Congressional Record, Volume 144 Issue 65 (Wednesday, May 20, 1998)

[Congressional Record Volume 144, Number 65 (Wednesday, May 20, 1998)]
[Senate]
[Pages S5190-S5215]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

NATIONAL TOBACCO POLICY AND YOUTH SMOKING REDUCTION ACT

The Senate continued with the consideration of the bill.
Mr. LOTT. Mr. President, we have had a good bit of discussion today
and two very important votes. I hope that we can move on now to some
other amendments that really are important and will determine how this
legislation is eventually written.
I thank Senators again for keeping calm and working through this. The
managers are working very diligently. I emphasize again to my
colleagues, while I think every Senator obviously needs to have the
time and will have the time he or she needs to make a statement, I do
think it would be wise if you can say what you have to say and we can
move on. To go for an extended period of time on an amendment 2, 3, 4,
5 hours is going to make it very difficult to ever get a satisfactory
result.
I hope Senators will agree to some reasonable time limits. I am not
going to ask for a unanimous consent agreement now. I don't think it is
necessary, but I will suggest the form that we might take in a consent
agreement as to how to proceed.
It is my hope that Senator Gregg from New Hampshire will be
recognized next to offer his amendment, with Senator Leahy, regarding
immunity. Senator Gregg and Senator Leahy have been circling the area
since we started. They are ready to go. The debate should last the rest
of this session today. It is my hope that the vote on, or in relation
to, that amendment can be scheduled to occur first thing on Thursday
morning--I mean early--so we can move to the next amendment, which will
come from the Democratic side. Senator Daschle and Senator Kerry will
have to decide what amendment that will be.
Following the disposition of that amendment offered by the Democrats,
then I hope the Senate will consider the farmers' protection issue and
debate it, have a vote on that issue or issues in a way, hopefully,
that is agreeable and as fair as possible to both sides of that issue.
Then we will really have a feel for where we are and can make an
assessment about time and where to go from there.
I hope that Senators are comfortable with that. I think that it is a
fair way to proceed alternating back and forth. We are not ducking the
tough issues. This last amendment was a key amendment. This next
amendment is a key amendment. The farmers' amendment is critical to all
concerned. So I hope this will be acceptable and we can move in this
way. I yield the floor.
Several Senators addressed the Chair.
The PRESIDING OFFICER. The Senator from Massachusetts.
Mr. KERRY. Mr. President, that is, I think, a superb way to proceed.
It is the way we have been trying to proceed. I thank the majority
leader for trying to structure it that way.
There was an understanding prior to that that the Senator from
Nebraska will proceed for 15 minutes, at which point Senators Gregg and
Leahy will be recognized for their amendment.
Mr. LEAHY. Mr. President, I have no objection to that.
Mr. KERRY. I yield the floor.
Mr. KERREY addressed the Chair.
The PRESIDING OFFICER. The Senator from Nebraska.
Mr. KERREY. Mr. President, I thank both the Senator from Arizona and
the Senator from Massachusetts for allowing me to speak.
I have come to the floor to speak about the tobacco bill. I began
several months ago to have conversations with Nebraskans about this
legislation. The first question I was asked is, Why do we need it? What
has happened here? All of a sudden we have a $368 billion to a $516
billion piece of legislation being introduced and people want to know
how we got to where we are today.
I would like to describe, at least as I see it, how we got to where
we are today in May of 1998, from a point just as recently as 2 years
ago when there was no piece of legislation on the floor even remotely
approaching something like this. ``Why all of a sudden is Congress
taking on something like this,'' is the question I get asked. I will
try to give Nebraskans an answer.
The second question I get asked is, ``What are we going to do? What
is the purpose here?'' On behalf of 1,600,000 Nebraskans, I will
describe what this law is attempting to do, what is the piece of
legislation which Senator McCain and Senator Kerry have brought before
this body all about.
The short answer to the question ``How did we get to this point?'' is
that there was a potential lawsuit. There was litigation that was being
proposed by States' attorneys general against tobacco companies. There
was an attempt through the discovery process to get internal tobacco
industry documents, and one of the tobacco companies said, ``We'll
provide you the information you need to proceed with your case because
we are concerned that what we know is going to be discovered

[[Page S5191]]

anyway, that there was an effort to withhold information from the
American people.''
What happened, in addition to some changes in State law, is that on
the 20th of June, 1997, there was an agreement--it was not even a year
ago--with 40 attorneys general in the United States and the tobacco
industry.
What they agreed to, Mr. President, on the 20th of June 1997, is very
important, especially now that the tobacco companies have broken off
from the settlement and are now advertising against this legislation in
our States.
Again, I emphasize that the reason we are debating this tobacco bill
today is not because the tobacco industry is afraid of Congress, and
what we may do to them. Rather, they are afraid of 12 faceless men and
women of a jury. They are worried about the evidence being introduced
and now stipulated in court, showing that the tobacco industry knew
nicotine was addictive and lied about it. They were, and still are
worried about what a jury would do with this evidence. They were, and
still are scared that a jury will end up costing them a whole lot of
money. That was the power that produced this offer to settle at $368
billion.
That begs a question that Nebraskans need to try to answer. What was
in that initial offer to settle? What were the tobacco companies
willing to do back on the 20th of June 1997?
First of all, they agreed to pay $368 billion over 25 years. They
said they would make annual payments starting at $10 billion, going up
to $15 billion by year 5, and every year thereafter.
Although they do not spell it out in terms of a per-pack price
increase like you hear them advertising against today, to make the $15
billion-per-year payment, the tobacco industry would have raised the
price of cigarettes by approximately 62 cents a pack. Less than a year
ago, they, not Congress, were going to raise the price of cigarettes by
62 cents a pack. Yet now, less than a year later, they have launched
this huge advertising campaign trying to convince you that Congress is
the bad guy trying to raise your taxes. They did this to settle
lawsuits that they were afraid of.
Indeed, the next amendment that we are going to talk about is their
liability. They were concerned about future liability, and they were
willing to pay out $15 billion a year, costing smokers about 62 cents a
pack, so they would not have to worry about it anymore.
They also agreed to pay $50 billion up front in punitive damages,
meaning for all their past wrongs that they knew they were guilty of
about misleading the American people, about nicotine's addictiveness,
and marketing to our children.
Next, they agreed to let the FDA regulate nicotine as a drug. Next,
they agreed to pay huge fines if goals of reducing teen smoking were
not met. And, finally, they agreed to restrict their advertising and
marketing to youth.
I say, Mr. President, that almost all of what I have just described
is in this tobacco bill. That is what the Commerce Committee has voted
out of Committee, and that is what we are debating on the floor today.
Yet, less than a year after the tobacco settlement, the tobacco
industry is spending millions of dollars trying to convince the
American people that they had nothing to do with any of this and that
Congress is the bad guy. This is the message they have paid lots of
money to convince the people of. I have seen it in their television
ads, on postcards that are being mailed in to my office, and from the
thousands of phone calls that I have received. Everything that they are
objecting to, and convincing others to object to, they agreed to back
on the 20th of June 1997.
A lot has happened since that settlement, Mr. President, that has
caused significant change to this legislation. First, the tobacco
industry settled a suit in Florida for $11 billion, they settled a suit
in Texas for $15.3 billion--but the settlement that really changed the
level of the playing field that we are on today was the one that
happened 12 days ago in Minnesota on the 8th of May. After 3 months of
a closely watched trial, just hours before the jury was going to get
the case, Attorney General Hubert Humphrey III and the tobacco industry
settled the case for $6.5 billion.
There were lots of firsts in this settlement. This was the first
settlement with a health insurance provider, in this case Blue Cross
and Blue Shield, getting $469 million of the $6.5 billion.

This was the first settlement where the tobacco industry signed a
consent promising not to misrepresent the health hazards of smoking.
And perhaps most significantly, this was the first settlement where
the State received more money than it would have collected under the
$368 billion settlement last June.
The $6.1 billion they settled on 12 days ago is 50 percent more than
the $4 billion they would have received under last summer's settlement.
This is significant. This is the justification for going from 62 cents
to $1.10 per pack. This is the justification for increasing the total
amount that we are asking the tobacco industry to pay into the tobacco
trust.
Already, the tobacco industries have said they will raise prices to
help defray some of their legal expenses. Indeed, in the past 9 months
cigarette prices have been raised about 20 percent to help offset the
tobacco industry's legal bills.
Again, Mr. President, I tell you the history of this bill because it
is important to understand how we got to where we are today. A single
tobacco company broke away from the rest and disclosed information that
enabled us to get a settlement on the 20th of June 1997. There has been
additional settlements in Texas, in Florida, and most significantly in
Minnesota that increased the dollar amounts from the base level
agreement that was formed on the 20th of June 1997.
Mr. President, the next issue to discuss, this bill and the goals of
this bill, is a bit more difficult because things are changing at such
a rapid pace. The way I see it, from talking to Nebraskans about this,
is that the goal of this legislation is clear. We need to prevent
teenagers from starting to smoke and to help those Americans who do
smoke and want to quit.
Why, Mr. President? Well, there are a couple of reasons why. The most
important one of which is that we now know, stipulated in court
documents, that nicotine is addictive. It is not habit forming, Mr.
President. It is addictive. And the qualities of the addictive property
of nicotine, taken together with the toxins that are contained in the
tobacco itself, create a tremendous public health problem.
I have 352,000 Nebraskans who smoke. I do not just want to raise the
prices on those Nebraskans to try to decrease the amount of
consumption, along with FDA regulation and advertising and other sorts
of things, I want to make certain that the money in this bill helps
them stop smoking.
Now, that should be our crusade. That should be our cause. Tobacco
kills prematurely nearly 400,000 people every year. Approximately 2700
of these are Nebraskans.
Tobacco consumption produces tremendous health problems for the
352,000 Nebraskans who smoke. And the best way for me to mitigate the
problem associated with an increased price is to give them a tax cut by
helping them stop smoking so their medical costs and lost wages from
missed work will be lower. My belief is, as we examine not only what
this legislation does in terms of regulation, in terms of advertising,
in terms of restrictions on smoking in public places to make sure that
we reduce the number of people who become involuntary smokers as a
result of inhaling secondhand smoke, is that we pay attention to how
the money is spent. This is so we have some confidence that in our
individual States those citizens out there who are currently smoking,
who are addicted to nicotine as a consequence, that those individuals
have a chance to get off this addiction that is reducing the quality of
their health and decreasing their life spans.
Mr. President, I examined the numbers in Nebraska. And 25 percent of
the men in Nebraska smoke; 19 percent of women smoke; 39 percent of all
my teenagers smoke. Nebraskans without a college degree are nearly
twice as likely to smoke as those with a college degree. A third of
Nebraskans with an income of $15,000 or less smoke compared to only 15
percent of those who earn $50,000 or more.
Again, Mr. President, tobacco is killing my people. And 2,700 of the
people who prematurely die every single year in the United States of
America are

[[Page S5192]]

Nebraskans. It is addictive. It causes a physical compulsion, a
physical need. Taken in small doses, nicotine produces pleasurable
feelings that make the smoker want to smoke more. A majority of smokers
who become dependent on nicotine will suffer both physical and
psychological withdrawal symptoms when they stop smoking.
Their symptoms are going to include nervousness, headaches,
irritability and difficulty in sleeping, among other things.
Mr. President, a couple of weeks ago I met with 10 or 12 high school
students in Burke High School in Omaha, NE. And I talked to them about
this problem of addiction. I think about 7 of the 12 were smokers. One
of the students explained to me that ``A cigarette,'' she said, ``is my
friend.'' She is 16 years old. ``A cigarette,'' she said, ``is my
friend . . . it is always there for me: When I'm driving in my car,
when I'm stressed out, when I'm going through a crisis . . . cigarettes
don't go out of town, I can count on them no matter what.''
I asked about 100 students to fill out a questionnaire about tobacco.
And one of the more disturbing results in their answers was that the
overwhelming majority of the current smokers said that although they
smoked today at age 16, and though some may continue smoking until they
are 18, the overwhelming majority of these students said, ``We're going
to quit.''
Well, Mr. President, because unbeknownst to them--and until recently
the tobacco companies were not stipulating that nicotine is addictive;
now it is universally recognized that it is--unbeknownst to these
students, they are addicted. They have a physical craving for something
and it is going to be very difficult for them to stop. Unbeknownst to
them, 90 percent of the 352,000 Nebraskans who smoke started smoking
when they were teenagers. That is when it began.
So unbeknownst to them, they may think they are going to quit, but
unless we intervene, and unless we help them--and hopefully through
this legislation we can help them--they are going to have a heck of a
time kicking this addiction.
Mr. President, cigarette smoking is harmful. Cigarette smoking, we
now know, is not only addictive, but taken as directed it is likely to
decrease your life span, likely to shorten not only your ability to
work, but shorten your time on Earth as well.
Mr. President, I intend during the course of the debate on this
legislation to focus my attention on a number of things.
One, this legislation must prevent teen smoking. It must reduce the
amount of teen smoking. I think perhaps one of the most important
things we are doing is giving FDA the authority to regulate.
I was practicing pharmacy back when dinosaurs roamed the Earth in
1965, when Congress was debating whether or not to regulate Dexedrine,
15 milligrams. This was a weight loss pill. It was the most rapidly
moving pharmaceutical in my drugstore in 1965. You could get a
prescription from a doctor and refill it every other day if you wanted
to for 500 Dexedrine. And the pharmaceutical industry was saying, ``No.
It is habit forming; it is not addictive.'' Today, through FDA
regulation, Dexedrine 15 milligrams is available only for narcolepsy,
and only small amounts are sold. I think the most likely reduction of
teen smoking is going to occur not through the price increase, but
through FDA regulation.

In addition, Mr. President, I intend to bring amendments to the floor
to say that we have to make certain that we have community-based
efforts in our States to reduce smoking of the adults out there who are
also addicted. It has to do that. It cannot be a top-down effort. It
has to be a community-based effort. The citizens are more likely to
know what needs to be done. I believe every single State needs to have
some kind of a research scholar connected to NIH to lead us in this
effort.
This is a tremendous public health problem. It has come upon us, the
history of the bill and the seriousness of this problem, relatively
quickly. I am hopeful we can make certain this legislation gives us a
fighting chance in my State, at least not just of increasing prices and
increasing the regulatory action, but of engaging the citizens
themselves and the smokers themselves in a serious challenge of trying
to break themselves from this habit.
Finally, I know we are going to be debating on this floor the
provisions relating to the tobacco farmers. I am of the opinion that
tobacco farmers need some assistance. It was not in the original
settlement. I praise Senator Ford and Senator Hollings for their work
in trying to get provisions in there, but I believe these provisions
are too generous and we need to scale them back. It is difficult for me
in a State that grows corn, soybeans, wheat, barley, and lots of other
products--under the Freedom to Farm Act they are getting substantially
less than what tobacco farmers will be getting out of the program. I
can make a case tobacco farmers ought to get more, but I cannot make a
case they ought to be given all that is in this bill.
It is my hope that during the course of this constructive debate we
are able to pass a piece of legislation that will increase regulation,
that will increase the price, will increase our involvement in our
community and decrease the consumption and the addiction to a substance
which is killing our people.
I yield the floor.
The PRESIDING OFFICER. The Senator from New Hampshire.

Amendment No. 2433 to Modified Committee Substitute

(Purpose: To modify provisions relating to civil liability for tobacco
manufacturers)

Mr. GREGG. Mr. President, I send an amendment to the desk on behalf
of myself and Senator Leahy.
The PRESIDING OFFICER. The clerk will report.
The legislative clerk read as follows:

The Senator from New Hampshire [Mr. Gregg], for himself and
Mr. Leahy, proposes an amendment numbered 2433 to the
modified committee substitute.

Mr. GREGG. Mr. President, I ask unanimous consent the reading of the
amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:

In title XIV, strike section 1406 and all that follows
through section 1412 and insert the following:

SEC. 1406. RESOLUTION OF AND LIMITATIONS ON CIVIL ACTIONS.

[[Page S5193]]

(2) Extension.--In the case of a State that has secured a
judgment against a participating tobacco product
manufacturer, distributor, or retailer in an action described
in subsection (a)(1) prior to or during the period described
in paragraph (1), and such judgment has been appealed by such
manufacturer, distributor, or retailer, such period shall be
extended during the pendency of the appeal and for an
additional period as determined appropriate by the Secretary.
(3) Application to certain states.--A State that has
resolved a tobacco claim described in subsection (a)(1) with
a participating tobacco product manufacturer, distributor, or
retailer prior to the date of enactment of this Act may not
make an election described in paragraph (1) if, as part of
the resolution of such claim, the State agreed that the
enactment of any national tobacco settlement legislation
would supersede the provisions of the resolution.
(4) Local governmental entity option for one-time opt
out.--
(A) In general.--The Secretary shall establish procedures
under which the attorney for a local governmental entity
which commenced a civil action prior to June 20, 1997,
against a participating tobacco product manufacturer,
distributor, or retailer seeking recovery for expenditures
attributable to the treatment of tobacco related illnesses
and conditions, not later that 1 year after the date of
enactment of this Act, may elect not to resolve any action
described in subsection (a)(3). A local governmental entity
whose attorney makes such an election shall not be eligible
to receive payments from the State Litigation Settlement
Account. Procedures under this paragraph shall permit such a
local governmental entity to make such an election on a one-
time basis.
(B) Extension.--In the case of a local governmental entity
that has secured a judgment against a participating tobacco
product manufacturer, distributor, or retailer in a claim
described in subsection (a)(3) prior to or during the period
described in subparagraph (A), and such judgment has been
appealed by such manufacturer, distributor, or retailer, such
period shall be extended during the pendency of the appeal
and for an additional period as determined appropriate by the
Secretary.
(C) Application to certain local governmental entities.--A
local governmental entity that has resolved a claim described
in subsection (a)(3) with a participating tobacco product
manufacturer, distributor, or retailer prior to the date of
enactment of this Act may not make an election described in
subparagraph (A) if, as part of the resolution of such claim,
the local governmental entity agreed that the enactment of
any national tobacco settlement legislation would supersede
the provisions of the resolution.
(c) Addiction and Dependency Claims; Castano Civil
Actions.--
(1) Addiction and dependence claims barred.--In any civil
action to which this title applies, no addiction claim or
dependence claim may be filed or maintained against a
participating tobacco product manufacturer.
(2) Castano civil actions.--
(A) In general.--The rights and benefits afforded in
section 221 of this Act, and the various research activities
envisioned by this Act, are provided in settlement of, and
shall constitute a remedy for the purpose of determining
civil liability as to those addiction or dependence claims
asserted in the Castano Civil Actions. The Castano Civil
Actions shall be dismissed to the extent that they seek
relief in the nature of public programs to assist addicted
smokers to overcome their addiction or other publicly
available health programs with full reservation of the rights
of individual class members to pursue claims not based on
addiction or dependency in civil actions in accordance with
this Act.
(B) Arbitration.--For purposes of awarding attorneys fees
and expenses for those actions subject to this subsection,
the matter at issue shall be submitted to arbitration before
one panel of arbitrators. In any such arbitration, the
arbitration panel shall consist of 3 persons, one of whom
shall be chosen by the attorneys of the Castano Plaintiffs'
Litigation Committee who were signatories to the Memorandum
of Understanding dated June 20, 1997, by and between tobacco
product manufacturers, the Attorneys General, and private
attorneys, one of whom shall be chosen by the participating
tobacco product manufacturers, and one of whom shall be
chosen jointly by those 2 arbitrators.
(C) Payment of awards.--The participating tobacco product
manufacturers shall pay the arbitration award.
(d) Rules of Construction.--
(1) Post enactment claims.--Nothing in this title shall be
construed to limit the ability of a government or person to
commence an action against a participating tobacco product
manufacturer, distributor, or retailer with respect to a
claim that is based on the conduct of such manufacturer,
distributor, or retailer that occurred after the date of
enactment of this Act.
(2) No limitation on person.--Nothing in this title shall
be construed to limit the right of a government (other than a
State or local government as provided for under subsection
(a) and (b)) or person to commence any civil claim for past,
present, or future conduct by participating tobacco product
manufacturers, distributors, or retailers.
(3) Criminal liability.--Nothing in this title shall be
construed to limit the criminal liability of a participating
tobacco product manufacturer, distributor or retailer or its
officers, directors, employees, successors, or assigns.
(e) Definitions.--In this section:
(1) Person.--The term ``person'' means an individual,
partnership, corporation, parent corporation or any other
business or legal entity or successor in interest of any such
person.
(2) Secretary.--The term ``Secretary'' means the Secretary
of Health and Human Services.

Mr. GREGG. Mr. President, this amendment has received a fair amount
of attention and I believe is fairly well understood by most of the
membership, but it is important that we have a substantive discussion
of it and an open debate of it over the next couple of hours. As I
understand, Senator McCain has allotted that type of a time window. I
very much appreciate that.
I want to thank Senator McCain for his courtesy in allowing us to put
this amendment in order at this time, and certainly I appreciate the
manner in which he has managed this bill in such a fair way.
The immunity issue is really at the essence of this bill and the
public policy which this bill addresses. What we have here is an
industry which produced a product which it knew killed people. It is an
industry that produced a product which it knew addicted people. In
fact, it created additives to that product so it would addict people at
a higher rate than were the product sold in its natural state. Then,
knowing that it had a product that killed people, and knowing that it
had a product that addicted people, it then targeted the sales of that
product on our kids.
That is an industry which deserves very little in the way of courtesy
or support or protection--and that is what this amendment is about,
``or protection''--from the U.S. Congress. Yet, within this bill there
is proposed language which would give a historic, unprecedented
protection to the tobacco industry from liability on their lawsuits.
Now, we have addressed this issue before in this body. In fact, not
too long ago there was a sense of the Senate which said there shall be
no immunity for the tobacco industry. That sense of the Senate passed
the Senate by a 79 to 19 vote. This amendment is the real thing. It is
calling to account that sense of the Senate.
Now, the question here goes to the manner in which we, as a country,
sell products. We are inherently the most capitalist, market-oriented
economy in the world. As a result, we have been the most prosperous
society in the world economically. What this amendment is about is
maintaining a capitalist marketplace approach to the issue of the sale
of a product in our society.
What this bill does in its present form is institute an antimarket,
anticapitalist approach into the process of producing and selling a
product in this society. It gives an artificial, inappropriate,
legislative protection to an industry from what has been the
traditional way in which consumers have a right of redress against that
industry.
Remember, in our society when a consumer, when John and Mary Jones
from Epping, NH, are sold a product that doesn't work, they have a
variety of different avenues to address the failure of that product.
Should that product harm them, one of their most appropriate avenues is
to go to court to bring an action against the producer of that product
and to get a recovery. That has been basically one of the essential
elements for disciplining the marketplace in our capitalist society. We
have not, as has been pursued in other nations, especially those that
use a Socialist form of management of their marketplace, we have not
had the Federal Government or any government come in and tell a
consumer what they can and cannot buy, except in very limited
instances. And we have certainly not limited that consumer's ability to
recover should they be sold a product that doesn't work or that harms
them.
The right of redress in the court system, the right of redress for a
consumer, is at the essence of having a competitive marketplace and a
disciplined marketplace. When you eliminate that right of redress,
which this bill does, when you take away the ability of the consumer,
of the person who has been damaged, of John and Mary Jones of Epping,
NH, to get a recovery for an injury they have received, you have
artificially preserved the marketplace. But more importantly, you have

[[Page S5194]]

given a unique, historic, and totally inappropriate protection to an
industry.
Now, let's think about this for a minute. Why would the Federal
Government at any point in its history want to step in and bar the
ability of the consumer to use the judicial method of protecting
themselves in the marketplace? There might be instances where that
would happen--national defenses might be an example. Under our law,
once we did that in the area of people working at nuclear weapons
factories. There was a national defense issue.
Or it might occur if a product was deemed so beneficial that it was
important to protect it. In those instances, of course, we have a
situation where the Government raises the visibility of the need to
protect the society as a whole over the individual. That has never
happened. We have never found a product that was so beneficial. Or if
we have, it has only occurred in the rarest of instances, so beneficial
that we give that sort of protection. So that is a very unusual
protection, to say the least.
But what we have here is the granting of a significant, unusual
protection of immunity to an industry that produces tobacco, which, as
I mentioned in my opening statement, is a product that kills people,
that addicts kids, and addicts people and is targeted at kids. It is
very strange that we should pick that industry for which to give this
sort of protection.
Mr. President, I ask for the yeas and nays on my amendment.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The yeas and nays were ordered.

Amendment No. 2434 to Amendment No. 2433

(Purpose: To modify provisions relating to civil liability for tobacco
manufacturers)

Mr. GREGG. Mr. President, I send an amendment to the desk and ask for
its immediate consideration.
The PRESIDING OFFICER. The clerk will report.
The bill clerk read as follows:

The Senator from New Hampshire [Mr. Gregg] proposes an
amendment numbered 2434 to amendment No. 2433.

Mr. GREGG. Mr. President, I ask unanimous consent that reading of the
amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:

In lieu of the language proposed to be inserted, insert the
following:
In title XIV, strike section 1406 and all that follows
through section 1412 and insert the following:

SEC. 1406. RESOLUTION OF AND LIMITATIONS ON CIVIL ACTIONS.

(a) State Attorney General Actions.--
(1) Pending claims.--With respect to a State, to be
eligible to receive payments from the State Litigation
Settlement Account, the attorney general for such State shall
resolve any civil action seeking recovery for expenditures
attributable to the treatment of tobacco related illnesses
and conditions that have been commenced by the State against
a tobacco product manufacturer, distributor, or retailer that
is pending on the date of enactment of this Act.
(2) Future actions based on prior conduct.--With respect to
a State, to be eligible to receive payments from the State
Litigation Settlement Account, the attorney general for such
State shall agree that the State will not commence any new
tobacco claim after the date of enactment of this Act (other
than to enforce the terms of a previous judgment) that is
based on the conduct of a participating tobacco product
manufacturer, distributor, or retailer that occurred prior to
the date of enactment of this Act, seeking recovery for
expenditures attributable to the treatment of tobacco induced
illnesses and conditions against such a participating tobacco
product manufacturer, distributor, or retailer.
(3) Application to local governmental entities.--The
requirements described in paragraphs (1) and (2) shall apply
to civil actions commenced by or on behalf of local
governmental entities for the recovery of costs attributable
to tobacco-related illnesses if such localities are within a
State whose attorney general has elected to resolve claims
under paragraph (1) and enter into the agreement described in
paragraph (2). Such provisions shall not apply to those local
governmental entities that are within a State whose attorney
general has not resolved such claims or entered into such
agreements.
(b) State and Local Option for One-Time Opt Out.--
(1) In general.--The Secretary shall establish procedures
under which the attorney general of a State may, not later
than 1 year after the date of enactment of this Act, elect
not to resolve an action described in subsection (a)(1) or
not to enter into an agreement under subsection (a)(2). A
State whose attorney general makes such an election shall not
be eligible to receive payments from the State Litigation
Settlement Account. Procedures under this paragraph shall
permit such a State to make such an election on a one-time
basis.
(2) Extension.--In the case of a State that has secured a
judgment against a participating tobacco product
manufacturer, distributor, or retailer in an action described
in subsection (a)(1) prior to or during the period described
in paragraph (1), and such judgment has been appealed by such
manufacturer, distributor, or retailer, such period shall be
extended during the pendency of the appeal and for an
additional period as determined appropriate by the Secretary,
not to exceed one year.
(3) Application to certain states.--A State that has
resolved a tobacco claim described in subsection (a)(1) with
a participating tobacco product manufacturer, distributor, or
retailer prior to the date of enactment of this Act may not
make an election described in paragraph (1) if, as part of
the resolution of such claim, the State agreed that the
enactment of any national tobacco settlement legislation
would supersede the provisions of the resolution.
(4) Local governmental entity option for one-time opt
out.--
(A) In general.--The Secretary shall establish procedures
under which the attorney for a local governmental entity
which commenced a civil action prior to June 20, 1997,
against a participating tobacco product manufacturer,
distributor, or retailer seeking recovery for expenditures
attributable to the treatment of tobacco related illnesses
and conditions, not later that 1 year after the date of
enactment of this Act, may elect not to resolve any action
described in subsection (a)(3). A local governmental entity
whose attorney makes such an election shall not be eligible
to receive payments from the State Litigation Settlement
Account. Procedures under this paragraph shall permit such a
local governmental entity to make such an election on a one-
time basis.
(B) Extension.--In the case of a local governmental entity
that has secured a judgment against a participating tobacco
product manufacturer, distributor, or retailer in a claim
described in subsection (a)(3) prior to or during the period
described in subparagraph (A), and such judgment has been
appealed by such manufacturer, distributor, or retailer, such
period shall be extended during the pendency of the appeal
and for an additional period as determined appropriate by the
Secretary, not to exceed one year.
(C) Application to certain local governmental entities.--A
local governmental entity that has resolved a claim described
in subsection (a)(3) with a participating tobacco product
manufacturer, distributor, or retailer prior to the date of
enactment of this Act may not make an election described in
subparagraph (A) if, as part of the resolution of such claim,
the local governmental entity agreed that the enactment of
any national tobacco settlement legislation would supersede
the provisions of the resolution.
(c) Addiction and Dependency Claims; Castano Civil
Actions.--
(1) Addiction and dependence claims barred.--In any civil
action to which this title applies, no addiction claim or
dependence claim may be filed or maintained against a
participating tobacco product manufacturer.
(2) Castano civil actions.--
(A) In general.--The rights and benefits afforded in
section 221 of this Act, and the various research activities
envisioned by this Act, are provided in settlement of, and
shall constitute a remedy for the purpose of determining
civil liability as to those addiction or dependence claims
asserted in the Castano Civil Actions. The Castano Civil
Actions shall be dismissed to the extent that they seek
relief in the nature of public programs to assist addicted
smokers to overcome their addiction or other publicly
available health programs with full reservation of the rights
of individual class members to pursue claims not based on
addiction or dependency in civil actions in accordance with
this Act.
(B) Arbitration.--For purposes of awarding attorneys fees
and expenses for those actions subject to this subsection,
the matter at issue shall be submitted to arbitration before
one panel of arbitrators. In any such arbitration, the
arbitration panel shall consist of 3 persons, one of whom
shall be chosen by the attorneys of the Castano Plaintiffs'
Litigation Committee who were signatories to the Memorandum
of Understanding dated June 20, 1997, by and between tobacco
product manufacturers, the Attorneys General, and private
attorneys, one of whom shall be chosen by the participating
tobacco product manufacturers, and one of whom shall be
chosen jointly by those 2 arbitrators.
(C) Payment of awards.--The participating tobacco product
manufacturers shall pay the arbitration award.
(d) Rules of Construction.--
(1) Post enactment claims.--Nothing in this title shall be
construed to limit the ability of a government or person to
commence an action against a participating tobacco product
manufacturer, distributor, or retailer with respect to a
claim that is based on the conduct of such manufacturer,
distributor, or retailer that occurred after the date of
enactment of this Act.
(2) No limitation on person.--Nothing in this title shall
be construed to limit the right of a government (other than a
State or local government as provided for under subsection
(a) and (b)) or person to commence

[[Page S5195]]

any civil claim for past, present, or future conduct by
participating tobacco product manufacturers, distributors, or
retailers.
(3) Criminal liability.--Nothing in this title shall be
construed to limit the criminal liability of a participating
tobacco product manufacturer, distributor or retailer or its
officers, directors, employees, successors, or assigns.
(e) Definitions.--In this section:
(1) Person.--The term ``person'' means an individual,
partnership, corporation, parent corporation or any other
business or legal entity or successor in interest of any such
person.
(2) Secretary.--The term ``Secretary'' means the Secretary
of Health and Human Services.

Mr. GREGG. Mr. President, the amendment is a second-degree amendment,
which simply perfects the amendment I offered, the underlying
amendment. I will give a copy of the changes to the other side. I don't
think they will find that they change the basic thrust of the original
amendment.
As I was discussing, the amendment goes to the question of immunity
and why we would choose, for the first time in the history of this
country, to grant immunity to an industry from lawsuits, which
basically changes the whole concept of the marketplace system in our
country--why we would choose the tobacco industry to which to give that
immunity. It is just beyond comprehension that an industry that
produces a product that kills people, which they designed to addict
kids, would be chosen as the industry to which we are going to give
immunity protection. It makes absolutely no sense. It skews the
marketplace. I simply point out to those who might be of a conservative
philosophy and may be following this argument that to have done this is
an absolute affront to the concept of capitalism and a free market
society.
Now, there is an attempt in the bill to address the liability that
tobacco companies generate as a result of their action--an $8 billion
cap. Some will tell us that is a lot of money and that should satisfy
everyone as a manner in which to redress the concerns of the consumer,
of the individuals, of the kids, of the parents, the mom and pops, who
have been damaged by the tobacco companies. And $8 billion is a huge
amount of money on an annual cap for recovery on the loss. But it
obviously isn't what the market sees as the potential liability here.
Otherwise, there would not be a cap in the first place. So by its very
definition it is an affront to the concept of a market-type approach to
the selling of products in this country.
Equally important is the way this cap works. It gives a
disproportionate amount of power to the tobacco companies to decide who
the winners and losers are, because it is essentially a race to the
courthouse. The tobacco companies, under the proposal in this bill,
would control who gets to the courthouse first. If they decided the XYZ
lawsuit was more amenable to them to settle than the ABC lawsuit, or
Mary Smith's lawsuit was less desirable to them, for some reason, than
Hank Jones', they can settle the ABC lawsuit, the XYZ lawsuit, and the
Mary Smith lawsuit, but they cannot settle the Hank Jones lawsuit, they
can make him litigate. And, by the time he is finished, they have
settled these other ones and, poof, the $8 billion is gone. So not only
does it have the total irony of perverting the marketplace, it has the
irony of giving the tobacco industry the capacity to choose who the
winners and losers are in the process of determining people who are
suing them for being caused physical damage.
Can you think of anything more ironic? You have been damaged, your
health has been destroyed, or maybe someone in your family has died as
a result of the tobacco industry's actions, or some child was addicted
and that child dies and the tobacco company gets to choose whether or
not that person is going to be a winner under the lawsuit process. How
unbelievably ironic and absurd that is. But that is the way this cap
works. This is just one of the many, many technical problems with the
concept of a cap, because what I think it reflects is the idea that
when you put an artificial cap into a huge, dynamic economy like the
United States', you are basically creating all sorts of unintended
consequences that don't flow naturally in a capitalist system. Much
more appropriate is that you allow the capitalist system to proceed in
its usual and orderly course.

Now, others will say, well, if you don't have immunity, then you
inevitably drive these companies into bankruptcy. To begin with, we
don't have any idea that that is true. What we know is that these
industries are extraordinarily profitable. We know that, right now,
they are pursuing major buy-backs. Philip Morris, an $8 million buy-
back; RJR, a buy-back of its stock. When you start buying back your
stock as a corporate leader, you are saying your stock is undervalued.
If your stock is undervalued, it is the ultimate test that in the
future you have a better chance of progressive sales and a strong
market force for your industry.
So the concept that if they don't have immunity, they are going to
end up going bankrupt, I think the marketplace has discounted and
rejected that and said that is not going to happen. In fact, there is a
tremendous earning capacity out there, and we already know there is a
tremendous capacity to pass on to the consumer, because that is the
theme of this bill--to pass on to the consumer a significant part of
the cost. As long as they can pass through that cost, it doesn't impact
them at all, doesn't impact their capacity at all.
So from a substantive standpoint, bankruptcy doesn't make any sense
as a defensive argument to this. But just from a purely logical
standpoint, it even makes less sense. Think about it this way. We are
saying that to save the industry from bankruptcy we have to put on this
cap. But at the same time, we have to tax it. The reason we are taxing
it is to discourage people from consuming the product. And the logical
extension of that is that if you are successful in taxing people and
managing to discourage them from using the product, you are going to
reduce utilization, which one presumes would inevitably lead to the
collapse of the industry and potentially bankruptcy.
So the bill, by its very nature, is inherently saying that the
options of bankruptcy are there, but they are going to do it on a
different system--through the tax system. Yet, they won't allow the
marketplace to make that decision. They won't allow the marketplace to
decide whether or not this industry survives, which is the way,
traditionally, we have done it in this country. We don't traditionally
say to an industry, well, you are about to go bankrupt, which is
something that this industry can't say, certainly in light of what it
is doing with stock values--so we, the Federal Government, are going to
step in and give you unique protection; we are going to give you
liability protection. And we certainly don't say it to an industry that
has produced a product that kills people and has addicted them.
For those people who don't believe this industry knew their product
was addictive, I will cite a few quotes. We have here quotes from the
Brown & Williamson documents, disclosed as a result of the Minnesota
case, and from documents of RJR. Brown & Williamson in 1978--that is a
long time ago; this wasn't just yesterday:

Very few consumers are aware of the effects of nicotine,
i.e., its addictive nature, and that nicotine is a poison.

These folks knew a long time ago that they were selling an addictive
product that killed people. This is a quote from RJR:

Tobacco companies are basically in the nicotine business. .
.Effective control of nicotine in our products should equate
to a significant product performance and cost advantages.

That is a pretty cynical statement. It reflects the fact that the
tobacco industry knew they were selling an addictive product.

Nicotine is the addicting agent in cigarettes.
The evidence is beyond question. They knew that it was a poison, that
it killed people, and they knew it was addictive.
Second, there are some who may say, ``Well, they don't really target
kids.'' That is very hard to defend also because the facts speak for
themselves from their own documentation. They look on kids as their
source of future revenues.
This is from the RJR documents of 1974:

Let's look at the growing importance of the young adult in
the cigarette market. In 1960, this young adult market, the
14-24

[[Page S5196]]

group, represented 21 percent of the population . . . they
will represent 27 percent of the population in 1975. They are
tomorrow's cigarette business.

How cynical could you be? Let's first produce a product that kills
you, let's make it addictive, and then let's target it at kids.
Mr. KERRY. Will the Senator be willing to yield for a question?
Mr. GREGG. I would like to complete my statement, and then I will
yield.
In 1974, ``Marlboro dominates in the 17 and younger age category,
capturing over 50 percent of the market.''
Obviously, Philip Morris knew that Marlboro was making money in that
area.
I will not read the next statement, but it has the same context. Kids
were the target.
So we have here, as I mentioned earlier, the concept that we are
going to be giving immunity, for the first time in our history, to an
industry. What industry do we pick? Do we pick the people who are
making heart valves so you can live longer? Do we pick an industry that
makes hip joints to make you live longer? Do we pick the industry that
is making a drug that will maybe make your life easier? Do we pick an
industry that makes cars so you can get places faster? No. We pick an
industry which targets kids with a poisonous product that they made
addictive. And they knew it all along.
The last argument that we hear is,

We can't do this bill unless we have the tobacco companies
cooperate, and we can't have cooperation unless we have some
sort of immunity for the tobacco companies, unless we give
them this historic new authority and protection.

First off, that is not true. The vast majority of the advertising
controls that we think are needed can be done without the tobacco
companies' participation. Yes, there are some issues of the first
amendment that we can't step over. But for the most part, we can do a
great deal to limit their access, especially to kids.
Second, we can compete with them. We can produce our own advertising
programs, which compete much more aggressively than they can in the
marketplace. Of course, that is the traditional American way: Make the
point, make it effectively, that tobacco kills.
But, most importantly, I think it ought to be pointed out here that
we are making a deal with the Devil and the Devil walked away from the
table. There is no tobacco company participation in this process any
longer. Here we are offering them the most significant legal protection
probably in the history of the country in exchange for them being
willing to give us some limited ability to limit their advertising
activities, and they are not even at the table to accept the offer. In
fact, they have walked away from the table. They said they don't want
to have anything more to do with this process.

The quote from the head of RJR is:

The extraordinary settlement, reached on June 20th last
year, that could have set the Nation on a dramatically new
and constructive direction regarding tobacco, is dead. And
there is no process which is even more remotely likely to
lead to an acceptable comprehensive solution this year.

With that statement, he walked out. He said, I am not going to
participate in this and tobacco is not participating in this anymore.
So you have this almost pathetic situation where the U.S. Congress is
passing immunity and giving this outrageous new authority to the
tobacco companies to protect them from lawsuits. The tobacco companies
have walked away, and the U.S. Congress is sort of chasing after them
on bended knee, saying, ``Please, tobacco companies, please, tobacco
companies, please take our offer.''
My goodness. First, we make a deal with the Devil, and then we chase
after him asking for him to take our deal. I mean it is just
ridiculous, it is inappropriate, it is not becoming of the Congress,
and it is wrong.
The language which Senator Leahy and I have proposed here is
essentially the same language which was in the original HEALTHY Kids
bill, which was endorsed by the White House. I regret that we have not
received White House support for reinserting this language. I regret
that the leadership within this Congress has not supported the
insertion, although on the House side I note, I believe that the
Speaker supports no immunity language, although I don't want to speak
for him. I have read reports to that effect.
But the point is that this is not dramatic language, it is not
outrageous language, it is the language that was in the original
HEALTHY Kids bill, and it essentially says no immunity. It says what
this Senate said back when we passed the sense of the Senate 79 to 19:
No immunity for the tobacco industry, because they don't deserve it, it
is wrong, and it is inconsistent with the capitalist system.
Mr. LEAHY. Will the Senator yield for a question?
Mr. KERRY. Will the Senator yield for a question?
Mr. GREGG. I yield to the Senator for a question. The Senator from
Massachusetts had a question. And then I will yield to the Senator from
Vermont.
Mr. KERRY. I thank the Senator. I know the Senator from Vermont has
to go somewhere.
I want to ask the Senator if he is aware that there is a real
distinction between the notion that he has been using called
``immunity'' and a limit on the exposure of liability. In fact, in this
bill there is no immunity. They are liable for up to $8 billion on an
annual basis. So that is not immunity.
Will the Senator not agree that the use of the word ``immunity'' is,
in fact, an exaggeration?
Mr. GREGG. No, I would not. I happen to think the use of the word
``immunity'' is correct. The fact is that we are setting up a new
structure here where, for the first time, we are giving product
liability protection to an industry which clearly doesn't deserve it.
The term ``immunity'' has become a term of art relative to that
discussion. From my standpoint, the term of ``immunity'' properly
defines that. If the Senator from Massachusetts wishes to define it in
a more narrow sense and say, ``We are giving them product liability
protection but we are not giving them immunity,'' that is the Senator
from Massachusetts's definitional approach, and that is fine. But the
point is the same. We are creating a unique, unusual, significant
action which changes the jurisprudence that has dominated the
marketplace in this country for 200 years.

Mr. KERRY. Will the Senator yield for a further question?
Mr. GREGG. Certainly.
Mr. KERRY. The Senator is aware, obviously, that Minnesota settled a
lawsuit. Minnesota settled a lawsuit, and other States have settled
lawsuits, and in those settlements there is, in fact, the same kind of
structure contemplated in this bill. That is part of the system of
jurisprudence, is it not? It is a normal part of how you arrive at a
settlement of a dispute?
Mr. GREGG. First off, there is no lawsuit against the Federal
Government. So that I don't think is applicable. I don't serve in the
legislature of Minnesota. If I did, I certainly would not have agreed,
and I would change the law of Minnesota to not allow that settlement to
have gone forward should that decision be found to be constitutional,
which I don't know whether it will be or not.
At this time, I yield the floor.
Several Senators addressed the Chair.
The PRESIDING OFFICER (Mr. Abraham). The Senator from Arizona.
Mr. McCAIN. I will be brief. I want to say to the Senator that I will
be very brief.
Mr. President, I yield the floor.
Mr. SESSIONS. Mr. President, is there an order of procedure, informal
or otherwise?
Mr. LEAHY. Mr. President, I note that my good friend from Arizona,
who is managing the bill, sought recognition, and I will be perfectly
willing to yield to him for that.
Mr. McCAIN. I thank my friend.
Mr. LEAHY addressed the Chair.
The PRESIDING OFFICER. The Senator from Vermont.
Mr. LEAHY. Mr. President, I rise in strong support of this amendment
of my friend and my neighbor from New Hampshire. I was thinking about
this. I thought to myself, why should we give big tobacco any special
legal protections? My friend from New Hampshire said that we are not
doing this for a medical company because they build some new kind of
heart valve, and to get it out, we will give them special
protection; or somebody else comes up with a new cancer drug and we
want to give them special protection. We are

[[Page S5197]]

being asked to give this special protection to tobacco. I have to tell
you, Mr. President, I don't have a whole lot of people in Vermont
rushing up to me and saying, ``Oh, please, please, please, give
immunity to the tobacco companies. This is our No. 1 priority.''

In fact, this is whom they are asking to give immunity to. Mr.
President, look at this stellar group standing, raising their hand,
swearing to tell the truth, the whole truth, nothing but the truth, and
then they sat down and lied. I remember my days as a prosecutor. We
used to see lineups like that, but they were usually a different type
of lineup and you had numbers across the front.
These are not the people I want to give immunity to. These are not
the people I want to go back home to Vermont and say, ``I voted to give
them immunity.'' In fact, yesterday the former Surgeon General, Everett
Koop, and the former FDA Commissioner, Dr. Kessler, endorsed the Gregg-
Leahy amendment because they know Congress can protect the public
health without having to protect big tobacco.
This really comes down to the issue of, Do you have to protect big
tobacco in order to protect public health? I say no. What we should be
doing is protecting public health, that is it, not protecting big
tobacco.
Now, the Senator from Arizona, Mr. McCain, the Senator from South
Carolina, Mr. Hollings, and the White House have done a great job in
narrowing the list of special legal protections in the managers'
amendment, and I compliment Senator McCain, Senator Hollings, and the
White House for what they have done. But now that the Senate begins
floor debate on this revised bill, we have to go beyond that. We have
to take the great work that my neighbor from Massachusetts, Senator
Kerry, and the others I have named have done. Then we have to say, once
and for all, we are rejecting the tobacco industry's siren song for
unprecedented legal protections.
I applaud Senator Kerry and Senator McCain and Senator Hollings and
the White House for going as far as they did, but I want to now go
further, lock the door, close the door once and for all, and allow us
all to go back home to our States and say we stood up to big tobacco,
we voted against immunity. It is time for Congress, and especially the
Senate, to scrap the last remnants of the original sweetheart deal of
immunity for the tobacco industry. That was the sweetheart deal that
was in the proposed national settlement.
In theory, the tobacco industry will restrict its future advertising
in exchange for legal protections from past punitive damages and other
past and future damages. I reject this mirage of a deal because it will
evaporate in a court of law. Any affected industry that is or is not
part of the deal, such as a retailer or distributor or even a tobacco
company, might sue to block these restrictions as being in violation of
the first amendment.
Many advertising experts, including the head of the Federal Trade
Commission, predict such a suit will succeed in throwing out the
advertising restrictions as unconstitutional. In the end, Congress will
have been duped again by the tobacco industry. They will have given
unprecedented legal protections in exchange for empty promises. They
will have said, ``You guys fooled us before when you testified under
oath, but we know you have now found religion and you are going to be
fined this time and you haven't fooled us again.'' It reminds me of
Charlie Brown and the football: ``Don't worry, Charlie Brown, I won't
pull the ball out this time.'' And we see that, of course, every year.
Out goes the football, and flat on his back goes Charlie Brown.

Well, let's not do that to the people of this country. We have
learned a lot more about the industry's schemes. We have seen what
Attorney General Skip Humphrey in Minnesota has pried loose from the
hundreds of thousands of internal tobacco documents. Let's take a look
at some of this.
Let's look at some of these things that came out of Minnesota, the
released tobacco documents. Now, this is just marketing that is aimed
at children. Look at this one:

To ensure increased and longer-term growth of Camel Filter,
the brand must increase its share penetration among the 14-24
age group which represents tomorrow's cigarette business.

Mr. President, this is not a typographical error. They are talking
about how they will increase--not just to start people at 14 years old
but how they will increase the market among 14-year-olds.
Philip Morris starts off being a little bit more responsible by
saying:

Marlboro dominates in the 17--

But then we see--

and younger age category.

RJR ``Product Research Report'':

Salem King shows encouraging growth by posting a four point
gain in the 14-17 market.

You wonder if whoever wrote this about encouraging growth, do they
have children of their own? Do they have children of their own that
they would brag about that?
Or look at Brown & Williamson:

At the present rate a smoker in the 16-25 year age group
will soon be three times as important to Kool as a prospect
in any other broad age category.

Again, Mr. President, as a parent, I find this reprehensible. To them
this was just marketing, and is that the kind of conduct that we should
reward with unprecedented legal protection, that we should reward
people who target 14-year-olds? To use the language of the same 14-
year-olds, get real. We can't do it. If we grant immunity to this
special rogue industry, we have lost all our common sense.
But if we go with the bill as now written, we will establish an $8
billion annual cap on damages for tobacco claims. That is about $20,000
per family for the 400,000 Americans who die from tobacco-related
diseases each year. These are special provisions. They are unnecessary.
Why should the industry stop marketing to children? Why should they
stop manipulating nicotine? Why should they stop cutting health
research when they know this liability cannot exceed a certain amount?
If they know the liability is capped, then it just becomes a marketing
ploy.
Some might say, ``Well, they would not do that because they promised
us.'' This is like saying the check is in the mail, I gave at the
office, or a few other versions of that. Why should anybody trust them?
I do not. A liability cap eliminates the incentive for the tobacco
industry to change its corporate culture. It is kind of like having two
warehouses side by side and one has got locks on the doors and one
doesn't. And you have somebody who is inclined toward burglarizing a
place, and they say, ``Oh, I promised not to burgle those places.''
Well, they are not telling us the truth. We know which one they are
going to go into. They are going to go into the warehouse without the
lock. Let's put some locks on it.
I think, if you don't have the incentive of real liability facing
them, the promises they make to get the Congress off their backs today
are the promises that will be forgotten tomorrow. If big tobacco could
turn its liability exposure to fixed costs which they could pass on to
consumers and taxpayers, then they can keep on doing business as usual
without the risk of litigation.
How will the liability cap work? Will it reward today's plaintiffs at
the expense of future injured parties? Because most lawsuits settle, I
believe the tobacco industry will have a unique negotiating edge if
they have a liability cap. The industry will have every incentive to do
sweetheart deals with favorite plaintiffs--do that first, then use the
prospect of delayed payments in the future to force smaller
settlements. A payment delayed will result in justice denied for
thousands of tobacco victims.
I said earlier, each week, when I go back home, I don't have a lot of
my fellow Vermonters coming up to me and saying, ``Hey, Pat, give
immunity to the tobacco industry.'' We Vermonters are known for our
common sense. My fellow Vermonters are telling me that immunity for big
tobacco makes no sense. In fact, the Vermont legislature
overwhelmingly, Republicans and Democrats alike, passed a resolution
condemning any immunity for the tobacco industry in Federal
legislation. I think that is because the American people outside the
beltway understand that big tobacco does not deserve any special legal
protections.
I take seriously the admonition of Mississippi Attorney General
Michael Moore, whom I respect greatly, who told the Senate Judiciary
Committee last year that the proposed settlement

[[Page S5198]]

offers Congress a historic opportunity to seize the moment and protect
the health of future generations. But I believe that we can seize this
historic opportunity to curb teenage smoking without giving big tobacco
any special legal protection. Under our amendment, a State may resolve
its attorney general's suit or take on the tobacco industry in court,
as Minnesota did. It is up to the people of that State, instead of
Washington. That is the same approach used in the Conrad bill that has,
I think, 32 cosponsors.
I am confident in my State of Vermont, Attorney General William
Sorrell knows the facts in his lawsuit against big tobacco. He is going
to weigh the interest of Vermonters in deciding to opt out of the
bill's settlement provisions. As one Vermonter, I am perfectly willing
to put that decision in the hands of our elected officials in our
State.
Our approach puts the interests of the children ahead of the
interests of the tobacco lobby. The public health community agrees that
immunity for the tobacco industry makes no sense. The Advisory
Committee on Tobacco Policy and Public Health, headed by Drs. Koop and
Kessler, wrote to Congress:

We oppose granting the tobacco industry immunity against
liability for past, present or future misdeeds. Congress
should focus its efforts on public health, not on the
concessions the tobacco industry seeks.

I agree. I agree. Dr. Koop called a liability cap a huge corporate
giveaway. He is right. I agree. After all, the only reason we are
here--and it is really a credit to it--is our civil justice system. In
fact, without the use of class actions, without the likelihood of
punitive damage recoveries, we all know tobacco companies never would
have come to the negotiating table. So let's not change our successful
State-based tort system as it involves tobacco legislation. It has
served us well. After all, the same people who were in the picture I
showed earlier, raising their hands, swearing they will tell the truth,
the whole truth, nothing but the truth so help me--and I think they
were swearing on a tobacco leaf because now the Department of Justice
is currently investigating them for criminal conspiracy and perjury. I
would say, if I can move that metaphor a little bit further, strip away
the tobacco leaf and see what is hidden behind it. I am not going to
give legal immunity to the same people who appeared here and lied to
Congress while under oath.

Why in the world do we want to give big tobacco such legal
protections? Rely on common sense. Rely on the things I hear from my
fellow Vermonters as I am in the grocery stores back home. Rely on what
I hear, as I am walking down the street, from Vermonters of all
political persuasions. Rely on the common sense I hear from my
neighbors and friends of a lifetime back home. Then we will reject the
unprecedented legal protections for the tobacco industry, and we will
vote for the Gregg-Leahy amendment.
I believe it makes sense. I certainly find myself in total agreement
with what the distinguished Senator from New Hampshire, Mr. Gregg,
said. That is the way I feel about it.
I understand from earlier discussions with the distinguished leader
we may not vote on this today; we may vote on it tomorrow. But whenever
we do, think what is in the best interests of the country. Think what
is in the best interests of the people. And think, every Senator, how
you would answer this question when you go home if you are asked: Are
you willing to give immunity, even limited immunity, to the tobacco
companies or not? If you are not, then you vote for this amendment.
I yield the floor.
The PRESIDING OFFICER. The Senator from Massachusetts.
Mr. KERRY. Mr. President, I have listened very carefully to both of
the proponents of this measure, for both of whom I have respect. But I
must say this amendment is really not connected to the reality of what
is in this bill or the reality of what we are trying to achieve with
this bill. And I say that respectfully.
You might dub this amendment the ``kick the tobacco companies hard no
matter what the consequences'' amendment. This is the amendment if all
you want to do is hate the tobacco companies, all you want to do is
come here and show photographs of children or show us how terrible the
companies have been. Nobody is going to argue. We all know that. We
know the companies have lied. We know they have been egregious in their
behavior. We know they targeted young people in this country. We know
they have come to the Congress, raised their hands, and not told the
truth. We understand all of that.
The question is, What are we going to be able to achieve here in the
U.S. Senate in terms of conditioning their behavior, within the limits
of our Constitution, within the limits of our ability to do so. We have
heard the words said that the tobacco companies ``do not deserve
immunity.'' That is correct. They do not deserve immunity. And they are
not receiving immunity under this bill. There is no immunity. They are
liable. There are simply two choices as to how they are liable.
They can be liable by paying the annual payments that will now come
from the $1.10 that appears to be at least settled for the time being.
They will pay from that. And they will, in addition to that, have very,
very rigorous so-called look-back assessments. They will have to live
up to those look-back assessments. Where, if they do not achieve a
specific level of reducing smoking among teenagers, then they get hit
harder. They pay more. They pay more as an industry, up to $4 billion
on any year, and they pay more per child that is deemed not to be
meeting that level of reduction--$1,000.

That is a pretty steep penalty, $4 billion plus the assessment per
child if they don't meet the reduction levels; that is, if the
companies do not decide to be part of the solution. If all they do is
get assessed the $1.10 assessment, and all they do is meet the
standards of the look-back, they are subject to suit forever--forever.
There is no immunity. They are liable. They are liable--not even under
the cap. There is no cap under those circumstances. I ask my colleagues
to focus on that in this bill. This is a two-part bill. One part offers
the companies the opportunity to be part of the solution. Only if they
become part of the solution does there then apply a so-called cap on
annual payments.
Even if there is a cap on annual payments, there is no immunity;
there is no avoidance of liability. We heard my colleagues stand here
and say--let me quote it: ``The liability cap permits them to avoid
changing the corporate structure.''
Not true, Mr. President. The liability cap does not permit them to
change to avoid it. In fact, they only get a liability cap if they
agree to change the corporate structure. That is the way it works now.
The incentive of the cap is the commitment to change the corporate
structure. If they change the corporate structure by agreeing to live
by the FDA rules, by agreeing to live by the advertising restrictions,
by agreeing to a whole set of requirements, that is the only way they
qualify for the so-called cap.
The cap is annual. That is not immunity. That means they can be
charged up to $8 billion in the industry for every year on into the
future, and it is indexed, incidentally, for inflation. That is
immunity? That is why so many people are on the floor saying, ``Hey,
wait a minute, what are you folks doing in the U.S. Senate?'' because
there are some people here who think that is too tough.
The fact is, and I emphasize this again and again, there are two
choices for the companies: They can either take the assessment, be
assessed the $1.10 and have the look-back provisions hanging over their
heads and be sued and sued and sued by a State or an individual on into
the future, or they can decide they are going to sign up.
What are they going to sign up to? Each company will sign up to a
whole set of restrictions--FDA advertising restrictions, they would
make a substantial up-front payment, they would abide by the far
broader advertising restrictions that were in the June 1997 settlement,
they would create a document depository, and they would agree not to
challenge provisions in the bill and to abide by these provisions,
notwithstanding any future decision from the court on
constitutionality.
That is really critical, Mr. President. We are asking these companies
to do a whole bunch of things that we can't get them to do unless they
agree. We can't mandate that they give up their constitutional rights.
No matter what we

[[Page S5199]]

pass here, these companies have constitutional rights under the first
amendment. They have to come in and sign a consent decree and sign an
agreement, and they have to agree, among other things, that there will
be no billboards within 1,000 feet of a school; that all advertising
will be black and white text unless in adult-only stores; that all
advertising in the text must be in black and white, unless in magazines
with 15 percent or less youth readership; it prohibits the sale or
give-away of any products with tobacco logos; it prohibits brand name
sponsorship of sporting and entertainment events.
We can't do those things, unless the tobacco companies agree. What
they agree to is that they will do that. Even if the court decided
later that it is unconstitutional, they will abide by it. How are we
going to get them to do that? How are we possibly going to get these
tobacco companies to become part of the solution of keeping our kids
from doing things unless they agree to do it, and the fastest way to
keep them from agreeing to do it is to say to them, ``We're just going
to kick you around forever and forever, be subject to lawsuits forever
and forever'' and not offer some incentive to come on board.
I reiterate, that is not immunity, it is a deal. It is a deal just
like the attorney general of Minnesota made, the attorney general of
Mississippi and the attorney general of Florida. That is what happens
in the courtrooms of our country every single day. If you bring a
lawsuit, as 44 attorneys general have done, then you go to court. But
many of these cases come to some kind of settlement before they
ultimately go to a jury verdict.

I remind my colleagues, the Senator from New Hampshire and the
Senator from Vermont, in all of the years of bashing tobacco, in all of
the years of hating tobacco, in all of the years of summoning up these
speeches that whack them apart and say what they have done, not one
lawsuit has been won in a courtroom. Not one.
What my colleagues are suggesting is that somehow the country is
going to be better off by allowing that status quo to continue; that
all we are going to do is have a bunch of lawsuits rather than trying
to bring the companies into the process of helping to resolve this
issue.
Again I say, if you want to have a document depository which,
incidentally, helps people continue to sue and they are able to
continue to sue up to the level of the $8 billion per year, that is not
immunity. The best of my judgment is that is a limitation on the
exposure of immunity. It is a limitation on the degree to which you are
going to have to pay out in a given year, and that is precisely the
kind of certainty that the tobacco companies and the attorneys general
were trying to achieve in the agreement they came to last year.
Here we have in front of the U.S. Senate the opportunity to raise the
price and the opportunity to have very stiff look-back provisions that
will hang over the heads of the company. Let me just cite what those
are, Mr. President, if you don't think those aren't tough. There are
two look-back assessments. There is an industry-wide assessment and
there is an individual assessment.
Under the industry-wide assessment, the industry is going to have to
reduce youth smoking 15 percent in years 3 and 4, 30 percent in years 5
and 6, 50 percent in years 7 and 9, and 60 percent in years 10 and
beyond.
If the industry fails to meet these targets, then there will be a
graduated industry-wide assessment of the following amounts: $80
million per point for missing the goals by 1 to 5 percentage points,
$160 million per point for missing the goals by 6 to 9 percentage
points, and $240 million per point for missing the goals by 10 or more
percentage points.
The total industry assessment will be capped at $4 billion per year,
which is about 22 percentage points, and this will not be tax
deductible. If the industry fails to meet the youth smoking targets,
they will have to pay about 27 percent per pack. In addition to that,
there will be a company-specific amount of an assessment annually--
$1,000 for each child who uses tobacco beyond the youth smoking
reduction targets.
Mr. President, there is no way to suggest that that is immunity. You
can't be required to engage in that if you, in fact, have immunity. If
you have immunity, you walk away free. Immunity means you are not going
to be prosecuted. Immunity means you don't pay. Immunity means there is
no price. There is clear liability here and the liability, I think, is
serious.
A final comment I will make is that participating manufacturers--and
this is very important--must agree to comply with all of the provisions
in the act, including the provisions in look-back and in the annual
assessments. They must also agree not to bring any court challenges to
any provision in the act.
I ask the Senator from New Hampshire rhetorically, we can't get them
to agree not to go to court. They are already challenging the FDA rule.
They are clearly going to challenge the constitutionality of the look-
back provision. The only way we can get them to participate is by
offering something, and the something is that you are going to settle
the lawsuits and you are going to have the ability to give them
certainty as to how much their liability is on an annual basis.

Also, they will agree to abide by the provisions in the act,
including the annual payment in the look-back provision, even if a
third party challenges that provision and it is declared void by a
court.
I emphasize that. Even if a third party challenges it, the tobacco
companies that sign the protocol and agree to get the $8 billion
limitation on their annual liability will still have to agree to live
by it. If any of them break any component of this act, they have no cap
at all. They are subject to exactly what the Senator wants.
Here is the choice for the U.S. Senate: It is a choice of whether we
are going to have a piece of legislation that makes sense, that is
built on common sense, that tries to bring the companies into the fold,
that tries to create a solution for this problem, or you just come out
here and feel happier bashing the companies.
And I think the choice is very, very clear for the Senate. I think
the Senator from Arizona, and Senator Hollings, and the others who have
worked on this particular effort to create this structure have struck a
balance of that common sense and of a way of achieving the goals of the
Senate.
Several Senators addressed the Chair.
The PRESIDING OFFICER. The Senator from Arizona.
Mr. McCAIN. I will be brief, because I do not want to take the time
from the Senator from Alabama who is going to speak next.
So I just mention administratively that, after discussion with the
Senator from Massachusetts and with the majority leader, it would be
our intention to have either a tabling motion or an up-or-down vote on
this amendment and the second-degree amendment around 10 o'clock
tomorrow. It is my understanding that we will be in at about 9:30, and
that would give a half-hour tomorrow morning. So whether we have the
unanimous consent agreement or not, that would be the intention of the
Senator from Massachusetts and myself.
Second, the majority leader has asked me to announce that there will
be no further rollcall votes tonight.
I would like to say, and point out to my colleagues, that I have
heard all day today that some of my colleagues have felt that they have
not been able to speak on the bill. There are others who want to speak
on the amendment. I encourage you to come over. As I mentioned earlier,
the Senator from Massachusetts and I will remain here until such time
as everyone is heard both on the bill and on the amendment.
So finally, Mr. President, I just received a letter from the
President addressed to Senator Lott expressing President Clinton's
opposition to the Gregg-Leahy amendment. I ask unanimous consent that
that letter be printed in the Record.
There being no objection, the letter was ordered to be printed in the
Record, as follows:

The White House,

Washington, May 20, 1998.
Hon. Trent Lott,
Majority Leader, U.S. Senate,
Washington, DC.
Dear Mr. Leader: I applaud the Senate for taking up
comprehensive, bipartisan legislation to dramatically reduce
teen smoking.

[[Page S5200]]

Every day, 3000 teenagers start smoking regularly, and 1000
will die prematurely of smoking-related diseases as a result.
I urge the Senate to move swiftly to pass comprehensive
legislation that could save those children's lives.
Last September, and in my budget plan, I set forth five
principles for comprehensive tobacco legislation: Raising the
price of cigarettes by $1.10 a pack over 5 years with
additional surcharges on companies that continue to sell to
kids; affirming the FDA's full authority to regulate tobacco
products; getting companies out of the business of marketing
and selling tobacco to minors; promoting public health
research and public health goals; and protecting our tobacco
farmers and their communities.
I have made protecting tobacco farmers and farming
communities a top priority for this legislation, and I
believe Senator Ford's LEAF Act fully meets this standard. I
am deeply troubled by the Senate Leadership's recent attempt
to undermine protection for tobacco farmers and their
communities. I urge the Senate to work through this impasse
and ensure that small, family farmers are protected.
If that issue can be resolved to my satisfaction, the bill
before the Senate, as amended by Senator McCain's Manager's
Amendment, is a good, strong bill that will make a real dent
in teen smoking. Congress should pass it without delay.
I applaud Senator McCain and others in both parties who
have worked hard to strengthen this legislation. I am
particularly pleased that the bill contains significant
improvements which will help reduce youth smoking and protect
the public health:
Tough industry-wide and company-specific lookback
surcharges that will finally make reducing youth smoking the
tobacco companies' bottom line;
Protection for all Americans from the health hazards of
secondhand smoke;
No antitrust exemption for the tobacco industry;
Strong licensing and anti-smuggling provisions to prevent
the emergence of contraband markets and to prosecute
violators;
A dedicated fund to provide for a substantial increase in
health research funding, a demonstration to test promising
new cancer treatments, a nationwide counteradvertising
campaign to reduce youth smoking, effective state and local
programs in tobacco education, prevention, and cessation, law
enforcement efforts to prevent smuggling and crackdown on
retailers who sell tobacco products to children, assistance
for tobacco farmers and their communities, and funds for the
states to make additional efforts to promote public health
and protect children; and
The elimination of immunity for parent companies of tobacco
manufacturers, an increase in the cap on legal damages to $8
billion per year, and changes to ensure that the cap will be
available only to tobacco companies that change the way they
do business, by agreeing to accept sweeping restrictions on
advertising, continue making annual payments and lookback
surcharges even if those provisions are struck down, make
substantial progress toward meeting the youth smoking
reduction targets, prevent their top management from taking
part in any scheme to promote smuggling, and abide by the
terms of the legislation rather than challenging it in court.
Because the First Amendment limits what we can do to stop the
tobacco companies' harmful advertising practices--which lure
so many young people to start smoking--we can do far more to
achieve our goal of reducing youth smoking if the companies
cooperate instead of tying us up in court for decades. If a
cap that doesn't prevent anybody from suing the companies and
getting whatever damages a jury awards will get tobacco
companies to stop marketing cigarettes to kids, it is well
worth it for the American people. I, therefore, oppose the
Gregg Amendment to strike the liability cap.
I strongly support these improvements, and I urge the
Senate to pass this legislation without delay.
Sincerely,
Bill Clinton.

Mr. McCAIN. Mr. President, I yield the floor.
Mr. KERRY addressed the Chair.
The PRESIDING OFFICER. The Senator from Massachusetts.
Mr. KERRY. I know the Senator from Alabama has been waiting. I just
misspoke on one thing, and I want to, if I may, correct it, take 2
minutes, and then I will yield the floor.
When I talked about the things that the advertising is going to
require, that was the components of the FDA rule itself. I want to just
share with my colleagues how, by bringing the companies in, it goes way
beyond the FDA rule, because they would then be agreeing to have a ban
on human images, animal images, and cartoon characters. They would
agree to a ban on outdoor advertising, including stadia and mass
transit, they would agree to a ban on Internet ads accessible to
minors, and they would agree to severe restrictions on point-of-sale
advertising of tobacco products. All of those things are what you get
for having the companies agree to be part of the process.
The final comments I would make is, I began the process very much
feeling that there should not be sort of a restraint liability, in a
sense. When we sent this bill out of committee, there was a great deal
more restraint with respect to liability. And since the Commerce
Committee effort in putting the managers' amendment together, we have
taken out an extraordinary number of those restraints. I will not go
into detail now, but all of them were taken away, so that there was
considerable increased exposure of the companies, which is one of the
reasons why the companies are spending so much money now advertising
and trying to refocus America on what this bill is not. And I think
that is a critical thing for us to keep in mind.
I yield the floor.
The PRESIDING OFFICER. The Senator from Alabama.
Mr. KERRY. I thank my colleague for his courtesy.
Mr. SESSIONS. I thank the Senator from Massachusetts for summarizing
many of the very significant restrictions that will be placed on the
tobacco companies if they participate in the settlement.
But I really do believe, and can say with great confidence, that we
are not dealing with a question of immunity when an industry agrees to
pay $750--$70 billion in payments to subject itself to many other
controls and limitations. That is not immunity. And in fact, they have
agreed, in addition, to pay $8 billion into a fund that would be
available for individual liability lawsuits--each year, $8 billion. It
goes up according to the cost of living index.
So I just say, this is a remarkable settlement. And it reminds me of
the case in which the client sues and gets everything he wants but he
still wants to keep suing because he wants to get a drop of blood.
Now, let me say this. I am not a defender of tobacco. I do not take
any money from the tobacco industry. I believe it is a very damaging
product to people's health. I know that as certainty as I am able to
know anything. I oppose its use. I believe anything we can do
particularly to keep youngsters from getting involved in tobacco is
good, because it is more difficult for them to quit once they start,
and they become addicted quicker at a younger age. It is a very
insidious product, and we ought not to do anything that would undermine
our effort, that I think has bipartisan support, to deal with smoking
in America.
Let me talk about this subject on a broader basis. And I think our
Members ought to consider this on both sides of the aisle. It is above
partisan politics. In my view, the law is too much with us late and
soon. We have too much litigation. Courts are clogged all over America
with more and more lawsuits every day. People cannot get speedy
justice. Cases are backed up. Costs have increased. And it is not a
pretty sight.
As policy-setting Members of this Government of the United States, it
ought to be our goal to reduce that litigation, to do what we can to
obtain justice in ways that do not require citizens of this country to
expend extraordinary sums of money over long periods of time for only
modest gain at the end of it. That is a principle in which I believe
deeply.
I have been a practicing lawyer all my career. I served as a U.S.
attorney for almost 12 years, and I practiced law in private practice.
Let me just mention the asbestos litigation situation. Asbestos
caused a number of different diseases that have resulted in large
payments by the asbestos companies. This was handled, in the normal
litigation of America, in the torts lawsuits that have been filed. Over
200,000 of those lawsuits have been filed and concluded, 200,000 more
are pending, and it is estimated there may be another 200,000 filed.
Now think about that. That is 600,000 lawsuits, perhaps more, having
to wind their way through the court system, with lawyers, and fees, and
costs, and expenses. According to testimony we had before the Judiciary
Committee by one expert who studied this matter, less than 40 percent
of the money paid by these asbestos companies actually got to the
victims, the people who were suffering disease because of their
exposure to asbestos. Just think about that. Less than 40 percent of
the money they

[[Page S5201]]

paid actually got to the victims of asbestos disease.
I think that is unacceptable. That is an unjustifiable event. It does
not reflect credit on the legal system, and it does not, even more so,
reflect credit on the Congress and the Senate of the United States,
because we should have legislation that can deal with that in a more
efficient way.
So I just say, I am troubled by the prospect that we will allow
litigation to spring up all over America, that we can have a fund there
to pay it, that we will have not 200,000 smoking suits, as they had in
asbestos, but perhaps 500,000, 800,000, a million, several million
lawsuits filed--tens of hundreds, maybe thousands in every community in
America, large and small, where lawsuits will be filed, clogging the
dockets of the courts, taking up weeks to try, and incurring great
expense. It seems to me we can do better than that. I am certain that
we can do better than that.
What happens when a lawsuit of this nature is filed? And I have to
agree with Senator Gregg from New Hampshire: This bill is not effective
in what it intends to do. It needs to be amended. And Senator Jeffords
from Vermont and I will be introducing legislation on this bill, an
amendment, that will distribute moneys that are paid in a fair and
equitable manner, with the minimum of cost and the quickest possible
turnaround time, so the people who are ill can receive compensation
which they deserve, receive it quickly, without even having a lawyer.

Under the court system approach, just turning over tobacco lawsuits
to litigation throughout America, we are talking about individuals
having to hire attorneys. The Wall Street Journal has already noted
that attorneys--I believe, in Detroit or Chicago--are advertising for
tobacco clients now. They are already advertising for clients so they
can file lawsuits. Traditionally, they will charge at least one-third,
probably more of them will charge 40 percent of the recovery on a
contingent fee basis. That means 40 percent of the money paid out by
the tobacco company won't go to the victim, but will go to the
attorneys. In addition to that, there will have to be trials, court
costs, jury costs, deposition costs, medical costs, expert witness
costs, and great delays.
Before you can get any money out of this bill, you have to have a
final judgment. Normally that would mean a judgment by the supreme
court of the State, which may be 2 years or more in the offing. The
result of that, I suggest, for people who are suffering from lung
cancer is that many of them, unfortunately, would not live to see any
recovery.
The Senator from New Hampshire is also correct that it appears under
this bill the tobacco companies decide who gets paid. I don't know how
that came about, but it indicates they pay whoever they want to pay and
that counts toward their payment into this fund. That is not a rational
way to see that injured people get paid. They should not be required to
do that. It will also cause a race to the courthouse because you don't
get any money until you have a final affirmance of your judgment, and
only then can you come to the tobacco company and get your payment.
We should not be put in a situation in which two equally deserving
claimants have filed a lawsuit and one wins and he has a fast court
system and he gets into the fund and gets his money first and another
one takes a long time before he ever gets his final judgment, before he
gets money. We are creating a system that will be aberrational.
It will be aberrational in a number of other ways. Some States will
be favorable to these kind of lawsuits. Some States will not. Maryland
has already changed its law to make lawsuits against tobacco companies
easier to file. Other States may do that. Traditional defenses such as
assumption of the risk and contributory negligence may be vitiated by
legislation or court rulings, and lawsuits will move faster and more
successfully in one State, whereas another State that adheres to
traditional rules of law may not allow cases to move forward at all. It
may be unsuccessful wholly in one State. Indeed, we could have one or
more States virtually bankrupting the tobacco industry themselves if
they were to have unfettered litigation cases of this kind.
As a person who has practiced law for a long time, who has been in
court on a consistent basis, I can tell you that the prospect of
hundreds of thousands, maybe a million tobacco lawsuits being filed,
burdening the judges and courts to a degree they have never known
before is not a good thing. The taxpayers pay for that. Some will say
it is a free-market deal. Just let people file their lawsuits and the
government is not involved in it. The courts are the government. Courts
are the government. The taxpayers are paying for the judges, the
jurors, the clerks, the court reporters and everybody that manages a
courtroom, and the courtrooms in which these cases are tried. The
taxpayers are intimately involved in that.
We can do a lot better than this. I just say we cannot allow a repeat
of the asbestos litigation situation. We cannot, as Members of this
body, allow a situation to occur in which less than 40 percent of the
money paid out actually gets to the people who are victims of the
crime. They will say, well, in this bill they have arbitration over
attorney's fees. I have heard that. So I have gone back and read the
legislation. This is the arbitration: If you are unhappy with the
agreement you have with your attorney, you can go to an arbitrator.
The attorney gets to name one member of the panel, you get to name one,
and those two select a third. But if you have a standard agreement with
them on a one-third or 40 percent contingent fee basis, 40 percent of
what you recover goes to the lawyer if you have that kind of an
agreement. That is what the arbitrators are going to affirm. They are
not going to undercut written contracts between attorneys and clients
the way this thing is written.

So there is no protection here to substantial fees being paid to
attorneys in all of these cases. We know it will take years for them to
be concluded. There will be a race to the courthouse to get judgment.
Some States will allow suits to proceed. Others will not. Some people
will draw a favorable jury, win a big verdict, $100 million; somebody
else will have a jury that is more conservative and renders no verdict,
zero verdict. This is not the way we ought to do it.
On this legislation, we begin the process of establishing a sane and
rational method of distributing the funds that ought to go to those who
have been injured by tobacco. However, the problem with it is it does
not go nearly far enough. This is a classic mass tort situation. The
greatest mass tort situation, perhaps, in the history of mankind in
which millions of Americans have smoked for a long time and they have
hurt and damaged their health because of it, and as a result of that
they now want to seek compensation.
First, let me say something. I have to be very frank. No individual
person has succeeded in a lawsuit against a tobacco company, primarily
because of the traditional rules of law that say if you undertake a
dangerous activity and you are injured in that, you cannot sue somebody
and ask for compensation because of it. The way this bill is written, I
believe the likelihood is we will have more States like Maryland
amending their law, more pressure on judges and juries to get around
the traditional defenses to these kind of activities, which is somewhat
dangerous, because what about the liquor companies and cirrhosis of the
liver or other kinds of diseases that come from other kinds of
products. Is there no barrier to that anymore?
I will say we have a major mass tort situation. We ought to deal with
it in a comprehensive manner. We should not allow an unfettered lawsuit
flood to dominate the American court system, resulting in some people
winning large verdicts, others getting nothing, delay, people dying
before they have any recovery.
Senator Jeffords and I will be introducing a bill that will say if
you have a serious disease and have been disabled because of your
smoking, you can file a claim and within 90 days you can be paid. You
will not even have to have an attorney. We will limit the cost to 10
percent and we will dispense the moneys based on the seriousness of
your disease, the seriousness of your disability and whether or not it
is connected to smoking. That is the kind of thing we can do. We can
use this money that the tobacco companies in this litigation demand
that they pay--

[[Page S5202]]

$8 billion a year--and we can use that to compensate in a prompt and
fair way those who have been injured. To do otherwise is just not a
good way to do business. It will enrich lawyers, it will burden the
courts, and it will guarantee an irrational distribution of funds to
those who have been injured and minimize the amount of money actually
getting to those who deserve to be compensated.
I will say that I do believe that this amendment should not be
passed, that the payment of $755 billion, the agreement to give up
certain constitutional rights such as free speech and advertising is
the kind of settlement that is justifiable and proper under the
circumstances. We would make a historic step forward for America if we
can develop a way to ensure that those who are injured in a mass
injury-type situation such as this are compensated in a realistic and
prompt way. I believe we can do that. For these reasons, I must ask my
fellow Senators to vote no on the Gregg amendment.
I yield the floor.
The PRESIDING OFFICER. The Senator from California.
Mrs. FEINSTEIN. Mr. President, I come to the floor to make a general
statement about the legislation.
Let me say this to begin with: I am very concerned by the speed with
which this bill has come to the floor. It has really foreclosed any
real financial analysis--no joint tax figures that are adequate, no CRS
analysis, no CBO study.
For me, who represents California, there is a certain irony in
passing a bill under these conditions. That irony is what we do that we
believe is right for people may turn out to be very harmful for those
very people. And I want to say what I mean by this. I want us to pass a
good bill. What is a good bill? It is one that deters smoking; it
doesn't create a huge black market; it is constitutional; it would give
the FDA full authority to regulate the contents of nicotine; it would
prohibit all advertising, which to me is very important, not the kind
of crimped regulations, but a prohibition on all advertising; and it
would have some strong antismuggling provisions, both domestic and
international.

We have heard Senators state the facts. Forty million Americans smoke
today. Most of them are addicted. I don't think we have heard the
California facts. Earlier, I was listening to the distinguished Senator
from Nebraska say he was speaking on behalf of 1.6 million Nebraskans.
My goodness, in California alone, three times the population of the
State of Nebraska smokes. We have 4.6 million smokers in California who
are adults; that is, 19 percent of the population of the State of
California smokes. You can figure how many of those people you believe
are truly addicted, who would like to quit but can't.
Ten percent of our youngsters smoke; that is, 890,000 young people in
California smoke. Let me give you a really chilling figure. One out of
every four high school senior is addicted to nicotine. One out of every
four high school senior in the largest State in the Union is addicted
to nicotine. That is why I say an express prohibition on all
advertising is important to the success of any antismoking effort.
Mr. President, 1.8 billion packs of cigarettes are sold in California
each year. On a per capita basis, 54 packs of cigarettes are consumed
in California each year by every man, woman, and child in the State.
And there are more than 32 million of us in that State. We already have
a 37-cent State tax. We have a 24-cent Federal tax. And on the ballot
in November is an initiative placed there by Rob Reiner, which would
put on 50 cents additional. So we will be over a dollar in tobacco
taxes in the State of California before this body and the other body do
anything at all.
In California, 300 young people under the age of 18 begin smoking
daily. We all know the health consequences. Just yesterday, my closest
and oldest friend called. She had just been diagnosed with lung cancer.
She quit smoking 30 years ago. Just the day before, I learned of the
husband of a very close friend of mine who just had a tumor, stage 4,
the size of a softball diagnosed in his lungs. So we all see this
happening to us every day. A good friend of mine just died from lung
cancer --a lifetime smoker.
The hard part is not that we don't want to do something, but whether
what we do is right. What really will turn around the teenage trap of
smoking and addiction? What is the right balance of penalties,
pressures, regulations, and health research for the next 25 years? If
the goal of this legislation is to reduce and limit youth smoking, and
not just creating a spending bill, we must address the link between
price of cigarette packs, the ratcheting down of nicotine, if the FDA
has full regulatory authority, a black market, and the availability of
cigarettes to children. We need to make certain that we don't increase
the price of cigarettes so high that it becomes lucrative for smugglers
and for organized crime to become involved in cigarette smuggling so
that, like cocaine, cheap black-market cigarettes will be available on
street corners in cities all over our country.
Mr. President, there is already a black market in California. It is a
substantial black market, and it is based on just the taxes I have
mentioned so far--a 37-cent State tax and a 24-cent Federal tax. The
State estimates they lose between $20 million and $50 million a year in
revenues.
We have all heard in the Judiciary Committee commentary that when the
per-pack price increases beyond $3.60 to $4 a pack--this takes into
consideration what the public health people said could be added to a
pack--about $2--and what the industry analysts said, anything over $3
to $3.50--at that point we would create a black market in this country,
unmatched by what happened in Canada in the 1980s.

I believe that, as I understand the McCain bill, within 5 years in
the State of California, with the item on the ballot, you will have a
black market in cigarettes unmatched by anything in history. According
to an independent industry analyst, the price per pack in 1997 dollar
terms, under the Commerce bill, would be $4.61. In California, with
what is on the ballot in June, that will make it $5 a pack. If you
include inflation, the McCain legislation would be $4.61, and that
becomes $5.11 if you add the 50 cents that is on the ballot in my State
in November. That is above anything that anyone has said would be the
trigger point to create a black market in the State. This is a 25-year
prospect, so the numbers only go up from there.
At the Judiciary Committee hearing 2 weeks ago, John Hugh, the senior
assistant attorney general of the State of Washington stated:

As tax rates have risen generally across the United States,
a new trend is emerging. Increasingly, tobacco products
manufactured outside the United States are being smuggled
into the United States and are sold on the contraband market.
In 1988, California increased its tobacco tax from 18 percent
to 35 percent per pack. Today, the contraband market is
estimated to be between 17 and 23 percent of the cigarettes
sold.

The impact of cigarette smuggling is enormous for this country and
most particularly for my State. First, there is, obviously, the loss of
State excise tax revenues, which I said were $20 million to $50 million
annually now.
Second, we have no control over the safety of cigarettes that are
smuggled in from overseas. For example, tobacco from China is much
harsher, and the cigarettes are much more carcinogenic. And that is a
very likely contraband potential black market today. Even though all 50
States have laws prohibiting the sale of tobacco to people under 18,
Federal sting operations show that four in ten teen smokers nationwide
today succeed in evading such laws.
Individuals, including teens, find ways to buy available cheaper
cigarettes. In Canada, when they increased tobacco prices by 150
percent in the 1980s, it is estimated that 40 percent of the cigarettes
in Canada may have been contraband U.S. cigarettes, where a carton of
Canadian cigarettes was $37 compared to $14 for U.S. cigarettes.
We also heard testimony about how a smugglers' ally developed in an
area between Cornwall, ON, and Messina, NY, the epicenter of the
Canadian contraband cigarette crisis.
It goes on and on and on with testimony.
There is a very real probability that within 5 years in California
there will be a major black market, if the McCain's per pack tax plus
what happens on the ballot in California in June all go into law.
With almost 890,000 youngsters smoking, with one out of every four
high

[[Page S5203]]

school seniors addicted to nicotine, what prospects do we have, then,
of really reducing teenage smoking unless we can get full regulatory
FDA authority, and unless we can prohibit all advertising, which I
don't believe we will be able to constitutionally do unless the tobacco
companies will agree to ban all advertising. To me, a ban of all
advertising is really going to be important if we want to help
youngsters to not smoke.
Let me tell you two things about the McCain bill that I cannot live
with.
I will shortly be introducing an amendment, along with Senators Boxer
and Durbin, to cure an injustice in the McCain bill's treatment of
local government. As presently drafted, the bill would wipe out the
suits that several local governments have filed against the tobacco
industry without providing a dime of compensation. That is simply
unfair. The McCain bill currently would prevent local governments from
sharing in any of the settlement funds now being provided for in the
United States. San Francisco was the first local government to sue. It
sued in June of 1996. The suit was joined in by 17 other California
cities and counties representing over half of the population of the
State of California. Local governments in three other States have also
sued the tobacco industry. New York City; Erie County, NY; Cook County,
IL; the City of Birmingham, AL; and Los Angeles County brought their
own suits. These local governments have been litigating against the
tobacco industry for 2 years. As a matter of fact, it was the
California cities and counties which resolved the Joe Camel case in
California. And as a result of that case R.J. Reynolds agreed to pull
the infamous Joe Camel campaign. R.J. Reynolds was required to disclose
its confidential marketing documents. The release of those documents
was front-page news across the country.
The California county lawsuit is set for trial early next year. In
the absence of Federal legislation, the California counties and other
local governments would expect to recover appropriate compensation as a
result of the trial or the settlement of these cases. The legislation
coming out of the Commerce Committee jettisoned all of these suits.
That is my first major point of a grievance with the McCain
legislation, in addition to it moving so fast and the cost such that I
believe it creates a major black market.
The second objection is that the formula for distribution in the
State disadvantages 26 States because it is based on an agreement among
the Attorney Generals and not on general population census figures. For
example, in California, if you use the population percentage as a
formula mix, what happens is California's share of revenues is
increased 4 percent. And that is 9 percent to 12 percent, and that is a
third net additional cost for 26 other States to which we have sent a
Dear Colleague letter out today letting them know about this.

It is no secret that I have been working with the distinguished
chairman of the Senate Judiciary Committee, the distinguished Senator
from Utah, on a bill that might well avoid some of these problems--
avoid the black market for California, cover local suits and county
suits, provide a formula which is really based on what we are trying to
do, which is to stop youth smoking, and it makes sense in many other
ways.
Particularly, let me stress again that unless whatever we do here has
some encouragement for the tobacco industry to agree not to advertise,
the only prohibition we can probably impose, or perhaps--I say
perhaps--some of those in the FDA rules, and even that will be
litigated and even that will hold up the legislation probably for 5 to
10 years.
I notice the distinguished Senator from Utah is on the floor. I
wonder if I might ask him this question. I have had the privilege of
serving with him on the Judiciary Committee for 5\1/2\ years now. I
regard him as a strong and positive constitutional expert.
Based on what the Senator from Utah knows of the Commerce Committee
bill, does the Senator believe it will be contested in court, and does
he believe that it will withstand a constitutional test?
Mr. HATCH. I thank the distinguished Senator for her kind remarks. I
have listened very carefully to her.
There is no question in my mind--not only from my own personal
evaluation and study of these issues, but also from conferring with the
top constitutional experts in the country, that both the original
Commerce bill and the managers' amendment we are now discussing, are
unconstitutional in scope and intent. This is especially true with
regard to the FDA provisions where it would appear that the advertising
restrictions are too broadly conceived to be enforced. Both Larry
Tribe, a constitutional expert on the left, and Robert Bork a renowned
scholar on the right, have concluded these provisions are problematic
and raise constitutional concerns.
With regard to any other advertising ban, as embodied in the new
title XIV of this managers' amendment, the only way they can go into
effect will be if the tobacco companies actually voluntarily consent to
these restrictions on advertising. As the distinguished Senator knows,
they have not voluntarily consented. Far from it.
The companies have said they will fight this bill. This means that if
the McCain bill passes in its current form, and thus there is no
voluntary consent to the advertising provisions, we will have up to at
least 10 years of litigation. During that time, we face the possibility
of having no money for our stated purpose of helping reduce youth
smoking, no money for smoking cessation, nor for any of the other
stated purposes such as biomedical research, settling the state suits,
and farmer transition payments.
And at the end of 10 years, it will be entirely likely that the
tobacco companies will have won their suits because of the
constitutional infirmities within this bill.
I am just talking about advertising.
Then we go to the look-back provisions. There are at least two major
constitutional problems with the look-back provisions as written in
this bill.
One is that they are going to punish these companies even though they
don't show fault on the part of the companies when the projected youth
smoking reduction targets are not attained.
The constitutional experts have said that may constitute a bill of
attainder which is expressly prohibited by the Constitution.
There are other constitutional infirmities with regard to the look-
back provisions. So it doesn't take anybody on the side of tobacco
companies 3 minutes to know that if they face the Commerce bill, in
which they had no part in drafting, during which they were not even
allowed to provide input, for which they gave no consent to waive their
constitutional rights, then it is a lot cheaper for them to litigate
the matter with a good prospect of winning than to pay over $800
billion in the next 25 years.
I might add just parenthetically that by some estimates there could
be 1 million young children whose lives will be cut short prematurely
because Congress has failed to write a constitutionally sound bill.
So the Senator raises very important issues; she raises very
important considerations here and very important criticisms of this
particular piece of legislation.
It really bothers me that many in this body are rushing to ``pile
on'' this legislation without trying to bring the tobacco companies
onboard, albeit screaming and kicking.
Let me state for the record. I have no respect whatsoever for the
tobacco companies.
I think that their record shows clearly they have lied to the
American people for decades. They knew their products were addictive.
They knew they caused cancer. They deliberately marketed their products
to young children, and then denied it.
I would like nothing more than for them to pay a trillion dollars a
year.
But what I would like even more is for us to endorse a workable,
constitutionally-sound new War on Tobacco, and we are not going to do
it by writing a bill which fails the constitutional test. Such an
approach is destined for failure.
I remember clearly when Mississippi Attorney General Mike Moore
testified before our committee, not once, but twice. He related that
the attorneys general knew all these evil things about the tobacco
companies when they were negotiating the settlement

[[Page S5204]]

last year, they waded through all the relevant documents, and they
concluded that the far greater goal was to help a generation of youth
from becoming addicted to tobacco than to continue to focus on the
companies misdeeds.
If the companies broke the law, if anyone in the companies broke any
law, they should be punished to the fullest extent possible. Nothing
here would preclude that. Nor should it.
But I get upset when some suggest that we can help children by
thinking up literally every measure we can to punish the tobacco
companies and then loading them into one constitutionally-infirm bill.
It seems to me it is possible to punish the companies, but at the
same time compel them to underwrite financially a new public health
program that can do future generations more good than anything we have
ever envisioned. We simply can't develop that comprehensive public
health approach without the industry's consent, again, however
reluctant.
I can go on and on. Tomorrow, I plan to go into greater detail on the
constitutional infirmities of both the original Commerce Committee
bill, which everybody knew was just a vehicle for amendment, and the
bill as now amended with the managers' amendment, which is just as bad
as the original Commerce bill with regard to constitutional concerns.
So I thank the distinguished Senator from California for bringing
this out. I also appreciate her working with me to try to resolve these
difficulties. And, as my dear friend from California knows, the
original settlement on June 20 of last year was for $368.5 billion.
All of us gasped for breath when we heard that. We thought, ``Why in
the world would the tobacco companies agree to pay $368.5 billion?''
The reason is because they want some limits of liability, even though
they will still have abundant liability; they want some finality to the
litigation that they face, a predictability that will allow them to
make the large payments we envision to underwrite the new public health
program we are trying to develop.
And so, if we take away even the few aspects of limited liability
that are there, there is no chance at all of ever getting the tobacco
companies to come on even a modest bill.
I thank the distinguished Senator from California for being willing
to help cosponsor the bill that we are working on that would require
$428.5 billion in payments over 25 years, or $60 billion more than the
June 20, 1997 settlement.
I believe that if we can limit it to somewhere between $400 billion
and $430 billion, and if we can include reasonable limited liability
provisions for the companies--limited liability provisions that
restrict class actions but do not stop individuals from suing--than I
am hopeful we can get the companies to come back on board.
I am not sure if this is possible, but I think we ought to try, or
the whole program will be lost. And if we get them back on, then this
whole matter can work and work to the best interests of children and
society as a whole.
So I thank my colleague for being willing to work together on this
and, of course, for bringing up the points she is raising here today. I
hope that at least cursorily answers her questions, and I will be glad
to go into much greater detail later.
Mrs. FEINSTEIN. I thank the Senator for that excellent answer and the
discussion of the constitutional infirmities and what is apt to happen
in the litigation which would really hold up a remedy for smokers,
probably for 10 years.
I would like to ask another question. Is it not correct, I ask the
Senator, that you also are a member of the Finance Committee in
addition to being chairman of the Judiciary Committee?
Mr. HATCH. In response to my colleague from California, it is
correct. I am a member of the Finance Committee and, of course, on that
committee voted against the $1.50 increase at the manufacturers level,
not because I would not like to punish the tobacco companies, but
because that amount is excessive and in the process will not lead to a
bill which can stop youth tobacco use.
Mrs. FEINSTEIN. I have been troubled by the absence of sound
analytical data. I just sent my staff to the Joint Tax Committee, and
as of May 18, there is a small report which shows the distributional
effects of S. 1415 as reported by the Senate committee, but that is
just the distribution of how the taxes would fall on the income groups.
To the Senator's knowledge, is there any sound analysis by a
governmental entity such as CRS, CBO, or Joint Tax on the actual per-
pack costs of this bill out 25 years?
Mr. HATCH. As the Senator knows, we held extensive hearings on this
issue in the Judiciary Committee. The Treasury Department sent up
Deputy Secretary Larry Summers, who gave us a five-line piece of paper
as the basis for their analysis. When we asked him about whether they
had a model, he wasn't able to respond very carefully.
There is apparently not much of a model backing up the Treasury
Department's assertions in this area. But, on the other hand, we had
three of the top analysts from Wall Street who spend all of their time
working on tobacco-related issues trying to be able to be accurate in
informing their customers, and they had extensive economic modeling
done that showed the retail cost per pack of tobacco under the $1.10
bill that we have before us would be somewhere between, as I recall,
$4.50 and $5.50 per pack. And if that is so, then the distinguished
Senator's concerns about the black market are certainly legitimate and
justified.
I might add that the Finance Committee last week did not view it as a
precedent for the future. But I cannot believe that it is good for the
Finance Committee, good for the full Senate, and good for the American
people to consider what one Wall Street analyst has projected to be an
$861 billion program without the Finance Committee having a meaningful
opportunity to study the Treasury Department's estimates of the costs
of the program.
As chairman of the Judiciary Committee, I tried to get a full
explanation of the Treasury model before a hearing that we held on
April 30.
But, the administration failed to provide us with their model
together with a full explanation of their assumptions. And what I can
only conclude from that is they did not have a model; perhaps they were
just hypothesizing. I hope this is not so.
Late the night before the hearing, I succeeded in getting only a one-
page summary table that some Treasury and White House staff insisted on
calling a model.
Let me just say that I hope we could all agree we should not launch a
huge new, multi-billion Federal program, with such far-ranging
implications, on the strength of a one-page chart.
It is also important for me to note that many Wall Street analysts
have been calling for a full explanation of the Treasury projections
for a few months. Several Wall Street experts have participated in
meetings with administration officials and Commerce Committee staff and
explained their own models and their own assumptions so this should
have been a very open process.
In fairness to the Treasury Department, I must say that finally, late
on May 12, but only after our hearing that same day where two financial
analysts testified--and this was 2 weeks after our hearing in which
Deputy Secretary Summers testified--Treasury did provide our Committee
with an additional 11 pages of information.
For the record, I must note that this still is not everything I have
asked them for. For example, Treasury s one-page summary table that
they insist on calling a model assumes a 23 percent reduction in
cigarette sales from 1998 to 2003, based upon a semilogarithmic demand
function with an initial elasticity of minus 0.45.
I might not know the difference between a semilogarithmic function
and a hole in the ground, but there are experts who know how to assess
this information. These experts deserve a chance to analyze this data
on something this important. And the fact is, on the evening of April
28, Treasury and the White House staff said they would send over the
formula for this function, that they would send it right over.
At this meeting, it was explained to my staff that this function
gradually reduced the price elasticity as the price climbed. Frankly,
this makes sense, because you would expect that as price goes up, there
would be fewer

[[Page S5205]]

and fewer people left who are willing to pay the higher and higher
prices.
But the administration officials also said that in year 5, for some
statistical reason, the Treasury elasticity function would actually
increase, under the Commerce bill assumptions.
So, while they are saying that as a general matter the elasticity
would get slightly lower as price climbed, they were also saying that
in year 5, at least, this elasticity would actually grow higher.
You can see why anyone would want to study the underlying assumptions
for these conclusions very carefully, since elasticity of demand--that
is, the responsiveness of individual consumption due to an increase in
price--is so important to the writing of this law.
Our debate on the floor over the Kennedy amendment calling for a
price increase of $1.50 per pack centered on this price elasticity
issue. But the formula that was going to come right over from the
Treasury never came on April 28, as they said it would.
At the April 30 hearing, I renewed this request by asking Deputy
Secretary Summers to provide this information with the details of the
so-called Treasury model. And, as I said earlier, the Treasury
Department did finally send us additional information after our hearing
on May 12, but we are still waiting for their semilogarithmic demand
function.
I have no reason to believe there is anything magical about this
information and cannot imagine why it has not been provided. Certainly,
it is not like I am asking for some sensitive top-secret security
information.

We are asking for information to help us understand how to write
properly a bill that is being touted as having a $516 billion revenue
impact, but in reality which is probably $861 billion, according to
those who have developed full, detailed models with assumptions which
they are willing to make public in at least two open hearings.
So, I have to say the testimony we heard from these financial
analysts just completely blows away the Treasury Department testimony
that was given, and certainly the 1-page so-called model that they
presented to the Committee, and even the 11 additional pages that they
gave us which really weren't very helpful.
And I have to say I take exception about remarks made hear earlier
today suggesting that these financial analysts had a vested interest in
killing the McCain legislation because it would help their investors.
We did, in fact, discuss this issue with the analysts at our recent
hearing. They advised the Committee, and I believe they had no reason
to mislead us, that their only vested interest was in providing
accurate information to their clients. They have both recommended
buying and selling tobacco stocks, depending on the company and the
time.
The companies they represent do not own tobacco stocks, as was
alleged here earlier, at least not in the traditional sense. It is
clear that they may hold tobacco stocks for their clients who have
purchased them, just as they hold stocks in a myriad of publicly-traded
companies, but it is hard to argue that this is ownership of those
stocks.
That was a little lengthy, but I don't know how else to explain it.
Mrs. FEINSTEIN. I thank the Senator. I think that was an excellent
explanation, if we all understood it. I don't know a lot about
logarithms. I do know about per-pack cost. And I do know we have 5
million smokers, and almost a million juvenile smokers, in the State of
California. And I do know that by all the testimony we had in the
Judiciary Committee, Senator Hatch, that if the price in 5 years is
over $5 a pack, we have a whopping black market on our hands.
Would you agree with that?
Mr. HATCH. There is no question in my mind about it. If we pass this
legislation the way it is currently written, we are going to have a
black market like you have never seen before.
When Canada raised its taxes so dramatically, they found this to be
the case. Remember the mayor of Cornwall, Canada----
Mrs. FEINSTEIN. Yes.
Mr. HATCH. Who came in and testified about how they threatened him,
his life, his family's life, how the city become inundated in organized
crime, until they finally had to reduce the size of the excise tax in
order to prevent further black marketeering?
Remember how he told us his family had to be removed to a safe house?
How ordinary citizens could not even go out at night because they were
afraid of random gunfire?
The distinguished Senator from Massachusetts also showed a chart here
today----
Mr. McCAIN. Mr. President, regular order here.
Mr. HATCH. That only went up to 1991.
Mrs. FEINSTEIN. Mr. President, I believe I asked----
The PRESIDING OFFICER. Regular order is the Senator from California
has the floor. She has yielded for a question to Senator Hatch.
Mr. HATCH. I am trying to answer that question.
Mrs. FEINSTEIN. Yes, I am asking the chairman----
MR. McCAIN. Further parliamentary inquiry. Will the Parliamentarian
describe the procedures here in the Senate called for as a result of a
question, and that the Senate is not supposed to be abused by long,
lengthy discussion of a question. This is clearly what is going on. It
is not in keeping with the spirit of the Senate. There is another
speaker waiting to speak, and that is why I am concerned about it.
Otherwise, I would not care.

I ask a parliamentary inquiry, to describe the procedures of the
Senate in this case.
The PRESIDING OFFICER. The Senator who has the floor may yield for a
question. And the precedent prohibits statements in the guise of a
question.
Mr. McCAIN. Would the Chair repeat that, please?
The PRESIDING OFFICER. Under the precedents, statements in the guise
of a question are not permitted.
Mr. McCAIN. Statements in the guise of a question are not permitted.
I thank the President. I made my point. If the Senators want to
continue to abuse it, that is fine.
Mrs. FEINSTEIN. And I would make my point to the Senator in return. I
have asked no question in the guise of a statement. I believe, if you
read the Record, the Record will reflect that. I have asked a question.
Mr. McCAIN. It is very clear what is going on.
Mr. HATCH. Mr. President, could I ask the distinguished Senator from
California a question? Do I have the right to do that, under the
parliamentary rules here today? If she will----
The PRESIDING OFFICER. The Senator from California has the floor--
Mr. HATCH. May I ask her a question?
The PRESIDING OFFICER. And the Senator from Utah may ask her a
question if she permits it.
Mr. HATCH. I think that is what I will do, because it seems to me
that some of the people around here are afraid to get the facts on this
matter.
And I have to say that it is highly offensive to have someone come
here and suggest that the distinguished Senator from California and I
are not trying to get to the bottom of the facts, especially since the
facts are so complex here.
So I will ask the distinguished Senator from California, isn't it
true that you are trying to get to the facts of this matter? Is that
right?
Mrs. FEINSTEIN. Yes. It is true.
Mr. HATCH. May I also ask the Senator from California, are you aware
of the fact that we have had extensive testimony on this very issue
before our Judiciary Committee? I hope this question is fair. I hope
that I will be permitted to ask it, under the Senate rules. I surely
hope that the manager of the bill will recognize we are going to abide
by the rules, if he wants to be a stickler on them. Is it not true that
we have had literally hours of testimony on this very issue?
Mrs. FEINSTEIN. Yes, it is true. And I believe I was present at most
of the hearings on this subject in the Judiciary Committee.
Mr. HATCH. And I would like to ask, isn't it true that the
distinguished Senator from California heard the testimony of witnesses
saying that if the per-pack price under the Commerce bill goes to $4.50
to $5.50 per pack, there is going to be an extensive black market?
Isn't that true?
Mrs. FEINSTEIN. That is true. The independent Wall Street analysts
said they believed it would happen at $3 to

[[Page S5206]]

$3.50 a pack. Mr. Myers, representing Tobacco-Free-Kids, testified
before our committee that he believed you could take an additional $2
on a pack before it would develop a black market. But the figures for
California really, if the tax passes in June, indicate that the tax in
this bill, plus that tax, would be substantially above $5 within 5
years.

Mr. HATCH. Is the Senator aware of this comment by CBO in April
1998--and I hope this is in the form of a question that is acceptable
to the manager of the bill--about black-market cigarettes:

Any legislation that would rapidly raise the price of a
product by a third or more would almost certainly spawn a
black market as people attempted to evade the high prices.
Tobacco is no exception.

Is the Senator aware of that?
Mrs. FEINSTEIN. That is correct.
Mr. HATCH. Is the Senator concerned about that?
Mrs. FEINSTEIN. I am very concerned about it, because, again, we have
40 million smokers in the United States, 5 million of them in
California. There is a huge market. There is a huge number of people
already addicted, and as the price per pack, plus reduction of smokers,
comes into play, the opportunity for a black market increases, and
particularly if you begin to ratchet down the addicting chemical which
is nicotine.
It is a serious question. I am surprised, frankly, that people really
don't want to know more about it. I, frankly, am surprised that there
is a rush to judgment. It seems to me that because of what we are doing
is for 25 years, we better be right. I don't want to see in my State a
huge black market in 5 years and know that I voted to help make that
market possible.
Mr. HATCH. Can I ask the Senator from California another question
that I think is relevant to her concerns?
Mrs. FEINSTEIN. Absolutely.
Mr. HATCH. The Senator comes from California, the largest populated
State in our Nation. How many people live in California?
Mrs. FEINSTEIN. Oh, probably around 33 million today.
Mr. HATCH. Almost 34 million people, I understand.
Mrs. FEINSTEIN. Nineteen percent of whom smoke.
Mr. HATCH. Nineteen percent of whom smoke. Is the Senator aware that
one out of five packs of cigarettes sold in California happens to be
contraband?
Mrs. FEINSTEIN. I believe that is correct. Law enforcement has said
there is now a substantial black market in California. With the
franchise tax, port authorities advise that the State loses about $20
million to $50 million a year in revenue now from that market.
Mr. HATCH. And that jumped up when the State raised its tax by a few
pennies from, I think, was it 17 cents to 34 cents or something like
that.
Mrs. FEINSTEIN. That is correct. There was a proposition on the
ballot that did do that. That generated the market. They have made some
major arrests with large numbers of confiscated goods to go on the
black market.
Mr. HATCH. What do you think is going to happen in California and
other States if that price is raised per pack from $2 to $4.50 or
$5.50?
Mrs. FEINSTEIN. I think if it goes from $2 to $4.50 in California,
with the number of people addicted and the fact that most are low
income, that it creates a black market. One of the concerns I have is
that it becomes a real pawn for organized criminal elements that also
brings on other serious repercussions. But I don't want the Senator
from Utah, or anybody else, to mistake me. I want to see us have a
bill. I want to see us have a bill that is going to be able to do the
job, rather than have adverse, unintended consequences.
Mr. HATCH. I have to agree with the Senator. And I have to say, is
the Senator aware that on May 4, 1998, testimony before the Senate
Democratic Task Force on Tobacco, Robert A. Robinson, Director of Food
and Drug, Agriculture Issues, Resources, Community and Economic
Division of the General Accounting Office--who should surely win an
award for one of the longest titles in Government--said:

Smuggling cigarettes from low- to high-tax States or
interstate smuggling prominent in the 1970s may be a
reemerging problem. Such activity is likely to occur when the
differences in cigarette taxes across the States are
significant enough to make it profitable. Recently, many
States have opted to sharply increase their cigarette taxes,
yet most low-tax States have not. As a result, recent studies
suggest that the level of interstate smuggling activity may
now be increasing. In fact, recent estimates suggest that
smuggling is responsible for States collectively losing
hundreds of millions of dollars in annual tax revenues.

Is the Senator aware of that?
Mrs. FEINSTEIN. Yes, I am aware of it. I am also glad that the
Senator from Utah is mentioning this, because one of the most
discouraging things here has been the rush to judgment, has been the
feeling of many people, very well-meaning, very much wanting to see
legislation in place, that if you pause to consider these impacts,
somehow you are un-American, somehow you are pro-tobacco. And yet, as
we know, the devil is in the details with all of these things. It
really is the long-term effect of a bill that we need to consider
carefully.
That is one of the reasons I have been, frankly, opposed to the speed
with which this bill is being pushed, and I think it is being pushed so
that we don't have this information in front of us, so that we don't
understand the repercussions, so that a bill gets passed and everybody
can pound their chests and say what a wonderful job we have done and
then, boom, in 4 years, there can be a cataclysmic event like a big
black-market operation.
Mr. HATCH. Let me just ask one other question of the distinguished
Senator, because there has been some indication here that there is some
sort of a game being played in this colloquy between the Senator and
myself. It is anything but a game being played.
We have seriously looked at these matters in 10 Judiciary Committee
hearings, at which the Senator from California was in attendance. And
these are important issues.
I just ask the distinguished Senator, what are we going to do if we
go through all of this piling on mentality, as is embodied in this
managers' agreement and many of the proposed amendments thereto, and,
after we get to the end of this, the bill is still constitutionally
unsound? What happens if we have 10 years of litigation and the program
falls apart? Isn't that some justification for finding out the facts
now in order to either amend this bill or have a substitute amendment
or other correctional measure? Shouldn't we really get to the heart of
how to develop a constitutionally-sound bill that will help reduce teen
smoking and solve some of these other problems in society? Does the
Senator agree with me?
Mrs. FEINSTEIN. That is absolutely correct, I say to the Senator. Not
only are we not playing a game, certainly no one in this body has asked
me, representing the State, what would be the impact of a bill on the
largest State in the Union with the most smokers by far in California,
with the most young people.
I came to this body to use my brain, to try to work for my State and
try to see that whatever it is that I vote for doesn't have unintended
consequences.
I think all the purpose of this colloquy is to say that there may
very well be serious, unintended consequences, heightened by the fact
that we are moving so fast without any major governmental analysis of
the long-term, per-pack costs and what those costs might do when you
measure elasticity, diminished market demand and a diminution of
nicotine in a regulatory order by the FDA.
These are very serious things. I think they deserve consideration,
and I thank you very much.
Mr. HATCH. May I ask the distinguished Senator one more question? It
is this: I have sought to facilitate a thorough examination of public
discussion of the Treasury model so policymakers can better understand
why there is so much disparity between Wall Street and 1600
Pennsylvania Avenue on critical items like the estimates of the retail
price per pack of cigarettes under the Commerce Committee bill.

Is the Senator aware that we have heard the official estimate is that
the Commerce Committee bill will increase the cost of a pack of
cigarettes by $1.10 per pack over 5 years? Many in the press simply
report that the price, not cost, will go up by just $1.10 a pack.

[[Page S5207]]

As I understand it, and I ask the Senator to help me to know if she
understands it the same way I do, the Treasury Department and the
proponents of the Commerce Committee bill believe that when you take
into account all other factors, you arrive at a real price in year 5 of
$3.19 per pack. Although it is not a number that many of the bill's
proponents seem anxious to get into public discussion, and the press is
not widely reporting it in nominal terms, this is how much money you
actually have to pull out of your wallet. This $3.19 per pack figure
translates at the cash register price of $3.57 in the year 2003 under
the White House and Treasury Department's estimates.
Now, again, I ask the Senator, is the Senator aware of those facts?
Mrs. FEINSTEIN. Actually, Senator, those are not the facts--they may
be the facts coming out of the White House.
Mr. HATCH. That is right.
Mrs. FEINSTEIN. But the facts in committee.
Mr. HATCH. That is the White House's spin here.
Mrs. FEINSTEIN. Yes.
Mr. HATCH. Let me ask the Senator this. Does the Senator recall that
in September the President called for, and the White House repeated
again in February, bipartisan legislation that raises the price of
cigarettes by up to --and that is up to --$1.50 per pack over 10 years?
Does the Senator remember the President calling for that?
Mrs. FEINSTEIN. I do.
Mr. HATCH. Given that the price of cigarettes is about $1.95 per pack
today, it looks like the Commerce Committee bill or this managers'
amendment will achieve the $1.50 price hike 5 years ahead of schedule
by the Treasury's own estimates. Is the Senator aware of that?
Mrs. FEINSTEIN. That is correct; yes.
Mr. HATCH. All right. Now, Wall Street analysts tell us the Treasury
numbers are off--way off, they say. They say that the actual price
increases under the Commerce Committee bill will be much higher than
what Treasury is telling us. They say the price in real dollars will
climb to between $4.50 and $5 per pack in 5 years; and at least one
indicated higher than $5 per pack, up to over $5.50. Is the Senator
aware of that?
Mrs. FEINSTEIN. I am.
Mr. HATCH. Martin Feldman of Salomon Smith Barney projects in the
year 2003, the Commerce Committee bill, the old bill--but the revised
one is the same on the facts--will result in a real price of $4.61 per
pack. In nominal terms, this means that cigarettes will cost $5.11 per
pack. That is over $50 per carton. Does the Senator remember that
testimony?
Mrs. FEINSTEIN. I believe you are accurately reflecting the
testimony.
Mr. HATCH. David Adelman of Morgan Stanley Dean Witter testified on
April 30 that the 2003 average retail price will reach at least $4.53
per pack if the Commerce Committee bill is adopted. His analysis also
indicates that the price under this bill that is on the floor right now
could actually grow to $5.66 per pack or higher within 5 years. Is the
Senator aware over that?
Mrs. FEINSTEIN. Yes.
Mr. HATCH. Now, similarly, Gary Black of Sanford C. Bernstein &
Company, told the Judiciary Committee on May 12, 1998, that under the
Commerce Committee bill the real price of cigarettes will exceed $5 per
pack in 2003. Is the Senator aware of that?
Mrs. FEINSTEIN. Absolutely. And the point that you are making is
really reflective of the point that I am trying to make in a less
erudite way. That point is, let us take the time to have a CRS
analysis, a CBO analysis, a joint tax force on some of the figures that
we are putting forward, because these are figures that have been
presented to us in a formal way.
Mr. HATCH. I would ask the Senator if she is aware--let me emphasize
the $4.50 to $5-per-pack prices that these leading Wall Street analysts
projected in testimony to the Judiciary Committee, those prices are
much higher than what the Treasury estimated and far higher than the
widely cited and widely reported $1.10-per-pack figure. Isn't that
correct?
Mrs. FEINSTEIN. That is correct--one of the reasons I do not know who
to believe.
Mr. HATCH. So it is far higher than the up to $1.50-per-pack increase
that the President called for over a 10-year period; is that correct?
Mrs. FEINSTEIN. That is correct.
Mr. HATCH. If these Wall Street analysts are correct, and the
Treasury estimates are off in year 5, under the Commerce
Committee bill, we may reach a price increase that is twice as high as
what the President has called for; that is, a $3-per-pack price
increase rather than a $1.50 price increase. That is certainly a far
cry from the $1.10 we hear so much about; isn't that so?

Mrs. FEINSTEIN. That is correct.
Mr. HATCH. Let me just finish this.
What is more, according to these experts, we will reach this twice as
high level twice as fast as called for by the President. I guess we
should ask whether the American public understands that what we may
actually be talking about under the Commerce Committee bill is a $50-
per-carton price for cigarettes.
Now, if you are like me, and do not, and will not, ever smoke, this
may not seem so bad, literally; but I just hope that the public health
lobby does not next focus its attention on the problem of obesity, or
we may have chocolate ice cream at $20 a gallon, a $10 package of
potato chips, or a $5 slice of apple pie, sold by prescription no
doubt, if we continue to follow this type of bureaucratic reasoning. Is
the Senator in disagreement with me on this? And I didn't even talk
about cheeseburgers!
Mrs. FEINSTEIN. My point is, Senator, I do not really know whom to
believe. And that is why I am where I am with respect to this bill.
Different committees have had different testimony. I do not know
whether the Finance and the Commerce Committees actually had this
testimony. We had it in the Judiciary Committee.
Mr. HATCH. The Finance Committee did not hear any testimony on the
tobacco issue; the Commerce Committee heard from Secretary Summers as
well as Mr. Feldman.
Is the Senator aware that the $1.10 price that is so widely reported
in the media as the add-on to the current $1.95 or the $2-per-pack
price at the manufacturer's level does not include a whole wide variety
of factors, like the wholesale markups, the retail costs, the
additional excise taxes added on by the States, litigations costs, the
lookback, all factors that could be add-ons to the retail price under
this bill?
So it is pretty clear that it is a lot higher than what the media are
reporting is $1.10. It is a lot higher, isn't it, than what the White
House has indicated?
And I would just ask the Senator this other question: Isn't it
plausible to believe these Wall Street analysts, whose very livelihoods
depend on trying to arrive at correct economic projections in order to
advise clients about whether or not to invest money, who have used
extensive models to make those projections rather than just a 5-line
sheet of paper?
Mrs. FEINSTEIN. I think that is right. I think what has happened is
that we have seen a net figure applied as a gross figure when in fact
it is just a beginning figure. It becomes an arbitrary cost added, and
then there are all these other costs that come on top that are not
factored in.
I think that is why we need a very thorough, objective report on what
actual street prices of cigarettes will be, what you get them for in
your 7-11, what you buy them for in your supermarket, what it will be
with inflated dollars in 5 years.
If we know that with specificity, then I think we can make some
informed judgments as to whether, in each of our respective States,
this is apt to create a black market or not apt to create a black
market. We then can relate this data to the distribution table that
Joint Tax has done so you know what portion of this falls on the
lowest-income people versus the highest-income people.
Mr. HATCH. Is it not true--this will be my last question--is it not
true that under the substitute that the distinguished Senator from
California and I are working on, that we do not base this on a price
per pack of cigarettes, our $428.5 billion, we base it on payments that
have to be made over 25 years?
Mrs. FEINSTEIN. That is correct.
Mr. HATCH. Whether the companies--whether they sell a lot of
cigarettes or not, they are going to have to make those payments; isn't
that correct?

[[Page S5208]]

Mrs. FEINSTEIN. That is correct. You see, the thing that bothers me
is, in this rush to judgment, everything is evaluated based on the per-
pack numbers that are thrown around, based on what is a net addition
that will not be the real street addition. So there is no way, with the
speed this bill is moving, to know exactly what we are going to be
doing down the line. The beauty of our bill, if people should be
interested, is that we have tried to avoid that problem.

Mr. HATCH. Mr. President, I thank the distinguished Senator from
California for answering my questions.
Parliamentary inquiry. Have these questions been in order under the
rules of the Senate?
The PRESIDING OFFICER. The Senator from California has the floor.
Mr. HATCH. I am asking the Parliamentarian if these questions have
been in order under the rules?
The PRESIDING OFFICER. I believe they are, Senator.
Mr. HATCH. Well, my goodness, I am so happy to find that out.
Thank you so much, Senator.
Mrs. FEINSTEIN. I thank the Senator. It has been a pleasure for me to
work with him.
Let me once again sum up, because I know the distinguished Senator
from Maine is waiting, and I do want to thank the Senator from Utah for
his leadership not only of the Judiciary Committee but in what we have
been working on. I hope if people might be interested they would let us
know.
In the meantime, I am really not prepared, based on the analytical
data--and we have tried to get every single piece we could--to cast a
vote which has repercussions for a quarter of a century and which would
have repercussions on a State where 5 million people smoke and almost a
million youngsters and one out of every four high school seniors is
addicted to nicotine. Until I have some of these answers and we know
what the impact on the streets in Los Angeles, in San Francisco, in
Fresno, in San Diego, is going to be 5 years, 10 years, 15 years, 20
years, and 25 years hence--then we can cast an informed vote, and then
we can go home and say we really have done something good for the
people we represent.
I thank the Chair. I apologize and I thank the Senator from Maine for
her forbearance.
I yield the floor.
The PRESIDING OFFICER. The Senator from Maine is recognized.
Ms. COLLINS. Mr. President, this week the Senate is debating far-
reaching landmark legislation which gives us a historic opportunity to
combat teen smoking and in the process save millions of lives.
Tobacco use is the No. 1 preventable cause of death in the United
States, accounting for almost half a million deaths a year and billions
of dollars in health care costs. More people die each year in the
United States from smoking than from AIDS, suicide, alcohol and drug
abuse, car accidents, and fires combined. Tobacco use in this country
carries a price tag of almost $100 billion a year in direct health
costs and in lost productivity.
Clearly, the single most effective thing we can do to improve our
Nation's health is to stop smoking. However, smoking rates are actually
increasing, particularly, and most tragically, among our young people.
Tragically, tobacco addiction is increasingly a teen onset disease.
Ninety percent of all smokers start before age 21. What is especially
disturbing is that children, especially girls, are smoking at younger
and younger ages. Smoking is at a 19-year high among high school
seniors and has increased by over 35 percent among 8th graders over the
past 7 years.
The statistics for my own State of Maine are particularly alarming.
Maine has the dubious distinction of having the highest smoking rate
among young adults in the country. Thirty-two percent of our 18- to 30-
year-olds are regular smokers. Almost 40 percent of Maine's high school
seniors smoke. If current trends continue, one in nine children will
die prematurely of tobacco-related illnesses.
Tobacco is the leading preventable cause of death in Maine,
responsible for almost 2,500 deaths a year. Direct medical costs of
treating tobacco-related illnesses in Maine are about $200 million.
Indirect costs--the costs associated with lost work time, higher
insurance premiums and so forth--are also estimated to be about $200
million.
These numbers speak for themselves. The status quo is simply
unacceptable. If we are to put an end to this tragic and preventable
epidemic, we must accelerate our efforts not only to help more smokers
quit but also to discourage young people from ever lighting up in the
first place.
I found one fact in a recent Maine survey of smoking habits to be
particularly disturbing. The smoking rate among young girls in my State
has increased by 30 percent since 1993. I think that this advertisement
gives us a good clue why. It is a blatant and shameless attempt by the
tobacco industry to entice young girls, to entice teenagers to smoke.
With more than 1,000 of the tobacco industries' best customers dying
every day and another 3,000 to 5,000 quitting because of health
concerns, smokers are literally a dying breed. As a consequence, the
tobacco industry must hook thousands of new customers each day just to
break even, and is now spending over $5 billion a year on advertising
and promotional campaigns.
The tobacco industry actually claims that it does not target image-
conscious young people with its advertisements featuring rugged
Marlboro men and fresh-faced, model thin, ``You can do it'' young
women. But, Mr. President, the evidence clearly proves otherwise. Just
look again at this magazine ad. It is very typical, very typical of
cigarette advertising. This ad is not aimed at people my age. It
certainly is not aimed at people my parent's age. There can be no doubt
it is not aimed at adults at all. It is aimed at teenagers.
Moreover, internal industry documents indicate that tobacco companies
have long known that tobacco use leads to addiction, serious illness,
and death. Yet, they nevertheless continue to pursue children, to
target teens through ads and promotional campaigns, and have even gone
so far as to consider marketing Coca-Cola-flavored cigarettes.
A landmark 1991 study published in the Journal of American Medical
Association showed that cigarette-smoking ``Smooth Joe'' Camel was as
recognizable to 6-year-olds as Mickey Mouse. Let me repeat that. Joe
Camel was as recognizable to 6-year-olds as Mickey Mouse. The tobacco
industry claimed the ads were, in fact, directed at adults. A second
study found that 98 percent of the 12- to 19-year-olds recognized Joe
Camel, compared to just 72 percent of adults. As a result, Camel's
market share among underage consumers rose from less than 1 percent
when the Joe Camel campaign first began, to 33 percent when he was
finally put out to pasture.
More recent studies published in JAMA and elsewhere add further
weight to the mounting evidence that advertising and marketing are the
linchpins of the tobacco industry's efforts to hook children on
nicotine. A February 1998 JAMA study found that the effect of tobacco
advertising and promotional activities is ``strong and specific,'' with
at least 34 percent of all experimentation with cigarettes by teenagers
attributable to those activities.
Moreover, a 1995 article in the Journal of the National Cancer
Institute found that tobacco marketing has a greater influence over a
teen's decision to smoke than whether or not their parents smoke or
their peers smoke.
Other studies have shown that the cigarette brands most popular with
teenagers are the ones most likely to advertise in magazines with the
highest youth readership. Moreover, unlike adults, the vast majority of
young smokers prefer the most heavily advertised brands of cigarettes.
It is also far too easy for children and teens in the United States
to purchase cigarettes. During hearings in the Labor Committee, we
heard testimony that children living in 99 percent of our cities and
towns have very little trouble walking into a store and buying a pack
of cigarettes, despite the fact that it is against the law in all 50
States to sell tobacco products to minors.
Mr. President, during this debate, we have focused a great deal of
attention on the $1.10-a-pack fee that the McCain bill imposes on
cigarettes. Some have argued today that is simply too low and that an
increase to $1.50 or more a pack is necessary if we are going to curb
underage smoking. Others--and I

[[Page S5209]]

include myself in this group--are concerned that the evidence linking
teen usage and price is not conclusive. Moreover, I am very concerned
that a price increase of this magnitude is highly regressive and will
fall mainly on adult smokers earning less than $30,000 a year. If we
were to increase the cost by the $1.50 that was proposed, it would have
meant that the average couple who smoke would be paying $712 more a
year in taxes. That is a very hefty tax increase on low-income
Americans.
Mr. President, at some point, raising the tax on cigarettes ceases to
contribute to the reduction of smoking and becomes little more than an
act of financial cruelty. Tobacco is highly addictive and there are
people, perhaps many people, who will not be able to quit smoking even
with an additional tax of $1.50 or more.
There is a point at which the tendency of the U.S. Senate to play God
in the lives of the American people becomes dangerous. The notion that
we can cure addictions by creating enough deprivation for those who are
addicted is a very arrogant one. If we are wrong, we do nothing more
than inflict suffering on those who do not deserve it.
While I respect the motives of its supporters, I could not, and did
not, back an amendment that carries such a risk and that is not truly
needed to fund the antismoking programs included in this bill. Those of
us who legislate must draw lines, and recognizing that I am far from
infallible, I believe that a tax of $1.50 per pack crosses that line.
If our purpose is to inflict pain, it should be on those who profit
from the addiction and not on those who suffer from it. That is why I
shall vote to support the amendment offered by my friend and colleague
from New Hampshire to eliminate the immunity protections afforded to
the tobacco industry by this bill.
My view on the $1.50-a-pack tax proposal has been strongly reinforced
by conversations I have had in recent weeks with young people in my
State in an attempt to find out what the true experts--our teenagers--
believe would be most effective in stopping teens from smoking in the
first place. I have asked this question to, among others, a seventh
grader from Portland, a Boy Scout troop in Dover-Foxcroft, high school
students in Aroostook, and a teen smoker in Bangor. Significantly, none
of these teens felt that a price increase would be the most effective
means of discouraging teens from smoking.
As the addicted Bangor teen told me, ``I can't quit, so what I'll do
is cut back on going to the movies or going to McDonald's in order to
pay for cigarettes.''

Another teen told me that many students get their cigarettes by
stealing them from their parents, so unless their parents stopped
smoking, their access to cigarettes will be unaffected.
Alex Pringle, a seventh grader from Portland, suggested that having
smokers who are suffering from lung cancer or other smoking-related
diseases come to schools would be the most effective means of
discouraging kids from smoking. It would effectively make the link
between smoking and illness, a link that is too often unrecognizable to
teens who believe themselves to be invulnerable.
Teens throughout the State told me that they smoked simply because it
was ``cool'' or because it helped them feel more accepted by their
friends. From their comments, I have no doubt that the tobacco
industry's ads, such as the one I have displayed today, have sent a
clear message to teens that teens who smoke are cool. I also have no
doubt that when teens see movie idols such as Leonardo DeCaprio smoke,
that message is, unfortunately, reinforced.
That is why the educational, counteradvertising, and research
programs funded by this legislation, as well as the advertising
restrictions, are so critical to our efforts to sever the deadly
connection between teens and tobacco.
Earlier this year, I joined Senators Jim Jeffords and Mike Enzi in
introducing the Preventing Addiction to Smoking Among Teens, or the
PAST Act, which adopts a comprehensive approach to preventing teens
from smoking. The bill gave clear and comprehensive authority to the
FDA to regulate tobacco products and incorporated the FDA's
recommendations on combating teen smoking, such as strong warning
labels, a ban on vending machine sales, a ban on outdoor advertising
and brand name sponsorship of sporting events, and prohibition on the
use of images like Joe Camel and the Marlboro man. The legislation also
held tobacco companies accountable by imposing stiff financial
penalties if the smoking rate among children does not decline.
Moreover, the legislation incorporates strong measures to ensure that
restrictions on youth access to tobacco products are tough and
enforceable, and it promoted the development of State and local
community action programs designed not only to educate the public on
the hazards of tobacco and addiction, but also to promote the
prevention and cessation of the use of tobacco products. We need to
focus on cessation programs. They are an important part of this bill.
It also called for a comprehensive, tobacco-related research program
to study the nature of addiction, the effects of nicotine on the body,
and ways to change behavior, particularly that of children and teens.
We don't know enough about addiction yet.
And finally, and very important, it called for a national public
education campaign to deglamorize the use of tobacco products to
discourage teens from smoking.
Mr. President, we have made tremendous progress in recent years in
making our streets safer from alcohol-impaired drivers. This was
accomplished not only through tough drunk-driving laws, but also
through a very effective national advertising campaign waged by Mothers
Against Drunk Driving and others that has resulted in a change in our
Nation's attitudes toward drinking and driving. This is the approach
that we need to take to curb teen smoking.
The legislation we are considering this week contains many of the
public health provisions that were included in the PAST Act. While the
legislation before us tonight is not perfect and will undoubtedly face
many more amendments during Senate consideration, it does give us a
critical opportunity to address the teen smoking epidemic in a strong
and comprehensive way.
I yield the floor.
Mr. FAIRCLOTH. Mr. President, while we may all agree that teenagers
should not be smoking, this bill goes well beyond reaching that goal.
We should all be deeply concerned about the ``tax and spend''
approach that the bill takes to resolving a social problem. The bill
reaches right into the pockets of hard-working low- and middle-income
adults who, even tobacco's most staunch critics acknowledge, have every
right to smoke if they so choose.
And, it takes their hard-earned dollars to create yet more federal
programs and to pay trial lawyers billions of dollars. We're literally
grabbing money from the poorest Americans to buy trial lawyers more
Learjets.
To what end? There appears to be uncertainty as to whether price
increases really have the effect of getting kids to stop smoking or to
never start in the first place.
And what is the real motivation here? If it were really to cut
smoking, we wouldn't phase it in, we would drop it right at once. But
we're not doing that because the tax-and-spenders want the revenues. I
know they're not doing it for the tobacco companies.
We all know that this isn't about smoking--it's about money.
What unpopular product or industry is next--now that we, our nation's
lawmakers, have decided that ``and justice for all'' really doesn't
mean what it says.
First, let's discuss the taxes imposed by the bill. Lots of people
are jubilant at the prospect of this legislation passing. The
plaintiffs' lawyers would become fabulously wealthy; the public health
community would get all of its favorite projects generously funded;
and, of course, the bureaucrats will get write volumes of new rules.
The ones who won't be so happy are the working class families who
have been targeted to pay for it all.
In short, the McCain bill, through its highly regressive tax
provisions, inflicts enormous costs on lower- and middle-income
families. Let me put this regressivity problem in concrete terms. The
increased excise tax payments under the McCain bill are projected to
exceed $690 billion over the next 25 years.

[[Page S5210]]

Based on analyses by the Joint Committee on Taxation, families with
incomes less than $30,000 a year will wind up paying roughly 43 percent
of these taxes. In other words, under the bill, families earning less
than $30,000 a year will have to pay roughly $300 billion in new taxes
over the next 25 years.
This amounts to more than the total income taxes that these families
are expected to pay over the same period of time.
The numbers are even more striking if we look at families earning
less than $75,000 a year. Other experts have estimated that families in
this category will pay more than 83 percent of all the tobacco excise
taxes, which means that families earning less than $75,000 a year will,
as a group, pay more than $570 billion in new excise taxes as a result
of the McCain bill.
Where are the cries about regressive taxes? We're all so used to the
long speeches about taxes on the poor. Or is that argument just used
for convenience? This is the largest tax increase on the poor in
years--if not in all time!
It gets even worse. The numbers I just cited only take into account
the excise taxes imposed by the bill. The reality is that the increases
in the prices of tobacco products resulting from this bill will be
substantially greater in magnitude. This is because of the look-back
payments and the increased sales taxes as well as wholesaler and
retailer margins that will be tacked on to any excise taxes.
It is estimated that, based on projections of the actual increases in
the prices of tobacco products, the true cost over the next 25 years
will be more in the range of $380 billion for families earning less
than $30,000 a year. it will be more than $735 billion for families
earning less than $75,000 a year.
These are truly staggering numbers. To put them in perspective, it is
projected that once the new excise taxes under the McCain bill are
fully phased in, the annual cost to the family of a smoker earning less
than $30,000 a year will be $875.
For a smoker's family earning less than $75,000 a year, the cost on
average will be more than $950 each year. Now, a figure of $875 or $950
a year may not sound like much to these plaintiffs' lawyers who are
expecting to get hundreds of millions of dollars. But I can assure you
that this money means a lot to families trying to get by on $30,000 a
year, or even on $75,000 a year.
If this doesn't persuade you, let's hear from the experts on Wall
Street. As noted by Morgan Stanley analyst, David Adelman: ``98.5
percent of cigarettes are legally purchased by adult smokers, and
therefore higher excise taxes will unfairly (and regressively) penalize
adult consumers who choose to smoke.''
So, we're talking about hundreds of billions of dollars in new taxes
to try to stop 1.5 percent of tobacco users from illegally buying
tobacco. Why not just impose penalties on children who try to purchase
tobacco? Well, I suppose, because it wouldn't be a jackpot for trial
lawyers and Washington bureaucrats. The fact that it might help the
children is irrelevant.
Mr. President, I, for one, was not elected to sock the American
taxpayer with more taxes. If teens are really our target, we owe it to
the taxpayer to first explore other non-price measures to combat youth
smoking.
At a minimum, we need to explore whether there are ways to rebate
these increased taxes back to the adult smokers who paid them--rather
than using these regressive taxes to fund huge new government programs.
Turning to the bill's disturbing reliance on new government programs,
I find it highly ironic that we are here debating a bill that will
increase the size of the federal bureaucracy when this is the Congress
that is supposedly committed to reducing federal government bloat.
The bill takes over half a trillion dollars in tobacco funds to fund
new social programs or enlarge existing programs.
We also need to think long and hard about the bill's Orwellian
approach--giving the federal government more power to look over our
shoulders regarding the personal choices we make.
I'd like to take this opportunity to read into the Record a few
excerpts from recent articles, articulating these concerns:

Most Americans may not like smoking, but that doesn't
necessarily mean they favor a big-spending nanny state. Yet
if President Clinton and his supporters are allowed to
succeed with this tobacco pact, the same extortionist tactics
will undoubtedly be applied to other ``sins.'' Just imagine
how much government could ``do'' by slapping a health tax on
Big Macs and Budweiser.

That's from the Detroit News, on April 24, 1998.
I urge my colleagues to learn from experience. Too many times in the
past, Washington has raised taxes in the name of one feel-good social
program or another. The American people have consistently indicated
that they are tired of that practice.
We on the Republican side of the aisle were supposedly sent here to
see to it that the tax and spend era of big government ceases to exist.
I'm not so sure we're holding up our end of the bargain when we propose
to pass legislation along the lines of the bill we're debating today.
As I raised earlier in my remarks, we appear to be forging blindly
into a tax and spend approach to combating youth smoking, even though
it is highly speculative that higher prices will even have this desired
effect.
This legislation is going to result in a massive price increase for
the entire smoking population, including the 98 percent of legal adult
smokers. I think it is important that my colleagues are aware of all
the facts before they vote on it.
A Cornell University study found that there is no significant
correlation between price levels and the youth smoking rate.
This study, conducted by researchers at the Department of Policy
Analysis and Management of Cornell University over a period of four
years, reexamined the relationship between price increases on tobacco
products and the likelihood that children will smoke.
It analyzed the smoking habits of over 14,000 children in grades 8
through 12. To quote the study's conclusion: ``the level and changes in
cigarette taxes [is] not strongly related to smoking onset'' for
children between 8th and 12th grades.
In addition, this study casts doubts on the results of previous
studies which have directly linked smoking rates among children to
price, noting that ``* * * youth who face different tax rates also face
different anti-smoking sentiment * * *.''
The study suggests that previous research on youth smoking failed to
take into account differing public perceptions that smokers face across
the country. The Cornell study attempted to eliminate such extraneous
information from their results.
Removing the effect of other factors, such as different State
smoking-related legislation, allowed researchers ``to directly examine
the impact of changes in tax rates on youth smoking behavior, and our
results indicate this impact is small or nonexistent.''
This view is also supported by statistical evidence from other
countries. As Martin Feldman of Salomon Smith Barney has noted:

But we all know that kids don't stop smoking because of the
price of cigarettes. Let me give you an example. In England,
between 1988 and 1994, cigarette prices rose in real terms,
by 20 percent. In '88, 8 percent of them 11 to 16-year-olds
smoked. By '94, 13 percent of them smoked, after the price
increase. The White House will not take this into account.
And I don't understand why.

And, it's not just academia that questions whether increased prices
will deter kids from smoking. It is the kids themselves. Just ask the
four bright, young citizens who recently testified before the House
Commerce Subcommittee on Health and Environment on March 19, 1998.
Of the four who testified about the effects of price increases on
youth smoking, three clearly stated that price increases would have no
effect on the number of youth smokers, and the fourth didn't know what
the result would be.
As one teenager testified, ``[I]f money were a huge issue, then kids
wouldn't be buying marijuana as much.
Another teenager testified:

[I]f you look, it's kind of weird how, people would be
willing to pay $150, $200, for shoes. And it's completely
outrageous; but people will complain about it. They'll moan
and groan; but they'll still pay. And, when it comes to
cigarettes--how much is it? Two dollars a pack?

We've heard it from the horse's mouth.
I closing, I know that the tobacco companies have become so unpopular
that nothing seems out of bounds. But,

[[Page S5211]]

whatever our views are about how much pain to inflict upon the
industry, let us not forget that Congress also has an institutional
responsibility.
We should be concerned that the McCain bill will set a terrible
precedent that will haunt us for years to come. If we begin to use the
tax code as a coercive means of social engineering, then I submit that
there is no end in sight.
Today, smokers will be asked to pay a huge share of their income to
the federal government and tomorrow, who will be next?

I fear the precedent of the anti-smoking remedies now
before Congress. What will they be used for next? Perhaps
fat. Excuse me, Big Fat. As I understand it, fat, when used
as intended, causes heart disease, which actually kills more
people each year than smoking. And have you seen any of those
chocolate ads, the ones targeting children, or the adult
versions, where a beautiful woman caresses a nougat bar with
her moist alluring lips? Consider that there are no warnings
on boxes of high-fat cake about the hazards to our health, no
restrictions on purchases of bacon by people under 26 and, to
my knowledge, no lawsuits. How about a fax tax?

That's from Fred Barbash in the Washington Post, April 19, 1998.
Mr. President, I believe that passage of the McCain legislation is
going to have a dramatic impact on the lives of millions of adult
smokers across the country who are going to have to bear a significant
price increase to purchase legal tobacco products.
It also perpetuates a tax and spend mentality that our constituents
have rejected, as well as sets us sliding down the slippery slope. And,
not only do we have no hard data that this is going to achieve the goal
of preventing kids from smoking, we have evidence suggesting that it
won't.
Mr. WYDEN addressed the Chair.
The PRESIDING OFFICER (Mr. Brownback). The Senator from Oregon is
recognized.
Mr. WYDEN. Mr. President, I rise tonight to take this opportunity to
discuss why I believe it is so important that the U.S. Senate pass
strong legislation to protect our children from the tobacco companies
that are preying on them.
I got my real start in public service in Eugene, OR, right after I
got out of law school in my twenties in Lane County in Oregon. I
started a senior citizens legal clinic. I was able to get almost all of
the attorneys in town to volunteer their time, coming to the senior
citizens center to help the older people with the varied legal problems
that seniors have.
At the legal clinic when I was in my twenties I saw firsthand the
extraordinary health consequences that smoking has for our citizens. I
saw older people come to that legal clinic in Lane County in Oregon
racked with emphysema. They were struggling for every breath.
I found myself, having organized this legal clinic to help older
people, having to console the widows and widowers of cancer victims,
families that lost loved ones years and years before their time. I saw
then when I set up that senior citizens legal clinic exactly what
cigarettes can do to the health and well-being of our citizens and the
toll that they take on American families.
So when I decided to seek elected office I said that I would put a
special focus on my service in the U.S. Senate in trying to improve the
health care of our citizens. I said that I wanted to focus on health
care issues in a meaningful way, because I came to feel that if a
person doesn't have their health care, doesn't have well-being, then
they can't really focus on much of anything else. If they and their
loved ones can't get access to decent medical care and they are
suffering, there really aren't many other issues that a person and a
family can focus on.
When I came to the U.S. Congress, I said I am going to remember all
those seniors that I met at the legal clinic when I got out of law
school, and I said if we really are going to take strong steps to
improve the health of our citizens, we had to take on these tobacco
companies, and that we will take them on even if it was a tough fight
in order to make the lives of our citizens better when they got older.
And it was just that simple.
The older people that I saw in that legal program didn't get started
smoking when they were 48 or 55. They got started in their teens. They
got started as kids when they were the age of Adam Wyden and his sister
Lilly.
So I felt then that all other issues revolved around whether our
citizens had their health. I remember those older people who came to
the legal clinic in Oregon. I said we are going to take steps to make
their lives better, and I am going to make that a special focus of my
service in the Congress.
So when I was elected to the House of Representatives in 1980, I was
able to win a position on the House Health Care Subcommittee, a
committee that, in my view, turned out some of the most important
public health legislation in our country's history under the
extraordinary leadership of Henry Waxman. I got to serve with one of
the most courageous public officials who has ever served in the U.S.
Congress, the late Mike Synar.
Against all odds, against all odds when he faced tremendous
resistance in his home district, the late Mike Synar was willing to
stand up for kids, and, in fact, wrote one of the first and the most
important public health statutes to protect kids against the tobacco
companies that prey on them, the statute known as the Synar amendment.
Of course, the tobacco companies worked very hard to try to get around
that because the Synar amendment stood for the proposition that we were
going to enforce tough laws to protect our minors at the State level.
That was too much for the tobacco companies, just as they sought hard
to get around the early advertising restrictions on the electronic
news, just as they sought to get around the early warning labels, they
sought to evade the mission and the specific requirements of the Synar
legislation.
So Mike Synar, Henry Waxman, I, and others worked through the 1980s
to try to rein in these tobacco companies and improve the lives of our
children.
A little over 4 years ago we were at the now well-recognized hearing
with the tobacco CEOs who under oath addressed for the first time
before the U.S. Congress these major public health questions that the
Senate has been occupied with over the last couple of days.
Mr. President, it was an extraordinary hearing. It went on for more
than 7 hours. The executives said, for example, that cigarettes were
sort of like Hostess Twinkies. They said that, of course, they never
ever would target young people. And for more than 7 hours they said
under oath that cigarettes essentially were not something that the U.S.
Congress should be focusing on. They said it is just like any other
health concern a person might have with sugar or with fat. Why is the
U.S. Congress singling out tobacco, was essentially their message over
a hearing that lasted more than 7 hours.
Chairman Waxman, Mike Synar, and others did, in my view, a
superlative job trying to put the key issues on the record. When it
came to my initial turn I felt that it was especially important to get
the executives' position on whether nicotine was addictive. We had them
all in front of the U.S. House of Representatives, the Subcommittee on
Health. They were under oath. So I simply said I am going to go down
the row. I am going to go down the row and ask each one of these
executives one after another whether nicotine is addictive. So I began.
The first executive said nicotine was not an addictive substance. The
second executive said that nicotine was not addictive. The third one
raised questions again about why anyone would possibly have
reservations about this issue, specifically why we would be asking
whether nicotine was addictive. And all of the executives then under
oath said for the first time that nicotine was not an addictive
substance.
They contradicted the Surgeon General, who has come before health
committees in the Congress for more than 20 years, and perhaps even
more importantly, they contradicted what their own executives were
saying for more than 30 years. That, of course, came out after the
hearing took place. But what has been especially telling is that, after
that historic hearing in 1994 when the executives said nicotine wasn't
addictive and didn't target kids, a voluminous record has been made by
various committees in the Congress which documents and makes very clear
that these executives, in fact, knew all along that nicotine was
addictive. There was not any question in their minds about whether it
was addictive.

[[Page S5212]]

Their own documents had proved that. But yet they told the U.S. House
of Representatives, the Subcommittee on Health, and myself specifically
under oath that nicotine was not addictive.
I think that moment contributed in a significant way to our achieving
a chance now to pass important legislation to protect our children. But
there were a number of other important issues that were brought up that
day before the Health Subcommittee that have implications even this
evening as the Senate considers this historic legislation. And I would
like to just touch on one of those.
At that hearing, it came to light that one tobacco company, Brown &
Williamson, was in fact genetically altering nicotine in order to give
it an extra punch, in order to make it more addictive to children and
others who used the product. The Food and Drug Administration under the
leadership of David Kessler had essentially brought this to light. The
committee confronted the Brown & Williamson Company, and they were
under oath and said that they would cease utilizing this high-nicotine
tobacco called 1Y. So this was more than 4 years ago. It came to light
as a result of the investigative work done by the Food and Drug
Administration.
After the Brown & Williamson Company was caught using 1Y, this
genetically altered, high-nicotine tobacco, they said they would not do
it anymore.
A number of things happened over the last 4 years. One of them was
that I had the honor of being chosen by the people of Oregon to serve
in the Senate, and I was chosen to serve in the Senate January 30 of
1996. Having had the additional privilege of being named to serve on
the Senate Commerce Committee under the outstanding leadership of John
McCain, and our ranking Democrat, Fritz Hollings, I had a chance to
participate in the next round of important tobacco hearings under John
McCain's leadership. We held a number of them prior to the committee's
consideration of the legislation that is now before us. And when
Senator McCain asked the executives--and a number of them, of course,
are new--to come before the Senate Commerce Committee, I asked Brown &
Williamson what was the current status of the use of 1Y genetically
altered, high-nicotine tobacco.
The reason I asked the question is that I had read news reports that
this special, genetically altered, high-nicotine tobacco was in fact
still being used by the Brown & Williamson Company even though the
company had said under oath that it would no longer use this
genetically altered, high-nicotine tobacco. And in fact at that
important hearing chaired by our leader on the committee, John McCain,
Brown & Williamson said in fact that they are now working off a small
stockpile of genetically altered nicotine. There is already a criminal
investigation underway.
The reason that I bring this to the attention of the Senate tonight
is for just one reason. If this company is so brazen as to engage in
this conduct, having promised the American people that they would no
longer do it again, and now being watched under the scrutiny of the
Congress, what will it be like, Mr. President and colleagues, when in
fact the hot spotlight is turned away from tobacco? This company has
engaged in activity that they pledged to the American people they no
longer would engage in, and they told the McCain committee that they
are now working off a small stockpile of genetically altered, high-
nicotine tobacco and that this product is being used in our country and
overseas.
The other reason that I bring this to the attention of the Senate,
Mr. President and colleagues, is this goes right to the heart of the
industry's argument that it is a new day and that they are pursuing a
new standard with respect to corporate citizenship. Before the McCain
committee, the executives came and said: We realize that what happened
in yesteryear was no longer acceptable. We are going to clean up our
act. We are going to make sure that young people are not targeted.

I think it is the impulse of all of us to say, new executives, new
day; let's look at this anew. But when it came to light that Brown &
Williamson was again using genetically altered, high-nicotine tobacco
after promising the American people and the Congress that they would no
longer engage in the practice, that is a pretty blatant contradiction
of the claim that things really are different, that it is a new day,
and that tobacco companies want to clean up their act.
As we consider this legislation on the floor of the Senate, Mr.
President and colleagues, the Justice Department continues its inquiry
into the use of this genetically altered nicotine, and there have
already been criminal pleas that have been entered into.
Now, having said that, and noting some of the great challenges, let
me also talk about what I think is a significant success, and I am
particularly pleased to have an opportunity to do it while Chairman
McCain is here and on the floor of the Senate.
Mr. President and Chairman McCain, I will tell you that when I left
the Waxman hearings in 1994, walking out of that hearing room with the
late Mike Synar, I told him that I was not convinced that we would make
real headway in this fight to protect our children in our lifetime. I
said to Mike Synar, ``We are going to be up against all of the odds. We
are going to be up against a lobbyist tidal wave. I am not sure we are
ever going to do it in our lifetime.''
We lost the late Mike Synar years before his time, but a lot of us
said that we are going to continue that work. And we have the
opportunity to do it because Chairman McCain was courageous enough to
take on this issue, come to Members of the Senate like myself, come to
the public health groups, and say that we are going to focus on this
issue until we get it done.
He did not minimize how tough a job it was. All he has to do is look
down the row of his committee members. He has our good friend, Wendell
Ford, sitting a few places away from me. It is going to be a challenge
to get Wendell Ford and Ron Wyden to support a bill. We both did in the
Senate Commerce Committee.
I commend Chairman McCain at this time because we would not be on
this floor, we would not have made as much progress, had he not been
willing to take this issue on. I say to you, Mr. President, and to the
country, we have come a long way. If you had told me 4 years ago, when
I walked out of the Waxman hearings, that we would now be debating
whether to impose fines of billions of dollars on companies that do not
meet tough targets in reducing youth smoking, if you had told me 4
years ago that we would be having a debate on how to do that and impose
those penalties, I would have asked you, ``What are you smoking?''
Because I thought there would never ever be an opportunity like that in
my lifetime.
We have that opportunity because John McCain has focused on this
issue and brought together a group in the Senate that certainly does
not agree on every single issue--that has been very clear--but does
agree on how important it is to focus on this and get the job done.
Now, I do want to touch for just a few additional moments on several
of the specific issues that have been important to me, and talk for a
bit about why that is the case.
First, I am certain that many Members of the Senate have not heard
about the accountability requirements that are in the legislation that
we take up this week. And the word ``accountability,'' for me and most
public health specialists, is probably the single most important word
in the discussion of this whole subject, because in the past it has not
been possible to hold the tobacco companies accountable. For all of the
past legislative efforts designed to rein them in--the Synar amendment,
the early warning labels, the restrictions on electronic advertising--
the industry would use their marketing and entrepreneurial talent and
would find a way around them. So when we focused on enforcement issues
in the committee, I began to discuss with Chairman McCain and the
bipartisan leadership of the Senate Commerce Committee how we could
assure our children and future generations that there would be an
ongoing watchdog who would scrutinize the practices of the tobacco
companies when they inevitably try to get around the new law that I
hope this Congress passes and that I know President Clinton will sign.
The tobacco companies, once again, when we get a new law, will put
their

[[Page S5213]]

entrepreneurial and marketing talent to the task of getting around it.
They will have scores of slick strategies to employ to try to get
around these protections. With the accountability requirements in this
legislation, we will have an ongoing watchdog who will be in a position
to let us know when the tobacco companies start trying to evade an
important new public health law, as they have done every single time
for decades.
With the accountability requirements, public health officials, the
Surgeon General, the Director of the Centers for Disease Control, and
the Office of Minority Health, will be involved in looking at company-
specific behavior to determine whether a company is trying to evade the
requirements of this law. They will be able to recommend at any time
that a company that seeks to evade the strictures of this statute ought
to have any liability protection they have pulled. Tobacco companies
clearly have not been straight with the Congress. All their documents
that came out after the 1994 hearings that contradicted what the
executive said under oath in 1994 have made it very clear to me the
single most important word in this debate--the single most
intellectually honest word in this debate--is ``accountability.'' I,
again, thank Chairman McCain and his staff. They were under a lot of
pressure from powerful interests to essentially strip out these
accountability requirements. Once again, Chairman McCain hung in there
for the public health, and I want to tell him how much I appreciate
that.
There are two other issues I would like to touch on briefly, with the
first being the issue of the health care of our minority citizens and
those in communities inhabited by many minority Americans. For years,
again as has come out in documents since the 1994 hearings, the tobacco
companies have shamelessly targeted these minority youngsters and
minority communities to sell their products. I think it is critically
important now that in this legislation there be resources specifically
targeted to these minority communities and to minority youngsters who
are preyed upon by the tobacco industry. This legislation provides a
first step toward addressing the health concerns of minorities by
assuring that all of the State efforts for smoking cessation and
prevention include minority populations, and that services can be made
available through community-based organizations.

In the Congressional Black Caucus, for example, Congressman Bennie
Thompson has done a yeoman's job in terms of trying to focus both the
other body and the U.S. Senate on this issue. I know they have talked
about this with Chairman McCain. This issue is not one that we are
going to allow to be swept under the rug. It is not right to see so
many minority youngsters get involved with tobacco at an early age, and
it is unconscionable the way these tobacco companies have targeted our
minority communities. In addition to the support for the State plans
for smoking cessation and prevention, the Office of Minority Health
will be represented on the accountability panel. In my view, this is a
significant win for the cause of minority health.
We are going to have much to do as we consider these questions
through the rest of the debate in the U.S. Senate and in the House. I
am particularly troubled about the prospect that some of the focus on
improving the health of our minority citizens, and specifically seeing
a reduction in smoking among minority youngsters, will get lost if the
final judgment by the Congress on this issue is to create a State block
grant approach. I don't want to see this issue, which has been
neglected for so long, lost in some sort of amorphous block grant
where, once again, the health needs of minority youngsters and minority
communities get lost. So there are going to be a number of Members of
the U.S. Senate who care about this issue, particularly Senators
Jeffords and Harkin, and I am looking forward to working with them to
strengthen the minority provisions, minority health provisions of this
legislation. I know that Congressman Bennie Thompson is going to bring
his talents and energy to doing that as the House considers the bill as
well.
Finally, there is one last issue I would like to raise. I have been
talking tonight about the needs of youngsters in the United States. I
represent the people of Oregon. I have the privilege of representing
them, serving with my colleague, Senator Gordon Smith who, in my view,
has been a very strong voice for protecting youngsters in this debate.
I appreciate that very much. We are both very proud to represent
Oregon, and to work to improve the health of youngsters all across this
country.
But I come tonight, as well, to talk about an issue that I think
ought to strike at our moral conscience, and that is, as I have said,
to say that it is critically important that we protect kids in Bend,
OR, across the country, in Bangor, ME, and communities in between. But
it is also critically important to protect kids in Bangladesh and
Bangkok, because a child is a child is a child. And I hope--it is my
fervent hope--that when this bill heads to the President of the United
States, that we will have put in place extremely strong health
protections for youngsters across the world.
Let us not say on our watch that to pay for a settlement, a tobacco
settlement in the United States, the children around the world lost
their health. Let us not sacrifice the lungs of youngsters around the
world to pay for a settlement here. Let's protect kids in the United
States. That is what we have a sworn obligation to do. But let us not
forget youngsters around the world who don't have lobbyists, who don't
have lawyers and the great array of talent that so many powerful
interest groups have.
I will say that if we don't speak for those children all over the
world on our watch--the Presiding Officer of the Senate and I are about
the same age, I am a little older, I resent that, but a little older--
but on our watch, millions of youngsters around the world will get sick
during our lifetime and die needlessly. I know that the Presiding
Officer and all our colleagues don't want to see that. That is why I
think it is so important that we pass the provisions in this
legislation that will protect youngsters around the world when the
tobacco companies target them.
Make no mistake about it, that is the game plan. The game plan for
the tobacco companies is consumption is going down here--it is well
documented--and it is going up at a staggeringly high level around the
world. The evidence shows, for example, that for every smoker who quits
in the United States, two start in China. There are countries around
the world that actually are in support of companies that sponsor
contests to see how many cigarettes a youngster can smoke at one time.
If we don't take the steps to protect these youngsters around the world
who are envisaged in the McCain legislation before us, we will have the
bizarre situation where a tobacco company in the United States won't be
able to slap a decal on some car or something that is utilized at a
sporting event, but that same company will be able to participate in
these contests around the world to see how many cigarettes a youngster
can smoke.
I don't think we ought to have that kind of double standard where we
say we are going to protect kids here but we are really not much
interested around the world. I know that this is an issue that a lot of
Members are not familiar with, but we are going to take the time over
the next few days and, in the days ahead, to make sure that they are,
because I think those kids count, too.
The legislation before us today is not all that I would want, and it
is not all that Senator Durbin and Senator Wellstone and Senator Harkin
and many others who have been interested in this issue would want
either. We really had our ideal plan and consideration in the Senate
Commerce Committee. Chairman McCain was straight and realistic with us.
We knew that we couldn't win that kind of package on the floor of the
U.S. Senate, so we vowed that we were going to lay a foundation to
protect the health of youngsters around the world, as well as
youngsters here, and that is what we have done in this legislation.
It wouldn't be my first choice, but to tell you the truth, Senator
Hollings, who very graciously worked with us essentially nonstop over
the weekend, wouldn't think it is his first choice either. But that is
what the legislative

[[Page S5214]]

process is all about. What this legislation does with respect to kids
around the world is very, very important.
Make no mistake about it, it is a strong beginning at laying out a
global policy to protect kids around the world. It essentially does
three things.
First, for all time--for all time--it gets the Federal Government out
of the business, through the U.S. Trade Representative and other
agencies, of promoting the sale of tobacco overseas. For the first
time, the U.S. Trade Representative will be directed to consult with
the Department of Health and Human Services concerning any trade
actions related to tobacco. The U.S. Trade Representative will not be
acting in a vacuum. They are required to let the Congress of the United
States know when tobacco companies approach them on these matters. I
think it is fair to say that with respect to the role of the U.S. Trade
Representative and the Federal agencies that are charged with leading
the international trade effort, that never again, as a matter of
Federal law, will we have them promoting the sale of tobacco overseas.
Second, for the first time, we will require that U.S. health warnings
on cigarette packs for exports are carried in a specific way. In
effect, we are making it clear that the kind of warning labels, health-
specific, that we have in the United States have to apply overseas. If
the other governments around the world choose to put another warning
on, it has to be substantially similar--substantially similar--in terms
of the warning provided to our citizens.
It would not be right, as our colleague Dick Durbin has said, to let
them off by putting on a warning, ``Well, cigarettes may cause bad
breath,'' or, as some have seen in other parts of the world,
``Cigarette smoking may be inconvenient to your neighbor.'' That won't
do.
Around the world, as a result of the legislation incorporated into
the McCain bill that we are considering now on the floor of the U.S.
Senate, the warning that is health specific used in our country will
have to be used around the world by regulation unless it is
substantially similar. Those labels will make it clear that smoking is
harmful, and they will be scientifically based.

The administration is charged with finding the most effective
compliance mechanism and assuring that the labels are in the language
of the country of destination. That is extremely important and
something long sought by the public health groups.
Finally--I guess our colleague from Missouri, Senator Ashcroft, took
particular issue with this--this for the first time puts resources into
the effort to work in an educational fashion around the globe. Several
hundred million dollars is devoted to our participation in these global
kinds of health efforts which are critically important, because if, for
example, we learn about an important educational innovation that really
does reach kids--for example, some of the counteradvertising that is
already showing real promise in deterring youth smoking--we want to
make sure that this kind of information is easily shared with the
global network of public health specialists.
This isn't going to be sort of sock the Government. This is to make
sure that kids around the world don't get sick. If we can prevent those
illnesses, those countries will be able to avoid some of the much
larger medical bills which often, as our colleagues know--particularly
the Presiding Officer of the Senate because of his role in foreign
affairs--and avoid coming to our Government to ask for support to deal
with it.
So again, if we can prevent these illnesses among young people,
particularly as it relates to tobacco, my sense is that the Presiding
Officer of the Senate will see fewer demands for help with much greater
medical bills which will come about as youngsters get hooked and
addicted to tobacco.
Finally, the bill sets up a system to combat smuggling, and in much
the same way the Federal Government today enforces the law against the
smuggling of alcohol. And in regard to the smuggling provisions, I
particularly want to commend the Senator from New Jersey, Senator
Lautenberg, who has long been involved in this issue.
The tobacco companies, as a number of our colleagues already noted to
me, do not want these provisions in this legislation. They do not want
these provisions to ruin their business plans to target kids overseas.
That is what the game plan is all about, Mr. President, and colleagues.
It is about recognizing that consumption is going down in our country
and skyrocketing around the world. With the export provisions, through
removing the U.S. Trade Representative and Federal officials from the
business of promoting tobacco permanently, through the warning labels,
through the funds to participate in educational efforts, we make a very
strong start to protect kids around the world. And I again thank
Chairman McCain for his help.
Mr. President, I want to wrap up with one last point.
I think I am the only Member of the U.S. Congress on either side who
had the privilege in the last few years to participate in historic
hearings in both of the Commerce Committees. I had the honor of serving
on Henry Waxman's subcommittee as a Member of the other body and I am
now honored to have the chance to serve with John McCain, who has done
so much to bring this bill to the floor tonight.
I will say that I think we have a once-in-a-lifetime opportunity to
protect kids. That is what this is all about. At the end of the day, it
is not about all these arcane and technical questions that we are
debating on the floor of the Senate. That is not to say those questions
are unimportant. They are. They are very important.
I will tell you, all of our colleagues who I have heard have been
asking important questions. But as we ask those important questions,
let us not lose sight of the end game here, which is to protect kids.
We have a President who is willing to take on the tobacco lobbies.
That is a major reason we have come thus far. We have a chairman of the
Senate Commerce Committee who has reached across both sides of the
aisle to try to fashion a strong bill. We have public health groups all
over this country who have made the case with their volunteers, with
their physicians, with their nurses, with all of the individuals who
participate in these superb organizations that now is the time, now is
the time to act. And that means passing a bill in this Senate.
It is not going to be the perfect bill. It is not going to be what
any of us would like in an ideal world. That is why I said there are a
number of aspects of the export provisions that I was very bothered to
see disappear. Senator Hollings has concerns about what is in there--
that is the process of fashioning legislation--but we were able to make
a strong start at protecting our kids. And if the Senate passes this
bill, and does it in a timely way, we can make a difference for kids
here and around the world.
But I say, Mr. President, and colleagues--and I will conclude with
this--the clock is ticking. It is not exactly an atomic secret that
there are not many days left in the session. And delay is the best
friend that the advocates of the status quo could possibly have. Delay
is the very best friend of the tobacco lobbies that want to engage in
business as usual. Delay is a perfect opportunity for all of those who
say, ``Tobacco company profits ought to come before the health of kids,
that, well, we just have to study this longer. We don't know all the
facts.''
I say, Mr. President, and colleagues, that we will have a chance all
the way through this process, through the amendments on the floor, and
the House considers its legislation and passes it, as we go to
conference, we will have a chance to learn more, to refine this
legislation and to improve it. That is what we did through the many
hearings that were held in the Senate Commerce Committee. That is what
has happened through the work done by the Labor Committee, the
Judiciary Committee, with so many of our colleagues on both sides of
the aisle. But let us not miss this opportunity to pass this
legislation. We have to do it soon. The clock is ticking.
Mr. President, this bill will be good for our children. More
importantly, it will be good for our children's children. It is my
fervent hope that this Senate passes this legislation, and does so in
an expeditious way.
Mr. President, I yield the floor.
Mr. McCAIN addressed the Chair.
The PRESIDING OFFICER. The Senator from the great State of Arizona.

[[Page S5215]]

Mr. McCAIN. Before my colleague from Oregon leaves the floor, I
express to him, first of all, my appreciation for his kind remarks,
which I do not deserve. Second of all, I thank him for all the work
that he has done on this legislation. Without him and his incredibly
active participation in this effort, we would not have been able to
reach the goal of getting a bill through the Commerce Committee and now
to the floor of the Senate.
But most importantly, I thank the Senator from Oregon because he was
involved in this issue very long before I or most of the Members of
this body were involved. He and former Congressman Synar embarked on
this effort long ago. And sometimes we have a reputation, which is well
deserved as politicians, of butterflying from one issue to the other
and forgetting the one of yesterday for the one of today and tomorrow.
Senator Wyden does not take that approach on any issue, but on this
issue he has been steadfast. He has been courageous. And, very frankly,
he has been criticized from time to time, when the mood of the country
was not as it is today. There was a time when we did not know all of
the details about the tobacco companies having deceived the American
people. There was a time when the tobacco lobby, we all know, had a
much greater influence on both sides of the Capitol than today. It was
during those times that Senator Wyden carried the torch for the
children of America.
I will always be grateful to him. And history will record that
Senator Wyden was a key and vital player in that effort. So I extend my
gratitude to Senator Wyden and remind him that we have a great deal yet
to do. I know I can count on him to do it.

EXPLANATION OF VOTE

Mrs. BOXER. Mr. President, I wish to inform the Senate of the reason
I voted ``present'' on the Faircloth amendment related to attorneys'
fees in tobacco litigation.
I abstained on this vote because my husband's law firm is co-counsel
in several lawsuits against tobacco companies filed in California state
court by health and welfare trust funds.
The Ethics Committee has advised me that voting on an amendment such
as this ``would not pose an actual conflict of interest'' under the
Senate Code of Conduct.
However, I decided that this vote could create the appearance of a
conflict of interest and therefore I abstained by voting ``present.''

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