N.Y. Public Health Law 1399-PP – Requirements
§ 1399-pp. Requirements. Any tobacco product manufacturer selling cigarettes to consumers within the state (whether directly or through a distributor, retailer or similar intermediary or intermediaries) after the effective date of this article shall do one of the following:
Terms Used In N.Y. Public Health Law 1399-PP
- Escrow: Money given to a third party to be held for payment until certain conditions are met.
- Master settlement agreement: means the settlement agreement (and related documents) entered into on November twenty-third, nineteen hundred ninety-eight by the state and leading United States tobacco product manufacturers. See N.Y. Public Health Law 1399-OO
- Settlement: Parties to a lawsuit resolve their difference without having a trial. Settlements often involve the payment of compensation by one party in satisfaction of the other party's claims.
- Tobacco product manufacturer: means an entity that after the effective date of this article directly (and not exclusively through any affiliate):
(a) manufacturers 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 subsections 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);
(b) 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
(c) becomes a successor of an entity described in paragraph (a) or (b) of this subdivision. See N.Y. Public Health Law 1399-OO - Units sold: means the number of individual cigarettes sold in the state 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 bearing the excise tax stamp of the state, or on "roll-your-own" tobacco containers. See N.Y. Public Health Law 1399-OO
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 fifteenth of the year following the year in question the following amounts (as such amounts are adjusted for inflation):
(i) 1999: $.0094241 per unit sold after the effective date of this section;
(ii) 2000: $.0104712 per unit sold;
(iii) for each of 2001 and 2002: $.0136125 per unit sold;
(iv) for each of 2003 through 2006: $.0167539 per unit sold;
(v) for each of 2007 and each year thereafter: $.0188482 per unit sold.
(b) a tobacco product manufacturer that places funds into escrow pursuant to paragraph (a) 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:
(i) 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 subparagraph: (A) in the order in which they were placed into escrow and (B) 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 the master settlement 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 subparagraph (i) or (ii) of this paragraph, funds shall be released from escrow and revert back to such tobacco product manufacturer twenty-five 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 shall annually certify to the attorney general that it is in compliance with this subdivision. 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 subdivision. Any tobacco product manufacturer that fails in any year to place into escrow the funds required under this subdivision shall:
(i) be required within fifteen days to place such funds into escrow as shall bring it into compliance with this subdivision. The court, upon a finding of a violation of this subdivision, may impose a civil penalty to be paid to the general fund of the state in an amount not to exceed five percent of the amount improperly withheld from escrow per day of the violation and in a total amount not to exceed one hundred percent of the original amount improperly withheld from escrow;
(ii) in the case of a knowing violation, be required within fifteen days to place such funds into escrow as shall bring it into compliance with this subdivision. The court, upon a finding of a knowing violation of this subdivision, may impose a civil penalty to be paid to the general fund of the state in an amount not to exceed fifteen percent of the amount improperly withheld from escrow per day of the violation and in a total amount not to exceed three hundred percent 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 (whether directly or through a distributor, retailer or similar intermediary) for a period not to exceed two years.
Each failure to make an annual deposit required under this subdivision shall constitute a separate violation, and the tobacco product manufacturer shall be required to pay the state's costs and attorney's fees incurred during a successful prosecution under this subdivision.