Pubdate: Mon, 13 Jul 1998 Source: San Jose Mercury News (CA) Contact: http://www.sjmercury.com/ Author: RICHARD TOMKINS Financial Times TOBACCO FIRMS AIM FOR PACT WITH STATES Accord Would End All Pending And New Suits WASHINGTON -- It's Plan B for the tobacco industry -- and this time there's a chance it may work. Last week word emerged of secret negotiations between cigarette makers and state attorneys-general to strike a deal. They are reportedly after a settlement that could end all present and future anti-tobacco lawsuits by states in return for payments by the tobacco industry of between $180 billion and $200 billion in the next 25 years. Already, the industry has settled lawsuits with four states for sums totaling $36 billion over the next 25 years. Under the secret talks now under way, cigarette prices -- which now average $2.05 a pack -- would be forced up by about 35 cents a pack. Though the tobacco industry would accept certain marketing and advertising restrictions, they would be much less onerous than the ones the anti-smoking lobby wants. Last month, the tobacco industry's first attempt at a settlement collapsed after Congress eliminated the legal immunities the tobacco industry had wanted and proposed toughening industry payments to $516 billion over 25 years, with much larger penalties if smoking among young people was not reduced by targeted amounts and dates. Plan B, on the other hand, would not require Congress' approval; it would be a private settlement between the cigarette makers and the states. ``The beauty of it is that it doesn't require a single vote,'' says Gary Black, a tobacco analyst. The new proposal is a slimmed-down version of the settlement first negotiated between the tobacco industry and the states last year, under which the tobacco industry would have paid $368.5 billion over 25 years and accepted tough restrictions on advertising and marketing. That settlement would have required the industry to meet targeted reductions in youth smoking, with extra financial penalties if the targets were missed. And tobacco companies agreed to accept regulation by the Food and Drug Administration. Cigarette makers sought the settlement because it would have disposed of all the lawsuits brought by states seeking compensation for the cost of treating smoking-related diseases. It also would have settled existing class-action lawsuits on behalf of whole classes of smokers and given immunity from future class-action lawsuits. The new settlement would settle only the state lawsuits, theoretically leaving cigarette makers exposed to the risk of ruinous class-action lawsuits. Those talks may come to nothing: Discussions apparently broke down Wednesday over money. And it is still possible that Congress, angry at being bypassed, might attempt to revive plans for federal legislation. - ---