Tobacco Documents Online

MR. BIBLE: Yes. Employees don't sell cigarettes to individuals, generally they sell them to wholesalers or to retailers, so that wouldn't apply in employees. Contractors could be, for example, a distributor. They distribute to retail stores who then sell to the customers, so distributors wouldn't be selling to individuals. I think the issue would be retailers. It is retailers, most of the time if not all the time, that sell cigarettes to customers. If retailers are selling to children, what you need in place is a very strong access program, which is what has been introduced in this country and we're trying to have enforced with even more strength under the proposed resolution. Philip Morris, worldwide, has introduced such programs, so far, in about 40 countries, and we ie gearing up to do it in every country in the world where we operate in business -- about 200 markets. So to the extent that we can cut off retailers who do that, we're setting programs up now so that we can monitor that. SEN. WYDEN: Mr. Gierer? MR. GIERER: Senator, the only market we have of any substance outside of the U.S. is Canada. Canada has a much more restrictive environment today than the U.S. I can tell you that if we found an employee, whether in Canada or the U.S., who was violating a sampling code, we would take the appropriate action, including temunation. SEN. WYDEN: Mr. Goldstone? MR. GOLDSTONE: Senator Wyden, we would fire anyone in our company who we found evading our policies about selling to children. And as far as people whom we have no control over, I think my answer is very similar to Mr. Bibles. SEN. WYDEN: Which would mean you would terminate a contractual relationship. I mean, a lot of this is semantics on employees and contractors. We followed the House hearings closely, and I'm concerned that people with whom you have a contractual relationship, you would be willing to terminate that relationship if they sell to minors. MR. GOLDSTONE: What -- again, I don't have in my head completely, and I want to be careful about it just because I'm not sure I can give you a fair answer. I'd have to think about the kinds of people we might have contractual relations to. I think what I can tell you for sure is we would fire any employee, anyone whom I employ, anybody who we have control over. And as to the kind of people -- I'm trying to think of who we have these relationships with by contract -- on that one, Senator, I'd prefer to do some research myself and write to you and get back to you with an answer. MR. BROOKS: Senator, I think I can confirm as well, we have a policy that we do not promote our products to kids or underage smokers. And that would be a terminable offense. We would terminate somebody who clearly evaded that policy. And indeed, I think we have historically terminated contractors who have done so. SEN. WYDEN: Thank you, Mr. Chairman. SEN. MCCAIN: Senator Bryan. SEN. RICHARD BRYAN (D-NEV): Thank you very much, Mr. Chairman. Gentlemen, I would hope that this Congress would be able to enact legislation to resolve this issue, but it strikes me that a good part of our problem is that you're having difficulty escaping from your history, and some of us on the committee are having difficulty to forget it. I thought the chairman's question, where he reviewed the issue of whether or not you believe nicotine to be addictive is somewhat illustrative of the situation here. I didn't think your responses were particularly candid, but assuming for the sake of argument that generically in one form or another, you do believe that it's addictive, it seems to me that the industry, which is trying to present a kinder and gentler and more conciliatory image, is trying to have it both ways. RJR0000000008001588 700516876

bankruptcy and what the impact on all of these proposed settlements and changes would be under those circumstances. Perhaps, each of them will tell us what the net worth of his company is, because that has something to do with it. I am somewhat concerned about the way in which everyone wants a share of the money that we probably wouldn't be getting had it not been for the state attorneys general. The president wants $60 billion, but has given us nothing but a few feel-good statements about what kind of settlement he acmally proposes. The states, of course, kind of want theirs. Farrners kind of want a cut because fewer people will he using tobacco. Vending machines want a bail-out because they'll be out of kind of business. You know, labor wants its share and everyone else that's involved in it. Personally, I believe that anything we get, you know, ought to go directly to those who have paid costs as a result of tobacco, which means to a considerable extent, you know, our Medicare trust funds and other similar activities. But I do hope that these gentlemen will tell us, you know, at what point the whole matter simply gets upsct. You know, we have filings in bankruptcy. We have a net worth that can go into a settlement, but how much less is that going to be, if it is less, than what they've already offered? SEN. MCCAIN: Thank you. Senator Dorgan? SEN. : Mr. Chairman, could I interrupt? SEN. MCCAIN: Yes, sir. SEN. : I have to go to a hearing, but I've been asked to submit two questions to Mr. Bible. I wonder if I may do that. SEN. MCCAIN: Without objection. SEN. : Thank you. SEN. MCCAIN: Senator Dorgan? SEN. BYRON DORGAN (D-ND): Mr. Chairman, I will be very brief. I was in a little general store in a small town recently and paged through some boxes they had of old magazines they had saved. And I was thinking -- I saw the cigarette ads in 50- and 60-year old magazines. The most famous people in the country -- actors, newsmen and women and others -- were advertising cigarettes. And the advertisement actually said, "Smoke cigarettes to improve your health." "Smoking cigarettes is the road to good health." "Smoking cigarettes promotes a good lifestyle." Well, we now know, 50, 60 years later, that's not true at all, that tobacco use injures one's health, it is addictive, it can cause cancer, heart disease and more. And so we're making progress in this area one step at a time. This hearing is one more important step. Mr. Chairman, I appreciate your calling the hearing. I will include other statements in a statement for the record, and I appreciate the witnesses coming to the committee today. SEN. MCCAIN: Thank you very much, Senator Dorgan. SEN. JOHN BREAUX (D-LA): Thank you, Mr. Chairman, for having the hearing. Very briefly, I think that -- you know the old saying, "What a difference a day makes." I mean, I think Senator Dorgan pointed it out, as have others, what a difference the generation makes. I mean, who would have thought that -- five years ago, even, that we would be looking at an agreement and we're trying to see whether it should be implemented or not, that, number one, regulates nicotine as a drug by the Food and Drug Administration; that allows the FDA to regulate tobacco products as a nicotine -delivering device; would provide funding for many tobacco -control initiatives that have RJR0000000008001588 700516857

SEN. MCCAIN: Again, in all due respect, the question isn't whether you put it in the classification of crack cocaine and heroin; it's whether you believe it's addictive or not. And I think most Americans believe that it is addictive -- perhaps not as addictive as cocaine or heroin, but certainly something that is very difficult to stop and has addictive aspects to it. I say that from personal experience. MR. BROOKS: Well, Senator, perhaps I could help you. I mean, I'm certainly prepared to accept that most Americans would certainly label smoking as "addictive" by their use of the term. I am simply saying that I think that's so inclusive a term as to be almost meaningless. And I would prefer to retain that word for things which are, more appropriately, labeled "addictive," such as hard drugs and cocaine. SEN. MCCAIN: Again, I hope you understand there is a lot of symbology associated with this particular aspect of the issue, and I hope you appreciate that. Mr. Goldstone. MR. GOLDSTONE: Mr. Chairman, at my House testimony, (it was ?) very simple that I thought that as a layman -- I am not a scientist -- but as a layman I thought that -- I have always thought, and I was a smoker, that cigarette smoking is habit-forming, as I think most Americans believe that kind of activity -- or that is addictive. And that's how I see it. SEN. MCCAIN: Thank you. Mr. Gierer? MR. GIERER: Yes, Senator. I just (word inaudible) to ask that under some definitions of "addiction" used today, nicotine would be considered addictive. We certainly recognize that that is of the dominant public-health point of view. And in this agreement, we have agreed to put that addiction warning on the packages so that the general public, or the consumers, buying the product would receive that message. SEN. MCCAIN: I understand the agreement. My question was: Do you consider it addictive? MR. GIERER: Senator, I would consider it more of a habit than I would consider it addictive. SEN. MCCAIN: Mr. Bible? MR. BIBLE: Mr. Chairman, before the -- SEN. MCCAIN: Again, I would ask the witnesses; there is a lot of symbology associated with this question, and that's the reason why it's my first question. Go ahead, Mr. Bible. MR. BIBLE: But I understand that. Mr. Chairman, back in October, Senator Hatch asked the companies to submit to him our views on this matter, which we did. And we have gone public on that, and I can read you the two or three paragraphs, which we submitted to Senator Hatch. SEN. MCCAIN: Well, I would appreciate it if you would just -- MR. BIBLE: I'll try to summarize it then, as I did at the House committee. And I said at the House committee that we recognize that nicotine as found in cigarette smoke, has mild pharmacological effects and that under some definitions, "cigarette smoking is addictive:" SEN. MCCAIN: Thank you. Mr. Tisch? MR. TISCH: I would agree that under some definitions that it is addictive, Senator. SEN. MCCAIN: Thank you. RJR0000000008001588 700516867

year period. No doubt, if there are industry volume reductions, there will be less usage of tobacco, therefore, less need for tobacco, therefore, less growers. Now, to try to put a number on the number of growers, I couldn't do that because it depends on the size of the allotments, but 1 would say it's fair to say that there would be a significant reduction in the amount of tobacco grown. Maybe with exports of tobacco some of that could be offset, but I think the significance would bc high, based on the proposed resolution of June 20. If that were changed, then it would be higher. I have been told that it would be more likely that smaller farmers would go out of business, more likely that larger farms would be developed such as we saw in the dairy industry, and they might be in other states than Kentucky. SEN. FORD: Anybody have anything that they want to comment to that? I just feel -- if we do away with the tobacco program -- and as I've said, we have several health units that have joined with us to keep the tobacco as it is today and administered by USDA. But if we do away with the program and we have all these large farms, and as we would say down in Kentucky, we grow tobacco from fence row to fence row, some say that the price of tobacco would be reduced as high as 70 cents per pound. Is there any -- anyone want to challenge that or agree with it or say anything different? MR. BIBLE: Well, I would say my own sense -- SEN. FORD: I'm sure glad you 're there at the table, Mr. Bible. MR. BIBLE: (Laughs.) Well, I'll have a shot. My own sense is in that environment tobacco prices would come down more to the level of world prices. Seventy cents may be a bit extreme, but it would come down. Burley tobacco, as you know, right now is in somewhat short supply. That will be corrected, I'd have thought, in the coming year or two. But there would be a decline, in my opinion, in the price of tobacco. SEN. FORD: Some say as high as 70 cents per pound. And if that's true, then the tobacco companies would have a windfall of about a billion a year because you'd be paying less -- MR. TISCH: The only thing I can say, senator, I don't want that windfall. 1 mean -- SEN. FORD: I don't want you to have it, either. (Laughter.) MR. TISCH: No. So let's work together to make sure we don't get this windfall, because we certainly don't want it. SEN. FORD: W hat we're doing here now, if we do away with the program and it restricts -- through a program and rules and regulations restricts the growth of tobacco. It does, however, keep the price support in tobacco higher. And those are the two things that the health groups that have agreed to this want, you know. And so that's what the farmers want. That's what they tell me. And so I just -- bankruptcy bothers me. You could hand the keys to us today, and we wouldn't pay for the first year some of the programs that we've built have been introduced out here. And I think somehow or another that we -- I said that righteous indignation of the tobacco industry's turned into greed, and they see the best opportunity in 20 years to get the money off of you guys so they can fund all these programs out here that sound good. I like them myself, you know. But funny money, we've got 10 states in recent months to raise their excise tax, one to 80 cents; one to a dollar; New Jersey, 40 percent. Those 10 states. You got four initiatives on the California ballot this fall that -- even reforming schools, you know, their school reform out there, a dollar per pack on cigarettes. And all that's going to be gone before we ever get a chance to get any money, you know. So I-- it's just -- that's funny money. Somebody somewhere has to have the charisma and the ability to bring us all together and work out something that's acceptable. And politics is the art of the doable. Right now, we don't have anything that's doable, and it's all politics, and it's no art. Thank you, Mr. Chairman. RJR0000000008001588 700516870

MR. TISCH: Good morning, Mr. Chairman, members of the committee. My name is Laurence Tisch, I am co- chairman and co-chief executive officer of Loews Corporation. 1 am very pleased to have the opportunity to appear before the committee today on the subject of the proposed National Tobacco Settlement. In addition to my positions with Loews Corporation, from 1986 to 1995 I was chairman and chief executive officer of CBS, and I also serve presently as chairman of the board of trustees of New York University. Loews Corporation is a diversified holding company, with ownership interests in a number of major American companies, including the CNA family of insurance companies, Bulova corporation, Diamond Offshore Drilling Corporation, and Loews Hotels. Another of those subsidiary corporations, indirectly owned by Loews Corporation, is Lorillard Tobacco Company. Lorillard, which is headquartered in Greensboro, North Carolina, produces several brands of cigarettes. Lorillard's current market share is approximately eight and three- quarter percent of the United States cigarette market. Lorillard has no international business. Lorillard, which was founded in 1760, operates -- operates under its own separate management, and my personal involvement with this business has been very limited. Nevertheless, I will do my best to answer questions of this committee, even though there may be some areas where I cannot be all that helpful. With respect to the proposed resolution, I am convinced, Mr. Chairman, that it is time to put confrontation behind us. If cigarette use is going to remain legal in this nation, for adults who choose to smoke, we must rationalize how we are going to handle this product. We must decide the terms and conditions upon which the product may continue to be sold. We must decide the terms and conditions upon which the product may continue to be sold. My view is that there are three basic elements to any sound plan: One, increased regulation of the sale and promotion of cigarettes designed in particular to stop kids from smoking; two, the payment of money toward the perceived social or medical costs of smoking; three, a rational litigation plan that preserves the right of individuals to sue where they believe that the tobacco industry's conduct has caused them harm, but that gives the industry and, by extension, the farmers, distributors, retailers and investors associated with the industry some measure of predictability. Mr. Chairman, as I have said, I am not a tobacco executive and I was not involved in every aspect of the negotiations between the tobacco companies and the state attorneys general and public health community representatives. However, due to the unprecedented and truly revolutionary nature of the proposed tobacco settlement, and because Loews Corporation itself has been a party in a number of pending tobacco litigations, I did personally play a role in trying to come up with common sense solutions to certain of the issues that arose during these negotiations. I can tell you that the other sides to the tobacco talks struck a very hard bargain with the tobacco companies. Putting aside the regulatory provisions here, which go beyond what the FDA has adopted and beyond what constitutionally could be imposed upon the companies, the companies have agreed to pay hundreds of billions of dollars in perpetuity -- $368.5 billion in the first 25 years alone -- to be used to fund a wide array of youth smoking prevention efforts and public health initiatives. And when I say $368.5 billion, putting aside the potentiality of the volume reductions that the public health community very much hopes to accomplish by the proposed resolution, that $368 billion is before the escalation factor written into this agreement and before the additional billions of dollars that are required to be paid under the look-back provisions. The escalation factor -- now this is a factor of a minimum of 3 percent per year compounded -- means that at a minimum, that 368 billion will actually equal $540 billion over the first 25 years of the proposed resolution. And these ongoing payments then continue and automatically escalate in perpetuity. In return for this financial commitment, one never before sought or obtained from the manufacturer of any other consumer product, the companies are not -- and I repeat the word not -- getting immunity from individual tort claims for compensation by smokers. And the Department of Justice representative, David Ogden, in his recent testimony before the House Judiciary Committee, recognized that reality. All the tobacco companies are getting in the civil liability area is a settlement of the state attorneys general actions, resolution of claims for punitive damages for past but not for future conduct and relief from mass aggregations of claims, whether by smokers or third parties. That, by the shear magnitude of expense and risk of dollars involved, RJR0000000008001588 700516865

Now, very quickly, this look-back provision -- I heard Dr. Koop say that, and he used -- I think he said something like this is only six cents a pack or eight cents a pack, and it sounds like a little amount of money. But the fact is, it was calculated to be all the profits a tobacco company could conceivably make from an underage smoker for all that smoker's life. Now what more could you want in taking away incentive? And by the way, if you then looked -- it's not eight cents a pack; if you calculate the penalty for the underage smoker, it comes to something like a couple of dollars a pack. So it's significant. And also, if you go on -- again, unduly limits the FDA -- public health advocate's dream come true. And on full disclosure, it is all documents, everything. And you know, Senator, the last thing I'll say about this is we talked a little bit today about Brown and Williamson when Senator Wyden was talking about ingredients and tobacco use. And I was thinking to myself when they were going through that colloquy, my goodness, if we have this proposed regulation, there will be no more discussion about that. The government will be in those factories. The government will decide good manufacturing practices, and that's the end of it. We won't have discussions anymore of whether they're cartoon characters or whether these appeal to children anymore, because there will be no advertising. We're giving up our constitutional right. So when I look at Dr. Koop, I say, "What more?" He hasn't once said, "Well, I want this regulation, this regulation is not in the package. It's a public health advocate c dream and I really hope" -- sometimes it's hard, after 40 years of war, to say enough. I really hope that Dr. Koop, Dr. Kessler, and some of those others who want to continue fighting will take a look at this and say, "You know what, it's time to put the weapons down. These guys really have given up, they want a cooperative new day." SEN. BRYAN: Thank you very much, Mr. Chairman. SEN. MCCAIN: Senator Rockefeller, Senator Kerry was here earlier and returned, so according to the "early bird" rule, we'll go to Senator Kerry. SEN. JOHN KERRY (D-MA): Thank you, Mr. Chairman. I'd like to first pursue the question of the degree to which you are, quote, sort of in a new posture and, in a sense giving up or coming to the table. Someone among you - - I think it might have been Mr. Bible, talked about earlier about good corporate citizenship, et cetera. I gather one or two of my colleagues may have asked some questions about the current advertising. But I'm struck by the fact that despite the fact that you've come to the table and despite the fact that you are acknowledging this new posture, there is not a voluntary willingness or acknowledgment of the need to change the way you're advertising, whether or not there is an agreement. And I've been, frankly, quite taken aback by some of the statements -- I think, Mr. Bible, it was -- your attorney, Mr. Meyer Koplow was quoted in USA Today as essentially warning us that the tobacco industry might return to practices such as cartoon advertising if we fail to grant the tobacco industry protection from lawsuits. So let me try to clarify this today, if we can, and speaking for your companies. I mean, first of all, Mr. Bible, is your lawyer threatening the Congress that you will return to advertising if we don't accept the terms that have been put in front of us? MR. BIBLE: Senator, I said in response to an earlier question that I doubt the veracity of that report in USA Today. I'd urge you to have it checked out. We have never used cartoon figures in our advertising; to the best of my knowledge, we don't plan to. So I don't think there is any substance in the comment. But I just would like to make one comment, if you don't mind. You talked about the companies have said they will do nothing about their advertising. Back in 1995, Philip Morris introduced on its own initiative a program called Action Against Access, which was a method of dealing with children getting access at retail stores to cigarettes. That's been a formidable program and has been in place now for nearly three years. tn The following year, in 1996, we proposed, together with United States Tobacco Company here, a number of ~ suggestions which would require legislation to be enforced so that it would be a level playing round. w N RJR0000000008001588 700516879

MR. BROOKS: Well perhaps I should just emphasize that American tobacco is still the best tobacco in the world. There will always be a demand for good American tobacco, and we will certainly want to go on buying it and putting it in our blend. SEN. FRIST: What percentage do you buy American? What percentage do you have? MR. BROOKS: Well, I have to just double check back on that, but it's around, I think between 50 and 60 percent. But I'd have to just double check to make sure that was an accurate statement. SEN. FRIST: Okay. So basically, if the price dropped in terms of how much you had to pay for tobacco, what would that -- happen to the number of smokers, do you know? MR. BROOKS: Well, as I say, Senator, I can't see that it would have an immediate impact. SEN. FRLST: And Mr. Goldstone? MR. GOLDSTONE: Senator, if in theory the price drops and you just took that and translated that out, obviously that's going to go counter to what people are talking about about raising the price of tobacco. SEN. FRIST: Right. MR. GOLDSTONE: But I think for us, anyone who is in the industry and understands -- even my short time -- and understands the importance in terms of quality of American leaf and how critical that is to our product, that what the potential disaster in terms of economic chaos is of -- nobody really can predict what could happen to the farmers. And I think from our point of view, we need to have as part of this a viable support program and we ic going to have to figure out how to do it. SEN. FRIST: If we did away with the support program, do you think prices would fall? Would you agree with the premise that they would fall? MR. GOLDSTONE: I think it's very likely. I think what first happens is you really have chaos, and in the dislocation of families, of farms, of communities, when you try to pick up the pieces, you probably are going to have falling prices, but you'll have even worse; you 1l have dislocations in supply -- SF,N. FRLST: If the prices fell, it would be a windfall maybe initially, but eventually your prices would come down. Would that increase the number of smokers? MR. GOLDSTONE: For those who believe that the price is -- the lower the price, the more the smokers, that obviously runs counter to the public health agenda. SEN. FRIST: Do you believe that? MR. GOLDSTONE: I have no doubt, the same I've said to you that if we raise prices, our volume and our sales and our earnings are going to drop, there's no question about that. I mean, that's just law of supply and demand. That happens everywhere. SEN. FRIST: Mr. Bible? MR. BIBLE: Could I dissect the question a little, please, Senator? I think if you raise the prices of cigarettes, as is proposed in the proposed resolution here, industry volume will come down, there'll be less tobacco grown. If you maintain the price support program that exists today, then although there will be less tobacco grown, there would be organized -- I think an organized fashion of dealing with the farmers. RJR0000000008001588 700518872

You urged the Congress to grant unprecedented legal protection for your industry as part of this settlement. I want to be blunt. It is the tobacco industry's track record on truth-telling that makes your eagerness for this settlement so suspect. The testimony of your predecessors built a high wall of skepticism that you're going to have to work hard to cross over, skepticism about addiction, about the international marketing of cigarettes to children, and about the targeting of youngsters in minority neighborhoods. And I want to wrap up with one last point -- I want to protect youngsters in this country -- in Bend (ph), Oregon, for example, in Boston where Senator Kerry lives, but I want to make sure that we also protect youngsters in Bangkok and Bangladesh. I'm going to do my best to make sure that morality doesn't stop at Oregon's beautiful coastline. Finally, Mr. Chairman, you and I have discussed many of these issues privately. I'm grateful for your independent and objective analysis of the challenge that tobacco legislation presents to the Commerce Committee, and I look forward to working with you and our colleagues to get a good bipartisan bill to the Senate floor. SEN. MCCAIN: Thank you very much, Senator Wyden. Senator Stevens. SEN. TED STEVENS (R-AK): I have no opening statement. Thank you very much. SEN. MCCAIN: Senator Kerry. SEN. JOHN KERRY (D-MA): Mr. Chairman, thank you very much first of all for having this hearing and for your leadership in the past months on this issue. I'm very sensitive to what Senator Bums and Senator Ford have said, and I'm glad that we arrive here finally at a time where the proposals that are on the table acknowledge the concerns of Senator Ford and the need to be sensitive to the needs of farmers and those who might be affected. And there's some truth in what Senator Bums has said about the nature of the traditional system in punitive damages. The difficulty here -- and I want this and I think my colleagues share this feeling that this should be a dialog and not a bashing session, though there's a lot of anger both in the American people and I think on this sidc of the dias about the track record. And candor requires that we at least say that that anger exists. It's not going to do us any good, any of us, to look at this settlement offer and simply continue a process of being angry, and we need to find a solution for the American people, and we need to recognize that you've come here with a certain recognition, I would say, of the road that has been traveled. It's a whole new group of executives that are in front of us today. You're not the people who answered the questions to Senator Wyden, but nevertheless we ask you to understand the full measure of our sense of trepidation that entering into agreement that somehow sets out a fixed sum of money for damages currently understood when we are still learning about the full measure of some of your companics' efforts to market to some of those who have yet to fall ill or to suffer the consequences of the choices that they've made. The statistics are absolutely staggering. In a sense, there's a contradiction that I think all of us feel as we sit here trying to grapple with the notion, you know, how much money do we provide to make up for the fact that more people are going to die in one year as a consequence of the product you sell than died in all of World War II. You know, we had ten years of bitter debate and fighting in our country over the longest war in American history which took 58,000 young American lives, but the product you sell openly on the market and market up until this time to kids kills seven or eight times that every single year. We know it; we know what it costs our hospitals and our health care system, and yet, that product is going to continue to be sold. So the measure of responsibility that is demanded here, I think you would agree with me, is significant. And I think most of what is recognized in this settlement tries to acknowledge that. But there's a very significant question still open about this issue of liability. I mean, I have to measure the question of liability against the statistics. I'll be very quick, Mr. Chairman. RJR0000000008001588 700516855

So, thank you, Mr. Chairman, for your leadership and I look forward to today's testimony. SEN. MCCAIN: Thank you very much, Senator Ford. Senator Burns. SEN. CONRAD BURNS (R-MT): Mr. Chairman, I would ask unanimous consent that my entire statement be made a part of the record. I will just have a couple of statements. SEN. MCCAIN: Without objection. SEN. BURNS: Back June 21st of 1997 when the settlement was reached between the tobacco companies and most of the states attorneys general, that accomplished some goals most of us would not have believed that could have been reached in our lifetimes. It would substantially raise the price of cigarettes and tobacco items, and it would provide for programs which are designed to reduce teen smoking. So as we go through this -- and I want to congratulate the chairmen like Senator Ford has done today -- taking care of all the people that have far-reaching ramifications in this settlement and the curtailment of some of their commercial enterprises. All the way from the men and women on the land that depend on this crop for a living and the communities that depend on it, to the people who process and to the people who distribute, all of them are small, for the most part, small business people and they will be seriously impacted. And in this whole settlement and on this whole controversy, what are the companies asking for upon this settlement? What they are asking for is knowing how much money they will have to pay to achieve what we know are the benefits of the settlement. The media portrayed what tobacco companies want is immunity. And I personally don't believe in agreeing to pay $350 billion to settle a case is immunity. In any other case law, if someone rear-ends a car and causes injury to the driver of the car and the settlement is reached for injuries, property damage, pain and suffering, the amount of money isn't called immunity. It's called a settlement, and no one in this country has ever been awarded the $50 billion in punitive damages by a jury ever. The fact is, the tobacco companies are willing to pay that amount after never losing a jury trial and to think that is almost incredible, but it isn't immunity. And no one likes to see young people smoke or even start to smoke. But to get to the point where we can do something about it, we also have to watch what we do as far as the First Amendment of the Constitution of the United States of America. Whether we like it or not, everybody has the rights afforded under that document. So I congratulate the chairman today for bringing this forward. I am not an attorney, never been hinged with that title -- don't want to be, but I will say this, that we have a First Amendment and if it's disregarded here, where will it be disregarded in later cases on down the line? And I thank the chairman. SEN. MCCAIN: Thank you very much, Senator Burns. And I would ask my colleagues for their indulgence to make their opening comments as brief as possible, so we can get to the witnesses. I know that this is an important time in these hearings, and everyone wants to be on record as their position. I understand and appreciate that, as well. Senator Wyden. SEN. RON WYDEN (D-OR): Thank you, Mr. Chairman. Gentlemen, four years ago, your predecessors came to the US House of Representatives, swore to tell the truth and in response to my questions stated that nicotine is not addictive. Mr. Bible, your predecessor told me that nicotine is not addictive. Mr. Goldstone, your predecessor told me that nicotine is not addictive. Mr. Brooks, your predecessor told me that nicotine is not addictive; the same is true for Mr. Tisch and Mr. Gierer. Gentlemen, subsequent to that 1994, documents were made public demonstrating that executives at the highest levels of your companies knew, in fact, that nicotine is addictive. Now, in your prepared testimony for today, you asked the United States Senate to approve a settlement, by which your companies shall pay the American people $368.5 billion for all the health problems they have suffered or will continue to suffer because of your products. RJR000D000008001588 700516854

which will be available to everybody in the world. So individual litigants can come together as a group for discovery reasons, they can come together as a group for pre-trial motions. So they do have a lot of additives that they can use in any litigation they care to pursue us with. SEN. KERRY: One final question, if I may, and that's on the asbestos issue. 1'm not going to run through all of the statistics, but you all are familiar with the non-smoker asbestos worker versus the asbestos smoker, et cetera. The bottom line is that smoker of a pack a day or more, who are also exposed to asbestos are 87 times more likely to die of lung cancer than those without it. In Massachusetts, we've got some 10,000 citizens with claims on the Manville (sp) Trust who apparently will receive only 10 cents on the dollar, and we've got maybe 10,000 more coming down the road, according to the demographics. Asbestos companies have paid billions in these claims; 17 of them have gone bankrupt -- the 17 of the majors, and they account for 70 percent of the industry. But everybody acknowledges they ve also paid for tobacco -caused harm. And they've got nothing left to pay, and we've got a bunch of citizens coming down the road who, therefore, will not be compensated or who have been significantly undercompensated. The question really is, you know, an obvious one: Should there not be some obligation in this legislation to find a way to help these tobacco -asbestos victims get adequate compensation? MR. BIBLE: I'm afraid I'm not an authority on that subject, Senator. SEN. KERRY: Do any of you -- well, I mean, I'm sure you're not unfamiliar with these arguments. MR. BIBLE: But I don't know what the evidence is and if a case has been proved or not, Senator. In fact -- SEN. KERRY: Well, if the evidence were very strong and we were satisfied that it was very strong, do you think it would be inappropriate for us to seek that kind of -- MR. BIBLE: Well, it would seem to me, Senator, that there would be scope under the existing -- the proposed resolution for individual litigants to sue the tobacco companies. SEN. KERRY: Well, except that it bars third party actions, including indemnification actions from the asbestos industry. MR. BIBLE: I'm not that familiar with that. It does not bar third party actions under subrogation, but I don't know about the asbestos. SEN. KERRY: Anybody else want to offer up some billions of dollars here quickly? (Laughter.) Well, not seeing any great volunteers, Mr. Chairman, it's something we can think about in the future. Thank you. SEN. MCCAIN: Thank you, John. I want to thank the witnesses. You've been here almost three hours and we appreciate your patience. I want to emphasize again that I think we have the beginnings of a bipartisan effort to try and resolve this issue, and we appreciate very much your being here. This hearing is adjourned. END ''RJR0000000008001588 7afl51 6869