Washington — A legal battle may be looming between states and tobacco companies over money owed from a landmark 1998 settlement agreement. What's at stake could be more than $1 billion.
An economic consulting firm determined late Monday that the agreement between the cigarette companies and the states was a "significant factor" in contributing to a loss of market share for the companies that signed on to the settlement.
The report stated that the agreement, which imposed numerous marketing limits on the companies and required billions of dollars in payments to states, led to the erosion of their market share to smaller manufacturers that didn't sign on and generally sell discount cigarettes. That finding is one of several determinations that would be necessary for the tobacco companies to reduce their annual payments to states under the agreement.
But Iowa Atty. Gen. Tom Miller and Idaho Atty. Gen. Lawrence Wasden released a joint statement Tuesday saying the finding by the Brattle Group, a consulting firm tasked by both sides with looking into the issue of eroding market share, should not lead to a reduction in payments. The two head the tobacco committee for the National Association of Attorneys General.
Miller and Wasden said the reduction - an estimated $1.2 billion - could only occur if states have failed to enforce statutes that require cigarette makers that aren't part of the settlement to put money in escrow accounts to meet any future legal obligations. The attorneys general say states are enforcing those statutes.
"As a result, the settling states believe that it would not be appropriate to withhold any portion of the April 17 payment," they said. About $6.5 billion is due to the states on that date.