Illinois Compiled Statutes
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FINANCE30 ILCS 168/1
(30 ILCS 168/) Tobacco Product Manufacturers' Escrow Act.
(30 ILCS 168/1)
This Act may be cited as the
Tobacco Product Manufacturers' Escrow Act.
(Source: P.A. 91-41, eff. 6-30-99.)
30 ILCS 168/5
(30 ILCS 168/5)
Findings and Purpose.
(a) Cigarette smoking presents serious public health concerns to the State
of Illinois and to the citizens of the State. The Surgeon General has
determined that smoking causes lung cancer, heart disease, and other serious
diseases, and that there are
hundreds of thousands of tobacco-related deaths in the United States each year.
These diseases most often do not appear until many years after the person in
question begins smoking.
(b) Cigarette smoking also presents serious financial concerns for the State
of Illinois. Under certain health care programs, the State may have a legal
obligation to provide medical assistance to eligible persons for health
conditions associated with cigarette smoking, and those persons may have a
legal entitlement to receive such medical assistance.
(c) Under these programs, the State pays millions of dollars each year to
provide medical assistance for these persons for health conditions associated
with cigarette smoking.
(d) It is the policy of the State of Illinois that financial burdens imposed
on the State by cigarette smoking be borne by tobacco product manufacturers
rather than by the State to the extent that such manufacturers either determine
to enter into a settlement with the State or are found culpable by the courts.
(e) On November 23, 1998, leading United States tobacco product
manufacturers entered into a settlement agreement, entitled the "Master
Settlement Agreement", with the State of Illinois. The Master Settlement
Agreement obligates these manufacturers, in return for a release of past,
present, and certain future claims against them as described in the Agreement,
to pay substantial sums to the State (tied in part to their volume of sales);
to fund a national foundation devoted to the interests of public health; and to
make substantial changes in their advertising and marketing practices and
corporate culture, with the intention of reducing underage smoking.
(f) It would be contrary to the policy of the State of Illinois if tobacco
product manufacturers who determine not to enter into such a settlement could
use a resulting cost advantage to derive large, short-term profits in the
years before liability may arise without ensuring that the State will have an
eventual source of recovery from them if they
are proven to have acted culpably. It is thus in the interest of the State of
Illinois to require that such manufacturers establish a reserve fund to
guarantee a source of compensation and to prevent such manufacturers from
deriving large, short-term
profits and then becoming judgment-proof before liability may arise.
(Source: P.A. 91-41, eff. 6-30-99.)
30 ILCS 168/10
(30 ILCS 168/10)
As used in this Act:
"Adjusted for inflation" means increased in accordance with the formula for
inflation adjustment set forth in Exhibit C to the Master Settlement Agreement.
"Affiliate" means a person who directly or indirectly owns or controls, is
owned or controlled by, or is under common ownership or control with, another
for purposes of this definition, the terms "owns", "is owned", and "ownership"
mean ownership of an equity interest, or the equivalent thereof,
10% or more, and the term "person" means an individual, partnership, committee,
association, corporation, or any other organization or group of persons.
"Allocable share" means Allocable Share as that term is defined in the Master
"Cigarette" means any product that contains nicotine, is intended to be
burned or heated under ordinary conditions of use, and consists of or contains:
(1) any roll of tobacco wrapped in paper or in any
substance not containing tobacco; or
(2) tobacco, in any form, that is functional in the
product, which, because of its appearance, the type of tobacco used in the filler, or its packaging and labeling, is likely to be offered to, or purchased by, consumers as a cigarette; or
(3) any roll of tobacco wrapped in any substance
containing tobacco which, because of its appearance, the type of tobacco used in the filler, or its packaging and labeling, is likely to be offered to, or purchased by, consumers as a cigarette described in item (1) of this definition.
"Cigarette" also means "roll-your-own" tobacco (i.e., any tobacco which,
because of its appearance, type, packaging, or labeling is suitable for use and
likely to be offered to, or purchased by, consumers as tobacco for making
cigarettes). For purposes of this Act, 0.09 ounces of "roll-your-own" tobacco
shall constitute one individual cigarette.
"Master Settlement Agreement" means the settlement agreement (and related
documents) entered into on November 23, 1998 by the State of Illinois and
leading United States tobacco product manufacturers.
"Qualified escrow fund" means an escrow arrangement with a federally or State
chartered financial institution having no affiliation with any tobacco product
manufacturer and having assets of at least $1,000,000,000 where such
arrangement requires that such financial institution hold the escrowed funds'
principal for the benefit of releasing parties and prohibits the tobacco
product manufacturer placing the funds into escrow from using, accessing, or
directing the use of the funds' principal except as consistent with
subdivision (a)(2)(B) of Section 15 of this Act.
"Released claims" means Released Claims as that term is defined in the Master
"Releasing parties" means Releasing Parties as that term is defined in the
Master Settlement Agreement.
"Tobacco Product Manufacturer" means any entity that, after the
effective date of this Act directly (and not exclusively through any
(1) manufactures cigarettes anywhere that such
manufacturer intends to be sold in the United States, including cigarettes intended to be sold in the United States through an importer (except where such importer is an original participating manufacturer (as that term is defined in the Master Settlement Agreement) that will be responsible for the payments under the Master Settlement Agreement with respect to such cigarettes as a result of the provisions of subsection II(mm) of the Master Settlement Agreement and that pays the taxes specified in subsection II(z) of the Master Settlement Agreement, and provided that the manufacturer of such cigarettes does not market or advertise such cigarettes in the United States);
(2) is the first purchaser anywhere for resale in the
United States of cigarettes manufactured anywhere that the manufacturer does not intend to be sold in the United States; or
becomes a successor of an entity described in
"Tobacco Product Manufacturer" does not mean an affiliate of a tobacco
product manufacturer unless the affiliate itself falls within any of items (1)
through (3) of this definition.
"Units sold" means the number of individual cigarettes sold in the State of
Illinois by the applicable tobacco product manufacturer (whether directly or
through a distributor,
retailer, or similar intermediary or intermediaries) during the year in
question, as measured by excise taxes collected by the State on packs (or
"roll-your-own" tobacco containers) bearing the excise tax stamp of the State.
The Illinois Department of Revenue shall promulgate such rules as are
necessary to ascertain the amount of State excise tax paid on the cigarettes of
such tobacco product manufacturer for each year.
(Source: P.A. 91-41, eff. 6-30-99.)
30 ILCS 168/15
(30 ILCS 168/15)
(a) Any tobacco product manufacturer selling cigarettes to consumers within
the State of Illinois (whether directly or through a distributor, retailer, or
similar intermediary or intermediaries) after the effective date of this
Act shall do one of the following:
(1) become a participating manufacturer (as that term
is defined in Section II(jj)
of the Master Settlement Agreement) and generally perform its
financial obligations under the Master Settlement Agreement; or
(2) (A) place into a qualified escrow fund by April
15 of the year following the year in question the following amounts (as such amounts are adjusted for inflation):
(i) For 1999: $0.0094241 per unit sold after
the effective date of this Act;
(ii) For 2000: $0.0104712 per unit sold;
(iii) For each of 2001 and 2002: $0.0136125
(iv) For each of 2003 through 2006:
$0.0167539 per unit sold;
(v) For each of 2007 and each year
thereafter: $0.0188482 per unit sold.
(B) A tobacco product manufacturer that places
funds into escrow pursuant to subdivision (a)(2)(A) shall receive the interest or other appreciation on the funds as earned. The funds themselves shall be released from escrow only under the following circumstances:
(i) to pay a judgment or settlement on any
released claim brought against the tobacco product manufacturer by the State or any releasing party located or residing in the State. Funds shall be released from escrow under this subdivision (a)(2)(B)(i): (I) in the order in which they were placed into escrow; and (II) only to the extent and at the time necessary to make payments required under such judgment or settlement;
(ii) to the extent that a tobacco product
manufacturer establishes that the amount it was required to place into escrow on account of units sold in the State in a particular year was greater than the Master Settlement Agreement payments, as determined pursuant to Section IX(i) of that Agreement, including after final determination of all adjustments, that such manufacturer would have been required to make on account of such units sold had it been a Participating Manufacturer, the excess shall be released from escrow and revert back to such tobacco product manufacturer; or
(iii) to the extent not released from escrow
under subdivisions (a)(2)(B)(i) or (a)(2)(B)(ii), funds shall be released from escrow and revert back to such tobacco product manufacturer 25 years after the date on which they were placed into escrow.
(C) Each tobacco product manufacturer that elects
to place funds into escrow pursuant to this subdivision (a)(2) shall annually certify to the Attorney General that it is in compliance with this subdivision (a)(2). The Attorney General may bring a civil action on behalf of the State of Illinois against any tobacco product manufacturer that fails to place into escrow the funds required under this subdivision (a)(2). Any tobacco product manufacturer that fails in any year to place into escrow the funds required under this subdivision (a)(2) shall:
(i) be required within 15 days to place such
funds into escrow as shall bring it into compliance with this Section. The court, upon a finding of a violation of this subdivision (a)(2), may impose a civil penalty to be paid into the General Revenue Fund in an amount not to exceed 5% of the amount improperly withheld from escrow per day of the violation and in a total amount not to exceed 100% of the original amount improperly withheld from escrow;
(ii) in the case of a knowing violation, be
required within 15 days to place such funds into escrow as shall bring it into compliance with this Section. The court, upon a finding of a knowing violation of this subdivision (a)(2), may impose a civil penalty to be paid into the General Revenue Fund in an amount not to exceed 15% of the amount improperly withheld from escrow per day of the violation and in a total amount not to exceed 300% of the original amount improperly withheld from escrow; and
(iii) in the case of a second knowing
violation, be prohibited from selling cigarettes to consumers within the State of Illinois (whether directly or through a distributor, retailer, or similar intermediary) for a period not to exceed 2 years.
(b) Each failure to make an annual deposit required under this Section shall
constitute a separate violation. If a tobacco product manufacturer is
successfully prosecuted by the Attorney General for a violation of subdivision
(a)(2), the tobacco
product manufacturer must pay, in addition to any fine imposed by a court, the
costs and attorney's fees incurred in the prosecution.
(Source: P.A. 93-446, eff. 1-1-04.)
30 ILCS 168/20
(30 ILCS 168/20)
If this amendatory Act of the 93rd General Assembly or any
portion of the amendment to
subdivision (2)(B)(ii) of subsection (a) of Section 15 made by this amendatory
Act of the
93rd General Assembly is held by a court of competent jurisdiction to be
unconstitutional, then such subdivision (2)(B)(ii) of subsection (a) of Section
15 shall be
deemed to be repealed in its entirety. If subdivision (2)(B)(ii) of
subsection (a) of Section 15 shall thereafter be held by a court of competent
jurisdiction to be
unconstitutional, then this amendatory Act of the 93rd General Assembly shall
be deemed repealed and subdivision (2)(B)(ii) of subsection (a) of Section 15
restored as if no such amendments had been made. Neither any holding of
unconstitutionality nor the
repeal of subdivision (2)(B)(ii) of subsection (a) of Section 15 shall affect,
invalidate any other portion of Section 15 or the application of such Section
to any other
person or circumstance, and such remaining portions of Section 15 shall at all
times continue in full force and effect.
(Source: P.A. 93-446, eff. 1-1-04.)
30 ILCS 168/999
(30 ILCS 168/999)
This Act takes effect upon becoming law.
(Source: P.A. 91-41, eff. 6-30-99.)