STATES STRIKE $200 BILLION TOBACCO DEAL

WASHINGTON -- Negotiators for states with lawsuits still pending against
Big Tobacco have struck a $200 billion, 30-state settlement and say it as
the best deal they can get after the collapse of a national agreement
earlier this year.

Arizona would receive a minimum of $2.67 billion over the first 25 years of
the agreement, with no restrictions on the money's use.

The settlement agreement also would sharply restrict cigarette advertising,
help curtail youth smoking, and fund research and countermarketing.

The agreement is expected to be announced Monday.

The package, a draft version of which was obtained by ``The Arizona
Republic,'' is a diminished version of the $368 billion national deal
hammered out by state attorneys general in June 1997. Gone are nicotine
regulation by the Food and Drug Administration, whistleblower protections,
industry funding of classes to quit smoking and severe penalties for
failures to reduce youth smoking.

Yet, it's a good deal, and one that Arizona will sign, said Attorney
General Grant Woods, one of the lead negotiators of the failed national
settlement and a key figure in the recent talks.

``When we weigh our two options now -- settlement or go to trial -it's
clear this is the way Arizona should go,'' Woods said. ``We're getting a
lot of things we could never get in a lawsuit.''

A jury could award only money, and probably a lot less than the roughly
$100 million per year the state will receive for the near future under the
agreement, Woods said. The advertising and marketing restrictions,
youth-smoking research, lobbying curbs, document repository and other
details of the settlement could not be won in a trial and would be
difficult to achieve in any settlement arrived at by Arizona on its own, he
said.

Arizona's lawsuit is set for trial in March.

It's still not a done deal. Tobacco companies want a ``critical mass'' of
states to agree to the proposal, particularly the population-heavy states
of California and New York, before they'll sign it. The states are
reviewing the proposal over the weekend.

Woods said there is ``widespread consensus'' among the states in support of
the agreement.

The tobacco companies were more circumspect.

``We are declining to comment on any speculation or reports of any
settlement agreement,'' said Jan Smith, spokeswoman for R.J. Reynolds
Tobacco Co. in North Carolina.

The Clinton White House was pleased with the progress, saying Thursday that
from what it knows of the agreement, it's ``a real step in the right
direction.''

A spokesman said the administration will ``continue to push Congress to
enact comprehensive legislation to substantially reduce youth smoking.''

According to the draft agreement, other provisions would:

Create a national foundation to reduce teen smoking funded by $25 million
per year for 10 years.

Create a national public education fund with $1.45 billion over the next
five years, largely to pay for counter-marketing targeting youth smokers.

Limit tobacco companies to one brand-name (such as Marlboro or Winston)
event sponsorship per year.

Ban ads in stadiums and arenas, outdoor ads larger than a poster, and
cartoon figures. Human figures would be permitted.

Ban distribution and sale of gear -- hats, shirts, etc. -- imprinted with
brand logos after July 1, 1999.

Disband the Council for Tobacco Research, the Tobacco Institute and the
Council for Indoor Air Research, but preserve their records.

Create a user-friendly World Wide Web site stocked with the industry's
smoking and health-related documents.

In Arizona, John Rivers, head of the Arizona Hospital and Healthcare
Association, said health advocates likely will accept the agreement.

``Most of us were chagrined that some zealots in public health community
weren't satisfied and, because of that overzealousness, we have an
agreement that's not as good as the one we had last June,'' he said.

Matt Madonna of the Arizona office of the American Cancer Society said that
he applauds the settlement, but that it's only a beginning.

He said he will monitor the Legislature to try to ensure the money goes for
public health, and he'll comb through the agreement out eement began to
unravel.

By the time legislators were done piling on under pressure from health care
advocates on one side and tobacco farmers on the other, the lead tobacco
bill sponsored by U.S. Sen. John McCain, R-Ariz., had grown to $516
billion. The industry balked at the onerous provisions and the bankrupting
cost, and that proposal died in June of this year.

``We did our best to do everything we could think of regarding tobacco, and
the Congress and the president were unable to get the job done,'' Woods
said. He said he and other attorneys general will try to get McCain and
other lawmakers to pass legislation to ``fill in the gaps'' between the new
deal and the old one.

McCain was in Asia and could not be reached, according to a spokeswoman.

Since the June proposal died, the legal climate has changed. Big Tobacco
has settled with four states for nearly $40 million total: Mississippi, the
first state to sue to recover costs from treating sick smokers, Florida,
Texas and Minnesota.

The tobacco companies drew the line with Washington state, which was in
poor position to win good terms because of unfavorable pretrial decisions,
and refused to settle. Settlement talks resumed however, when Washington
Attorney General Christine Gregoire joined other state attorneys general in
a renewed effort to get an agreement.