Oklahoma § 37-600.23 - Participating manufacturers – Escrow deposits

§ 37-600.23. Participating manufacturers – Escrow deposits

A. Any tobacco product manufacturer selling cigarettes to

consumers within the state, whether directly or through a

distributor, retailer or similar intermediary or intermediaries,

after July 1, 1999, 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. Place into a qualified escrow fund, by April 15 of the year

following the year in question, the following amounts, as such

amounts are adjusted for inflation:

a.

1999: ninety-four thousand two hundred forty-one onehundred-thousandths of one cent ($.0094241) per unit

sold after July 1, 1999,

b.

2000: one hundred four thousand seven hundred twelve

one-hundred-thousandths of one cent ($.0104712) per

unit sold,

c.

for each of 2001 and 2002: one hundred thirty-six

thousand one hundred twenty-five one-hundredthousandths of one cent ($.0136125) per unit sold,

d.

for each of 2003 through 2006: one hundred sixtyseven thousand five hundred thirty-nine one-hundredthousandths of one cent ($.0167539) per unit sold, and

e.

for each of 2007 and each year thereafter: one

hundred eighty-eight thousand four hundred eighty-two

one-hundred-thousandths of one cent ($.0188482) per

unit sold.

Oklahoma Statutes - Title 37. Intoxicating Liquors

B. A tobacco product manufacturer that places funds into escrow

pursuant to paragraph 2 of subsection A of this section 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:

1. 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 paragraph:

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;

2. 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 this state in a particular year was greater

than the Master Settlement Agreement payments, as determined

pursuant to Section IX(i) of that 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, unless

otherwise provided for by subsection C or D of this section; or

3. To the extent not released from escrow under paragraph 1 or

2 of this subsection, funds shall be released from escrow and revert

back to such tobacco product manufacturer twenty-five (25) years

after the date on which they were placed into escrow.

C. If this act, or any portion of the amendment to paragraph 2

of subsection B of this section made by this act, is held by a court

of competent jurisdiction to be unconstitutional, then paragraph 2

of subsection B of this section shall have no force and effect.

D. If in accordance with the provisions of subsection C of this

section, paragraph 2 of subsection B of this section shall have no

force and effect because a court of competent jurisdiction found

such provisions unconstitutional, and if, thereafter, a court of

competent jurisdiction finds that subsection B of this section

without the provisions of paragraph 2 of subsection B of this

section is unconstitutional, then paragraph 2 of subsection B of

this section shall be replaced by the provisions of paragraph 1 of

this subsection.

1. To the extent that a tobacco product manufacturer

establishes that the amount it was required to place into escrow in

a particular year was greater than the allocable share for the state

of the total payments that such manufacturer would have been

required to make in that year under the Master Settlement Agreement

(as determined pursuant to Section IX(i)(2) of the Master Settlement

Agreement, and before any of the adjustments or offsets described in

Oklahoma Statutes - Title 37. Intoxicating Liquors

Section IX(i)(3) of that Agreement other than the Inflation

Adjustment) had it been a participating manufacturer, the excess

shall be released from escrow and revert back to such tobacco

product manufacturer.

2. Neither any holding of unconstitutionality nor the rendering

of paragraph 2 of subsection B of this section to have no force and

effect shall affect, impair or invalidate any other provision of

this section, or the application of this section to any other person

or circumstance, and the remaining portions of this section shall at

all times continue in full force and effect.

E. Each tobacco product manufacturer that elects to place funds

into escrow pursuant to paragraph 2 of subsection A of this section

shall annually certify to the Attorney General that it is in

compliance with paragraph 2 of subsection A of this section. 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 section. Any tobacco product

manufacturer that fails in any year to place into escrow the funds

required under this section shall:

1. Be required within fifteen (15) days to place such funds

into escrow as shall bring it into compliance with this section.

The court, upon a finding of a violation of paragraph 2 of

subsection A or this subsection of this section, may impose a civil

penalty to be paid to the General Fund of the state in an amount not

to exceed five percent (5%) of the amount improperly withheld from

escrow per day of the violation and in a total amount not to exceed

one hundred percent (100%) of the original amount improperly

withheld from escrow;

2. In the case of a knowing violation, be required within

fifteen (15) days to place such funds into escrow as shall bring it

into compliance with this section. The court, upon a finding of a

knowing violation of paragraph 2 of subsection A or this subsection

of this section, may impose a civil penalty to be paid to the

General Fund of the state in an amount not to exceed fifteen percent

(15%) of the amount improperly withheld from escrow per day of the

violation and in a total amount not to exceed three hundred percent

(300%) of the original amount improperly withheld from escrow; and

3. 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 (2) years.

Each failure to make an annual deposit required under this

section shall constitute a separate violation.

Added by Laws 1999, c. 357, § 3, eff. July 1, 1999. Amended by Laws

2003, c. 401, § 1. Renumbered as § 2317 of Title 62 by Laws 2016,

c. 366, § 187, eff. Oct. 1, 2018. Renumbered back to original

Oklahoma Statutes - Title 37. Intoxicating Liquors

number as § 600.23 of Title 37 by Laws 2018, c. 270, § 4 (see note

for § 1 of c. 270 below).

NOTE: Laws 2016, c. 366, was conditionally effective upon passage

of State Question No. 792, Legislative Referendum No. 307, which was

adopted at election held on Nov. 8, 2016.

NOTE: Laws 2003, c. 401, § 2 provides:

"The amendments to Section 600.23 of Title 37 of the Oklahoma

Statutes made by Enrolled House Bill No. 1359 of the 1st Regular

Session of the 49th Oklahoma Legislature shall become effective

on January 1 of the year after:

1. Twenty-five states have enacted similar amendments to

their laws on early release of funds from escrow accounts

established in compliance with the statutes of other states that

are similar to the escrow requirements of Sections 600.21 through

600.23 of Title 37 of the Oklahoma Statutes; and

2. The Attorney General certifies such fact to the President

Pro Tempore of the Senate, the Speaker of the House of

Representatives, and the Secretary of State."

The Oklahoma Attorney General, on October 15, 2004, certified

that more than twenty-five states have enacted similar amendments

to their laws on early release of funds from escrow accounts

established in compliance with the statutes of those states that

are similar to the escrow requirements of Section 600.21 through

600.23 of Title 37 of the Oklahoma Statutes.

NOTE:

Laws 2018, c. 270, § 1 reads:

"SECTION 1. It is the intent of the Legislature with this

act to recodify the recodification sections, specified in this

act, in Enrolled Senate Bill No. 383 of the 2nd Session of the

55th Oklahoma Legislature. The result shall be for those

sections of law to remain codified with the respective numbering

in Title 37 of the Oklahoma Statutes for the purpose of

maintaining accuracy of the exhibits citing references to the

aforementioned sections of law as part of the Master Settlement

Agreement and the Non-Participating Manufacturer Adjustment

Arbitration Settlement Agreement."