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Clinton All But Kills Tobacco Settlement President Implores Congress For Broader Penalties On Companies

Wed., Sept. 17, 1997

The tobacco wars are headed back to square one - away from Washington and back to the courts.

Early this summer, the $368.5 billion tobacco settlement between the tobacco industry and the states promised to resolve the decades-long struggle over how to cut tobacco use. But President Clinton will ask Congress today to toughen penalties on tobacco companies, mollifying critics but sinking once-buoyant prospects for pushing the agreement through Congress this year.

“We are going to come out for some clear principles that will further this debate,” Clinton told reporters Tuesday.

Aides said that among those principles are guarantees that the Food and Drug Administration will have full authority to regulate nicotine and that tobacco companies will be subject to a penalty of about $1.50 a pack if teen smoking does not fall by prescribed amounts.

In making the recommendations, Clinton won’t back specific legislation but instead will ask Congress to repair the flaws, even if it means delaying action for months or longer.

Advocates and critics of the settlement conceded that the only way the settlement would get through Congress this year is with a vigorous push from Clinton. With that not happening, the battlefield shifts back to the states, which are lined up to challenge the tobacco industry in court and where the outcome is far less certain. Texas goes to court Sept. 29, followed by Minnesota next year.

At this point, the adversaries say they won’t settle these suits. If the tobacco industry loses, it will be forced to return to Congress next year with less ability to resist moves to toughen the agreement. But if it can win some of these cases, the industry will be emboldened to fight harder. It could balk at any effort to toughen the nationwide settlement and perhaps even retreat from some of its earlier concessions. The result could be a patchwork of regulations that vary widely from state to state.

All sides are awaiting a decision from the federal appeals court in Richmond, Va., which is expected to rule soon on whether FDA has the authority to regulate tobacco advertising.

If the tobacco industry loses this case and appeals fail, the FDA would be able unilaterally to impose marketing restrictions that are part of the nationwide settlement. But if the court agrees with the industry’s arguments that such curbs violate free-speech rights, anti-smoking forces would be forced to make concessions to get the industry to limit its advertising voluntarily.

“No one has a crystal ball,” Matthew Myers, an anti-tobacco advocate who helped negotiate the settlement, told the Senate Commerce Committee. “No one can predict whether we will be stronger or weaker in six months.”

Mississippi Attorney General Michael Moore, who was the lead negotiator for the states, said last week that leaving it to the courts is “a risk.”

“There have been some wins and some losses,” he said. “It’s going to be a mixed result, and that’s not as good” as a uniform settlement.

The biggest variable is the tobacco companies’ formidable record in court cases. Until this year, the industry never had lost and it carries a reputation for fighting fiercely.

And Colorado Attorney General Gail Norton warned that with each case that comes to court, the likelihood increases that the settlement’s delicate balance could be toppled.

“If implementing legislation is delayed,” she told the Senate Agriculture Committee last week, “the pressure for each state to negotiate a separate deal will only escalate. With each separate deal, the incentive for a global comprehensive settlement is diminished. Moreover, regardless of how tough the individual states are in negotiation, we can never achieve individually what has been achieved collectively.”

Clinton’s recommendations on the settlement have been widely anticipated since the deal was announced June 20. They come after weeks of tense negotiations between the tobacco industry on one side and attorneys general representing 40 states and public health advocates on the other.

The agreement called for the nation’s five largest tobacco companies to pay states at least $368.5 billion over the next 25 years to compensate them for the cost of providing health care to residents made ill by cigarettes.

The agreement also called for tobacco companies to pay $500 million annually for counteradvertising campaigns, to ban or restrict most tobacco advertising and to pay for smoking-cessation programs, among other provisions.

The accord also requires teen smoking to fall by 30 percent within five years of the agreement being enacted and by 60 percent within 10 years. The so-called “look-back” provision has been one of the most harshly criticized provisions of the proposed settlement because it calls for the tobacco companies to pay $80 million for each percentage point above the target with a maximum penalty of $2 billion in any one year.

In return, the tobacco industry would receive sweeping immunity from class actions and a measure of protection from the threat of financial ruin.

xxxx ONE BIG ISSUE All sides are awaiting a decision from the federal appeals court in Richmond, Va., which is expected to rule soon on whether the Food and Drug Administration has the authority to regulate tobacco advertising.


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