2005 Regular Session
By: Senator(s) Hyde-Smith
AN ACT TO REQUIRE ANY TOBACCO PRODUCT MANUFACTURER SELLING CIGARETTES TO CONSUMERS WITHIN THIS STATE, WHETHER DIRECTLY OR THROUGH A DISTRIBUTOR, RETAILER OR SIMILAR INTERMEDIARY, TO BECOME A PARTICIPATING MANUFACTURER IN THE TOBACCO SETTLEMENT OR PLACE CERTAIN AMOUNT INTO AN ESCROW ACCOUNT; TO PROVIDE THE CIRCUMSTANCES UNDER WHICH THE FUNDS IN SUCH AN ESCROW ACCOUNT MAY BE RELEASED; TO PROVIDE THAT FUNDS THAT ARE NOT RELEASED SHALL REMAIN IN THE ESCROW ACCOUNT FOR 25 YEARS; TO PROVIDE THAT EACH TOBACCO PRODUCT MANUFACTURER THAT ELECTS TO PLACE FUNDS INTO ESCROW PURSUANT TO THIS SECTION SHALL ANNUALLY CERTIFY TO THE ATTORNEY GENERAL THAT IT IS IN COMPLIANCE WITH THIS SECTION; TO AUTHORIZE THE ATTORNEY GENERAL TO BRING A CIVIL ACTION ON BEHALF OF THE STATE AGAINST ANY TOBACCO PRODUCT MANUFACTURER THAT FAILS TO PLACE INTO ESCROW THE FUNDS REQUIRED UNDER THIS SECTION; TO PROVIDE CERTAIN CIVIL PENALTIES FOR THE FAILURE TO DEPOSIT THE CORRECT AMOUNTS INTO THE ESCROW ACCOUNT; AND FOR RELATED PURPOSES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:
SECTION 1. (1) Any tobacco product manufacturer selling cigarettes to consumers within this state, whether directly or through a distributor, retailer or similar intermediary or intermediaries, after July 1, 2004, shall comply with either subsection (1) or subsection (2) of this section.
(2) The tobacco product manufacturer shall become a participating manufacturer in the tobacco settlement (as defined in Section 43-13-405) and generally perform its financial obligations under the tobacco settlement.
(3) The tobacco product manufacturer shall place into a qualified escrow fund by April 15 of the year in question the following amounts as such amounts are adjusted for inflation:
(a) For each calendar year through 2006, $.0137539 per unit sold;
(b) For calendar year 2007 and each calendar year thereafter, $.0188482 per unit sold.
(4) A tobacco product manufacturer that places funds into escrow pursuant to subsection (3) of this section shall receive the interest or other appreciation on such funds as earned, such funds themselves shall be released from escrow only under the following circumstances:
(a) To pay a judgment or settlement on any released claim brought against such tobacco product manufacturer by the state or any releasing party located or residing in the state. Funds shall be released from escrow under this paragraph in the order in which they were placed into escrow and only to the extent and at the time necessary to make payments required under such judgment or settlement.
(b) To the extent that a tobacco product manufacturer establishes that the amount it was required to place into escrow in a particular year was greater than the state's allocable share of the total payments that such manufacturer would have been required to make in that year under the tobacco settlement (before any of the adjustments or offsets described in that agreement other than the inflation adjustment) had it been a participating manufacturer, the excess shall be released from escrow and revert back to such tobacco product manufacturer.
(c) To the extent not released from escrow under paragraphs (a) and (b) of this subsection, funds shall be released from escrow and revert back to such tobacco product manufacturer twenty-five (25) years after the date on which they were placed into escrow.
(5) Each tobacco product manufacturer that elects to place funds into escrow pursuant to this section shall annually certify to the Attorney General that it is in compliance with this section. The Attorney General may bring a civil action on behalf of the state against any tobacco product manufacturer that fails to place into escrow the funds required under this section. Any tobacco product manufacturer that fails in any year to place into escrow the funds required under this section shall:
(a) Be required within fifteen (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 section, may impose a civil penalty in an amount not to exceed five percent (5%) of the amount improperly withheld from escrow per day of the violation and in a total amount not to exceed one hundred percent (100%) of the original amount improperly withheld from escrow.
(b) In case of a knowing violation, be required within fifteen (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 section, may impose a civil penalty in an amount not to exceed fifteen percent (15%) of the amount improperly withheld from escrow per day of the violation and in a total amount not to exceed three hundred percent (300%) of the original amount improperly withheld from escrow.
(c) In the case of a second knowing violation, be prohibited from selling cigarettes to consumers within the state whether directly or through a distributor retailer or similar intermediary for a period not to exceed two (2) years.
(6) Each failure to make an annual deposit under this section shall constitute a separate violation.
SECTION 2. This act shall take effect and be in force from and after July 1, 2005.