89R10741 MCF-F
By: Parker S.B. No. 1698
A BILL TO BE ENTITLED
AN ACT
relating to the sale of certain e-cigarettes in this state and a
directory of e-cigarette manufacturers and their products;
authorizing fees; authorizing administrative and civil penalties;
creating a criminal offense.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 161, Health and Safety Code, is amended
by adding Subchapter I to read as follows:
SUBCHAPTER I. E-CIGARETTE DIRECTORY
Sec. 161.0951. DEFINITIONS. In this subchapter:
(1) "Directory" means the e-cigarette directory
maintained by the comptroller under Section 161.0954.
(2) "Distributor" means a person who:
(A) receives from a manufacturer e-cigarette
products for a first sale in this state or otherwise brings or
causes to be brought into this state e-cigarette products for sale,
use, or consumption;
(B) manufactures or produces e-cigarette
products; or
(C) ships, transports, or imports into this state
e-cigarette products manufactured or produced outside the United
States for a first sale in this state.
(3) "E-cigarette" has the meaning assigned by Section
161.081.
(4) "Retailer" means a person who engages in the sale
of e-cigarettes to consumers and includes the owner of a
coin-operated e-cigarette vending machine. The term includes an
e-cigarette retailer as defined by Section 147.0001.
(5) "Wholesaler" means a person, including a
manufacturer's representative, who sells or distributes
e-cigarettes in this state for resale but who is not a distributor
or interstate warehouse.
Sec. 161.0952. APPLICABILITY. This subchapter applies only
to an e-cigarette that contains nicotine.
Sec. 161.0953. CERTIFICATION AND FEES. (a) Each
manufacturer of e-cigarettes sold in this state, whether directly
or through an importer, distributor, wholesaler, retailer, or
similar intermediary, shall annually certify under penalty of
perjury, on a form the comptroller prescribes, that the
manufacturer agrees to comply with this subchapter and:
(1) the manufacturer holds for the manufacturer's
e-cigarettes a marketing authorization or similar order issued by
the United States Food and Drug Administration under 21 U.S.C.
Section 387j; or
(2) the e-cigarette manufactured by the manufacturer
was marketed in the United States as of August 8, 2016, and the
manufacturer submitted a premarket tobacco product application for
the e-cigarette to the United States Food and Drug Administration
under 21 U.S.C. Section 387j before September 8, 2020, and either:
(A) the application is under review by the United
States Food and Drug Administration; or
(B) a final decision on the application has not
taken effect.
(b) Each manufacturer of e-cigarettes shall submit a
separate certification form under Subsection (a) for each
e-cigarette product the manufacturer sells in this state.
(c) A manufacturer required to submit a certification form
under Subsection (a) shall, at the time of certification, submit to
the comptroller:
(1) either, as applicable:
(A) a copy of the marketing authorization or
other order for the e-cigarette issued by the United States Food and
Drug Administration under 21 U.S.C. Section 387j; or
(B) evidence the premarket tobacco product
application for the e-cigarette was submitted to the United States
Food and Drug Administration and a final authorization or order has
not taken effect; and
(2) a fee of $2,500.
(d) A manufacturer required to submit a certification form
under Subsection (a) shall notify the comptroller not later than
the 30th day after the date the certification form is submitted of
any material change to the information included in the
certification form, including:
(1) the subsequent issuance or denial of a marketing
authorization or other order by the United States Food and Drug
Administration under 21 U.S.C. Section 387j; and
(2) any other order issued or action taken by the
United States Food and Drug Administration that affects the ability
of the e-cigarette to be introduced or delivered into interstate
commerce for commercial distribution in the United States.
(e) The form the comptroller prescribes under this section
must include the brand name, product name, flavor, and category of
the e-cigarette product certified by the manufacturer.
(f) The information a manufacturer submits under this
section is exempt from disclosure under Chapter 552, Government
Code. A manufacturer may redact certain confidential commercial or
financial information on the documents required under Subsection
(c).
Sec. 161.0954. E-CIGARETTE DIRECTORY. (a) The comptroller
shall maintain a directory listing all e-cigarette manufacturers
and e-cigarettes, including the brand name, product name, flavor,
and category of e-cigarette product, for which the required forms,
fees, and certifications have been submitted to the comptroller
under Section 161.0953.
(b) The comptroller shall post the directory on the
comptroller's publicly accessible Internet website and update the
directory monthly to comply with this subchapter.
(c) The comptroller shall establish a process by which
importers, distributors, wholesalers, retailers, and other
relevant parties may receive notification of directory updates for
the preceding month.
Sec. 161.0955. OUT-OF-STATE MANUFACTURERS AND IMPORTERS.
(a) A manufacturer not registered to conduct business in this state
must designate and continually engage the services of a registered
agent in this state.
(b) A manufacturer not located in the United States may only
employ or contract with an importer who designates a registered
agent in this state whose services the importer continually
engages.
(c) A manufacturer described by Subsection (a) or (b) must
provide to the comptroller any information the comptroller requests
about the registered agent designated by the manufacturer or the
manufacturer's importer, as applicable, including the agent's name,
address, and telephone number.
(d) A manufacturer shall provide written notice to the
comptroller not later than the 30th day before the date the
manufacturer or the manufacturer's importer, as applicable,
terminates a registered agent's designation. Not later than the
fifth day before the date the termination is effective, the
manufacturer shall provide to the comptroller any information about
the replacement the comptroller requests, including the name,
address, and telephone number of the newly appointed registered
agent.
(e) If the registered agent terminates an agency
designation, the manufacturer shall:
(1) notify the comptroller not later than the fifth
day after the date of the termination; and
(2) include proof satisfactory to the comptroller that
a new agent has been appointed.
(f) A manufacturer not registered to conduct business in
this state must file with the comptroller a surety bond or other
cash security payable to this state in the amount of $25,000. The
bond must be posted by a corporate surety located in the United
States. The surety bond or cash security must be conditioned on the
performance by the manufacturer of all requirements and obligations
under this subchapter.
(g) The liability of the surety of a bond described by
Subsection (f) may not exceed the amount of the bond for the payment
of fines, penalties, and costs of seizure, destruction, and
disposal imposed on a manufacturer under this subchapter.
(h) If payment executed from a bond under Subsection (g) is
required, the comptroller may require a manufacturer to submit to
the comptroller an additional bond or cash security.
(i) The comptroller may not include in the directory a
manufacturer who has not complied with this section or the
manufacturer's e-cigarettes.
Sec. 161.0956. SURETY RELEASE FROM LIABILITY. (a) The
comptroller shall release and discharge from liability to this
state a surety on a bond a manufacturer furnishes in accordance with
Section 161.0955 on the 60th day after the date the surety company
files with the comptroller a written request to be released and
discharged.
(b) A request described by Subsection (a) does not relieve,
release, or discharge the surety company from a liability accrued
before expiration of the 60 days.
(c) The comptroller, promptly on receipt of the request
under Subsection (a), shall notify the manufacturer who furnished
the bond that unless the manufacturer, before the expiration date
of the existing security, files with the comptroller a new bond with
a surety company located in the United States, or other authorized
security, in the amount required by Section 161.0955, the
comptroller shall remove the manufacturer and the manufacturer's
e-cigarettes from the directory.
Sec. 161.0957. EXCLUSION AND REMOVAL FROM DIRECTORY. (a)
The comptroller may not include or retain in the directory a
manufacturer or a specific e-cigarette produced by that
manufacturer if the manufacturer:
(1) failed to provide a complete and accurate
certification form, including the fee, required under Section
161.0953 with respect to an e-cigarette;
(2) sold an e-cigarette in this state for which either
the e-cigarette or the manufacturer was not certified in accordance
with this subchapter; or
(3) provided in the manufacturer's certification form
or other submitted documents information the comptroller
determined to be false or to contain a material misrepresentation
or omission.
(b) The comptroller may not remove a manufacturer or
specific e-cigarette from the directory for a reason described by
Subsection (a) unless:
(1) the comptroller provides to the manufacturer
notice that the manufacturer or an e-cigarette produced by the
manufacturer will be removed from the directory if the manufacturer
fails to cure the deficiencies; and
(2) the manufacturer fails to cure the deficiencies
before the 15th day after the date the manufacturer received notice
under Subdivision (1).
(c) The comptroller may not remove a manufacturer or
e-cigarette produced by the manufacturer from the directory before
the 30th day after the date the comptroller provides the notice
under Subsection (b)(1).
(d) Notice provided under Subsection (b)(1) is considered
sufficient and immediately received if the comptroller sends the
notice by facsimile or electronically to an e-mail address or
facsimile number provided by the manufacturer in the manufacturer's
most recent certification submitted under this subchapter.
Sec. 161.0958. DIRECTORY LISTING REQUIRED FOR RETAIL SALE
OF E-CIGARETTES. (a) An importer, distributor, wholesaler,
retailer, or similar intermediary may not sell in this state at
retail an e-cigarette not included in the directory.
(b) A retailer may not sell an e-cigarette that was removed
from the directory or that is produced by a manufacturer that was
removed from the directory after the 30th day following the date the
e-cigarette or manufacturer was removed from the directory.
Sec. 161.0959. DISPOSITION OF PROHIBITED E-CIGARETTES. (a)
An e-cigarette intended for sale or distribution in this state that
is not included in the directory is subject to seizure,
destruction, and disposal. The importer, distributor, wholesaler,
retailer, or similar intermediary from whom the e-cigarette is
seized is responsible for the cost of the seizure, destruction, and
disposal.
(b) An e-cigarette intended for sale or distribution in this
state that was removed from the directory or that was certified by a
manufacturer that was removed from the directory is subject to
seizure, destruction, and disposal after the 30th day following the
date on which the e-cigarette or manufacturer was removed from the
directory. The importer, distributor, wholesaler, retailer, or
similar intermediary from whom the e-cigarette is seized is
responsible for the cost of the seizure, destruction, and disposal.
Sec. 161.0960. AUDITS. (a) The comptroller shall provide
for two annual random audits of each importer, distributor,
wholesaler, and retailer who sells or distributes e-cigarettes in
this state to ensure compliance with this subchapter. The
comptroller shall provide for a subsequent audit not later than the
30th day after the date on which an importer, distributor,
wholesaler, or retailer was audited and determined not to be in
compliance with this subchapter.
(b) The comptroller shall annually publish the results of
the audits on the comptroller's Internet website.
Sec. 161.0961. CIVIL PENALTIES. (a) An importer,
distributor, wholesaler, retailer, or similar intermediary who
violates Section 161.0958 is subject to a civil penalty in an
amount:
(1) for a first violation, equal to $1,000 for each
individual e-cigarette sold or offered for sale;
(2) for a second violation occurring before the first
anniversary of the date of the first violation, not less than $1,250
and not more than $1,500 for each individual e-cigarette sold or
offered for sale; and
(3) for a third or subsequent violation occurring
before the first anniversary of the date of the first violation, not
less than $1,750 and not more than $2,000 for each individual
e-cigarette sold or offered for sale.
(b) A manufacturer who causes an e-cigarette removed from or
not included in the directory to be sold or offered for sale in this
state, whether directly or through an importer, distributor,
wholesaler, retailer, or similar intermediary is subject to a civil
penalty in an amount equal to $10,000 for each individual
e-cigarette sold or offered for sale in violation of Section
161.0958.
(c) The attorney general may bring an action to recover a
civil penalty imposed under this section.
(d) The attorney general may recover reasonable attorney's
fees and other reasonable expenses incurred in investigating and
bringing an action under this section.
Sec. 161.0962. DECEPTIVE TRADE PRACTICE. A violation of
Section 161.0958 is a deceptive trade practice under Subchapter E,
Chapter 17, Business & Commerce Code, and is actionable under that
subchapter.
Sec. 161.0963. ADMINISTRATIVE SANCTIONS. (a) The
comptroller shall suspend for a period of 30 days the permit,
registration, certificate, or other authority of an importer,
distributor, wholesaler, retailer, or similar intermediary who
violates Section 161.0958 a second time before the first
anniversary of the date of the first violation.
(b) The comptroller shall revoke the permit, registration,
certificate, or other authority of an importer, distributor,
wholesaler, retailer, or similar intermediary who violates Section
161.0958 a third time before the first anniversary of the date of
the first violation.
Sec. 161.0964. CRIMINAL OFFENSE. A manufacturer commits an
offense if the manufacturer falsely represents information on a
certification form under Section 161.0953. An offense under this
section is a Class B misdemeanor.
Sec. 161.0965. FEES COLLECTED. A fee or civil penalty the
comptroller collects under this subchapter may be used only for the
administration and enforcement of this subchapter.
Sec. 161.0966. REPORT TO LEGISLATURE. The comptroller
shall prepare and submit to the legislature not later than
September 1 of each year a report that contains:
(1) the current status of the directory, including the
dates of the initial and updated versions;
(2) issues related to updating the directory;
(3) revenue received and expenses incurred in
administering this subchapter;
(4) enforcement activities taken in accordance with
this subchapter; and
(5) the most recent version of the directory.
Sec. 161.0967. RULES. The comptroller shall adopt rules
necessary to implement this subchapter.
SECTION 2. (a) Notwithstanding Section 161.0953, Health and
Safety Code, as added by this Act, a manufacturer is not required to
comply with the requirements of that section until September 15,
2025.
(b) Notwithstanding Section 161.0954, Health and Safety
Code, as added by this Act, the comptroller of public accounts is
not required to maintain the directory until November 1, 2025.
(c) Notwithstanding Section 161.0958, Health and Safety
Code, as added by this Act, an importer, distributor, wholesaler,
retailer, or similar intermediary is not required to comply with
the requirements of that section until January 1, 2026.
(d) Notwithstanding Section 161.0966, Health and Safety
Code, as added by this Act, the comptroller of public accounts is
not required to submit a report until September 1, 2026.
SECTION 3. This Act takes effect September 1, 2025.