Now, Big Tobacco Is Eager To Please

The industry scrambles to get Congress to approve the $368 billion settlement

As negotiations were under way at the ANA Hotel outside of Washington to hammer out legislation on the historic $368 billion tobacco settlement, tobacco lawyers threw down a glove: If the White House doesn't back their requests for immunity from civil litigation, they could walk as soon as Feb. 13.

Tough talk. But who's listening? The tide has turned on the powerful tobacco lobby. This year, Big Tobacco must plead, cajole, and probably even compromise to get Congress to turn the proposed deal--and its language promising limited immunity from future litigation--into law. The promise of immunity never won widespread backing among antitobacco forces or within the Administration, anyway. And after dramatic disclosures about cigarette-marketing efforts aimed at underage smokers, even Big Tobacco's longtime Republican allies are wavering on the idea of immunity. Another complication for the industry: Because President Clinton has earmarked tobacco money for some of his domestic initiatives, Republicans have more reason to back away.

Time is running out. Unless Congress takes up the tobacco settlement soon, the issue will get pushed aside until after next fall's elections. Meanwhile, the legal assault on tobacco proceeds. Minnesota launched its case against the tobacco companies in late January and Attorney General Hubert H. Humphrey III promises to expose dozens of damaging industry documents at the trial. On Feb. 9, a major second-hand smoking trial is set to open in Indiana.

Big Tobacco is adjusting its tactics. Industry executives spent years stonewalling and challenging all scientific evidence of the health risks from smoking. But last year, when documents began to surface in state suits that showed that the companies knew of the risks and intentionally marketed to minors, they began to backpedal. By this January, when several industry CEOs testified before Congress, they were downright contrite--admitting that nicotine is addictive, that smoking plays a role in causing cancer, and that their marketing included studies of teen smokers. "It is immoral, it is unethical, as well as illegal to market to people under age," said Steven Goldstone, chairman and CEO of RJR Nabisco.

The kinder, gentler face of Big Tobacco is part of a program prescribed by Washington spin-doctor firm, Bozell Sawyer Miller Group. But Bozell also recommends maintaining tobacco's traditional hardball tactics in an ad campaign aimed at prodding voters to pressure Congress for the deal to get those billions. Meanwhile, industry lawyers are playing hardball in the negotiations.

None of this has slowed the antitobacco forces, who figure they can write laws to get the tobacco money without making the immunity deal. A bill by Sen. Edward M. Kennedy (D-Mass.), which would raise $600 billion from the industry over 3 years without granting any immunity, is the most draconian of several proposals now before Congress. The public-health community is organizing to launch, by mid-February, a new publicity campaign demanding no immunity whatsoever for Big Tobacco, and is recruiting former Surgeon General C. Everett Koop to lead the charge.

All parties are waiting for President Clinton to act. A senior White House official says that immunity is "philosophically the most difficult" issue for Clinton and that it will be "the last thing on the table." The President, the official says, will weigh a simple question: "Is what you're getting worth what you're giving up?" In his new budget, Clinton is counting on $65 billion in revenues from a tobacco deal. That motivates him to go for the deal, but negotiators are getting tired of waiting for him to decide. "If the Administration doesn't commit on immunity, you could get a walkout" by the industry, says Joe Rice, a lawyer for states suing the industry and a key player in the settlement talks.

Would Big Tobacco drop its demand for a ban on class actions? A consultant to the industry hints that it might--but only if there are no other concessions. If that's the strategy, Big Tobacco could be in trouble. Shares in the industry dropped by 15% in January amid concerns that the settlement might fall apart. And perhaps more important, the industry's difficulties with the immunity issue are exposing a previously unrecognized weakness in Big Tobacco's vaunted lobbying power. "They're very good at killing things, but they're not very good at passing things," says John Coale, a leading plaintiff's lawyer involved in the tobacco talks. It may turn out that the immunity issue is the one that ultimately makes Congress immune to the persuasions of Big Tobacco.By David Greising in Atlanta, with Susan Garland and Richard Dunham in WashingtonReturn to top

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