NEW YORK -- As a new round of tobacco settlement talks starts Monday in New York, state attorneys general are more in agreement about money than about public health goals.
Well before the $368.5 billion proposed tobacco settlement was reached last year between the industry and state officials, the 22 attorneys general who then had pending lawsuits issued a public road map of their objectives. Those demands, largely incorporated in last year's plan, required among other things that producers restrict tobacco advertising and enforce controls over retailers with the goal of reducing sales to minors; divulge information about product hazards, place new warnings on packages and submit to government regulation.
Last year's plan unraveled in Congress. But while attorneys general reached agreement in preliminary discussions last week in Chicago that they would press for more money than the states would have received under the earlier proposal, they have yet to issue a clear statement about their specific public health goals.
A part of the dilemma reflects the fact that state officials were bargaining last year with an eye toward Congress. But their ability to achieve broad changes now may be more limited because the earlier concessions by the cigarette industry were made in the belief that federal legislation would protect them from some tobacco lawsuits. There is little prospect of such legislation now.
There are other complications. While some attorneys general who face elections this fall are eager to settle their cases so they can reap the political benefits, others believe that they could face attack if they settle for too little. And while most states with pending lawsuits appear ready to strike a deal, some states, like Iowa, Missouri, Maryland, Michigan and New Mexico, have taken a harder line, and a few states, including Wisconsin, have refused to participate in the talks.
"You have to realize that when you talk about attorneys general you are not talking about a monolithic group," said Frank Kelly, the attorney general of Michigan.
The latest round of talks began last month when Joe Rice, a plaintiffs' lawyer in Charleston, S.C., who represents some 27 states, met with industry lawyers and Christine Gregoire, the Washington attorney general, in a court-ordered bid to mediate Washington's lawsuit, the next state tobacco action set for trial. Those secret talks were then expanded to include the attorneys generals of California, Colorado, New York and North Carolina.
But the discussions, which one lawyer said came "close" to reaching a proposed settlement, stalled over monetary and public health issues, lawyers familiar with the discussions said. The proposal was worth about $196 billion over 25 years and would have raised the price of cigarettes about 32 cents a pack.
For now, the states have decided to use the public concessions gained by the state of Minnesota as part of its $6.5 billion settlement this spring as a starting point. Under that deal, producers agreed to take down tobacco billboards, finance anti-smoking campaigns and refrain from making misleading statements about product hazards.
But how much further state officials are willing to push cigarette makers is anybody's guess. Some lawyers familiar with the talks said that the harder-line states have drawn up a number of additional demands, including an end to all outdoor tobacco advertising, sharp restrictions on the way cigarettes are marketed and displayed in stores, and requirements that producers finance both smoking-cessation programs and research into reducing underage smoking.
A few states are also seeking to persuade tobacco makers to drop their lawsuit opposing federal regulation of tobacco, though a similar demand by public health groups in last year's talks was rejected by producers, lawyers said.
The new talks come three days after a state judge in Indiana dismissed a lawsuit by state officials seeking to recover billions of dollars in smoking-related health care costs. It marked the biggest defeat suffered by a state since attorneys general began filing actions against the industry in 1994.
The Indiana attorney general, Jeffrey Modisett, vowed to appeal the ruling, in which the judge held that the state would have to prove damage claims on a resident-by-resident basis.
Modisett also said he believed the decision would have little impact on the upcoming talks because producers are trying to resolve cases with all the remaining states, including those that have not filed lawsuits.
"I think this decision does show a need for a national settlement," Modisett added. "It would obviously make no sense if the children of Illinois, Ohio and Michigan would receive protection and the children of Indiana would not."
In recent weeks, some state officials like Mike Easley, the North Carolina attorney general, have been working behind-the-scenes in an effort to find a common ground among various state positions.
While North Carolina is one of only 10 states nationwide that have not sued tobacco companies, Easley also played a key role in helping to bring together negotiators in the talks that led to last June's proposal. And Easley said in an interview that given the failure of Congress, it was now up to state officials to strike the best possible deal with producers.
"I want to bring some resolution to this issue," said Easley, a Democrat who has indicated his desire to run for governor of North Carolina. "There has been too much political rhetoric, too much tough talk with little action."
Easley is not the only person that state officials have heard from in recent weeks. State officials like Kelly said they have received lists of suggested demands from anti-smoking advocates.
In addition, Matthew Myers, a lawyer for the Campaign for Tobacco-Free Kids and a participant in last year's talks, has sent out position papers to state officials arguing that industry settlement talks represent the most significant pressure to produce changes.
"We recognize that your leverage is not as great as it would be if the package you were negotiating contained the types of benefits that only Congress can give," he recently wrote. "At the same time, you should not underestimate your leverage."
For the industry, there are strong incentives to settle. The state lawsuits represent the major regulatory and financial threat they face. But lawyers familiar with the new talks said the companies face their own negotiating dilemma.
For example, while they were quick to give up advertising and marketing concessions last year, they may be less willing to do so this time, arguing that they need to retain such concessions as bargaining chips in future negotiations with Congress over federal regulation of nicotine.
Also, going into this latest round of talks, producers sense they may have the upper hand, said lawyers familiar with the discussions. With so many states eager to settle, cigarette producers believe that time and pressure may bring any hard-liners back into the fold.
"They are going to put out something to get the majority of the attorneys general behind it," said one industry consultant who spoke on condition of anonymity. "And that could produce enough momentum to get the rest of them to fall in line."
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