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.     * * * * *