TOBACCO SETTLEMENT SEEN HEADED INTO NEXT YEAR: SLOW GOING IN CONGRESS TURNS SPOTLIGHT BACK TO COURT BATTLE OVER FDA REGS

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There was a growing realization last week among ad groups, industry analysts, Congress and the White House that the issues being raised about the tobacco settlement may occupy Washington well beyond the fall and perhaps into next year-if the deal has any chance of going through at all.

That prospect reinforces the importance of the lawsuit challenging Food & Drug Administration regulations, a case due to be heard by the 4th U.S. Circuit Court of Appeals in Warm Springs, Va., on Aug. 11.

SEEKING TO OVERTURN COURT

In that case, the tobacco companies are challenging a lower court's decision upholding the right of the FDA to regulate tobacco, while the Clinton administration is trying to overturn the same court's decision that FDA didn't have the legal authority to regulate tobacco advertising.

Ad groups also had challenged the FDA rules, contending the federal agency didn't have authority to regulate advertising and that the FDA's rules were unconstitutional.

The FDA rules were to take effect Aug. 28 and, unless the appeals court alters the lower court ruling or issues a stay, the portion of the restrictions upheld will take effect on that date-for example, self-service tobacco displays would be banned.

The lower court never ruled on whether the FDA model was constitutional, deciding instead that the agency had no jurisdiction to issue them.

GINGRICH'S MONOPOLY CONCERN

House Speaker Newt Gingrich (R., Ga.) told The Wall Street Journal last week that the tobacco industry's settlement with state attorneys general "might create a monopoly, suspend free speech, raise taxes and transfer wealth to trial lawyers."

Rep. Gingrich also questioned any action giving more authority to the FDA.

Mississippi Attorney General Michael Moore, who led the tobacco negotiations, told Advertising Age he was hopeful Congress would be able to finish consideration of the deal by October or November, already much later than he first had hoped.

LOOKING PAST LABOR DAY

But Sen. Orrin Hatch (R., Utah), chairman of the Senate Judiciary Committee, said drafts of the legislation would not even be ready until after Labor Day.

Sen. Hatch's committee last week held its first extensive hearing on the tobacco deal, and the questions raised by senators and witnesses on legal issues alone were extensive.

Several other committees are due to have hearings this fall on other aspects of the deal.

In testimony prepared for the Judiciary Committee, Harvard University law professor and First Amendment expert Laurence Tribe questioned any attempt to write the ad restrictions in the agreement into law, and said they are less likely to withstand judicial scrutiny than the Internet decency law already overturned by the U.S. Supreme Court.

FIRST AMENDMENT OBJECTION

"The First Amendment objection is even stronger that it was in the Internet indecency case and other decisions," said Mr. Tribe, who has worked on behalf of tobacco critics. "For what is harmful about tobacco is obviously not the advertising itself but tobacco's use. In contrast, in the Internet case, the government's interest was in preventing children from being exposed to indecent expression on the computer; the speech itself was alleged to cause harm."

VOLUNTARY OPTION OK

Mr. Tribe said that while the advertising restrictions could not be written into law, they could be incorporated voluntarily into settlement agreements filed in state lawsuits.

"It's not that it can't happen," said Dan Jaffe, exec VP of the Association of National Advertisers, of the far-reaching industry settlement."They haven't got off to a fast start, and there is a limited window for action. It will be hard to move the legislation quickly."

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