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H0358......................................................by STATE AFFAIRS
MASTER SETTLEMENT AGREEMENT - Amends, adds to and repeals existing law to
revise how moneys in escrow pursuant to the Tobacco Master Settlement
Agreement may be released.
03/10 House intro - 1st rdg - to printing
03/11 Rpt prt - to St Aff
03/13 Rpt out - rec d/p - to 2nd rdg
03/14 2nd rdg - to 3rd rdg
03/17 3rd rdg - PASSED - 65-0-5
AYES -- 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), Garrett, Harwood, Henbest, Jaquet, Jones,
Kellogg, Kulczyk, Lake, Langford, Langhorst, Martinez, McGeachin,
McKague, Meyer, Miller, Mitchell, Moyle, Naccarato, Nielsen,
Raybould, Ridinger, Ring, Ringo, Roberts, Robison, Rydalch, Sali,
Sayler, Schaefer, Shepherd, Shirley, Skippen, Smylie, Snodgrass,
Stevenson, Tilman, Trail, Wood, Mr. Speaker
NAYS -- None
Absent and excused -- Andersen, Gagner, Smith(30), Smith(24), Wills
Floor Sponsor - Ellsworth
Title apvd - to Senate
03/19 Senate intro - 1st rdg - to St Aff
04/01 Rpt out - rec d/p - to 2nd rdg
04/02 2nd rdg - to 3rd rdg
04/03 3rd rdg - PASSED - 28-0-7
AYES -- Andreason, Bailey, Brandt, Bunderson, Burkett, Burtenshaw,
Calabretta, Cameron, Compton, Darrington, Gannon, Goedde, Kennedy,
Keough, Little, Lodge, Malepeai, Marley, McKenzie, Noh, Pearce,
Schroeder, Sorensen, Stegner, Stennett, Sweet, Werk, Williams
NAYS -- None
Absent and excused -- Davis, Geddes, Hill, Ingram, McWilliams, Noble,
Richardson
Floor Sponsor - Sorensen
Title apvd - to House
04/04 To enrol
04/07 Rpt enrol - Sp signed - Pres signed
04/08 To Governor
04/14 Governor signed
Session Law Chapter 289
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. 358
BY STATE AFFAIRS COMMITTEE
1 AN ACT
2 RELATING TO THE TOBACCO MASTER SETTLEMENT AGREEMENT; AMENDING SECTION 39-7803,
3 IDAHO CODE, TO REVISE HOW FUNDS PLACED IN ESCROW MAY BE RELEASED; TO PRO-
4 VIDE SEVERABILITY AND TO PROVIDE A CONTINGENT EFFECTIVE DATE UPON CERTAIN
5 CIRCUMSTANCES OCCURRING AND THE GOVERNOR ISSUING A PROCLAMATION AND FILING
6 THE SAME WITH THE SECRETARY OF STATE; REPEALING SECTION 39-7803, IDAHO
7 CODE; AND AMENDING CHAPTER 78, TITLE 39, IDAHO CODE, BY THE ADDITION OF A
8 NEW SECTION 39-7803, IDAHO CODE, TO PROVIDE REQUIREMENTS UPON TOBACCO
9 PRODUCT MANUFACTURERS SELLING CIGARETTES TO CONSUMERS WITHIN THE STATE.
10 Be It Enacted by the Legislature of the State of Idaho:
11 SECTION 1. That Section 39-7803, Idaho Code, be, and the same is hereby
12 amended to read as follows:
13 39-7803. REQUIREMENTS. Any tobacco product manufacturer selling ciga-
14 rettes to consumers within the state (whether directly or through a distribu-
15 tor, retailer or similar intermediary or intermediaries) after the date of
16 enactment of this act shall do one (1) of the following:
17 (a) Become a participating manufacturer (as that term is defined in sec-
18 tion II(jj) of the Master Settlement Agreement) and generally perform its
19 financial obligations under the Master Settlement Agreement; or
20 (b) (1) Place into a qualified escrow fund by April 15 of the year fol-
21 lowing the year in question the following amounts (as such amounts are
22 adjusted for inflation):
23 1999: $.0094241 per unit sold after the date of enactment of this
24 act;
25 2000: $.0104712 per unit sold;
26 For each of 2001 and 2002: $.0136125 per unit sold;
27 For each of 2003 through 2006: $.0167539 per unit sold;
28 For each of 2007 and each year thereafter: $.0188482 per unit sold.
29 (2) A tobacco product manufacturer that places funds into escrow pursuant
30 to paragraph (1) of this subsection shall receive the interest or other
31 appreciation on such funds as earned. Such funds themselves shall be
32 released from escrow only under the following circumstances:
33 (A) To pay a judgment or settlement on any released claim brought
34 against such tobacco product manufacturer by the state or any releas-
35 ing party located or residing in the state. Funds shall be released
36 from escrow under this subparagraph: (i) in the order in which they
37 were placed into escrow; and (ii) only to the extent and at the time
38 necessary to make payments required under such judgment or settle-
39 ment;
40 (B) To the extent that a tobacco product manufacturer establishes
41 that the amount it was required to place into escrow on account of
42 units sold in the state in a particular year was greater than the
43 state's allocable share of the total payments that such manufacturer
2
1 would have been required to make in that year under the Master Set-
2 tlement Agreement (as determined pursuant to section IX(i)(2) of the
3 Master Settlement Agreement, and before any of the adjustments or
4 offsets described in section IX(i)(3) of that Agreement other than
5 the inflation adjustment) the Master Settlement Agreement payments,
6 as determined pursuant to section IX(i) of that Agreement including
7 after final determination of all adjustments, that such manufacturer
8 would have been required to make on account of such units sold had it
9 been a participating manufacturer, the excess shall be released from
10 escrow and revert back to such tobacco product manufacturer; or
11 (C) To the extent not released from escrow under subparagraphs (A)
12 or (B) of this paragraph, funds shall be released from escrow and
13 revert back to such tobacco product manufacturer twenty-five (25)
14 years after the date on which they were placed into escrow.
15 (3) Each tobacco product manufacturer that elects to place funds into
16 escrow pursuant to this section shall annually certify to the attorney
17 general that it is in compliance with this section. The attorney general
18 may bring a civil action on behalf of the state against any tobacco prod-
19 uct manufacturer that fails to place into escrow the funds required under
20 this section. Any tobacco product manufacturer that fails in any year to
21 place into escrow the funds required under this section shall:
22 (A) Be required within fifteen (15) days to place such funds into
23 escrow as shall bring it into compliance with this section. The
24 court, upon a finding of a violation of this section, may impose a
25 civil penalty to be paid to the general fund of the state in an
26 amount not to exceed five percent (5%) of the amount improperly with-
27 held from escrow per day of the violation and in a total amount not
28 to exceed one hundred percent (100%) of the original amount improp-
29 erly withheld from escrow;
30 (B) In the case of a knowing violation, be required within fifteen
31 (15) days to place such funds into escrow as shall bring it into com-
32 pliance with this section. The court, upon a finding of a knowing
33 violation of this subsection, may impose a civil penalty to be paid
34 to the general fund of the state in an amount not to exceed fifteen
35 percent (15%) of the amount improperly withheld from escrow per day
36 of the violation and in a total amount not to exceed three hundred
37 percent (300%) of the original amount improperly withheld from
38 escrow; and
39 (C) In the case of a second knowing violation, be prohibited from
40 selling cigarettes to consumers within the state (whether directly or
41 through a distributor, retailer or similar intermediary) for a period
42 not to exceed two (2) years.
43 Each failure to make an annual deposit required under this section shall
44 constitute a separate violation.
45 (4) In any action brought under this section, the court shall award the
46 attorney general, if he is the prevailing party, reasonable costs,
47 expenses and attorney's fees in bringing his action.
48 SECTION 2. SEVERABILITY. If this act, or any portion of the amendment of
49 subsection (b)(2)(B) of Section 39-7803, Idaho Code, made by this act, is held
50 by a court of competent jurisdiction to be unconstitutional, then Sections 3
51 and 4 of this act shall be in full force and effect. If such finding occurs,
52 the Governor shall, upon his determination that such event has occurred, make
53 a proclamation declaring said event to have happened and the date of such
54 event and file the same with the Secretary of State.
3
1 SECTION 3. That Section 39-7803, Idaho Code, be, and the same is hereby
2 repealed.
3 SECTION 4. That Chapter 78, Title 39, Idaho Code, be, and the same is
4 hereby amended by the addition thereto of a NEW SECTION, to be known and des-
5 ignated as Section 39-7803, Idaho Code, and to read as follows:
6 39-7803. REQUIREMENTS. Any tobacco product manufacturer selling ciga-
7 rettes to consumers within the state (whether directly or through a distribu-
8 tor, retailer or similar intermediary or intermediaries) after the date of
9 enactment of this act shall do one (1) of the following:
10 (a) Become a participating manufacturer (as that term is defined in sec-
11 tion II(jj) of the Master Settlement Agreement) and generally perform its
12 financial obligations under the Master Settlement Agreement; or
13 (b) (1) Place into a qualified escrow fund by April 15 of the year fol-
14 lowing the year in question the following amounts (as such amounts are
15 adjusted for inflation):
16 1999: $.0094241 per unit sold after the date of enactment of this
17 act;
18 2000: $.0104712 per unit sold;
19 For each of 2001 and 2002: $.0136125 per unit sold;
20 For each of 2003 through 2006: $.0167539 per unit sold;
21 For each of 2007 and each year thereafter: $.0188482 per unit sold.
22 (2) A tobacco product manufacturer that places funds into escrow pursuant
23 to paragraph (1) of this subsection shall receive the interest or other
24 appreciation on such funds as earned. Such funds themselves shall be
25 released from escrow only under the following circumstances:
26 (A) To pay a judgment or settlement on any released claim brought
27 against such tobacco product manufacturer by the state or any releas-
28 ing party located or residing in the state. Funds shall be released
29 from escrow under this subparagraph: (i) in the order in which they
30 were placed into escrow; and (ii) only to the extent and at the time
31 necessary to make payments required under such judgment or settle-
32 ment;
33 (B) To the extent that a tobacco product manufacturer establishes
34 that the amount it was required to place into escrow in a particular
35 year was greater than the state's allocable share of the total pay-
36 ments that such manufacturer would have been required to make in that
37 year under the Master Settlement Agreement (as determined pursuant to
38 section IX(i)(2) of the Master Settlement Agreement, and before any
39 of the adjustments or offsets described in section IX(i)(3) of that
40 Agreement other than the inflation adjustment) had it been a partici-
41 pating manufacturer, the excess shall be released from escrow and
42 revert back to such tobacco product manufacturer; or
43 (C) To the extent not released from escrow under subparagraphs (A)
44 or (B) of this paragraph, funds shall be released from escrow and
45 revert back to such tobacco product manufacturer twenty-five (25)
46 years after the date on which they were placed into escrow.
47 (3) Each tobacco product manufacturer that elects to place funds into
48 escrow pursuant to this section shall annually certify to the attorney
49 general that it is in compliance with this section. The attorney general
50 may bring a civil action on behalf of the state against any tobacco prod-
51 uct manufacturer that fails to place into escrow the funds required under
52 this section. Any tobacco product manufacturer that fails in any year to
53 place into escrow the funds required under this section shall:
4
1 (A) Be required within fifteen (15) days to place such funds into
2 escrow as shall bring it into compliance with this section. The
3 court, upon a finding of a violation of this section, may impose a
4 civil penalty to be paid to the general fund of the state in an
5 amount not to exceed five percent (5%) of the amount improperly with-
6 held from escrow per day of the violation and in a total amount not
7 to exceed one hundred percent (100%) of the original amount improp-
8 erly withheld from escrow;
9 (B) In the case of a knowing violation, be required within fifteen
10 (15) days to place such funds into escrow as shall bring it into com-
11 pliance with this section. The court, upon a finding of a knowing
12 violation of this subsection, may impose a civil penalty to be paid
13 to the general fund of the state in an amount not to exceed fifteen
14 percent (15%) of the amount improperly withheld from escrow per day
15 of the violation and in a total amount not to exceed three hundred
16 percent (300%) of the original amount improperly withheld from
17 escrow; and
18 (C) In the case of a second knowing violation, be prohibited from
19 selling cigarettes to consumers within the state (whether directly or
20 through a distributor, retailer or similar intermediary) for a period
21 not to exceed two (2) years.
22 Each failure to make an annual deposit required under this section shall
23 constitute a separate violation.
24 (4) In any action brought under this section, the court shall award the
25 attorney general, if he is the prevailing party, reasonable costs,
26 expenses and attorney's fees in bringing his action.
STATEMENT OF PURPOSE
RS 13109
This proposed legislation is designed to eliminate an unintended
consequence of language found in Idaho's Tobacco Master
Settlement Agreement Act (the Act). Some tobacco product
manufacturers, not parties to the Master Settlement Agreement
(MSA), have begun utilizing present language in Idaho Code 39-
7803(b)(2)(B) of the Act, to obtain an early release of the great
majority of their escrow deposits. This frustrates the purposes
for which the Act was passed, as stated in Idaho Code 39-7801.
The proposed amendment would cure this unintended consequence by
limiting releases from escrow accounts under Idaho Code 39-7803
to any amounts paid into escrow in excess of the MSA payments
that the manufacturer would have been required to make on account
of cigarettes sold in Idaho for a particular year had it
participated in the MSA in that year.
FISCAL IMPACT
There is no fiscal impact to the general fund.
Contact
Name: Brett DeLange, Office of The Attorney General
Phone: 208/334-4114
Contact: William von Tagen
Phone: 208/334-4140
STATEMENT OF PURPOSE/FISCAL NOTE H 358