White House Will Challenge Terms of Tobacco Deal

The White House has decided to reject a critical element of the proposed $368.5-billion settlement with the tobacco industry because it would impose broad new restrictions on federal authority to regulate nicotine in cigarettes, senior officials said Tuesday.

In their first direct involvement in the effort to craft a settlement, advisors to President Clinton plan to rewrite the proposal themselves after concluding that it surrenders too much of the Food and Drug Administration’s ability to control the addictiveness of cigarettes. Such limits, they determined, would roll back their arduous campaign to assert jurisdiction over tobacco.

“After taking a serious look at it, they’re unacceptable,” said an administration official who asked not to be named. “The way it’s written, it actually slides back on what we’ve already won.”

That conclusion did not come as a complete surprise, given the public reservations Clinton had expressed about the FDA limits since the plan was unveiled last month. But it reflects a calculated gamble by Clinton that the political momentum is running his way and that he can afford to risk reopening the delicately balanced deal because the industry has little room to maneuver.

According to aides, Clinton is willing to walk away from the settlement entirely if it cannot be amended to his satisfaction.

The proposed settlement would resolve scores of lawsuits against the industry by state governments and individual smokers seeking reimbursement for medical expenses caused by smoking. It was reached after months of difficult negotiations between industry representatives and a group of state attorneys general and trial lawyers, but any deal ultimately will require the approval of Clinton and Congress, which will have to translate it into legislation.

In addition to reimbursing the states for health costs, tobacco companies agreed to fund anti-smoking campaigns, accept a virtual ban on most cigarette advertising and promise to reduce underage smoking by certain quotas.

In exchange, they demanded that the FDA meet certain standards before being allowed to reduce nicotine in cigarettes, including complying with a requirement that it prove such a move would not create a black market in stronger cigarettes.

Whether Clinton can pressure tobacco companies to accept further compromise is unclear. At a White House meeting with a top presidential advisor last week, tobacco lawyers exhibited little appetite for more concessions, but they did not rule them out.

Meanwhile, officials representing union-administered health funds also said Tuesday that they will seek compensation from cigarette makers on behalf of blue-collar workers who could be adversely affected by the pending industry settlement.

The coalition of workers’ health funds, which provide coverage for union members engaged in trades such as construction, trucking and garment-making, said it will seek its own reimbursement for funds spent to treat tobacco-related illnesses. The amount of money involved, it said, could rival the figure the tobacco companies have agreed to pay to the states. If the industry agreement is eventually accepted by Congress, class-action suits against the firms would be prohibited, although individual smokers could still sue. The coalition seeks either to be reimbursed as part of the current settlement or to be allowed to pursue individual class-action suits and separate negotiations with the industry.

This marks the first of what could be many requests by private groups to be included in the settlement, which currently calls for the reimbursement of only state Medicaid costs. Some critics of the deal, such as Sen. Edward M. Kennedy (D-Mass.), have already said they will seek recompense for the costs of patients covered by Medicare and the Veterans Administration.

The chairman of the union coalition, Brian McQuade, said the settlement, as currently worded, signs away the legal rights of blue-collar workers without repaying their medical costs.

“We cannot support the current settlement,” McQuade said. The attorneys general who won the accord “did not have the right to negotiate away our rights to lawful claims.”

Union health funds in 16 states have already filed class-action suits seeking damages from the tobacco industry, and 10 more are expected to do so in the coming days, according to McQuade.