§ 1399-PP — Requirements

§ 1399-pp. Requirements. Any tobacco product manufacturer selling\ncigarettes to consumers within the state (whether directly or through a\ndistributor, retailer or similar intermediary or intermediaries) after\nthe effective date of this article shall do one of the following:\n 1. become a participating manufacturer (as that term is defined in\nsection II(jj) of the master settlement agreement) and generally perform\nits financial obligations under the master settlement agreement; or\n 2. (a) place into a qualified escrow fund by April fifteenth of the\nyear following the year in question the following amounts (as such\namounts are adjusted for inflation):\n (i) 1999: $.0094241 per unit sold after the effective date of this\nsection;\n (ii) 2000: $.0104712 per unit sold;\n (iii) for each of 2001 and 2002: $.0136125 per unit sold;\n (iv) for each of 2003 through 2006: $.0167539 per unit sold;\n (v) for each of 2007 and each year thereafter: $.0188482 per unit\nsold.\n (b) a tobacco product manufacturer that places funds into escrow\npursuant to paragraph (a) shall receive the interest or other\nappreciation on such funds as earned. Such funds themselves shall be\nreleased from escrow only under the following circumstances:\n (i) to pay a judgment or settlement on any released claim brought\nagainst such tobacco product manufacturer by the state or any releasing\nparty located or residing in the state. Funds shall be released from\nescrow under this subparagraph: (A) in the order in which they were\nplaced into escrow and (B) only to the extent and at the time necessary\nto make payments required under such judgment or settlement;\n (ii) to the extent that a tobacco product manufacturer establishes\nthat the amount it was required to place into escrow on account of units\nsold in the state in a particular year was greater than the master\nsettlement agreement payments, as determined pursuant to section IX(i)\nof the master settlement agreement including after final determination\nof all adjustments, that such manufacturer would have been required to\nmake on account of such units sold had it been a participating\nmanufacturer, the excess shall be released from escrow and revert back\nto such tobacco product manufacturer; or\n (iii) to the extent not released from escrow under subparagraph (i) or\n(ii) of this paragraph, funds shall be released from escrow and revert\nback to such tobacco product manufacturer twenty-five years after the\ndate on which they were placed into escrow.\n (c) Each tobacco product manufacturer that elects to place funds into\nescrow pursuant to this subdivision shall annually certify to the\nattorney general that it is in compliance with this subdivision. The\nattorney general may bring a civil action on behalf of the state against\nany tobacco product manufacturer that fails to place into escrow the\nfunds required under this subdivision. Any tobacco product manufacturer\nthat fails in any year to place into escrow the funds required under\nthis subdivision shall:\n (i) be required within fifteen days to place such funds into escrow as\nshall bring it into compliance with this subdivision. The court, upon a\nfinding of a violation of this subdivision, may impose a civil penalty\nto be paid to the general fund of the state in an amount not to exceed\nfive percent of the amount improperly withheld from escrow per day of\nthe violation and in a total amount not to exceed one hundred percent of\nthe original amount improperly withheld from escrow;\n (ii) in the case of a knowing violation, be required within fifteen\ndays to place such funds into escrow as shall bring it into compliance\nwith this subdivision. The court, upon a finding of a knowing violation\nof this subdivision, may impose a civil penalty to be paid to the\ngeneral fund of the state in an amount not to exceed fifteen percent of\nthe amount improperly withheld from escrow per day of the violation and\nin a total amount not to exceed three hundred percent of the original\namount improperly withheld from escrow; and\n (iii) in the case of a second knowing violation, be prohibited from\nselling cigarettes to consumers within the state (whether directly or\nthrough a distributor, retailer or similar intermediary) for a period\nnot to exceed two years.\n Each failure to make an annual deposit required under this subdivision\nshall constitute a separate violation, and the tobacco product\nmanufacturer shall be required to pay the state's costs and attorney's\nfees incurred during a successful prosecution under this subdivision.\n