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THE TOBACCO INSTITUTE 18751 STREET. NORTHWEST SAMUEL D. CHILCOTE, JR. WASHINGTON. DC ?W06 Phesident 202'457-4600 9 800/424-9876 July 12, 1990 MEMORANDIIM TO: The Members of the Executive Committee FROM: Samuel D. Chilcote, Jr. Chairman Henry Waxman (D-CA) convened the Subcommittee on Health and the Environment this morning to hear testimony on his bill, H.R. 5041, the "Tobacco Control and Health Protection Act." Waxman was joined by Representatives Terry Bruce (D-IL), J. Roy Rowland (D-GA), Gerry Sikorski (D-MN), Mike Synar (D-OK), Edoiphus Towns (D-NY), Thomas Bliley (R-VA), Bob Whittaker (R-KS), William Dannemeyer (R-CA) and Howard Nielson (R-UT). Representative Bill Richardson (D-NM) also attended portions of the hearing. Bliley remained for the entire proceedings, and asked questions of each panel. In addition, through their questions, Dannemeyer, Towns, Rowland and Bruce made clear their opposition to the legislation. Of the three Representatives scheduled to testify today, only Mel Levine (D-CA) and Stephen Neal (D-NC) appeared before the subcommittee. Four panels comprising 16 witnesses testified before the subcommittee. A list of witnesses and all available testimony, including The Institute testimony and press materials, are enclosed. Media coverage was heavy and included the Washington Post, New_ York Times, Associated Press, Advertising Age, Advertisina Week, a number of television cameras, predominately satellite organizations such as Post-Newsweek, Group W and Hearst Broadcasting. C-SPAN also taped the hearing but has not yet determined an air date. Radio coverage was also extensive, including AP, CBS'and several others. ;T . Tobilpqp'Institqte media staff were on hand and distribytQd the prama r819ano with the industry's testimony. Staff condt>}atqd numeVpli9 intervj,elws,d0ring the hearing. ..r ;,,;.~ The Frq~ed~Im to Advertis.e Coalition he14 a press conference in a room in the sam® building a half hour before the hearing started.

The Members of The Executive Committee July 12, 1990 Page 2 In his opening remarks, Waxman stated that despite the tobacco industry's position that the public knows enough about the health concerns associated with smoking, H.R. 5041 would speak to new health concerns, provide naw information and display that information in a highly visible format. Waxman cited the failure of states to enforce current laws prohibiting sale of tobacco to minors, and claimed it is the federal government's responsibility to encourage enforcement of these laws and strengthen cigarette health warnings. Calling H.R. 5041 the "most draconian anti-tobacco legislation" to date, Bliley said the new warning labels are unjustified and won't increase public awareness of the smoking and health issue. The bill's requirements are "clearly unconstitutional," he said and reminded the audience that Congress cannot ban truthful speech about lawful products. He also requested an extra day of hearings before any further action on the bill, to allow the many people requesting to testify to do so. Synar congratulated Waxman for "working to get the tobacco industry to clean up its act," saying that it is appropriate for Congress to prevent the "unnecessary loss of human life." He claimed that all tobacco advertising appeals to and is directed at youth, and that the industry violates its own code of ethics. He reiterated his strong support of the First Amendment and said that while he respected the opinions of the ACLU, he disagreed with them, and offered to "fight it out in court." Whittaker addressed the majority of his remarks to regulation of ingredients in tobacco products. Describing the current system as a "haphazard patchwork", he called for listing of ingredients on packages, eliminating unsafe additives and "restoring truthfulness" in advertising. Displaying several "low tar and nicotine" ads, he said they mislead the public. He also attacked the industry for "doing nothing to alter ads to prevent youth smoking." Sikorski cited statistics concerning smoking and death. He also faulted the lack of enforcement of laws barring sales to minors and called for a ban on cigarette vending machine sales. On the panel of Congressional witnesses, Levine called for equal treatment of overseas advertising and marketing of American tobacco products, asking for health warnings and cautions similar to those on domestically consumed products. Representing constituents whose bedrock industry is tobacco, Neal asked that fair consideration be given the "thousands of good, decent, hard-working, tax-paying people" who depend on tobacco for their livelihood. Referring to the subcommittee as "sincere"

The Members of The Executive Committee July 12, 1990 Page 3 in its efforts, he reminded his colleagues "there are other values at issue here," including First Amendment rights which, he said, the bill rides "roughshod over." Referring to his vote against a Constitutional amendment against flag burning, Neal emphasized that the First Amendment doesn't disappear when difficult issues such as tobacco are present. Neal also pointed to peer pressure as the main reason children start to smoke, not advertising. The first panel consisted of two representatives from the Department of Health and Human Services (HHS), which supports the intent of the bill but does not support certain provisions, including Section 9, which would withhold federal funds from states not in compliance with the provisions of the bill. In his testimony, Michael Mangano, Deputy Inspector General of HHS, said that despite the fact that most youth and vendors know the laws about sales to minors, children have easy access to cigarettes. He outlined an active enforcement plan including licensing of retailers, fines, "sting" operations, warning signs and civil penalties for infractions. James Mason, Assistant Secretary for Health, pointed out that while in the past the tobacco industry spent the majority of its advertising expenditures on traditional advertising, it now spends the majority on promotional events. He claimed that this is done to attract youth. Mason explained Secretary Sullivan's model bill on the sale of tobacco products to minors, believing states will act responsibly and adopt the model legislation. He also pointed out that the state by state approach also allows time and flexibility for constructive changes to the plan. When asked by Waxman if states' implementation of the model bill should be required in order to receive federal funds, Mason replied that "holding states hostage is not a good idea." Mason argued in general for responsible cooperation by parties such as candy distributors and baseball card manufacturers, rather than government intervention. When pressed by Sikorski about his criticism of U.S. tobacco company export marketing practices, Mason stood by the remarks (made in Australia), saying "tobacco is an equal opportunity killer" and that he and the Secretary.were in agreement about that. In response to a question about other provisions of the bill, Mason suggested larger, altered warning labels and creation of a "milieu where smoking is no longer considered glamorous, successful, slick." Mason also said he supported the California Proposition 99 advertising campaign.

The Members of The Executive Committee July 12, 1990 Page 4 The second panel consisted of representatives from the anti- smoking lobby. A video was played of Carl Lewis, Olympic gold medal track and field star, who extolled the virtues of not smoking. "I'd never be able to run so fast, or jump so far if I smoked," said Lewis. William Cahan of Memorial Sloan-Kettering testified on the medical effects of smoking, showing an x-ray of a smoker's lung and giving an emotional account of the patient's situation. He then showed pictures of two adult lung specimens -- a nonsmoker and a smoker. Ken Kyle of the Canadian Cancer Society described the effects of a parliamentary ban on tobacco advertising and promotion in Canada. He said the ban was a "reasonable limitation on freedom of speech" allowed under Canadian law. Dr. Holly Atkinson, testifying on behalf of the Coalition on Smoking OR Health, said she wanted to protect the public from "the industries' right to sell a product which kills," saying "enough is enough." She claimed the industry successfully put up a"smokescreen" designed to give Congress and the public the impression that it is a responsible industry. Alberta Tinsley Williams, a Detroit community activist, attacked the industry as deliberately targeting the "Afro-American community." She said that H.R. 5041 is not a panacea, but would help when combined with educational and other campaigns. Commissioner Mark Green of the New York City Department of Consumer Affairs said the Dinkins Administration advocates an anti-nicotine agenda, and called the Waxman bill the "most important pro-health legislation since the 1938 Federal Drug Administration Act." He also indicated that R.J. Reynolds and Philip Morris would be receiving letters requesting they voluntarily remove advertisements from stadiums in the New York City area. During questioning that followed, Atkinson supplied data suggesting the public is less informed than is generally held true. Williams requested a "level playing field" in advertising campaigns. Synar displayed two magazine ads -- one a Kool ad featuring an attractive model, the other a Merit advertisement featuring a written message, which he said would be legal under the bill. He questioned the oppressiveness of the bill, given the Merit ad. The panel endorsed an excise tax increase, and agreed that peer pressure and advertising are not mutually exclusive.

The Members of The Executive Committee . July 12, 1990 Page 5 The third panel consisted of witnesses testifying on behalf of The Institute and other tobacco groups. Charles 0. Whitley addressed allegations about the purpose of tobacco advertising, the industry's targeted marketing strategies, smoking and youth, public awareness levels and the industry's position on H.R. 5041. "The only advertising message left after the requirements of this bill would be don't buy this product," he told the subcommittee. Dr. Richard Mizerski, a marketing expert, testified that banning or restricting cigarette advertising would not reduce smoking among young people or adults. Dr. Gerald Goldhaber testified that the intent of the bill, to curb smoking by using "scare" tactics, repeating known information and providing overly detailed information to the public, will not be achieved, based on communication theory. He said the results could "boomerang," as did "the great seatbelt campaign plot." Norman Sharp, representing both the Cigar Association of America and the Pipe Tobacco Council, argued against including cigars and pipe tobacco in the advertising provisions of the bill. "The focus of the bill is on advertising and youth," he said, and pointed out that youth do not use pipe tobacco and cigars. The final panel consisted of three First Amendment experts -- Alan Morrison of Public Citizen, Floyd Abrams for The Tobacco Institute and Barry Lynn of the American Civil Liberties Union (ACLU) -- and two advertising witnesses -- DeWitt Helm, president of the Association of National Advertisers (ANA) and David Bell, chairman of the American Advertising Federation (AAF). Bell also represented The Freedom to Advertise Coalition, which gave up its own witness slot so that the ACLU could testify. Morrison was the only person on the panel favoring H.R. 5041. He said that in his opinion the Posadas decision makes a cigarette ad ban Constitutional. But he also believes that the bill is not a ban. Abrams urged the subcommittee to rely on the American experience 0 and not the Canadian, Australian or French experiments with ~ advertising bans. In terms of U.S. Constitutional history, H.R. w 5041 "ignores the First Amendment," he said, adding that the bill W assumes it is Congress' right to determine what may be said in an r ad for a lawful product -- not the advertisers' right. "The & target of this bill is commercial speech and its evident goal is ~ its suppression," he warned. Abrams also said that the more M~ recent Peel decision refutes the earlier Posa a decision.

The Members of The Executive Committee July 12, 1990 Page 6 Lynn saw a dangerous precedent for free speech in the bill. Today tobacco is the "2 Live Crew" of commercial speech, he said, but tomorrow it could be any other product which may become controversial. The ACLU saw First Amendment problems with three provisions of the bill: the restriction on images, the repeal of preemption and the compulsory warning. In response to an earlier witness, Lynn said that Canada is a nice place to visit, but not if you are interested in free speech. Helm termed H.R. 5041 a recipe for censorship that threatens all advertising. "It contains unquestionably the most unconstitutional provisions ever introduced in Congress," he said in offering Professor Burt Neuborne's legal analysis for insertion into the hearing record. Bell, who is also president of Bozell, Inc.,. the country's 14th largest ad agency, said that 80 percent of H.R. 5041 is about advertising and is based on two false assumptions. "The first is that advertisers would put their dollars against product category non-users. The second is that much tobacco advertising is specifically designed to appeal to minors through the use of pictures, images, color, and cartoons." In response to questions from Synar, Bell analyzed point by point why the Merit ad cited by the Oklahoma Congressman would not be permitted under the bill without drastic modifications. Waxman complained that the subcommittee's request for witnesses from ad agencies that handled cigarette accounts was refused. None of the advertising witnesses could recall such an invitation. The chairman closed the day arguing with Lynn and Abrams that repeal of preemption and compulsory warning provisions did not present First Amendment problems. They held to their view that both provisions did. Enclosures SDC:mlm cc: TI Senior Staff