Stalemate in Tobacco Wars After Industry's Summer of Victories

Is there any way to control the tobacco industry?

That's the question rumbling through the White House, Congress, and the antitobacco groups now that it appears the industry has won another round in the tobacco wars.

Over the past few months, the industry has defeated attempts to corral it in Congress. It has also won important legal victories over the past several weeks, culminating Aug. 14 when a federal appeals court ruled that Congress had not given the Food & Drug Administration (FDA) authority to regulate tobacco.

"What we have now is a really ugly stalemate," says Bill Novelli, the head of the Campaign for Tobacco-Free Kids, a Washington interest group.

Mr. Novelli and other public-health advocates are now looking beyond the fall elections for any further federal movement on tobacco. A lot will depend on the future makeup of Congress. It will also depend on how much damage the Clinton presidency suffers as a result of the Monica Lewinsky matter. And, as Novelli notes, "It will be important to see how Vice President Al Gore and other contenders treat this issue."

In the meantime, the White House is considering a giant lawsuit against the tobacco industry. It would be modeled after the lawsuits brought by the state attorneys general and would attempt to collect federal money spent to treat smokers. It would seek $20 billion a year from the industry.

But Gary Black, a securities analyst at Sanford C. Bernstein & Co. in New York, believes the government's case is relatively weak. "Unlike the states, the federal government has a long paper trail of documents showing awareness to the dangers of tobacco," wrote Mr. Black last month. So far, the Justice Department has been very cautious in reviewing the case.

While the federal government ponders a lawsuit, the attorneys general for 46 states are still negotiating with the tobacco companies over a proposed settlement of their lawsuits. The next state lawsuit scheduled for trial is in the state of Washington on Sept. 14. A judge has already thrown out part of the lawsuit. "Washington Attorney General Christine Gregoire is worried. It's a high risk suit, and she would like to settle before going for a verdict," says Clifford Douglas, president of Ann Arbor, Mich.-based Tobacco Control Law & Policy Consulting.

THE tobacco industry may be playing tough with the attorneys general. In recent months, it has been winning some important lawsuits. On July 30, a federal court in Illinois invalidated a billboard restriction ordinance similar to one in Baltimore that has already been through judicial review. The EPA has on appeal a North Carolina federal judge's ruling that it had used improper methodology to conclude second-hand smoke is dangerous.

"Basically, it has not been a great summer for public-health advocates in this area," says Richard Daynard, head of the Tobacco Products Liability Project at Northeastern University in Boston.

However, the biggest blow of the summer came Aug. 14 when a federal appeals court in Richmond ruled that Congress had not given the FDA authority to regulate tobacco products. The government has asked the entire US Fourth Circuit Court of Appeals to hear the case, which was initially heard by three judges. No matter what the court decides, Mr. Daynard expects the issue will reach the Supreme Court by late fall. "This issue is so important, the Supreme Court will have to hear it," he says.

WHILE the case is going through the appeals process, the FDA's rules and regulations will remain in effect. This means that stores that sell tobacco products will have to continue to ask for positive identification from anyone under the age of 27 and can't sell tobacco products to anyone under 18. The FDA is currently spending $34 million a year to contract with states to hire inspectors to ensure compliance with its laws. It has yet to implement a ban on vending machines or restrictions on advertising pending judicial review.

Even with the court ruling against the FDA, it's considered unlikely that Congress will pass any tobacco control legislation. After the Richmond decision, Arizona Sen. John McCain (R) said it was "imperative" that Congress pass comprehensive legislation. However, a spokeswoman for the senator, says it's "very doubtful" that anything could pass Congress in the short time left on the legislative calendar. But, she adds, "stranger things can happen."

For that reason, the tobacco industry is continuing its $40 million advertising campaign against regulation. Ironically, the antitobacco groups are also opposed to having Congress take up a makeshift bill. "We don't want to have them come back and throw off some quick and dirty slim Jim and say, 'We took on the tobacco problem,' " says Mr. Novelli. Instead, he thinks sometime in the future everyone will end up back at the bargaining table. "The public really wants regulation and protection for kids," he says.