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) SB 1698 - Senate Committee Report version - Bill Text

By: Parker

S.B. No. 1698

(In the Senate - Filed February 27, 2025; March 11, 2025,

read first time and referred to Committee on State Affairs;

May 5, 2025, reported adversely, with favorable Committee

Substitute by the following vote: Yeas 9, Nays 0; May 5, 2025, sent

to printer.)

COMMITTEE SUBSTITUTE FOR S.B. No. 1698

By: Parker

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. Section 161.0876(b), Health and Safety Code, is

amended to read as follows:

(b) A person commits an offense if the person markets,

advertises, sells, or causes to be sold an e-cigarette product, if

the product's container:

(1) depicts a cartoon-like fictional character that

mimics a character primarily aimed at entertaining minors;

(2) imitates or mimics trademarks or trade dress of

products that are or have been primarily marketed to minors;

(3) includes a symbol that is primarily used to market

products to minors;

(4) includes an image of a celebrity; [
or
]

(5) includes an image that resembles a food product,

including candy or juice
; or

(6)

attempts to conceal the nature of the e-cigarette

product from consumers or falsely represents that the product does

not contain nicotine
.

SECTION 2. Subchapter H, Chapter 161, Health and Safety

Code, is amended by adding Section 161.0904 to read as follows:

Sec.

161.0904.

E-CIGARETTE DISTRIBUTOR REGISTRATION

REQUIRED; CRIMINAL OFFENSE.

(a)

In this section, "distributor"

has the meaning assigned by Section 161.0951.

(b)

A person may not engage in business as an e-cigarette

distributor in this state unless the person is registered with the

comptroller in accordance with this section.

(c)

A person must register each place of business the person

owns or operates as an e-cigarette distributor.

The comptroller

may not register as an e-cigarette distributor a place of business

located at a residence or in a public storage facility unit.

(d)

The comptroller shall prescribe the form and content of

the e-cigarette distributor registration application.

An

applicant shall accurately complete all information required on the

application and provide to the comptroller any additional

information the comptroller considers necessary.

(e)

A person who engages in business as an e-cigarette

distributor without registering with the comptroller as required by

this section commits an offense. An offense under this subsection

is a Class B misdemeanor.

SECTION 3. 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 is not an

interstate warehouse and 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

retail sale, use, or consumption in this state;

(B)

manufactures or produces e-cigarette

products for retail sale in this state; 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)

"Interstate warehouse"

has the meaning assigned by

Section 154.001 or 155.001, Tax Code, as applicable.

(5)

"Retailer" means a person who engages in the sale

of e-cigarettes to consumers, including an e-cigarette retailer as

defined by Section 147.0001.

(6)

"Wholesaler" means a person, including a

manufacturer's representative, who sells or distributes

e-cigarettes in this state for resale in this state but who is not a

distributor or interstate warehouse.

Sec.

161.0952. APPLICABILITY. This subchapter applies only

to an e-cigarette that contains nicotine from any source.

Sec.

161.0953.

CERTIFICATION AND FEES. (a) Each

manufacturer of e-cigarettes sold for retail sale, use, or

consumption 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 is not required to submit an additional

marketing authorization or similar order or premarket tobacco

product application for an e-cigarette for which the manufacturer

previously submitted a marketing authorization or similar order or

premarket tobacco product application for a change in the name,

brand style, or packaging of the e-cigarette.

(d)

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.

(e)

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.

(f)

Not later than the 30th day after the effective date of a

federal law, regulation, or guidance changing a standard or

requirement for an e-cigarette manufacturer, the manufacturer must

provide to the comptroller proof satisfactory to the comptroller of

the manufacturer's compliance with the law, regulation, or

guidance.

(g)

The comptroller may remove from the directory as

provided by Section 161.0957 the e-cigarettes of a manufacturer who

fails to comply with Subsection (f).

(h)

The certification form the comptroller prescribes under

this section must require

a manufacturer to list the brand name,

product name, flavor, and category of the e-cigarette the

manufacturer is certifying.

(i)

The information a manufacturer submits under this

section is exempt from disclosure under Chapter 552, Government

Code.

A manufacturer may redact in the manner prescribed by the

comptroller confidential commercial or financial information

included on the documents required under Subsection (d).

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 the certifications

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 to notify

importers, distributors, wholesalers, retailers, and other

relevant parties of directory updates for the preceding month.

Sec.

161.0955.

OUT-OF-STATE MANUFACTURERS AND IMPORTERS.

(a) A manufacturer not registered with the secretary of state to

conduct business in this state shall designate and continually

engage the services of an agent registered with the secretary of

state.

(b)

A manufacturer not located in the United States may only

employ or contract with an importer who designates an agent

registered with the secretary of 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 the

comptroller requests about the newly appointed registered agent,

including the name, address, and telephone number.

(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 registered agent has been appointed.

(f)

A manufacturer not registered with the secretary of

state 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 for an e-cigarette;

(2)

sold in this state an e-cigarette 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 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 retail sale or distribution for use or

consumption 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 retail sale or distribution

for use or consumption 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.

(c)

An e-cigarette seized under this section may be

inventoried and preserved as evidence.

(d)

Any product seized under this section may be disposed of

in any manner consistent with state or federal law, including by

incineration.

Sec.

161.0960.

INSPECTIONS. (a) The comptroller or the

comptroller's designee, including a state or local law enforcement

official, shall, at least annually, provide for random, unannounced

inspections of various importers, distributors, wholesalers, and

retailers who sell or distribute e-cigarettes in this state to

ensure compliance with this subchapter.

The comptroller, or the

comptroller's designee, shall provide for a subsequent inspection

not later than the 30th day after the date on which an importer,

distributor, wholesaler, or retailer was inspected and determined

not to be in compliance with this subchapter.

(b)

The comptroller shall annually publish the results of

the inspections on the comptroller's Internet website.

(c)

An inspection under this section may be combined with an

inspection under Section 161.088.

(d)

The comptroller may presume an e-cigarette listed in the

directory established under Section 161.0954 is not a prohibited

e-cigarette product under Section 161.0876.

(e)

Nothing in this section may be construed to prevent the

attorney general from conducting an audit or inspection of an

importer, distributor, wholesaler, or retailer who sells or

distributes e-cigarettes in this state to ensure compliance with

this subchapter or in furtherance of an action brought under

Section 161.0961.

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 for retail sale, use, or

consumption or offered for retail sale, use, or consumption 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 in addition to the

practices described by 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 any permit,

registration, certificate, or other authority issued by the

comptroller 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 any permit, registration,

certificate, or other authority issued by the comptroller 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 OFFENSES. (a)

A manufacturer

commits an offense if the manufacturer falsely represents

information on a certification form under Section 161.0953.

(b)

A person commits an offense if the person violates

Section 161.0958.

(c) 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 4. (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 October 1, 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 January 1, 2026.

(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 May 31, 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 5. This Act takes effect September 1, 2025.

* * * * *