2000 Legislation
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HOUSE BILL NO. 501, As Amended in the Senate – Tobacco Agreemnt/unit # verificatn

HOUSE BILL NO. 501, As Amended in the Senate

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Daily Data Tracking History



H0501aaS..................................................by APPROPRIATIONS
TOBACCO MASTER SETTLEMENT AGREEMENT - Amends existing law to delete
language stating that all per unit numbers are subject to verification.
                                                                        
02/04    House intro - 1st rdg - to printing
02/07    Rpt prt - to 2nd rdg
02/08    2nd rdg - to 3rd rdg
02/09    3rd rdg - PASSED - 64-0-6
      AYES -- Alltus, Barraclough, Bell, Bieter, Black, Boe, Bruneel,
      Callister, Campbell, Chase, Cheirrett, Clark, Crow, Cuddy, Deal,
      Denney, Ellsworth, Field(13), Gagner, Geddes, Gould, Hadley, Hammond,
      Hansen(23), Hansen(29), Henbest, Hornbeck, Jaquet, Jones, Judd,
      Kempton, Kendell, Kunz, Lake, Linford, Loertscher, Mader, Marley,
      McKague, Meyer, Montgomery, Moss, Moyle, Pearce, Pomeroy, Reynolds,
      Ridinger, Ringo, Robison, Sali, Schaefer, Sellman, Shepherd, Smith,
      Smylie, Stevenson, Stoicheff, Stone, Taylor, Tilman, Trail(Miller),
      Wheeler, Wood, Mr Speaker
      NAYS -- None
      Absent and excused -- Barrett, Field(20), Kellogg, Mortensen,
      Pischner, Zimmermann
    Floor Sponsor - Hansen(23)
    Title apvd - to Senate
02/10    Senate intro - 1st rdg - to Fin
02/11    Rpt out - rec d/p - to 2nd rdg
02/14    2nd rdg - to 14th Ord
02/22    Rpt out amen - to engros
02/23    Rpt engros - 1st rdg - to 2nd rdg as amen
02/24    2nd rdg - to 3rd rdg as amen
03/21    3rd rdg as amen - PASSED - 30-0-5
      AYES--Boatright, Branch, Bunderson, Burtenshaw, Cameron, Danielson,
      Darrington, Davis, Deide, Dunklin, Frasure, Hawkins, Ingram, Ipsen,
      Keough, King-Barrutia, Lee, McLaughlin, Parry, Richardson, Riggs,
      Risch, Schroeder, Sorensen, Stegner, Stennett, Thorne, Wheeler,
      Whitworth, Williams
      NAYS--None
      Absent and excused--Andreason, Crow, Geddes, Noh, Sandy
    Floor Sponsor - Ingram
    Title apvd - to House
03/22    House concurred in Senate amens - to engros
03/23    Rpt engros - 1st rdg - to 2nd rdg as amen
03/24    2nd rdg - to 3rd rdg as amen
    Rules susp - PASSED - 62-0-8
      AYES -- Alltus, Barraclough, Barrett, Bell, Bieter, Black, Boe,
      Bruneel, Callister, Cheirrett, Clark, Crow, Cuddy, Deal, Denney,
      Ellsworth, Field(13), Field(20), Gagner, Geddes, Gould, Hadley,
      Hansen(23), Henbest, Hornbeck, Jaquet, Jones, Judd, Kellogg, Kempton,
      Kendell, Kunz, Linford, Loertscher, Mader, Marley, McKague, Meyer,
      Montgomery, Moss, Moyle, Pearce, Pomeroy, Ridinger, Ringo, Robison,
      Sali, Schaefer, Sellman, Shepherd, Smith, Smylie, Stevenson,
      Stoicheff, Stone, Taylor, Tilman, Trail, Wheeler, Wood, Zimmermann,
      Mr Speaker
      NAYS -- None
      Absent and excused -- Campbell, Chase, Hammond, Hansen(29), Lake,
      Mortensen, Pischner, Reynolds
    Floor Sponsor - Hansen(23)
    Title apvd - to enrol
03/27    Rpt enrol - Sp signed
03/28    Pres signed
03/29    To Governor
03/30    Governor signed
         Session Law Chapter 118
         Effective: 01/01/00

Bill Text


 H0501
                                                                        
                                                                        
  ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
 Fifty-fifth Legislature                  Second Regular Session - 2000
                                                                        
                                                                        
                              IN THE HOUSE OF REPRESENTATIVES
                                                                        
                        HOUSE BILL NO. 501, As Amended in the Senate
                                                                        
                                BY APPROPRIATIONS COMMITTEE
                                                                        
  1                                        AN ACT
  2    RELATING TO THE TOBACCO MASTER SETTLEMENT AGREEMENT; AMENDING SECTION 39-7803,
  3        IDAHO CODE, TO DELETE LANGUAGE STATING THAT ALL PER UNIT NUMBERS ARE  SUB-
  4        JECT TO VERIFICATION AND TO MAKE TECHNICAL CORRECTIONS; DECLARING AN EMER-
  5        GENCY AND PROVIDING RETROACTIVE APPLICATION.
                                                                        
  6    Be It Enacted by the Legislature of the State of Idaho:
                                                                        
  7        SECTION  1.  That  Section 39-7803, Idaho Code, be, and the same is hereby
  8    amended to read as follows:
                                                                        
  9        39-7803.  REQUIREMENTS. Any tobacco  product  manufacturer  selling  ciga-
 10    rettes  to consumers within the state (whether directly or through a distribu-
 11    tor, retailer or similar intermediary or intermediaries)  after  the  date  of
 12    enactment of this act shall do one (1) of the following:
 13        (a)  Become  a participating manufacturer (as that term is defined in sec-
 14    tion II(jj) of the Master Settlement  Agreement)  and  generally  perform  its
 15    financial obligations under the Master Settlement Agreement; or
 16        (b)  (1) Place  into  a qualified escrow fund by April 15 of the year fol-
 17        lowing the year in question the following amounts  (as  such  amounts  are
 18        adjusted for inflation):
 19             1999:  $.0094241  per  unit  sold after the date of enactment of this
 20             act;
 21             2000:  $.0104712 per unit sold;
 22             For each of 2001 and 2002:  $.0136125 per unit sold;
 23             For each of 2003 through 2006:  $.0167539 per unit sold;
 24             For each of 2007 and each year thereafter:  $.0188482 per unit sold.
 25        All per unit numbers are subject to verification.
 26        (2)  A tobacco product manufacturer that places funds into escrow pursuant
 27        to paragraph (1) of this subsection shall receive the  interest  or  other
 28        appreciation  on  such  funds  as  earned.  Such funds themselves shall be
 29        released from escrow only under the following circumstances:
 30             (A)  To pay a judgment or settlement on any  released  claim  brought
 31             against such tobacco product manufacturer by the state or any releas-
 32             ing  party  located or residing in the state. Funds shall be released
 33             from escrow under this subparagraph: (i) in the order in  which  they
 34             were  placed into escrow; and (ii) only to the extent and at the time
 35             necessary to make payments required under such  judgment  or  settle-
 36             ment;
 37             (B)  To  the  extent  that a tobacco product manufacturer establishes
 38             that the amount it was required to place into escrow in a  particular
 39             year  was  greater than the state's allocable share of the total pay-
 40             ments that such manufacturer would have been required to make in that
 41             year under the Master Settlement Agreement (as determined pursuant to
 42             section IX(i)(2) of the Master Settlement Agreement, and  before  any
 43             of  the  adjustments or offsets described in section IX(i)(3) of that
                                                                        
                                           2
                                                                        
  1             Agreement other than the inflation adjustment) had it been a partici-
  2             pating manufacturer, the excess shall be  released  from  escrow  and
  3             revert back to such tobacco product manufacturer; or
  4             (C)  To  the  extent not released from escrow under subparagraphs (A)
  5             or (B) of this paragraph, funds shall be  released  from  escrow  and
  6             revert  back  to  such  tobacco product manufacturer twenty-five (25)
  7             years after the date on which they were placed into escrow.
  8        (3)  Each tobacco product manufacturer that elects  to  place  funds  into
  9        escrow  pursuant  to  this  section shall annually certify to the attorney
 10        general that it is in compliance with this section. The  attorney  general
 11        may  bring a civil action on behalf of the state against any tobacco prod-
 12        uct manufacturer that fails to place into escrow the funds required  under
 13        this  section.  Any tobacco product manufacturer that fails in any year to
 14        place into escrow the funds required under this section shall:
 15             (A)  Be required within fifteen (15) days to place  such  funds  into
 16             escrow  as  shall  bring  it  into  compliance with this section. The
 17             court, upon a finding of a violation of this section,  may  impose  a
 18             civil  penalty  to  be  paid  to  the general fund of the state in an
 19             amount not to exceed five percent (5%) of the amount improperly with-
 20             held from escrow per day of the violation and in a total  amount  not
 21             to  exceed  one hundred percent (100%) of the original amount improp-
 22             erly withheld from escrow;
 23             (B)  In the case of a knowing violation, be required  within  fifteen
 24             (15) days to place such funds into escrow as shall bring it into com-
 25             pliance  with  this  section.  The court, upon a finding of a knowing
 26             violation of this subsection, may impose a civil penalty to  be  paid
 27             to  the  general fund of the state in an amount not to exceed fifteen
 28             percent (15%) of the amount improperly withheld from escrow  per  day
 29             of  the  violation  and in a total amount not to exceed three hundred
 30             percent (300%)  of  the  original  amount  improperly  withheld  from
 31             escrow; and
 32             (C)  In  the  case  of a second knowing violation, be prohibited from
 33             selling cigarettes to consumers within the state (whether directly or
 34             through a distributor, retailer or similar intermediary) for a period
 35             not to exceed two (2) years.
 36        Each failure to make an annual deposit required under this  section  shall
 37        constitute a separate violation.
 38        (4)  In  any  action brought under this section, the court shall award the
 39        attorney general,  if  he  is  the  prevailing  party,  reasonable  costs,
 40        expenses and attorney's fees in bringing his action.
                                                                        
 41        SECTION  2.  An  emergency  existing  therefor,  which emergency is hereby
 42    declared to exist, this act shall be in full force and effect on and after its
 43    passage and approval, and retroactively to January 1, 2000.

Amendment


 AH0501
                                                                        
                                                                        
  ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
 Fifty-fifth Legislature                  Second Regular Session - 2000
                                                                        
                                                                        
                                                     Moved by    Ingram              
                                                                        
                                                     Seconded by Parry               
                                                                        
                                                                        
                                       IN THE SENATE
                              SENATE AMENDMENT TO H.B. NO. 501
                                                                        
  1                                AMENDMENT TO SECTION 1
  2        On page 2 of the printed bill, in line 25, delete "subsection" and insert:
  3    "section"; and in line 26, delete "section" and insert: "subsection".

Statement of Purpose / Fiscal Impact




Statement of Purpose
RS09315
This legislation makes technical corrections to Sections 39-7803(1)(b)(1) and 39-7803(3)(A) and (B), Idaho Code. The amendments do not alter the substance or intent of these sections. The two sections being amended are part of Title 39, Chapter 78, Idaho Code, which the Legislature enacted last year. Idaho’s settlement agreement with leading United States tobacco manufacturing companies requires these manufacturers, in part, to pay substantial sums of money to the State of Idaho and to make substantial changes in their advertising and marketing practices and corporate culture, with the intention of reducing underage smoking. It would be contrary to the policy of the State if tobacco manufacturers who determine not to enter into such a settlement could use a resulting costs advantage to derive large, short-term profits in the years before liability may arise without ensuring that the State will have an eventual source of recovery from them if they are proven to have acted culpably. It is thus in the interest of the State of Idaho to require that such manufacturers establish a reserve fund to guarantee a source of compensation and to prevent them from deriving large, short term profits and then becoming judgment-proof before liability may arise. Title 39, Chapter 78, Idaho Code, was enacted last session to address that concern by requiring tobacco product manufacturers to either become a participating manufacturer under the November 23, 1998, settlement agreement or annually contribute into a qualified escrow account an amount of money based upon cigarette sales for the previous year. The qualified escrow account shall be at the manufacturer's selection. Money in the account not released to satisfy a judgment obtained against the manufacturer shall revert back to the manufacturer 25 years after it was first deposited. In addition to the above reason for this legislation, Idaho’s settlement agreement with the tobacco industry states that if the settling manufacturers lose market share as a result of compliance with the terms of the settlement agreement to nonsettling manufacturers, then Idaho's share shall be reduced three percentage points for every one percentage point in market share reduction that is over two percent, unless qualifying legislation is passed. Enacting these technical amendments makes Idaho’s legislation “qualifying” under the settlement agreement.
Fiscal Note
No financial impact to the State of Idaho is expected. If a manufacturer violates the terms of this legislation, the Attorney General can recover all attorney fees incurred in enforcement of the legislation's provisions.

Contact: Brett DeLange Deputy Attorney General 334-4114

Statement of Purpose/Fiscal Note Bill No. H501