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§ 999.26. Surety Bonds.

11 CA ADC § 999.26Barclays Official California Code of RegulationsEffective: July 1, 2022

Barclays California Code of Regulations
Title 11. Law
Division 1. Attorney General
Chapter 16. Attorney General Regulations Under Master Settlement Agreement with Tobacco Product Manufacturers and Non-Participating Tobacco Product Manufacturer Law (Health & Safety Code Sections 104555-104557)
Effective: July 1, 2022
11 CCR § 999.26
§ 999.26. Surety Bonds.
Currentness
(a) Newly qualified NPMs and NPMs that are elevated-risk, as set forth below, must post surety bonds pursuant to Revenue and Taxation Code section 30165.1(c)(4). Surety bonds executed by manufacturers and importers pursuant to Business and Professions Code section 22979 or Revenue and Taxation Code section 30165.1 must be issued by a surety corporation that is authorized to conduct business in this state. Business and Professions Code section 22979 requires manufacturers and importers that chose not to waive sovereign immunity defenses to post a surety bond in lieu of a waiver.
(b) A Non-Participating Manufacturer may be deemed to pose an elevated risk of non-compliance if:
(1) The Non-Participating Manufacturer or any affiliate has failed to deposit the full amount due on a tobacco escrow obligation with respect to any state at any time within the past three (3) calendar years unless either of the following occur:
(A) The manufacturer did not underdeposit knowingly or recklessly and the manufacturer promptly cured the underdeposit within 180 days of notice of it; or
(B) The underdeposit or lack of deposit is the subject of a good faith dispute as documented to the satisfaction of the Attorney General and the underdeposit is cured within 180 days of entry of a final order establishing the amount of the required escrow deposit.
(2) Any state has removed the Non-Participating Manufacturer or its brands or Brand Families or brands or Brand Families of an affiliate from the state's tobacco directory for noncompliance with a state tobacco escrow deposit or tobacco tax law within the past three (3) calendar years;
(3) Any state has litigation pending against, or an unsatisfied final judgment against, the Non-Participating Manufacturer or any affiliate for escrow due or for penalties, fees, costs, refunds, or attorney's fees related to noncompliance with state tobacco escrow laws;
(4) The Non-Participating Manufacturer sells its cigarettes or tobacco products directly to consumers via remote or other non-face-to-face means;
(5) A state or federal court has determined that the Non-Participating Manufacturer has violated any tobacco tax or tobacco control law or engaged in unfair business practice or unfair competition;
(6) Any state has suspended or revoked the Non-Participating Manufacturer's license to engage in any aspect of tobacco business;
(7) Any state or federal court has determined that the Non-Participating Manufacturer has failed to comply with state or federal law imposing marking, labeling, and stamping requirements or requiring information to be affixed to, or contained in, the labels, markings, or packaging; or
(8) The Non-Participating Manufacturer fails to submit or complete any required forms, documents, certification, or notices, in a timely manner or to the satisfaction of the Attorney General or CDTFA.
(c) Manufacturers and importers shall post the required surety bond by using the JUS-TOB14. Surety bond forms must also be signed by an attorney-in-fact or by a representative of the bonding company.
(d) Surety bonds must indicate the name of the manufacturer or importer as shown on the license issued by CDTFA. For a limited partnership, the names of the general partners and the name of the limited partnership must also be shown. For partnerships, the names of the partners must be shown.
(e) Surety bonds shall be posted by a corporate surety in an amount equal to the greater of fifty thousand dollars ($50,000) or the amount of escrow the manufacturer in either its current or predecessor form was required to deposit as a result of the largest of its most recent five (5) calendar years' sales in California. The bond shall be written in favor of the State of California. The bond may be drawn upon by the Attorney General to cover unsatisfied escrow obligations, tax obligations, claims for penalties, claims for monetary damages, and any other liabilities that are subject to the licensee's claim of sovereign immunity against enforcement of the laws specified above.

Credits

Note: Authority cited: Section 30165.1, Revenue and Taxation Code; and Section 11110, Government Code. Reference: Section 22979, Business and Professions Code; and Section 30165.1, Revenue and Taxation Code.
History
1. New section filed 4-11-2011 as an emergency; operative 4-11-2011 (Register 2011, No. 15). A Certificate of Compliance must be transmitted to OAL by 10-10-2011 or emergency language will be repealed by operation of law on the following day.
2. New section, including amendment of Note, refiled 10-7-2011 as an emergency; operative 10-7-2011 (Register 2011, No. 40). A Certificate of Compliance must be transmitted to OAL by 1-5-2012 or emergency language will be repealed by operation of law on the following day.
3. New section, including amendments, refiled 1-3-2012 as an emergency; operative 1-5-2012 pursuant to Government Code section 11343.4(b) (Register 2012, No. 1). A Certificate of Compliance must be transmitted to OAL by 4-5-2012 or emergency language will be repealed by operation of law on the following day.
4. Certificate of Compliance as to 1-3-2012 order, including amendment of subsection (b)(1) and new subsections (b)(1)(A) and (b)(1)(B), transmitted to OAL 3-26-2012 and filed 5-7-2012 (Register 2012, No. 19).
5. Amendment of section and Note filed 5-19-2022; operative 7-1-2022 pursuant to Government Code section 11343.4(a) (Register 2022, No. 20). Transmission deadline specified in Government Code section 11346.4(b) extended 60 calendar days pursuant to Executive Order N-40-20 and an additional 60 calendar days pursuant to Executive Order N-71-20. Filing deadline specified in Government Code section 11349.3(a) extended 60 calendar days pursuant to Executive Order N-40-20.
This database is current through 4/26/24 Register 2024, No. 17.
Cal. Admin. Code tit. 11, § 999.26, 11 CA ADC § 999.26
End of Document