TOBACCO ACCORD WOULD AID S.J.

A proposed $200 billion nationwide settlement with the tobacco industry
would generate an estimated $23 billion for California over the next 25
years, a figure that would be divvied up by cities and counties across the
state, including San Jose and Santa Clara County.

San Jose would receive roughly $287 million, and Santa Clara County's share
might exceed $500 million over the life of the agreement, according to
lawyers who have analyzed the tentative settlement, which is expected to be
announced formally Monday.

The deal now being completed has been hashed out by attorneys general of
eight states, including California, and representatives of the nation's
four leading cigarette manufacturers. The $200 billion would flow to the
states to help pay their smoking-related health costs, according to a
partial draft of the deal.

The proposal restricts cigarette advertising and marketing. All cigarette
billboards and merchandise with cigarette logos would disappear. Tobacco
companies would foot the bill for ads discouraging youth smoking.

In California, the settlement would be distributed under a 17-page
agreement ratified in August by the California Attorney General's Office
and the major cities and counties pushing five separate court battles
against the tobacco industry.

Under that accord, California will turn over 50 percent of any recovery
from the tobacco industry to cities and counties. With the tentative
settlement providing about $23 billion to California, roughly $11.5 billion
would go to local governments, based on the August pact.

Cities' special status

San Jose, Los Angeles, San Francisco and San Diego have special status
under the pact because they are cities large enough to pursue litigation
under the state law being used in court against the tobacco companies. The
formula worked out in the August memorandum, which gives the four cities 10
percent of the amount that goes to local governments, entitles San Jose to
its $287 million share.

``That's the figure as I understand it,'' San Jose City Attorney Joan Gallo
said Friday. ``Everything I have heard makes it sound imminent. We are very
pleased with the agreement.''

Meanwhile, the agreement with the state calls for the 58 counties to divide
the remainder of the tobacco payout. San Francisco Deputy City Attorney
Andrew Chang, a member of his city's tobacco team, said Santa Clara County
should receive about $500 million.

County Counsel Ann Ravel said that figure appeared to be close to her
office's estimates. Ravel plans to recommend the deal to the board of
supervisors.

``It ensures that we will be able to recover when the likelihood of
recovery from the litigation was not clear,'' Ravel said.

Santa Clara County participated in a statewide case initiated by San
Francisco, which sued the tobacco companies on behalf of the state's cities
and counties, seeking reimbursement for the public health costs associated
with treating smoking-related illnesses.

To resolve five cases

Overall, the settlement, if approved, would resolve five pending cases now
joined in state court in San Diego, including one brought by Governor-elect
Gray Davis. At least one of those cases sought to force tobacco companies
to relinquish their profits from selling cigarettes in the state under the
theory that the public had been deceived about the dangers of smoking.

A spokesman for Attorney General Dan Lungren declined comment Friday,
saying there would not be discussion of the pact until Monday. A
spokeswoman for incoming Attorney General Bill Lockyer also declined
comment. Lockyer recently urged Lungren to accommodate a public debate on
any settlement with the tobacco companies.

San Francisco expects to receive more than $500 million under the
settlement. The Los Angeles Times reported this week that the city and
county of Los Angeles expect to recover as much as $3 billion.

For the tobacco companies, the settlement terms could have been far worse
- -- a fact likely to be pounced upon by potential critics of the deal. Just
five months ago, cigarette makers were staring down legislation in
Washington that could have cost them $516 billion and regulated everything
from the manufacturing to the marketing of tobacco.

Only a week to decide

Once the deal is announced, attorneys general of those states that were not
directly involved in negotiations are expected to have about a week to
decide whether they will take part or take their chances in a courtroom.
The deal eventually could cover 46 states.

The cigarette makers also aren't bound to the deal. They are expected to
wait to see if enough states participate to make it worth absorbing the
large financial hit.

If companies finance the plan's cost by raising cigarette prices, the cost
of a pack would increase 35 cents over the next five years. Some makers,
however, for competitive reasons, may choose to raise prices less and
absorb the cost themselves.

The companies at the table are Philip Morris Inc., R.J. Reynolds Tobacco
Co., Brown & Williamson Tobacco Corp., and Lorillard Inc., the nation's
four top cigarette makers.

Key states are California and New York. Both attorneys general played lead
roles in the five-month talks that have led up to this agreement, and they
are expected to go along.

``I am optimistic that enough states will agree with this settlement and
sign on,'' said Pennsylvania Attorney General Mike Fisher, another one of
the lead negotiators.

Holdouts are expected. In Alabama, for instance, Gov. Fob James said
Thursday that even though the deal could mean almost $3 billion to his
state, he will pursue a lawsuit against the industry in hopes of getting
more money.

Public health groups have decried the short timetable for the deal.

``If this is a binding agreement that we're going to be living with for the
next 30 years, then we ought to at least have 30 days to review it,'' said
Lynn Carol Birgman, an anti-smoking activist in Kentucky.

One tobacco-control organization pledged Friday to ask judges in many of
the states to withhold approval of any formal settlements until public
health groups and others have had an opportunity to review it.

``If ever the devil was in the details, this is such a case -- and
literally millions of lives and trillions of dollars are at stake,'' said
Executive Director John Banzhaf of the group Action on Smoking and Health.

Gail Gibson and Raja Mishra of Knight Ridder Newspapers and the New York
Times contributed to this report.

Checked-by: Pat Dolan