Senate unveils bill on tobacco Industry would pay $500 billion but gain annual cap on liability

Bipartisan measure

Tobacco Foes, backers air disapproval, but plan seen as a start

March 31, 1998|By Jonathan Weisman | Jonathan Weisman,SUN NATIONAL STAFF

WASHINGTON -- A bipartisan coalition of senators formally unveiled sweeping tobacco legislation yesterday that would extract a half-trillion dollars from the cigarette industry but would limit how much the industry would have to pay in damages each year.

The proposal would not give the companies immunity from class action lawsuits or punitive damages, as tobacco lawyers have demanded. But it would limit the industry's payouts at $6.5 billion a year, granting the embattled tobacco companies a measure of the stability they desperately want.

Tobacco foes and friends quickly pounced on the proposal, declaring it either too lax or too punitive. Yet, even skeptics conceded that -- flawed as it is -- the proposal could become a framework for an eventual law. Suddenly, Washington has a tobacco bill, which appeared dead just weeks ago, moving through Congress.

"I don't believe there's any more reason to compromise," said the bill's chief author, Sen. John McCain, chairman of the Senate Commerce Committee. "At this point, I don't know how the tobacco companies can stand in the way of overwhelming public opinion."

The Commerce Committee plans to begin drafting the final legislative language tomorrow, a year after attorneys for the tobacco industry first met with state attorneys general and trial lawyers to hammer out a landmark deal to settle the barrage of lawsuits besetting the industry.

The initial settlement has endured a withering assault from tobacco foes, who complained that it amounted to a giveaway to cigarette makers.

But the Senate proposal has breathed life into a deal of far-reaching significance.

"We stand on the verge of one of the greatest public health achievements in history," Erskine Bowles, the White House chief of staff, declared yesterday. Bowles called the bill a "strong foundation," if not a perfect one.

Mississippi's attorney general, Michael Moore, one of the architects of the original settlement, hailed the Senate proposal as "our last, best effort to get this tobacco settlement done. If it fails -- if the Commerce Committee fails to get a bill to the [Senate] floor, I believe this effort is over."

On the surface, the carping continues unabated. Already, the proposal is under fire from liberals who say it does not go far enough and from the tobacco industry, which says it goes too far.

J. Phil Carlton, the industry lawyer who helped negotiate the $368 billion deal last summer, denounced the proposal as "fundamentally flawed," saying it would spawn a black market, push tobacco jobs overseas, wreak havoc on the economy and push tobacco companies into bankruptcy.

The most combative tobacco opponents were equally dismissive. Sen. Edward M. Kennedy, a Massachusetts Democrat, said the proposal "does too little to protect our children and too much to protect the tobacco industry."

But just as telling were those who offered qualified support. As McCain, an Arizona Republican, unveiled his proposal, he was flanked by Sen. Ernest F. Hollings, a South Carolina Democrat and longtime industry ally, as well as by Sen. Ron Wyden of Oregon, a Democrat who has waged war on the industry for years. None declared the bill perfect, but none withheld his support, either.

Former Surgeon General C. Everett Koop and former Food and Drug Administration chief David A. Kessler, two of the most influential voices on the issue, said that while they could not support the legislation as written, the measure held out the prospects of a deal they could accept.

If enacted, the bill would be the most sweeping tobacco control legislation in U.S. history. The measure would sharply restrict cigarette advertising, grant the government authority to regulate tobacco as a drug, establish nationwide anti-smoking campaigns and smoking cessation programs, restrict indoor smoking and provide billions of dollars to wean farmers and communities from a tobacco economy that dates to the dawn of the nation.

The industry would pay a "licensing fee" to the government that would total 65 cents a pack next year, climbing to $1.10 a pack by 2003. Over 25 years, those fees could reap up to $506 billion, nearly $120 billion more than the industry agreed to last summer.

Cigarette makers would pay additional penalties of up to $3.5 billion a year if teen-age smoking failed to decline by 60 percent over the next decade.

Democrats in the White House and Congress were troubled by the penalties levied on tobacco companies that fail to meet smoking-reduction goals. With a $3.5 billion-a-year cap on such penalties, the maximum payment would equal less than 15 cents a pack -- small enough for the industry to ignore, critics said.

Moreover, under the legislation, the penalties would be exacted on the industry at large. Anti-smoking Democrats want the fines to be levied on individual companies that fail to meet goals.

Bruce Reed, a key White House adviser, said the president would insist on either a considerably higher cap on such "look-back" penalties or no cap at all.

Rep. Henry A. Waxman, a California Democrat and ardent foe of the industry, zeroed in on another provision that he said would leave taxpayers to subsidize the cost of legal judgments reached against the tobacco industry; the industry would be allowed to deduct 80 percent of any such judgment from its federal taxes that year.

Some of the central elements of the legislation -- advertising restrictions, for example, and "look-back" penalties -- may need the industry's agreement, because they might be deemed unconstitutional if challenged.

Pub Date: 3/31/98

ZTC

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