.
 19        (4)  The attorney general may seek an injunction to prevent or restrain  a
 20    threatened   or   actual   violation  of  section  39-8403(3),  39-8405(1)  or
 21    39-8405(4), Idaho Code, by a stamping agent and to compel the  stamping  agent
 22    to comply with such subsections.
 23        (5)  A  person  who violates section 39-8403(1), Idaho Code, engages in an
 24    unfair and deceptive trade practice in violation of the Idaho consumer protec-
 25    tion act, chapter 6,  title 48, Idaho Code.
                                                                        
 26        39-8407.  MISCELLANEOUS PROVISIONS. (1) A determination  of  the  attorney
 27    general  to  exclude  or  remove  from the directory a brand family or tobacco
 28    product manufacturer shall be subject to review in the  manner  prescribed  by
 29    Idaho's administrative procedure act.
 30        (2)  No person shall be issued a license or granted a renewal of a license
 31    to  act as a stamping agent unless such person has certified, in writing, that
 32    such person will comply fully with this chapter.
 33        (3)  For the year 2003, the first report of stamping  agents  required  by
 34    section  39-8405(1),  Idaho Code, shall be due thirty (30) calendar days after
 35    the effective date of this chapter; the certifications by  a  tobacco  product
 36    manufacturer  described in section 39-8403(1), Idaho Code, shall be due forty-
 37    five (45) days after such effective date; and the directory described in  sec-
 38    tion  39-8403(2),  Idaho  Code,  shall  be  published or made available within
 39    ninety (90) calendar days after such effective date.
 40        (4)  The commission and the attorney general may promulgate  rules  neces-
 41    sary to effect the purposes of this chapter.
 42        (5)  In  any  action brought by the attorney general to enforce this chap-
 43    ter, the attorney general shall be entitled to recover the costs of investiga-
 44    tion, expert witness fees, costs of the action and reasonable attorney's fees.
 45        (6)  If a court determines that a person has violated  this  chapter,  the
 46    court  shall order any profits, gain, gross receipts or other benefit from the
 47    violation to be disgorged and paid to the state treasurer for deposit  in  the
 48    general  fund.   Unless otherwise expressly provided the remedies or penalties
 49    provided by this chapter are cumulative to each other and to the  remedies  or
 50    penalties available under all other laws of this state.
 51        (7)  If  a  court  of  competent jurisdiction finds that the provisions of
 52    this chapter and of the Idaho tobacco master settlement agreement act conflict
 53    and cannot be harmonized, then such provisions of  the  Idaho  tobacco  master
 54    settlement  agreement act, chapter 78, title 39, Idaho Code, shall control. If
                                                                        
                                           7
                                                                        
  1    any section, subsection, subdivision, paragraph, sentence, clause or phrase of
  2    this chapter causes the Idaho tobacco master settlement agreement  act  to  no
  3    longer constitute a qualifying or model statute, as those terms are defined in
  4    the  master  settlement agreement, then that portion of this chapter shall not
  5    be valid.  If  any  section,  subsection,  subdivision,  paragraph,  sentence,
  6    clause  or phrase of this chapter is for any reason held to be invalid, unlaw-
  7    ful or unconstitutional, such decision shall not affect the  validity  of  the
  8    remaining portions of this chapter or any part thereof.

Amendment


                                                                        
                                                                        
  ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
 Fifty-seventh Legislature                 First Regular Session - 2003
                                                                        
                                                                        
                                                     Moved by    Wills               
                                                                        
                                                     Seconded by Smylie              
                                                                        
                                                                        
                              IN THE HOUSE OF REPRESENTATIVES
                              HOUSE AMENDMENT TO H.B. NO. 111
                                                                        
  1                                AMENDMENT TO SECTION 2
  2        On page 6 of the printed bill, in line 23, delete "39-8403(1)" and insert:
  3    "39-8403(3)".

Engrossed Bill (Original Bill with Amendment(s) Incorporated)


                                                                        
                                                                        
  ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
 Fifty-seventh Legislature                 First Regular Session - 2003
                                                                        
                                                                        
                              IN THE HOUSE OF REPRESENTATIVES
                                                                        
                               HOUSE BILL NO. 111, As Amended
                                                                        
                                 BY STATE AFFAIRS COMMITTEE
                                                                        
  1                                        AN ACT
  2    RELATING TO THE IDAHO TOBACCO MASTER SETTLEMENT AGREEMENT ACT; REPEALING  SEC-
  3        TIONS  39-7804  AND 39-7805, IDAHO CODE; AMENDING TITLE 39, IDAHO CODE, BY
  4        THE ADDITION OF A NEW CHAPTER 84, TITLE 39, IDAHO CODE, PROVIDING A STATE-
  5        MENT OF FINDINGS AND PURPOSE, PROVIDING DEFINITIONS, ESTABLISHING  A  DUTY
  6        UPON  NONPARTICIPATING TOBACCO PRODUCT MANUFACTURERS TO CERTIFY THEIR COM-
  7        PLIANCE WITH IDAHO'S  MASTER  SETTLEMENT  AGREEMENT  ACT,  ESTABLISHING  A
  8        DIRECTORY  OF  COMPLIANT TOBACCO PRODUCT MANUFACTURERS AND PROHIBITING THE
  9        STAMPING OR SALE OF CIGARETTES NOT IN COMPLIANCE  WITH  THE  IDAHO  MASTER
 10        SETTLEMENT  AGREEMENT  ACT, PROVIDING FOR AN AGENT FOR SERVICE OF PROCESS,
 11        PROVIDING FOR THE REPORTING OF INFORMATION  BY  STAMPING  AGENTS  AND  THE
 12        ESTABLISHMENT  OF  QUARTERLY  ESCROW INSTALLMENTS, PROVIDING FOR PENALTIES
 13        AND OTHER REMEDIES FOR VIOLATIONS, AND PROVIDING FOR MISCELLANEOUS  PROVI-
 14        SIONS  RELATED  TO NOTICE OF DETERMINATIONS, LICENSING OF STAMPING AGENTS,
 15        EFFECTIVE DATES, PROMULGATION OF RULES, THE RECOVERY OF COSTS AND FEES  BY
 16        THE ATTORNEY GENERAL AND DISGORGEMENT OF PROFITS FOR VIOLATION OF THE ACT,
 17        AND PROVIDING SEVERABILITY.
                                                                        
 18    Be It Enacted by the Legislature of the State of Idaho:
                                                                        
 19        SECTION  1.  That  Sections  39-7804  and 39-7805, Idaho Code, be, and the
 20    same are hereby repealed.
                                                                        
 21        SECTION 2. That Title 39, Idaho Code, be, and the same is  hereby  amended
 22    by the addition thereto of a NEW CHAPTER, to be known as designated as Chapter
 23    84, Title 39, Idaho Code, and to read as follows:
                                                                        
 24                                      CHAPTER 84
 25                TOBACCO MASTER SETTLEMENT AGREEMENT COMPLEMENTARY ACT
                                                                        
 26        39-8401.  FINDINGS  AND  PURPOSE. The legislature finds that violations of
 27    Idaho's tobacco master settlement agreement  act  threaten  the  integrity  of
 28    Idaho's  master  settlement  agreement  with  leading tobacco product manufac-
 29    turers, the fiscal soundness of the state, and the public health. The legisla-
 30    ture finds that enacting procedural enhancements will help prevent  violations
 31    of  Idaho's  tobacco master settlement agreement act and thereby safeguard the
 32    master settlement agreement, the fiscal soundness of the state and the  public
 33    health.
                                                                        
 34        39-8402.  DEFINITIONS.  (1)  "Brand family" means all styles of cigarettes
 35    sold under the same trademark and differentiated from one another by means  of
 36    additional  modifiers or descriptors including, but not limited to, "menthol,"
 37    "lights," "kings," and "100s," and includes any brand name (alone or  in  con-
 38    junction with any other word) trademark, logo, symbol, motto, selling message,
 39    recognizable pattern of colors, or any other indicia of product identification
 40    identical  or  similar  to,  or identifiable with, a previously known brand of
                                                                        
                                           2
                                                                        
  1    cigarettes.
  2        (2)  "Cigarette" has the same meaning as that term is defined  in  section
  3    39-7802(d), Idaho Code.
  4        (3)  "Commission" means the state tax commission for the state of Idaho.
  5        (4)  "Master  settlement  agreement"  has the same meaning as that term is
  6    defined in section 39-7802(e), Idaho Code.
  7        (5)  "Nonparticipating manufacturer" means any  tobacco  product  manufac-
  8    turer that is not a participating manufacturer.
  9        (6)  "Participating  manufacturer"  has  the  same meaning as that term is
 10    defined in section II(jj) of the master settlement agreement  and  all  amend-
 11    ments thereto.
 12        (7)  "Qualified  escrow fund" has the same meaning as that term is defined
 13    in section 39-7802(f), Idaho Code.
 14        (8)  "Stamping agent" means a person that is  authorized  or  required  to
 15    affix  tax  stamps to packages or other containers of cigarettes under chapter
 16    25, title 63, Idaho Code.
 17        (9)  "Tobacco product manufacturer" has the same meaning as that  term  is
 18    defined in section 39-7802(i), Idaho Code.
 19        (10) "Units  sold" has the same meaning as that term is defined in section
 20    39-7802(j), Idaho Code.
                                                                        
 21        39-8403.  CERTIFICATIONS -- DIRECTORY -- TAX  STAMPS.  (1)  Every  tobacco
 22    product  manufacturer whose cigarettes are sold in this state whether directly
 23    or through a wholesaler, distributor,  retailer  or  similar  intermediary  or
 24    intermediaries  shall execute and deliver on a form prescribed by the attorney
 25    general a certification to the attorney general no later  than  the  thirtieth
 26    day  of April each year, certifying, under penalty of perjury, that, as of the
 27    date of such certification, such tobacco product  manufacturer  is  either:  a
 28    participating  manufacturer;  or  in  full compliance with section 39-7803(b),
 29    Idaho Code, including all quarterly installment payments required  by  section
 30    39-8405(5), Idaho Code.
 31        (a)  A  participating  manufacturer  shall  include in its certification a
 32        list of its brand families. The participating  manufacturer  shall  update
 33        such list thirty (30) days prior to any addition to or modification of its
 34        brand families by executing and delivering a supplemental certification to
 35        the attorney general.
 36        (b)  A  nonparticipating manufacturer shall include in its certification a
 37        complete list of all of its brand families that were sold in the state  at
 38        any time during the preceding calendar year, or that have been sold in the
 39        state at any time during the current calendar year, and shall:
 40             (i)   List,  for  each  brand family, the number of units sold in the
 41             state during the preceding calendar year;
 42             (ii)  Note, by means of an asterisk, any brand  family  sold  in  the
 43             state during the preceding calendar year that is no longer being sold
 44             in the state as of the date of such certification;
 45             (iii) Identify  by  name  and  address any other manufacturer of such
 46             brand families in the preceding calendar year or the current calendar
 47             year. The nonparticipating manufacturer shall update such list thirty
 48             (30) days prior to any addition to or modification of its brand fami-
 49             lies by executing and delivering a supplemental certification to  the
 50             attorney general;
 51        (c)  In  the  case  of a nonparticipating manufacturer, such certification
 52        shall further certify:
 53             (i)   That such nonparticipating manufacturer  is  registered  to  do
 54             business  in the state or has appointed an agent for service of proc-
                                                                        
                                           3
                                                                        
  1             ess and provided notice thereof as required by section 39-8404, Idaho
  2             Code;
  3             (ii)  That such nonparticipating manufacturer has:
  4                  1.  Established and continues to  maintain  a  qualified  escrow
  5                  fund;
  6                  2.  Executed a qualified escrow agreement that has been reviewed
  7                  and approved by the attorney general and that governs the quali-
  8                  fied escrow fund;
  9             (iii) That  such  nonparticipating manufacturer is in full compliance
 10             with section 39-7803(b), Idaho Code, and this section, and any  rules
 11             promulgated pursuant thereto.
 12             (iv)  1. The  name,  address,  and  telephone number of the financial
 13                  institution where the nonparticipating manufacturer  has  estab-
 14                  lished  such  qualified escrow fund required pursuant to section
 15                  39-7803(b), Idaho Code, and all rules promulgated thereto;
 16                  2.  The account number of such qualified  escrow  fund  and  any
 17                  subaccount number for the state of Idaho;
 18                  3.  The amount such nonparticipating manufacturer placed in such
 19                  fund  for cigarettes sold in the state during the preceding cal-
 20                  endar year, the date and amount of each such deposit,  and  such
 21                  evidence  or  verification  as  may  be  deemed necessary by the
 22                  attorney general to confirm the foregoing;
 23                  4.  The amount and date of any withdrawal or transfer  of  funds
 24                  the  nonparticipating  manufacturer  made  at any time from such
 25                  fund or from any other qualified escrow fund into which it  ever
 26                  made escrow payments pursuant to section 39-7803(b), Idaho Code,
 27                  and all rules promulgated thereto.
 28        (d)  A  tobacco product manufacturer may not include a brand family in its
 29        certification unless:
 30             (i)   In the case of a participating manufacturer, said participating
 31             manufacturer affirms that the brand family is to be deemed to be  its
 32             cigarettes  for purposes of calculating its payments under the master
 33             settlement agreement for the relevant year, in the volume and  shares
 34             determined pursuant to the master settlement agreement; and
 35             (ii)  In the case of a nonparticipating manufacturer, said nonpartic-
 36             ipating manufacturer affirms that the brand family is to be deemed to
 37             be  its  cigarettes  for  purposes of section 39-7803(b), Idaho Code.
 38             Nothing in this section shall be construed as limiting  or  otherwise
 39             affecting  the  state's right to maintain that a brand family consti-
 40             tutes cigarettes of a different tobacco product manufacturer for pur-
 41             poses of calculating payments under the master  settlement  agreement
 42             or for purposes of section 39-7803(b), Idaho Code.
 43        (e)  Tobacco  product  manufacturers shall maintain all invoices and docu-
 44        mentation of sales and other such information relied upon for such  certi-
 45        fication  for a period of five (5) years, unless otherwise required by law
 46        to maintain them for a greater period of time.
 47        (2)  Not later than September 30, 2003, the attorney general shall develop
 48    and publish on his website a directory listing all  tobacco  product  manufac-
 49    turers  that  have  provided current and accurate certifications conforming to
 50    the requirements of subsection (1) of this section,  and  all  brand  families
 51    that are listed in such certifications, except as noted below.
 52        (a)  The  attorney  general  shall not include or retain in such directory
 53        the name or brand families of any nonparticipating manufacturer that fails
 54        to provide the required certification or whose certification the  attorney
 55        general determines is not in compliance with subsections (1)(b) and (c) of
                                                                        
                                           4
                                                                        
  1        this  section, unless the attorney general has determined that such viola-
  2        tion has been cured to the satisfaction of the attorney general.
  3        (b)  Neither a tobacco product manufacturer nor a brand  family  shall  be
  4        included or retained in the directory if the attorney general concludes in
  5        the case of a nonparticipating manufacturer that:
  6             (i)   Any  escrow  payment  required  pursuant to section 39-7803(b),
  7             Idaho Code, for any period and for any brand family, whether  or  not
  8             listed by such nonparticipating manufacturer, has not been fully paid
  9             into a qualified escrow fund governed by a qualified escrow agreement
 10             that has been approved by the attorney general; or
 11             (ii)  Any outstanding final judgment, including interest thereon, for
 12             a  violation  of  Idaho's tobacco master settlement agreement act has
 13             not been fully satisfied for such brand family and such manufacturer.
 14        (c)  The attorney general shall update the directory as necessary in order
 15        to correct mistakes and to add or remove a tobacco product manufacturer or
 16        brand families to keep the directory in conformity with  the  requirements
 17        of  this  chapter. The attorney general shall transmit by electronic mail,
 18        if possible, or by other means as are reasonable to each  stamping  agent,
 19        notice  of  the addition to, or removal from, the directory of any tobacco
 20        product manufacturer or brand family.
 21        (d)  Every stamping agent shall provide and update as necessary a  mailing
 22        address  and,  where available, an electronic mail address to the attorney
 23        general for the purpose of receiving any notifications as may be  required
 24        by this chapter.
 25        (3)  It shall be unlawful for any person:
 26        (a)  To  affix  a stamp to a package or other container of cigarettes of a
 27        tobacco product manufacturer or brand family not included  in  the  direc-
 28        tory;
 29        (b)  To  sell,  offer  or  possess for sale in this state, cigarettes of a
 30        tobacco product manufacturer or brand family not included  in  the  direc-
 31        tory;
 32        (c)  To  acquire,  hold,  own,  possess, transport, import, or cause to be
 33        imported cigarettes that the person knows or should know are intended  for
 34        distribution or sale in the state in violation of this subsection (3).
 35        (4)  Nothing in this chapter shall excuse payment of cigarette taxes under
 36    chapter  25,  title 63,  Idaho Code, by any person in regard to any package or
 37    other container of cigarettes not included in the directory but sold  by  that
 38    person.
                                                                        
 39        39-8404.  AGENT  FOR  SERVICE  OF  PROCESS. (1) Any nonresident or foreign
 40    nonparticipating manufacturer that has not registered to do business  in  this
 41    state as a foreign corporation or business entity shall, as a condition prece-
 42    dent to having its brand families listed or retained in the directory, appoint
 43    and  continually  engage without interruption the services of an agent in this
 44    state to act as agent for the service of process on whom all process, and  any
 45    action  or  proceeding against it concerning or arising out of the enforcement
 46    of this chapter and Idaho's tobacco master settlement agreement  act,  may  be
 47    served  in  any  manner authorized by law. Such service shall constitute legal
 48    and valid service of process on the nonparticipating  manufacturer.  The  non-
 49    participating  manufacturer  shall provide the name, address, phone number and
 50    proof of the appointment and availability of such agent to, and to the  satis-
 51    faction of, the attorney general.
 52        (2)  The  nonparticipating manufacturer shall provide notice to the attor-
 53    ney general thirty (30) calendar days prior to termination of the authority of
 54    an agent and shall further provide proof to the satisfaction of  the  attorney
                                                                        
                                           5
                                                                        
  1    general  of the appointment of a new agent no less than five (5) calendar days
  2    prior to the termination of an existing agent appointment.  In  the  event  an
  3    agent  terminates  an  agency  appointment,  the nonparticipating manufacturer
  4    shall notify the attorney general of said termination within five (5) calendar
  5    days and shall include proof to the satisfaction of the  attorney  general  of
  6    the appointment of a new agent.
  7        (3)  Any  nonparticipating  manufacturer  whose  products are sold in this
  8    state, without appointing or designating an agent as herein required, shall be
  9    deemed to have appointed the secretary of state as such agent and may be  pro-
 10    ceeded  against  in courts of this state by service of process upon the secre-
 11    tary of state; however, the appointment of the  secretary  of  state  as  such
 12    agent  shall  not satisfy the condition precedent to having its brand families
 13    listed or retained in the directory.
                                                                        
 14        39-8405.  REPORTING OF INFORMATION --  ESCROW INSTALLMENTS. (1) Not  later
 15    than  twenty  (20)  calendar  days after the end of each calendar quarter, and
 16    more frequently if so directed by the attorney general,  each  stamping  agent
 17    shall  submit  such information as the attorney general requires to facilitate
 18    compliance with this chapter including, but not limited to, a  list  by  brand
 19    family  of the total number of cigarettes for which the stamping agent affixed
 20    stamps during the previous calendar quarter or otherwise paid the tax due  for
 21    such  cigarettes. The stamping agent shall maintain, and make available to the
 22    attorney general, all invoices and documentation of sales  of  all  nonpartic-
 23    ipating  manufacturer  cigarettes  and  any  other  information relied upon in
 24    reporting to the attorney general for a period of five (5) years.
 25        (2)  The commission is authorized to disclose to the attorney general  any
 26    information  received  under this chapter or Idaho's tobacco master settlement
 27    agreement act and requested by the attorney general for purposes of  determin-
 28    ing compliance with and enforcing the provisions of this chapter.  The commis-
 29    sion and attorney general shall share with each other the information received
 30    under  this  chapter  or chapter 25, title 63,  Idaho Code, and may share such
 31    information with other federal, state or local agencies only for  purposes  of
 32    enforcement  of this chapter, Idaho's tobacco master settlement agreement act,
 33    or corresponding laws of other states.
 34        (3)  The attorney general may require at  any  time  from  the  nonpartic-
 35    ipating manufacturer proof, from the financial institution in which such manu-
 36    facturer has established a qualified escrow fund for the purpose of compliance
 37    with  Idaho's  tobacco master settlement agreement act, of the amount of money
 38    in such fund, exclusive of interest, and the amount and date of  each  deposit
 39    to the fund, and the amount and date of each withdrawal from the fund.
 40        (4)  In  addition  to the information required to be submitted pursuant to
 41    this chapter, the attorney general may require a  stamping  agent  or  tobacco
 42    product  manufacturer  to submit any additional information including, but not
 43    limited to, samples of the packaging or labeling of each brand family,  as  is
 44    necessary  to enable the attorney general to determine whether a tobacco prod-
 45    uct manufacturer or stamping agent is in compliance with this chapter.
 46        (5)  To promote compliance with the provisions of this chapter, the attor-
 47    ney general may promulgate rules requiring a tobacco product manufacturer sub-
 48    ject to the requirements of section 39-7803(b), Idaho Code, to make the escrow
 49    deposits required in quarterly installments during the year in which the sales
 50    covered by such deposits are made.  The attorney general may  require  produc-
 51    tion of information sufficient to enable the attorney general to determine the
 52    adequacy of the amount of the installment deposit.
                                                                        
 53        39-8406.  PENALTIES  AND OTHER REMEDIES. (1) Each stamp affixed, each sale
                                                                        
                                           6
                                                                        
  1    or offer to sell,  and  each  cigarette  possessed  in  violation  of  section
  2    39-8403(3),  Idaho  Code,  shall  constitute  a  separate violation.  For each
  3    violation hereof, the district court may impose a civil penalty in  an  amount
  4    not  to  exceed the greater of five hundred percent (500%) of the retail value
  5    of the cigarettes or five thousand dollars ($5,000) upon  a  determination  of
  6    violation  of  section  39-8403(3),  Idaho  Code, or any rule adopted pursuant
  7    thereto.
  8        (2)  In addition to or in lieu of any other civil or criminal remedy  pro-
  9    vided  by law, upon a determination that a stamping agent has violated section
 10    39-8403(3), Idaho Code, or any rule adopted pursuant thereto,  the  commission
 11    may revoke or suspend the license of any stamping agent in the manner provided
 12    by law.
 13        (3)  Any  cigarettes  that have had stamps affixed, been sold, offered for
 14    sale or possessed for sale in this state in violation  of  section  39-8403(3)
 15    shall  be  deemed contraband under section 63-2513, Idaho Code, and such ciga-
 16    rettes shall be subject to seizure and forfeiture by the  commission  as  pro-
 17    vided  in  such section, and all such cigarettes so seized and forfeited shall
 18    be destroyed and not resold.
 19        (4)  The attorney general may seek an injunction to prevent or restrain  a
 20    threatened   or   actual   violation  of  section  39-8403(3),  39-8405(1)  or
 21    39-8405(4), Idaho Code, by a stamping agent and to compel the  stamping  agent
 22    to comply with such subsections.
 23        (5)  A  person  who violates section 39-8403(3), Idaho Code, engages in an
 24    unfair and deceptive trade practice in violation of the Idaho consumer protec-
 25    tion act, chapter 6,  title 48, Idaho Code.
                                                                        
 26        39-8407.  MISCELLANEOUS PROVISIONS. (1) A determination  of  the  attorney
 27    general  to  exclude  or  remove  from the directory a brand family or tobacco
 28    product manufacturer shall be subject to review in the  manner  prescribed  by
 29    Idaho's administrative procedure act.
 30        (2)  No person shall be issued a license or granted a renewal of a license
 31    to  act as a stamping agent unless such person has certified, in writing, that
 32    such person will comply fully with this chapter.
 33        (3)  For the year 2003, the first report of stamping  agents  required  by
 34    section  39-8405(1),  Idaho Code, shall be due thirty (30) calendar days after
 35    the effective date of this chapter; the certifications by  a  tobacco  product
 36    manufacturer  described in section 39-8403(1), Idaho Code, shall be due forty-
 37    five (45) days after such effective date; and the directory described in  sec-
 38    tion  39-8403(2),  Idaho  Code,  shall  be  published or made available within
 39    ninety (90) calendar days after such effective date.
 40        (4)  The commission and the attorney general may promulgate  rules  neces-
 41    sary to effect the purposes of this chapter.
 42        (5)  In  any  action brought by the attorney general to enforce this chap-
 43    ter, the attorney general shall be entitled to recover the costs of investiga-
 44    tion, expert witness fees, costs of the action and reasonable attorney's fees.
 45        (6)  If a court determines that a person has violated  this  chapter,  the
 46    court  shall order any profits, gain, gross receipts or other benefit from the
 47    violation to be disgorged and paid to the state treasurer for deposit  in  the
 48    general  fund.   Unless otherwise expressly provided the remedies or penalties
 49    provided by this chapter are cumulative to each other and to the  remedies  or
 50    penalties available under all other laws of this state.
 51        (7)  If  a  court  of  competent jurisdiction finds that the provisions of
 52    this chapter and of the Idaho tobacco master settlement agreement act conflict
 53    and cannot be harmonized, then such provisions of  the  Idaho  tobacco  master
 54    settlement  agreement act, chapter 78, title 39, Idaho Code, shall control. If
                                                                        
                                           7
                                                                        
  1    any section, subsection, subdivision, paragraph, sentence, clause or phrase of
  2    this chapter causes the Idaho tobacco master settlement agreement  act  to  no
  3    longer constitute a qualifying or model statute, as those terms are defined in
  4    the  master  settlement agreement, then that portion of this chapter shall not
  5    be valid.  If  any  section,  subsection,  subdivision,  paragraph,  sentence,
  6    clause  or phrase of this chapter is for any reason held to be invalid, unlaw-
  7    ful or unconstitutional, such decision shall not affect the  validity  of  the
  8    remaining portions of this chapter or any part thereof.

Statement of Purpose / Fiscal Impact



                       STATEMENT OF PURPOSE
                             RS 12609
This proposed legislation is designed to be complementary
legislation to Idaho's Tobacco Master Settlement Agreement Act
("the Act").  Under Idaho's Master Settle Agreement with the
tobacco industry, Idaho must diligently enforce the Act.  A
number of tobacco product manufacturers are not complying with
the provisions of the Act.  Many of the non-compliant
manufacturers are located in foreign countries.  Effecting
compliance is in some cases quite difficult because of their
location.  Requiring cigarette distributors to only stamp and
distribute cigarettes of tobacco product manufacturers that are
in compliance with the Act, and establishing procedures and
remedies to ensure that the Act's provisions will be followed
will significantly improve compliance under, and assist Idaho
with its duty of enforcing, the Act.
                          FISCAL IMPACT
There is no fiscal impact to the general fund.  In fact,
enactment of this bill should save the State money in its
enforcement duties under the Act.


Contact
Name: Brett DeLange, Office of the Attorney General 
Phone: 208/334-4114
William von Tagen



STATEMENT OF PURPOSE/FISCAL NOTE                         H111