STATEMENT OF
J. PHIL CARLTON

BEFORE THE SENATE COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY

SEPTEMBER 11, 1997

My name is J. Phil Carlton. I am a lawyer in private practice in Raleigh, North Carolina. I previously was an Associate Justice of the North Carolina Supreme Court. I was one of the negotiators for the tobacco side in connection with the Proposed Resolution that was signed on June 20, 1997, by various State Attorneys General, counsel for plaintiffs in tobacco class actions, representatives of the public health community, and the tobacco industry. I appreciate the Committee's invitation to provide testimony regarding the agreement.

The main features of the agreement are by now well known.

First, Congress would enact legislation putting tobacco products squarely within the jurisdiction of the Food and Drug Administration. This legislation would end the controversy regarding FDA's assertion of jurisdiction over tobacco products, and would create a regulatory framework tailored to the special issues presented by these products.

Second, all of the provisions of the FDA's tobacco rules designed to reduce underage tobacco use -- all of the FDA's sales and advertising restrictions, every one of them -- would be put into effect, and in some cases would be extended much further. A new set of warnings would be required on tobacco product packages and advertising.

Third, going beyond FDA's rules, targets for reducing underage tobacco use in the next ten years would be established, and the industry would be held financially accountable if those targets were not achieved, without any showing of fault or responsibility on the industry's part.

Fourth, Congress would enact legislation establishing a federal standard on smoking in public places that would implement the proposals of some of the industry's severest critics. State and local governments would have the authority to go even further.

Fifth, the industry itself would provide funding under the agreement for enforcement of the new rules, as well as provide funding for such other purposes as Congress and the President may decide. Industry payments over the next 25 years would total $368.5 billion (with adjustments for inflation and volume changes), and the industry's payment obligations would continue indefinitely into the future.

Sixth, the agreement would settle conclusively some of the major civil litigation involving tobacco issues currently pending in the nation's courts, while preserving the right of individuals to seek compensation from the tobacco companies now and in the future for any alleged tobacco-related injuries.

The Proposed Resolution is truly extraordinary. It goes even further than the FDA went in its tobacco rules (and, in some cases, further than FDA could go); it accomplishes results -- principally in regard to tobacco advertising and promotion -- that many believe could not be achieved by legislation or regulation for constitutional reasons; it establishes national standards for public smoking, which state and local governments can exceed; and in general it provides a comprehensive, national resolution of many of the controversial issues surrounding the use of tobacco products that simply could not be ordered by any court.

The agreement has been forcefully advocated, by the Attorneys General and public health representatives who negotiated it, and by others, as offering an unparalleled opportunity to reduce underage tobacco use and advance the public health. For its part, the industry -- while recognizing that many of the agreement's provisions will be onerous and even painful -- supports the agreement as the best possible means of ending a culture and climate of confrontation that ultimately will benefit no one.

The agreement already has been criticized on a number of grounds -- the FDA provisions unduly limit the agency, the "look back" provisions are too weak, the smoking standards do not go far enough, the agreement should cover cigarettes for export, etc. Many of these criticisms, ironically, have been expressed by individuals who until now had enthusiastically advocated the very approaches to tobacco control that are reflected in the agreement. Tobacco control measures that used to be considered more than sufficient to reduce underage tobacco use are now assailed as inadequate, and sums of money that should stagger the imagination -- and go far beyond what the FDA proposed -- are now dismissed as paltry.

Perhaps this is to be expected. But I hope that as this Committee considers the proposed agreement it will keep in perspective the sweeping and fundamental change in tobacco control policy that the agreement, as written, represents, and will listen with particular care to the Attorneys General and others in the public health community who negotiated it and support prompt Congressional action, lest the opportunity be lost. The agreement is not ideal -- from anyone's standpoint -- but it is achievable; and what may be considered to be the ideal should not be the enemy of what can be achieved.

Before concluding, I would like to speak briefly to the issue of how tobacco growers can expect to fare under the proposed agreement.

Aside from keeping the FDA "off the farm" and providing absolute protection against tobacco-and-health lawsuits, the Proposed Resolution does not itself make provision for the growers. The growers were not part of the negotiations, and the parties therefore decided not to attempt to fashion terms that would address their interests. On the other hand, no one doubts that the interests of the growers should be addressed, and will be addressed, before the agreement is translated into law. Decisions regarding the allocation of industry payments under the agreement will be made by Congress and the President, and the tobacco industry will definitely support the allocation of an ample portion of those payments to growers.

I would be glad to answer any questions.