States Could Lose Tobacco Settlement Money in 2010

The tobacco industry and more than 40 states will face off in an arbitration hearing early next year over the industry's contention that it has paid too much money via the 1998 nationwide tobacco settlement.

The Gadsden (Ala.) Times reported Dec. 5 that Alabama and scores of other states are being compelled to prove at a binding arbitration hearing that they have complied with the Master Settlement Agreement between the states and the tobacco industry.

Big Tobacco companies contend that the states have violated the agreement by failing to protect them from competition by enforcing state laws against tobacco firms that were not party to the original agreement. Such firms are required by the agreement to pay into an escrow account to cover potential liability lawsuits.

“These potential 2004-2008 (tobacco payment) adjustments total an additional $4.1 billion” nationwide, said Peter Levin of the National Association of Attorneys General.

Alabama used its tobacco-settlement funds to pay for programs like the Children's Trust Fund. “The loss would be devastating to children's services and health care and everything surrounding children's services,” said program director Kelley Parris-Barnes. “We let about 170 grants to communities on the local level to prevent child abuse and neglect.”