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President Bill Clinton implicitly rejected the proposed tobacco settlement Wednesday and said he would seek legislation that would cut teen smoking and raise cigarettes by as much as $1.50 per pack. . . "We have this unprecedented opportunity to enact comprehensive legislation, working with all the parties involved," he said.

In making his first detailed comment on the $368.5 billion tobacco accord reached in June, Clinton effectively refused to endorse the agreement, outlining so many changes that it was certain to serve as little more than a starting point for any legislation that Congress may ultimately fashion. Speaking at the White House, Clinton said he wanted Congress to pass broad legislation on tobacco but insisted that his main objective was to reduce smoking by young people rather than simply to extract money from the tobacco industry.

"We're not rejecting their agreement, we're building on it," he told a White House news conference.

Declining to endorse the landmark $368 billion tobacco settlement, President Clinton Wednesday called for legislation hiking cigarette prices by up to $1.50 per pack. "Reducing teen smoking has always been America's bottom line. It must be the industry's bottom line," the president said. Ending three months of divisive internal debate among administration officials, Clinton said he was not out to punish cigarette makers. "It is not about how much money we can extract from the tobacco industry. It's about fulfilling our duties as parents and responsible adults to protect our children," Clinton said.

The designated Senate leader on tobacco, Republican Sen. Don Nickles of Oklahoma, said that President Clinton "only complicated" work on a proposed tobacco settlement and was too "ambiguous." Nickles said Clinton's speech calling for a tougher tobacco settlement lacked specifics. "He said he'd work with Congress but there's a whole lot of work to do," Nickles said.

The lead senator working on a proposed "global" tobacco deal says (Wednesday) President Clinton's proposal to stiffen penalties for tobacco companies hinders, rather than helps, quick congressional action.

"I think the president is right on track," the South Dakota Democrat said. "To delay consideration is admirable and I support it."

Wednesday, Sept. 17, 1997 3:45 p.m. (Eastern) HOW: Telephone conference call Dial-in number: 1-800-403-1065 Participant code: 555115 [no longer valid]. Limited lines available/no advance reservations

We are gratified that President Clinton stated his desire to build on the June 17 plan in order to achieve a national resolution on tobacco issues. But we disagree with some of the proposed changes offered today, and with suggestions that the terms of the June 20th agreement undergo significant change. . . Now that the White House has completed its review, Congress can and should move forward. We believe the June 20th plan still represents the most achievable balance, and we will work constructively with the Congress and the President to build upon the historic accomplishments of that agreement to enact a national tobacco plan.

To characterize the tremendous progress reflected in the June 20th agreement, which was negotiated not only with the attorneys general, but also representatives of the health community and others as "half-a-loaf" is to trivialize its considerable achievements. The June 20th agreement represents a carefully crafted solution to the many complex tobacco issues which have been debated for years. We continue to believe that the June 20th agreement offers the best opportunity to reduce underage smoking, protect the rights of adults to smoke and meet the demands of the public health community. B&W stands ready to work with Congress and the President to support national legislation incorporating the basic provisions outlined in the June 20th agreement. Given the major concessions already made, we cannot support significant changes to that agreement.

"The American Cancer Society has joined forces with ten other major national public health organizations, including the American Medical Association and the American Heart Association, to ignite the grassroots support necessary to move this through Congress quickly," added Seffrin. "The opportunity to enact the right tobacco policy has never been greater. We will not let the momentum for a national policy, supported by the vast majority of Americans, fade."

"The president says this is not about money -- it's about our children's health. If so, then new ideas should be developed to protect children's health without busting the bank. And let's make sure tobacco legislation is focused on this overriding goal. "Now the ball is in Congress' court -- and they must go for an immediate slam dunk. "Since the attorneys general gave the agreement to the White House, approximately 270,000 children have become regular smokers. Approximately 90,000 of them will die prematurely as a result. "Congress has a moral obligation to act now on the tobacco agreement. One life needlessly lost to tobacco is one too many. One-hundred-thousand would be unforgivable.

"In addition, we continue to maintain that Liggett, the whistleblower that brought Big Tobacco to the negotiating table, should have its binding contractual settlements honored and receive the financial protection that it deserves."

PA Attorney General Mike Fisher today announced that Pennsylvania would receive between $52.2 million and $53.3 million for every $1 billion paid to the states by the tobacco companies under a proposed allocation plan for the National Tobacco Settlement. If the settlement is approved, Pennsylvania would rank third behind New York and California in the percentage of settlement funds received by the states.

The bad news is that Congress isn't likely to act on any settlement plan soon. Many members, tobacco friends and foes, want to see how current and upcoming court cases decide the industry's liability. Others find the settlement plan too complex for fast action. . . Clinton has it right. Kids must come first. The question is, when will adults put them there in deed as well as in word?

President Clinton's largely negative verdict Wednesday on the proposed $368.5-billion tobacco deal comes as no surprise. But while his evaluation may put some details of the landmark agreement between cigarette manufacturers and 39 state attorneys general in limbo, the president nonetheless emphatically embraced its major principles, namely regulation of the nicotine content in cigarettes and strong steps against teenage smoking. Congress members who said they were waiting for Clinton's signal to take action against the tobacco industry now have no excuse to delay.

THE PRESIDENT has come out in the right place on a possible tobacco settlement. The deal negotiated between the state attorneys general and the tobacco companies earlier this year was an important step, but defective in certain respects. The principles the president enunciated yesterday would shore up its weak spots.

Still, when people do smoke, they hurt only themselves (all the scientifically unsound horn-tooting about "lethal" second-hand smoke notwithstanding). When Al Capone-style butt-legging mobs emerge, law-enforcement officers and innocent bystanders alike stand to die - collateral victims, ironically, of the war on nicotine.

President Clinton was posturing on tobacco yesterday. It may have been necessary and politically smart. But any big antitobacco accord--highly desirable--is possible only with more direct and stronger presidential leadership. . . [T]here ought to be legislation enacted to save millions of Americans from the horrors of smoking. That's possible only if the president provides active leadership.

"You're defending the tobacco companies!", an apoplectic cigarette-model-turned-anti-smoking-activist screamed at me. "They're merchants of death....How dare you defend them!" On occasions like these, I used to insist that I was defending the tobacco companies because important principles were at stake: freedom of speech, the rule of law, property rights, individual responsibility, the liberty to trade longevity for pleasure. But the tobacco companies freed me from the burden of defending them when they agreed to the nationwide liability settlement proposed last summer, thereby renouncing all of these principles. Now I am in the unaccustomed position of rooting for the industry's most militant opponents, hoping the deal will fall apart.

"In this area [cigarette additives]the agreement does not give us any authority we currently lack. What's different about the settlement [from the FDA's existing authority to regulate cigarettes] is that we only get 90 days to consider a safety review and if we don't come to a decision, the ingredient is deemed safe anyway." . . [Also,] the proposed agreement makes it clear that the FDA regulations would supersede, and effectively cancel out, state laws. Says Dr. Connolly, who helped craft the Massachusetts law, ". . . Right now, in terms of regulating cigarette ingredients, the states can exceed the FDA's authority. That was a hard-fought battle in the courts. We won. And now we're going to lose it."

"When the R.J. Reynolds company stopped using Joe Camel, don't for a moment think they stopped advertising to kids," said Matthew Myers, executive vice president of the National Center for Tobacco-Free Kids. He pointed to toy cars with cigarette logos on the side and said, "These aren't meant for adults. Let's not kid ourselves." The hearing about youth smoking and advertising reflected a new momentum for the national tobacco settlement. Three senators and all but one of the witnesses spoke in favor of the deal, although each had reservations.

Vote follows similar one by Senate last week. Setback is one of industry's worst in years.

Commissioner Irvin will testify to the Senate Committee on Agriculture, Nutrition, and Forestry on the "Tobacco Settlement and the Future of the Tobacco Industry." Testimony will take place in the Capitol in SD 106.

Thursday's meeting of 100 anti-tobacco lawyers in Chicago took on new urgency after President Clinton failed to endorse passage of the $368 billion national settlement Wednesday. "If the national settlement is delayed, it's back to warfare out there in the states," said Mississippi Attorney General Michael Moore.

A proposed national settlement on tobacco that would raise cigarette prices by up to $1.50 per pack over 10 years is unlikely to have a substantial effect on the American economy, analysts say. They said the main effect could be a short-term increase in inflation and that the price rise may hit poorer families hardest. "It might affect parts of the economy but it does not affect the total picture," said chief economist Douglas Lee of HSBC Washington Analysis.

Senate Democratic leaders on Thursday said they planned to introduce their own proposal next year for legislation on tobacco and youth smoking, saying their package would go further than the agreement negotiated by state attorneys general. Sen. Kent Conrad, a North Dakota Democrat who heads the Senate Democratic tobacco taskforce said, "We've got a pretty clear idea of what we've got to do." He said his group would probably draft a bill over the next few months and hope the Senate takes it up next year. Senate Democratic leader Thomas Daschle of South Dakota said he sees broad bipartisan support for the anti-smoking goals outlined by President Clinton Wednesday.

President Bill Clinton has invited the congressional leaders from both parties to discuss tobacco legislation at the White House in the first week of October, Vice President Al Gore said on Thursday. "The president and I have formally invited the bipartisan congressional leadership of Congress, House and Senate, to come here to the White House the first week in October to start work on the details of the legislation," Gore told reporters at a White House event on tobacco.

Here are "five key elements" President Clinton says are essential for national tobacco legislation: Reduce teen smoking . . FDA clout . . . Hold industry accountable: . . . Other health goals . . . Protections [for farmers & their communities].

Uncertainties and hurdles remain, but president's call for settlement revisions makes legislation next year more likely.

Even by President Clinton's standards, his performance yesterday was a smoke-and-mirrors tour de force. He announced he would seek a $1.50-per-pack government-imposed increase in cigarette prices without using the word tax. And he took credit for the cigarette industry's $368.5 billion agreement with state attorneys general while at the same time spreading word he took a dim view of it. . . What happens now is anyone's guess. The tobacco industry had been pressing for quick ratification of the huge settlement. It has been an unprecedented spectacle ‹ an industry telling Washington it needs to be punished in order to avoid even a worse fate. President Clinton's answer was not so fast, not at that price and not as simply.

First, an interview with the Secretary of Health and Human Services, Donna SHALALA, and then Jim Lehrer talks to individuals [MOORE, CARLTON] embroiled in the tobacco debate.

Now that President Clinton has spoken, the action on tobacco moves to Congress and the courts.

Tobacco companies, eager for limits on lawsuits they face, yesterday hailed President Bill Clinton's call for congressional action on a proposed national tobacco deal even though he proposed tougher guidelines that the industry opposes. Industry analysts, insiders and critics predicted the companies may reluctantly be able to live with those guidelines.

The nation's cigarette makers reacted bitterly to President Clinton's new tobacco policy, saying that it demands concessions that go far beyond a costly and ground-breaking plan they reluctantly agreed to in June. Four major tobacco companies, in a joint statement issued in Washington, said the president has ripped up the June accord and offered the companies little incentive to support his new proposal.

"It's late and it's paltry." ‹Senate Majority Leader Trent Lott of Mississippi; "The president further complicated the issue by walking away from the agreement and embracing five vague principles that give Congress little guidance." ‹Sen. Don Nickles, R-Okla.; "Clinton moved the issue of tobacco use by children to the forefront of the public health issues facing this country." ‹Dudly Hafner of the American Heart Assn.

The industry may find its solace in the fact that the deal is now firmly in the hands of Congress. Last election cycle, tobacco companies shelled out $10 million to candidates and political parties. In another symbol of its muscle, U.S. Tobacco Co. was among several companies that provided private jets to shuttle GOP lawmakers to a New York fund-raiser Wednesday night.

House Speaker Newt Gingrich says he wanted a comprehensive settlement with the tobacco industry that would include reducing teen-age smoking as well as alcohol and drug use. Gingrich, who came to New York City for a tour of its midtown library on Fifth Avenue, added he wanted to be sure that costs of the program fell on smokers.

David Kessler, former commissioner of the Food and Drug Administration, Thursday asked Congress not to endorse any tobacco settlement unless it ensures a reduction in teen smoking. That would only happen, he said, if prices were increased by at least $1.50 to $2 a pack.

Humphrey was among a small group of critics standing in the Oval Office with President Clinton when he also rejected the $368 billion proposed landmark settlement Wednesday.

"We'll either get it right out here in Washington, or we'll get it right in court back in Minnesota," Humphrey said.

"Even if they were $3.50 a pack, I'd still buy them," said Marci Fountain, 16, who, hours after the White House announcement, was huddled on the front steps of Schaumburg High School with three other teen smokers. This determination of area teens to continue smoking in spite of presidential decrees is the strongest evidence that price hikes alone, no matter how steep, are not enough, according to public health officials and police combating teen smoking in the Chicago area.

Youths will cheat, steal, starve and mooch off rich friends before they give up the habit, a group of Los Alamitos High School students said. "We spend our lunch money on cigarettes," said a 16-year-old from Los Alamitos, who migrated with a group of other teenagers to a local strip mall to smoke on her lunch break.

NBC was the only broadcast network that did not break into local programming yesterday morning to carry President Clinton's news conference on anti-tobacco measures.

ABC News, CBS, CNN, the Fox News Channel and MSNBC all had live coverage yesterday of President Clinton's statement about the tobacco settlement. CNN went on the air at 10:49 with Donna Kelley; ABC, anchored by Kevin Newman, followed at 10:51 a.m.; CBS went on the air at 10:55 with Dan Rather

After taking three months to study the historic agreement forged between 40 states, including New York, and the tobacco industry in June, Clinton praised its good intentions, but pointedly refused to endorse it.

"We have moved from confrontation and denial and inertia to the brink of action on behalf of our children," the president said. "Today I want to challenge Congress to build on this historic opportunity by passing sweeping tobacco legislation that has one goal in mind: the dramatic reduction in teen smoking."

President Clinton's decision neither to fully endorse the landmark tobacco deal nor to offer his own specific replacement leaves the fight over tobacco in limbo for now. Congress is certain not to pass any tobacco settlement this year and who will jump-start the issue in 1998 is up for grabs. By January, tobacco companies, angry at Clinton's stance, could be so deep into two lawsuits that they lose their desire to compromis

President Clinton asked Congress yesterday to pass sweeping anti-tobacco legislation that would go beyond the historic megadeal with the tobacco industry, but key Republicans accused him of making prospects for an accord even tougher.

This settlement is, and likely will continue to be, something of a Faustian bargain. The tobacco companies have agreed to pay $363 billion-plus. But to do that, they argue, they must be left in sound enough financial condition to make those payments: That, unfortunately, means the ability to continue to find buyers for cigarettes. Congress will have to find the right balance, but at this point we're guessing it will be closer to the original agreement than to the one favored by the president.

The big questions that need to be settled will reveal much about elected officials' ability to swear off the tobacco drug. They still must decide how much settlement money can be siphoned off for attorney fees, and whether tobacco companies can claim settlement fees as a tax-deductible business expense. All the while, tobacco companies erect billboards and fill vending machines from Asia to eastern Europe, counting on international addiction to counterbalance any signs of backbone at home.

Clinton made clear that he was taking a stand against the industry--and signalled that he plans to make tobacco a huge issue in next year's elections. Democrats will portray Republicans as pawns of a rogue industry; the GOP will depict Democrats as lackeys of greedy trial lawyers. Clinton and congressional leaders say they still want a bipartisan accord. But even Republicans, who have traditionally sided with the industry, are distancing themselves from the original deal. "The tobacco pact has no credibility--none whatsoever," says Representative Marge Roukema (R-N.J.). "We'd look like accomplices to the perpetration of a crime if we approved it."

A comparison of the tobacco deal reached in June by states and the tobacco industry and of details of President Clinton's proposal outlined Wednesday:

Surrounded by youngsters in fire-engine red "Tobacco-Free Kids" T-shirts, Vice President Gore yesterday inaugurated the administration push for comprehensive tobacco legislation with a vow to stand firm on the anti-smoking goals President Clinton laid out Wednesday. Gore said the administration has invited Democratic and Republican congressional leaders to the White House in early October to help craft a bill that would curb tobacco advertising and sales to youngsters, grant the FDA broad regulatory powers over nicotine and increase the price of a pack of cigarettes by $1.50 over 10 years if teenage smoking is not sharply reduced.

President Clinton's proposal to stiffen the terms of the tobacco settlement and throw the issue over to Congress likely will mean a longer period of uncertainty for cigarette makers and investors, according to industry executives and analysts. That helps explain why the stock prices of tobacco companies have slipped about 10 percent in the days before and after the president's announcement, Wall Street sources said.

Smokers favor the tobacco deal that state attorneys general cut with the tobacco companies, designed to reduce smoking, by almost the same margin as nonsmokers. And of those smokers who oppose the deal, more worry that it doesn't go far enough in protecting public health or regulating tobacco companies than are concerned that it gives the federal government too much control.

Backers of the current deal tend to be upper-income people, blacks and liberals, according to the poll. Among opponents who say the deal isn't tough enough, concern is highest among Democrats, women and young adults.

The legal drive to reduce smoking "is the most important thing I ever will be involved in in my life," Mississippi Attorney General Michael C. Moore said Thursday. . . "We have changed an industry; we have changed a culture. I get maybe hypersensitive to the criticisms I hear sometimes that it is not a perfect deal," said one of its negotiators, Minneapolis attorney Charles S. Zimmerman. The speakers appeared at a conference on tobacco litigation sponsored by Mealey Publications of Wayne, Pa., which publishes legal documents.

Farmers asked Congress on Thursday for a share of any national tobacco settlement but also expressed skepticism of government buyouts and sought preservation of federal tobacco controls.

Key senators warned tobacco farmers Thursday that anti-smoking sentiment in Congress may force them to choose between getting an economic chunk of the national settlement and salvaging the federal price-support program. Democratic Rep. Bob Etheridge of Lillington, one of two active tobacco farmers in Congress, joined other Tar Heel defenders of leaf growers at a Senate Agriculture Committee hearing on the settlement proposal announced in June and toughened Wednesday by President Clinton. "A buyout that ends the quota system is a temporary fix that does not address the long-term stability of the community," Etheridge said.

U.S. tobacco growers warned senators on Thursday against scaling down the tobacco program or eliminating it outright as part of the proposed $368.5 billion pact with cigarette makers. They predicted disastrous price declines and the loss of tens of thousands of small farms if Congress followed suggestions, like that of Senate Agriculture chairman Richard Lugar, Indiana Republican, to deregulate the crop and use money from the settlement for transition payments to growers.

Farmers asked Congress on Thursday for a share of any national tobacco settlement but also expressed skepticism of government buyouts and sought preservation of federal tobacco controls. "We want to grow tobacco. That is the business we are in," said Rod Kuegel, a farmer from Owensboro, Ky.

Among President Clinton's top five principles in any tobacco deal is protection of farmers, but he has not offered any concrete proposals to do that.

"We know that tobacco farmers are honest, hard-working people, most of whom live and work on small, family-owned farms," Clinton said in unveiling his long-awaited assessment of a proposed $368 billion tobacco settlement. "Any [settlement] legislation must protect these farmers, their families and their communities from loss of income." Cigarette manufacturers, who refused to include provisions to protect farmers when striking their preliminary agreement in June to settle current and future lawsuits, said Wednesday that they also favor "special consideration" for the farmers.

A letter from tobacco-state lawmakers to President Clinton last week urged protection for small tobacco growers and their communities as part of the landmark tobacco settlement. But like the president's remarks yesterday, the group -- headed by U.S. Rep. Scotty Baesler of Lexington -- offered few details for how that should be done.

The tobacco deal may be dead for the duration of this Congress, or it may be dead for all time. Either way, public health is a winner.

Tobacco is what has delivered Skip to the big leagues of the victimization of America. He is trying to ride this horse all the way to the White House.

The public health gains are likely to be far greater without a deal than with one. Without a deal, the state suits and the class-actions will proceed, with ever increasing rates of success. The Mississippi and Florida individual state settlements begin to show what can be extracted from the industry, without compromising any victims' rights. The lawsuits will also bring more and more document disclosures, revealing the tobacco companies' historic mendacity. That will change the political climate, making higher tobacco taxes and tough industry regulations, including limits on the companies' overseas operations, possible.

The billions of dollars earmarked for trial lawyers such as Robins, Kaplan, Miller and Ciresi could pay for early childhood vaccinations and Head Start-style nutrition programs for millions of underprivileged American children. For the wealthy trial lawyers involved, those bucks would just add another layer to already countless layers of unneeded wealth -- new millions piled on top of old millions. The American Trial Lawyers Association recently announced it will embark on a massive public-relations campaign to improve the steadily deteriorating public image of its members. What better way than to urge its members to forgo their obscenely excessive tobacco settlement fees and, in an unprecedented show of altruism, urge Wellstone to rethink his position and sign on as a co-sponsor of Sessions' proposal.

President Clinton has put the tobacco industry and Congress on notice thatthe national tobacco settlement should serve the entire public's interest, not merely protect those who negotiated the deal behind closed doors.

President Clinton drew the right lines this week when he laid down the minimum conditions that any comprehensive deal with the tobacco industry must meet. Our only quibble would be that he may not have gone far enough. . . Most experts agree that price increases are the most certain way to reduce youth smoking. But there is no good reason for limiting the price boost to $1.50 if further analysis shows that more is needed. Higher increases would cut smoking even more.

President Clinton's recent views on a historic deal with tobacco companies add spice to the churning cauldron of this complicated issue. . . With Clinton's proposal on the table now, the Senate and House can move on to a bill that can have nationwide effect with nationwide education programs and advertising. Whether it's accomplished this year or next is not as important as getting it done right.

WHO WOULD have thought a year ago that President Clinton could suggest raising cigarette prices $1.50 a pack and the tobacco companies would respond not with outraged venom but with an annoyed grumble and a grudging willingness to continue talking? . . . Clinton could have sped the process if he had presented Congress with more details rather than broad outlines. But his proposal gives House and Senate leaders a solid rough draft that has the potential for saving lives.

Lexington (KY) Herald Leader Has a number of stories examining the effects of a National Tobacco Agreement on the farming community.

• 9/21/97 Big Farmers, Tenants Face Biggest Risk Lexington (KY) Herald Leader
  
  The consequences of such actions would not fall evenly among the 60,000 Kentucky farmers who raise tobacco and the 126,000 landowners with tobacco quotas. Tobacco's decline could be a body blow for many tenant farmers, migrant workers, big-time producers and others who count on burley for much of their annual income. On the other hand, the effects could be less traumatic for some part-time growers, diversified farmers and landowners who lease out their quotas for others to grow.
• 9/21/97 Other Businesses Rely on Burley
  
  Statistics compiled by UK agriculture economist Will Snell and graduate student Brad Gross show that nearly one in three jobs in the county can be attributed to tobacco money. That includes money the farmer gets, what he spends it on, and the effect of the money being passed on through the community. Kevin Luther figures he has one of those jobs. He's co-owner of Kindoll & Riley, which sells new and used tractors and other farm equipment. "Without tobacco we wouldn't have a business," he said. "It's at least 95 percent, and the other 5 percent is city farmers and lawn and garden." Overall, Snell says tobacco accounts for about 6 percent of Kentucky's economy. The number might strike some as sounding too low, but he says it's a significant chunk of production and jobs.
• 9/21/97 Family Turning to Other Crops for Part of Income
  
  "We're expecting change in the tobacco program and we'll deal with it when it comes," Ann Bell said. "We're taking steps to prepare for it with diversification." John Bell said, "It's good business sense. You don't want to have all your eggs in one basket."
• 9/21/97 High Pay Makes Long Separation from Family Worth It
  
  It's 1,500 miles from the Shelby County fields where Jesus Cardenas is cutting tobacco to his home and family in Mexico.
• 9/21/97 Millionaire Is Part Of Trend Toward Bigger, Fewer Growers
  
  "Tobacco paid for the golf course," said Rankin, of Jessamine County. That was possible because Rankin may be the state's largest tobacco grower. He has 725,000 pounds of tobacco quota on his farms in Jessamine, Fayette and Bourbon counties, and another 200,000 leased. He is part of a trend in tobacco: the concentration of production in the hands of larger growers. He grows 200,000 pounds and has tenants raise the rest.
• 9/21/97 Lack Of Land, Quota-buyout Talk Making Life Uncertain
  
  But the Hays family is worried about what changes could be in store with a proposed tobacco settlement -- especially the talk of a quota buyout. Farmers like Jeff Hays, who own little, if any, of the land they farm could be left out in the cold if money is distributed based on who owns the tobacco quotas. "With land being as expensive as it is, I can't afford to buy a farm," he said.
• 9/21/97 'I guess I just love it; it's in your blood,' says Bath man
  
  Out the door at 5 a.m., coffee in hand, and on the road for the hourlong drive to Lexington. Work 10 hours at the factory. Drive 50 miles back home and into the field to set tobacco, or top tobacco, or cut it, or strip it.

J. Paul Sticht, a former chairman of what is now RJR Nabisco Holdings Corp., was surprised and upset that RJR Nabisco had agreed to settle with its legal opponents. "We always decided to fight," said Sticht, who led the company through the 1970s and early '80s when its subsidiary R.J. Reynolds Tobacco Co. was still the biggest tobacco company in the country. "We never saw a reason to settle." . . Another former RJR Nabisco board member who spoke on condition of anonymity has a more pessimistic view. "I think this settlement is a going-out-of-business sale," he said. "They are using this thing like an oil well in that they are just depleting it -- get as much cash out now and move into other businesses. And like an oil well, they'll shut it down when they can't get any more out of it." Until relatively recently, smokers were accepted on elevators, public buildings, and airplanes and it was considered rude to ask a smoker to go outside, the former director said. "Now if a smoker comes into a group, it's like he has leprosy," he said. "That's what has happened in 10 years."

And it took Kennedy above all to help him get past the details of the tobacco settlement to raise his sights and fix them on price. The result is a slam-dunk political issue that can bring about a massive change no one thought possible just a few months ago. All the president has to do is stay on the high ground he has just occupied.

"When we draft legislation with both parties in both chambers, it is a principle that we are going to hold steadfast to," Clinton adviser Rahm Emanuel said Sunday on CNN's "Late Edition."

"We've always said that some form of caps on liability is not a deal-killer for us, but we would condition that on getting the kind of comprehensive plan to reduce smoking that we're asking for," Mr. Reed said on Fox News on Sunday. "We very much want to get this done."

The U.S. tobacco industry's top negotiator said Sunday that a final national agreement to settle lawsuits against the industry is possible by spring or early next summer. In an interview on CNN's "Late Edition with Frank Sesno," J. Phil Carlton, a North Carolina lawyer, also predicted that the final pact would mirror the agreement reached on June 20 between state attorney generals and the tobacco industry. "I believe that when the Congress and the administration realize all that is contained in this complex document, it will be enacted into law," he said.

Mr. Carlton's televised remarks were a prominent example of what others at tobacco companies describe as the industry's new strategy of increased visibility as the focus on the tobacco issue shifts to Capitol Hill. This campaign, people in the industry say, will hammer two basic points: The industry backs the president's goal of sharply reducing teenage smoking, and it is willing to work toward this goal in exchange for relief from the wave of state and private lawsuits against it.

Bloomberg News will sponsor a discussion of prospects for national tobacco legislation. The first panel features White House domestic policy adviser Bruce Reed, Philip Morris attorney J. Philip Carlton, Mississippi Attorney General Michael Moore, and Bill Novelli, President for Campaign for Tobacco- Free Kids. The second panel includes four tobacco industry analysts talking about the impact of the settlement on the tobacco companies. Panelists include Roy Burry from Oppenheimer & Co., Martin Feldman from Smith Barney, Jack Maxwell from Davenport & Co., and Ethan Siegal of The Washington Exchange. 9:30 a.m. National Press Club, 14th and F streets N.W., First Amendment Room. Sept. 29. All interested investors, analysts, reporters and TV cameras are welcome. Please call the contact below to reserve a seat. CONTACT: Julie Slattery of Bloomberg News, 202-624-l866.

[Pete] Stark shares the view that it's but a matter of time before the courts slap a major tobacco company with the kind of wrongful death suit that will drive it into bankruptcy. While not so sure as Stark about the final victory, the Clinton people consider this a fight well worth making and, as one key aide told me, a "great election year issue" besides. So expect the Clinton message to stay tough and streetwise. Joe Friday to Joe Camel: No deals.

The Bootleggers Full Employment Act of 1997 was unveiled in Washington last week.

What public intervention could control the mutual stimulation of supply and demand? The only way it has ever been possible to do this is by creating a non-profit way to serve existing demand. Interventions that effectively serve existing demand also effectively eliminate the profit opportunity that motivates private enterprise. Therefore, an effective program to eliminate profit-making opportunity and interrupt the mutual stimulation of supply and demand would start with the following two core elements: 1) Make private enterprise in the manufacture, distribution and sale of tobacco products illegal, and 2) Create a public health agency authorized to supply the existing demand for tobacco products.

President Clinton set the upper limits on Wednesday, sending to Congress a tough package of tobacco-control principles that go far beyond anything the cigarette companies have been willing to accept up to now. Between Clinton's ceiling and the June settlement floor lie scores of billions of dollars for the tobacco industry, more than a dollar a pack for smokers, and the possibility that hundreds of thousands of people, most of them teen-agers, might be deterred from smoking. By proposing only principles, Clinton delivered to Capitol Hill a vast, unwieldy and largely blank canvas that is not likely to be completed until next spring, if ever. But at least now such a canvas exists, and lawmakers can begin to do what they do best: posture and politic in public, haggle and horse-trade in private.

"Congress will act," predicted Sen. Connie Mack, a Florida Republican pushing for legislation that is tough on tobacco. "There will be throughout the country a strong reaction to the need to do something about the effects of tobacco on our society." The road will be long and tortuous, but the elements are in place for Congress to pass a national tobacco policy next year.

The best, the ancient Greeks used to say, is enemy of the good. By seeking the whole cigar, to put it more colloquially, you may find yourself puffing in thin air. The tobacco deal is no mealy-mouthed thing . . . The Clinton proposals would be an outrage if actually put into effect, and yet may produce something quite the opposite of their purpose: the near-term preservation of the status quo.

Washington's official repudiation of last summer's sweetheart deals with the tobacco industry deserves some applause. . . But if the president's goal is to cut smoking among kids, maybe he should start bringing some of his persuasive powers to bear on parents. When was the last time he said anything about moms and dads and their moral duty to their kids?

The industry strategy of hook 'em early and keep 'em puffing has been very good for the tobacco companies, but very bad for smokers and society. The president's insistence on attacking that strategy guarantees a fight in Congress and risks the companies' walking away from the table.

It was one of the darkest mysteries of Congress: who was the mastermind behind the biggest heist of the year--the delivery of a $50 billion tax break for tobacco companies? Now a prime suspect has emerged: former Republican National Committee chairman Haley Barbour. Two Republican Party officials told Time last week that Barbour, now a millionaire tobacco lobbyist, had gone to House Speaker Newt Gingrich and majority leader Trent Lott and persuaded them to slip a giant gift to his clients into the must-pass balanced-budget agreement just minutes before it was inked. . . You would think that getting caught in a clear exchange of cash for a tax break might pique the interest of the two committees busily looking for just that. But you would be wrong. . .After the House killed the tax break on Wednesday, members of Congress piled onto a United States Tobacco Co. jet that very night to fly to a--this is hard to believe--tobacco-industry fund raiser in Manhattan. How's that for remorse? When the posturing at the hearings is over, the Capitol will still be for sale, and that's just what most of the Congress intends.

The study found that the tobacco companies could reap as much as $123 billion in additional profits in the next 25 years if the settlement plan was adopted as drafted. The analysis, conducted in response to a request from Congress, also concluded that the $368.5 billion face value of the settlement was significantly overstated. The real cost to industry is about $207 billion because the companies' payments are to fall as cigarette consumption drops, the commission staff report found. The cost to industry of the June agreement is about $100 billion in today's dollars, the study found.

"This exemption as written would allow the tobacco companies to get in a room, sit down, talk to each other and say, 'Well, what do we think the best price of a pack of cigarettes is and what do we think is the right level of profits for us to earn?"' The report said if tobacco companies take advantage of proposed antitrust exemptions they could net extra profits of anywhere from $36 billion to $123 billion over the next 25 years. It also said history shows that the tobacco industry has been quick to raise prices when it can.

The report says the settlement gives cigarette manufacturers an exemption from antitrust laws that would allow them to collaborate in raising prices as high as they want. The report also says payments made by the companies under the settlement "most likely will be considerably less than the $368.5 billion in the agreement." If the settlement achieves its goal of reducing smoking and cutting cigarette sales, the manufacturers would pay less. The FTC analyzed the potential economic impact of the settlement at the request of the House Task Force on Tobacco and Health. FTC Chairman Robert Pitofsky emphasized today that the commission is taking no position on whether the settlement is in the public interest.

As the FTC noted, Liggett's demise will move the industry 'closer to a monopoly pricing level after the settlement.' This report validates Liggett's concern that the June 20th settlement was drafted by Big Tobacco, for the benefit of Big Tobacco."

"Eight dollars a pound has struck a very resonant chord with our growers," said Andrew Shepherd, vice president of the Raleigh, North Carolina-based Flue-Cured Tobacco Cooperative.

But major questions remain unresolved, Baesler said, such as where the money would come from, whether it would be taxable, whether it would be paid in a lump sum or over 25 years, how to divide it between quota owners and tenants, and what the conditions would be under which farmers could keep growing tobacco after a buyout -- if at all.

In Washington, the proposed tobacco settlement is a political hot potato that few congressmen want to touch. In Mineola, it's enough of a done deal to be included in Nassau County's proposed 1998 budget. Buried in his 904-page proposal in a line labeled miscellaneous receipts, County Executive Thomas Gulotta stuck in $16 million in revenue from the tobacco deal. "It's a very speculative number to rely upon in a budget line at this juncture," said Nassau Comptroller Fred Parola, who is analyzing the Gulotta proposal.

Senate Majority Leader Trent Lott (R-Miss) and President Clinton each have a brother-in-law with a huge financial stake in the $365 billion tobacco settlement currently working its way through Congress. Lott recused himself from the deal; Clinton did not. But Lott has gotten so tangled in the tobacco controversy that even some Republicans are privately wondering whether the apparently unprecedented recusal by a Senate Majority Leader has gone up in smoke. Despite turning responsibility for the deal over to his deputy, Majority Whip Don Nickles (R-Okla), Lott has tried to help soften the blow of the settlement deal for the tobacco industry with a $50 billion tax credit, has offered several public comments that have affected the progress of the negotiations, and seems to have a shifting definition of what it means to recuse oneself. Lott insisted in two separate interviews that he has not violated his recusal.

A key congressional committee is already formulating its part of a tobacco litigation settlement, and the industry expects final approval of the entire deal next year, officials said Sunday. Their comments confirmed what some analysts have been saying for days: that news of the tobacco deal's death is somewhat premature, even if President Clinton did send a first draft to the political mortuary. . . On Sunday, however, Senate Agriculture Committee Chairman Richard Lugar, R-Ind., said his panel was prepared to proceed on its own. "We are, in fact, going to formulate legislation," Mr. Lugar told Fox News Sunday.

Health and Human Services Secretary Donna Shalala proposed that lawmakers levy penalties aimed at curbing youth smoking on a company-by-company basis, so that those that make brands popular among underage smokers pay more than others. "I think it's doable," Ms. Shalala told the Senate Labor and Human Resources Committee. "We do know that kids in particular are sensitive to brand names. This will be a very important point for Congress to consider as it reviews the legislation."

"We in the administration are eager to work with you and others in Congress to meet this responsibility and to make major progress on one of the most significant public health challenges facing our nation," she told a Senate hearing Thursday.

Members of the Senate's Labor and Human Resources Committee voiced concern over whether the Food and Drug Administration would ban tobacco if given full control over the issue. "It is not going to take a randomized trial" to determine that tobacco kills you, said Sen. Bill Frist, R-Tenn. "I would say your goal is to eliminate tobacco as a product in this country." Secretary of Health and Human Services Donna Shalala told the committee that the goal of FDA oversight would be to stop teen smoking. However, she added that the agency's hands should not be tied from making future decisions if science dictated.

Senators criticized President Clinton on Thursday for not being more specific about a national tobacco settlement but agreed with him that the primary goal of any law should be to reduce youth smoking. "Reducing teen smoking has to be the main objective," said Sen. Mike DeWine, R-Ohio, told Donna Shalala, the health and human services secretary. But he criticized the administration for not drafting its own bill. "I think it would have been helpful," DeWine said at a hearing by the Senate Labor and Human Resources Committee, one of several congressional panels responsible for shaping a national tobacco policy. "I think it's going to be a lot tougher without that kind of legislation." Shalala said the administration had no plans to send a bill to Congress, but instead wanted to work with lawmakers as the policy develops. She said Clinton simply laid out the "five core principles" that must form the basis of any tobacco legislation he would support. "If we do it right, we have an opportunity to usher in one of the greatest public health victories of our time," she said.

Is the potential federal Medicare claim a potential looming liability that faces the industry? Or will Congress not assert a Medicare claim and provide the tobacco companies with a multibillion dollar windfall?

A masked senator said nervously, "Suppose someone finds it and they vote to repeal it?" "You are worrying for no reason. No one is going to discover a tobacco tax break in a bill this large. Frankly, I think we should insert a rebate of more than $75 billion because it might be the last tax break we have." The other masked senator said, "I always like to sneak in a bill when no one is looking. I once got the Senate to approve an Air Force base in my home state when they were voting on a bill to eliminate scarlet fever. Getting something you want for something you couldn't care less about is what makes Congress a great legislative body."

Although tobacco companies say they'll dig deep in their pockets to pay for any settlement with states, others say the payout will hit another industry harder -- the insurance industry. Anti-smoking advocates say the manufacturers aren't as hard hit as they claim because their product liability insurers will pay a good part of the final settlement.

Is the tobacco industry playing Brer Rabbit to President Clinton's Brer Fox?

Asked if the industry could pay more, attorney Phil Carlton simply said: "No." He added, "They have milked this cow dry as far as money is concerned."

• 9/27/97 Smoke Hasn't Settled in Tobacco Wars
• 9/27/97 Who's Who in the Tobacco Debate
• 9/27/97 Tobacco Facts
• 9/27/97 State-by-State Tobacco Index
  
  Click on a state from the map below to view state-by-state information on tobacco taxes, revenues and lawsuits.

A cigarette maker helping pay for a state-sponsored conference has been the only private company invited to have a speaker at the gathering of agriculture leaders, lawmakers and other public officials. A representative of the Philip Morris tobacco company is scheduled to talk at the Kentucky Agricultural Leadership Summit about the proposed $368 billion settlement of lawsuits against the tobacco industry. Nobody representing health groups has been asked to present a viewpoint at the conference scheduled for Nov. 13-14 in Louisville.

The proposed settlement, which Clinton said should be translated into legislation and also improved, would recoup hundreds of millions of federal dollars spent by Medicaid to treat smoking-related ailments. Justice Department lawyers, however, never joined the lawsuits or negotiations other than to, as department officials explained, "monitor" what was happening. In addition, the government's lawyers never filed a lawsuit to recover Medicare money -- federal health insurance for the aged -- that was spent treating smokers' illnesses. . . The Justice Department's actions, or lack of action, were indicative of a debate within the Clinton administration and elsewhere: should the government recoup the money through litigation and the courts or let Congress decide, as a public health matter, to impose regulatory penalties on the tobacco companies? The Clinton administration has chosen the latter course. "I'm not sure (the Justice Department) was invited" to join the states' lawsuits, said Sen. Orrin G. Hatch, R-Utah, chairman of the Senate Judiciary Committee.

Until Congress decides how much of the $1.50-per-pack increase will come in the form of increased levies and how much will be in the form of penalties, it is impossible to predict how Clinton's plan would affect government treasuries. But tax increases, if they are imposed, won't necessarily guarantee more revenue. If they actually push down smoking, government receipts could actually decline. But then again, maybe that's a price the country is willing to pay.

"As long as the focus remains on reducing teen smoking as the president called for, Congress can get this done," Bruce Reed, assistant to the president for policy development, said at a public forum yesterday. . . "The only competitive tool that these companies will have left will be price competition," Carlton said, adding, "When the FTC says there is some threat to price competition, that's an amazing statement." . . . Mississippi Attorney General Michael Moore . . . said he is worried Congress is moving too slowly and that upcoming court actions could shift the balance of strength to the tobacco industry. He said the drafting of proposed legislation - based on the June 20 settlement and requested by some legislators he would not identify - is 90-percent done.

The settlement would create a new era of cigarette marketing, J. Phil Carlton, the tobacco industry's top attorney, said at a panel discussion sponsored by Bloomberg Financial News Service. "The only way for cigarette companies to compete will be price competition." . . In turn, that would increase demand for the cheaper, foreign-grown tobacco used to produce discount cigarettes, said Jack Maxwell, a tobacco stock analyst with Davenport & Co. Those moves would cost the tobacco companies. . . The potential for increasing tobacco imports poses an additional threat to U.S. tobacco growers . . . But the deal still is a winner for the industry, and analysts said its passage is all but inevitable because it serves the interests of the tobacco companies and anti-smoking advocates.

Figuring that a crackdown will come sooner or later, gasoline marketer Ultramar Diamond Shamrock Corp. is adding new racks behind cash registers to make room for cigarettes that are now displayed on countertops. Discounter Kmart Corp. has moved cigarettes from open floor displays to "tobacco convenience centers" stationed in the front of about 900 of its 2,100 stores. Both Kroger Co. and regional convenience-store chain Family Express Corp. have created "store-within-a-store" cigarette areas, with access restricted to adults.

Mr. Clinton called on Congress almost two weeks ago to craft legislation building on the $368.5 billion agreement between the tobacco industry and its foes, saying the measure should include strict marketing and advertising curbs and a potential price boost of $1.50 a pack over 10 years if teen smoking doesn't decline. Now he's acting to build momentum for legislation. The White House meeting at 11 a.m. Wednesday will be Mr. Clinton's first face-to-face discussion with lawmakers since his Sept. 17 announcement. This week's meeting is Mr. Clinton's effort to take the next step: persuade lawmakers to introduce legislation that would get the debate rolling, the aide said.

A top White House adviser and tobacco industry representative were optimistic yesterday about their prospects. But important parts of the political mix remain volatile, key backers of a national accord indicated yesterday. . . Carlton pushed for the settlement proposal to remain intact. "We haven't agreed to change one word, one comma, one syllable in the June 20" proposal, he said.

President Bill Clinton plans to invite leaders of Congress to the White House on Wednesday to discuss ways to advance tobacco legislation, the White House said on Monday. White House spokesman Barry Toiv said a number of members of Congress had been invited to the meeting, including the leadership, but it was not yet clear who would be attending. "The purpose of the meeting is to discuss the process for developing and enacting legislation to protect kids from tobacco," Toiv said.

Senate Agriculture Committee Chairman Richard Lugar (R-Ind.) said today that Congress and the White House have not agreed on the current tobacco settlement. Lugar noted that a meeting yesterday between White House officials and representatives of Congress was intended to determine "who will lead, who will do something." Lugar's comments came this morning during an interview on the daily public affairs program Washington PartyLine, airing on CHANNEL EARTH. "In the agriculture area we are working with producers to see what the affects of the settlement will be," Lugar said. "I'm going to come forward with a plan during the month of October that people can discuss."

After days of squabbling on other topics, President Clinton and House Speaker Newt Gingrich (R-Ga.) put aside their differences yesterday and agreed to create an informal joint working group to craft a bipartisan compromise on tobacco legislation.

Republican leaders emerged from a meeting with President Clinton pledging to try to pass tobacco legislation by early next year, possibly by hammering out a compromise in a bipartisan task force similar to the one that negotiated last summer's budget agreement. "There's a broad consensus that we want to make sure that children don't smoke, and there's a broad consensus that we want to find a way to pass legislation sometime early next year," said House Speaker Newt Gingrich.

"There's a broad consensus that we want to find a way to pass legislation some time early next year," House Speaker Newt Gingrich said. . . Clinton and the leaders from both parties decided to model their efforts on the informal talks that led to the landmark bipartisan accord to balance the budget earlier this year. "That's the way I'd like to approach this," Gingrich said. "Let's get it all laid out into a common-sense working document, and then let's see if we can't get the job done." Clinton has asked Erskine Bowles, his chief of staff, to set up the process. Bowles, a conservative North Carolinian who has the trust of congressional Republicans, was a pivotal figure in those budget talks.

President Clinton and congressional leaders sat down to work in a bipartisan spirit yesterday on achieving landmark tobacco control legislation, perhaps as soon as early next year. The White House said it was preparing to set up a working group of lawmakers and administration aides to seek a legislative compromise, in the same way a budget-balancing accord was negotiated earlier this year.

After pledging help for farmers in the national tobacco settlement, President Clinton did not invite one of their key allies to a meeting yesterday where congressional leaders discussed the deal's future. U.S. Sen. Wendell Ford, one of the tobacco growers' most vocal and powerful advocates in Congress, said the fact that he and other key tobacco-state lawmakers were excluded "calls into question just how serious the White House will be in helping find a solution for our farmers."

Congressional leaders balked Wednesday at President Clinton's suggestions for a tobacco deal, saying they want to ensure that trial lawyers don't grab too big a chunk of any financial settlement. "Certainly among the Republicans there was a strong feeling that literally billions of dollars, maybe $100 billion, is at stake," Gingrich told reporters. "That could be spent on health in general and on children's health in particular ... rather than just (going) to enriching a small group of trial lawyers."

Without an agreement fully in force, the status quo would prevail. That would be unacceptable. After many years of struggling, a historic deal was struck. It is not perfect, but it's better than going back to square one.

House Speaker Newt Gingrich and the chairmen and ranking minority members of relevant congressional committees attended the White House meeting. Reporters and photographers were not allowed in to record the start of the meeting. White House spokesman Mike McCurry said Clinton wanted to use the meeting to "push hard for a strong bipartisan effort to enact the particulars of a program that would achieve our public health goals with respect to teen smoking."

But while lawmakers emerged from the White House today supportive of the effort, Republicans complained Clinton had not offered any legislation, especially covering a possible $1.50 rise in the cost of a pack of cigarettes.

"I think the president is asking the questions that ought to be asked" on the proposed settlement between states and tobacco companies, said Dr. C. Everett Koop . . . "I just hope he holds firm on them," Koop added.

"What we're dealing with (in the recommended formula) is Monopoly money," [Attorney General Richard] Cullen said. "I would give a stern warning to budget writers to be very wary of these numbers." Indiana Attorney General Jeffrey A. Modisett has headed a committee of attorneys general looking at how to split up more than half of the money the tobacco industry agreed to pay to end lawsuits against it by 40 states. He reported to colleagues in a letter Sept. 16.

Worse still, members no longer feel the glare of public scrutiny. In 1994, then-Republican National Committee Chairman Haley Barbour wrote that "Americans are justly angry with Congress. They feel it has lost touch with them and their needs and they are right." But now, in his new incarnation as a lobbyist for big tobacco, Barbour is writing other things. Like tax-break provisions for his new employers. This summer, with the help of his buddies Gingrich and Trent Lott, he engineered a write-off for tobacco companies worth $50 billion.

And now, with discussions about helping farmers gaining public attention, the details of those brief, early talks are in dispute. Both sides claim they were out front in suggesting aid for the nation's 124,000, potentially politically persuasive tobacco growers. Indiana Attorney General Jeffrey Modisett testified last month before the Senate Agriculture Committee that the state attorneys general wanted the deal to include economic help for farmers, but the issue was a "deal breaker" to the industry. In a letter dated Wednesday to Modisett, however, the tobacco companies' top attorney said Modisett's characterization of the talks is wrong. "You may be sure that the tobacco industry never thought legislation should or could pass that did not address the legitimate and important concerns of tobacco growers," J. Phil Carlton

The House speaker urges a broad "antiaddiction" plan aimed at teens. He cites a school official who told him of a child whose father said it was OK to smoke marijuana but not tobacco; an aide notes the binge-drinking death of an MIT student. A wider approach could attract social conservatives and parents' groups to back a final measure next year.

Cecil B. Wilson, MD, President of the Florida Medical Association, today announced creation of the "Breath of Fresh Air" Coalition, a group currently comprised of more than 40 health-related organizations committed to use of funds from the recent tobacco settlement for health-related purposes. . . "The Breath of Fresh Air Coalition will stand united in the coming months to oppose use of tobacco funds for non-health-related purposes," Wilson said. "Those of use who work together to improve the health of Florida's citizens must work together even more vigorously as we enter what is likely to be an all-out battle for the funds," he concluded.

Officials of health care funds providing coverage for some 32 million working class Americans told House Democrats today that within their membership could be found the hardest of the hard core of American smokers and those most in need of help in the way of smoking prevention and cessation programs, including women and minorities. Their presentation was to the House Democratic Caucus Tobacco Working Group. . . "... failure to address the problem of the hard core smokers is failure to address the problem of smoking in America in a meaningful way -- it is as simple and uncomplicated as that," said Robert J. Connerton, Chairman of the Executive Committee of the Workers Coalition for Health Care Funds.

In other business Monday, the Board of Supervisors: TOBACCO SETTLEMENT: Went on record in opposition to the proposed $368 billion settlement between cigarette makers and more than three dozen states that would end dozens of anti-tobacco civil suits. Locally, elected leaders are concerned that none of the money would trickle down to city coffers.

Private lawyers representing 40 states in their suits against the tobacco industry stand to get more than $14.7 billion over 25 years if the national settlement between the states and cigarette makers is approved by Congress and the White House, a Seattle Times analysis shows. The record-smashing fee is potentially so large that it could threaten the passage of the $368.5 billion settlement with the tobacco industry and arouse the skepticism of a wide range of observers regardless of their views on the lawsuits against cigarette makers.

"We don't know how extreme the anti-settlement lobby is," Feldman said last Monday at a forum sponsored by Bloomberg News in Washington. Feldman need only look -- and listen -- to hear some of that sentiment. Seated only a few feet away in the First Amendment Room were representatives of various health and anti-smoking groups, such as Anne Morrow Donley of Richmond. Donley, a leader of Virginia GASP (Group to Alleviate Smoking in Public), branded the proposed settlement "a pardon that is a license to kill" by allowing the tobacco industry to keep selling cigarettes and "killing a certain percentage of kids each year." . . . The health advocates, sometimes viewed as walking in lockstep against Big Tobacco, actually march to plenty of different drummers. During the Bloomberg panel discussion, William Novelli, president of the Campaign for Tobacco-Free Kids in Washington, faced critics who blasted him for siding with the tobacco industry on the settlement.

The Senate's point man on tobacco says he's not convinced sweeping legislation is needed to combat the nation's deadliest habit. He offers a simple suggestion. "You know, Nancy Reagan had a pretty good anti-drug campaign when she said, `Just say, no,"' Senate assistant Republican leader Don Nickles (R-Okla.) said at a recent news conference. "I'd hope that people don't smoke." . . Nickles' fingerprints are certain to be on any legislation that ultimately is introduced on Capitol Hill and sent to President Clinton for his signature. And that should provide some comfort to the tobacco industry, which has long seen Nickles as a friend. In the past six years, federal records show, the Oklahoma Republican has received nearly $60,000 in campaign contributions from tobacco giants. Now, as the lead Senate Republican on tobacco, Nickles is responsible for deciding what, if any, national legislation may be needed to better control tobacco, blamed by some for more than 400,000 U.S. deaths a year.

"Quota" is the crucial economic fact of life among North Carolina's 18,000 growers. Through a system of county-by-county limits on tobacco sales - based largely on production during the Great Depression, when the program started - the government stabilizes U.S. prices and helps keep them above world levels. It also creates a market in buying, selling and leasing quota.

Both sides fear Congress may end the federal program that imposes quotas on tobacco production and guarantees floor prices for growers. That would cause the price of tobacco to drop, hurting farmers but benefiting Big Tobacco. Health activists want to keep tobacco prices high so fewer people will smoke. They note that ending the federal tobacco quota program could lead to an explosion of tobacco production, perhaps including its return to Texas. Growers, already stung by tobacco firms' increasing use of foreign leaf, fear decontrol may cause an explosion in domestic supply. That would slash their profits per acre, demolish property values, destroy retirement nest eggs and drive smaller growers out of business. Both sides are lobbying Congress to give the growers more, at the expense of the tobacco firms and the smokers who will pay higher prices.

Some Indian legal experts say the settlement would erode tribal powers, essentially allowing states to decide how tobacco sales will be regulated on reservations. Under the settlement, a tribe's regulations would have to be as strict their state's. "This, in effect, completely subrogates the tribal interests to the interests of the states," said Alexander Tallchief Skibine, a University of Utah law professor. Tribal leaders also want to make sure the crackdown on tobacco sales doesn't interfere with religious ceremonies.

America's first smokers, the Indians, use tobacco at twice the rate of the general population and that's costing taxpayers some $200 million a year in hospital bills, a Senate committee was told Wednesday. Indian smoking is "clearly a major public health problem," said Craig Vanderwagen, director of clinical and preventive health for the Indian Health Service.

Liggett Group is pleading for political help to stay in business after breaking ranks with the rest of the U.S. tobacco industry and stating that cigarettes cause cancer and are addictive. Ronald Fulford, Liggett Group's chairman, has asked Gov. Jim Hunt to help the company avoid the more than $200 million a year for 25 years it could owe under a $368 billion tobacco settlement with nearly 40 states.

Ronald W. Fulford, the architect of Liggett Group's recent massive layoffs, is asking Gov. Jim Hunt to help his company avoid bankruptcy and save thousands of Liggett retirees from losing their health coverage and other benefits. The plea came in a letter sent last month and obtained recently by The News & Observer. It places Hunt in the position of having to balance the interests of current and former Liggett employees against thousands of workers elsewhere in the state who could be hurt if the tobacco settlement is scuttled.

The fate of the proposed tobacco settlement and, in turn, the health and longevity of generations of Americans now lie in the hands of the Congress. . . If we accept the proposed settlement in its current form, it will make some difference. But it will keep the industry booming and profitable at the expense of the nation's health. By focusing on the steps that we know will significantly reduce smoking, we will be protecting future generations from the spread of this addiction. And it can be done, if for once there is the national will to do so, without conceding an inch to the forces that have lied to, addicted, and killed Americans for years.

After months on the sidelines, Gov. Arne Carlson's administration on Thursday jumped into the national tobacco debate with this message: Settle it soon. "With 3,000 teen-agers taking up smoking each day, the opportunity cost of forgoing settlement is too high," two members of the governor's Cabinet said in written testimony to a Senate committee in Washington. . . "Now is not the time . . . to risk the health of our nation in courtrooms," the commissioners said. They described as a "solid package" the $368 billion settlement negotiated between the tobacco industry and some state attorneys general.

The administration of Gov. Arne Carlson endorsed a national tobacco settlement Thursday in terms critical of the three-year effort by Attorney General Hubert Humphrey III to battle the industry in court. "I'd rather take a bird in hand than engage in any kind of wishful thinking," Carlson told reporters. . . But Humphrey's office questioned Carlson's motivation for promoting its position Thursday and his understanding of the issue. "There's good news and bad news here," Johnson said. "The good news is that the Carlson administration is finally paying attention to the greatest public health issue of the day. The bad news is they don't know what they're doing."

Minnesota Gov. Arne Carlson's administration is splitting with the state's attorney general and urging Congress to settle with the tobacco industry. . . Carlson dispatched two of his top officials, Health Commissioner Anne Barry and Commerce Commissioner Dave Gruenes, to Washington this week to lobby for a settlement. . . "Most people believe it can be improved. It can be strengthened," Barry said Thursday. "At some point Minnesota can't be an island. Minnesota has to join in the discussion."

Congress should phase out the U.S. tobacco program, Senate Agriculture Committee Chairman Richard Lugar said Friday, by making $15 billion in transition payments to growers and their communities. In a letter to colleagues, Lugar said he would soon file a bill to put into effect his plan that would draw funds from the proposed $368.5 billion settlement between cigarette makers and states. "This legislation will get government out of the business of encouraging tobacco production," wrote Lugar, an Indiana Republican. "However, it will provide a fair and generous transition for tobacco growers."

In the first legislation to emerge from the proposed national tobacco settlement, Sen. Dick Lugar is proposing adding $15 billion to the deal to buy out tobacco farmers and gradually end government programs that support the crop. . . "It seems to me we have a responsibility to fashion a generous and fair program," Lugar, R-Ind., chairman of the Senate Agriculture Committee, said in an interview. "You'd have some stabilization in what is clearly a very, very difficult transition."

The tobacco companies didn't try to gauge the impact on youth smoking, but they predicted a 43 percent decline in overall cigarette consumption by 2007.

Cigarette makers say the proposed national settlement of tobacco-related litigation would raise prices by at least $1.50 a pack, far more than the 62 cent estimate commonly cited by the industry's critics. In an 11-page economic analysis of the pact released Thursday, the tobacco industry also said the proposal would cut cigarette consumption by up to 43 percent in the next decade. And it described as "seriously flawed" a recent Federal Trade Commission analysis that concluded the pact could boost profits by $123 billion over 25 years.

Tobacco companies estimated Thursday that the price of a pack of cigarettes would rise by $1.50 over 10 years -- much higher than the government's own estimate -- under a proposed nationwide settlement. The issue is key because President Clinton has insisted that any deal must include annual industry settlement payments and fines that are steep enough to force the industry to raise prices by $1.50 a pack over a decade.

A proposed national policy to curb smoking among American teen-agers must extend similar protections to young people abroad, public health advocates and members of Congress said Thursday. Leaders of several health groups urged the Senate Commerce Committee to use some of the money that would be paid under a national settlement with the tobacco industry to fund public education programs in foreign countries.

In a carefully worded statement sent to the Senate Judiciary Committee, the tobacco company said the word addiction has come to have different meanings, and "under some definitions, cigarette smoking is 'addictive.' " Philip Morris didn't give its own definition of the word addictive, but the company indicated it subscribes to a more technical version that wouldn't apply to smoking. Nonetheless, it will defer to public health authorities about what warnings on cigarette packages are most effective, the company said in its statement last week.

At a June hearing of the Senate Judiciary Committee, Democrat Edward Kennedy of Massachusetts angrily asked a tobacco-industry lawyer whether tobacco executives agreed with the warnings they had negotiated in the settlement. Mr. Kennedy noted that at a 1994 congressional hearing seven high-ranking tobacco executives flatly denied that nicotine is addictive; he wanted to know whether the companies had changed their stance. Now, more than three months later, three of the companies have responded with carefully worded statements that essentially deny that cigarettes are addictive and make only indirect references to their health effects. "We certainly accept that these warnings are true and acceptable reflections of the predominant public-health view," wrote RJR Nabisco Inc. Chairman and Chief Executive Steven Goldstone. RJR "supports the directness of these unqualified warnings as a means of communicating effectively with teenagers to discourage them from smoking," he wrote.

State attorneys general may have thought they negotiated a sweet deal for themselves when they reached a $368 billion accord with the tobacco industry in June. But Congress, always on the lookout for new sources of cash, wants a piece of the action. House Ways & Means Committee Chairman Bill Archer (R-Tex.) says Uncle Sam would be entitled to a portion of any settlement because the feds underwrite state health programs. "After all, we pay half of the Medicaid costs," he points out. "It's not just the states that are paying for the cost of medical care for the indigent."

A poll by Sanford C. Bernstein & Co., based on interviews with 62 institutional investors in Philip Morris and RJR Nabisco, found that 91% of those polled believe it would be a mistake for the companies to walk away from the agreement rather than accept any changes. Indeed, the institutional shareholders think the companies should be prepared to shell out more money. While the June 20 deal would have added about 70 cents to the average pack of cigarettes, the tobacco investors in the poll said they would accept a deal that would boost the price by up to $1 per pack, Sanford Bernstein's survey says.

An 83% majority of tobacco shareholders expect Congress to enact into law next year a settlement of health-related lawsuits against cigarette companies, according to a survey by Sanford C. Bernstein & Co. analyst Gary Black.

But if smokers want to influence a settlement between government and the tobacco companies, and/or affect major congressional legislation, the time to speak up is now. I happen to think that corporate tobacco needs -- not deserves, but needs, in this imperfect world, filled with imperfect people like me -- liability protection to encourage marketing of less-hazardous tobacco and nicotine products. I also believe that if billions of dollars are going to be thrown at smoking, a portion of that should be showered on smokers: possibly in developing more effective quit methods, underwriting smokers' rehab costs, compensating smokers for related out-of-pocket health costs and promoting optimally ventilated interiors. Even more important: Any comprehensive resolution that doesn't guarantee smokers' rights isn't worth the paper on which the Constitution of the United States was written.

"I think the key point is that the industry is looking to avoid any major decisions against it while Congress is debating the issue," said Martin Feldman, an analyst at Smith Barney Inc. Further, analysts suspect that tobacco companies will try to settle any remaining cases that are close to going to trial before the national agreement is approved by Congress.

Congress doesn't handle [multifaceted issues] very well. But I am of the inclination to see if we can't come up with an overall solution, and if not, at least address teenage smoking. I don't want the perfect to be the enemy of the good. . . Things like product liability and immunity...that could be done later, if necessary.

To now continue the blitz-kriek abroad, even if the laws of those country allow them to do so, would be tantamount to knowingly contribute to these consequences . . .More than that, there is a clear need for an international agreement-potentially brokered by the World Health Organization in collaboration with UNICEF--for a global treaty restricting the marketing and sale of tobacco products to the young. This is no longer simply about massaging national egos or protecting free trade; this is about protecting human lives. The potential of a cigarette to kill in New York is obviously no less than its potential to do so in New Delhi; and if Joe Camel is bad for kids in the Boston, he could be no less evil for teenagers in Bangkok.

Former senator Dave Durenberger (R-Minn.) is weighing in for "a whole new side" in the tobacco dispute. His Public Policy Partners represents Healthcare Recoveries Inc. of Louisville, which advises health plans on ways to recover the health insurance costs. So on behalf of Healthcare Recoveries, Durenberger is attempting to pull together large health care providers to see if they want to go along with the proposed tobacco settlement or attempt to carve out a way they still can file claims against tobacco companies.

Kenneth Feinberg, a mediation lawyer hired by Philip Morris Companies, the No. 1 cigarette maker, in recent weeks explored the idea of a settlement with Michael Ciresi, a lawyer representing the state, attorneys for both sides said. . . The conversations were "feelers" from the tobacco industry, said Eric Johnson, Humphrey's executive assistant. "To say that we are in settlement talks would be a gross overstatement. We're going to get what we set out to get, through a trial or through a settlement, and we're preparing for both." The state's suit is scheduled for trial in January.

And what about the grim irony of Joy Baker's death from lung cancer? "It is a fact," Hamberger said. "He is comfortable with this representation because he believes it is good for the public health." Baker will be in good company working for Big Tobacco, joining a lot of other heavy-hitting "formers," including former Republican National Committee chairman Haley Barbour, former Senate majority leader George Mitchell and former Texas governor Ann Richards.

Former Senate Majority Leader Howard Baker, R-Tenn., has become a paid lobbyist for five major tobacco companies seeking a favorable liability settlement with states and Congress, Senate records show. Baker is working for cigarette companies' interests even though his first wife, Joy, was a chain smoker who developed lung cancer and died in 1993 after an 11-year battle with cancer and other health problems. He now is married to former Sen. Nancy Kassebaum, R-Kan. Federally required lobbying reports filed with the Senate show that Baker and several co-workers at his law and lobbying firm, Baker, Donelson, Bearman & Caldwell, have been retained by five tobacco firms: Philip Morris, R.J. Reynolds, Brown & Williamson, Loews and U.S. Tobacco.

"If giving the tobacco industry partial immunity for legal liability and from regulation in return for some concessions is such a good deal for the public health, why does the industry need a virtual army of wheelers-and-dealers working behind the scenes to twist arms and get it passed," [Banzhaf] asks.
Howard H. Baker Jr
Baker, Donelson, Bearman & Caldwell
801 Pennsylvania Ave, NW
Washington, DC 20004
(202) 508-3400
FAX: 508-3402
hbaker@bdbc.com

Nearly half the state's voters consider the proposed tobacco settlement fair even though it could cost Virginia manufacturing and farm jobs, a Times-Dispatch/NBC12/Newschannel 10 poll shows. Forty-five percent said there is no reason to seek additional concessions from Philip Morris USA and the four other cigarette giants, despite demands for such by the White House and anti-tobacco forces. Thirty-three percent said the companies should give up even more. Twenty-two percent were undecided or declined to answer.

The annual tab comes to at least $584 million each year, according to Pentagon General Counsel Judith Miller. . .The Pentagon is also potentially the most culpable area of the federal government in terms of contributing to smoking-related problems, given its only recent moves to stop the damaging habit in the ranks. After decades of including cigarettes in field rations, the military no longer does that. But it still subsidizes smoking by selling cigarettes at military commissaries for only a third of the price of those sold in civilian stores, despite a recent price increase.

Pentagon spokesman Kenneth Bacon said the request was made in a Sept. 22 letter sent by Pentagon General Counsel Judith Miller to the White House. . . The letter was first reported by the trade publication Defense Week. The report said the proposed tobacco settlement with 40 state attorneys general calls for payments of $196 billion to state governments, of which 60 percent could be earmarked for federal Medicaid reimbursements. However, no dollars have been earmarked specifically for federal agencies or departments, Defense Week reported. Lt. Col. Thomas Begines, another Pentagon spokesman, said the Pentagon request was made in the event federal agencies are included in any kind of settlement.

When negotiators sat down to carve up $368.5 billion in tobacco industry spoils this spring, Washington, D.C., lawyer Robert J. Connerton was not invited. But Mr. Connerton, who says he represents more than 23 million union members, may soon find himself right in the middle of the tobacco debate. In April, Mr. Connerton's firm, Connerton & Ray, began filing statewide class actions against the tobacco industry to recover money spent on tobacco-related diseases by union health care trust funds. The cases, modeled after Medicaid cost-recovery suits brought by 40 attorneys general, have been filed in 28 states, with more expected soon.

Sen. Charles S. Robb is wading into the tobacco wars. The Virginia Democrat is positioning himself as a centrist who might help forge a consensus between competing interests. He's especially concerned about protecting tobacco growers. . . Robb isn't as well-positioned as Virginia's Thomas J. Bliley Jr., Republican chairman of the House Commerce Committee, to shape final legislation. But Robb has shown active interest as a member of a Senate Democratic task force on tobacco, and he claims diverse constituencies that include growers, cigarette maker Philip Morris and health advocates. . . "I believe an agreement is better than not having an agreement," because an accord offers "some sense of certainty for almost all of the players," he said last week.

If Congress slaps the penalty directly on the cigarette makers, it will boost the price at the factory instead of later as a tax. In that scenario, smugglers may not be able to avoid it, ATF agents said. Smuggling works in different ways, but the most common, and what Canada saw in droves a few years ago, starts with a cigarette wholesaler buying from the factory and then selling to an exporter. In the United States, for example, neither the wholesaler nor the exporter has to pay federal tax -- currently $2.40 a carton -- on export cigarettes, since they are intended for foreign sale. Exports also avoid state cigarette taxes, which run from 2.5 cents per pack in Virginia to $1 per pack in Alaska.

What of a conflict of interest between Baker's role as chairman of the Mayo Foundation, which oversees the entire Mayo operation, and his role as a tobacco lobbyist? Hamberger said Baker and Mayo officials discussed the lobbying job before Baker accepted it in August. That means that Mayo and Baker, who has been on the board since 1987 and has been its chairman since 1996, apparently are going to try to pretend that no conflict exists. . . "This industry that has lied to and defrauded the American public for 40 years, it hired the chairman of the Mayo board," said Humphrey.

Seeking approval of a landmark settlement that would ease their epic legal problems, the five major tobacco firms have roughly quadrupled their previous spending on outside lobbyists, according to disclosure reports filed with Congress. . . In battles for congressional support, it makes sense to enlist former legislators because they have instant clout, says Kent Cooper, president of the nonpartisan Center for Responsive Politics. . . Tobacco lobbyist and former Sen. Walter D. Huddleston, D-Ky, agrees. "We have access that a nonmember would not have," he says. "We do have floor privileges. We can go into the private dining rooms. We can go to the cloak rooms. Just walking down the hall you can spot a former colleague, and he'll stop and chat with you, and you can make a [lobbying] point with him if you want to."

Tobacco farmers would be wise to recognize that prospect and accept the generous deal that Lugar has offered.

Henry Waxman, Phil Carlton and Orrin Hatch have little in common. . . But the three can agree on one thing: Despite the now-popular perception that landmark tobacco legislation is DOA, a deal lives. They predict Congress will push legislation through in the next year -- with Mr. Carlton guessing by summer . . .What emerges from Congress will likely look different from the original settlement. But neither President Clinton's refusal to directly endorse the pact nor Republican leaders' decision to delay action means the tide has shifted against passage of the most resounding law in tobacco-industry history.

The official was cautiously optimistic that the Congressional election in 1998 will galvanize Congress to pass some form of the legislation. He noted that Clinton and Congress were unable to move on many issues in 1995 but then found the impulse to pass several large pieces of legislation in 1996 in the midst of the presidential election. However, the official also noted that if the debate over tobacco becomes overly politicized, it could sink the process in an election year. To avoid this, the official said the White House remains committed to working with Congress on a bi-partisan basis at this point.

The congressional battle over tobacco farming will be fought over the Ohio River between senators from Indiana and Kentucky. . . "If we don't get our bill passed, it will be a long time passing (Lugar's bill)," Ford said. Farmers are siding with Ford, saying they need the federal support.

• 10/25/97 Competing Tobacco Bill Filed Lexington (KY) Herald Leader
  
  Finding the money, though, could be a sticking point. All but $1.2 billion of the $368.5 billion in the settlement deal has been earmarked, albeit vaguely in some cases. . . "Whatever the amount that Congress decides on for farmers has to come out of the $368" billion, said North Carolina lawyer J. Phil Carlton. . . Cutshall said other senators have told Lugar they like his funding plan, because they don't want to detract from the original settlement's broad public health goals.
• 10/24/97 Tobacco Farmer Settlements Debated Lugar's plan vs. Ford's. AP Washington Post
• 10/24/97 Bill Sets $28.5 Billion for Tobacco Growers, Towns Reuters
• 10/24/97 Farmers Included in Tobacco Legislation Lexington (KY) Herald Leader
• 10/24/97 Tobacco Farmers Fear for Jobs AP Washington Post
• 10/24/97 Facts about US Tobacco Farming AP Washington Post
• 10/23/97 Tobacco Farmers May Get Money Winston-Salem Journal
• 10/23/97 Protection for Tobacco Farmers Urged AP
  
  The legislation by Sen. Wendell Ford, D-Ky., differs markedly from a $15 billion plan outlined by Sen. Dick Lugar, R-Ind., in that it continues government programs that control tobacco supplies and set a minimum price and does not recommend paying off growers to get out of the tobacco business. "This legislation is about providing stability, preserving traditions and keeping farms in the hands of farm families," Ford said.
• 10/23/97 FORD Plan Protects Tobacco Farmers Kentucky Post
  
  WASHINGTON - Senate Minority Whip Wendell Ford unveiled Thursday morning a $28.5 billion plan to protect tobacco farmers who would be adversely affected by the proposed settlement between more than 40 state attorneys general and cigarette manufacturers. The plan, which Ford will introduce in Congress as the Long-Term Economic Assistance for Farmers Act, would preserve the current quota program but provide payments to growers who are forced to reduce the amount of tobacco they can grow. Quota holders will receive $4 per pound per year for every pound of quota that falls below their base quota.

Insisting that he still didn't see that he had a conflict of interest, former U.S. Sen. Howard Baker resigned as chairman of the Mayo Foundation board of trustees Friday, less than a week after it was revealed that his Washington, D.C., law firm had been hired by five cigarette companies. . . But "to eliminate any possible disagreement at this point, I have resigned from the board," Baker wrote. He said he believes that years from now the proposed settlement will "be in the best national interest" and that there is no conflict between his representation of the tobacco industry and his unsalaried position with Mayo.

The tobacco wars have taken an unlikely victim. Howard Baker, the respected former Senate majority leader and Reagan's chief of staff, has resigned as chairman of the Mayo Foundation's board of trustees.

House Speaker Newt Gingrich of Georgia met Thursday with three prominent Republicans, Commerce Committee Chairman Thomas Bliley of Virginia, Ways and Means Chairman Bill Archer of Texas, and Judiciary Chairman Henry Hyde of Illinois. The four came to no agreement about the Republican response to the settlement and President Clinton's call for Congress to toughen it, but they candidly discussed the deal's strong potential ramifications for next fall's congressional elections. Mr. Bliley came armed with polling data that suggested the public doesn't fully understand the proposed settlement, but that the more it learns, the less it likes the deal. Mr. Gingrich expressed a resolve not to have Republicans portrayed as the party of Big Tobacco in the 1998 congressional elections. The meeting was a preparation for another session Friday with Republican attorneys general who were involved in negotiating the settlement.

Koop has declined to become a spokesman for a national coalition of public health groups that wants Congress to approve a national tobacco settlement, possibly signaling a new rift over the proposed deal. In an Oct. 20 letter to Stanton A. Glantz of the University of California, San Francisco, one of the most vocal opponents of the deal, Koop wrote that the coalition, called ENACT, is being too meek in its approach, and thus stands to lose important measures that would reduce smoking by teenagers.

House Speaker Newt Gingrich, R-Ga., hopes to keep the lawyers as poor as possible. "Some of them will become instant billionaires. And that's not a justified fee," he said. "That money could be spent on health in general and children's health in particular rather than enriching a small group of trial lawyers." Mr. Gingrich endorsed a House Republican proposal to cap lawyers' fees at $140 per hour, plus some share of a national fund totaling $32 million. The Clinton administration, politically indebted to trial lawyers, was not enthusiastic about the Republican plan.

Steven Goldstone, the chairman and chief executive of RJR Nabisco Holdings Corp., said yesterday that the proposed tobacco settlement would cause the company's tobacco earnings to drop significantly but would allow the company to take its "rightful place in commerce." In his first public comments on the settlement, Goldstone strongly endorsed it and warned against tampering with it. "When you start tearing down one end of the compromise, the whole thing starts to fray," he said. Goldstone, who spoke to a conference of investors here, said that the settlement would provide a stable environment for an industry now beset with lawsuits, smoking restrictions, unfair press, a White House campaign against it, and public perception that it is a "rogue industry." "It will secure the industry's place in mainstream commerce," Goldstone said, arguing that the settlement answers the demands that the industry meet higher standards because of health concerns about its products.

RJR Nabisco chief executive Steven Goldstone said Tuesday that congressional attempts to raise cigarette costs under the proposed tobacco deal would be "prohibition by over-the-top taxation." Goldstone's first public comments since the proposed national tobacco settlement in June came just as a senator prepared legislation that would raise cigarette prices by $1.50 a pack. "When you start tearing down one end of the compromise, the whole thing starts to fray," Goldstone told Wall Street analysts meeting here, saying cigarette makers have conceded all they can in the original deal.

In an opening shot in the struggle over the proposed national tobacco settlement, two Republican lawmakers, with the backing of House Speaker Newt Gingrich, introduced a bill to limit the fees lawyers can collect for helping to negotiate the pact. The two lawmakers, Scott McInnis of Colorado and Christopher Cox of California, along with Democratic Rep. Paul McHale of Pennsylvania sponsored the legislation, which would cap fees for the lawyers at $150 an hour, plus reimbursement of their actual expenses. The bill also would require the lawyers to give Congress a detailed account of the time they spent working on the settlement and any related lawsuit before they can be paid.

It's time to give Bill Clinton some support where he needs it. . . 4 Let's urge the President to stand up to Philip Morris® and the other tobacco companies by making sure any tobacco settlement drastically reduces teenage smoking. Don't let the industry off the hook for the hundreds of thousands of deaths they've caused. Call 1-888-38-STAND-UP.

"The industry is playing Mr. Nice Guy in Washington, but it is pounding harder than ever at state and local levels, using all sorts of front groups and dirty-trick operations," charges Gregory Connolly . . . [M]any fighting Big Tobacco at the grass-roots level say that hand-to-hand combat may still be the best way to win the war.

In the first major legislation spawned by the proposed tobacco deal, a bill was introduced in Congress on Wednesday to raise the federal tax on cigarettes by $1.50 a pack to discourage smoking--but without providing legal protections sought by the tobacco industry. The proposal by Sen. Frank R. Lautenberg (D-N.J.) and Rep. James V. Hansen (R-Utah) would raise the cigarette excise tax by 50 cents per pack for three consecutive years . . The bill will not be the last vehicle for implementing a tobacco settlement. Orrin G. Hatch (R-Utah), chairman of the Senate Judiciary Committee, said Wednesday that he hopes to introduce comprehensive legislation within the next two weeks. And Sen. Edward M. Kennedy (D-Mass.) may also offer a bill before Congress adjourns next month.

It will be modeled on $368.5 billion deal, take comprehensive approach

Senate Judiciary Chairman Orrin Hatch said Wednesday that he wanted legislation enforcing a national tobacco settlement submitted before Congress adjourns for the year although lawmakers are unlikely to act on it by then. . . Hatch said the bill being drafted would stick closely to that deal, by which the industry would settle dozens of state lawsuits and win protection from future lawsuits by paying $368.5 billion over 25 years, accepting limits on advertising and paying fines for failure to discourage youth smoking. He said he wanted a "discussion bill" before the end of the session so that interested parties could offer opinions before hearings begin.

"I really think you've got a big problem here. This cowboy has lassoed so many kids; how you're going to shake loose of them, I don't know," [Sen. Dick Durbin of Illinois] told Meyer Koplow, a New York lawyer representing Philip Morris, at a hearing of the Senate antitrust subcommittee. "I think we've got to hold you, . . . Philip Morris, more responsible because you've been so successful in addicting children," the anti-smoking Democrat added during discussion of the proposed $368.5 billion tobacco settlement. . . The senators' criticisms yesterday showed the detailed scrutiny being given to the June 20 proposed settlement between tobacco companies and state attorneys general, and the kind of hurdles that face tobacco companies in winning its approval. On another front, Sen. Orrin Hatch, influential chairman of the Senate Judiciary Committee, said he hopes to unveil shortly a "discussion" bill that would follow many of the settlement's provisions. "We're thinking of licensing the tobacco companies to be able to produce these products, subject to certain fees," Hatch said.

Ford . . . put the chances of approval at 60-40. That's because so many people favor a settlement, and others fear that failing to approve a deal aimed at cutting youth smoking would become a political issue, Ford said. Ford said that if the deal goes through, there's an 80-20 chance his plan [the LEAF Act] to aid farmers and tobacco communities will be included.

Robb's proposal, with an estimated price tag of $18 billion to $21 billion over 25 years, takes a middle course between two plans already introduced in the Senate. One of those bills would end the federal quota system, which keeps tobacco prices stable and high, and pay farmers cash for their quotas. That plan would leave the price of tobacco to fluctuate with the market. The other plan would keep the quota system and compensate farmers when demand for their crop drops. Robb outlined his plan in a floor speech and said he wanted to get reaction before drafting a bill.

The Republican senator coordinating tobacco policy said Tuesday he expected to announce soon a timetable and procedure on a bill related to the so-called global settlement with cigarette makers. But Sen Don Nickles of Oklahoma said a consensus on any proposed legislation had yet to emerge. "I'll have an announcement on our schedule and procedure, but there's no consensus yet on elements of a bill," Nickles told reporters.

The following document . . . was prepared by Hogan & Hartson (a Washington, DC law firm) and was sent to each member of Congress by the national office of American Cancer Society. This document advocates congressional action to PREEMPT numerous state consumer health protection laws in order to protect the tobacco industry from legal liability, as well as delineating complex preemption schemes that could survive constitutional challenges.

The summary of the ACS's document "Constitutional Issues In Proposed Tobacco Settlement" . . totally mischaracterizes the American Cancer Society's position on the issue of preemption
"The American Cancer Society believes that the Act must not set a ceiling on state and local tobacco control -- it need set only a floor."
The ACS's position on preemption is consistent and well-settled: although the federal government should enact broad-based measures to effectively protect the public health from the harms of tobacco use, states and localities should be permitted and encouraged to enact measures that are more stringent than the federal standards.

"Not a single one of us probably would vote for this bill in its current form," said Sen. John McCain, R-Ariz., signaling that changes lie ahead for the sweeping plan when Congress takes it up next year.

"Our language exactly mirrors the language proposed by the attorneys general," said Mr. McCain. "But we're willing to support any other vehicle that we think is reasonable." The bill's co-sponsors are Sens. Ernest F. Hollings, South Carolina Democrat; Slade Gorton, Washington Republican; and John B. Breaux, Louisiana Democrat. . . "The tobacco-control legislation introduced by Senators McCain and Hollings today represents a step in the wrong direction," said Bill Novelli, president of the Campaign for Tobacco-Free Kids

Sen. John McCain, an Arizona Republican and the chairman of the Commerce Committee, said he sponsored the bill as a starting point in the debate. "The substance of the bill is not perfect, complete, comprehensive, or legislation that could ever be signed into law without considerable debate or amendments," he said. "None of the co-sponsors endorse this bill as being the answer to our nation's problems with tobacco-related death and illness, but it can and should serve as a basis to begin negotiations."

First out of the blocks will be Sens. John McCain, R-Ariz., and Ernest Hollings, D-S.C., who today plan to introduce a bill that puts into law the sweeping $386.5 billion settlement reached in June among attorneys general from 40 states and the major tobacco companies. The bill also would include an $18 billion bailout for tobacco farmers. "This bill will codify the agreement between the state attorneys general and the tobacco companies as well as adding the provisions to protect tobacco farmers," said Hollings spokesman Maury Lane.

Rep. Thomas J. Bliley Jr. of Richmond, a longtime friend of the tobacco industry, will hold the first hearing of his House Commerce Committee on Thursday on the proposed $368.5 billion tobacco settlement. . . Senate committees already have held numerous hearings, but the House has not done so. Because of this, Thursday's session may reveal more about thoughts of key lawmakers such as Bliley than about positions of the administration and attorneys general, which are known.

"We are not going to let the tobacco companies dictate the outcome in the Senate of the United States," Kennedy said. His bill, co-sponsored by Sens. Richard J. Durbin (D-Ill.) and Frank R. Lautenberg (D-N.J.), also would assist farmers hurt by the industry upheaval and require tobacco companies to pay stiff penalties if targets to reduce youth smoking are not met. The bill does not grant the industry any of the protection from lawsuits it negotiated in the June 20 deal.

"It would be irresponsible to wait another decade while we test the impact of lesser measures on youth smoking," Kennedy said. "The most effective way to reduce youth smoking is a substantial price increase, and we should do it now."

Edward Kennedy of Massachusetts, Richard Durbin of Illinois and Frank Lautenberg of New Jersey introduced the "Healthy and Smokefree Children Act" that would raise tobacco taxes by $1.50 over three years starting next July. The June 20 draft agreement reached by the tobacco companies and 40 state attorneys general would have required industry payments of $368.5 billion over 25 years. The taxes in the Kennedy bill raise roughly $650 billion over that time. The bill would strengthen Food and Drug Administration authority over nicotine and would increase penalties to $1 a pack if companies fail to reduce teen smoking by 75 percent in six years. The penalty would be linked to specific brands and companies, not the industry as a whole. "Under our legislation, every new child who picks up a cigarette or pockets a can of spit tobacco will become an economic loss to a tobacco company," Durbin said. It does not include any provisions granting the industry immunity from lawsuits, contained in the state-industry agreement. But the three senators told reporters they would not rule out incorporating some form of immunity as long as the bill achieves public health goals.

Referring to the accord negotiated by state attorneys general and the tobacco industry in June, Daschle said, "The agreement has been reduced in terms of credibility and overall support." "I don't think it's an appropriate vehicle" for Senate consideration, added Daschle, a South Dakota Democrat.

The bill would limit the lawyers to $150 an hour, plus expenses. It would apply only to plaintiffs' lawyers, not to any hired by the cigarette companies. The bipartisan bill was introduced by Republican Scott McInnis of Colorado, Republican Christopher Cox of California and Democrat Paul McHale of Pennsylvania. . . The three sponsors said the money should go to anti-smoking programs and medical research, not be a windfall for attorneys.

[T]he Council for Citizens Against Government Waste (CCAGW) joined House members in support of the Tobacco Attorney Fee Limitation Bill (H.R. 2740), a proposal that would restrict the amount of money private attorneys can collect from the recent tobacco settlement.

Taking the lead in the Senate on the issue after Majority Leader Trent Lott recused himself because his brother-in-law is tied to the settlement negotiations, Sen. Nickles said he expects Congress to act on tobacco legislation "in the earlier part of the session" next year.

Nickles . . . said he was asking the half-dozen committees with tobacco-related jurisdiction to try to seek a bipartisan consensus by March 16. The Oklahoma Republican, who has been coordinating Republican Senate efforts on tobacco, told reporters he hoped to be able to take a package to the floor relatively early in 1998, an election year.

"Where will the cigarettes come from?" asked Banzhaf. "Even after a tax increase, the price in the U.S. will still be lower than in Canada." One source may be Mexico. Lindquist Avey says about a fifth of the cigarettes smoked in California already come from Mexico. "The government can't stop marijuana from being brought into the country, and that's no less bulky than tobacco," said Jacob Sullum, author of the forthcoming book "For Your Own Good: The Anti-Smoking Crusade and the Tyranny of Public Health."

A freshman Democrat from North Carolina, Bob Etheridge, announced his support for the bill after he received a letter from Clinton promising new assistance to tobacco farmers and a pledge from the administration that future trade accords would not put American peanut growers at a disadvantage.

Rep. Bob Etheridge, D-N.C., announced his support for the fast-track trade bill Friday after the White House circulated a seven-point memo promising continued support for the tobacco price-support program and immunity from health-related lawsuits for tobacco farmers. The paper also promised reform of import duty rules that farmers say encourages imports of foreign tobacco.

Big Tobacco will move to center stage on Capitol Hill in 1998, embarking on a tailored strategy to end the "Great War" over smoking. As tobacco pushes for congressional approval of a landmark legal settlement that is favorable for the industry, it has taken a series of steps to win support. It has converted former enemies like state attorneys general and the American Medical Association into allies. . . The AMA, the American Cancer Society and the American Heart Association, among others, have formed a coalition called ENACT -- Effective National Action to Control Tobacco -- to push comprehensive tobacco-control legislation.

But the Utah Republican's proposal, while comprehensive, doesn't appear to enjoy the support of the Senate Republican leadership or the tobacco industry. It is possible, congressional aides said, that some parts of the bill may ultimately be approved but Congress is unlikely to embrace all of it.

Hatch's plan would increase the $368.5 billion June settlement proposal of state attorneys general and tobacco lawyers by almost $30 billion. The bill Hatch planned to introduce today would yield a payout that "the tobacco companies feel the pain in meeting," but which isn't so steep that the industry couldn't comply, he said.

Calling it a once-in-a-generation opportunity, Hatch said that a few weeks ago people had written off the prospects for a national tobacco policy but now it seemed viable once again. "A little over a month ago, this thing was dead," he said. "Now it's alive. There are people on both sides of the issue trying to get this done." . . "I think my bill satisfies the goals of the president and the public health community," he said, adding he wanted to be as tough as possible without being so onerous that it would "blow the deal."

Hatch said he plans to formally introduce the bill in the Senate Friday. . . "This legislation improves on the June attorneys general settlement, but contains the critical balance between strong penalties on the tobacco industry with strict regulation of tobacco products by the FDA, implements a major national anti- tobacco and anti-addiction campaign and defines liability protections for the industry," Hatch said. Hatch said he is not calling for a higher tobacco tax, but the payments will be considered a federal licensing fee. He said his bill would codify FDA authority over tobacco products, but treat them according to a new system designed for tobacco. The bill also calls for assistance to tobacco farmers who were not covered in the June state negotiations.

he American Cancer Society's board unanimously passed a resolution in Los Angeles on Tuesday making passage of a tough, comprehensive tobacco control law its No. 1 priority for 1998, society officials said. The organization plans an extensive media, lobbying and grass roots effort as part of a $1-million campaign . . . The cancer society also has hired a high-powered Washington law firm, Hogan & Hartson to draft legislative language relating to the authority of the FDA over tobacco products "that can be used by our congressional allies at the appropriate time," according to a copy of the cancer society's action plan. . . To further shore up its efforts, the cancer society has assembled a team of lobbyists who will assist on a pro bono basis, said Linda Crawford, the group's senior vice president for federal and state governmental relations.

Rep. Henry A. Waxman (D-Calif.), one of tobacco's strongest foes, commended Bliley. "I think he was genuinely determined to get these documents," Waxman said after the hearing. "I don't see an ulterior motive. . . . I think he is sincere and genuine."

Rep. Thomas J. Bliley Jr., chairman of the House Commerce Committee and an unlikely inquisitor of the tobacco industry, demanded yesterday that tobacco companies turn over certain secret internal documents or face the threat of a subpoena. A Richmond Republican, Bliley has defended the tobacco industry for years. . . A letter yesterday from Bliley to Geoffrey Bible, chairman of Philip Morris Cos. Inc., asked for the company to turn over by Dec. 4 those 864 documents that a Minnesota court official has determined were improperly shielded by attorney-client privilege claims. If the documents aren't turned over, "I will consider issuing a subpoena on Dec. 5," Bliley added in the letter.

Both J. Phil Carlton, a North Carolina lawyer who represented the industry in negotiations leading up to the settlement, and Lance Morgan, a Washington spokesman for the companies, said they would not comment until they had received a formal written request for the documents from Bliley. Tobacco analyst Gary Black of Sanford C. Bernstein & Co. in New York dismissed Bliley's move as an attempt to publicly establish his independence from the industry. "It's a way of making yourself look tough," Black said. "This is the opposite of Teddy Roosevelt--speak loudly and carry a little stick." Another analyst said Bliley's action is a sign of how much tobacco's fortunes have eroded in Congress.

Thomas Bliley, a Virginia Republican, said the industry must disclose the documents that a Minnesota court official has concluded are not protected through attorney-client privilege because they have evidence about crime and fraud. Those documents, a small part of a huge trove of papers amassed during litigation, are part of ongoing judicial proceedings in Minnesota and have not been made public. "If the tobacco industry engaged in criminal or fraudulent activities, then Congress has a right -- a duty -- to know before legislation is enacted granting that industry any form of immunity against lawsuits," Bliley said as he opened the first House hearings on the proposed tobacco settlement.

President Clinton Thursday signed into law a measure, authored by Sen. Dick Durbin, D-Ill., repealing a $50 billion tax break for the tobacco industry. The repeal provision was contained in a funding bill for numerous government agencies.

A cautious Speaker Newt Gingrich said the House may break the national tobacco settlement into "several bills" and act on key parts as consensus emerges.Moreover, Mr. Gingrich suggested the settlement's final dollar amount may far exceed the $368.5 billion set by cigarette makers, public-health advocates and state attorneys general. Mr. Gingrich said he favors making public now-secret tobacco-industry documents and endorsed efforts by House Commerce Committee Chairman Thomas Bliley of Virginia to gain their release before Congress acts on the proposed settlement.

THE TWO MAIN FACTIONS IN the tobacco-control community have come out into the open. . . The hard-line group, which calls itself the National Tobacco Control Coalition, thinks that antitobacco forces should not make compromises with Big Tobacco. The coalition is being set up by Minnesota Attorney General Hubert Humphrey III, the American Lung Assn., and a host of other antismoking organizations such as SmokeFree Pennsylvania. Their rivals, called Effective National Action to Control Tobacco (ENACT), set up shop in October to push Congress into--well, enacting a deal. Under ENACT's banner are the American Medical Assn., the American Cancer Society, and the Campaign for Tobacco-Free Kids. The ENACT crowd feels the other side is well-meaning but unrealistic.

"We deserve to know the full extent of the industry's knowledge of the health risks associated with tobacco use," he said. "We need to know the full extent of the industry's knowledge about marketing appeals to children. We need to know whether the tobacco industry engaged in activities to hide this information from the American people." The tobacco companies have never come clean on these questions. The real surprise would be if they even begin to do so in response to Chairman Bliley's pertinent demands.

The Clinton administration and state officials have begun squabbling over the proceeds from a $368 billion settlement between the tobacco companies and 40 states, even before the accord is approved or modified by Congress and President Clinton. In a letter this month, the Department of Health and Human Services put state officials on notice that the federal government will seek to recover from the settlement the federal share of any Medicaid funds spent on treating people with smoking-related illnesses.

Critics from the White House to the public-health community to Capitol Hill have called for major changes in the proposed settlement negotiated by the states. But the prospect of fundamentally altering the way cigarettes are marketed and sold in the U.S., plus the big pot of money that would become available, appeals to public-health advocates and politicians alike. Continuing the courtroom pursuit of an industry that has never paid a penny in damages to individual smokers has been wearying on all sides.

U.S. Rep. Thomas J. Bliley Jr. said yesterday that his first responsibility as a Virginian is to protect children as Congress begins to examine the proposed settlement state attorneys general and trial lawyers have reached with Philip Morris and other major tobacco companies. He spoke yesterday at Southern States Cooperative's annual meeting at the Fairgrounds on Strawberry Hill in Henrico County.

A national settlement with the tobacco industry might be a tempting political target for the White House and Senate Democrats, but not for top House Democrats. Such an effort could complicate their goal of winning a House majority by imperiling Democrats from tobacco-growing districts. But a unified Democratic agenda has something for everyone:

Ten years ago, Banta was one of 399 dairy farmers in Kentucky who got out of the milking business in exchange for hefty buyout checks from the federal government. . . Larger tobacco, corn and soybean crops have replaced his dairy income. For the federal government, the program was a dramatic step to cut American milk production and reduce massive surpluses of milk, cheese and butter -- as well as its own role in dairy production. The results were mixed, at best. The reductions were modest. And the criticism of paying farmers to not do something was harsh.

Congress is expected to enact legislation next year to implement a settlement plan. But the prospect concerns some who wonder who loses in a finalized settlement. Among them is San Francisco City Attorney Louise Renne, who admits that she worries that The City - the first local government to sue tobacco companies to recover costs of treating smoking-related diseases - would be left out in the cold if Congress enacts legislation similar to the June settlement. While funneling billions of dollars to states to cover costs of treating sick smokers, that tentative accord doesn't earmark any money for counties or cities.

Although the industry has spent more than $6 billion a year in sowing confusion and in product promotion, members of the press have demonstrated that they know how to read and to evaluate the results of research. Industry advocates have accused the media of bias because they are telling the truth. . . These historic settlements . . . indicate that this is no time for concessions that will stabilize an industry now rocked by public recognition of industrial malfeasance and scientific truths.

Both Republican and DFL candidates to replace him as attorney general have publicly stated they will continue the litigation. If it is not an issue in the race among the candidates for attorney general, why is Cooper trying to make it one? . . Cooper stated that the American Heart Association, the American Cancer Society and the American Public Health Association supported the proposed national settlement. That is not true. We do not and have not supported the proposed national settlement. There were significant problems with the proposal as it was initially negotiated by the state attorneys general and the tobacco industry. Our own attorney general refused to support it; we opposed it; the Congress and the White House opposed it. That is why the settlement failed to move at all this year. --David Ahmann, M.D., president, American Cancer Society, Minnesota division, and Brooks Edwards, M.D., president, American Heart Association, Minnesota affiliate.

Even if Congress manages to plug all the other holes that favor the tobacco companies in the proposed deal. The settlement should be sent back for further negotiations if taxpayers for the federal, county and city governments get the shares that Aesop's lion allocated to the wolf, the fox and the ass.

Spokesman Scott Williams denied news reports saying that the industry had decided not to comply with the demand and had informed House Commerce Committee Chairman Thomas Bliley that he would have to subpoena them. "The companies are still reviewing and considering the request," Williams told Reuters.

Cigarette makers plan to wait until Thursday's deadline to answer a congressional request for documents and may decide to resist . . . The cigarette companies probably will tell Bliley that to release the documents would compromise the companies' ability to defend themselves in the upcoming Minnesota trial and other cases, said the industry representatives . . . Senate Judiciary Committee Chairman Orrin Hatch has refused to subpoena the documents

Bliley's seeming turnaround mystifies many observers on Capitol Hill and leaves others skeptical. . . Yet relations between the powerful congressman and the industry have been increasingly tense. The chairman has expressed frustration that a tobacco settlement proposed last summer did not address the concerns of such groups as retailers, according to one Bliley adviser, and he wanted to send a signal to the industry that it will face compromises ahead. Other sources say Bliley wants the documents released so that lawmakers will not be blindsided by tobacco revelations coming out after a bill passes.

But a Bliley aide said UST will not be subpoenaed because it is not part of the Minnesota case. . . Two Democratic Senators, Patrick Leahy of Vermont and Frank Lautenberg of New Jersey, wrote Bliley a letter this week praising him but also asked him to broaden his requesst to get many other industry documents that the senators wrote could shed light "on the manipulation of nicotine and other health issues the companies have hidden from the public."

"I am going to make sure these documents see the light of day," Bliley, R-Va., said in a statement. "Congress is going to get these documents, and I'm not going to tolerate unnecessary delays in obtaining them." "If the tobacco industry engaged in criminal or fraudulent activities, then Congress needs to know about these activities before we consider granting the industry unprecedented immunity from future lawsuits," he said. A Bliley aide confirmed that the subpoenas were being served late Thursday to four cigarette makers: Philip Morris, R.J. Reynolds, Brown & Williamson and Lorillard Inc. Bliley said he was giving the companies until noon Friday to comply

Matthew L. Myers, of the National Center for Tobacco-Free Kids, said he hoped that Bliley's comments were not an indication that the documents would be kept private. "It's as important for the American public to see these documents as for Congress -- so that the citizens of the country can make an informed decision about what Congress should do," Myers said.

But lawyers battling the tobacco industry warned that the two boxes of documents submitted to Rep. Tom Bliley, R-Va., in Washington, represent only a fraction of the confidential papers shielded by tobacco industry lawyers. "The smoking guns are trickling out, but the smoking howitzers remain under lock and key," Minnesota Attorney General Hubert Humphrey III said, referring to 250,000 additional industry documents being sought in court. The 834 documents submitted to Bliley include scientific research papers, memos and reports.

Many experts said the nation's four top tobacco firms were placing a high-stakes bet: Releasing the papers could hurt their chances in pending state lawsuits. But it also could speed approval of a $368.5 billion deal, now before Congress, that would settle all such lawsuits. "These were documents that were going to come out anyway," said Calvert Crary, a legal analyst with Auerbach, Pollak & Richardson in Stamford, Conn. "So I think the industry is just trying to get political mileage out of it."

The four companies each sent a separate cover letter to House Commerce Committee Chairman Thomas Bliley, who Thursday night had subpoenaed more than 800 potentially damaging documents. The Virginia Republican gave the companies less than 24 hours to deliver the papers after they failed to meet an earlier deadline. Copies of the four letters were made available to Reuters. "Under these circumstances we have no choice but to comply with the subpoena," wrote Alfonso Carney, a Philip Morris Cos. Inc. (NYSE:MO - news) vice president.

Minutes before a noon deadline, industry officials delivered two boxes of documents to the House Commerce Committee, which Bliley serves as chairman. . . . The cache's contents weren't revealed yesterday, but industry observers have said they contain information about joint scientific research and legal strategy, as well as studies of teen smoking.

The nation's largest cigarette makers ended a confrontation with a longtime congressional ally today by complying with subpoenas to release more than 800 documents that purportedly illustrate industry crime and fraud. . . Now, Bliley said he will establish "a bipartisan process for reviewing and disclosing the documents." "Congress has a right to examine these documents as part of its consideration of the proposed tobacco settlement, and today's development will give Congress the information it needs to make more informed and responsible decisions," he said in a statement.

The federal government is entitled to a major share of any of the bounty that states have recovered in lawsuits against the tobacco industry for Medicaid expenses for sick smokers, according to a study released Friday by a Washington public-interest organization. The Center on Budget and Policy Priorities also said that the federal government would be entitled to a large chunk of the money if Congress enacts legislation embodying the proposed $368.5-billion national tobacco settlement. The states would get $190 billion of those funds under terms of the settlement announced on June 20.

Weighing in on what will be a key fight in discussions about a national tobacco settlement, the Center on Budget and Policy Priorities concluded that current law entitles the federal government to a sizable cut of the proposed multibillion-dollar deal "Given the amount of money at issue ... the state position is understandable," Andy Schneider, a researcher for the liberal think tank, said in yesterday's report. "From the standpoint of federal law, however, that position is flatly incorrect."

"If they took away tobacco, it would be like they dropped an atom bomb here," said Tom Raab as he sat in his furniture store on Main Street. "It would probably take us 50 years to recover -- if we recovered at all."

"A settlement would have a more pervasive impact in the New York area than anywhere else, even the tobacco belt," said David J. Adelman, a tobacco analyst for Morgan Stanley, Dean Witter. . . Madison Avenue could be deprived of tens of millions of dollars in billings if Congress enacts Draconian prohibitions affecting cigarette marketing. And it is New York, not tobacco country, that is home to the parent companies of three of the nation's cigarette giants . . . Analysts said that the corporations could downsize or even move out of New York in the wake of a settlement.

"It could be stuff that is already out there, is already public, or it could be entirely new evidence against the tobacco industry," Mr. Dusek said Saturday. "But we certainly want to know what it is."

Amid the seeming quiet of the congressional recess, crucial players and powerful lobbies are maneuvering for what could be one of the biggest and most divisive debates to reach Washington in years: the fight over the future of the tobacco industry and the nation's 45 million smokers. . . and new and surprising alliances are forming in a battle that could have far-reaching political, economic and social implications.

House Commerce Committee Chairman Tom Bliley, R-Va., promised Monday to release more than 800 sensitive tobacco company documents, probably before Christmas. Meanwhile, congressional hearings defused a debate about dividing tobacco settlement payoffs, after state and federal officials found they had little to fight about.

Bliley said documents that his panel subpoenaed from Philip Morris, R.J. Reynolds, Brown and Williamson and Lorillard Inc. will be made public after a bipartisan review. "I want to assure members of the committee and the American people that we will work as quickly as possible to make these documents available to the public," he said.

"It is my intention to release all documents to the public," he said. "I expect that this will occur prior to Christmas," although he said that was a goal, not an absolute deadline.

"Now that the committee has obtained the documents, a process for bipartisan, committee review of the documents will begin," said Rep. Thomas Bliley, R-Va., chairman of a House Commerce health subcommittee. "When that process is completed, it is my intention to release all documents to the public," Bliley said, probably by Christmas.

And as a subcommittee of Mr. Bliley's commerce panel begins hearings on the proposed settlement Monday, industry executives are left to wonder whether they can count on him in the long run to help protect their interests. The tobacco companies say they intended no offense. "From the industry's perspective, it was only a matter of timing and sequence," says industry spokesman Scott Williams. . . Mr. Bliley says he subpoenaed the documents because he is concerned that the proposed settlement grants the industry extensive legal protections without first forcing it to divulge secret documents.

The Minnesota court created 12 subject categories to review hundreds of Liggett Group documents. The 864 records deemed by the court to contain potentially damaging evidence fall into five of them. The categories include records about industry-sponsored research on the health effects of smoking performed either by company officials or consultants; records of research projects financed by industry lawyers or through industry trade organizations; documents reflecting public statements by companies on the risks of smoking, and documents reflecting industry activities aimed at youths under 18. . . Bliley has said that he would seek any other company records, along with the Liggett documents, deemed by the Minnesota court to contain possible evidence of wrongdoing.

Monday, the subcommittee on health will examine whether the federal government ought to get a share of any settlement to reimburse taxpayers for the billions of dollars spent on smoking-related Medicaid claims. . . Tuesday, the committee will look into whether large price increases and tough new controls on cigarettes would spark the growth of sales on the black market. The House Judiciary Committee jumps in Wednesday with its first hearing on the settlement, focusing on whether to limit attorneys' fees. This burst of activity marks the beginning of the House's in-depth consideration of the deal . . .

Mr. Clinton wrote, "I would prefer to see the allocation of tobacco funds between federal and state government resolved through legislation, and I look forward to working with the states and with Congress to find a mutually agreeable purpose for the funds generated by the tobacco legislation."

The Clinton administration has no immediate plans to force states to hand over part of their settlements of lawsuits with the tobacco industry, officials told members of a House subcommittee yesterday. In a conciliatory letter from President Clinton to state officials that was released at the hearing, Clinton said he hoped to "find a mutually agreeable purpose" for the funds.

Florida Gov. Lawton Chiles came to Washington on Monday ready to duke it out with the federal government over its claim to a share of the state's $11.3 billion tobacco settlement. He didn't get the fight he expected. "It sounds like they have called the dogs off, and they're not going to do anything right away," Chiles said.

Gov. Jane Hull has taken aim at a Clinton administration proposal to take more than half of Arizona's share of a national tobacco settlement. The Western Governors' Association on Friday unanimously adopted Hull's resolution calling for the entire $368 billion tobacco companies will pay over the next 25 years to go to the states, which would use the money for health care.

President Clinton signaled a moderate tone in a dispute with states over how much money the federal government could get from the $368 billion tobacco litigation settlement to cover smoking-related Medicaid costs. Clinton, in a Dec. 5 letter to the National Governors Association, said he would "prefer to see the allocation of tobacco funds between federal and state government resolved through legislation." Clinton's letter was released Monday at a House Commerce health subcommittee hearing on the proposed tobacco settlement.

The truth is that anti-smoking researchers like Jason will soon be hooked up to the 24-hour ATM known as the tobacco settlement. . . This is not to denigrate teen-age smoking as a long-term health issue. All I'm suggesting is that we will soon have more resources than we can use properly - what conservatives used to ridicule as "throwing money at problems." In fact, pretty soon the best way to get government aid if you're homeless will be to loudly lament that you're trying to quit smoking.

The line is already forming at the teller's window, and there's more than a little shoving involved. . . The public policy questions involved may turn out to be easier to solve than it will be to satisfy the personal and institutional greed that the prospect of a settlement -- a k a the honey pot -- has already loosed.

House COMMERCE Committee HearingsDecember 8,9, 1997

• 12/08/97 Bliley Expects to Make Tobacco Documents Public Before Christmas
• Hearing Document: BLILEY Statement
• Hearing Witness: MICHAEL MOORE
• Hearing Witness: NANCY ANN MIN DEPARLE
• Hearing Witness: JEFFREY MODISETT

The group, including representatives of the Royal Canadian Mounted Police and the U.S. Bureau of Alcohol, Tobacco and Firearms, testified that Canada's experience doubling cigarette prices from 1984 to 1993 held cautionary lessons for Congress as it considers steps to fight underage smoking. Smuggled cigarettes from the U.S. poured across the border, undercutting the goal of reducing tobacco consumption, the witnesses said. . . a U.S. law-enforcement official testified that other components of the proposed settlement -- including education, law-enforcement efforts and the lack of a sudden, dramatic price increase -- might actually prevent development of a black market.

Federal and state law enforcement officials testifying before the House Health subcommittee said raising taxes or cigarette prices across the board would not create a greater incentive for state-to-state smuggling. But other problems could arise, including foreign smuggling or a black market for cigarettes with higher nicotine or tar levels, if U.S. health authorities in coming years decide to require lower nicotine levels.

The expert, Michael Eriksen of the Federal Centers for Disease Control and Prevention, testified that a survey in 1995 showed that while 40 percent of white female high school students smoked, only 12 percent of black female students did. . . "White and American Indian girls described smoking as empowering, particularly in relation to males," Eriksen said. But he added that black girls "held extremely negative views of smoking," and "they believed that smoking would compromise their future and mess up their lives." Eriksen noted that unlike white teen-agers, black and Hispanic females often also believed that smoking was disrespectful to their parents.

"I think it goes without question that everyone involved in this (tobacco) issue is rightfully concerned about teen-age smoking," said Whitfield, R-Hopkinsville, who represents Paducah as well as much of tobacco-rich Western Kentucky. "But I would also say that this is an unprecedented assault on one industry," Whitfield said at a meeting of a House subcommittee on which he serves. "... I think attorney generals also have a responsibility to look at the movie industry.

"I want to see us stay in the tobacco business with our farmers growing flue-cured and burley tobacco," Hunt said. "We have to keep working on it. Our farmers must be treated right in any tobacco settlement." Hunt spoke to more than 1,000 people at the 62nd convention of the N.C. Farm Bureau at the Benton Convention Center in Winston-Salem. Lt. Gov. Dennis Wicker, Attorney General Mike Easley and Agriculture Commissioner Jim Graham also addressed the audience.

"There is no single magic bullet," said DePaul University psychology Professor Leonard Jason told the House Commerce subcommittee on health and environment. "The best approach is a combination of tools, including restricting access and advertising, school-based programs and price increases."

A fight is brewing over the spoils of tobacco legislation, with state officials calling on the Republican-controlled Congress to protect their share of billions of tobacco-industry dollars from federal bureaucrats. Florida Gov. Lawton Chiles, among others, asked the House Commerce Health and Environment Subcommittee to take action to ensure that states keep any money they receive under settlements with tobacco companies. Committee Chairman Mike Bilirakis (R., Fla.) has introduced a bill that would ban the federal government from claiming a share of states' tobacco settlements.

House JUDICIARY Committee Hearing on attorney fees and the proposed national tobacco settlement. December 10, 1997

• Tentative Witness List
• Testimony Of Congressman Scott Mcinnis
• Testimony by the Honorable Paul McHale
• Statement Of D. Scott Wise, Esq. Davis Polk & Wardwell
• Summary Of Statement Of Lester Brickman Professor of Law Cardozo School of Law
• Summary Of Testimony Of Alan B. Morrison
• Testimony Of Mississippi Attorney General Mike Moore
• Prepared Statement Of C. Steven Yerrid, Esquire
• Jeffrey E. Harris ["Not Found" See FNS version]
• FTP: Hr 2740 To Limit Attorneys' Fees In The Tobacco Settlement In the House of Representatives, October 24, lg97. Introduced by Mr. Mclnnis (for himself, Mr Cox of California, and M r. McHale)

Attorneys battling the tobacco industry could earn as much as $18 billion in fees, if all the state contracts with lawyers were carried out to the letter, according to a law professor who testified yesterday before an influential House panel. While states suing the industry insist that will never happen, those astronomical figures set the tone for the hearing at which both Republicans and Democrats criticized the fees lawyers might receive.

Lawyers who have sued the tobacco industry on behalf of states stand to collect fees of between $7.9 billion and $18.6 billion, legal scholars told a congressional panel Wednesday. The estimates came as the House Judiciary Committee began debating how much is too much to pay the lawyers. In Florida, some of the lawyers hired by the state are seeking fees that would work out to more than $7,700 an hour. If the proposed national tobacco settlement is enacted, "some of these lawyers will become instant billionaires," said Rep. Scott McInnis, R-Colo., co-sponsor of a bill that would cap lawyers fees at $150 an hour in the tobacco cases.

Mr. Moore said his private attorneys used their own money to support his suit and deserve compensation for the risk. "What we were up against was an industry which paid their lawyers $600 million a year to defend ongoing litigation," he said. "They had never lost a case or paid out a penny to anyone."

The Association of Trial Lawyers of America distanced itself yesterday from some of the Florida attorneys, hoping to keep Congress from enacting a cap. Citing the resources and expertise that trial lawyers contributed to the lawsuits, Richard D. Hailey, the association's president, wrote to Coble, "It would be a shame if that heroic effort were to be undermined or overshadowed by the unjustifiable and excessive fee demands of a very few individual lawyers."

Even in light of a chiding from the nation's largest group of trial lawyers, Bob Montgomery makes no apologies for the massive fee he says he's owed in Florida's $11 billion tobacco settlement. "I did not take a vow of poverty when I was sworn into the Bar, nor did they ask me to," said Montgomery, who along with four other members of the state's trial team is seeking 25 percent of the deal, as promised in their contract.

Officials at ATLA said in a statement yesterday that they were not surprised that the Chamber was asking insurance, tobacco and manufacturing giants to finance what they called an "anti-consumer" propaganda campaign. . . The Chamber of Commerce's Kraus said the group will get its money from its 200,000 member corporations but will not solicit or accept funds from the tobacco industry.

The U.S. Chamber of Commerce, with help from Republican leaders and the tobacco industry, is laying plans for an all-out battle next year against some of its most powerful foes: trial lawyers. Plans call for a multifront attack that could include legal challenges to the election of judges in Alabama and other states seen as particularly friendly for plaintiffs; lobbying Congress on such issues as product liability; and a public relations campaign to convince consumers that they in the end pay for excessive legal costs and judgments. The millions of dollars the battle will need are to be raised from business interests who see growing legal costs as a burden to economic growth and competitiveness, officials knowledgeable about the campaign said. A chamber official said it could become the most expensive such effort undertaken by the alliance of more than 200,000 businesses nationwide and 3,000 state and local chambers of commerce. Tobacco companies have been approached about helping to pay for the campaign, along with other manufacturers, wholesalers and retailers, the official said.

Attorneys involved in the proposed $368 billion tobacco settlement Wednesday questioned the legality of a House bill that would place a cap on fees collected by plaintiffs' attorneys. 'This attempted abrogation of a states' right to contract would run into considerable constitutional challenge,' said Mississippi Attorney General Mike Moore, speaking at a House Judiciary subcommittee hearing on legal fees tied to the settlement.

Congressional hearings this week have made clear that the tobacco deal negotiated last spring between the states and the Big Four cigarette companies will be one of the most controversial issues Congress takes up next year.

A resolution passed late last week by the board of directors of the Tobacco Growers Association of North Carolina, Inc. (TGANC) calls for Congressional action to pay quota holders and growers for damages incurred should a buy-out proposal for flue-cured tobacco quotas become a reality.

Friday, December 12, 1997 ­ Kentucky Senator Wendell Ford is warning tobacco farmers that now's the time to throw their support behind a solution to the national tobacco debate. Ford spoke at a meeting of the Kentucky Farm Bureau along with the two heavy hitters from the tobacco talks, Mississippi Attorney General Mike Moore and North Carolina tobacco attorney Phil Carlton. Moore says all the states' attorneys general are united in wanting farmers to get a share of the 368-billion-dollar settlement. Ford warns, however, that if farmers don't agree on what that share will be, they won't be getting anything.

Mississippi Attorney General Mike Moore said he sees Ford's plan as "a tremendous step in the right direction." "I believe that I'm in a position to support what Sen. Ford is trying to do for the farmers here in Kentucky," Moore said. He spoke to hundreds of farmers attending a session on the proposed $368.5 billion settlement at the Kentucky Farm Bureau annual convention.

Led by Philip Morris Cos., the nation's five major tobacco producers will have spent more than $30 million on lobbying by the end of 1997, with a sum far larger than that predicted next year . . . The companies have hired an all-star cast of former politicians that includes a former Democratic majority leader in the Senate, George J. Mitchell; former Texas Gov. Ann Richards, also a Democrat, and another former Senate majority leader, Howard Baker, a Republican. "This is probably the most expensive and formidable array of talent ever hired by a single industry," said Charles Lewis, executive director of the Center for Public Integrity, a nonpartisan group that studies lobbying and campaign finance. "What's troubling is to see so many politicians aligning themselves to lobby for an industry that has been responsible for so much death." Here's the article at the Lexington (KY) Herald Leader: Both Sides Fine-Tune Lobbying Machine in Tobacco War

Reeling from this onslaught, the industry is fighting back -- seeking to expunge its image as a corporate pariah, insisting in the face of great public hostility that it has truly turned a new leaf -- and girding itself for an epic fight over the tobacco deal in the 1998 Congress.

With such a range of issues involved - from protecting family farms to protecting the health of children - many expect the issue to give rise to the biggest legislative skirmish since President Clinton's failed health care. But unlike health care, Congress seems more than willing to do something. In fact, many of the most potent signals that tobacco won't escape unscathed are from Congress rather than the White House.

And that's just the beginning. Three comprehensive smoking-control bills have been introduced by key senators in response to the $368 billion tentative tobacco settlement worked out in June between state attorneys general and cigarette manufacturers. More are being drafted, both in the Senate and the House.

n side agreements negotiated with the plaintiffs' lawyers, the companies have agreed not to "take any position adverse to the size of the fee award requested" or even "express an opinion if asked." Moreover, they've placed no limit on the total payout, capping only the maximum annual amounts, and agreed to forgo an appeal of whatever amount an arbitration panel decides is fair.

Rep. Thomas J. Bliley Jr. told a ballroom full of lobbyists and Richmond-area business and civic leaders yesterday that he will stick up for the tobacco industry in upcoming negotiations over a proposed tobacco settlement. "Despite what you have read in the press, I have not forgotten my roots," the 7th District Republican congressman said. Bliley said he wanted all tobacco interests, including farmers, plant workers and merchants, to be represented fairly in any settlement.

Sen. John McCain, chairman of the Commerce Committee, said in a statement issued on Monday that he wanted more than another recitation of goals by the White House when his panel resumes hearings this winter. "I would like to ensure that the appropriate administration representative is prepared to testify at those hearings and to provide the committee with the administration's analysis, specific policy positions and legislative proposals," he wrote President Clinton.

The new coalition, called Save Lives, Not Tobacco, is expected to urge Congress to pass sweeping anti-smoking legislation without granting the industry its cherished goal of immunity from the most threatening types of lawsuits. The group's formation, to be announced in coming weeks, underscores the bitter ideological debate and personal hostilities that have festered within anti-smoking ranks over whether it is necessary to cut a deal with cigarette makers to achieve public health goals. The split is likely to further complicate the already thorny task of moving major tobacco legislation through Congress next year.

The Coalition for Workers' Health Care Funds, which has filed class action lawsuits against the tobacco industry in some 30 states, has appealed to the American Cancer Society (ACS) to abandon its efforts to persuade Congress to extinguish those lawsuits. The ACS has assumed a key role in an organization called ENACT, a grouping of organizations created to assist the tobacco industry in its quest to persuade Congress to provide it with a sweeping grant of immunity . . . The appeal was contained in a letter to Dr. John Seffrin, M.D., ACS president and CEO from Mr. Robert J. Connerton, chairman of the workers' coalition executive committee. . . "Dr. Seffrin, lawsuit immunity for the tobacco industry is not an arcane subject of debate by scholars cloistered in the dusty halls of academe. Lawsuit immunity for the tobacco industry is a public health issue," said Connerton.

• 12/11/97 New Poll Shows Broad Support in Oklahoma for a National Tobacco Control Policy; Oklahoma Voters Want Immediate Congressional Action CTFK PR Newswire
  
  More than three-fourths of Oklahoma voters are deeply concerned about the epidemic of youth tobacco addiction. According to a state poll released today, large majorities also favor a strong national tobacco control policy that would protect kids from cigarettes and spit tobacco and believe that Congress should move quickly to enact tobacco control legislation. At a press conference today in Oklahoma City, Attorney General Drew Edmondson, State Representative Ray Vaughn, and a representative of the American Heart Association released the polling data and unveiled new advertising calling for a national tobacco control policy.
• 12/11/97 Taft-Hartley Funds Laud AMA Opposition To Big Tobacco Quest for Lawsuit Immunity PR Newswire
  
  The Coalition for Workers' Health Care Funds today issued a message of congratulations to the American Medical Association for its overwhelming vote in opposition to the tobacco industry's quest for immunity from civil lawsuits.
• 12/11/97 ENACT Group Releases Poll on Special Immunity for Tobacco Industry: Wording of Question Makes Results Contrary to Impartial Polls and AMA Vote. ASH PR Newswire
  
  In the wake of a determination by one of its most powerful members -- the American Medical Association -- to oppose any legal immunity for the tobacco industry, the ENACT group is releasing a poll allegedly showing that a majority of the public does support it. However, because of the wording of the question, the results are different from several independent polls and misleading. . . A much larger and growing coalition of antismoking, public health, medical, civic and other organizations known collectively as SAVE LIVES, NOT TOBACCO is seeking national legislation now which does not grant any immunity to the tobacco industry.
• 12/10/97 Coalition for Workers' Health Care Funds Asks: Who is ENACT and Why is It Trying to Prevent Tobacco Victims from Suing the Tobacco Industry for Damages? PR Newswire
  
  The forthcoming release of a badly slanted public opinion poll by ENACT demonstrates clearly that group's dedication to helping the tobacco industry achieve its goal of immunity from lawsuits. This was the message delivered today to the union members and trustees of some 500 workers' health care funds around the country by Coalition for Workers' Health Care Funds Executive Committee Chairman Robert J. Connerton. . . Connerton pointed out that other, legitimate, polls such as one conducted recently by the Associated Press and Business Week, show the American public in favor of allowing tobacco victims to sue.
• 12/09/97 AMA Rejects Idea of Immunity for Tobacco Industry Reuters
  
  Delegates at the AMA's policy-making meeting in Dallas reaffirmed their opposition to civil immunity for the tobacco industry and rejected proposals that it be used as a bargaining chip in negotiations. "The AMA remains opposed to any form of civil immunity for the tobacco industry and remains opposed to giving the tobacco industry any other special legal advantages that would abridge the rights of individuals or groups of individuals who have been harmed by this industry," the delegates said in a resolution.

"Today these documents will be available to everyone with access to the Internet," Chairman Bliley said. "I've said all along that it is important that Congress and the American people have the facts, and today they will have them."

The House Commerce Committee intends to make public more than 800 secret tobacco-company documents today, giving the public its first look at records the tobacco companies have been trying to keep under wraps for years. The decision to release the records came less than a day after a Minnesota judge ruled that the 834 documents -- which include research on nicotine and marketing to youth -- had been improperly shielded from disclosure when cigarette-makers said they were covered by attorney-client privilege.

Blue Cross proposes a national policy based on these two factors: --The public's right to know. This includes access to tobacco industry information which will come out during the Minnesota case about the addictive nature of nicotine and the harmful effects of tobacco use. --The best interests of the public's health.

We continue to believe that continued controversy and confrontation serve no useful purpose and delay the inevitable need to implement a national tobacco policy. Those who believe 20 -- or 40 -- year old documents merit continuation of legal and regulatory hostilities in lieu of a national legislative solution fail to see what is at stake. We must learn from, but not be obsessed by, events past, and recognize the value of a comprehensive national policy and the promise it holds for the future. Only such a comprehensive settlement, agreed to by the tobacco companies, will result in meaningful, national progress with respect to a reduction in youth smoking and responsible regulation of the design, manufacturing and marketing of tobacco products.

As the special master's report indicates, the documents show that the different cigarette makers cooperated with each other to a far great extent than previously believed, he stated. For example, the documents describe what is called the "mouse incident," in which Philip Morris ordered RJR to shut down some biological research which could have been embarrassing to the industry. . . There is also growing suspicion, says Banzhaf, that Philip Morris conspired with Commerce Committee Chairman Thomas Bliley, known as the "Congressman from Philip Morris," to orchestrate the release of the documents long before serious consideration of federal tobacco legislation begins, and in a form which makes it difficult for the media and others to appraise them. "Instead of releasing the documents in text form where they could be easily downloaded, searched for key words, and copied, Bliley posted digital pictures which are very slow to download, cannot then be searched, and which require special programs to handle," says Banzhaf. Banzhaf suggests that the media download a copy of the report of the special master from the Commerce Committee's Internet Web site or ASH's (http://ash.org) because it singles out and quotes from many of the most incriminating documents.

One of the world's largest cigarette companies considered admitting nearly 20 years ago that smoking causes disease, according to a report in Minnesota's lawsuit against the tobacco industry. Brown & Williamson Tobacco Corp. considered breaking ranks with the industry in 1980 because denying a link between smoking and disease was "simply not believed," Special Master Mark Gehan wrote in a report made public Wednesday.

"The industry is unable to argue satisfactorily for its own continued existence because all the arguments eventually lead back to the primary issue of causation, and on this point, our position is unacceptable," the 1980 B.A.T document stated, according to a report prepared by Mark W. Gehan, the court-appointed official. The judge ordered the report released late Tuesday after ruling that documents in the case showed that industry executives and their lawyers had engaged in a long-running "conspiracy of silence and suppression of scientific research" about the dangers of smoking.

Tobacco industry research in the United States was coordinated by a group of cigarette manufacturers' attorneys with the intention of providing favorable results about smoking and health, a judicial officer in Ramsey County determined earlier this year. The report of Special Master Mark Gehan, unsealed Tuesday in the state of Minnesota's lawsuit against the tobacco industry, said a "Committee of Counsel" selected research projects to bolster the industry's position that smoking did not cause disease. The research was for use in lawsuits, government testimony and public relations matters.

Attorneys for tobacco companies scrambled Wednesday to respond to a judge's order to release 800 industry documents to the state. . . Late Tuesday, Judge Kenneth Fitzpatrick gave the companies five days to release the documents.

Tobacco companies for decades used their lawyers to conceal smoking research, then engaged in "abuse and disregard for the judicial process" during a recent court-ordered review of the practice, a judge in St. Paul ruled Tuesday. The ruling by Ramsey County District Judge Kenneth Fitzpatrick is a sweeping indictment of Big Tobacco's use of lawyer-client privilege to prevent disclosure of documents related to children, special research projects, science and other subjects. "The court's own review of the documents reveals a conspiracy of silence and suppression of scientific research," the judge wrote. In another rebuke to cigarette makers, Fitzpatrick concluded their lawyers violated court orders and abused the legal process during a special master's review of industry "privileged" documents this year.

With sometimes scathing language, Ramsey District Judge Kenneth Fitzpatrick blasted the tobacco industry for improperly hiding sensitive documents behind attorney-client privilege claims and ordered the files' release to attorneys for the state of Minnesota.

"Did the defendants claim privilege for such material to create more of a 'haystack' in which to hide their 'needles?' Did they fail to conduct a review of the documents sufficient to make a good-faith claim of privilege in the first instance? Whatever the reason, claiming privilege where none even arguably exists constitutes abuse," Fitzpatrick wrote. "Moreover, a pattern of abuse taints the entire submission." Still to come is a decision by Gehan on 150,000 more documents that the companies are trying to keep secret.

'One of the principles the President articulated for a tobacco settlement was a full disclosure of documents relevant to an understanding of the issues,' said White House Spokesman Mike McCurry. 'The President believes the release of these documents adds further momentum to the effort to achieve the type of settlement he has suggested,' McCurry added. However, President Clinton has never fully defined how he views the issue of immunity for the tobacco industry, a key issue from the industry's point of view.

While containing no dramatic new revelations, the huge cache of documents helps bring into focus a picture described by previously released documents: the industry's strategy to undercut a growing scientific consensus on the health risks of smoking, anti-tobacco activists said. "Not a single [document] is definitive in any single way," said Rep. Henry A. Waxman (D-Calif.), "but there's a pattern of very sophisticated, long-term efforts by the tobacco industry to find scientists who will cast doubt on the idea that smoking is dangerous, and to mislead the public."

A new debate over proposed federal tobacco legislation erupted in Congress Thursday after the release of hundreds of cigarette company documents . . . Here's the article at the Winston-Salem Journal, Documents Raise Settlement Questions

The 847 documents show an industry under siege that turned to a core group of lawyers to coordinate a multilayered defense relying on science, public relations and political muscle. Here's the article at the St. Paul Pioneer Press

What happened? The House Commerce Committee used the Internet to release more than 800 potentially sensitive tobacco industry documents gathered as part of Minnesota's lawsuit against the tobacco industry. - Why now? . . .

Among the materials seen for the first time Thursday were: * A 1967 memo suggesting that celebrities such as the Monkees, the Supremes and John (sic) Unitas be hired to pitch smoking in television commercials because they are "persons who young people admire and respect."

Prominent Republicans, including Senate Commerce Committee Chairman John McCain of Arizona predicted a thorough review of the documents before Congress takes any action. Various House and Senate panels will seek extensive testimony on the documents' "legal and policy ramifications during in-depth hearings early next year," Sen. McCain said. In a joint statement, the big tobacco companies declined to comment on the specifics of the documents, citing their position taken in court proceedings that the documents remain privileged. "It should also come as no surprise that the tobacco companies needed and sought advice of lawyers, given the adversarial environment of the last four decades," they added, noting that the issues raised in the documents "are not new."

"Buried inside these documents are some of the most lethal hand grenades we've ever seen the industry throw at America's children," said Sen. Frank R. Lautenberg, D-N.J. and a leading tobacco foe. "What's so scary about the revelations is that these documents aren't even the ones that the industry is so afraid to release. Without releasing the remaining documents to Congress, the tobacco industry can kiss any form of their settlement goodbye," he added.

But he added that the 834 documents, disclosed over an Internet site, show no new "smoking gun" against cigarette manufacturers.

Philip Morris Cos., RJR Nabisco Holdings Corp. and other tobacco companies are considering launching an advertising campaign to build public support for a proposed $368.5 billion settlement of health-related litigation.

The chairman of the Senate Agriculture said Wednesday it was "a nonstarter" to think Congress would provide billions of dollars in aid to tobacco growers and keep the federal tobacco program in effect.

• 12/14/97 Part 1: Big Tobacco and Its Foes Wrestle On Deal Worth Billions
  • What's in the Tobacco Deal?
• 12/15/97 Part 2: In Advertising, A New Battleground
  •  The Deal on Advertising
• 12/16/97 Part 3: Tobacco Wants Broad Immunity From Lawsuits. But At What Price? Focus on Burl Butler case
  
  Today, however, this right is being challenged as the tobacco industry pursues a high-stakes deal on Capitol Hill that would bar folks such as the Butlers from punishing the industry for its past behavior. Curbing lawsuits -- and their potentially ruinous awards -- has been Big Tobacco's goal for years. In 1998, it just might happen. THE AMERICAN CIGARETTE industry is terrified that the dike is breaking and that it soon will be drowning in successful lawsuits brought by dying smokers, bystanders or their estates.
  • The Deal on Litigation
• 12/17/97 Part 4: For Tobacco Farmers, A Way of Life at Risk
  • 12/17/97 What's in the Tobacco Deal on Farming?
    
    The proposed settlement speaks directly to tobacco farmers only in one clause. It says that government cannot impose a higher regulatory burden on tobacco farmers than it does on any other farmers.
• 12/18/97 Part 5: Looking Oversease for a Thriving Future
  • 12/18/97 What's in the Tobacco Deal on Sales Abroad?
    
    The proposed deal explicitly stays away from tobacco's sales and marketing abroad.
• 12/19/97 Part 6: Firms Scramble to Find "Safer" Way of Smoking Companies could have incentives if the tobacco deal goes through.
  • 12/19/97 What's in the Tobacco Deal on safer cigarettes
• 12/15/97 Kicking the Habit
• Web Links

Releasing the companies' secrets on the World Wide Web gives the 65-year-old congressman a fresh image, said University of Virginia government professor Larry Sabato. It may allow him to discard the snide appellation tobacco foes pinned on him years ago, "the congressman from Philip Morris." It may realign his long relationship with Philip Morris: "Instead of the puppet, he his now the puppeteer," Sabato said. And it could give him the credibility to help broker a deal, not as tobacco's man in Congress, but as the leader of a powerful House committee.

The tobacco documents were painstakingly scanned by staff members, in their original form, directly onto the web site. By mid-day, more than 70,000 visitors had logged on to the site.

Lawyers for cigarette makers deliberately funneled research money into experiments designed to blame almost anything but smoking for lung cancer and other diseases, newly released industry documents show. The grant-handout strategy . . . steered money away from experimental work directly related to tobacco and health.

Tobacco industry documents released on the Internet this week provide a partial road map to the January trial in St. Paul where cigarette manufacturers will face allegations of fraud and deception.

"Where they run into trouble and where it becomes immoral is when they deny legitimate science, and they did that," Kluger said. "It was disinformation." What's important, he said, is to use any public outrage that comes from the new documents to push Congress to protect other smokers and those thinking about taking up smoking.

Buried among hundreds of secret tobacco industry documents released by Congress this week is one that sheds some light on Phil Carlton, the longtime pal of Gov. Jim Hunt who has been the cigarette manufacturers' point man in negotiations on a national smoking settlement. The 1983 document from Carlton to the president of the Tobacco Institute outlined plans to establish a "broad-based, grass-roots national membership organization which would provide a nationwide network of persons supportive of tobacco."

Unlike the Monkees, whose TV reruns and nostalgia tours have kept them from totally fading out of pop culture, the tobacco industry's exploitative and deceptive tactics must never be allowed a comeback.

The tobacco industry, gearing up to do battle over a proposed national settlement with opponents, spent $15.8 million employing 186 different lobbyists to press its views on tobacco-related issues in the first half of this year, according to a study by Public Citizen, a consumer group founded by Ralph Nader.

The farmers, who met at the Forsyth County Agricultural Building, came from Stokes, Surry, Yadkin, Davie, Iredell and Forsyth counties. Blake Brown, an agricultural and economics professor at N.C. State University, outlined the proposals on the settlement that will affect tobacco farming's future in the Piedmont.

That's why we're blushing now for Ann Richards, George Mitchell and Howard Baker. While cashing in has become a national calling, their Faustian bargain with Big Tobacco has left many here speechless. This "dream team" once had the fragrance of integrity. Now they're all lobbyists taking sinful amounts of money from America's leading sin industry, lending it their aura of respectability. Their assignment is to sell Congress on the $368.5 billion tobacco settlement, negotiated by tobacco lawyers and state attorneys general, which would shield the industry from future lawsuits filed by smokers. In return, these politicos get a big cut of the whopping $30 million that the tobacco industry has spent on lobbying this year. If Big Tobacco thinks this deal is good for it, it's bad for us. Here's the article at the Minneapolis-St. Paul Star Tribune

The companies said that Judge Kenneth Fitzpatrick of Ramsey County District Court violated their constitutional right to due process by reviewing only sample documents, then ordering entire categories to be turned over. The companies asked the appeals court to make Fitzpatrick review each document separately and follow that procedure in future fights over what documents are subject to the privilege that protects most communications between clients -- in this case , the tobacco companies -- and their attorneys.

In an article Tuesday, the Associated Press erroneously reported that tobacco companies were granted a stay of a judge's order that they turn over more than 800 internal documents to plaintiffs in Minnesota's lawsuit against the industry. The companies sought time to appeal the order, maintaining the documents are privileged and should not be introduced at trial. The judge took no immediate action on their request.

A judge on Monday stayed his order that tobacco companies must turn over more than 800 internal documents to plaintiffs in Minnesota's tobacco lawsuit, saying the companies may first appeal his ruling. The cigarette makers said they expected to file their appeal today.

Here are the top news stories of 1997, as selected by 190 Associated Press newspaper editors and broadcast news directors in the United States: . . 7. Tobacco settlement

THIS WILL BE remembered as the year the once-invulnerable tobacco industry cried "uncle." . . Mississippi Attorney General Michael C. Moore is the man most responsible. . . Looking forward to 1998, Mr. Moore predicts Congress will enact a tobacco resolution in the spring that will build on, rather than discard, the June 20 agreement.

Former Surgeon General C. Everett Koop said he opposes any tobacco legislation that grants cigarette makers special legal protections . . Koop made it clear he is still willing to negotiate, saying he might consider legal protections "if everything we want on public health" is in a final settlement. For now, though, he said: "I think the stance has to be: 'No immunity.' " . . "This really jeopardizes the deal," said PaineWebber Inc. tobacco analyst Emanuel Goldman. "It . . . makes it more difficult because the president has been leaning" on Koop as a key advisor.

The tobacco settlement will get nowhere in the 1998 Congress, predicts Hall Dickler Kent Friedman & Wood LLP in the firm's annual ADLAW predictions. And don't expect the settlement's advertising restrictions to ever see the light of day in their current form -- the firm believes sensible legislators will see through the "smoke" and recognize that the provisions are unconstitutional.

I have never suggested dropping the lawsuit. Why would we dedicate the hours of state time and money to a case that we wanted dropped? Rather, I have proposed participating in a national settlement in addition to pursuing the state's lawsuit. Let me say it again: we want to win the state's lawsuit. But no matter how many times we have emphasized this point, it goes ignored by the Star Tribune.

But across the country, the Minnesota case is well known as Humphrey's lawsuit, mainly because of the independent, sometimes isolated stand he has taken against a once-popular out-of-court national settlement deemed insufficient by the Minnesota DFLer. The course to trial is unpredictable and the consequences significant if Humphrey is wrong. . . "That's a risk," Humphrey said of the possibility of losing in court. "It's like going to war. But even in the event of a loss, we have moved the ball substantially forward. We're not going to lose."

Congress is using its winter recess to gird for what many expect will be the biggest legislative skirmish since President Clinton's failed health care initiative in 1994 -- the tobacco settlement.

The deception is that AMA leaders have misled the public by distorting members' views.... From the standpoint of public relations fiascos, the AMA's sellout to tobacco could make its sellout to Sunbeam look as pale as a sunbeam.

By early last week, no one had found any "smoking guns" in the hundreds of tobacco industry documents posted on the Internet by the House Commerce Committee. . . "We believe that the documents once again help confirm the public's impression of the tobacco industry as a pariah and as being untrustworthy," said Ethan H. Siegal, president of the Washington Exchange, which provides political advice to institutional investors. . . "The public will read about the documents via the headlines and 200-300 word stories," he wrote. "And those stories will generally be ugly in nature and tone."

"I can anticipate rulings which would leave us defeated by our own hand," Hardy wrote in a "confidential" memo in 1970, warning one of his tobacco clients, Brown & Williamson, that comments by researchers at its British sister company about the potential dangers of cigarettes might one day be prone to discovery in an American lawsuit. The day Hardy anticipated is here. But cigarette makers are not the only ones facing atonement because of the airing of industry documents.

Attorneys preparing Minnesota's case against the tobacco industry now have official access to internal company documents that earlier were released on the Internet. . . "It's important to have (the document evidence) in some mode where they could introduce it, and this way they can," said Lee, who is not involved in the Minnesota case.

As state attorneys general prepare to resume settlement talks next week with tobacco companies, they plan to meet on Tuesday in Chicago to discuss how to divide tens of billions of dollars in possible settlement money. . . In the latest talks, the industry offered to pay about $196 billion to resolve the remaining state lawsuits, officials familiar with the terms said. Companies also agreed to a public health provisions like the removal of all outdoor tobacco advertising and the funding of a national foundation that would work on stopping smoking.

Republicans in Congress took numerous rides aboard jets owned by tobacco companies in the 17 months before the GOP killed a Senate tobacco bill the industry strongly opposed, a Democratic study of election records shows.

Tobacco companies showered Republicans with dozens of luxury jet flights in the past year and a half, according to Democrats seeking to show voters that the GOP killed tobacco legislation as a favor to the industry.

A new report finds that GOP lawmakers and their political committees accepted dozens of trips on jets owned by tobacco companies during this 1997-98 congressional election cycle. The tobacco industry provided far more subsidized travel to Republicans than any other industry or special interest, according to the report prepared by Democrats on the House Government Reform and Oversight Committee.

The tobacco industry provided far more subsidized travel than any other industry, according to an examination of Democratic and Republican campaign finance reports by Democrats on the House Committee on Government Reform and Oversight. . . Investigators said they found no reports of Democrats traveling on tobacco planes between January 1997 and the end of May, the period covered by their study. Much of the travel occurred as the tobacco companies were trying at first to get Congress to approve legislation to give them some protection from mounting lawsuits, and later as the companies successfully lobbied Republican senators to kill that legislation after the lawsuit protection was removed.