Tobacco Ad Curbs May Be Illegal, Memo Says

The White House is raising a red flag to deter Congress from imposing sweeping restrictions on cigarette advertising, arguing in a memorandum scheduled for release today that broad legislative curbs would “raise significant constitutional problems.”

The memo, a copy of which was obtained Sunday by The Times, casts doubt on the legality of legislating new curbs on industry advertising practices in the absence of a comprehensive settlement acceptable to both sides. It implicitly tells lawmakers that a broad ban on advertising is possible only if tobacco companies voluntarily agree to it.

Therein lies a legislative dilemma. The industry has made clear that the price of a voluntary agreement to curtail advertising is legislation shielding tobacco companies from future class-action lawsuits brought by people who claim their health has been harmed by the companies’ products.

If Congress rejects that quid pro quo and maintains the right to allow such legal actions, lawmakers might have to settle for passage of more modest advertising restrictions that would not infringe on the industry’s free-speech rights.

The White House memo provides detailed answers to questions on tobacco advertising and marketing submitted by Sen. John McCain (R-Ariz.), chairman of a committee with jurisdiction over tobacco legislation.

On another key issue, the Clinton administration said it would oppose any effort by Congress to exempt the industry from antitrust laws so tobacco companies could consult with each other about cigarette prices.

“An antitrust exemption that allowed tobacco firms to set prices jointly could be used by firms to increase prices beyond what is necessary to deter youth smoking and thereby increase profits at the expense of consumers,” the memo states.

In addition, the memo says the administration strongly supports the right of states to enact tobacco marketing and advertising restrictions stronger than federal curbs approved by Congress.

Both points undermine the legislative objectives of the industry, which has been seeking a broad antitrust exemption as well as the preemption of state tobacco laws.

The memo largely ignores McCain’s repeated invitation to make suggestions that would help Congress craft legislation that would move beyond current Food and Drug Administration regulation of tobacco advertising and marketing. Lawmakers have repeatedly criticized the White House for refusing to say specifically what it would accept in a tobacco bill.

Neither McCain nor the White House would comment on the memo.

The tobacco debate is at a critical point in Congress, with several committees scheduled to begin work on legislation this month. McCain’s Commerce, Science and Transportation Committee is expected to start work on a bill March 12.

Congressional interest in new tobacco regulation was prompted by a proposed settlement reached last summer between the industry and the attorneys general of 40 states. The agreement, if adopted, would require tobacco companies to pay the states hundreds of billions of dollars over 25 years and accept a virtual moratorium on tobacco advertising, especially ads aimed at teenagers. In exchange, the industry would receive protection from future class-action lawsuits and limits on the amount of future liability payments. In addition, tobacco companies would receive an antitrust exemption to allow them to set prices collectively.

Stringent limits on the advertising and marketing of tobacco products is one of the chief goals of public health groups. They cite recent studies published in the Journal of the American Medical Assn. showing that young people who own promotional tobacco products such as hats and T-shirts and who recognize tobacco ads are far more likely to become smokers than those who do not.

These groups have been urging Congress to legislate many of the advertising restrictions that were proposed in the settlement, including bans on billboard and online advertising, as well as ads depicting human figures or cartoon characters such as Joe Camel.

All of the proposed restrictions would almost certainly be challenged on 1st Amendment grounds if imposed by Congress over industry objections, according to the White House memo.

The Supreme Court has said limitations on commercial speech must be narrowly tailored. A ban on billboard ads designed to appeal to adults as well as to children might not meet the court’s test. Similarly, a prohibition on using cartoon characters and human images in ads published by magazines that are read largely by adults might be ruled unconstitutional.

The White House memo argues that the FDA’s new tobacco advertising and marketing regulations, which are being challenged in federal court, represent the extent of what the government can do without raising 1st Amendment problems.