Tobacco's Lucky Strike

Forget what you've heard about the proposed tobacco agreement. The devil is in the details -- and the details will be worked out in Congress.

Plus: How Big Tobacco's sneaky deal would leave one federal agency in the dust.

—By Eric Umansky

| Tue Jul. 1, 1997 12:00 AM PDT

The proposed tobacco agreement stinks. The $368 billion deal, cut earlier this month with 40 state attorneys general, rescues Big Tobacco from its worst fears -- class-action trials and bottomless liability -- while skimping on the public health measures that could reduce smoking worldwide.

Public health groups, led by former Surgeon General C. Everett Koop and former FDA Commissioner David Kessler, immediately attacked the deal because it would weaken the FDA's regulatory powers over nicotine. The American Lung Association says it won't support any deal that limits the liability of tobacco companies and restricts the FDA, both of which this plan does. ALA even refuses to use the word "settlement," calling the proposed deal a "bailout."

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"The attorneys general were out of their league and they got hoodwinked," says Prof. John Banzhaf, executive director of Action on Smoking and Health (ASH). "They are not experts when it comes to federal regulations, and it shows. Plus, it wasn't in their interest to represent public health; they were ethically obligated to look out for their clients. Their job is to get money for their clients, not to reduce the number of teenagers smoking."

What's worse: The sweetheart deal could be sweetened further in the historically tobacco-friendly confines of Congress. The proposal is only an "agreement of principles." It's up to Congress to write up the details -- and the fine print is always a good place to stash a loophole. Expect serious lobbying as Congress is pulled between consumers who want to see Big Tobacco cut down to size, and Big Tobacco itself, a major sugar daddy to legislators in recent years. Some of the industry's biggest beneficiaries, like Tom Bliley, Jesse Helms, and Dick Gephardt, will feel pressure to reward their investors. It's payback time.

In the interest of helping you keep your representatives honest, the MoJo Wire presents some of the more slippery terms of the proposed tobacco agreement:
The Good:

  • Not preempting the states. The tobacco deal provides that state and local regulations, even when they're tougher than the proposals in the agreement, will remain the law. For example, even though the agreement permits smoking in bars, the city of Berkeley could still outlaw smoking in all its bars. Watch for legislators to try and insert a preemption clause that would weaken or void such state and local regulations.
    The Bad:

  • Cutting down OSHA. A favorite bogeyman for Republicans, OSHA, the agency charged with regulating safety in the workplace, has huge potential powers but has failed to enact new smoking regulations since the anti-regulatory 104th Congress came to town. Right now OSHA has the power to ban smoking in the workplace, period. OSHA has already proposed such a rule -- but the tobacco deal would specifically exempt restaurants, bars, and casinos -- so that even if OSHA someday has the guts to protect waiters from their customers' smoke, it won't be able to do a thing about it.

  • Hobbling the FDA. The deal would allow the FDA to regulate nicotine immediately, with a few restrictions, and to ban nicotine altogether in 2009. Sounds like powerful medicine, until you consider that the FDA already has the power to regulate nicotine as a drug -- without the industry-friendly restrictions.

  • Limiting liability. It's a key component of the deal: Tobacco companies pay off the states and in return they're protected from future class action lawsuits and punitive damages. Individuals would still be allowed to sue tobacco companies -- but few individuals can afford to take on such massive corporations in court. Look for some legislators to try and add procedural barriers that would make it even harder to sue.

  • Tax break. Right now, the agreement states that every dollar the tobacco companies spend on the settlement can be considered "ordinary and necessary business expenses." That means all $368 billion is tax-deductible, leaving American taxpayers to make up the shortfall in the federal treasury.
    The Ugly:

  • Youth smoking. The penalties for failing to reduce youth smoking may seem harsh, but they have two crucial weaknesses: First, they add up to only about 8 cents a pack. Second, these paltry fines will be slashed by 75 percent if cigarette companies show they've "acted in good faith" -- even if youth smoking doesn't drop at all.

  • Curbing the political influence of tobacco. The agreement proposes to "disband and dissolve" the famed Tobacco Institute and the Council for Tobacco Research, ending a long career of hardball lobbying and bogus science in support of the tobacco industry. But as Julia Carol of Americans for Nonsmokers' Rights points out, under the terms of the deal the offending trade associations won't really die, they can simply change their names and board members and continue business as usual. "All we're going to do," said Tobacco Institute vice president Walker Merryman to the Los Angeles Times, "is change the name on the door."

    And there's not a single word in the agreement about banning tobacco PAC money -- a must in order to limit tobacco's influence on lawmakers.

  • International limits. They call it a "global agreement," but it's about as international as IHOP. The proposal offers no rules or guidelines to regulate Big Tobacco's sales in other countries -- and the Republican Congress is unlikely to step in to prevent, say, Philip Morris from marketing tobacco to twelve-year-old smokers in Thailand or Kenya.

    Crippled by so many flaws and giveaways, the tobacco deal now being considered by Congress isn't even supported by all the attorneys general on whose behalf it was negotiated. "To my way of thinking," says Minnesota Attorney General Hubert H. (Skip) Humphrey III, "the current settlement is like a dead fish -- the longer it's in the sun, the worse it smells."

    The question now is: Will it smell even worse after it passes through the 105th Congress?

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