Legal Battle Looms Over Rules to Curb Teen Smoking : Tobacco: Unlike previous cases involving product liability, the fight this time will center on whether the FDA should regulate cigarettes.

In more than four decades of litigation over cigarettes, the tobacco industry has defended itself vigorously and won--every time. No cigarette company has paid a penny to any smoker who claimed injury from its products.

Today, however, as the government and the industry gear up for a potentially landmark legal battle over new federal regulations to curb teen-age smoking, the chief issue at hand is quite different from that which was disputed in those years of civil trials.

The courts will be asked to resolve the jurisdictional question of whether a federal agency has legal standing over cigarettes, rather than the product liability question involved in the earlier cases: whether cigarette companies bear responsibility for the illnesses of smokers who, industry has argued, use their products willingly.

President Clinton approved FDA proposals Thursday that would prohibit the sale of cigarettes to minors; sharply limit cigarette advertising, including on billboards and at sports events; ban cigarette vending machines; eliminate mail-order cigarette sales and distribution of free samples and promotional merchandise, and require the industry to fund a $150-million anti-smoking education program for teen-agers.

Almost simultaneously, the nation’s five major cigarette companies and an advertising agency challenged the actions in a lawsuit filed in a North Carolina court.

Legal experts said Friday that the odds on the jurisdictional issue do not seem to favor the industry as much as they do in liability cases.

“Traditionally, the courts have given great deference to agencies in determining what falls under their jurisdiction,” said Stuart Friedel, a New York lawyer who specializes in regulation. On the other hand, if the courts regard the agency’s action as arbitrary, they “won’t hesitate to overrule it,” he said.

“This is going to be a totally different challenge for the industry,” he added. “But it’s not going to be an easy case for either side.”

The outcome likely will rest on whether the Food and Drug Administration has built a solid enough case to justify its authority to regulate cigarettes. The industry claims that the FDA has overstepped its boundaries.

A second and equally significant legal issue is whether the FDA’s proposed advertising restrictions infringe on the industry’s constitutional freedoms under the First Amendment.

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The Clinton Administration’s plan would ban ads near schools and playgrounds and limit many types of advertising messages to black-and-white “text only.”

The FDA claims authority over cigarettes under its power to regulate drugs and medical devices, calling a cigarette a “combination product” that falls into both areas. Cigarettes contain nicotine, an addictive drug whose levels are adjusted by manufacturers, and cigarettes themselves are a “device” because they deliver a drug, nicotine, the agency maintains.

Federal law defines a drug as a substance intended to diagnose, treat, cure or prevent disease. But it also classifies as drugs any items, other than food, “intended to affect the structure or any function of the body.”

No one has challenged the fact that the industry controls and adjusts nicotine levels. The legal debate will be over why it is done and what the companies’ intentions are in doing so.

Industry officials repeatedly have insisted that they fix nicotine levels to maintain taste and product consistency and that nicotine is neither addictive nor a drug.

The FDA, on the other hand, in hundreds of pages of documents that cite the industry’s own research and statements, argues that tobacco company officials have long been aware of the health dangers and addictive properties of nicotine. Morever, the FDA asserts that manufacturers have manipulated nicotine levels in cigarettes deliberately to keep smokers hooked.

In the industry’s complaint, the companies maintain that only Congress has the authority to give the FDA jurisdiction over cigarettes and that lawmakers have refused to do so over the years. The FDA itself was created by Congress, in 1906--an argument legal experts predicted could be powerful for industry.

“Nine federal government agencies, including the Federal Trade Commission and the Justice Department, oversee various facets of the tobacco industry,” said Steve Parrish, a senior vice president of Philip Morris Cos. Inc. “But in each of those cases, oversight has been granted by Congress and Congress has never delegated the authority to regulate cigarettes to the FDA.”

Industry officials also frequently point to a 1980 case in which the FDA was sued by an anti-smoking group for failing to assert its jurisdiction over cigarettes. The FDA maintained it did not have jurisdiction and the court agreed.

However, in that instance, the court emphasized that the jurisdictional decision was the agency’s call.

New scientific and other information that has emerged in recent years has changed the landscape, bolstering the FDA’s position, experts said. “The courts allow an agency to change its mind as new facts come forward,” Friedel said.

Matthew Myers, an attorney for the anti-smoking organization Coalition on Smoking OR Health, stressed that in the 1980 case, the FDA still believed “nicotine appeared naturally in tobacco products” and wasn’t adjusted by the companies.

“The agency conducted no investigation whatsoever,” he said. “It was a different FDA. This FDA has an entirely different factual record upon which to make a determination.”

Industry and advertisers also have challenged the advertising curbs, saying that their rights to free speech would be impaired.

“I think they [the courts] will have a terrible time with this one, [because] the product is legal to sell and there are no misrepresentations,” Myers said.

FDA spokesman Jim O’Hara, however, said that the courts consistently have upheld restrictions on “dangerous but legal products,” adding: “There is a body of case law about appropriate restrictions on commercial speech when there is a compelling need.”

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As the legal maneuvering began, Clinton said Friday that he also will consider preventing cigarette manufacturers from taking a tax deduction for advertising. Current law allows the companies to write it off as a business expense.

In a television interview on MTV, a music video cable station with special appeal to teen-agers, Clinton said that he had not considered such a ban, which Congress has rejected in the past. But when reminded of the write-off by his MTV interviewer, Clinton said the ban was “an interesting idea” and that he will “look into it.”