21.0889.01000
Sixty-seventh
Legislative Assembly SENATE BILL NO. 2259
of North Dakota
Introduced by
Senators Lee, Davison
Representatives Dockter, M. Johnson
1 A BILL for an Act to create and enact chapter 51-25.1 of the North Dakota Century Code,
2 relating to tobacco product manufacturer certification, service, and reporting requirements; and
3 to provide a penalty.
4 BE IT ENACTED BY THE LEGISLATIVE ASSEMBLY OF NORTH DAKOTA:
5 SECTION 1. Chapter 51-25.1 of the North Dakota Century Code is created and enacted as
6 follows:
7 51-25.1-01. Definitions.
8 As used in this chapter:
9 1. "Brand family" means any style of cigarettes sold under the same trademark and
10 differentiated from one another by means of additional modifiers or descriptors,
11 including "menthol", "lights", "kings", and "100s", and includes any brand name alone
12 or in conjunction with any other word, trademark, logo, symbol, motto, selling
13 message, recognizable pattern of colors, or any other indicia of product identification
14 identical or similar to, or identifiable with, a previously known brand of cigarettes.
15 2. "Cigarette" has the same meaning as in section 51-25-01.
16 3. "Commissioner" means the tax commissioner.
17 4. "Distributor" has the same meaning as in section 57-36-01.
18 5. "Master settlement agreement" has the same meaning as in section 51-25-01.
19 6. "Nonparticipating manufacturer" means a tobacco product manufacturer that is not a
20 participating manufacturer.
21 7. "Participating manufacturer" has the same meaning as in section II(jj) of the master
22 settlement agreement of 1998.
23 8. "Qualified escrow fund" has the same meaning as in section 51-25-01.
24 9. "Tobacco product manufacturer" has the same meaning as in section 51-25-01.
Page No. 1 21.0889.01000
 Sixty-seventh
Legislative Assembly
1 10. "Units sold" has the same meaning as in section 51-25-01.
2 51-25.1-02. Certification - Directory.
3 1. Before April thirtieth of each year, a tobacco product manufacturer whose cigarettes
4 are sold in this state, whether directly or through a distributor, retailer, or similar
5 intermediary, shall execute and deliver on a form prescribed by the attorney general a
6 certification to the attorney general certifying under penalty of perjury that, as of the
7 date of the certification, the tobacco product manufacturer either is a participating
8 manufacturer or is in compliance with subsection 5 of section 51-25.1-04, subsection 2
9 of section 51-25-02, and any rules adopted under these provisions.
10 a. The participating manufacturer shall include a list of its brand families in the
11 participating manufacturer's certification. The participating manufacturer shall
12 update the list thirty calendar days before any addition to, or modification of, the
13 participating manufacturer's brand families by executing and delivering a
14 supplemental certification to the attorney general. The participating manufacturer
15 shall include an electronic mail address and facsimile number in the certification
16 to receive any notification required by this chapter.
17 b. A nonparticipating manufacturer shall include in the certification:
18 (1) A list of all the nonparticipating manufacturer's brand families and the
19 number of units sold for each brand family sold in the state during the
20 preceding calendar year;
21 (2) A list of all the nonparticipating manufacturer's brand families sold in the
22 state during the current calendar year; and
23 (a) Indicate by an asterisk any brand family sold in the state during the
24 preceding calendar year which is no longer being sold in the state as
25 of the date of certification; and
26 (b) Identify by name and address any other manufacturer of the brand
27 families in the preceding or current calendar year; and
28 (3) An electronic mail address and facsimile number to receive any notification
29 required by this chapter.
30 c. The nonparticipating manufacturer shall update its list of brand families thirty
31 days before any addition to, or modification of, the nonparticipating
Page No. 2 21.0889.01000
 Sixty-seventh
Legislative Assembly
1 manufacturer's brand families by executing and delivering a supplemental
2 certification to the attorney general.
3 d. The certification of the nonparticipating manufacturer further must certify:
4 (1) The nonparticipating manufacturer is registered to do business in the state
5 or has appointed a resident agent for service of process, and provided
6 notice thereof, as required by section 51-25.1-03.
7 (2) The nonparticipating manufacturer has:
8 (a) Established and continues to maintain a qualified escrow fund; and
9 (b) Executed a qualified escrow agreement that has been reviewed and
10 approved by the attorney general which governs the qualified escrow
11 fund.
12 (3) The nonparticipating manufacturer is in compliance with this chapter,
13 chapter 51-25, and any rules adopted under these chapters.
14 (4) With respect to a qualified escrow fund:
15 (a) The name, address, and telephone number of the financial institution
16 in which the nonparticipating manufacturer has established the
17 qualified escrow fund, and any rules adopted thereunder;
18 (b) The account number of the qualified escrow fund and any subaccount
19 number for the state;
20 (c) The amount the nonparticipating manufacturer placed in the qualified
21 escrow fund for cigarettes sold in the state during the preceding
22 calendar year, the date and amount of each deposit, and any
23 evidence or verification the attorney general deems necessary; and
24 (d) The amount and date of any withdrawal or transfer of funds the
25 nonparticipating manufacturer made at any time from the qualified
26 escrow fund or from any other qualified escrow fund into which the
27 nonparticipating manufacturer ever made any escrow payment under
28 subsection 5 of section 51-25.1-04, chapter 51-25, and any rules
29 adopted under these provisions.
30 e. A tobacco product manufacturer may not include a brand family in the
31 certification unless:
Page No. 3 21.0889.01000
 Sixty-seventh
Legislative Assembly
1 (1) In the case of a participating manufacturer, the participating manufacturer
2 affirms the brand family is the participating manufacturer's cigarettes for
3 purposes of calculating the participating manufacturer's payments under the
4 master settlement agreement for the relevant year, in the volume and
5 shares determined under the master settlement agreement; and
6 (2) In the case of a nonparticipating manufacturer, the nonparticipating
7 manufacturer affirms the brand family is to be deemed the nonparticipating
8 manufacturer's cigarettes for purposes of chapter 51-25.
9 f. This section does not limit the state's right to maintain that a brand family
10 constitutes the cigarettes of a different tobacco product manufacturer for
11 purposes of calculating payments under the master settlement agreement or for
12 purposes of chapter 51-25.
13 g. The tobacco product manufacturer shall retain all invoices and documentation of
14 sales and other information relied on for the certification for a period of five years,
15 unless otherwise required by law.
16 2. The attorney general shall develop and publish on the attorney general's website, a
17 directory listing all tobacco product manufacturers that have provided current and
18 accurate certifications conforming to the requirements of subsection 1 and all brand
19 families listed in the certifications, except as otherwise provided in this subsection.
20 a. The attorney general may not include or retain in the directory the name or brand
21 family of any tobacco product manufacturer that fails to provide the required
22 certification or whose certification the attorney general determines is not in
23 compliance with subsection 1, unless the attorney general has determined the
24 violation has been cured.
25 b. A tobacco product manufacturer or brand family may be included or retained in
26 the directory if the attorney general determines:
27 (1) In the case of a nonparticipating manufacturer, an escrow payment required
28 under subsection 5 of section 51-25.1-04 or subsection 2 of section
29 51-25-02, for any period for any brand family, whether listed by the
30 nonparticipating manufacturer, has not been fully paid into a qualified
Page No. 4 21.0889.01000
 Sixty-seventh
Legislative Assembly
1 escrow fund governed by a qualified escrow agreement approved by the
2 attorney general.
3 (2) Any outstanding final judgment, including any interest, for a violation of
4 chapter 51-25 has not been fully satisfied for the brand family and the
5 tobacco product manufacturer.
6 c. The attorney general shall update the directory as necessary to correct mistakes,
7 to add or remove a tobacco product manufacturer or brand family, and to keep
8 the directory in conformity with the requirements of this chapter.
9 3. The attorney general may not remove a tobacco product manufacturer or the tobacco
10 product manufacturer's brand family from the directory until the tobacco product
11 manufacturer has been provided at least fifteen days' notice of the intended action.
12 Notice is sufficient if sent either electronically or by facsimile to the electronic mail
13 address or facsimile number provided by the tobacco product manufacturer in the
14 tobacco product manufacturer's most recent certification filed under subsection 1.
15 4. It is unlawful for any person to sell, offer, or possess for sale in this state, cigarettes of
16 a tobacco product manufacturer or brand family not included in the directory.
17 5. A person is deemed to have received notice that cigarettes of a tobacco product
18 manufacturer or a brand family are not included in the directory maintained by the
19 attorney general under subsection 2 at the time the attorney general's website fails to
20 list any tobacco product manufacturer or brand family in the directory or at the time the
21 attorney general removes the tobacco product manufacturer or brand family from the
22 directory.
23 51-25.1-03. Agent for service of process.
24 1. Any nonresident or foreign nonparticipating manufacturer that has not registered to do
25 business in the state as a foreign corporation or business entity, as a condition
26 precedent to having the nonparticipating manufacturer's brand families included or
27 retained in the directory, shall appoint and continually engage without interruption the
28 services of an agent in this state to act as agent for service of process on whom all
29 process, and any action or proceeding against the nonparticipating manufacturer
30 concerning or arising out of the enforcement of this chapter and chapter 51-25, may
31 be served in any manner authorized by law. This service constitutes legal and valid
Page No. 5 21.0889.01000
 Sixty-seventh
Legislative Assembly
1 service of process on the nonparticipating manufacturer. The nonparticipating
2 manufacturer shall provide the name, address, telephone number, and proof of the
3 appointment and availability of the agent to the attorney general.
4 2. The nonparticipating manufacturer shall provide notice to the attorney general no less
5 than thirty days before termination of the authority of an agent. The nonparticipating
6 manufacturer shall provide proof, to the satisfaction of the attorney general, of the
7 appointment of a new agent no less than five days before the termination of an
8 existing agent appointment. If an agent terminates an agency appointment, the
9 nonparticipating manufacturer shall notify the attorney general of the termination within
10 five days and shall include proof, to the satisfaction of the attorney general, of the
11 appointment of a new agent.
12 3. A nonparticipating manufacturer whose products are sold in this state, without
13 appointing or designating an agent as required by this section, is deemed to have
14 appointed the secretary of state as the agent and the nonparticipating manufacturer
15 may be proceeded against in courts of this state by service of process upon the
16 secretary of state. The appointment of the secretary of state as the agent does not
17 satisfy the condition precedent in subsection 1 for having the nonparticipating
18 manufacturer's brand families included or retained in the directory.
19 51-25.1-04. Reporting of information - Escrow installments.
20 1. Not later than twenty days after the end of each calendar quarter, and more frequently
21 if directed by the attorney general, a distributor shall submit information the attorney
22 general requires to facilitate compliance with this chapter, including a list by brand
23 family of the total number of cigarettes or, in the case of "roll-your-own", the equivalent
24 stick count the distributor paid the excise tax due for the cigarettes. The distributor
25 shall maintain and make available to the attorney general all invoices and
26 documentation of sales of all nonparticipating manufacturer cigarettes and any
27 other information relied upon in reporting to the attorney general for a period of five
28 years. The distributor shall provide the information and documentation to the
29 commissioner, together with any other information and documentation requested
30 by the commissioner. The commissioner shall process the information and
Page No. 6 21.0889.01000
 Sixty-seventh
Legislative Assembly
1 documentation as needed by the commissioner and as needed by the attorney
2 general for the purposes of this chapter and chapter 51-25.
3 2. The commissioner may disclose to the attorney general any information in the
4 commissioner's possession requested by the attorney general for purposes of
5 determining compliance with and enforcement of this chapter. The commissioner
6 and attorney general may share the information received under this chapter, and
7 may share the information with a federal, state, or local agency for purposes of
8 enforcement of chapter 51-25, this chapter, or any equivalent law of another state.
9 3. The attorney general may require from the nonparticipating manufacturer, at any
10 time, proof from the financial institution in which the nonparticipating manufacturer
11 has established a qualified escrow fund for the purpose of compliance with
12 subsection 2 of section 51-25-02 of the amount of money in the qualified escrow
13 fund, exclusive of interest, being held on behalf of the state, and the amount and
14 date of each deposit to, and withdrawal from, the qualified escrow fund.
15 4. In addition to the information required to be submitted under chapter 51-25 and
16 this chapter, the attorney general may require a distributor or tobacco product
17 manufacturer to submit any additional information, including samples of packaging
18 or labeling of a brand family, as necessary to enable the attorney general to
19 determine whether a tobacco product manufacturer is or will continue to be in
20 compliance with this chapter and chapter 51-25.
21 5. In addition to the requirements of subsection 2 of section 51-25-02, and to promote
22 compliance with this chapter:
23 a. The