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Oregon HB 3461 introduces a change for certain tobacco manufacturers in the state. Any non-participating tobacco manufacturers—meaning they chose not to participate in a 1998 Master Settlement Agreement reached between Oregon and 45 other states and four large domestic tobacco manufacturers—must post a surety bond. The new law took effect on August 8, 2017.
In the Master Settlement Agreement (MSA), participating tobacco manufacturers agree to pay into a state fund reserved for settling state claims against the tobacco industry to recover state healthcare costs. Non-participating tobacco manufacturers pay into an escrow account based on their cigarette sales; the fund is used for the same purpose as the MSA, to settle claims made against a non-participating manufacturer. After 25 years, any money in the escrow account that has not been used to pay claims is returned to the manufacturers.
HB 3461 introduces new provisions for Oregon non-participating tobacco manufacturers, including requiring them to post a surety bond. The bond has been made a legal requirement to ensure that non-participating manufacturers make their escrow payments on time and in the correct amount. The bonds must be posted quarterly and their amount is one of the following, whichever is greater:
- The greatest required escrow amount due from the manufacturer or its predecessor for any of the 12 preceding calendar quarters
- $25,000
If the non-participating tobacco manufacturer does not make the required quarterly escrow payment within 15 days of its due date, the Attorney General can execute on the bond, meaning the state can seek payment through the surety bond. The Attorney General may also accept forms of security other than surety bonds as he or she sees fit.
Tobacco manufacturers, participating or non-participating, can contact the Oregon Department of Justice or their licensing bureau, the Department of Revenue, with questions about their rules and regulations. If you need an Oregon surety bond, get in touch with Single Source Insurance today.