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TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING ARTICLE 3 TO CHAPTER 48 OF TITLE 11 SO AS TO PROVIDE FOR ASSIGNMENTS OF ESCROW PAYMENTS UNDER THE TOBACCO MASTER SETTLEMENT AGREEMENT AND CREATE FINANCIAL INCENTIVES FOR MAKING ASSIGNMENTS OF ESCROW PAYMENTS; AND TO DESIGNATE SECTIONS 11-48-10 THROUGH 11-48-40 AS ARTICLE 1, CHAPTER 48 OF TITLE 11.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Sections 11-48-10 through 11-48-40 of the 1976 Code, as added by Act 61 of 2005, are designated as Article 1, Chapter 48 of Title 11, and entitled "Procedures and Penalties".
SECTION 2. Chapter 48 of Title 11 of the 1976 Code is amended by adding:
Section 11-48-210. (A) Notwithstanding another provision of law, a tobacco product manufacturer who elects to place funds into escrow may make an irrevocable assignment of its interest in the funds to the benefit of the State. The assignment must be permanent and must apply to all funds in the subject escrow account at the time of assignment or that may come into the account later, including those deposited into the escrow account before the assignment is executed, those deposited into the escrow account after the assignment is executed, and interest or other appreciation on the funds. Interest or other appreciation withdrawn from the subject escrow account before the time of assignment is not a part of the assignment.
(B) The tobacco product manufacturer, the Attorney General, and the financial institution at which the escrow account is maintained shall make amendments to the qualified escrow account agreement, title to the account, and the account itself as are necessary to effectuate an irrevocable assignment of rights executed pursuant to this section or a withdrawal or payment of funds from the escrow account.
(C) An assignment of rights executed pursuant to this section must be in writing and signed by a duly authorized representative of the tobacco product manufacturer making the assignment, and becomes effective upon delivery of the assignment to the Attorney General and the financial institution at which the escrow account is maintained.
Section 11-48-220. (A) Notwithstanding another provision of law, escrow funds assigned and contributed to the State, less the aggregate limitation for incentive payments to all small tobacco product manufacturers for the relevant year due from the escrow funds, must be withdrawn by the State upon request of the State Treasurer to the Attorney General and upon approval of the Attorney General. The State Treasurer shall make the request as soon as practicable and the escrow funds withdrawn must be deposited into the Health Care and Human Services Fund as created in Section 12-21-625.
(B) After the withdrawal, and after the actual incentive payments have been made from the escrow funds in the escrow account, remaining escrow funds must be withdrawn under the withdrawal procedures provided in this section, and the withdrawn escrow funds must be deposited into the Health Care and Human Services Fund. This article does not relieve a tobacco product manufacturer from past, current, or future obligations it has.
Section 11-48-230. (A) As used in this section:
(1) 'Domestic tobacco' means tobacco grown, produced, and processed entirely within the United States of America.
(2) 'Master Settlement Agreement' means the same as that term is defined in Section 11-47-20(e).
(3) 'Small tobacco product manufacturer' means an entity making an assignment:
(a) that directly, and not exclusively through any affiliate, manufactures fewer than five billion cigarettes in the calendar year in which the assignment is made;
(b) whose manufactured cigarettes contain a minimum of seventy-five percent domestic tobacco;
(c) who is not participating in the Master Settlement Agreement; and
(d) who has executed an assignment and payment to the State.
(4) 'Director' means the director of the Department of Revenue.
(5) 'Department' means the Department of Revenue.
(B)(1) A small tobacco product manufacturer who intends to apply for incentive payments pursuant to this article shall provide, by January thirty-first of the applicable year, in a written certification to the department, the information as the department may require to establish the:
(a) percentage of domestic tobacco contained in cigarettes produced by the manufacturer; and
(b) amount paid for domestic tobacco purchased by the manufacturer on or after January 1, 2005, which was used by the manufacturer in manufacturing cigarettes in the immediately preceding year.
(2) For all certifications made by an eligible manufacturer which are approved by the department, the department shall cause incentive payments to be made to the small tobacco product manufacturer. Incentive payments must be made pursuant to this section first in calendar year 2007 for calendar year 2006 manufacturing.
(C) The director, as soon as practicable but no later than thirty days after the manufacturer's certification, shall make a written certification to the Comptroller General of the amount of the incentive payment to be made to the small tobacco product manufacturer. As soon as practicable after receipt of the director's certification, but no later than fifteen days after receipt of the certification, the Comptroller General shall draw his warrant from funds in the appropriate escrow account in the proper amount in favor of the small tobacco product manufacturer.
(D)(1) For incentive payments made in 2007 for calendar year 2006, the incentive payments must equal the amount paid by the small tobacco product manufacturer for domestic tobacco that was purchased by the manufacturer on or after January 1, 2005, and was used by the manufacturer in manufacturing cigarettes in 2006; except that the aggregate incentive payments for which a small tobacco product manufacturer may be eligible for those purchases may not exceed a total sum equal to twenty-five percent of the amount that the manufacturer paid in calendar year 2005 into a qualified escrow account net of any escrow funds released and reverted to the small tobacco product manufacturer that are attributable to calendar year 2005 escrow payments in effect on June 30, 2005. The amount paid into a qualified escrow account in calendar year 2005 also shall include the amount that the small tobacco product manufacturer paid into a qualified escrow account for all calendar years before 2005 net of any escrow funds released and reverted to the manufacturer for those years as in effect on June 30, 2005.
(2) For incentive payments made in 2008 for calendar year 2007, the incentive payments must equal the amount paid by the small tobacco product manufacturer for domestic tobacco that was purchased by the manufacturer on or after January 1, 2005, and was used by the manufacturer in manufacturing cigarettes in 2007; except that the aggregate incentive payments for which a small tobacco product manufacturer may be eligible for those purchases may not exceed a total sum equal to twenty percent of the amount that the manufacturer paid in calendar year 2006 into a qualified escrow account.
(3) For incentive payments made in 2009 for calendar year 2008, the incentive payments must equal the amount paid by the small tobacco product manufacturer for domestic tobacco that was purchased by the manufacturer on or after January 1, 2005, and was used by the manufacturer in manufacturing cigarettes in 2008; except that the aggregate incentive payments for which a small tobacco product manufacturer may be eligible for those purchases may not exceed a total sum equal to fifteen percent of the amount that the manufacturer paid in calendar year 2007 into a qualified escrow account.
(4) For incentive payments made in 2010 for calendar year 2009, the incentive payments must equal the amount paid by the small tobacco product manufacturer for domestic tobacco that was purchased by the manufacturer on or after January 1, 2005, and was used by the manufacturer in manufacturing cigarettes in 2009; except that the aggregate incentive payments for which a small tobacco product manufacturer may be eligible for those purchases may not exceed a total sum equal to ten percent of the amount that the manufacturer paid in calendar year 2008 into a qualified escrow account.
(5) For incentive payments made in 2011 for calendar year 2010, the incentive payments must equal the amount paid by the small tobacco product manufacturer for domestic tobacco that was purchased by the manufacturer on or after January 1, 2005, and was used by the manufacturer in manufacturing cigarettes in 2010; except that the aggregate incentive payments for which a small tobacco product manufacturer may be eligible for those purchases may not exceed a total sum equal to five percent of the amount that the manufacturer paid in calendar year 2009 into a qualified escrow account.
(6) For incentive payments made in 2012 for calendar year 2011, the incentive payments must equal the amount paid by the small tobacco product manufacturer for domestic tobacco that was purchased by the manufacturer on or after January 1, 2005, and was used by the manufacturer in manufacturing cigarettes in 2011; except that the aggregate incentive payments for which a small tobacco product manufacturer may be eligible for those purchases may not exceed a total sum equal to five percent of the amount that the manufacturer paid in calendar year 2010 into a qualified escrow account.
(7) Incentive payments must not be made in calendar years after 2012.
Section 11-48-240. The department, within two hundred eighty days of the effective date of this article, shall develop and make publicly available guidelines governing the payments to small tobacco product manufacturers purchasing domestic tobacco. The development of those guidelines are exempt from the provisions of the Administrative Procedures Act."
SECTION 3. This act takes effect upon approval by the Governor.
This web page was last updated on Tuesday, June 23, 2009 at 2:53 P.M.