2017 ORS 323.806¹
Required actions by manufacturers
  • liability of importers

(1) 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:

(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)(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):

(i) For 1999, $0.0094241 per unit sold after October 23, 1999.

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

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

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

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

(B) A tobacco product manufacturer that places funds into escrow pursuant to subparagraph (A) of this paragraph 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 of Oregon or any releasing party located or residing in this state. Funds shall be released from escrow under this sub-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;

(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 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

(iii) To the extent not released from escrow under sub-subparagraph (i) or (ii) of this subparagraph, 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 paragraph shall annually certify to the Attorney General that it is in compliance with this paragraph. 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 paragraph. Any tobacco product manufacturer that fails in any year to place into escrow the funds required under this paragraph shall:

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

(ii) 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 paragraph. The court, upon a finding of a knowing violation of this paragraph, 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

(iii) 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.

(2) In the case of units sold that are cigarettes manufactured outside the United States and imported into the United States by an importer:

(a) Importers shall be jointly and severally liable with the tobacco product manufacturer of the cigarettes for the escrow deposits required under subsection (1)(b)(A) of this section;

(b) Importers may be sued under subsection (1)(b)(C) of this section to the same extent as the tobacco product manufacturer, and shall be subject to all of the same civil penalties, remedies or other relief that may be awarded against the tobacco product manufacturer of the cigarettes as provided in subsection (1)(b)(C) of this section;

(c) If the importer fails or refuses within 15 days of the Attorney General’s written demand to deposit the funds into escrow for which it is jointly and severally liable under paragraph (a) of this subsection, all cigarettes imported into the United States by the importer shall constitute contraband cigarettes as defined in ORS 323.010 (Definitions for ORS 323.005 to 323.482) and shall be subject to seizure and forfeiture as provided under ORS 323.248 (Seizure and forfeiture of contraband cigarettes); and

(d) A nonparticipating manufacturer located outside the United States that conducts business in this state shall provide to the Attorney General on a form prescribed by the Attorney General a declaration from each importer that imports the cigarettes of the nonparticipating manufacturer intended for sale in this state stating that the importer accepts liability pursuant to subsection (1)(b)(A) of this section and consents to the jurisdiction of the courts of this state for the purposes of enforcing this section. [Formerly 293.535; 2017 c.687 §2]

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, becomes operative 31 days after entry of the final judgment, including amendments by section 3, chapter 687, Oregon Laws 2017, is set forth for the user’s convenience.

323.806 (Required actions by manufacturers). (1) 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:

(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)(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):

(i) For 1999, $0.0094241 per unit sold after October 23, 1999.

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

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

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

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

(B) A tobacco product manufacturer that places funds into escrow pursuant to subparagraph (A) of this paragraph 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 of Oregon or any releasing party located or residing in this state. Funds shall be released from escrow under this sub-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;

(ii) 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

(iii) To the extent not released from escrow under sub-subparagraph (i) or (ii) of this subparagraph, 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 paragraph shall annually certify to the Attorney General that it is in compliance with this paragraph. 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 paragraph. Any tobacco product manufacturer that fails in any year to place into escrow the funds required under this paragraph shall:

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

(ii) 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 paragraph. The court, upon a finding of a knowing violation of this paragraph, 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

(iii) 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.

(2) In the case of units sold that are cigarettes manufactured outside the United States and imported into the United States by an importer:

(a) Importers shall be jointly and severally liable with the tobacco product manufacturer of the cigarettes for the escrow deposits required under subsection (1)(b)(A) of this section;

(b) Importers may be sued under subsection (1)(b)(C) of this section to the same extent as the tobacco product manufacturer, and shall be subject to all of the same civil penalties, remedies, or other relief that may be awarded against the tobacco product manufacturer of the cigarettes as provided in subsection (1)(b)(C) of this section;

(c) If the importer fails or refuses within 15 days of the Attorney General’s written demand to deposit the funds into escrow for which it is jointly and severally liable under paragraph (a) of this subsection, all cigarettes imported into the United States by the importer shall constitute contraband cigarettes as defined in ORS 323.010 (Definitions for ORS 323.005 to 323.482) and shall be subject to seizure and forfeiture as provided under ORS 323.248 (Seizure and forfeiture of contraband cigarettes); and

(d) A nonparticipating manufacturer located outside the United States that conducts business in this state shall provide to the Attorney General on a form prescribed by the Attorney General a declaration from each importer that imports the cigarettes of the nonparticipating manufacturer intended for sale in this state stating that the importer accepts liability pursuant to subsection (1)(b)(A) of this section and consents to the jurisdiction of the courts of this state for the purposes of enforcing this section.

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/­ors323.­html (2017) (last ac­cessed Mar. 30, 2018).
 
2 Legislative Counsel Committee, Annotations to the Oregon Revised Stat­utes, Cumulative Supplement - 2017, Chapter 323, https://­www.­oregonlegislature.­gov/­bills_laws/­ors/­ano323.­html (2017) (last ac­cessed Mar. 30, 2018).
 
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.