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Senate approves tobacco settlement

State House Bureau

March 14. 2013 12:54PM

CONCORD - The Senate on Thursday approved a bill authorizing the state to enter into a new settlement with tobacco companies over the state's enforcement of the 1998 master agreement.

Under the new settlement, New Hampshire would receive about $30 million the tobacco companies withheld from their payments for eight years. The state would have to pay the tobacco companies $13 million, netting the state $17 million.

The tobacco companies sued 35 states claiming they failed to "diligently enforce" the 1998 agreement. Now Hampshire and 18 others states have reached agreement with the tobacco producers, but expect the settlement to be challenged by the state remaining in litigation with the companies.

The tobacco companies in the 1998 settlement claim the states did not force the non-participating tobacco companies to pay into an escrow account as required. The non-settling companies are required to pay into an escrow account a similar amount to what the participating companies pay states to protect the settling companies' market share Deputy Attorney General Ann Rice told the Senate Ways and Means Committee earlier this week.

Going forward with the suit represents a significant amount of risk that could cost the state all of the $40 million to $50 million annual payment, Rice told the committee.

By reaching a settlement, the state resolves the litigation and the time and cost of the trial before the arbitration panel that is expected to take years to resolve, Rice said.

This fiscal year, the state receives $42.4 million from the tobacco companies. The first $40 million goes into the education trust fund used to pay for state adequacy grants to school districts. The rest of the money goes into the state's general fund as would the $30 million payment.

The state receives about 50 cents for every pack sold in New Hampshire. With sales decreasing, the state's share has gone down and the trend is expected to continue.

The agreement requires the state do additional enforcement work The House has scheduled a public hearing on Senate Bill 199 for Tuesday and will vote on the bill next week.

Legislative approval of the settlement is needed by March 22.

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