A pair of big tobacco companies have refused to pay states the full amount due under the terms of the 1998 nationwide tobacco settlement, Reuters reported April 17.

R.J. Reynolds deposited $674 million into a special escrow account set up in the event of disputes, rather than making its entire $2.016-billion payments to the states. Lorillard Tobacco Co. deposited $108 million of the $666 million owed into the escrow account.

The companies are challenging their payments amounts under the 1998 pact, saying the deal allows them to cut their payments if they lose market share because of the agreement. In March, an arbitrator ruled that the 1998 Master Settlement Agreement had caused the nation's largest tobacco firms to lose market share in 2003.

States dispute that claim, and the tobacco companies would still have to provide that states had failed to enforce the agreement's terms regarding payments by their competitors -- smaller tobacco companies.

Philip Morris USA made its full payment to the states -- $3.4 billion.