View Daily Data Tracking History
View Bill Text
View Amendment
View Engrossed Bill (Original Bill with Amendment(s) Incorporated)
View Statement of Purpose / Fiscal Impact
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
|||| 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.
|||| 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)".
|||| 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
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