The three largest tobacco companies last week exempted 12 states and four territories from arbitration that would force the municipalities to refund money from 2003 settlement overpayments the companies believe they made.

As a result, 34 other states — plus the District of Columbia and Puerto Rico — that signed the 1998 Tobacco Master Settlement Agreement may have to do without up to $1.1 billion they otherwise would receive from the tobacco companies as early as 2013.

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