| NEW YORK, Sept 11
NEW YORK, Sept 11 Cigarette makers must pay New
York state $92 million they withheld from their 2003 annual
payment required by the landmark 1998 tobacco settlement, an
arbitration panel ruled on Wednesday.
The panel, made up of three retired federal judges in San
Francisco, rejected the tobacco companies' demand for a
reduction in their 2003 annual payment to New York.
The dispute stemmed from untaxed sales of cigarettes on
Native American reservations.
"This ruling is a huge victory for all New Yorkers," New
York Attorney General Eric Schneiderman said in a statement.
"This is good news for investors in tobacco bonds issued
within New York state," Dick Larkin, director of credit analysts
at HJ Sims & Co, said in a statement.
Lorillard Tobacco Company, Altria Group Inc's Philip Morris
USA, and R.J. Reynolds Tobacco Company, Inc did not immediately
respond to calls for comment.
The settlement, first signed in November 1998, resolved
claims by states and territories for, among other things, the
recovery of healthcare costs attributed to smoking-related
illnesses. In exchange, the companies agreed to make annual
payments based on their annual cigarette sales.
The tobacco manufacturers said an adjustment to their
payment was necessary because New York did not seek to have
non-participating manufacturers make escrow deposits for their
untaxed sales in the state. New York said it did not have to
collect escrow on sales on Native American lands because no
excise tax was imposed on such sales.
In their ruling favoring New York, the arbitrators said the
evidence showed it was state policy not to collect excise taxes
on the sales on American Indian reservations before, during and
after the master settlement agreement, and was not obligated to