PRINTER'S NO. 1279
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
1209
Session of
2023
INTRODUCED BY TWARDZIK AND ZIMMERMAN, MAY 19, 2023
REFERRED TO COMMITTEE ON HEALTH, MAY 19, 2023
AN ACT
Amending the act of December 30, 2003 (P.L.441, No.64), entitled
"An act requiring certifications by tobacco product
manufacturers; providing for a directory of cigarettes
approved for stamping and sale; conferring powers and
imposing duties on the Attorney General and the Department of
Revenue; and imposing penalties," in preliminary provisions,
further providing for definitions; in tobacco product
manufacturers directory, further providing for directory, for
certification, for required information, for agent for
service of process and for records and reporting and
providing for nonparticipating manufacturer and importer
joint and several liability and for surety bond requirements;
and imposing duties on the Office of Attorney General.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. The definition of "units sold" in section 102 of
the act of December 30, 2003 (P.L.441, No.64), known as the
Tobacco Product Manufacturer Directory Act, is amended and the
section is amended by adding definitions to read:
Section 102. Definitions.
The following words and phrases when used in this act shall
have the meanings given to them in this section unless the
context clearly indicates otherwise:
* * *
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
"Importer." A person in any state or territory of the United
States to whom cigarettes that are manufactured outside the
United States are shipped, delivered or consigned for resale.
* * *
"Nonparticipating Manufacturer Adjustment Settlement
Agreement." The settlement agreement and related documents
entered into on June 20, 2018, by the Commonwealth and the
participating manufacturers settling certain disputes regarding
application of adjustments to payments made pursuant to the
Master Settlement Agreement.
* * *
"Units sold." The number of individual cigarettes sold in
this Commonwealth by the applicable tobacco product manufacturer
during the year in question[, as measured by taxes collected by
the Commonwealth on packs bearing the tax stamp of the
Commonwealth required under section 1215 of the act of March 4,
1971 (P.L.6, No.2), known as the Tax Reform Code of 1971; by
taxes collected by the Commonwealth on "roll-your-own" tobacco
containers which are not required to have a tax stamp under
section 1215 of the Tax Reform Code of 1971; and by taxes
collected by the Commonwealth on cigarettes sold without a tax
stamp, when authorized by the Department of Revenue, under
section 1215(h) of the Tax Reform Code of 1971.] on which the
Commonwealth has authority under Federal law to collect State
excise tax, notwithstanding whether the State excise taxes were
imposed or collected by the Commonwealth. Cigarettes that are
exempt from State excise taxes under Federal law are
specifically excluded from this definition.
Section 2. Section 301 introductory paragraph, (1)(ii) and
(iv) of the act are amended and the paragraph is amended by
20230HB1209PN1279 - 2 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
adding a subparagraph to read:
Section 301. Directory.
The Attorney General shall develop and publish a directory of
all tobacco product manufacturers and their brand families that
have provided current and accurate certification under section
303. The directory shall be available on the Office of Attorney
General's [World Wide Web site] publicly accessible Internet
website. The following shall apply:
(1) In the case of a nonparticipating manufacturer,
neither the manufacturer nor its brand family shall be
included or retained in the directory if the Attorney General
determines that any of the following apply:
* * *
(ii) The manufacturer has failed to make any payment
required under the Tobacco Settlement Agreement Act,
including applicable penalties, for any period for any
brand family, whether or not listed by the tobacco
product manufacturer, including all payments or penalties
required from prior manufacturers of those brands, into a
qualified escrow fund approved by the Attorney General.
For purposes of retention on the directory, the
Commonwealth's recovery of any amount from execution of a
bond under section 313 shall not excuse a manufacturer's
failure to timely deposit escrow as required by the
Tobacco Settlement Agreement Act, notwithstanding if the
bond fully covers the escrow owed and any other costs,
fees or penalties that may be applicable.
* * *
(iv) The requirements of section 303(a), 304(b), 312
or 313 have not been satisfied.
20230HB1209PN1279 - 3 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
(v) The Commonwealth has executed upon a bond under
section 313 due to the manufacturer's failure to timely
deposit escrow as required. This ground for exclusion or
removal from the directory shall remain notwithstanding
whether the manufacturer's escrow obligations and other
costs were fully covered by the amount recovered by the
Commonwealth under the bond.
* * *
Section 3. Section 303(a) of the act is amended by adding a
paragraph to read:
Section 303. Certification.
(a) Required information.--A tobacco product manufacturer
whose cigarettes are sold in this Commonwealth, whether directly
or through a distributor, retailer or similar intermediary or
intermediaries, shall execute and deliver to the Attorney
General a certification under penalty of perjury that, as of the
date of the certification, the tobacco product manufacturer is
either a participating manufacturer or is in full compliance
with this act and the Tobacco Settlement Agreement Act. In the
case of a nonparticipating manufacturer, the certification shall
include a statement that:
* * *
(3) The nonparticipating manufacturer has posted the
bond required under section 313.
* * *
Section 4. Section 304(b) of the act is amended to read:
Section 304. Required information.
* * *
(b) Nonparticipating manufacturers.--A nonparticipating
manufacturer shall include in its certification the following:
20230HB1209PN1279 - 4 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
(1) A list of all of its brand families that were sold
in this Commonwealth during the preceding calendar year,
including the number of units sold for each brand family.
(2) A list of all of its brand families that have been
sold in this Commonwealth during the current calendar year.
(3) The following:
(i) The name, address and telephone number of the
financial institution where the nonparticipating
manufacturer [has] and its importers have established
[its] a qualified escrow fund.
(ii) The account number of [the] each qualified
escrow fund and [any] each subaccount number for the
escrow account established for the benefit of the
Commonwealth.
(iii) The amount the nonparticipating manufacturer
and its importers placed in [the fund] qualified escrow
funds for cigarettes sold in this Commonwealth during the
preceding calendar year, the date and amount of each
deposit and any other evidence of the deposit required by
the Attorney General.
(iv) The amount and date of any withdrawal or
transfer of funds the nonparticipating manufacturer or
its importers made from [the] qualified escrow [fund]
funds at any time or from any other qualified escrow fund
into which the nonparticipating manufacturer or its
importers made escrow payments under the Tobacco
Settlement Agreement Act.
(v) The name and address of any other manufacturer
of its brand families in the current or preceding
calendar year. A supplemental certification shall be
20230HB1209PN1279 - 5 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
filed if brand families change during the course of the
year.
(4) If the nonparticipating manufacturer's cigarettes
are manufactured outside of the United States, a complete
list of its importers into the United States who sell
cigarettes into this Commonwealth and the brand families sold
by the importers, including the importer's name, address,
contact name, phone number and email address at which the
importer can be reached, and a declaration signed by each
importer on a form prescribed by the Attorney General. The
declaration shall state the following:
(i) The importer accepts joint and several liability
with the nonparticipating manufacturer for each
obligation to place money into a qualified escrow fund
and for payment of civil penalties, costs, expenses and
attorney's fees related to the nonparticipating
manufacturer's failure to deposit escrow as required.
(ii) The importer consents to personal jurisdiction
in this Commonwealth for the purposes of claims by the
Commonwealth for any obligations to place money into a
qualified escrow fund and for payment of civil penalties,
costs, expenses and attorney's fees related to the escrow
obligations.
(iii) The importer has appointed an agent for
service of process in this Commonwealth according to the
same requirements under section 305.
(iv) The importer holds a valid permit under 26
U.S.C. § 5713 (relating to permit).
(v) The importer agrees to provide any information
required under this act.
20230HB1209PN1279 - 6 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
* * *
Section 5. Section 305 of the act is amended by adding a
subsection to read:
Section 305. Agent for service of process.
* * *
(d) Importers.--Each importer of cigarettes into the United
States of any nonparticipating manufacturer's brand families
that are sold in this Commonwealth shall appoint an agent for
service of process located in this Commonwealth pursuant to the
same requirements provided by this section. The importers shall
be subject to personal jurisdiction within this Commonwealth.
The nonparticipating manufacturer shall bear responsibility for
ensuring its importers' compliance with this act. Failure to
ensure compliance shall constitute grounds for removal of the
nonparticipating manufacturer's brand families from the
directory.
Section 6. Section 306(c) of the act is amended to read:
Section 306. Records and reporting.
* * *
(c) Disclosure.--The department may disclose to the Attorney
General any information received under this section. The
department and the Attorney General shall share information
received under this [section with other Federal, State and local
agencies as necessary to enforce this act or related laws of
other states.] chapter, the act of April 9, 1929 (P.L.343,
No.176), known as The Fiscal Code, or the act of March 4, 1971
(P.L.6, No.2), known as the Tax Reform Code of 1971, with:
(1) other Federal, State and local agencies as necessary
to determine compliance with and enforcement of this act or
related laws of other states; or
20230HB1209PN1279 - 7 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
(2) the data clearinghouse and the participating
manufacturer's counsel as provided by the Nonparticipating
Manufacturer Adjustment Settlement Agreement to determine the
proper amount of any payment, offset, adjustment or refund
pursuant to the Master Settlement Agreement or the
Nonparticipating Manufacturer Adjustment Settlement
Agreement.
* * *
Section 7. The act is amended by adding sections to read:
Section 312. Nonparticipating manufacturer and i mporter joint
and several liability.
In the case of nonparticipating manufacturers located outside
of the United States, each importer into the United States of
any nonparticipating manufacturer's brand families that are sold
in this Commonwealth shall bear joint and several liability with
the nonparticipating manufacturer for deposit of all escrow due
under section 4(a) of the Tobacco Settlement Agreement Act and
payment of all civil penalties, fees, costs and attorney fees
due under section 4(c) and (d) of the Tobacco Settlement
Agreement Act.
Section 313. Surety bond requirements.
(a) Requirements.-- All nonparticipating manufacturers shall
post a bond for the benefit of the Commonwealth, which shall be:
(1) Subject to execution under subsection (c).
(2) Conditioned on the nonparticipating manufacturer's
compliance with the requirements of this act and the Tobacco
Settlement Agreement Act.
(3) Posted by a surety bond company located within this
Commonwealth.
(4) Posted or adjusted at least 21 days prior to every
20230HB1209PN1279 - 8 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
calendar quarter.
(5) Provided to the Attorney General at least 21 days in
advance of each calendar quarter as a precondition for the
nonparticipating manufacturer and its brand families being
included on the directory for that quarter. If the amount
required to be posted under subsection (b) is equal to or
lower than the amount already posted, the nonparticipating
manufacturer shall not be required to post a new bond and may
comply with this section by providing evidence that the bond
already posted will remain in effect for the next calendar
year or quarter, whichever is applicable.
(b) Amount.--The amount of the bond required by subsection
(a) shall be the greater of:
(1) $25,000;
(2) for a nonparticipating manufacturer that deposits
escrow annually, the highest collective amount of escrow owed
in this Commonwealth by the nonparticipating manufacturer or
its predecessor for any four consecutive calendar quarters
out of the past 12 calendar quarters;
(3) for a nonparticipating manufacturer that deposits
escrow quarterly, the highest amount of escrow owed in this
Commonwealth by the nonparticipating manufacturer or its
predecessor for any of the past 12 calendar quarters; or
(4) f or a nonparticipating manufacturer that, at the
time of its application, is not included on the directory and
is applying for initial inclusion or reinclusion on the
directory, an amount determined by the Attorney General to
adequately protect the Commonwealth's interest in enforcing
the Tobacco Settlement Agreement Act and this act,
considering:
20230HB1209PN1279 - 9 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
(i) the nonparticipating manufacturer's prior sales
history selling within this Commonwealth or in other
states, territories or countries;
(ii) the nonparticipating manufacturer's history of
compliance with Federal or State tobacco regulations;
(iii) the financial state of the nonparticipating
manufacturer; and
(iv) any other factors that the Attorney General
deems pertinent to the determination.
(c) Execution upon bond.--If a nonparticipating manufacturer
that posted a bond has failed to make, or have made on its
behalf by its importer with joint and several liability, escrow
deposits equal to the full amount due for the certification
within 15 days following the due date for the certification
under section 4 of the Tobacco Settlement Agreement Act, the
Attorney General may execute upon the bond, first to recover
delinquent escrow, then to recover civil penalties and costs
authorized by section 4 of the Tobacco Settlement Agreement Act,
all of which, including escrow, shall be deposited into the
General Fund. Escrow obligations, civil penalties, costs, fees
and disgorgement of profits determined to be due under this act
or the Tobacco Settlement Agreement Act that are above the
amount collected on the bond shall remain due from the
nonparticipating manufacturer and from any importer that sold
cigarettes during the period of default. Any delinquent escrow
recovered under this subsection shall reduce the amount of
escrow due from the nonparticipating manufacturer by the dollar
amount collected.
Section 8. The following shall apply:
(1) The Office of Attorney General shall attempt to
20230HB1209PN1279 - 10 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
obtain the consent of the participating manufacturers under
the Master Settlement Agreement, as defined in section 102 of
the act, to the amendment or addition of the following
provisions of the act:
(i) The definitions of "importer," "Nonparticipating
Manufacturer Adjustment Settlement Agreement" and "units
sold" in section 102.
(ii) Section 301(1)(ii), (iv) and (v).
(iii) Section 303(a)(3).
(iv) Section 304(b).
(v) Section 305(d).
(vi) Section 306(c).
(vii) Section 312.
(viii) Section 313.
(2) If consent is obtained under paragraph (1), the
Office of Attorney General shall:
(i) provide notice to the Secretary of Revenue; and
(ii) transmit notice of the consent to the
Legislative Reference Bureau for publication in the next
available issue of the Pennsylvania Bulletin.
(3) If consent is not obtained under paragraph (1), the
Office of Attorney General shall:
(i) notify the Secretary of Revenue; and
(ii) transmit notice of the refusal to the
Legislative Reference Bureau for publication in the next
available issue of the Pennsylvania Bulletin.
Section 9. This act shall take effect as follows:
(1) This section and section 8 of this act shall take
effect immediately.
(2) The remainder of this act shall take effect 60 days
20230HB1209PN1279 - 11 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
after publication of the notice of consent under section 8(2)
(ii) of this act.
20230HB1209PN1279 - 12 -
1
2