Abstract
This 67 page R.J. Reynolds (RJR) document is a run-down on how the tobacco industry deals with threats. In one example from this document, RJR was threatened by a government-instituted smoking cessation program, and worked to defeat the program:
In 1986 the U.S. Department of Defense initiated smoking cessation programs in all branches of the armed services with a goal of reducing smoking prevalence among military personnel to 10%. The RJR document concludes, "Reports indicate that such goals are reachable," and then says, "RJR is seeking to limit the impact of cessation program." The financial impact, RJR determined, was "Possibly as high as $1.8 million annually" in cigarette sales. RJR's "Action Plan" was to "Posture [the cessation program] as discriminatory and unfair toward class of individuals loyal to and serving their country." Specific actions to fight the program were: "Organize and maintain Congressional opposition to continuation of [the program]. Continue contacts with Department of Defense officials and individual services to limit the impact of cessation programs." (Bates Page 507604615)
RJR also planned to fight measures that would allow states to mandate more informative health warnings on cigarette packages, saying "This would greatly increase RJR's exposure to adverse results in smoking and health litigation." RJR put the potential loss at "upward of several hundred million dollars annually." The overall strategy to fight these measures was to "Focus the debate on the success of [existing federally-mandated warning label] provision in communicating health warnings about smoking to the public." Their "fallback plan" was to throw communities a harmless bone, permitting laws to be passed instead that would only "Limit scope of preemption so that it does not prevent localities from reasonably regulating placement of billboards advertising cigarettes." (Bates page 507604591).
To fight cigarette excise taxes, RJR's overall plan was to "Focus debate on excise taxes as regressive, working man's tax rather than 'sin' taxes or user fee." Specific plans to oppose taxes included "Reintroduce legislative resolutions opposing increase in excise taxes," and "placing favorable op-ed articles from noted economists in major and select local papers." Costs to implement this plan included fees paid to anti-tax front groups, public relations groups, RJR employees and the Tobacco Institute.
For the issue of environmental tobacco smoke (ETS), RJR says, "Increased smoking restrictions affect consumption, and the beginnigns of lawsuit exposure in U.S. offer prediction of things to come internationally." RJR deems the financial impact of smoking restrictions to be "Substantial (expressed both in consumption fall-off and defense and political costs)..." It's also clear that Philip Morris was the leader in fighting efforts to regulate ETS worldwide: "Action Plan: Evaluate effectiveness and decide whether to join the current international activities led by PM." (Bates Page 507604593).
User-Contributed Notes
- Multiple country document on how tobacco industry deals with threats, includes information about strategies for opening Asian markets to tobacco well as well as US domestic strategies
Fields
- Quotes
FEDERAL PREEMPTION FOR CIGARETTE WARNINGS
Issue:
There is a growing Congressional interest in repealing preemption for cigarette labeling and advertising, allowing states/localities to require additional labels on packages and in advertisments and effectively overturning favorable Federal Court of Appeals decisions in product liability cases. This would greatly increase RJR's exposure to adverse results in smoking and health litigation. RJR opposes any attempt to delete or modify preemption.
Financial Impact:
Product Liability Cases: Potential loss upward of several hundred millin dollars annually.
Advertising: Uncertain, but potential loss of national advertising due to multiple warning requirements impacting new product introduction and maintenance of current markets.
Action Plan:
Overall: Focus debate on the success of federal preemption provision in communicating health warnings about smoking to the public.
Specific:
1. Organize tobacco-land Members of Congress to lobby House Energy and Commerce Committee (letters and personal visits).
2. Develop and maintain coalition of majority of the Health and Transportation Subscommitees' members who oppose repeal through contacts with Members and staff.
3. Obtain commitment from Chairman of Senate Commerce Committee to hold repealing legislation if it reaches Senate and transmit position to House Committee.
4. Utilize ad gorups (Freedom to Advertise Doalition, ANA, AAAA) to lobby members on impact on national advertising.
5. Utilize business product liability groups to lobby Members of Congress.
Fallback Position:
Limit scope of preemption so that it does not prevent localities from reasonably regulating placement of billboards advertising cigarettes.
Cost to Implement Action Plan:
No additional costs above existing salaries and fees paid to: RJR employees, Tobacco Institute, FAC, AAAA, ANA...
- Rank
- 1
- Company
- R.J. Reynolds Tobacco Co.
- Author
- Foreman, D.D.
- Recipient
- Ainsworth, W. Eugene (RJR VP, Government Relations)
W. Eugene "Gene" Ainsworth Jr. served as the Vice President of Government Relations for R. J. Reynolds Tobacco USA in 1984 and 1987 and as Senior Vice President of Government Relations for RJR Tobacco USA in 1988 & 1989. (Source: R. J. Reynolds Summary - RJR Liability Notebook).
TypeReport
SubjectAdvertising Regulations
Agricultural Subsidies
Airlines
Cessation
ETS
Exports and Imports
Fire Safe Cigarettes
Pesticides
Political interference
Political participation
preemption
Taxes
Vending Machines
Veterans Affairs
Warning Labels
addiction
Document Images
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Z~= cF crrrIOM
Title
I. Tobacco rssues
FEB z o wD
Regulation of CFC ...................................... 1
Federal Preeuption for Cigarette Warnirgs .............. 2
Cigarette E~ocise Tawes ................................. 3
Erzvix+crarnsYtal Zhbaoflo SZnok,e . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
FDA ,7lirisdiction over Cigarettes ....................... 5
Fire Safe Cigarettes ................................... 6
Ciqarette Adverti.sinq Restrictions ..................... 7
EC Canoer P.r+oqraWhm Anti-SZnoking Efforts ............. 8
Market Acoess/Retaliation Zhreats ...................... 9
Restrictions on Cigarette Exports ...................... 10
Tobacco PriceS1:pport Program .......................... 11
Tobacco Inport Restrictions ............................ 12
Tobacco Pesticide Residue Tbleranoes ................... 13
Zbrt Iaw Refozm ........................................ 14
Tobacco Export Reporting ............................... 15
Cigqarette Sales in Military Comaissaries ............... 16
Addiction Warnirg Iabel ................................ 17
Totbaooo b~m}ce Constituent Testing anci Disclosure........ 18
Vendirg Machine Sales of Cigarettes .................... 19
VA Canteen Sales of Cigarettes ......................... 20
snoking on Airlines .................................... 21
S1mo}cirq on Amtrak ...................................... 22
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p2sge ' 2
Title
~
DOD SmatciY4 Qessaticn Pt+ogram ............... ........... 23
Natiornal Age Limit ..................................... 24
II. Food I
Ornprehensive Federal Preeaption ....................... 25
Fats arxi Oils .......................................... 26
Fresh Fruit Market DevelopnerYt/Irspection and.......... 27
Quarantine Prooedures
Food AdveYtisinq Restrictiass ..........................
28
Food Pesticide Iaesidue Zblerarxoes ...... ......... ....... 29
S~xgar Price Sl.pport Program Reforms .................... 30
Fearnit Priee Stipport Program Reforns................... 31
Row CYop Price SUpport Program Refozats ................. 32
Sauth Africa Trade Sanctions........................... 33
Food Trade............................................. 34
Food Prioes............................................ 35
U.S. Central American Fblicy........................... 36
U.S.-Philippine Negootiations ........................... 37
III. corporate Issues
A. ~a
Restrictions on LIFU ................................
38
Der3uc.~tibility of Advertising Costs .................. 39
State Sales/Use Taxes on Advettising ................ 40
Taxation of Fringe Bp.nefits ......................... 41
Retention of Sec. 936 Credit ........................ 42
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page 3
Title
A. MIX
Stirtax on Oarporate Ir~s .......................... 43
Icrg-h+.rm Health Care ............................... 44
Irxxease in dorporate Ftate .......................... 45
Inteexnation3l Tax Clanges ........................... 46
Taxation ofIrnnestment Incxine on Feasion Fvn3s....... 47
Bznacl-Based Enerc3Y Tax .............................. 48
CaMaptim Tax ..................................... 49
B. Emlcnree Benefits
Per+ental Ieave ...................................... 50
Mandated Health Benefits ............................ 51
Retir+ee Health Benefits ............................. 52
C. Envi rrnm,Pnt
Solid Waste Disposal/Packaging Restrictians......... 53
Proposition 65 ...................................... 54
Clean Air Act ....................................... 55
GY+eenhou_se Effect ................................... 56
D. ~' -~adg
Eurapean CYumtuiity - 1992 ........................... 57
Soviet Trade Consortitan ............................. 58
Foreign Direct Investment in the U.S ................ 59
Trade Bill InplementatiorVS%3er 301 ................. 60
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In SepFambex 1987 the U.S. signed the Motrtx+ea.l Protocol calling for a 50%
reduction of five "ozone depleting" CECs by 1999. Fiowever, recent
scientific studies, including a recent report by EPA, indicate that
stratospheric ozone levels have declined considerably more than previously
believed. 'ihis, coupled with DuFtatt's announcement to totally phaseout its
prcd3ction of the targe'-,.ed CFCs, has increased Qongressional support for a
phasewt, rather than a phase-dcwm as stipulated in the Protocol ard for
bans on nonessential t~ses of CFCs. Moreover, legislation was introduced
last Congress requiring labeling of all products coatai.ning or made with
CFcs. Such proposals eaild have a serious iupact on R7R sinoe it uses CFC
to expaixi its tobacoo in contrast with Philip Morris who uses m2.
Aoeelerate the ckaqpany's efforts to find an alternative tobaeeo expansion
process so as to ensure a timely; appropriate response to the anticipated
CFC restrictions. Urge Congress to insist on a eoordinated international
effort to regulate CFrs. Potential Q=gressimnal action concerning
aooelerated phaseout of CFCs labeling, bans on nonessential uses are our
greatest short-term threats and should be avoided at all costs. our
opposition to these proposals must be indirect so not to invite unwanted
regulation because of tobaeco's unfavorable image.
Financial Ittmact
$50-$100 million.
Action Plan
1) Support the efforts of the Alliance for Responsible CFC Policy to avoid
unwarranted regulation of CFC at the international, federal and local
levels.
2) Line up appropriate state lobbbyists to work on the CFC issue.
3) closely follow regulatory, CFC iixiustry, and scientific developments at
all levels of government.
4) Develop a response plan to address regulatory restrictions on CFC use
which might occur prior to an alternative process being developed.
5) Continue to reduce CFC-11 usage, as justified, in existing processes.
6) Aggressively pursue eammercial availability of CFC-123 with suppliers,
and begin R7RT toxicity evaluations.
7) Accelerate develognent of high pressure expansion process.
8) Fully evaluate use of Philip Nbrris' 002 process.
9) Develop a plan to eliminate dependency on expansion agents with
potential envirormental problem.
Fallback Position:
1) Support legislation that eliminates the uses of CFCs that fail to
recapture or conserve substantial portions of CFCs that are not
consumed. At present, R7RT's process recaptures at least 95% of CFCs.
2) Push for a phaseout of 10 years or more.
3) As a last resort, license the 002 process fran Philip Morris.
Cost to I=lemer,t Action Plan:
r
Difficult to asse--s.
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Federal Preen2ttor: for Cigarette Warninas
Issue:
There is a growing Congressional interest in repealing federal
preemption for cigarette labeling and advertising, allowing
states/localities to require additional labels on packages and in
advertisements and effectively overturning favorable Federal Court of
Appeals decisions in product liability cases. This would greatly
increase RJR's exposure to adverse results in smoking and health
litigation. RJR opposes any attempt to delete or modify existing
preemption.
Financial Im2act:
Product liability cases: Potential loss upward of several
hundred million dollars annually.
Advertising: Uncertain, but potential loss of national advertising
due to multiple warning requirements impacting new product
introduction and maintenance of current markets.
Action Plan:
Overall: Focus debate on the success of federal preemption
provision in communicating health warnings about smoking to the
public.
Specific:
1. Organize tobacco-land Members of Congress to lobby House Energy
and Commerce Committee (letters and personal visits).
2. Develop and maintain coalition of majority of the Health and
Transportation Subcommittees' members who oppose repeal through
contacts with Members and staff.
3. Obtain commitment from Chairman of Senate Commerce Committee to
hold repealing legislation if it reaches Senate and transmit
position to House Committee.
4. Utilize ad groups (Freedom to Advertise Coalition, ANA, AAAA) to
lobby members on impact on national advertising.
5. Utilize business product liability groups to lobby Members of
committee.
Fallback Position:
Limit scope of preemption so that it does not prevent localities
from reasonably regulating placement of billboards advertising
cigarettes.
Cost To Implement Action Plan:
No additional costs above existing salaries and fees paid to:
1. RJR employees 4. FAC
2. Tobacco Institute 5. AAAA
3. Vern Clark & Associates 6. ANA
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igjLc_t_jaExcise Taxes
Iss ue:
Approximately 10-15 bills introduced in House and Senate increasing tax
from 2 to 25 cents above existing 16 cent per pack rate. Additional
revenue goes to General Revenue Fund unless earmarked for programs such
as medicare, houses for homeless or catastrophic health. During 100th
Congress, the House and Senate approved a study on social costs of
smoking to be conducted by the Treasury Department in consultation with
the Surgeon General. It did not become law. House Ways a*.d Means and
Senate Finance Committees have jurisdiction over this matter. The tax
has been maintained at 16 cent level since 1982 but proposed increases
have been voted on annually during deficit reduction debate. RJR opposes
increase above 16 cent level.
Financial Imoact:
8 cent increase-5100 million annually
16 cent increase-S200 million annually
Action Plan:
Overall: Focus debate on excise taxes as regressive, working man's tax
rather than "sin" taxes or user fee.
Specific
1. Organize t8bacco-land Members of Congress to lobby Tax Committees
(letters and personal visits).
2. Maintain and increase participation in Coalition Against Regressive
Taxation (CART) which is an ad hoc group of industries opposed to
increases in any excise tax.
3. Personal visits to Tax Committee Members and staff from RJR, Tobacco
Institute, CART, Labor-Management Group and other coalition groups
(Lulac, Citizens for Tax Justice, etc.).
4. Obtain reissuance and distribute CBO study on regressivity of excise
taxes.
5. Complete and distribute Tobacco Institute position paper rebutting
"social costs of
smoking".
6. Generate and distribute letters, extension of remarks etc. from
Members opposing excise taxes. Distribution includes Bush letter to
Governor Martin.
7. Reintroduce legislative resolutions opposing increase in excise taxes.
8. Place favorable op-ed articles from noted economists in major and
select local papers.
Fallback Position:
None
Cost To Implement Action Plan:
No additional costs above existing salaries and fees paid to:
1. RJR employees 4. Lipsen, Hamberger
2. Tobacco Institute 5. Keefe & Company
3. CART
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Eivi[ratmetital Zbbacoo Snake
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Ranging far beyond the scientific to enounass public, litigating and even
marketing conoesrtis, "Ei5" is an issue the Industry (and thus R7R) has not
come to grips with-yet. M7e 1986 Surgeon General's Report on EIS has
popularized the notion that "one's right to smoka stops at the end of a
noc=aker's nose." Ircrez+sed smokirg rest.rictiaris affect cocwmpticn, and
the beginnings of lawsuit exposure in the U.S. offer prediction of things
to oane 3nternational.ly. (There is also an EI'S oaapocvstt to P=position
65, dealt with separately.)
Financial I~pact
S~tantial (expressed both in oonsuaption fall-off arxi defense and
political costs), but difficult to estimate.
Action Plan
1. Evaluate effectiveness and decide whether to join the airre.nt
international activities led by FM.
2. iaevelop for the U.S. and international scerye--a cooriinated plan,
involving all appropriate disciplines (scientific/R&D (including CIAR
support), PR, legal, and gaverrnnent relations.)
3. Identify and bring on board in the U.S. and internationally sufficient
witnesses to use for both regulatory hearings (smoking restrictians and
Prop 65) and litigation.
4. Cannission proposal for pro-active dissemination of industry views by
global PR resaurces.
5. consider scientific briefings/written sutmissions to key EEC and other
international goverrmient bodies.
Fallback Position:
Concentrate on U.S. witness developme.nt, leaving international effort to
PM; secure agreenPnt to share efforts.
- Cost To Imlenent Action Plan:
1989 Bidget estimate for Action Plan (1) and (3) is $250K. Fstimate for
(2) is $1.2 million. Estimate for (4) is $50K to $1 million, depending on
whether a plan is approved.
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RW
FCA Jurisdiction over Cigaxettes
fbtential legislative proposals for fivi to be given jurisdiction over
cigarettes, eit]ner generally or with specific refererbe to ingredients
am/or pesticide residues. Incr,ea.sed pressure for sirh action likely to
arise in 1989 from any FUA decision not to regulate P42Eff.ER and/or from the
anticipated release of the HiS Report on irgredients, or release of data
obtainal frcm diseovery in srraking and health litigation. If FI1A were to
assert jurisdiction over cigarettes, the result eould be an out right ban.
£itancial hrpact:
Not quantifiable, but oould result in demi.se of tobacoo ixdustry.
Action P1an
The legislative status ug~ is favorable and FIlA has not sought to exharxi
its jurisdiction (subject to the pend_ing PREKEER decision.) A pro-active
program in the immediate future would call attention to this area and would
be mor+e likely to be couriterproductive. Preparation for a prrxrQt response
when the issue is raised should proce©d, including the follovwing: 1)
broadened role for R. Cooper on behalf of RJR, including preparatiom of
pasition paper on legal and public policy reastxis FDA jurisdiction is
inappropriate; 2) review of Owingtcxn & Burlirg ability arrl prepa2ation to
obtain advarce information en Hi5 Report and respond effectively; and 3)
prepare R7R to supplement or svpplant industty and C&B efforts on the M3S
Report. (7his includes assigning lead outside legall responsibility to
williams & Qonrblly, Jones Day or Wa;ble Carlyle.)
Fallbacic Fosition:
Develop pro1osa1 for federal regulatory authority over ingredients, zrrxieled
aftex German legislation (scientific review and approval of ingredients;
regulation of allowrable amounts of pesticide residues.) Assess feasibility
of a pzeerTtive pzro4xsa1 to confer jurisdiction in these areas on US[A
rather than FIA. Test industry support for such a proposal.
Cost 'Ib Irplement Action Plan:
Peints (1) and (2) above should cost $50,000 or less. Point (3), if
necessary, should cost $250,000-$500,000, depending on scale of effort
recluired.
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I-irI.- Safe Cigq:?,z~ Ifiqislatf,on
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A 1987 report kV the Oanqreesional ftanded Technical Stuc2y Groap concluded fire
safe cigarettes were technically feasible but left open to question whether
they were caanez+cially feasible. Bills introduoed in 100th OonJre.ss requiring
oaqplianoe with ignition propensity standards for cigarette within two years.
Alternate legislation, drafted arxi supported by tobacoo industry, was
introduced in HaLse and Senate requirinq additioelal three year study of
comeercial feasibility but no inplementation date. Jurisdiction resides in
Hw.se Energy and Oarmeme and Senate Ooameree ecmnittees.
Also anticipate legislative activity in at least three and as many as fifteen
states. "Fire safe'l bill already introduoed in Minnesota which provides
funding for standard setting to be inpleznented by Jarnuary 1, 1991.
RJR Rasition:
R7R prefers defeat of all state and federal bills. R7R R&D efforts are
continuing with principal activities directed toward developnent of validated
test method and determination of cam-ercial feasibility of reduced ignition
propensity cigarettes.
Financial I~ct:
Unoertain, but potentially enormou.s, since failure to meet standards in any
state mandating them would result in prohibition fraa sales in that state.
Morewer, since all scenarios for ocaplianee with potential standards call for
increased usage of'G-13, national and worldwide likely limitations on the
future use of fern increases the risk to the company..
Action Plan
Position industry bill as conceived and supported by various Fire Fighters
Associations and Unions as a means of preventing more onerous legislation fraa
being enacted.
Provide support to industry effort as necessary in the form of RJR scientific
witness prepared to testify on feasibility and test methodology.
Fallback Position
1. F]nactment of irx3ustry-drafted federal legislation extending study for
three years.
2. Expand issue to include textile, furniture and other industries concerned
with fire safety of products.
Cbs-t _to_ Im1ement Act ion Plan:
Ti
1989 Budget Estimate for Action Plan is $525,000.
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A number of bills have been introduced in the Fiouse arxi Senate to
either ban or restrict in some manner advertising and pramotion of
tabaooo products. Hearings were held by twc suboannittees but no
votes were taken. Given the growing anti-tobacoo sesYtiaient in
Congress, this issue is likely to receive further - nsideration in
1989 perhaps in the form of ta¢nbstane advertising or aouzter
advertising. R7R has vigorously opposed such proposals to date on
qro~uxLs that advertising prnmotes bzand switching or braxi loyalty
rather than increased oonsunption of cigarettes.
Financial I~act
A ban on advertising and prarotion would eliminate such expenses. The
impact on existing brand.s might be minimal but new product
introduction would be severely hampered if not impossible.
Action Plan
Overall: Frame debate as First Amerxtnent, not tobacoo, issue.
amific:
1. Maintain anr3 increase lobbying efforts of third parties such as
FYeedaa to Advertise Coalition, AQU and Washington Ieqal Foundation.
2. organize tobaeco-land members to lobby F]nezgy and C7annerce members
(letters and personal visits).
3. Form new coalition of industries (meat, dairy, poultry, beer, etc.)
to lobby issue on slippery slope theory.
4. Maintain opposition fram Federal TYade Caraaission and Department of
Justice.
5. Seek to shore up opposition of Chain;an of Senate Camneroe
Comanittee in order to block ad barVrestrictions in the Senate.
Fallback Position:
1. Expand bill to include other industries so as to develop broader
base of opposition.
2. Aocept restrictions on sampling and/or use of human models in
advertising.
Cost To Lmlement Action Plan:
No additional vosts above existing salaries and fees paid to:
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1. R7R employees 4. AAAA 0
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2. Freedom to Advertise Coalition 5. Vern Clark & Associates ~
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3. ANA 6. Tbbacao Institute
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