2007 ORS 323.806¹
Required actions by manufacturers

Any tobacco product manufacturer selling cigarettes to consumers within the State of Oregon (whether directly or through a distributor, retailer or similar intermediary or intermediaries) after October 23, 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)(a) 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) For 1999, $0.0094241 per unit sold after October 23, 1999.

(B) For 2000, $0.0104712 per unit sold.

(C) For each of the years 2001 and 2002, $0.0136125 per unit sold.

(D) For each of the years 2003 through 2006, $0.0167539 per unit sold.

(E) For 2007 and each year thereafter, $0.0188482 per unit sold.

(b) A tobacco product manufacturer that places funds into escrow pursuant to paragraph (a) of this subsection 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:

(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 subparagraph 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;

(B) 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 Oregon in a particular year was greater than the Master Settlement Agreement payments, as determined pursuant to section IX(i) 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 that term is defined in the Master Settlement Agreement), the excess shall be released from escrow and revert back to such tobacco product manufacturer; or

(C) To the extent not released from escrow under subparagraph (A) or (B) of this paragraph, funds shall be released from escrow and revert back to such tobacco product manufacturer 25 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 subsection shall annually certify to the Attorney General that it is in compliance with this subsection. 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 subsection. Any tobacco product manufacturer that fails in any year to place into escrow the funds required under this subsection shall:

(A) Be required within 15 days to place such funds into escrow as shall bring such manufacturer into compliance with this subsection. The court, upon a finding of a violation of this subsection, 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 such manufacturer into compliance with this subsection. 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 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 cigarettes 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. [Formerly 293.535]

Note: The amendments to 323.806 (Required actions by manufacturers) [formerly 293.535] by section 22, chapter 801, Oregon Laws 2003, become operative only if there is a final judgment that invalidates the amendments to 323.806 (Required actions by manufacturers) by section 21, chapter 801, Oregon Laws 2003. If the court enters a final judgment that invalidates the amendments to 323.806 (Required actions by manufacturers) by section 21, chapter 801, Oregon Laws 2003, the amendments to 323.806 (Required actions by manufacturers) by section 22, chapter 801, Oregon Laws 2003, become operative 31 days after entry of the final judgment. See section 25, chapter 801, Oregon Laws 2003. The text that, if the court enters a final judgment that invalidates the amendments to 323.806 (Required actions by manufacturers) by section 21, chapter 801, Oregon Laws 2003, is operative 31 days after entry of the final judgment is set forth for the user’s convenience.

323.806 (Required actions by manufacturers). Any tobacco product manufacturer selling cigarettes to consumers within the State of Oregon (whether directly or through a distributor, retailer or similar intermediary or intermediaries) after October 23, 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)(a) 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) For 1999, $0.0094241 per unit sold after October 23, 1999.

(B) For 2000, $0.0104712 per unit sold.

(C) For each of the years 2001 and 2002, $0.0136125 per unit sold.

(D) For each of the years 2003 through 2006, $0.0167539 per unit sold.

(E) For 2007 and each year thereafter, $0.0188482 per unit sold.

(b) A tobacco product manufacturer that places funds into escrow pursuant to paragraph (a) of this subsection 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:

(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 subparagraph 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;

(B) 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 this state’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 (as that term is defined in the Master Settlement Agreement), the excess shall be released from escrow and revert back to such tobacco product manufacturer; or

(C) To the extent not released from escrow under subparagraph (A) or (B) of this paragraph, funds shall be released from escrow and revert back to such tobacco product manufacturer 25 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 subsection shall annually certify to the Attorney General that it is in compliance with this subsection. 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 subsection. Any tobacco product manufacturer that fails in any year to place into escrow the funds required under this subsection shall:

(A) Be required within 15 days to place such funds into escrow as shall bring such manufacturer into compliance with this subsection. The court, upon a finding of a violation of this subsection, 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 such manufacturer into compliance with this subsection. 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 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 cigarettes 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.

Note: See note under 323.800 (Definitions for ORS 323.800 to 323.806).

Chapter 323

Notes of Decisions

This chapter was not intended to impose a tax on cigarettes sold by an Oregon distributor, to be shipped out of state and sold out of state to ultimate consumers for use out of state. Carter & Son v. Dept. of Rev., 5 OTR 379 (1974)

1 Legislative Counsel Committee, CHAPTER 323—Cigarettes and Tobacco Products, https://­www.­oregonlegislature.­gov/­bills_laws/­ors/­323.­html (2007) (last ac­cessed Feb. 12, 2009).
 
2 Legislative Counsel Committee, Annotations to the Oregon Revised Stat­utes, Cumulative Supplement - 2007, Chapter 323, https://­www.­oregonlegislature.­gov/­bills_laws/­ors/­323ano.­htm (2007) (last ac­cessed Feb. 12, 2009).
 
3 OregonLaws.org assembles these lists by analyzing references between Sections. Each listed item refers back to the current Section in its own text. The result reveals relationships in the code that may not have otherwise been apparent.