A fight over the tobacco industry's decision to reduce payments to the state of Nebraska from the 1998 nationwide tobacco settlement is coming before the state Supreme Court, the Beatrice Daily Sun reported Feb. 5.

Citing a provision in the settlement, three major tobacco companies reduced their payments to Nebraska by $4.5 million in 2006, saying that the state failed to live up to the terms of the agreement and require smaller tobacco firms to pay into an escrow account if they failed to take part in the settlement. The provision was intended to prevent smaller tobacco companies from gaining a competitive advantage over the firms that signed the agreement.

The Nebraska attorney general and those from several other states sued, saying the big tobacco companies were violating the agreement by holding back about $775 million in 2006 payments to states. In Nebraska, a district judge ordered the state and the companies to submit to arbitration to settle the matter, but the state appealed the ruling, saying that it violated the 1998 agreement.

State officials are asking the Supreme Court to order the big tobacco firms to pay the money, saying that the state did hold the smaller tobacco companies accountable during the year in question.

In 2007, the big tobacco companies reduced Nebraska's award by $4 million, citing the same alleged violations of the 1998 agreement.