What Next if Tobacco Pact Falls Apart

The proposed $368.5 billion settlement of state lawsuits against tobacco companies is in deep trouble in Washington. It now appears unlikely that the big pact will ever become the law of the land without major change.

Delay has proved to be the enemy of an accord struck in June with much fanfare by state attorneys general and representatives of tobacco firms. The deal has languished in the nation's capital for months as the White House reviewed it and Congress considered its many complications.

A $50 billion tobacco-firm tax credit slipped into this summer's budget bill further roiled the political waters - as did congressional feelings that the pre-cooked deal preempted lawmakers' public-policy role.

The result: a rising tide of anti-tobacco sentiment that may be at its highest level since planters began scratching out a living at Jamestown. Rightly or wrongly, many in Washington now believe that a deal tobacco firms would endorse is by definition too soft. Unless the firms ante up more cash, or agree to tighter regulatory restrictions, settlement negotiations may end up going for naught.

"The deal that we have before us plainly is not going to fly in its current form. Right now I would say it's headed for a crash landing," said Sen. Tom Harkin (D) of Iowa at a hearing on the subject last week.

President Clinton is likely to address the tobacco issue this week in a manner that reflects the settlement's problems. The White House is set to make public - perhaps as early today - the results of its internal tobacco review. But Mr. Clinton isn't expected to outline specific changes he wants in the deal, as he would if the legislative battle were truly joined.

Instead, the president is likely to talk about the deal in vague terms - saying that it needs tighter restrictions on teen smoking, for instance, as well as greater disclosure of industry documents and increased oversight from the Food and Drug Administration.

That's the response of an experienced politician who sees months of negotiations ahead.

Clinton views the formal review "as an opportunity to move the debate forward," said White House spokesman Mike McCurry last week.

No terms of endearment?

Currently, settlement terms call for tobacco companies to pay $368.5 billion over 25 years to settle the many lawsuits filed by states trying to recover tobacco-related Medicaid costs. The firms would also agree to stiff curbs on advertising and pay fines if youth smoking did not fall to agreed-upon levels.

In return, tobacco companies would be protected from most class-action lawsuits and shielded from punitive damages in individual lawsuits.

Washington gets to look at the settlement because many of its aspects - such as the lawsuit provisions - require passage of national legislation. And almost from the beginning, lawmakers were making sounds of discontent. Many felt that the parties who had negotiated the deal were simply dumping it in their laps, and telling them they had to sign off.

Opponents, sensing a mood of discontent, went on the offensive. Respected figures such as former Surgeon General C. Everett Koop hit the deal hard when it was first announced, calling it a sellout to industry.

Dr. Koop and others have since softened their language somewhat. But they and other opponents continue to call for major changes, such as:

* An increase in the overall level of the settlement, partly to fund federal, as opposed to state, Medicaid costs that may be related to tobacco.

* Clear authority for the Food and Drug Administration to regulate tobacco products.

* Less protection for tobacco firms from future lawsuits.

Tobacco firms, for their part, have threatened to walk away if the deal unravels. If that is the case, a renewed wave of tobacco-related litigation could sweep the nation's courtrooms.

Three possible scenarios loom in the absence of a settlement, according to Colorado Attorney General Gale Norton.

The first is that courts continue to rule in favor of tobacco companies. No private plaintiff has yet collected an antitobacco judgment, Ms. Norton told a congressional hearing. The recent settlement by the state of Florida was due to singular legal reasons, she said.

The second scenario is that lawsuits are successful, and existing tobacco firms are driven into bankruptcy as individuals collect millions in judgments for firms selling them an addictive, dangerous product.

The third possible outcome is a mix that wastes huge amounts of time and energy in the courtroom.

None of the scenarios "has the rosy glow envisioned by the settlement's critics," said Norton. "Our choice is between a settlement that provides predictability and a chaotic situation with unpredictable results."