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:

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.