093_HB3517eng

 
HB3517 Engrossed                     LRB093 10348 LCB 10602 b

 1        AN ACT concerning tobacco.

 2        Be it enacted by the People of  the  State  of  Illinois,
 3    represented in the General Assembly:

 4        Section  1.  Short  title.  This  Act may be cited as the
 5    Tobacco Products Manufacturers'  Escrow  Enforcement  Act  of
 6    2003.

 7        Section 5.  Findings; purpose. The General Assembly finds
 8    that  violations of the Tobacco Product Manufacturers' Escrow
 9    Act threaten the integrity of the tobacco  Master  Settlement
10    Agreement,  the fiscal soundness of the State, and the public
11    health. The General Assembly finds that  enacting  procedural
12    enhancements   will  help  prevent  violations  and  aid  the
13    enforcement of the Tobacco Product Manufacturers' Escrow  Act
14    and  thereby  safeguard  the Master Settlement Agreement, the
15    fiscal soundness of the State, and  the  public  health.  The
16    provisions  of  this Act are not intended to and shall not be
17    interpreted  to  amend  the  Tobacco  Product  Manufacturers'
18    Escrow Act.

19        Section 10.  Definitions. As used in this Act:
20        "Brand family" means all styles of cigarettes sold  under
21    the  same  trade  mark and differentiated from one another by
22    means of additional modifiers or descriptors, including,  but
23    not limited to, menthol, lights, kings, and 100s and includes
24    any  brand name (alone or in conjunction with any other word)
25    trademark, logo, symbol, motto, selling message, recognizable
26    pattern  of  colors,  or  any  other   indicia   of   product
27    identification identical or similar to, or identifiable with,
28    a previously known brand of cigarettes.
29        "Cigarette"  has  the  same  meaning in Section 10 of the
30    Escrow Act.
 
HB3517 Engrossed            -2-      LRB093 10348 LCB 10602 b
 1        "Director" means the Director of Revenue.
 2        "Distributor" has the same meaning prescribed in  Section
 3    1  of  the  Cigarette Tax Act, Section 1 of the Cigarette Use
 4    Tax  Act,  and,  in  addition,   means   a   distributor   of
 5    roll-your-own  tobacco in accordance with Section 10-5 of the
 6    Tobacco Products Tax Act of 1995, as appropriate.
 7        "Escrow Act" means  the  Tobacco  Product  Manufacturers'
 8    Escrow Act.
 9        "Non-participating   manufacturer"   means   any  Tobacco
10    Product   Manufacturer   that   is   not   a    participating
11    manufacturer.
12        "Participating  manufacturer"  has the meaning given that
13    term in Section II(j) of the Master Settlement Agreement  and
14    all amendments thereto.
15        "Qualified escrow fund" has the same meaning as that term
16    is defined in Section 10 of the Escrow Act.
17        "Tobacco  product  manufacturer"  has the same meaning as
18    that term is defined in Section 10 of the Escrow Act.
19        "Units sold" has the same meaning as that term is defined
20    in Section 10 of the Escrow Act.

21        Section 15.  Certifications; directory; tax stamps.
22        (a)  Every tobacco product manufacturer whose  cigarettes
23    are  sold  in  this  State  whether  directly  or  through  a
24    distributor,    retailer,    or   similar   intermediary   or
25    intermediaries shall execute and deliver on a form prescribed
26    by the Attorney  General  a  certification  to  the  Attorney
27    General,  no later than the thirtieth day of April each year,
28    certifying under penalty of perjury that, as of the  date  of
29    the  certification,  the tobacco product manufacturer either:
30    (i) is a participating  manufacturer;  or  (ii)  is  in  full
31    compliance  with  the  Escrow  Act,  including  all quarterly
32    installment payments.
33             (1)  A participating manufacturer shall  include  in
 
HB3517 Engrossed            -3-      LRB093 10348 LCB 10602 b
 1        its  certification  a  list  of  its  brand families. The
 2        participating manufacturer shall update the list 30  days
 3        prior  to  any  addition  to or modification of its brand
 4        families  by  executing  and  delivering  a  supplemental
 5        certification to the Attorney General.
 6             (2)  A non-participating manufacturer shall  include
 7        in  its certification a complete list of all of its brand
 8        families:  (i)  separately  listing  brand  families   of
 9        cigarettes  and  the  number of units sold for each brand
10        family that were sold in the State during  the  preceding
11        calendar  year;  (ii)  listing  all of its brand families
12        that have been sold in the State at any time  during  the
13        current  calendar  year; (iii) indicating by an asterisk,
14        any brand family sold in the State during  the  preceding
15        calendar  year  that is no longer being sold in the State
16        as of the date of the certification; and (iv) identifying
17        by name and address any other manufacturer of  the  brand
18        families    in   the   preceding   calendar   year.   The
19        non-participating manufacturer shall update the  list  30
20        days  prior  to  any  addition  to or modification of its
21        brand families by executing and delivering a supplemental
22        certification to the Attorney General.
23             (3)  In   the   case    of    a    non-participating
24        manufacturer, the certification shall further certify:
25                  (A)  that the non-participating manufacturer is
26             registered  to  do  business  in  this  State or has
27             appointed a resident agent for  service  of  process
28             and provided notice thereof as required by item 4 of
29             subsection (a) of this Section;
30                  (B)  that  the  non-participating  manufacturer
31             has  (i)  established  and  continues  to maintain a
32             qualified escrow fund as that  term  is  defined  in
33             Section  10  of  the Escrow Act, and (ii) executed a
34             qualified escrow agreement that  has  been  reviewed
 
HB3517 Engrossed            -4-      LRB093 10348 LCB 10602 b
 1             and  approved  by  the  Attorney  General  and  that
 2             governs the qualified escrow fund;
 3                  (C)  that the non-participating manufacturer is
 4             in  full  compliance  with  the  Escrow Act and this
 5             Section, and any  regulations  promulgated  pursuant
 6             thereto;
 7                  (D)  the  name, address and telephone number of
 8             the     financial     institution     where      the
 9             non-participating  manufacturer  has established the
10             qualified escrow fund required pursuant  to  Section
11             15 of the Escrow Act and all regulations promulgated
12             thereto;
13                  (E)  the account number of the qualified escrow
14             fund and sub-account number for this State;
15                  (F)  the     amount    the    non-participating
16             manufacturer placed in the fund for cigarettes  sold
17             in  the  State  during  the preceding calendar year,
18             including the dates and amount of each deposit,  and
19             such  evidence  or  verification  as  may  be deemed
20             necessary by the Attorney  General  to  confirm  the
21             foregoing; and
22                  (G)  the amounts of and dates of any withdrawal
23             or   transfer   of   funds   the   non-participating
24             manufacturer  made at any time from the fund or from
25             any other qualified escrow fund into which  it  ever
26             made  escrow  payments pursuant to Section 15 of the
27             Escrow Act and all regulations promulgated thereto.
28             (4)  A tobacco product manufacturer may not  include
29        a  brand  family  in its certification unless: (i) in the
30        case of a participating manufacturer,  the  participating
31        manufacturer  affirms  that  the  brand  family  is to be
32        deemed to be its cigarettes for purposes  of  calculating
33        its  payments  under  the master settlement agreement for
34        the relevant year, in the volume  and  shares  determined
 
HB3517 Engrossed            -5-      LRB093 10348 LCB 10602 b
 1        pursuant  to the master settlement agreement; and (ii) in
 2        the  case  of  a  non-participating   manufacturer,   the
 3        non-participating  manufacturer  affirms  that  the brand
 4        family is to be deemed to be its cigarettes for  purposes
 5        of Section 15 of the Escrow Act.
 6             Nothing  in  this  Section  shall  be  construed  as
 7        limiting  or  otherwise  affecting  the  State's right to
 8        maintain that a brand family constitutes cigarettes of  a
 9        different  tobacco  product  manufacturer for purposes of
10        calculating  payments   under   the   master   settlement
11        agreement  or  for  purposes  of Section 15 of the Escrow
12        Act.
13             (5)  The   tobacco   product   manufacturers   shall
14        maintain all invoices  and  documentation  of  sales  and
15        other  information  relied  upon  for certification for a
16        period of 5 years, unless otherwise required  by  law  to
17        maintain them for a greater period of time.
18        (b)  Not  later than 6 months after the effective date of
19    this  Act,  the  Attorney  General  shall  develop  and  make
20    available for public inspection, through  publishing  on  its
21    website,    a   directory   listing   all   tobacco   product
22    manufacturers  that  have  provided  current   and   accurate
23    certifications  conforming  to the requirements of subsection
24    (a) of Section 15 and all brand families that are  listed  in
25    the certifications, except for the following:
26             (1)  The  Attorney  General  shall  not  include  or
27        retain in the directory the name or brand families of any
28        non-participating  manufacturer that fails to provide the
29        required  certification  or   whose   certification   the
30        Attorney  General  determines  is  not in compliance with
31        subsections (a)(2) or (a)(3) of Section  15,  unless  the
32        Attorney  General  has  determined that the violation has
33        been cured to the satisfaction of the Attorney General.
34             (2)  Neither  a  tobacco  product  manufacturer  nor
 
HB3517 Engrossed            -6-      LRB093 10348 LCB 10602 b
 1        brand  family  shall  be  included  or  retained  in  the
 2        directory if the Attorney General concludes that: (i)  in
 3        the  case  of a non-participating manufacturer all escrow
 4        payments required pursuant to Section 15  of  the  Escrow
 5        Act  for  any period for any brand family, whether or not
 6        listed by the non-participating  manufacturer,  have  not
 7        been  fully paid into a qualified escrow fund governed by
 8        a qualified escrow agreement that has  been  approved  by
 9        the  Attorney  General;  or  (ii)  all  outstanding final
10        judgments, including interest thereon, for violations  of
11        Section  15  of  the  Escrow  Act  have  not  been  fully
12        satisfied for that brand family and manufacturer.
13             (3)  The Attorney General shall update the directory
14        as  necessary  in order to correct mistakes and to add or
15        remove a tobacco product manufacturer or  brand  families
16        to keep the directory in conformity with the requirements
17        of this Act.
18             (4)  Every  distributor  shall provide and update as
19        necessary an electronic  mail  address  to  the  Attorney
20        General for the purpose of receiving any notifications as
21        may be required by this Act.
22        (c)  It  shall be unlawful for any person: (i) to affix a
23    stamp to a package or other  container  of  cigarettes  of  a
24    tobacco  product manufacturer or brand family not included in
25    the directory or to sell, offer, or possess for sale in  this
26    State; or (ii) import for personal consumption in this State,
27    cigarettes  of a tobacco product manufacturer or brand family
28    not included in the directory.

29        Section 20.  Agent for Service of Process.
30        (a)  Any  non-resident   or   foreign   non-participating
31    manufacturer  that  has not registered to do business in this
32    State as a foreign corporation or business entity shall, as a
33    condition precedent to having its brand  families  listed  or
 
HB3517 Engrossed            -7-      LRB093 10348 LCB 10602 b
 1    retained  in  the  directory,  appoint and continually engage
 2    without interruption the services of an agent in  this  State
 3    to  act  as  agent  for  the  service  of process on whom all
 4    process, and any action or proceeding against  it  concerning
 5    or  arising out of the enforcement of this Act and the Escrow
 6    Act, may be served in  any  manner  authorized  by  law.  The
 7    service  shall  constitute legal and valid service of process
 8    on the non-participating manufacturer. The  non-participating
 9    manufacturer  shall  provide the name, address, phone number,
10    and proof of the appointment and availability of the agent to
11    and to the satisfaction  of  the  Commissioner  and  Attorney
12    General.
13        (b)  The  non-participating  manufacturer  shall  provide
14    notice  to  the Commissioner and Attorney General 30 calendar
15    days prior to termination of the authority of  an  agent  and
16    shall  further  provide  proof  to  the  satisfaction  of the
17    Attorney General of the appointment of a new  agent  no  less
18    than  5 calendar days prior to the termination of an existing
19    agent appointment. In the event an agent terminates an agency
20    appointment, the non-participating manufacturer shall  notify
21    the  Commissioner  and  Attorney  General  of the termination
22    within 5  calendar  days  and  shall  include  proof  to  the
23    satisfaction  of the Attorney General of the appointment of a
24    new agent.
25        (c)  Any non-participating  manufacturer  whose  products
26    are  sold in this State, without appointing or designating an
27    agent as herein required shall be deemed  to  have  appointed
28    the  Secretary  of  State  as  the agent and may be proceeded
29    against in courts of this State by service  of  process  upon
30    the  Secretary  of  State;  however,  the  appointment of the
31    Secretary  of  State  as  an  agent  shall  not  satisfy  the
32    condition precedent to having its brand  families  listed  or
33    retained in the directory.
 
HB3517 Engrossed            -8-      LRB093 10348 LCB 10602 b
 1        Section    25.  Reporting    of    information;    escrow
 2    installments.
 3        (a)  Not  later  than  20  days  after  the  end  of each
 4    calendar quarter, and more frequently if so directed  by  the
 5    Attorney   General,   each   distributor   shall  submit  the
 6    information as the Attorney General  requires  to  facilitate
 7    compliance  with this Section, including, but not limited to,
 8    a list by brand family of the total number of  cigarettes  or
 9    in  the case of roll-your-own, the equivalent stick count for
10    which the distributor  affixed  stamps  during  the  previous
11    calendar  quarter  or  otherwise  paid  the tax due for these
12    cigarettes.  The  distributor  shall   maintain,   and   make
13    available   to   the   Attorney  General,  all  invoices  and
14    documentation of sales of all non-participating  manufacturer
15    cigarettes and any other information relied upon in reporting
16    to the Attorney General for a period of 5 years.
17        (b)  The  Director  is  authorized  to  disclose  to  the
18    Attorney  General any information received under this Act and
19    requested by the Attorney General for purposes of determining
20    compliance with and enforcing the provisions of this Act. The
21    Director and Attorney General shall share with each other the
22    information received  under  this  Act,  and  may  share  the
23    information with other federal, State, or local agencies only
24    for  purposes  of enforcement of this Act, the Escrow Act, or
25    corresponding laws of other states.
26        (c)  The Attorney General may require at any  time,  from
27    the  non-participating manufacturer, proof from the financial
28    institution in  which  the  manufacturer  has  established  a
29    qualified  escrow fund for the purpose of compliance with the
30    Escrow Act of the amount of money in the fund being  held  on
31    behalf  of  the  State and the dates of deposits, and listing
32    the amounts of all withdrawals from the fund  and  the  dates
33    thereof.
34        (d)  In  addition  to  the  information  required  to  be
 
HB3517 Engrossed            -9-      LRB093 10348 LCB 10602 b
 1    submitted  pursuant  to  this  Act,  the Attorney General may
 2    require a distributor  or  tobacco  product  manufacturer  to
 3    submit  any additional information including, but not limited
 4    to, samples of  the  packaging  or  labeling  of  each  brand
 5    family,  as  is  necessary  to enable the Attorney General to
 6    determine  whether  a  tobacco  product  manufacturer  is  in
 7    compliance with this Act.
 8        (e)  To promote compliance with the  provisions  of  this
 9    Act,   the   Attorney   General  may  promulgate  regulations
10    requiring a  tobacco  product  manufacturer  subject  to  the
11    requirements  of  subsection (a)(2) of Section 15 to make the
12    escrow deposits required in quarterly installments during the
13    year in which the sales covered by the deposits are made. The
14    Attorney  General  may  require  production  of   information
15    sufficient  to  enable  the Attorney General to determine the
16    adequacy of the amount of the installment deposit.

17        Section 30.  Penalties and other remedies.
18        (a)  In addition to or in lieu  of  any  other  civil  or
19    criminal  remedy provided by law, upon a determination that a
20    distributor has violated subsection (c) of Section 15 or  any
21    regulation  adopted pursuant thereto, the Director may revoke
22    or suspend the license of any stamping agent  in  the  manner
23    provided  by Section 6 of the Cigarette Tax Act, Section 6 of
24    the Cigarette Use Tax Act, or Section 10-25  of  the  Tobacco
25    Products  Tax Act of 1995, as appropriate. Each stamp affixed
26    and each offer to sell cigarettes in violation of  subsection
27    (c)  of Section 15 shall constitute a separate violation. For
28    each violation, the Director may also impose a civil  penalty
29    in  an amount not to exceed the greater of 500% of the retail
30    value of the cigarettes sold or $5,000 upon  a  determination
31    of   violation  of  subsection  (c)  of  Section  15  or  any
32    regulations adopted pursuant thereto.
33        (b)  Any cigarettes that  have  been  sold,  offered  for
 
HB3517 Engrossed            -10-     LRB093 10348 LCB 10602 b
 1    sale,  or  possessed  for sale in this State, or imported for
 2    personal consumption in this State in violation of subsection
 3    (c) of Section 15 shall be subject to seizure and  forfeiture
 4    as  provided in Sections 18, 18a, and 20 of the Cigarette Tax
 5    Act and Sections 24, 25, 25a and 26 of the Cigarette Use  Tax
 6    Act,  and  all  cigarettes  so  seized and forfeited shall be
 7    destroyed and not resold.
 8        (c)  The Attorney  General  may  seek  an  injunction  to
 9    restrain  a  threatened or actual violation of subsection (c)
10    of Section 15, subsection (a) of Section  25,  or  subsection
11    (d)  of  Section  25  by  a  stamping agent and to compel the
12    stamping agent to comply with such subsections. In any action
13    brought pursuant to this Section, the State shall be entitled
14    to recover the costs of investigation, costs of  the  action,
15    and reasonable attorney fees.
16        (d)  It  shall  be  unlawful for a person to: (i) sell or
17    distribute cigarettes; or (ii) acquire, hold,  own,  possess,
18    transport,  import,  or  cause to be imported cigarettes that
19    the person knows or should know are intended for distribution
20    or sale in the  State  in  violation  of  subsection  (c)  of
21    Section  15.  A  violation of this Section shall be a Class 2
22    felony.
23        (e)  A person who violates subsection (c) of  Section  15
24    engages   in  an  unfair  and  deceptive  trade  practice  in
25    violation of the Uniform Deceptive Trade Practices Act.

26        Section 35.  Miscellaneous provisions.
27        (a)  A determination of the Attorney General to not  list
28    or  to  remove  from  the directory a brand family or tobacco
29    product manufacturer shall be subject to review in the manner
30    prescribed by rule.
31        (b)  No person shall be issued a  license  or  granted  a
32    renewal  of  a  license  to  act  as a distributor unless the
33    person has certified in writing, under  penalty  of  perjury,
 
HB3517 Engrossed            -11-     LRB093 10348 LCB 10602 b
 1    that the person will comply fully with this Section.
 2        (c)  The  Attorney  General  may  promulgate  regulations
 3    necessary to effect the purposes of this Act.
 4        (d)  In  any  action brought by the State to enforce this
 5    Act, the State shall be entitled  to  recover  the  costs  of
 6    investigation,  expert witness fees, costs of the action, and
 7    reasonable attorney fees.
 8        (e)  If a court determines that  a  person  has  violated
 9    this  Act,  the  court  shall  order any profits, gain, gross
10    receipts, or other benefit from the violation to be disgorged
11    and paid to the General Revenue Fund.
12        (f)  Unless otherwise expressly provided the remedies  or
13    penalties  provided  by this Act are cumulative to each other
14    and to the remedies or penalties available  under  all  other
15    laws of this State.

16        Section 40.  Severability.
17        (a)  If  any  provision of this Act or its application to
18    any person or circumstance is held  invalid,  the  invalidity
19    does  not affect other provisions or applications of this Act
20    that can be given effect without  the  invalid  provision  or
21    application.
22        (b)  If  a court of competent jurisdiction finds that the
23    provisions of this Act and of the  Escrow  Act  conflict  and
24    cannot  be  harmonized, then the provisions of the Escrow Act
25    shall control.
26        (c)  If any Section, subsection, subdivision,  paragraph,
27    sentence, clause, or phrase of this Act causes the Escrow Act
28    to  no  longer  constitute  a qualifying or model statute, as
29    those terms are defined in the Master  Settlement  Agreement,
30    then that portion of this Act shall not be valid.

31        (30 ILCS 169/Act rep.)
32        Section  200.  The Tobacco Products Manufacturers' Escrow
 
HB3517 Engrossed            -12-     LRB093 10348 LCB 10602 b
 1    Enforcement Act is repealed.