GREGOIRE THINKS LATEST TOBACCO DEAL WILL BE APPROVED

WASHINGTON - This time, Attorney General Christine Gregoire thinks she
has a deal that will fly.

Seventeen months ago, Washington state's top law-enforcement official
- - with a mix of exhaustion, exuberance and political naivete - stepped
onto a hotel ballroom platform with other attorneys general and
optimistically pitched a nationwide settlement with the tobacco industry.

That deal collapsed.

Today, Gregoire formally launches another campaign to sell another
plan to settle lawsuits with the tobacco industry. Only this time, the
deal is a smaller settlement - $206 billion instead of $368.5 billion
- - and contains public-health solutions more modest in approach.

"I believe we have extracted everything that can be extracted from a
lawsuit and then some," Gregoire, the lead negotiator in the deal,
said in her first extended interview after settling terms with the
tobacco industry over the weekend. "I don't know of any case that has
the kind of reform on how a company does business that this settlement
has."

The deal bans outdoor advertising, marketing to youths and product
placement in movies and TV shows. It places limits on marketing,
merchandising and lobbying. It limits cigarette brand sponsorship of
sporting events to one sponsorship per brand per year.

And it creates a $1.45 billion national public education fund to
promote tobacco control and a $250 million charitable foundation to
study ways to curtail teen smoking and drug abuse.

Gregoire's list for what's missing, though, is almost as long what's
in the deal. She wishes it included Food and Drug Administration
regulation, harsher warnings on cigarette packs and full disclosure of
the ingredients of cigarettes. She also regrets the deal doesn't have
a total ban on cigarette sponsorship, or a prohibition on using humans
in cigarette ads. The settlement doesn't limit advertising in
publications, such as Sports Illustrated, that can reach a high youth
readership.

"What this does is give us a huge step forward," Gregoire said. "But
it ain't all that we need to get done."

Despite the failure of the earlier deal and the expected lukewarm or
hostile response from some public health groups, Gregoire is still
optimistic about this one.

She insists she is more realistic. And perhaps less politically naive.
After all, unlike the June 20, 1997, agreement, this deal she crafted
along with seven other attorneys general needs no approval from
Congress or President Clinton. Just the nod of her fellow attorneys
general.

"On June 20 (1997), we thought we had done what no one could have ever
imagined could be accomplished," Gregoire said. "And on June 21, it
wasn't good enough. I learned my lesson: Expectations far exceed what
litigation can deliver. Just because legislators - Congress - have
failed the American people doesn't mean that the courts can give them
all that they want."

This week, Gregoire will find out whether she has led a cadre of
attorneys general to a successful out-of-court settlement for their
consumer fraud and antitrust lawsuits to recover the costs of treating
sick smokers, or whether the American people think the deal is not
enough.

By Friday, the nation's attorneys general have to decide whether they
will join the national settlement that includes payments to states
through 2025. If enough attorneys general sign up, then the deal will
be enacted. It hasn't been specifically determined how many states
make a critical mass needed to approve the deal. Four major tobacco
companies - Philip Morris, R.J. Reynolds, Brown & Williamson and
Lorillard - will decide if enough states have signed on within a
couple of days after the deadline.

If they agree they have a deal, Gregoire said her attorneys could ask
a King County Superior Court judge as early as next Monday to halt the
state's trial and consider a consent decree enacting the settlement.
Until then, she has ordered her deputies to continue the trial.

In the previous talks, Gregoire was the top negotiator behind
Mississippi Attorney General Mike Moore. Gregoire and Moore were
almost hawkish and unbending in their advocacy for the deal.

This time, Moore is gone because his state's suit has been settled,
and Gregoire led the talks. Gregoire has a different approach: She
already is anticipating the criticism.

"There are those who are disappointed because they wanted more,"
Gregoire said. "To them I say, lawsuits have limits, and this one has
pushed the edge of the envelope. And there's more to be done, but it
has to be done legislatively."

The odds might be better this time, she said, because the
decision-makers must weigh this settlement against the odds of going
to trial against an industry known for its scorched-earth defense strategy.

"I've gone to my colleagues and said, `This is not a legislative
decision. This is a legal decision. Your measure has to be, `What can
I get in my courtroom?' "

The choice, Gregoire said, is this: A risk-free settlement or a
high-risk trial.

When the talks for a scaled-down negotiation began in June, Gregoire
tried for a concession from the tobacco industry to agree to the
regulation of nicotine and cigarettes by the Food and Drug
Administration.

"We talked about it," Gregoire said. "It became very clear to us they
were not willing to entertain the issue at all. Ultimately, we were
not willing to push any further, because we thought that it has got to
be done legislatively.

The problem, she said, was that the states were in no position to
relieve the liability of tobacco companies in class-action lawsuits
outside of the 41 suits filed by states.

"Initially in the negotiations, they made it clear to us they weren't
willing to give the kinds of things (they conceded in 1997) because
they weren't going to get the kinds of things they were going to get
in June 20," Gregoire said.

Also, the tide seemed to be changing for the tobacco industry. After
the 1997 agreement went to the U.S. Senate, a group of Senators led by
Sen. John McCain, R-Ariz., attempted to stiffen penalties and tighten
enforcement of the tobacco industry. Big Tobacco balked and waged a
campaign that killed the bill.

Even if the deal is approved, another fight looms over money. Federal
officials are likely to seek as much as half of the settlement money
under the argument that the federal government is owed compensation
for lost Medicaid payments.

The attorneys general are girded for battle.

First, the federal government dropped out of the earlier deal, which
would have provided more money to the federal government than the
states. "So," Gregoire said, "as far I'm concerned, the feds walked
away from their share."

In Washington state, total Medicaid damages being sought are $2.2
billion. This deal would provide the state $4.02 billion - and perhaps
more when another $8.6 billion pot is divided among states most
responsible for winning the settlement.

The attorneys general are talking to the White House.

"We can either do this through sit-down, cordial negotiations with the
administration, or get it accomplished through Congress," Gregoire
said, "or they are in for a whale of a fight with us in court. We are
united."

Checked-by: Patrick Henry