Leyes del 2000

Ley Núm. 453 del año 2000

(S. B. 2704), Ley 453, 2000

To complement the “Law Regulating the Responsibility of Tobacco Product Manufacturers with the Government of Puerto Rico”

Ley Núm. 453 de 28 de diciembre de 2000

AN ACT 453 DECEMBER 28, 2000

To complement the “Law Regulating the Responsibility of Tobacco Product Manufacturers with the Government of Puerto Rico” Act 401 of September 9, 2000 so as to consider it a qualified statute under the Master Settement Agreement between the government of Puerto Rico and the tobacco product’s manufacturers.

STATEMENT OF MOTIVES

On September 9, 2000, the Governor of Puerto Rico signed Senate Bill 2343, thus converting it into Act 401. The purpose of the referenced act was to require responsibility and impede an unfair competitive advantage to the non-participating manufacturers of the Master Settlement Agreement signed on November 23, 1998 by the Government of Puerto Rico and the principal tobacco products’ manufacturers in the United States. The underlying reasons for the approval of such an act are various.

Cigarette smoking presents serious public health concerns to Puerto Rico and to the citizens of Puerto Rico. The United States Surgeon General has determined that smoking causes lung cancer, Heart disease 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 smoking.

Cigarette smoking also presents serious financial concerns for Puerto Rico. Under certain health-care programs, the Government of Puerto Rico may have a legal obligation to provide medical assistance to eligible persons for health conditions associated with cigarette smoking, and those persons may have a legal entitlement to receive such medical assistance.

Under these programs, Puerto Rico pays millions of dollars each year to provide medical assistance for these persons for health conditions associated with cigarette smoking.

Be It Enacted By The Legislative Assembly Of Puerto Rico:

Section 1.- Definitions.

For purposes of this act, the terms contained therein will be defined as follows:

a) “Adjusted for inflation” means increased in accordance with the formula for inflation adjustment set forth in Exhibit C to the Master Settlement Agreement.

b) “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. Solely for purposes of this definition, the terms “owns,” “is owned” and “ownership” mean ownership of an equity interest, or the equivalent thereof, of ten percent (10%) or more, and the term “person” means an individual, partnership, committee, association, corporation or any other organization or group of persons.

c) “Allocable share” means Allocable Share as that term is defined in the Master Settlement Agreement.

d) “Cigarette” means any product that contains nicotine, is intended to be burned or heated under ordinary conditions of use, and consists of or contains (1) any roll of tobacco wrapped in paper or in any substance not containing tobacco; or (2) tobacco, in any form, that is functional in the product, which, because of its appearance, the type of tobacco used in the filler, or its packaging and labeling, is likely to be offered to, or purchased by, consumers as a cigarette; or (3) any roll of tobacco wrapped in any substance containing tobacco which, because of its appearance, the type of tobacco used in the filler, or its packaging and labeling, is likely to be offered to, or purchased by, consumers as a cigarette described in clause (1) of this definition. The term “cigarette” includes “roll-your-own” (i.e., any tobacco which, because of its appearance, type, packaging, or labeling is suitable for use and likely to be offered to, or purchased by, consumers as tobacco for making cigarettes). For purposes of this definition of “cigarette,” 0.09 ounces of “roll-your-own” tobacco shall constitute one individual “cigarette”.

e) “Master Settlement Agreement” means the settlement agreement (and related documents) entered into on November 23, 1998 by Puerto Rico and leading United States tobacco product manufacturers.

f) “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 $1,000,000,000 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 placing the funds into escrow from using, accessing or directing the use of the funds’ principal except as consistent with section 3(b)(2) of this act.

g) “Released claims” means Released Claims as that term is defined in the Master Settlement Agreement.

h) “Releasing parties” means Releasing Parties as that term is defined in the Master Settlement Agreement.

i) “Tobacco Product Manufacturer” means an entity that after the date of enactment of this Act directly (and not exclusively through any affiliate): manufactures cigarettes anywhere that such manufacturer intends to be sold in the United States, including cigarettes intended to be sold in the United States through an importer (except where such importer is an original participating manufacturer (as that term is defined in the Master Settlement Agreement) that will be responsible for the payments under the Master Settlement Agreement with respect to such cigarettes as a result of the provisions of subsection II(mm) of the Master Settlement Agreement and that pays the taxes specified in subsection II(z) of the Master Settlement Agreement, and provided that the manufacturer of such cigarettes does not market or advertise such cigarettes in the United States); is the first purchaser anywhere for resale in the United States of cigarettes manufactured anywhere that the manufacturer does not intend to be sold in the United States; or becomes a successor of an entity described in paragraph (1) or (2).

The term “Tobacco Product Manufacturer” shall not include an affiliate of a tobacco product manufacturer unless such affiliate itself falls within any of (1) - (3) above.

j) “Units sold” means the number of individual cigarettes sold in Puerto Rico 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 Puerto Rico on packs (or “roll-your-own” tobacco containers) bearing the excise tax stamp of Puerto Rico. The Department of the Treasury shall promulgate such regulations as are necessary to ascertain the amount Puerto Rico excise tax paid on the cigarettes of such tobacco product manufacturer for each year.

Section 2.- Requirements.

Any tobacco product manufacturer selling cigarettes to consumers within Puerto Rico (whether directly or through a distributor, retailer or similar intermediary or intermediaries) after the date of enactment of this Act shall do one of the following:

(a) 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

(b) 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):

2000: $.0104712 per unit sold after the date of enactment of this act;

for each of 2001 and 2002: $.0136125 per unit sold;

for each of 2003 through 2006: $.0167539 per unit sold;

for each of 2007 and each year thereafter: $.0188482 per unit sold.

A tobacco product manufacturer that places funds into escrow pursuant to paragraph (1) 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:

-to pay a judgment or settlement on any released claim brought against such tobacco product manufacturer by the Government of Puerto Rico or any releasing party located or residing in Puerto Rico. Funds shall be released from escrow under this subparagraph (i) in the order in which they were placed into escrow and (ii) only to the extent and at the time necessary to make payments required under such judgment or settlement;

-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 Puerto Rico’s allocable share 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 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; or

-to the extent not released from escrow under subparagraphs (A) or (B), 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.

Each tobacco product manufacturer that elects to place funds into escrow pursuant to this subsection shall annually certify to the Secretary of Justice that it is in compliance with this subsection. The Secretary of Justice may bring a civil action on behalf of Puerto Rico 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 it into compliance with this section. The court, upon a finding of a violation of this subsection, may impose a civil penalty to be paid to the General Fund of the Commonwealth of Puerto Rico in an amount not to exceed 5 percent 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;

b) 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 this subsection, may impose a civil penalty to be paid to the General Fund of the Commonwealth of Puerto Rico 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

c) in the case of a second knowing violation, be prohibited from selling cigarettes to consumers within Puerto Rico (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. A tobacco product manufacturer that violates this section shall be required to pay the costs and attorney’s fees incurred by the Government of Puerto Rico during a successful prosecution under this paragraph (3).

Section 3.- Doubt or Conflict.

In the event of doubt or conflict between this act and the provisions of the Master Settlement Agreement, the defined terms, provisions and rules of the Master Settlement Agreement, in English, shall control.

Section 4.- Effectiveness.

This Act shall become effective immediately upon its approval.

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