Tobacco Deal Spurs Bonanza for Lobbyists

WASHINGTON —  It’s no surprise that cigarette makers and anti-tobacco law firms are lobbying hard in Congress for the giant tobacco truce. The deal would give the former crucial legal protections and the latter fat fees.

But from the nooks and crannies of the economy, a hodgepodge of groups whose stake in the outcome is less apparent also is competing for lawmakers’ attention--ranging from insurance giant Aetna and the hotel workers union to pint-sized cigarette marketer Single Stick.

Compared to industry foes, who oppose the peace accord as soft on Big Tobacco, the concerns of these groups are less ideological and narrowly focused on the deal’s financial impact. Some of them support and others oppose the settlement, which would allow the industry to trade $368.5 billion and sweeping health concessions for protection from the most threatening types of lawsuits.

Still others merely want Congress to tweak the implementing language to ensure that what cigarette makers surrender does not come out of their hides or imperil their livelihoods.

That concern stems from the fact that although only the five top companies signed the deal, its terms also will apply to smaller tobacco firms, merchants and others if Congress passes it. Affected groups last week voiced some of their concerns about the deal at a hearing before a House Commerce subcommittee.

The sheer number and variety of groups that see some danger in the deal reflects its complexity and the difficulty of reaching a consensus. It also underscores the degree to which the U.S. economy and politics, along with 45 million smokers, are hooked on tobacco.

Veteran lobbyists say the settlement debate is shaping up as one of the biggest lobbying free-for-alls in history.

At least 21 former congressmen are involved themselves or through their lobbying firms--including former Senate Majority Leaders George J. Mitchell, Howard Baker and Bob Dole. Other political heavyweights--such as former GOP National Committee Chairman Haley Barbour, former Democratic National Committee Chairman Charles T. Manatt, ex-Texas Gov. Ann Richards and Harry S. McPherson, who served as an aide to President Johnson--also have been tapped.

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To be sure, the tobacco giants who negotiated the deal with state attorneys general and anti-tobacco lawyers are busiest in this area. During the first half of 1997, they spent $15 million and employed more than 150 in-house and outside lobbyists, according to an analysis of disclosure reports by the consumer group Public Citizen.

Private law firms banking on a big payday if the deal goes through have hired at least eight lobbying firms on their own, including those of former Sen. Birch Bayh (D-Ind.) and former Rep. Norman Lent (R-N.Y.).

Two law firms--Ness, Motley, Loadholt, Richardson & Poole, of Charleston, S.C., and Scruggs, Millette, Lawson, Bozeman & Dent of Pascagoula, Miss.--represent most of the state attorneys general whose lawsuits drove the industry to the bargaining table. Another, the Castano group, actually is a consortium of anti-tobacco law firms whose class-action suits also would be settled if Congress approves the deal.

Audible above the Beltway din, however, an eclectic mix of business groups is criticizing various provisions of the deal, including its curbs on advertising and future lawsuits.

Thus, whether it passes or not, the tobacco deal already is a full-employment act for lobbying firms such as Patton, Boggs, & Blow.

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Patton, Boggs has amassed a stable of clients, all with reasons to be fearful of the deal. One, the Assn. of Trial Lawyers of America, which represents plaintiffs’ lawyers, opposes restrictions on lawsuits like those contained in the deal--which would protect tobacco firms from punitive damages and class-action claims.

ATLA maintains that “if you did something wrong, you should be held accountable,” said Roger Ballentine, its lobbyist at Patton, Boggs.

Other partners lobby for a slew of advertising groups, including publishers, ad agencies and point-of-purchase marketers who place signs, displays and kiosks in stores.

They want the deal’s ad restrictions--including a ban on tobacco billboards and limits on in-store signage--spelled out in separate protocols, rather than federal legislation, lest they serve as precedents for restricting ads on “other controversial products, such as alcohol or high-fat foods,” said John Fithian of Patton, Boggs.

Still another client is the Smokeless Tobacco Council, which, along with other small tobacco manufacturers, claims the deal would shorten the lives of member businesses.

“We believe that the big tobacco settlement is designed to make the big companies bigger and the small companies extinct,” says Alan Hilburg, a spokesman for the council.

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The agreement would require all tobacco manufacturers to make annual contributions to the $368.5-billion settlement in proportion to market share. Those not signing--including all the small firms--would be dunned a 50% premium. Thus, if a small firm’s annual assessment based on market share is $500,000, it will actually have to pay $750,000.

Also troubling to the small fry: Although the agreement gives immunity to tobacco dealers who carry products of the Big Five--Philip Morris, R.J. Reynolds, Brown & Williamson, Lorillard, and U.S. Tobacco--they could still be sued for selling products of firms not party to the agreement. Some likely would refuse to carry the smaller brands.

The smokeless council once included giant U.S. Tobacco, which controls 70% of the smokeless market, but has consisted of five smaller manufacturers of snuff and chewing tobacco since U.S. Tobacco defected and joined in negotiating the nationwide deal. (Ironically, Brown & Williamson, which does a modest business in smokeless products, remains a member even as it pushes for the settlement.)

Financially troubled Liggett Group has similar complaints about the deal, as do smaller firms generally.

One of them, S&M; Brands of Keysville, Va., ships about $5 million worth of cigarettes a year, roughly what Philip Morris sells in two hours. The firm is run by father-and-son team Mac and Steven Bailey, whose family has been growing tobacco for five generations.

S&M; has joined other small manufacturers in hiring their own lobbyist, former North Carolina Rep. J. Alex McMillan. Among other changes, they want manufacturers with less than 1% of the market to be exempted from settlement payments.

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If the deal “goes through as written . . . people like me won’t have a prayer,” Steven Bailey recently told The Times. And in testimony Wednesday before the House subcommittee on trade and consumer protection, Bailey said his firm “would have no chance in the marketplace” if the settlement is approved.

Then there’s the eponymous Single Stick Inc., a Phoenix-based firm that sells a one-smoke pack for about 35 cents, or three for $1.

Health authorities contemptuously call these “kiddie packs” for their appeal to cash-strapped teenagers. Food and Drug Administration rules attacking underage smoking would ban their sale. The rules are under a court challenge but would be approved in the tobacco deal.

That would be curtains for Single Stick. Says its lobbyist, former Missouri Rep. Jack Buechner: “We want to make sure that single cigarettes are treated no differently” than standard packs.

Also arming for battle are the National Assn. of Convenience Stores, Petroleum Marketers Assn. of America and the National Grocers Assn., whose members rack up most of the the $50 billion in annual tobacco sales.

Among other things, they complain that the deal punishes illegal sales to kids--hitting merchants with stiff fines and possible loss of a tobacco sales license--without doing anything to discourage illegal buying.

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Some insurance companies and health plans oppose the deal’s ban on anti-tobacco class actions, including some whose pending suits over smoking-related health care costs might be extinguished if the deal is approved. Others, including the Health Payers Alliance for Equitable Tobacco Policy, want their legal options kept open.

Tobacco farmers were miffed at being excluded from the negotiations, but they more recently have been cheered by bills to earmark billions of dollars in settlement funds to compensate for lost tobacco sales.

Lionel Edwards, manager of the Flue-Cured Tobacco Cooperative Stabilization Corp., said the North Carolina-based growers’ group also wants limits imposed on tobacco imports from abroad.

Organized labor is sending mixed signals. The Bakery, Confectionary and Tobacco Workers International Union, with 15,000 members in tobacco plants and warehouses, says the settlement offers the “best balance” between public health and economic concerns, including “the best chance for our members to preserve their jobs,” said Ray Scannell, union research director.

On the other hand, an alliance of funds that pays medical expenses for union members has targeted the deal’s ban on class-action suits. Since last spring, members of the Coalition for Workers Health Care Funds have filed 29 suits to recover costs of treating sick smokers--legal actions that could be voided unless Congress alters the deal.

The Hotel Employees and Restaurant Employees International Union is poised to fight calls for more drastic curbs on indoor smoking than the deal contains.

The settlement would ban smoking in most public places but not in restaurants and hotel rooms--which is crucial to drawing foreign tourists, says union lobbyist Robert Juliano.

Times staff writer Henry Weinstein contributed to this story.