Tobacco companies have withheld at least US$ 7.5 million in payments to South Dakota over the past three years because of a dispute on whether states are enforcing the terms of the national settlement with those tobacco companies, Attorney General Larry Long said on Monday.

South Dakota was due more than US$ 23.6 million when it recently received its annual payment under the settlement, but the payment was only US$ 21 million, Long told the legislature's Government Operations and Audit Committee. At least US$ 2.5 million annually has been withheld by two of the largest tobacco companies in each of the past three years, he said.
Long said he thinks the state eventually will succeed in recovering the amount that has been withheld. He added that the state has joined 45 other states in litigation to determine whether they have diligently enforced the terms of the national settlement. "In theory, we could lose the entire $23 million, which is why we spend a fair amount of time diligently enforcing,” he explained.
The settlement requires states to make tobacco manufacturers who were not part of the national agreement pay money into an escrow account. This ensures that these companies do not get a price advantage over the companies that are paying under the settlement. States also have to make sure cigarettes are not being sold illegally over the Internet or in other ways that avoid taxes, Long said.