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.

89(R) HB 3772 - Introduced version - Bill Text

89R10741 MCF-F

By: Craddick

H.B. No. 3772

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.