House Bill hb1459
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Florida House of Representatives - 2002 HB 1459
By Representatives Henriquez, Ross, Seiler, Mayfield,
Greenstein, Ausley and Gelber
1 A bill to be entitled
2 An act relating to the Florida Cigarette
3 Anti-Conduit Act; creating pt. III of ch. 210,
4 F.S.; providing a short title; providing
5 findings and purposes; providing definitions;
6 prohibiting shipment and sale of certain
7 cigarettes; requiring the Division of Alcoholic
8 Beverages and Tobacco of the Department of
9 Business and Professional Regulation to prepare
10 a list of cigarettes approved for shipment and
11 sale; providing criteria and requirements for
12 such list; requiring certain cigarette
13 manufacturers to provide to the division
14 certain certifications; providing for a
15 determination of compliance; providing
16 construction; requiring permitholders to report
17 certain information to the division; providing
18 for administrative penalties; providing for
19 injunctive relief; providing for bringing
20 actions against certain manufacturers for
21 certain violations; providing for appellate
22 court review of certain actions of the
23 division; providing for stays of actions of the
24 divisions under certain circumstances;
25 authorizing the division to revise certain
26 lists for certain purposes; authorizing the
27 division and the Attorney General to share
28 certain information; authorizing the division
29 and the Attorney General to conduct certain
30 audits; prohibiting issuance of certain permits
31 under certain circumstances; specifying due
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1 dates for certain reports, submissions, and
2 transmissions required under the act; providing
3 an effective date.
4
5 Be It Enacted by the Legislature of the State of Florida:
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7 Section 1. Part III of chapter 210, Florida Statutes,
8 consisting of sections 210.81, 210.82, 210.83, 210.84, 210.85,
9 210.86, 210.87, 210.88, 210.89, 210.90, 210.91, and 210.92,
10 Florida Statutes, is created to read:
11 210.81 Short title.--This part may be cited as "The
12 Cigarette Anti-Conduit Act."
13 210.82 Findings and purposes.--
14 (1) It is the policy of this state to reduce cigarette
15 smoking by minors and adults who are residents of this state.
16 According to public health authorities, higher cigarette
17 prices help reduce cigarette consumption.
18 (2) In 1997 and 1998, leading United States cigarette
19 manufacturers entered into settlement agreements with this
20 state and other states and territories, resolving various
21 lawsuits brought by those states and territories against those
22 manufacturers.
23 (3) Under the settlement agreement with this state
24 dated August 25, 1997, defined in s. 215.56005 as the tobacco
25 settlement agreement, leading cigarette manufacturers agreed
26 to make annual payments to the state. These payments are tied
27 to each such manufacturer's share of cigarette sales for
28 consumption in the United States. If the national market
29 share of any of these manufacturers declines, its payments to
30 this state under the tobacco settlement agreement decline.
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1 (4) Under the settlement agreement with these
2 cigarette manufacturers and others dated November 23, 1998,
3 known as the Master Settlement Agreement, 46 states and 6
4 territories have enacted a law, known as the MSA statute,
5 which requires tobacco product manufacturers to:
6 (a) Sign the Master Settlement Agreement and thereby
7 become participating manufacturers responsible for making
8 settlement payments as specified in the Master Settlement
9 Agreement; or
10 (b) Remain nonparticipating manufacturers and thereby
11 become responsible for making specified payments into escrow
12 accounts for sales of their cigarettes to consumers in those
13 states and territories.
14 (5) The Master Settlement Agreement and the MSA
15 statutes enacted by MSA states directly benefit the people of
16 this state in the following ways:
17 (a) By requiring each tobacco product manufacturer to
18 make either settlement payments or escrow payments, as the
19 case may be, they ensure higher prices for cigarettes, which
20 public health authorities believe help reduce cigarette
21 consumption.
22 (b) By requiring nonparticipating manufacturers to
23 make escrow payments, the MSA statutes directly protect the
24 payments this state receives under the tobacco settlement
25 agreement by preventing nonparticipating manufacturers from
26 using their cost advantage vis-a-vis the participating
27 manufacturers as a result of the Master Settlement Agreement
28 to siphon sales from such manufacturers.
29 (6) Some nonparticipating manufacturers are
30 circumventing or may attempt to circumvent the escrow payment
31 requirements of the MSA statutes enacted by MSA states by
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1 using this state as a conduit, selling their cigarettes to
2 distributors in this state for transhipment to states and
3 territories covered by the Master Settlement Agreement and
4 then claiming that the MSA statutes do not require them to
5 make escrow payments for sales of the transhipped cigarettes
6 in those states and territories. As a result of such
7 circumvention, the prices of cigarettes of such
8 nonparticipating manufacturers in this state do not reflect
9 the escrow payments required by the MSA statutes enacted by
10 the MSA states.
11 (7) Such circumvention undermines the policy of this
12 state to reduce smoking by the residents of this state by
13 enabling such nonparticipating manufacturers to offer
14 significantly lower prices than the tobacco product
15 manufacturers that must make annual settlement payments under
16 the Master Settlement Agreement and the nonparticipating
17 manufacturers that make such escrow payments. It also
18 threatens the payments that are due this state under the
19 tobacco settlement agreement by siphoning sales from the
20 manufacturers whose payments to this state are tied to their
21 national market share. Finally, the use of this state as a
22 conduit to circumvent the laws of other states is generally
23 contrary to the public policy of this state.
24 (8) Prohibiting the shipment or sale of cigarettes of
25 a nonparticipating manufacturer that has not made all escrow
26 payments required by the MSA statutes of the MSA states will
27 help ensure that the nonparticipating manufacturer will make
28 such payments, thereby serving this state's policies of:
29 (a) Reducing smoking by its residents.
30 (b) Protecting payments to this state under the
31 tobacco settlement agreement.
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1 (c) Avoiding the use of this state as a conduit to
2 circumvent the laws of other states and territories.
3 210.83 Definitions.--As used in this part:
4 (1) "Brand family" means all styles of cigarettes sold
5 under the same trademark and differentiated from one another
6 by means of additional modifiers, including, but not limited
7 to, "menthol," "lights," "kings," and "100s."
8 (2) "Cigarette" means any product that contains
9 nicotine, is intended to be burned or heated under ordinary
10 conditions of use, and consists of or contains:
11 (a) Any roll of tobacco wrapped in paper or in any
12 substance not containing tobacco;
13 (b) Tobacco, in any form, that is functional in the
14 product, which, because of its appearance, the type of tobacco
15 used in the filler, or its packaging and labeling, is likely
16 to be offered to, or purchased by, consumers as a cigarette;
17 or
18 (c) Any roll of tobacco wrapped in any substance
19 containing tobacco which, because of its appearance, the type
20 of tobacco used in the filler, or its packaging and labeling,
21 is likely to be offered to, or purchased by, consumers as a
22 cigarette described in paragraph (a). The term "cigarette"
23 includes "roll-your-own," meaning any tobacco which, because
24 of its appearance, type, packaging, or labeling, is suitable
25 for use and likely to be offered to, or purchased by,
26 consumers as tobacco for making cigarettes. For purposes of
27 this definition of "cigarette," 0.09 ounces of "roll-your-own"
28 tobacco shall constitute one individual "cigarette."
29 (3) "Division" means the Division of Alcoholic
30 Beverages and Tobacco of the Department of Business and
31 Professional Regulation.
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1 (4) "Master Settlement Agreement" means the settlement
2 agreement and related documents entered into on November 23,
3 1998, by the MSA states and certain tobacco product
4 manufacturers, and subsequently entered into by certain other
5 tobacco product manufacturers.
6 (5) "MSA state" means a settling state as defined in
7 section II(qq) of the Master Settlement Agreement.
8 (6) "MSA statute" means the law enacted by an MSA
9 state to implement Exhibit T to the Master Settlement
10 Agreement.
11 (7) "Nonparticipating manufacturer" means any tobacco
12 product manufacturer that is not a participating manufacturer,
13 as defined in subsection (8).
14 (8) "Participating manufacturer" means a participating
15 manufacturer as that term is defined in section II(jj) of the
16 Master Settlement Agreement and any amendments to such
17 section.
18 (9) "Permitholder" means a person who holds a permit
19 as a wholesale dealer or exporter under Part I or as a
20 distributor under Part II.
21 (10) "State" means any state or territory of the
22 United States.
23 (11) "Tobacco product manufacturer" means a tobacco
24 product manufacturer as that term is defined in section II(uu)
25 of the Master Settlement Agreement.
26 210.84 Prohibition against shipment and sale of
27 certain cigarettes.--It is unlawful for a permitholder to
28 ship, sell, or possess for sale or resale to any person in
29 this state or another state cigarettes belonging to a brand
30 family not included on the list provided by the division to
31 the permitholder under s. 210.85.
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1 210.85 List of cigarettes approved for shipment and
2 sale.--The division shall annually prepare, and not later than
3 July 15 of each year shall transmit to all permitholders and
4 post on the website of the division, a list of all brand
5 families manufactured for sale to consumers within the United
6 States by:
7 (1) Each tobacco product manufacturer that by May 1 of
8 such year has provided the division the certification and
9 information specified in s. 210.86(1).
10 (2) Each tobacco product manufacturer as to which the
11 division has made the determination described in s. 210.87(2).
12 210.86 Inclusion on list.--
13 (1) PARTICIPATING MANUFACTURERS.--The division shall
14 include on the list described in s. 210.85 all brand families
15 manufactured for sale to consumers within the United States by
16 each tobacco product manufacturer that has provided to the
17 division, not later than May 1 of the year in question or
18 previously, a certification, under penalty of perjury, that
19 such manufacturer is a participating manufacturer and the
20 names of all such brand families. Such a tobacco product
21 manufacturer shall be deemed to be the manufacturer of all
22 those cigarettes, but only those cigarettes, that are counted
23 as its cigarettes for purposes of calculating its payments
24 under the Master Settlement Agreement for the year in
25 question.
26 (2) NONPARTICIPATING MANUFACTURERS.--The division
27 shall include on the list described in s. 210.85 all brand
28 families manufactured for sale to consumers within the United
29 States by each nonparticipating manufacturer that has provided
30 the division, not later than May 1 of the year in question,
31 the certification described in s. 210.87, but only if the
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1 division has determined that such certification is true and
2 correct, and the names of all such brand families. A
3 nonparticipating manufacturer shall be deemed to be the
4 manufacturer of all cigarettes as to which it is the first
5 purchaser anywhere for resale in the United States of
6 cigarettes manufactured anywhere that the manufacturer of such
7 cigarettes did not intend to be sold in the United States.
8 210.87 Determination by division.--
9 (1) CERTIFICATION BY NONPARTICIPATING
10 MANUFACTURER.--For the brand families of a nonparticipating
11 manufacturer that sells, whether directly or through a
12 distributor or similar intermediary or intermediaries,
13 cigarettes to any permitholder to be eligible for inclusion in
14 the list described in s. 210.85, such manufacturer, not later
15 than May 1 of the year in question, under penalty of perjury,
16 shall provide to the division:
17 (a) A certification that such manufacturer:
18 1. Will make all escrow payments required by the MSA
19 statute of each MSA state for all cigarettes of such
20 nonparticipating manufacturer that shall be sold to consumers
21 within each such MSA state through April 30 of the year
22 following the year in which such certification is provided.
23 2. Has made all escrow payments required by the MSA
24 statute of each MSA state for cigarettes of such
25 nonparticipating manufacturer that were sold to consumers
26 within each such MSA state during the preceding calendar year.
27 (b) Such information as the division shall require to
28 determine whether such certification is true and correct.
29 (2) DETERMINATION OF COMPLIANCE.--A nonparticipating
30 manufacturer shall be determined to have made a true and
31 correct certification under subsection (1) if the division
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1 determines that the total amount of the escrow payments made
2 by the nonparticipating manufacturer in all MSA states for
3 cigarettes of the nonparticipating manufacturer that were sold
4 to consumers within all such states during the preceding year
5 is equal to the product of:
6 (a) The applicable per-unit amount specified in the
7 MSA statutes of such states, including all adjustments for
8 inflation; and
9 (b) The number of units of cigarettes manufactured by
10 the nonparticipating manufacturer that were sold to consumers
11 within all MSA states during the preceding year,
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13 provided, the division may determine that a nonparticipating
14 manufacturer has made a true and correct certification under
15 subsection (1) if the nonparticipating manufacturer
16 demonstrates that the MSA statutes of all MSA states required
17 the nonparticipating manufacturer to make total payments for
18 the preceding year in some other amount and such manufacturer
19 has made such payments.
20 (3) NOTICE OF DETERMINATION.--The division shall
21 promptly notify the nonparticipating manufacturer and the
22 Attorney General of any determination made under this section.
23 (4) DEFINITION.--For purposes of this section,
24 references to cigarettes sold to consumers within a state
25 include any cigarettes sold to consumers within the state,
26 whether sold by the manufacturer directly or by a distributor,
27 retailer, or similar intermediary or intermediaries.
28 210.88 Reports by permitholders.--Not later than 30
29 days after the end of each quarter, and more frequently if
30 required by the division, each permitholder shall report to
31 the division all shipments of cigarettes to persons in this
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1 state and other states during the preceding calendar quarter.
2 The report shall state, by nonparticipating manufacturer and
3 brand family, the quantity of cigarettes shipped to persons in
4 each such state.
5 210.89 Administrative penalties and injunctive
6 relief.--
7 (1) PENALTIES.--Upon a finding by the division that a
8 permitholder has violated s. 210.84, the division may impose
9 upon the permitholder a civil penalty in an amount not to
10 exceed the greater of 500 percent of the retail value of the
11 cigarettes shipped in violation of s. 210.84 or $5,000. Upon
12 a finding by the division that a permitholder has violated s.
13 210.88, the division may impose upon the permitholder a
14 penalty in an amount not to exceed $5,000. Upon a finding of
15 a second or subsequent violation by a permitholder of s.
16 210.84 or s. 210.88, the division may suspend or revoke the
17 license of the permitholder.
18 (2) INJUNCTIONS.--The Attorney General, on behalf of
19 the division, shall seek an injunction to restrain a
20 permitholder from shipping cigarettes in violation of s.
21 210.84 or to compel a permitholder to submit the information
22 required by s. 210.88.
23 (3) ACTIONS AGAINST NONCOMPLIANT MANUFACTURERS.--Based
24 on credible information provided by authorities in an MSA
25 state or other credible information, the Attorney General
26 shall bring an action in the Circuit Court of Leon County
27 against a nonparticipating manufacturer for filing a false
28 certification in violation of s. 210.87. Upon a finding that
29 the nonparticipating manufacturer has filed a false
30 certification under s. 210.87(1)(a)2. or has fraudulently or
31 intentionally filed a false certification under s.
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1 210.87(1)(a)1., the court shall issue a permanent injunction
2 prohibiting the nonparticipating manufacturer from selling
3 cigarettes, directly or through a distributor or other
4 intermediary or intermediaries, to permitholders and consumers
5 within the state for a period not to exceed 2 years.
6 210.90 Review of division's determination.--If the
7 division determines to exclude or remove from the list
8 described in s. 210.85 the brand families of a
9 nonparticipating manufacturer that timely submitted to the
10 division the certification and information described in s.
11 210.87(1)(b), such nonparticipating manufacturer may challenge
12 such determination as erroneous and seek relief from such
13 determination by bringing an action in the appellate district
14 in which the division maintains its headquarters or where a
15 party resides or as otherwise provided by law to challenge the
16 division's determination. Upon the filing of such an action,
17 the division's determination shall be stayed for 20 days. The
18 court may extend the stay upon a showing by the
19 nonparticipating manufacturer, after notice to the division,
20 that such manufacturer has a substantial probability of
21 success in the action and would suffer irreparable injury in
22 the absence of a stay.
23 210.91 Additional authority of division and the
24 Attorney General.--
25 (1) REVISION OF LIST.--Each month the division shall
26 update the list described in s. 210.85 in order to correct
27 mistakes and to remove or add brand families, including brand
28 families of nonparticipating manufacturers that have failed to
29 make escrow payments required by the MSA statute of an MSA
30 state, or that have corrected such failures, and new brand
31 families of participating manufacturers.
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1 (2) INFORMATION SHARING.--The division and the
2 Attorney General may share with each other, with other
3 authorities within this state, and with authorities in other
4 states the information they receive under this part, including
5 audits under subsection (3), and may combine such information
6 with information received from authorities in other states for
7 purposes of analysis and enforcement.
8 (3) AUDITS.--The Attorney General and the division may
9 audit, or engage others to audit, information supplied by
10 nonparticipating manufacturers under s. 210.87(1) and the
11 division may audit the information supplied by permitholders
12 under s. 210.88.
13 210.92 Applicants for permits.--No person shall be
14 issued a permit to act as a permitholder unless such person
15 has certified, under penalty of perjury, that such person will
16 comply fully with this part.
17 Section 2. For the year 2002:
18 (1) The reports of permitholders required by s.
19 210.88, Florida Statutes, shall be due 30 days after the
20 effective date of this act.
21 (2) The submissions of participating manufacturers
22 described in s. 210.86(1), Florida Statutes, and the
23 certifications of nonparticipating manufacturers described in
24 s. 210.87(1), Florida Statutes, shall be due 45 days after the
25 effective date of this act.
26 (3) The transmission by the Division of Alcoholic
27 Beverages and Tobacco of the Department of Business and
28 Professional Regulation to permitholders and the website
29 posting under s. 210.85, Florida Statutes, shall be due 90
30 days after the effective date of this act.
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1 Section 3. This act shall take effect upon becoming a
2 law.
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4 *****************************************
5 HOUSE SUMMARY
6
Creates pt. III of ch. 210, Florida Statutes, as the
7 Florida Cigarette Anti-Conduit Act to protect payments to
this state by cigarette manufacturers of agreed to
8 amounts specified in the tobacco settlement agreement and
the Master Settlement Agreement to resolve various
9 lawsuits brought by states against those manufacturers
and to prevent this state from being used as a conduit by
10 nonparticipating manufacturers to avoid paying amounts
under those agreements to the various states, by selling
11 their cigarettes to distributors in this state for
transhipment to signatory states to the agreements. See
12 bill for details.
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