AN ACT
RELATING TO TOBACCO; ENACTING THE
TOBACCO ESCROW FUND ACT; PROVIDING FOR A DIRECTORY TO BE MAINTAINED BY THE
ATTORNEY GENERAL; IMPOSING REPORTING AND CERTIFICATION REQUIREMENTS;
PROHIBITING CONDUCT RELATING TO CIGARETTES AND CERTAIN OTHER TOBACCO PRODUCTS;
PROVIDING CIVIL AND CRIMINAL PENALTIES; DECLARING AN EMERGENCY.
BE IT ENACTED BY THE LEGISLATURE OF
THE STATE OF NEW MEXICO:
Section 1. SHORT TITLE.--This act may be cited as the
"Tobacco Escrow Fund Act".
Section 2. FINDINGS AND PURPOSE.--The legislature finds
that violations of Section 6-4-13 NMSA 1978 threaten the integrity of the
master settlement agreement and that enacting procedural requirements will
safeguard the agreement and aid in its enforcement.
Section 3. DEFINITIONS.--As used in the Tobacco Escrow
Fund Act:
A. "brand family" means all styles of
cigarettes sold under the same trademark and differentiated from one another by
means of additional modifiers such as "menthol", "lights",
"kings" and "100s", and includes the use of a brand name,
trademark, logo, symbol, motto, selling message, recognizable pattern of colors
or other indicia similar to or identifiable with a previously known brand of
cigarettes;
B. "cigarette" means
"cigarette" as defined in Subsection D of Section 6-4-12 NMSA 1978;
C. "department" means the taxation and
revenue department;
D. "directory" means a listing of
tobacco product manufacturers and brand families that is developed, maintained
and published by the attorney general;
E. "distributor" means a person
required to affix stamps on cigarette packages pursuant to Section 7-12-5 NMSA
1978 or required to pay excise tax imposed on cigarettes pursuant to Section
7-12A-3 NMSA 1978.
"Distributor" does not include a retailer of cigarette
packages upon which stamps were already affixed when the packages were received
by that retailer;
F. "master settlement agreement" means
the settlement agreement and related documents entered into on November 23,
1998 by the state and leading United States tobacco product manufacturers;
G. "nonparticipating manufacturer"
means a tobacco product manufacturer that is not a participating manufacturer;
H. "participating manufacturer" means
a tobacco product manufacturer that is a "participating manufacturer"
as defined in Section II(jj) of the master settlement agreement and subsequent
amendments to that section;
I. "qualified escrow fund" means
"qualified escrow fund" as defined in Subsection F of Section 6-4-12
NMSA 1978;
J. "secretary" means the secretary of
taxation and revenue;
K. "tobacco product manufacturer"
means "tobacco product manufacturer" as defined in Subsection I of
Section 6‑4-12 NMSA 1978; and
L. "units sold" means "units
sold" as defined in Subsection J of Section 6-4-12 NMSA 1978.
Section 4. CERTIFICATION BY TOBACCO PRODUCT
MANUFACTURER.--
A. No later than April 30 of each year, a
tobacco product manufacturer whose cigarettes are sold in this state, whether
directly or through a distributor, retailer or similar intermediary, shall
execute and deliver to the attorney general, in the manner and on the form
prescribed by the attorney general, a certification pursuant to this
section. The certification shall:
(1) be made under penalty of perjury;
(2) state that as of the date of the
certification, the tobacco product manufacturer is either a participating or a
nonparticipating manufacturer; and
(3) include the information required pursuant to
Subsections B or C of this section.
B. In its certification, a participating
manufacturer shall include a complete list of its brand families.
C. In its certification, a nonparticipating
manufacturer shall:
(1) certify that it is registered to do business
in the state or has appointed an agent for service of process and has provided
written notice to the attorney general in accordance with Section 7 of the
Tobacco Escrow Fund Act;
(2) certify that it is in full compliance with
Section 6-4-13 NMSA 1978, the Tobacco Escrow Fund Act and any rules promulgated
pursuant to that act, including all annual payments as may be required by the
attorney general;
(3) certify that it has established and maintains
a qualified escrow fund governed by a qualified escrow agreement that has been
reviewed and approved by the attorney general and provide:
(a) the name, address and telephone number of the
financial institution where the fund is established;
(b) the account number of the fund and the
subaccount number for the state;
(c) the amounts placed in the fund for cigarettes
sold in the state during the preceding calendar year, including the date and
amount of each deposit and any other evidence or verification of the amounts as
the attorney general deems necessary; and
(d) the amount and date of each withdrawal or
transfer of funds made at any time from the fund or from any other qualified
escrow fund into which the nonparticipating manufacturer has made escrow
payments pursuant to Section 6-4-13 NMSA 1978; and
(4) include a complete list of its brand families
and:
(a) separately list the number of units sold in
the state for each brand family during the preceding calendar year, indicating
any brand family sold in the state during the preceding calendar year that is
no longer being sold as of the date of certification; and
(b) indicate all of its brand families that have
been sold in the state at any time during the current calendar year,
identifying by name and address any other manufacturer of such brand families
in the preceding or current calendar year.
D. A tobacco product manufacturer may not
include a brand family in its certification unless:
(1) in the case of a participating manufacturer,
the participating manufacturer affirms that the brand family is to be deemed
its cigarettes for purposes of calculating its payments under the master
settlement agreement for the relevant year in the volume and shares determined
pursuant to the master settlement agreement; or
(2) in the case of a nonparticipating
manufacturer, the nonparticipating manufacturer affirms that the brand family
is to be deemed its cigarettes for purposes of Section 6-4-13 NMSA 1978.
E. A tobacco product manufacturer shall update
the list of its brand families thirty days prior to any addition to or
modification of its brand families by executing and delivering a supplemental
certification to the attorney general.
F. A tobacco product manufacturer shall maintain
all invoices and documentation of sales and other information relied upon for
its certification to the attorney general for a period of five years, unless
otherwise required by law to maintain them for a greater period of time.
G. Nothing in this section shall 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
Section 6-4-13 NMSA 1978.
Section 5. DIRECTORY OF TOBACCO PRODUCT MANUFACTURERS
AND CIGARETTE BRANDS.--
A. The attorney general shall develop, maintain
and publish on its web site a directory listing all tobacco product manufacturers
that have provided current, accurate and complete certifications as required by
the Tobacco Escrow Fund Act and all brand families that are listed in those
certifications. The attorney general
shall not include or retain in the directory a nonparticipating manufacturer or
brand family if:
(1) the nonparticipating manufacturer fails to
provide the required certification or the attorney general determines that its
certification is not in compliance with Section 4 of the Tobacco Escrow Fund
Act; or
(2) the attorney general concludes that:
(a) all escrow payments required by Section
6-4-13 NMSA 1978 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
(b) all outstanding final judgments, including
interest thereon, for violations of Section 6-4-13 NMSA 1978 have not been
fully satisfied for the brand family or the nonparticipating manufacturer.
B. The attorney general shall update the
directory as necessary by adding or removing a tobacco product manufacturer or
a brand family to keep the directory in conformity with the requirements of the
Tobacco Escrow Fund Act.
C. A distributor shall provide a current
electronic mail address to the attorney general for the purpose of receiving
notifications as may be required pursuant to the Tobacco Escrow Fund Act.
Section 6. MAINTENANCE OF DIRECTORY--NOTICE.--
A. If the attorney general determines to remove
from or to not include a tobacco product manufacturer or brand family in the
directory, the attorney general shall provide by email or other practicable
means notice of the preliminary determination to the tobacco product
manufacturer's registered agent for service of process in the state; provided,
however, that if one of the bases of removal or non-inclusion in the directory
is the failure to satisfy Section 7 of the Tobacco Escrow Fund Act, the
determination shall be final and no preliminary notice shall be necessary. The tobacco product manufacturer shall have
ten business days from the date of the attorney general's notice of the
preliminary determination to the registered agent for service of process in the
state to establish, to the attorney general's satisfaction, compliance with
Section 6-4-13 NMSA 1978 and the Tobacco Escrow Fund Act.
B. If the tobacco product manufacturer fails to
establish said compliance within the ten-day period set forth above, the
attorney general shall remove from or not include the tobacco product
manufacturer or brand family in the directory.
The determination to remove from or to not include a tobacco product
manufacturer or brand family in the directory may be appealed to the district
court pursuant to the provisions of Section 39-3-1.1 NMSA 1978.
Section 7. AGENT FOR SERVICE OF PROCESS.--
A. A nonparticipating manufacturer not
registered to do business in the state shall, as a condition precedent to
having its name or its brand families listed and retained in the directory,
appoint and continually engage without interruption a registered agent in this
state for service of process on whom all process and any action or proceeding
arising out of the enforcement of the Tobacco Escrow Fund Act or Section 6-4-13
NMSA 1978 may be served. The nonparticipating
manufacturer shall provide to the attorney general the name, address and
telephone number of its agent for service of process and shall provide any
other information relating to its agent as may be requested by the attorney
general.
B. A nonparticipating manufacturer shall provide
written notice to the attorney general thirty calendar days prior to the
termination of the authority of an agent appointed pursuant to Subsection A of
this section. No less than five calendar
days prior to the termination of an existing agent appointment, a
nonparticipating manufacturer shall provide to the attorney general the name,
address and telephone number of its newly appointed agent for service of
process and shall provide any other information relating to the new appointment
as may be requested by the attorney general.
In the event an agent terminates an agency appointment, the
nonparticipating manufacturer shall notify the attorney general of the
termination within five calendar days and shall include proof to the
satisfaction of the attorney general of the appointment of a new agent.
C. A nonparticipating manufacturer whose
products are sold in this state without appointing or designating an agent as
required by this section shall be deemed to have appointed the secretary of
state as agent and may be proceeded against in the courts of this state by
service of process upon the secretary of state; provided that the appointment
of the secretary of state as agent shall not satisfy any other requirement of
the Tobacco Escrow Fund Act.
Section 8. REPORTING OF INFORMATION--ESCROW
INSTALLMENTS.--
A. A distributor shall submit to the department
by the twenty-fifth day of each month a list by brand family of the total
number of cigarettes, or equivalent stick count in the case of roll-your-own,
for which the distributor affixed tax stamps or otherwise paid the tax due
during the previous calendar month, and any other information that the
department or attorney general may require.
A distributor shall maintain and make available to the department and
attorney general all invoices and documentation of sales of all
nonparticipating manufacturer cigarettes and any other information relied upon
in reporting to the department and attorney general for a period of five years.
B. The department and attorney general shall
share information received pursuant to the Tobacco Escrow Fund Act, and may
share information with other federal, state or local agencies for purposes of
enforcement of that act, enforcement of Section 6-4-13 NMSA 1978 or enforcement
of corresponding laws of other states.
C. The attorney general may require proof from a
nonparticipating manufacturer that it has established a qualified escrow fund
with verification of the amount of money in the fund exclusive of interest,
including the balance, dates and amounts of deposits and dates and amounts of
withdrawals.
D. The attorney general and the department may
require a distributor or tobacco product manufacturer to submit additional
information as necessary to determine compliance with the Tobacco Escrow Fund
Act, including samples of the packaging or labeling of each brand family.
E. The attorney general may promulgate rules
requiring a nonparticipating manufacturer to make escrow fund deposits annually
and may require information sufficient to determine the adequacy of the amount
of the annual deposit.
F. The attorney general or the department may
seek an injunction to compel compliance with this section. In any action brought pursuant to this
subsection, the state shall be entitled to recover the costs of investigation,
costs of the action and reasonable attorney fees.
Section 9. PENALTIES AND OTHER REMEDIES.--
A. It is unlawful for a person to:
(1) affix a tax stamp or otherwise pay the tax
due on a package or other container of cigarettes of a tobacco product
manufacturer or a brand family that is not included in the directory; or
(2) sell, offer or possess for sale cigarettes of
a tobacco product manufacturer or a brand family that is not included in the
directory.
B. The secretary may revoke or suspend the
registration or license of a person licensed or registered pursuant to Section
7-12-9 or 7-12A-7 NMSA 1978 that violates Subsection A of this section.
C. Each stamp affixed, payment of tobacco tax,
offer to sell, possession for sale or sale of cigarettes in violation of Subsection
A of this section constitutes a separate violation. For each violation, the secretary may impose
a civil penalty in an amount not to exceed the greater of five thousand dollars
($5,000) or five hundred percent of the retail value of the cigarettes sold,
offered for sale or possessed for sale.
D. Cigarettes that have been sold, offered for
sale or possessed for sale in this state in violation of Subsection A of this
section are contraband, are subject to seizure and forfeiture and shall be
destroyed.
E. It is unlawful for a person to sell,
distribute, acquire, hold, own, possess, transport, import or cause to be
imported cigarettes that the person knows or should know are intended for
distribution or sale in violation of Subsection A of this section. A person who violates this subsection is
guilty of a misdemeanor and shall be sentenced in accordance with Section
31-19-1 NMSA 1978.
F. The attorney general or the department may
seek an injunction to compel compliance with or to restrain a threatened or
actual violation of Subsection A of this section. In any action brought pursuant to this
subsection, the state shall be entitled to recover the costs of investigation,
costs of the action and reasonable attorney fees, if the state prevails.
Section 10. GENERAL PROVISIONS.--
A. The attorney general and the secretary shall
promulgate rules to effectuate the purposes of the Tobacco Escrow Fund Act.
B. In an action brought by the state to enforce
the provisions of the Tobacco Escrow Fund Act, the state shall be entitled to
recover the costs of investigation, costs of the action and reasonable attorney
fees, if the state prevails.
C. If a court determines that a person has
violated a provision of the Tobacco Escrow Fund Act, the court shall order any
profits, gain, gross receipts or other benefit from the violation to be
disgorged and paid to the state treasurer for deposit in the general fund.
D. The remedies and penalties provided in the
Tobacco Escrow Fund Act are cumulative to each other and to penalties and
remedies available under other laws.
Section 11. CONSTRUCTION OF ACT.--If a court finds that a
provision of the Tobacco Escrow Fund Act and of Sections 6‑4-12 and
6-4-13 NMSA 1978 conflict and cannot be harmonized, Sections 6-4-12 and 6-4-13
NMSA 1978 shall control. If a provision
of the Tobacco Escrow Fund Act causes Sections 6‑4‑12 and 6-4-13
NMSA 1978 to no longer constitute a qualifying or model statute as those terms
are defined in the master settlement agreement, that provision shall be
invalid.
Section 12. EMERGENCY.--It is necessary for the public
peace, health and safety that this act take effect immediately.
HB 137
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