TOBACCO INDUSTRY ANGLES FOR LAWMAKERS' SUPPORT

BUSINESS

The lobbying effort heats up in Washington as companies push for a
settlement on their terms.

WASHINGTON As the tobacco industry pushes for congressional approval of a
landmark legal settlement that is favorable for the industry, it has taken
a series of steps to win support:

It has converted former enemies like state attorneys general and the
American Medical Association into allies.

It has curried favor with influential members of Congress by making
campaign contributions.

And it has assembled a powerful lobbying army to win what the industry
hopes will be a decisive battle.

"This is an industry that wants to come in from the cold," said Scott
Williams, an industry spokesman in Washington.

"There is new group of executives who don't want to be pariahs of the
corporate world."

Sen. John McCain, RAriz., this month unveiled what is expected to be the
industry's tobaccocontrol bill. It virtually mirrors the terms of the
settlement, although it has one new element: It would divert $28.5 billion
of the settlement money to aid tobacco farmers who would be hurt if
consumption of tobacco dropped.

The legislation also earmarks money to cover the cost of antismoking
programs and care for sick smokers. It would accept more restrictions on
advertising and impose penalties of up to $2 billion a year for failing to
hit targets to reduce teen smoking.

But it ignores tougher measures recommended by President Clinton and
lawmakers who want a $1.50 increase in the price of a pack of cigarettes
and a bigger role for the Food and Drug Administration in regulating tobacco.

The tobacco industry portrays the deal as a framework to reduce the
nation's smoking habit and pay the industry's share of the devastating
consequences. But antismoking advocates say the industry is up to its old
tricks, looking to cut corners now that it has succeeded for the first time
in winning a settlement that gives it the promise of legal immunity.

The pact, which industry lawyers negotiated with the attorneys general of
40 states earlier this year, would exact $368.5 billion over 25 years from
the tobacco industry to compensate the states for care of people disabled
by smoking and to underwrite antismoking programs and children's health
insurance.

But it also carries a huge payoff for the industry: immunity from
classaction lawsuits and punitive damages for past misconduct, and an
annual cap on damages paid fin any single year.

And while the tobacco industry has many allies in Congress including a
number of members who are smokers it is by no means certain that
lawmakers can be convinced to overlook growing objections form smoking foes
who say the settlement does not impose a sufficient penalty on the industry
and falls short of protecting public health.

As a result, the tobacco industry has acted to dramatically beef up what
has historically been one of the most powerful lobbying operations in
American politics. A review of lobbying reports for the first half of 1997
by Congressional Quarterly shows that the industry has added new players
and a new look in Washington as it promotes its cause.

The reports show the industry spent $15.7 million on lobbying, including
hefty fees for two new superstar law firms:

$4.7 million to Verner, Liipfert, Bernhard McPherson and Hand,l where
former Senate Majority Leaders George J. Mithchell, DMaine, and Bob Dole,
RKan., and former Texas Democratic Gov. Ann W. Richards all work.

$800,000 to the firm of former Republican National Commettee Chairman Haley
Barbour, who helped elect dozens of GOP lawmakers.

The industry also hired former Senate Majority Leader Howard H. Baker Jr.,
RTenn., just before the end of the reporting period in June to help
enhance its influence on Capitol Hill.

The pace of spending by the industry is roughly on par with 1996, when it
reported spending $26.9 million in lobbying Congress, according to the
Center for Responsive Politics. Records show the industry increased
spending on outside lobbying firms in the first half of 1997 to $7.9
million, more than the $5.6 million it spent in all of 1996 for similar
services.

Besides Barbour, Baker and Mitchell, other former members of Congress in
the lineup include Sen. Walter D. Huddleston, DKy., a tobacco company
lobbyist; and former Reps. Stan E. Parris, RVa., and Democrats James V.
Stanton of Ohio, Ed Jenkins of Georgia and Alan Wheat of Missouri.

The industry's outside lobbyists also include former aides with ties to
leading lawmakers on Capitol Hill. Among them: Edward W. Gillespie, former
policy and communications director for Republican House Majority Leader
Dick Armey of Texas, and Darryl Nirenberg, former chief of staff for Sen.
Jesse Helms, RN.C.

In addition, Lance Morgan, a Washington veteran, was hired to be the
industry's chief spokesman for the issue. Morgan, who has worked for Sen.
Daniel Patrick Moynihan, DN.Y., had no previous ties to the tobacco industry.

Critics say the industry has been trying to buy credibility by hiring
prominent new lobbyists and developing allegiances with groups with the
promise of future support for antismoking campaigns.

Meanwhile, antismoking advocates have been moving to assemble their own
campaign to defeat the settlement. Minnesota Attorney General Hubert
Humphrey III, A critic of the settlement, has hired the lobbying firm of
two former House members, Thomas J. Downey, DN.Y., and Rod Chandler,
RWash., to help fight it.

The American Lung Association calls the deal a "bailout" for an industry
with "a dismal record of lies and bad faith." But some of tobacco's
toughest enemies are cautiously backing the dealat least as a starting
pointto reduce tobacco's advertising allure and to pay health costs.

The American Medical Association, the American Cancer Society and the
American Heart Association, among others, have formed a coalition called
ENACTEffective National Action to Control Tobaccoto push comprehensive
tobaccocontrol legislation.

The groups lined up with President Clintonwho didn't endorse the
settlementto call for changes in the deal. Clinton said Sept.17 that he
wanted full regulatory authority over tobacco for the Food and Drug
Administration and stiffer penalties of companies miss targets to cut teen
smoking.

The AMA called for strengthening the agreement. "Since the announcement of
the tobacco settlement, almost 300,000 children have taken their first
puff," said Dr. Randolph Smoak Jr., the association's vice chairman.

"Each day we delay action on a national tobacco control policy, we risk not
one life but thousands."