APPEALS COURT WARY OF FDA RULES ON TOBACCO

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[warm springs, va.] The weight of Food & Drug Administration regulation that helped push cigarette marketers to "voluntarily" accept ad curbs appeared to significantly lighten last week.

During a hearing by the 4th U.S. Circuit Court of Appeals, two of three judges on the panel appeared skeptical about FDA's right to regulate tobacco, let alone curb advertising and marketing.

"We don't have new facts; we have the same old nicotine," said Judge Donald S. Russell, noting the agency's longtime argument that it didn't have any authority over tobacco. His expressed concerns were frequently echoed by Judge James Michael.

NEW EVIDENCE CITED

Acting U.S. Solicitor General Walter Dellinger responded by saying the government has the right to regulate tobacco because of new evidence of tobacco marketers' intent to manipulate nicotine levels.

Mr. Dellinger was left with little time to argue about whether FDA had authority to regulate tobacco advertising.

Ad groups that successfully argued in the lower court that the FDA didn't have the right to regulate tobacco advertising and marketing were pleased. "There was a good deal of questioning about the fundamental position of who has the right to regulate," said Hal Shoup, exec VP of the American Association of Advertising Agencies.

A third appellate judge, K.K. Hall, did suggest in the hearing that advertising might be the problem with underage smoking.

TWO APPEALS

The FDA is asking the appeals court to overturn a lower court ruling that said the FDA had no authority to regulate advertising. But tobacco marketers and convenience-store owners are asking the appeals court to overturn the portion of the lower court decision that said FDA could regulate tobacco as a "drug delivery device."

The earlier ruling by U.S. District Judge William Osteen served as the basis of negotiations between tobacco marketers and state attorneys general that led to a $300 billion-plus industry settlement of tobacco liability cases.

That deal needs congressional authorization, and the White House, health groups and attorneys general have been negotiating to toughen some sections.

Observers said that while the line of questioning at a hearing isn't always indicative of how judges decide cases, its tone and extent may have given tobacco marketers incentive to stand tougher in further negotiations.

"If I were the Clinton administration, I would have to be looking at 'If I don't embrace the settlement now, what will happen?'*" said Gary Black, a tobacco industry analyst for Sanford C. Bernstein & Co. "If it does get thrown out of court, what does Clinton have? He has nothing to bargain with."

Mary Aronson, who publishes a tobacco policy letter, noted tobacco companies get something they want from the deal-liability limits. But the hearing may have

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