Bliley PM
Presentation to the Board
Abstract
Contains slide presentation to board of directors concerning issues facing the tobacco industry. Discusses the Administrations objective of a "smoke-free society." States that the "overall environment for tobacco could be rapidly deteriorating." Outlines what has occurred and presents strategies and plans "to seize the initiative wherever possible." Discusses media activity in regard to the tobacco industry. Notes lawsuits, in particular the libel suit against ABC for their spiking story featured on "Day One." Discusses actions taken on the state and local level that "contribute to the negative environment."
Fields
- Company
- Philip Morris Cos., Inc.
- Type
- Speech
- Named Person
- Booker, L.
- Clinton, W.J. Pres.
- Durbin
- Elders, J. Dr.
- Giuliani, R.
- Kennedy
- Kessler, David A., M.D., J.D. (Former FDA Commissioner)appointed FDA Commissioner by President George Bush in December 1990.
- Koop, C. Everett, M.D. (Surgeon General ('81-'89))former US Surgeon General (1981-1989)
- Levine, A.
- Linehan, Kathleen "Buffy", J.D. (PM Washington Relations staffer/PM lobbyist)Philip Morris Washington relations staffer and lobbyist, VP of Corporate Affairs, also known as "Buffy"
- Moakley
- Reich
- Synar
- Wachtell, H.
- Wallace, M.
- Waxman
- Wyden
- Named Organization
- 60 Minutes
- ABA
- ABC
- Antitrust Division of the Justice Department
- Arnold & Porter (PM Counsel)Counsel for Philip Morris.
- CBS Television
- CNN
- Coalition on Smoking or Heath
- Consumer Product Safety Commission
- Day One
- Department of Defense
- Department of Labor and Industry of the State of Washington
- Environmental Protection Agnecy
- EPA
- Face the Nation
- FDA
- Florida Court of Appeals
- Food and Drug Administration
- GAO
- GE
- General Motors
- HHS
- Hunton & Williams (Counsel for Philip Morris)Counsel for Philip Morris, located in Richmond, VA.
- IN FACT
- Jack-in-the-Box
- KGF
- Maryland State Department of Licensing and Regulation
- McDonalds
- Mississippi Supreme Court
- NBC
- Nestle
- New York City Council
- New York City Parks
- New York Mets
- New York Times
- Occupational Safety and Health Administration
- Occupational Safety and Health Administration (Held hearings in 1994 to ban smoking in workplaces)OSHA opened hearings in September 1994 on a proposal that amounts to a virtual ban on smoking in every workplace in the nation
- Taco Bell
- Wachtell, Lipton
- Keyword
- Airline attendants
- Anti-smoking groups
- First Amendment
- Joe Camel
- Nicotine spiking
- Surgeon Generals Report - 23
- Tobacco wars
- Thesaurus Term
- advertising
- legislation
- mass media
- nicotine
- secondhand smoke
- tobacco use
- Brand
- Marlboro (PM)
- Subject
- Children
- Coalitions
- Economic Costs
- Federal Level
- Fire Safe Cigarettes
- Government Agencies
- Health Advocacy Groups
- Lawsuits
- Liability
- Local Level
- Ordinances
- Regulations
- Restrictions
- State Level
- Taxes
- Additives
Document Images
PRIVILEGED AND CONFIDENTIAL
PRESENTATION TO THE BOARD
MARCH 30, 1994
[SLIDE 1]
You have undoubtedly seen a great deal of adverse publicity about
the tobacco industry in the last few weeks. [SLIDE 2] There is growing
evidence that many of the attacks that have been mounted against the
industry are part of a well coordinated effort by the Administration, whose
objective is the achievement of a smoke-free society, as declared last
Sunday by Surgeon General Elders on CBS's "Face the Nation" program.
Thus, within the last few weeks, we have observed major new anti-
smoking initiatives launched by OSHA, the Department of Defense, the
Antitrust Division of the Justice Department, the Surgeon General, and
~the Food andDrug a~iministrafion. [SLIDE 31 The//drninistratidn's ' " ~
efforts have found willing accomplices among the anti-smoking activists,
who are now better organized, coordinated, and focused than ever before.
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[SLIDE 4] The combined activities of the Administration and the "antis" in
Congress and in the health community have triggered a media frenzy
which escalates almost on a daily basis. [SLIDE 5] (Albright)
Those of us who have participated in the "tobacco wars" over the
years believe that these assaults seem to represent a "sea change,'
compared to previous challenges, and that the overall environment for
tobacco could be rapidly deteriorating.
What I would like to do this morning is to provide you with a
complete description of what has occurred in recent weeks that is
contributing to the deteriorating environment. At Sea Island, we will give
you a presentation on the strategies and plans that we are implementing
to respond to these attacks and to seize the initiative wherever possible.
[SLIDE 6] I will start with a description of the initiatives that have
been undertaken by the Administration, be~.ause I believe that those
initiatives pose the most serious threat to the industry. Earlier this
morning, you received a briefing from Buffy Linehan about the federal
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excise tax proposal. As she indicated, the situation is still fluid, but we
have long recognized that one of the most serious potential threats to the
industry involves taxes. The Administration and the "antis" have
obviously come to the same conclusion, and there is no doubt that the
"antis" regard the federal excise tax as a matter of high priority. In that
connection, you will recall that it was various anti-smoking activists,
including the Coalition on Smoking or Health and Surgeon General Koop,
who first proposed a $2-a-package tax increase.
[SLIDE 7] A second leg of the Administration's attack was unveiled
last week by OSHA, which has proposed a regulation that would ban
smoking in all public buildings and gathering places, including restaurants
and bars. By way of background, you may recall that recently
Congressman Waxman introduced legislation entitled "The Smoke-Free
Environment Act". Under that proposal, smoking would be prohibited in
any building into which ten or more people enter in a week. It would
imp0seatota! smokingban on virtually everypublic building in the United
States, including private offices within buildings. The Waxman bill was
endorsed by representatives of the Administration, including Surgeon
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General Elders, The bill would place regulatory authority in the
Environmental Protection Agency. Thus far, we have been successful in
blocking Waxman's efforts to move the legislation through Congress.
However, the legislative issue may become moot if the proposed
OSHA regulation becomes effective. Under the OSHA proposal, smoking
would be permitted only in specially designed enclosed areas which have
direct exhaust to the outside. It is unlikely that very many building owners
would incur the expense necessary to provide such facilities. Companies
that are found to be in violation of the smoking ban could face significant
fines, which could be as high as $70,000 per violation for companies that
willfully fail to comply with the ban.
Secretary of Labor Reich indicated last week when he announced the
proposed regulation that the normal procedures which must be followed
before the ban can be promulgated will take approximately one year, and
that.once the regulation becomes .final~ building ownerswouldbe given ....
another year to come into compliance.
[SLIDE: 8] The OSHA proposal was foreshadowed by another
Administration assault which occurred three weeks ago, when the
Department of Defense issued a regulation that will ban smoking in all
military installations. That ban will become effective on April 8.
[SLIDE 9] Yet another initiative recently undertaken by the
Administration is the Antitrust Division's investigation of fire-safe
cigarettes. I have previously reported to you that the Antitrust Division is
investigating a complaint which it received from an anti-smoking activist,
claiming that the cigarette manufacturers have jointly agreed to avoid
marketing a fire-safe cigarette. There is absolutely no truth to the
allegation of collusive activity by the industry, .but the inquiry has attracted
considerable media attention, and the subject of fire-safe cigarettes was
the focus of a Mike Wallace "60 Minutes" segment last Sunday, about
which I will say more in a moment.
[SLIDE 10] In .discussing the.Administration's activities, one cannot .~ .
overlook the role of Surgeon General Eiders. About six weeks ago, she
issued the 23rd Surgeon General's Report. This one focused on smoking by
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kids, and leveled a broad scale attack on the industry, claiming that the
companies target children with much of their advertising. She specifically
challenged Reynolds' Joe Camel campaign. Since the issuance of her
report, Surgeon General Elders has appeared before Congressional
committees and on many television broadcasts, attacking the industry and
supporting many of the other Administration initiatives which I have
already described. While she is not as formidable as former Surgeon
General Koop, she has nevertheless become an outspoken advocate of an
anti-smoking policy.
O'o
[SLIDE 11] By far, the most threatening of the Administration's
initiatives is the one launched two weeks ago by FDA Commissioner
Kessler. In a letter which he wrote responding to a petition by the
Coalition on Smoking and Health, he first asserted the possibility that
FDA, under existing legislation, may have the authority to regulate
nicotine in cigarettes as a drug. That assertion, which represents a major
• shift in FDA"thinking, was.amplifiedlast°Friday in Kessler~s testimony -
before Congressman Waxman's Subcommittee, which was televised live
by CNN and has received extensive media coverage. It is obvious that the
FDA has committed major resources to this issue over a several-months-
long period, and we believe that Kessler is quite serious in his effort to
assert jurisdiction over tobacco. The implications of FDA regulation are
enormous. They include the possibility that the nicotine levels in cigarettes
will be mandated by the Government, and that cigarettes containing
nicotine in excess of a prescribed level may be banned, as Kessler himself
has suggested. Because of the gravity of this threat, we have arranged for
a presentation immediately following mine by our FDA outside counsel,
who will describe for you in greater detail the position that Kessler has
adopted, and its implications.
[SLIDE 12] There are, of course, many willing allies of the
Administration in Congress. Congressmen Waxman, Synar, Durbin, and
Wyden have all recently launched attacks against the industry, using their
committee chairmanships or proposed legislation as vehicles. [SLIDE 13]
On the Senate side, Senator Kennedy has intensified his attacks on the
• .industry, and has initiated a GAO investigation Of the nicotine issue, with
particular emphasis on the allegation by ABC that we "spike" our
cigarettes with additional nicotine in order to keep smokers "hooked".
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We have been advised by reliable sources that Commissioner
Kessler's new initiative was specifically approved not only by the White
House, but also by many of the Congressmen I have just mentioned before
it was launched. [SLIDE 14] We also believe that a number of hostile
Congressmen will shortly initiate an attack on the question of ingredients.
As you may know, the industry has provided the Department of HHS with
a complete list of all ingredients used in cigarettes for the past eight years
under a statute that was adopted in 1984. That legislation specifically
provides that the list of ingredients shall be held in confidence because they
constitute trade secrets. Nevertheless, several hostile Congressmen have
obtained the list from HHS, and it is quite possible that one of them will
release it publicly in violation of the statute. There is also the distinct
possibility that Congressman Waxman will hold a legislative hearing on
the subject of ingredients at some point in the near future. Because the
release of the list is likely to stimulate another frenzy in the media, we are
considering the possibility of preemptivelyreleasing ou~ list of ingredients,
along with statements by several prominent toxicologists that all of the
ingredients which we use are contained on various governmental lists of
ingredients which are approved for use in food or tobacco, and that none
of the ingredients as used in our cigarettes poses any health threat.
[SLIDE 15] Congressman Moakley is pushing a bill through
Congress which would mandate the production of fire-safe cigarettes
under a test standard and on a schedule which has yet to be determined.
Enforcement jurisdiction would be vested with the Consumer Product
Safety Commission. We have been working with Moakley in the hope that
the final legislation ends up being something we can live with. It appears
likely that some legislation in this area will pass the Congress this year.
[SLIDE 16] Having described the recent activities of the
Administration and of Congress, I will now discuss recent attacks by major
media organizations. Of course, as you would expect, all of the
Government initiatives which I have mentioned have received extensive,
and generally unfavorable, media treatment. [SLIDE: 17] With respect to
in~ependenf initiatives by the media,themost OUtrageous atta~ks were
those contained in two segments recently broadcast by ABC's "Day One"
program. These segments are claimed by ABC to emanate from a year-
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long investigation of the cigarette industry, and were said to be part of a
series of segments which will air in the weeks ahead.
[SLIDE 18] The first program appeared on February 28 and centered
on an allegation that cigarette manufacturers add significant quantities of
nicotine to their products in order to keep smokers addicted. This
allegation was immediately and warmly embraced by hostile
Congressmen and the "antis", and led to a several-day-long media frenzy.
Even President Clinton expressed his concern over the ABC allegation on a
weekend show broadcast by ABC. [SLIDE 19] There is absolutely no truth
to the allegation, and although we specifically denied it to ABC before the
program aired, and to the world at large after the program appeared, our
denials were lost in a sea of newspaper articles and television reports
which focused on the sensational statements made in the ABC story.
[SLIDE 20] After careful consideration, and consultation with
.... " " outSid~ counsel;we concluded that We had a basis forinitiating a libel Suit~ •
against ABC, and, as you know, we filed that suit last Thursday. The
Complaint alleges that ABC knowingly made a number of false allegations
