State To Receive $2.6 Million – Tobacco Arbitration Unanimously Finds North Dakota Enforced Its Tobacco Laws
Attorney General Wayne Stenehjem announced today that an arbitration panel unanimously determined that North Dakota complied with its obligations under the 1998 tobacco settlement. At stake for North Dakota was a potential loss of up to $23 million withheld by the tobacco companies from their 2003 annual payment due under the settlement agreement. The arbitration panel unanimously concluded that North Dakota had complied with its obligations and diligently enforced its laws, as required by the settlement agreement, rejecting claims by tobacco companies to the contrary.
The decision is a significant legal victory for the state in a years-long dispute with major tobacco companies that have withheld a significant portion of their 2003 settlement payments to the states, including North Dakota. The tobacco manufacturers pay billions annually to settling states.
Stenehjem noted that this arbitration focused on the 2003 sales year, and that tobacco companies could launch further legal challenges for subsequent years. “The panel’s decision validates North Dakota’s long-held position that for the last ten years, the tobacco companies have tried to avoid their financial responsibility to the state. The tobacco companies were wrong to shortchange North Dakota in the amounts due, and we will continue to challenge them to make good on the promises they made and to pay us what they owe,” stated Stenehjem. Those manufacturers include R.J. Reynolds, Phillip Morris Inc., Lorillard and 16 smaller companies.
North Dakota’s arbitration trial was held in Chicago last October. If the three-member arbitration panel, comprised of retired federal judges, had ruled that a state failed to “diligently enforce” its tobacco laws, the tobacco settlement agreement allows participating manufacturers to withhold all or part of their annual scheduled payments to that state. North Dakota was one of 31 states whose tobacco enforcement efforts were challenged by the tobacco companies. Of the 31 states challenged, 16 states settled their cases, 6 states received unfavorable arbitration decisions, and 9 states, including North Dakota, received favorable arbitration decisions.
“The panel’s decision represents an important step in North Dakota’s enforcement of its tobacco laws and it likely will affect many more years of tobacco enforcement for the state,” said Stenehjem.
North Dakota’s share of the money wrongly withheld by the tobacco companies from the 2003 payment is approximately $2.6 million. Since 1999, when tobacco companies sent their first settlement payments to the states, North Dakota has received $338,963,752.
The decision is a significant legal victory for the state in a years-long dispute with major tobacco companies that have withheld a significant portion of their 2003 settlement payments to the states, including North Dakota. The tobacco manufacturers pay billions annually to settling states.
Stenehjem noted that this arbitration focused on the 2003 sales year, and that tobacco companies could launch further legal challenges for subsequent years. “The panel’s decision validates North Dakota’s long-held position that for the last ten years, the tobacco companies have tried to avoid their financial responsibility to the state. The tobacco companies were wrong to shortchange North Dakota in the amounts due, and we will continue to challenge them to make good on the promises they made and to pay us what they owe,” stated Stenehjem. Those manufacturers include R.J. Reynolds, Phillip Morris Inc., Lorillard and 16 smaller companies.
North Dakota’s arbitration trial was held in Chicago last October. If the three-member arbitration panel, comprised of retired federal judges, had ruled that a state failed to “diligently enforce” its tobacco laws, the tobacco settlement agreement allows participating manufacturers to withhold all or part of their annual scheduled payments to that state. North Dakota was one of 31 states whose tobacco enforcement efforts were challenged by the tobacco companies. Of the 31 states challenged, 16 states settled their cases, 6 states received unfavorable arbitration decisions, and 9 states, including North Dakota, received favorable arbitration decisions.
“The panel’s decision represents an important step in North Dakota’s enforcement of its tobacco laws and it likely will affect many more years of tobacco enforcement for the state,” said Stenehjem.
North Dakota’s share of the money wrongly withheld by the tobacco companies from the 2003 payment is approximately $2.6 million. Since 1999, when tobacco companies sent their first settlement payments to the states, North Dakota has received $338,963,752.
Stenehjem commended Assistant Attorneys General Matthew Sagsveen and Janilyn Murtha, who represented North Dakota during the arbitration hearings, and Solicitor General Doug Bahr and John Quinlan (ND Tax Department), who were noted for praise by the arbitration panel for their “diligent and efficient” enforcement efforts on behalf of the state.
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