Tobacco States Heap Scorn on Suit
Jan. 21, 1999
DURHAM, N.C. (AP) _ Tobacco company executives and officials in states dependent on the crop had nothing but scorn for President Clinton's threatened lawsuit against cigarette makers and an increased tobacco tax.
``This industry is under siege,'' Kentucky Gov. Paul Patton said Wednesday. ``There's a limit to what this product can bear, and we're coming close to that limit.''
Patton was among representatives from 11 tobacco states and four companies who discussed Clinton's speech as they met in Durham to work out plans for a $5.15 billion trust fund to assist farmers hurt by the settlement of state lawsuits.
In his State of the Union speech Tuesday night, Clinton said the federal government would follow the lead of states and sue tobacco companies to recover health care costs of treating sick smokers.
States won $246 billion, mostly through lawsuit settlements, plus new restrictions on tobacco ads and other industry practices. Federal attorneys have studied the states' strategy.
Administration officials insisted Wednesday that the decision was made after they determined the government has legal grounds to make its case.
Tommy Payne, senior vice president of R.J. Reynolds, said Clinton apparently wants ``more money from the industry and some political gain from the industry.''
``The federal government already makes more money per pack on cigarettes than the companies make,'' he said. ``The federal government makes 24 cents per pack, and R.J. Reynolds makes 9 or 10 cents.''
Phil Carlton, a tobacco industry lawyer, said the companies would fight any federal suit ``to the last day.''
``If there's any federal lawsuit, if new taxes are added by Congress, it will have a terrible impact on the industry,'' he said. Cigarette makers called the potential federal suit ``political.''
Administration officials say the lawsuit is independent from Clinton's push to pass tobacco legislation in Congress, but they acknowledge a pending suit could put increased pressure on the industry to cut a deal.
The government released few details about the upcoming lawsuit, which is meant to recover tax dollars spent treating sick smokers in Medicare, the Defense Department, Veterans Affairs, federal employee health benefits and other federal programs.
It's expected to be months before a suit is filed.
A task force within the Justice Department, yet to be appointed, will soon begin work to develop the precise legal strategy. Officials would not say where the suit might be filed or how much money it might seek.
Separately, the administration will try again to persuade Congress to give the Food and Drug Administration the power to regulate tobacco and adopt other policies meant to cut youth smoking.
The president also has proposed an additional 55-cents-per-pack tax on cigarettes.
It's unclear how the administration and its allies will fare on their second try in Congress.
Last year, there was considerably more momentum for tobacco legislation, in part because state lawsuits had not yet been settled. But the deal died.
Administration officials argue they have a better chance this time because the legislation is less ambitious and doesn't directly tie tobacco penalties to domestic spending.
Still, Republicans fiercely oppose hiking the cigarette tax, and the industry is sure to renew its fight against new regulations.
Carlton said the settlement with the states doesn't set any legal precedent and that ``unfortunately, the polls apparently show that suing tobacco is popular.''