Senate OKs landmark tobacco-regulation bill

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By Helen Dewar
The Washington Post

WASHINGTON — In a breakthrough for long-stalled tobacco legislation, the Senate yesterday overwhelmingly approved a newly struck deal to regulate manufacturing, marketing and sales of cigarettes in return for an industry-financed buyout of tobacco farmers.

Despite the 78-15 vote in favor of the Senate proposal, its backers cautioned it could still get derailed in negotiations over the huge, complex and controversial corporate-tax-relief bill to which it is attached.

It was the first time that either house approved regulation of tobacco by the Food and Drug Administration, according to a coalition of public-health groups.

The proposal would give the FDA broad authority to regulate sale, distribution and advertising of cigarettes and other tobacco products — with the aim of reducing addiction and smoking by children and teenagers, according to its sponsors.

Among other things, the measure empowers the FDA to bar industry advertising aimed at children, end vending-machine and self-service sales, require stronger and more conspicuous warning labels, bar or limit use of hazardous ingredients in cigarettes and prohibit "reduced-risk" health claims if they cannot be verified.

Tobacco companies would have to give the government a list of all ingredients and additives in tobacco products, along with any new documents relating to health and other effects of tobacco use. The FDA could require that ingredients be listed on the product packaging.

The FDA could also require changes in tobacco products, such as reduction or elimination of additives, but it could not ban the products themselves without congressional authorization, which appears unlikely at this time.

These proposals go far beyond current government regulations, which are limited largely to advertising constraints and health-warning labels, according to Sen. Mike DeWine, R-Ohio, who cosponsored the regulation proposal with Sen. Edward Kennedy, D-Mass.

The FDA tried in the mid-1990s to expand its regulation of tobacco but was stopped by the Supreme Court, which found that it lacked the power under existing law.

The Altria Group, parent company of Philip Morris, has endorsed the regulation proposal, but other large tobacco companies oppose it. R.J. Reynolds Tobacco Co. issued a statement yesterday saying the deal "fails to make U.S. tobacco farmers more competitive and would be financially disastrous for tobacco manufacturers, their employees, their business partners and adult smokers, many of whom are lower- and middle-income wage earners."

Under the buyout proposal, the tobacco industry would pay farmers to abandon a quota system — aimed at limiting production and bolstering prices — that dates back to the 1930s but has since lost much of its value to individual farmers.

Manufacturers of cigarettes and other tobacco products would be assessed $12 billion over 10 years to finance the buyout, with each company's contribution pegged to its share of the market. The cost is likely to be passed on to smokers and could increase the price of cigarettes by about 6 cents a pack, according to congressional aides.

The deal arose largely out of the fact that the buyout plan, a political "must" in tobacco-producing states, appeared doomed without support of tobacco foes who were demanding more government regulation as the price for their support.

It was a "shotgun marriage ... that made sense," said DeWine.

Sen. Jim Bunning, R-Ky., said he opposed government regulation of tobacco but was willing to accept it as price for a buyout. The House approved a government-financed buyout but later withdrew its support for government financing. Its bill did not include FDA regulation, which is less popular in the House than it is in the Senate.

Pressure is strong for approval of the tax measure because European countries are levying tariffs until the United States replaces export subsides outlawed by the World Trade Organization. But it includes costly special-interest provisions and other features that may be difficult to deal with.

The core of the tax bill eliminates the exporters' tax break and replaces it with new tax cuts for manufacturers. The House and Senate also used the bills to streamline some international tax rules.

In addition to the tobacco buyout and cigarette regulations, dozens of other items had already been attached to the corporate-tax bill, one of the few things that lawmakers expect to be completed during this election year.

Billions in tax breaks for energy producers, a short tax holiday for companies amassing profits overseas, a new federal deduction for state sales taxes, and dozens of changes designed to close tax loopholes are among those additions.