75th OREGON LEGISLATIVE ASSEMBLY--2010 Special Session

NOTE:  Matter within  { +  braces and plus signs + } in an
amended section is new. Matter within  { -  braces and minus
signs - } is existing law to be omitted. New sections are within
 { +  braces and plus signs + } .

LC 68

                           A-Engrossed

                         House Bill 3682
                 Ordered by the House February 8
           Including House Amendments dated February 8

Sponsored by COMMITTEE ON REVENUE

                             SUMMARY

The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure.

  Creates definition of 'smokeless tobacco products' for purposes
of weight-based tax.  { + Applies to distributions of smokeless
tobacco products occurring on or after July 1, 2010. + } Allows
Attorney General to compel by subpoena information required to be
maintained by smokeless tobacco distributors. Eliminates
requirement that smokeless tobacco manufacturers pay into escrow
in proportion to volume of sales. Requires manufacturers  { + not
participating in Tobacco Master Settlement Agreement + } to make
annual escrow payments to fund foundation supporting education
about smokeless tobacco use. Allows Department of Revenue to
disclose information related to smokeless tobacco to Attorney
General for purposes of monitoring and enforcing compliance with
provisions of Smokeless Tobacco Master Settlement Agreement.
  Takes effect on 91st day following adjournment sine die.

                        A BILL FOR AN ACT
Relating to smokeless tobacco products; creating new provisions;
  amending ORS 180.477, 180.483, 180.486, 180.491, 180.494,
  323.500, 323.505, 323.810, 323.813 and 323.816; and prescribing
  an effective date.
Be It Enacted by the People of the State of Oregon:
  SECTION 1. ORS 323.500 is amended to read:
  323.500. As used in ORS 323.500 to 323.645, unless the context
otherwise requires:
  (1) 'Business' means any trade, occupation, activity or
enterprise engaged in for the purpose of selling or distributing
tobacco products in this state.
   { +  (2) 'Chewing tobacco' means loose leaf, plug or twist
tobacco, tobacco bites or bits, or other whole or coarsely
shredded leaf tobacco that is intended to be placed in the oral
cavity and consumed without being combusted. + }
    { - (2) - }   { + (3) + } 'Cigar' means a roll for smoking
that is of any size or shape and that is made wholly or in part
of tobacco, irrespective of whether the tobacco is pure or
flavored, adulterated or mixed with any other ingredient, if the
roll has a wrapper made wholly or in greater part of tobacco and
if 1,000 of these rolls collectively weigh more than three

pounds. 'Cigar ' does not include a cigarette, as defined in ORS
323.010.
    { - (3) - }   { + (4) + } 'Consumer' means any person who
purchases tobacco products in this state for the person's use or
consumption or for any purpose other than for reselling the
tobacco products to another person.
    { - (4) - }   { + (5) + } 'Contraband tobacco products' means
tobacco products or packages containing tobacco products:
  (a) That do not comply with the requirements of ORS 323.500 to
323.645;
  (b) That do not comply with the requirements of the tobacco
products tax laws of the federal government or of other states;
  (c) That bear trademarks that are counterfeit under ORS 647.135
or other state or federal trademark laws; or
  (d) That have been sold, offered for sale or possessed for sale
in this state in violation of ORS 180.486.
    { - (5) - }   { + (6) + } 'Department' means the Department
of Revenue.
    { - (6) - }   { + (7) + } 'Distribute' means:
  (a) Bringing, or causing to be brought, into this state from
without this state tobacco products for sale, storage, use or
consumption;
  (b) Making, manufacturing or fabricating tobacco products in
this state for sale, storage, use or consumption in this state;
  (c) Shipping or transporting tobacco products to retail dealers
in this state, to be sold, stored, used or consumed by those
retail dealers;
  (d) Storing untaxed tobacco products in this state that are
intended to be for sale, use or consumption in this state;
  (e) Selling untaxed tobacco products in this state; or
  (f) As a consumer, being in possession of untaxed tobacco
products in this state.
    { - (7) - }   { + (8) + } 'Distributor' means:
  (a) Any person engaged in the business of selling tobacco
products in this state who brings, or causes to be brought, into
this state from without the state any tobacco products for sale;
  (b) Any person who makes, manufactures or fabricates tobacco
products in this state for sale in this state;
  (c) Any person engaged in the business of selling tobacco
products without this state who ships or transports tobacco
products to retail dealers in this state, to be sold by those
retail dealers;
  (d) Any person, including a retail dealer, who sells untaxed
tobacco products in this state; or
  (e) A consumer in possession of untaxed tobacco products in
this state.
    { - (8) - }   { + (9) + } 'Manufacturer' means a person who
manufactures tobacco products for sale.
    { - (9) - }   { + (10) + } 'Moist snuff' means:
  (a)   { - Any - }   { + Snus or any other + } finely cut,
ground or powdered tobacco that is not intended to be smoked or
placed in a nasal cavity; or
  (b)  { + Pouches, lozenges, tobacco gum, strips, orbs, sticks
or + } any other product containing  { + finely cut, ground or
powdered + } tobacco that is intended or expected to be consumed
without being combusted.
    { - (10) - }   { + (11) + } 'Place of business' means any
place where tobacco products are sold or where tobacco products
are manufactured, stored or kept for the purpose of sale or
consumption, including any vessel, vehicle, airplane, train or
vending machine.
    { - (11) - }   { + (12) + } 'Retail dealer' means any person
who is engaged in the business of selling or otherwise dispensing
tobacco products to consumers. The term also includes the
operators of or recipients of revenue from all places such as

smoke shops, cigar stores and vending machines, where tobacco
products are made or stored for ultimate sale to consumers.
    { - (12) - }   { + (13) + } 'Sale' means any transfer,
exchange or barter, in any manner or by any means, for a
consideration, and includes and means all sales made by any
person. It includes a gift by a person engaged in the business of
selling tobacco products, for advertising, as a means of evading
the provisions of ORS 323.500 to 323.645, or for any other
purpose.
   { +  (14) 'Smokeless tobacco products' means snuff, dry snuff,
snuff flour, moist snuff, chewing tobacco, shorts, refuse scraps,
clippings, cuttings and sweepings of tobacco and all other kinds
or forms of tobacco, prepared in such a manner as to be suitable
for consumption, either orally or through the nasal cavity,
without being combusted. + }
    { - (13) - }   { + (15) + } 'Taxpayer' includes a distributor
or other person required to pay a tax imposed under ORS 323.500
to 323.645.
    { - (14) - }   { + (16) + } 'Tobacco products' means cigars,
cheroots, stogies, periques, granulated, plug cut, crimp cut,
ready rubbed { + , cavendish + } and other smoking tobacco,
 { - snuff, snuff flour, moist snuff, cavendish, plug and twist
tobacco, fine-cut and other chewing tobaccos, shorts, refuse
scraps, clippings, cuttings and sweepings of tobacco - }
 { + smokeless tobacco products + } and other kinds and forms of
tobacco, prepared in such manner as to be suitable for chewing or
smoking in a pipe or otherwise, or both for chewing and smoking,
but shall not include cigarettes as defined in ORS 323.010.
    { - (15) - }   { + (17) + } 'Untaxed tobacco products' means
tobacco products for which the tax required under ORS 323.500 to
323.645 has not been paid.
    { - (16) - }   { + (18) + } 'Wholesale sales price' means the
price paid for untaxed tobacco products to or on behalf of a
seller by a purchaser of the untaxed tobacco products.
  SECTION 2. ORS 323.505 is amended to read:
  323.505. (1) A tax is hereby imposed upon the distribution of
all tobacco products in this state. The tax imposed by this
section is intended to be a direct tax on the consumer, for which
payment upon distribution is required to achieve convenience and
facility in the collection and administration of the tax. The tax
shall be imposed on a distributor at the time the distributor
distributes tobacco products.
  (2) The tax imposed under this section shall be imposed at the
rate of:
  (a) Sixty-five percent of the wholesale sales price of cigars,
but not to exceed 50 cents per cigar;
  (b) One dollar and seventy-eight cents per ounce based on the
net weight determined by the manufacturer, in the case of
 { - moist snuff - }  { +  smokeless tobacco products + }, except
that the minimum tax under this paragraph is $2.14 per retail
container; or
  (c) Sixty-five percent of the wholesale sales price of all
tobacco products that are not cigars or   { - moist snuff - }
 { +  smokeless tobacco products + }.
  (3) For reporting periods beginning on or after July 1, 2019,
the rates of tax applicable to   { - moist snuff - }
 { + smokeless tobacco products + } under subsection (2)(b) of
this section shall be adjusted for each biennium according to the
cost-of-living adjustment for the calendar year. The Department
of Revenue shall recompute the rates for each biennium by adding
to the rates in subsection (2)(b) of this section the product
obtained by multiplying the rates in subsection (2)(b) of this
section by a factor that is equal to 0.25 multiplied by the
percentage (if any) by which the monthly averaged U.S. City
Average Consumer Price Index for the 12 consecutive months ending
August 31 of the prior calendar year exceeds the monthly averaged
U.S. City Average Consumer Price Index for the 12 consecutive
months ending August 31, 2017.
  (4) If the tax imposed under this section does not equal an
amount calculable to a whole cent, the tax shall be equal to the
next higher whole cent. However, the amount remitted to the
Department of Revenue by the taxpayer for each quarter shall be
equal only to 98.5 percent of the total taxes due and payable by
the taxpayer for the quarter.
  (5) No tobacco product shall be subject to the tax if the base
product or other intermediate form thereof has previously been
taxed under this section.
  SECTION 2a.  { + The amendments to ORS 323.500 and 323.505 by
sections 1 and 2 of this 2010 Act apply to distributions
occurring on or after July 1, 2010. + }
  SECTION 3. ORS 180.483 is amended to read:
  180.483. (1) Not later than 20 days after the end of each
calendar quarter, and more frequently if so directed by the
Attorney General, a distributor of smokeless tobacco products
subject to the requirements of ORS 323.500 to 323.645 shall
report such information as the Attorney General requires to
facilitate compliance by tobacco product manufacturers with this
section and ORS 180.471, 180.474, 180.477, 180.480, 180.486 and
323.816 and with rules adopted under ORS 180.489 and 180.491. The
information shall include, but need not be limited to, a list of
the total number of units sold of smokeless tobacco products for
which the distributor paid the tax due during the previous
calendar quarter.
  (2) A distributor shall maintain for a period of five years all
invoices and documentation of sales of smokeless tobacco products
manufactured by nonparticipating manufacturers and any other
information relied upon in reporting to the Attorney General
under subsection (1) of this section. The distributor shall make
the invoices and other documentation available to the Attorney
General upon request.
   { +  (3)(a) The Attorney General may compel by subpoena the
production of any books, papers, records or other information
required to be maintained under subsection (2) of this section
and may require any person to appear and provide testimony
pertinent to the information described in subsection (2) of this
section.  The subpoena shall have the same force and effect and
be served in the same manner as a subpoena in a civil action in
the circuit court.
  (b) If a person fails to produce any books, papers, records or
other information required to be produced, fails to appear or
testify about a matter for which testimony may be compelled or
otherwise fails to comply with a subpoena issued under this
subsection, the Attorney General may apply to the circuit court
of the county in which the person to whom the subpoena was issued
resides or may be found. The application shall be for an order
requiring the person to comply with the demand or request of the
Attorney General. The application shall be made by ex parte
motion. The order of the court shall require the person against
whom the order is directed to comply with the request or demand
of the Attorney General within 10 days after the service of the
order, or such further time as the court may grant, or justify
the failure to comply with the order within that time.
  (c) Failure to comply with an order under this subsection shall
constitute contempt of court. The remedy provided under this
paragraph shall be in addition to any other remedy provided by
law. + }
    { - (3) - }   { + (4) + } A distributor shall provide the
Attorney General with an electronic mail address so that the
Attorney General may notify the distributor of the information
required under subsections (1) and   { - (7) - }   { + (8) + } of
this section.

    { - (4) - }   { + (5) + } The Attorney General and the
Department of Revenue may share with each other information
received under this section and ORS 180.471, 180.474 and 323.520
and may share such information with federal, state or local
agencies for purposes of enforcement of this section and ORS
180.471, 180.474, 180.477, 180.480, 180.486 and 323.816, rules
adopted under ORS 180.489 and 180.491 and corresponding laws of
other states.
    { - (5) - }   { + (6) + } The Attorney General may at any
time require a nonparticipating manufacturer to produce proof
from the financial institution in which the nonparticipating
manufacturer has established a qualified escrow fund for the
purpose of compliance with ORS 323.816 of the amount of moneys in
the fund, exclusive of interest, the amount and date of each
deposit and the amount and date of each withdrawal from the fund.
    { - (6) - }   { + (7) + } The Attorney General shall, upon
request of a nonparticipating manufacturer whose compliance with
escrow requirements is at issue, provide the manufacturer with
copies of all documents upon which any proposed addition to the
escrow is based. Documents required to be provided under this
subsection include, but are not necessarily limited to, reports
under this section from distributors. The information provided to
the manufacturer under this subsection may not include
information about products of any tobacco product manufacturer
other than the one to whom the information is provided. The
information may be used only for the purpose of determining the
appropriate amount of escrow deposits.
    { - (7) - }   { + (8) + } The Attorney General may require a
distributor or a tobacco product manufacturer to submit any
additional information, including, but not limited to, samples of
the packaging and labeling of each smokeless tobacco product
manufactured or distributed, to enable the Attorney General to
determine whether a tobacco product manufacturer is in compliance
with this section and ORS 180.471, 180.474, 180.477, 180.480,
180.486 and 323.816 and with rules adopted under ORS 180.489 and
180.491.
  SECTION 4. ORS 180.486 is amended to read:
  180.486. (1) A person may not:
    { - (a) Sell, offer for sale or possess for sale in this
state smokeless tobacco products of a tobacco product
manufacturer that is not included in the directory developed
under ORS 180.477; - }
    { - (b) - }   { + (a) + } Sell, offer for sale or possess for
sale in this state smokeless tobacco products of a tobacco
product manufacturer that the person acquired at a time when the
tobacco product manufacturer was not included in the directory
developed under ORS 180.477;
    { - (c) - }   { + (b) + } Possess in this state for sale in
another jurisdiction smokeless tobacco products of a tobacco
product manufacturer that the person acquired at a time when the
tobacco product manufacturer was not included in the directory
developed under ORS 180.477   { - and was not in compliance with
the Smokeless Tobacco Master Settlement Agreement qualifying
statute in the other jurisdiction or with statutes that
supplement the qualifying statute in that jurisdiction - } ; or
    { - (d) - }   { + (c) + } Distribute, in this state, free
samples of smokeless tobacco products:
  (A) To persons under 21 years of age; or
  (B) In any area, unless access by persons under 21 years of age
to that area is prohibited.
  (2) A person who sells, offers for sale, distributes, acquires,
holds, owns, possesses, transports, imports or causes to be
imported smokeless tobacco products that the person knows or
should know are intended for sale or distribution in violation of
subsection (1) of this section commits a Class A misdemeanor.
  SECTION 5. ORS 180.491 is amended to read:
  180.491. (1) A determination by the Attorney General to omit or
remove a tobacco product manufacturer from the directory
developed under ORS 180.477 is subject to review in the manner
prescribed by ORS 183.484 for judicial review of orders in other
than contested cases.
  (2) The Attorney General may adopt rules necessary to effect
the purposes of ORS 180.465 to 180.494 { + , + }   { - and - }
323.520 (3) { +  and 323.810 to 323.816 + }.
  (3) In any action brought by the state to enforce ORS 180.471,
180.474, 180.477, 180.480, 180.483, 180.486 or 323.816, or any
rule adopted under this section or ORS 180.489, the state may
recover the costs of investigation, expert witness fees, costs of
the action and reasonable attorney fees. Moneys recovered under
this subsection shall be deposited into the Tobacco Enforcement
Fund established under ORS 180.205.
  (4) If a court determines that a person has violated any
provision of ORS 180.471, 180.474, 180.477, 180.480, 180.483,
180.486 or 323.816, or any rule adopted under this section or ORS
180.489, the court shall order any profits, gain, gross receipts
or other benefit from the violation to be disgorged and paid to
the Tobacco Enforcement Fund established under ORS 180.205.
  (5) Unless otherwise expressly provided, the remedies or
penalties provided by this section and ORS 180.486 and 180.494
are cumulative to each other and to the remedies or penalties
available under all other laws of this state.
  SECTION 6. ORS 180.494 is amended to read:
  180.494. (1) Upon a determination that a distributor has
violated ORS 180.486, the Department of Revenue may revoke or
suspend the license of the distributor in the manner provided by
ORS 323.535. Each offer to sell smokeless tobacco products in
violation of ORS 180.486 constitutes a separate violation.
  (2) Upon a determination that a person applying for a license
under ORS 323.520 has violated ORS 180.486 at any time within the
five years preceding the application, the department may refuse
to issue the license. The department shall provide opportunity
for hearing and judicial review in the manner provided in ORS
323.535.
  (3)  { - (a) - }  Upon a determination that a person has
violated ORS 180.486   { - (1)(b) or (c) - }  { +  (1)(a) or
(b) + }, the department may impose a civil penalty in an amount
not to exceed the greater of $5,000 or 500 percent of the retail
value of the smokeless tobacco products sold, offered for sale or
possessed for sale. Judicial review of an order imposing a civil
penalty shall be as provided in ORS 305.445 and 305.501.
    { - (b) Upon a determination that a person has violated ORS
180.486 (1)(a), the department may impose a civil penalty in an
amount not to exceed $5,000. Judicial review of an order imposing
a civil penalty shall be as provided in ORS 305.445 and
305.501. - }
  (4) The Attorney General may seek an injunction to restrain a
threatened or actual violation of ORS 180.483 or 180.486 by a
  { - distributor - }   { + person + } and to compel the
 { - distributor - }   { + person + } to comply with ORS 180.483
and 180.486. In any action brought pursuant to this subsection,
the state may recover the costs of investigation, the costs of
the action   { - and - }  { + , + } reasonable attorney fees { +
and a civil penalty in an amount not to exceed $5,000. The civil
penalty must be imposed in the manner provided by ORS
183.745 + }.
  (5) A person who violates ORS 180.486 (1) engages in an
unlawful practice in violation of ORS 646.608.
  SECTION 7. ORS 323.810 is amended to read:
  323.810. As used in ORS 323.810 to 323.816:
  (1) 'Adjusted for inflation' means increased in accordance with
the formula for inflation adjustment set forth in Exhibit F to
the Smokeless Tobacco Master Settlement Agreement.
  (2) 'Affiliate' means a person who directly or indirectly owns
or controls, is owned or controlled by or is under common
ownership or control with another person. For purposes of
defining ' affiliate':
  (a) 'Owns,' 'is owned' and 'ownership' mean ownership of an
equity interest, or the equivalent thereof, of 10 percent or
more; and
  (b) 'Person' means an individual, partnership, committee,
association, corporation or any other organization or group of
persons.
  (3) 'Qualified escrow fund' means an escrow arrangement with a
federally or state chartered financial institution having no
affiliation with any tobacco product manufacturer and having
assets of at least $1 billion, where such arrangement requires
that such financial institution hold the escrowed funds'
principal for the benefit of releasing parties and prohibits the
tobacco product manufacturer who is placing the funds into escrow
from using, accessing or directing the use of the escrowed funds'
principal except as consistent with ORS 323.816   { - (2)(b) - }
.
  (4) 'Released claims' has the meaning given that term in
section II(gg) of the Smokeless Tobacco Master Settlement
Agreement.
  (5) 'Releasing parties' has the meaning given that term in
section II(ii) of the Smokeless Tobacco Master Settlement
Agreement.
  (6) 'Smokeless Tobacco Master Settlement Agreement' means the
settlement agreement { +  with that title + } (and related
documents) entered into on November 23, 1998, by the State of
Oregon and leading United States tobacco product manufacturers.
  (7) 'Smokeless tobacco products' means moist snuff { +  or
chewing tobacco + },  { + both + } as defined in ORS 323.500
 { - , or chewing tobacco, as defined in section 5702 of the
Internal Revenue Code - } .
  (8)(a) 'Tobacco product manufacturer' means an entity that,
after September 28, 2009, directly (and not exclusively through
any affiliate):
  (A) Manufactures smokeless tobacco products anywhere that such
manufacturer intends to be sold in the United States, including
smokeless tobacco products intended to be sold in the United
States through an importer (except where such importer is an
Original Participating Manufacturer, as defined in section II(cc)
of the Smokeless Tobacco Master Settlement Agreement), that will
be responsible for the payments under the Smokeless Tobacco
Master Settlement Agreement with respect to such smokeless
tobacco products as a result of the provisions of section VI(b)
of the Smokeless Tobacco Master Settlement Agreement and that
pays the taxes specified in section II(w) of the Smokeless
Tobacco Master Settlement Agreement, and provided that the
manufacturer of such smokeless tobacco products does not market
or advertise such smokeless tobacco products in the United
States);
  (B) Is the first purchaser anywhere for resale in the United
States of smokeless tobacco products 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 subparagraph
(A) or (B) of this paragraph.
  (b) 'Tobacco product manufacturer' does not include an
affiliate of a tobacco product manufacturer unless such affiliate
is itself a tobacco product manufacturer under paragraph (a) of
this subsection.
  (9) 'Units sold' means the number of individual  { + unit + }
containers of smokeless tobacco products sold in the State of
Oregon 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 of Oregon. The
Department of Revenue   { - shall - }   { + may + } adopt such
rules as are necessary to ascertain the amount of state excise
tax paid on the smokeless tobacco products of such tobacco
product manufacturer for each year. A unit container shall
contain   { - 3.2 - }   { + 1.2 + } ounces of moist snuff, as
defined in ORS 323.500, or 3.0 ounces of chewing tobacco { + , as
defined in ORS 325.500 + }.
  SECTION 8. ORS 323.813 is amended to read:
  323.813. (1) The use of smokeless tobacco products presents
serious public health concerns to the State of Oregon and to the
residents of the State of Oregon. The United States Surgeon
General has determined that use of smokeless tobacco causes
cancer, noncancerous oral conditions and other serious diseases,
and that there are hundreds of thousands of tobacco-related
deaths in the United States each year. These diseases most often
do not appear until many years after the person in question
begins using tobacco products.
  (2) Use of smokeless tobacco products also presents serious
financial concerns for this state. Under certain health care
programs, the State of Oregon may have a legal obligation to
provide medical assistance to eligible persons for health
conditions associated with the use of smokeless tobacco, and
those persons may have a legal entitlement to receive such
medical assistance.
  (3) Under those health care programs, the State of Oregon pays
millions of dollars each year to provide medical assistance for
persons for health conditions associated with the use of
smokeless tobacco products.
  (4) It is the policy of the State of Oregon that financial
burdens imposed on this state by the use of smokeless tobacco be
borne by tobacco product manufacturers rather than by this state
to the extent that such manufacturers either determine to enter
into a settlement with the State of Oregon or are found culpable
by the courts.
  (5) On November 23, 1998, leading United States tobacco product
manufacturers entered into a settlement agreement, titled the
'Smokeless Tobacco Master Settlement Agreement,' with the State
of Oregon. The Smokeless Tobacco Master Settlement Agreement
obligates those manufacturers, in return for a release of past,
present and certain future claims against them as described in
the Smokeless Tobacco Master Settlement Agreement:
    { - (a) To pay substantial sums to the State of Oregon (tied
in part to their volume of sales); - }
    { - (b) - }   { + (a) + } To fund a national foundation
devoted to the interests of public health; and
    { - (c) - }   { + (b) + } To make substantial changes in
their advertising and marketing practices and corporate culture,
with the intention of reducing underage   { - smoking - }  { +
use of smokeless tobacco products + }.
  (6) It would be contrary to the policy of the State of Oregon
if those tobacco product manufacturers who determine not to enter
into such a settlement could use a resulting cost advantage to
derive large, short-term profits in the years before liability
may arise without ensuring that this state will have an eventual
source of recovery from them if they are proven to have acted
culpably. It is thus in the interest of the State of Oregon to
require that such manufacturers establish a reserve fund to
guarantee a source of compensation and to prevent such
manufacturers from deriving large, short-term profits and then
becoming judgment-proof before liability may arise.
  SECTION 9. ORS 323.816 is amended to read:
  323.816. (1) Any tobacco product manufacturer selling smokeless
tobacco products to consumers within the State of Oregon (whether
directly or through a distributor, retailer or similar
intermediary or intermediaries) after September 28, 2009,
 { + other than a tobacco product manufacturer that, as of
February 1, 2010, and for purposes of ORS 323.800 to 323.806, is
a Participating Manufacturer in the Tobacco Master Settlement
Agreement,  + }shall do one of the following:
    { - (a) Comply with the requirements imposed on Participating
Manufacturers that are set forth in sections III, V and VII of
the Smokeless Tobacco Master Settlement Agreement; or - }
    { - (b) Place into a qualified escrow fund, by April 15 of
the year following the year in question, the amount of $0.40 per
unit sold for 2010 or such amount adjusted for inflation for each
year thereafter. - }
   { +  (a) Become a participating manufacturer (as that term is
defined in section II(ee) of the Smokeless Tobacco Master
Settlement Agreement) and generally perform its obligations under
the Smokeless Tobacco Master Settlement Agreement; or
  (b) Place into a qualified escrow fund, by April 15 of the year
following the year in question, the amount of the Smokeless
Tobacco Master Settlement Agreement annual payment, as determined
pursuant to section VI(b)(6) of that agreement, that the
manufacturer would be required to pay if it were a participating
manufacturer during the year in question. The required payments
shall be calculated as if the manufacturer had become a
participating manufacturer in 2010. + }
  (2) A tobacco product manufacturer that places funds into
escrow pursuant to this section shall receive the interest or
other appreciation on such funds as earned. The 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 of
Oregon or any releasing party located or residing in this 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; { +  or + }
    { - (b) To refund any excess amount owed to a tobacco product
manufacturer when the tobacco product manufacturer establishes
that the amount it was required to place into escrow on account
of units sold in Oregon in a particular year was greater than the
Smokeless Tobacco Master Settlement Agreement payments, as
determined pursuant to section IX(c) of that agreement after
final determination of all adjustments, that the manufacturer
would have been required to make on account of such units sold
had it been a Participating Manufacturer, as defined in section
II(ee) of the Smokeless Tobacco Master Settlement Agreement;
or - }
    { - (c) - }   { + (b) + } To refund funds to a tobacco
product manufacturer 25 years after the date on which they were
placed in escrow, only if the funds were not released from escrow
under paragraph (a)   { - or (b) - }  of this subsection.
  (3) 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 of Oregon 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 15 days to place such funds into escrow
as shall bring the manufacturer into compliance with this
section. The court, upon a finding of a violation of this
section, may impose a civil penalty to be paid to the General
Fund of this 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 100 percent of the original
amount improperly withheld from escrow;
  (b) In the case of a knowing violation, be required within 15
days to place such funds into escrow as shall bring the
manufacturer into compliance with this section. The court, upon a
finding of a knowing violation of this section, may impose a
civil penalty to be paid to the General Fund of this state in an
amount not to exceed 15 percent of the amount improperly withheld
from escrow per day of the violation and in a total amount not to
exceed 300 percent of the original amount improperly withheld
from escrow; and
  (c) In the case of a second knowing violation, be prohibited
from selling smokeless tobacco products to consumers within the
State of Oregon (whether directly or through a distributor,
retailer or similar intermediary or intermediaries) for a period
not to exceed two years. Each failure to make an annual deposit
required under this section shall constitute a separate
violation.
  SECTION 10.  { + Section 11 of this 2010 Act is added to and
made a part of ORS 323.810 to 323.816. + }
  SECTION 11.  { + The Department of Revenue may disclose
information submitted to the department related to smokeless
tobacco products, tobacco product manufacturers and tobacco
retailers to the Attorney General, and such other parties as the
Attorney General determines necessary, to monitor and enforce
compliance by tobacco product manufacturers with ORS 180.465 to
180.494 and 323.810 to 323.816. + }
  SECTION 12. ORS 180.477 is amended to read:
  180.477. (1) The Attorney General shall develop and make
available for public inspection a directory listing all tobacco
product manufacturers that have provided current and accurate
certifications conforming to the requirements of ORS 180.471 and
180.474.
  (2) The Attorney General may not include or retain in the
directory the name of any nonparticipating manufacturer that
fails to provide the required certification or whose
certification the Attorney General determines is not in
compliance with ORS 180.471 and 180.474, unless the Attorney
General has determined that the violation has been cured to the
satisfaction of the Attorney General. The Attorney General shall
adopt rules defining the criteria by which the Attorney General
will exercise the discretion granted by this subsection.
  (3) The Attorney General may not include or retain in the
directory a nonparticipating manufacturer if the Attorney General
concludes that:
  (a) Any escrow payment required from the nonparticipating
manufacturer pursuant to ORS 323.816 for any period has 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) Any outstanding final judgment against the nonparticipating
manufacturer, including interest thereon, for a violation of ORS
323.816 has not been fully satisfied.
  (4) The Attorney General shall update the directory in order to
correct mistakes and to add or remove a tobacco product
manufacturer to keep the directory in conformity with the
requirements of this section. The Attorney General shall update
the directory with new tobacco product manufacturers upon receipt
of an annual or supplemental certification listing new tobacco
product manufacturers if the Attorney General determines that the
annual or supplemental certification is in compliance with the
requirements of ORS 180.471 and 180.474. The Attorney General
shall make the determination about compliance within 45 days of
receipt of the certification.
  (5) The Attorney General shall:

  (a) Create and maintain a list of persons, including but not
limited to tobacco product manufacturers and distributors, that
are interested in receiving electronic mail notifications of
changes in the directory developed under this section;
  (b) Develop a registration form to be completed by persons
interested in receiving electronic mail notification of changes
in the directory developed under this section that are not
otherwise required by ORS 180.483   { - (3) - }   { + (4) + } or
rules adopted under ORS 180.489 and 180.491 to submit their
electronic mail addresses to the Attorney General; and
  (c) Immediately upon making any change in the directory
developed under this section, send electronic mail notices of the
change to all persons on the list created under this subsection.
  SECTION 13.  { + This 2010 Act takes effect on the 91st day
after the date on which the special session of the Seventy-fifth
Legislative Assembly adjourns sine die. + }
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