State attorneys general and tobacco industry representatives are getting close to consummating a $200-billion agreement that would settle massive lawsuits in 36 states, say sources close to the negotiations.
The agreement would also provide monetary compensation to 10 other states. The tobacco industry already has settled with four states for a total of $41 billion.
Washington Atty. Gen. Christine Gregoire, the lead negotiator for the states, told other attorneys general last week that she hoped to announce a settlement by Oct. 15. She told reporters Friday that three major issues still separated the two sides.
One negotiator, speaking on condition of anonymity, said Monday that the deal is about 95% done but it could fall apart "over six or seven sentences."
Gregoire acknowledged that one point of division is the so-called renegade issue--how to prevent smaller tobacco companies, who aren't part of the settlement, from underpricing the major companies that are signatories to it.
Gregoire declined to reveal the other points of contention in the 150-page draft agreement. Other sources said that differences remained on public health issues.
During the four months of negotiations, there have been splits among both the attorneys general and the tobacco companies. In August, Massachusetts Atty. Gen. Scott Harshbarger, who is considered to have one of the strongest cases, stopped participating in the talks, saying he considered industry positions on public health unacceptable.
In September, R.J. Reynolds Tobacco Corp. and British American Tobacco Corp., parent of Brown & Williamson Tobacco Corp., bolted from the talks over the renegade issue, but on Monday sources said that BAT was back at the table. Industry leader Philip Morris and Lorillard have been negotiating throughout with representatives of attorneys general from eight states--California, Colorado, New York, North Carolina, North Dakota, Oklahoma, Pennsylvania and Washington.
Gregoire was scheduled to be in New York today briefing attorneys from several states who are skeptical of the deal. Other briefings are set for Thursday and Monday.
Each state would have the choice of joining the settlement or opting out and going to trial against the industry. Several of the skeptical attorneys general, including Harshbarger who is running for governor, may be faced with the tough choice of turning down a huge settlement on the eve of an election.
As it now stands, the deal would provide curbs on tobacco marketing. Gregoire said she would "consider myself a failure if I didn't" get more than Minnesota achieved in its settlement with the industry last May.
In addition to getting $6.1 billion, the Minnesota settlement bans marketing of tobacco products to children and eliminates tobacco advertising on billboards, buses and taxis as well as tobacco merchandise giveaways such as T-shirts and baseball caps.
On the other hand, the multi-state deal would not include several key restrictions that were part of the proposed $368.5-billion national settlement, which was consummated in June 1997 but was killed in Congress. For example, the settlement does not call for any restrictions on print advertising, nor would it ban advertising featuring human characters such as the Marlboro Man. The industry also would be able to continue hawking its products inside and outside retail stores, although there would be some limits on the size of signs.