Bill Text: IN SB0176 | 2010 | Regular Session | Introduced
Bill Title: Nonparticipating tobacco product manufacturers.
Spectrum: Slight Partisan Bill (Republican 2-1)
Status: (Passed) 2010-03-25 - Effective 07/01/2010 [SB0176 Detail]
Download: Indiana-2010-SB0176-Introduced.html
Citations Affected: IC 24-3-5.4.
Synopsis: Nonparticipating tobacco product manufacturers. Requires:
(1) newly qualified nonparticipating tobacco product manufacturers;
and (2) nonparticipating tobacco product manufacturers that the
attorney general determines pose an elevated risk of noncompliance
with tobacco product regulations; to post a surety bond. Requires a
person that imports cigarette brand families of a nonparticipating
manufacturer to assume joint and several liability with the
nonparticipating manufacturer for qualified escrow payments and
associated penalties, costs, and fees.
Effective: July 1, 2010.
January 11, 2010, read first time and referred to Committee on Commerce, Public Policy
& Interstate Cooperation.
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A BILL FOR AN ACT to amend the Indiana Code concerning trade
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(1) that has filed a certification under section 13 of this chapter; and
(2) whose brand families are not listed in a directory under section 14 of this chapter.
April 30 of each year, a tobacco product manufacturer whose cigarettes
are sold in Indiana, whether directly or through a distributor, retailer,
or similar intermediary, shall certify to the department and the attorney
general that, as of the date of the certification, the tobacco product
manufacturer is:
(1) a participating manufacturer; or
(2) in full compliance with IC 24-3-3.
The department shall prescribe the form of the certification.
(b) A participating manufacturer shall include in a certification
under subsection (a) a list of the participating manufacturer's brand
families. The participating manufacturer shall update the list by filing
a supplemental certification with the department and the attorney
general not less than thirty (30) days before the participating
manufacturer adds a brand family or otherwise modifies the list of
brand families.
(c) A nonparticipating manufacturer shall include in a certification
under subsection (a) a list of the nonparticipating manufacturer's brand
families, including the following:
(1) A separate listing of each brand family that was sold in
Indiana during the calendar year before the year in which the
certification is filed.
(2) A separate listing of the number of units sold for each brand
family that was sold in Indiana during the calendar year before the
year in which the certification is filed.
(3) An indication of any brand family that was sold in Indiana
during the calendar year before the year in which the certification
is filed and that is not sold in Indiana as of the date of the
certification.
(4) The name and address of any other manufacturer of a brand
family that was sold in Indiana during the calendar year before the
year in which the certification is filed.
(d) A nonparticipating manufacturer shall file a supplemental
certification with the attorney general not less than thirty (30) days
before the nonparticipating manufacturer adds to or otherwise modifies
its list of brand families.
(e) A nonparticipating manufacturer shall certify the following in a
certification under subsection (a):
(1) The nonparticipating manufacturer:
(A) is registered to do business in Indiana; or
(B) has appointed an agent for service of process and provided
notice under section 16 of this chapter.
(2) The nonparticipating manufacturer has:
(A) established and continues to maintain a qualified escrow fund; and
(B) executed a qualified escrow agreement that:
(i) the attorney general has approved; and
(ii) governs the qualified escrow fund.
(3) The nonparticipating manufacturer is in full compliance with:
(A) this section;
(B) section 13.5 of this chapter, if applicable;
(C) section 13.6 of this chapter, if applicable; and
(4) The name, address, and telephone number of the financial institution that holds the nonparticipating manufacturer's qualified escrow fund.
(5) The account number and any subaccount numbers of the nonparticipating manufacturer's qualified escrow fund.
(6) The amounts and dates of deposits that the nonparticipating manufacturer placed in the qualified escrow fund for cigarettes sold in Indiana during the calendar year before the year in which the certification is filed, including any verification required by the attorney general.
(7) The amounts and dates of withdrawals or transfers of funds that the nonparticipating manufacturer made from a qualified escrow fund into which the nonparticipating manufacturer made or makes escrow payments under IC 24-3-3.
(f) A tobacco product manufacturer shall not include a brand family in the tobacco product manufacturer's certification under subsection (a) unless:
(1) in the case of a participating manufacturer, the participating manufacturer affirms that the brand family is considered the participating manufacturer's cigarettes for purposes of calculating the participating manufacturer's payments under the master settlement agreement for the year in which the certification is filed in the volume and shares determined under the master settlement agreement; or
(2) in the case of a nonparticipating manufacturer, the nonparticipating manufacturer affirms that the brand family is considered to be the nonparticipating manufacturer's cigarettes for purposes of IC 24-3-3-12(2).
(g) This section does not limit or otherwise affect the state's right to maintain that a brand family constitutes cigarettes of a different tobacco product manufacturer for purposes of calculating payments under the master settlement agreement or for purposes of IC 24-3-3.
(h) A nonparticipating manufacturer shall maintain all invoices and documentation of sales and any other relevant information for a period of five (5) years unless otherwise required by law to maintain the invoices, documentation of sales, or other relevant information for more than five (5) years.
(b) Each year, a nonparticipating manufacturer shall provide to the attorney general a declaration from each of the nonparticipating manufacturer's importers that does the following:
(1) States that the importer assumes joint and several liability with the nonparticipating manufacturer for the following payments, penalties, costs, and fees with respect to the importer:
(A) Any escrow payments required under IC 24-3-3-12(2) for deposit in a qualified escrow fund.
(B) Any penalties assessed against the nonparticipating manufacturer under IC 24-3-3 or this chapter.
(C) Payment of all costs and fees recovered by the state against the nonparticipating manufacturer under section 28 of this chapter.
(2) Appoints a registered agent for service of process for the importer and provides notice in accordance with section 16 of this chapter.
The attorney general shall prescribe the form of a declaration under this subsection, including dates for filing the declaration.
(1) The nonparticipating manufacturer or an affiliate of a nonparticipating manufacturer has failed to make required payments into a qualified escrow fund in any state during the three (3) calendar years immediately preceding the date of the determination unless:
(A) the nonparticipating manufacturer or affiliate:
(i) did not knowingly or recklessly fail to make the required payments; and
(ii) makes the required payment not more than one hundred eighty (180) days after receiving notice of the missed or insufficient payment; or
(B) the failure to make the required payment is:
(i) the subject of a good faith dispute that is documented to the satisfaction of the attorney general; and
(ii) cured not more than one hundred eighty (180) days after entry of a final order that resolves the good faith dispute and establishes the amount of the required escrow payment.
(2) A state has removed the nonparticipating manufacturer, an affiliate of the nonparticipating manufacturer, or a brand family of the nonparticipating manufacturer or an affiliate of the nonparticipating manufacturer from the state's tobacco directory for noncompliance with state law during the three (3) calendar years immediately preceding the date of the determination.
(3) A state has:
(A) litigation pending; or
(B) an unsatisfied judgment;
against the nonparticipating manufacturer or an affiliate of the nonparticipating manufacturer for escrow payments or penalties, costs, or fees related to the nonparticipating manufacturer or affiliate's noncompliance with the state's escrow laws.
(b) The attorney general shall require:
(1) a newly qualified nonparticipating manufacturer; or
(2) a nonparticipating manufacturer that:
(A) has filed a certification under section 13 of this chapter; and
(B) poses an elevated risk for noncompliance, as determined by the attorney general under subsection (a);
to post a bond as described in subsection (c).
(c) A bond required under subsection (b) must be:
(1) posted by corporate surety located within the United States;
(2) in an amount equal to the greater of:
(A) fifty thousand dollars ($50,000); or
(B) the amount that the nonparticipating manufacturer is required to place into a qualified escrow fund under
IC 24-3-3-12(2) for the calendar year in which the bond is
posted;
(3) written in favor of the state of Indiana; and
(4) for a nonparticipating manufacturer, conditioned on the
performance of the nonparticipating manufacturer, or an
importer that assumes joint and several liability with the
nonparticipating manufacturer under section 13.5 of this
chapter, of all of obligations and duties of the
nonparticipating manufacturer under this article during the
calendar year in which the bond is posted and the
immediately succeeding calendar year.
(d) If the attorney general determines under subsection (a) that
a newly qualified nonparticipating manufacturer poses an elevated
risk of noncompliance, the attorney general may require the newly
qualified nonparticipating manufacturer to post a bond under
subsection (c) for at least the first three (3) years during which the
newly qualified nonparticipating manufacturers brand families are
listed in a directory under section 14 of this chapter.
(b) A directory described in subsection (a) shall not include the name or brand families of a nonparticipating manufacturer:
(1) that fails to comply with section 13 of this chapter;
(2) whose certification fails to comply with section 13(c) or 13(e) of this chapter, unless the attorney general determines that the failure has been remedied; or
(3) that:
(A) has filed a certification under section 13 of this chapter; and
(B) poses an elevated risk for noncompliance, as determined by the attorney general under section 13.6(a) of this chapter;
unless the nonparticipating manufacturer, or an importer that assumes joint and several liability with the nonparticipating manufacturer under section 13.5 of this chapter, posts a bond under section 13.6 of this chapter.
(c) The directory may not include a tobacco product manufacturer
or a brand family if the attorney general concludes that:
(1) in the case of a nonparticipating manufacturer, all escrow
payments required under IC 24-3-3-12 for any period for any
brand family, whether or not listed by the nonparticipating
manufacturer, have not been fully paid into a qualified escrow
fund governed by a qualified escrow agreement that has been
approved by the attorney general; or
(2) all outstanding final judgments, including interest on the
judgments, for violations of IC 24-3-3 have not been fully
satisfied for the tobacco product manufacturer or brand family.
(d) The directory may not include a newly qualified
nonparticipating manufacturer unless the newly qualified
nonparticipating manufacturer posts a bond under section 13.6 of
this chapter.
(d) (e) The attorney general shall update the directory as necessary
to correct mistakes or to add or remove a tobacco product manufacturer
or brand family to keep the directory in conformity with the
requirements of this chapter.
(e) (f) The attorney general shall post in the directory and transmit
by electronic mail or other means to each distributor or stamping agent
notice of any removal from the directory of a tobacco product
manufacturer or brand family not later than thirty (30) days before the
attorney general removes the tobacco product manufacturer or brand
family from the directory.
(f) (g) Unless otherwise provided in an agreement between a
tobacco product manufacturer and a distributor or stamping agent, a
distributor or stamping agent is entitled to a refund from a tobacco
product manufacturer for any money paid by the distributor or
stamping agent to the tobacco product manufacturer for any cigarettes
of the tobacco product manufacturer or brand family that:
(1) are in the possession of the distributor or stamping agent on;
or
(2) the distributor or stamping agent receives from a retailer after;
the date on which the tobacco product manufacturer or brand family is
removed from the directory.
(g) (h) Unless otherwise provided in an agreement between a
retailer and a distributor, stamping agent, or tobacco product
manufacturer, a retailer is entitled to a refund from a distributor,
stamping agent, or tobacco product manufacturer for any money paid
by the retailer to the distributor, stamping agent, or tobacco product
manufacturer for any cigarettes of the tobacco product manufacturer or
brand family that are in the possession of the retailer on the date on
which the tobacco product manufacturer or brand family is removed
from the directory.
(h) (i) The attorney general shall not restore a tobacco product
manufacturer or brand family to the directory until the tobacco product
manufacturer pays a distributor, stamping agent, or retailer any refund
due under subsection (f) (g) or (g). (h).
(i) (j) A distributor or stamping agent shall provide and update as
necessary an electronic mail address to the attorney general for
purposes of receiving a notification required by this chapter.
