Burning Down the Houses: Big Tobacco's 1997 Congressional Lobbying

Burning Down the Houses: Big Tobacco's 1997 Congressional Lobbying


Big Tobacco's 1997 Congressional Lobbying

March 1998

Introduction

In June 1997, a group of state attorneys general, trial lawyers, and tobacco industry representatives announced they had struck a deal that would settle lawsuits brought against the tobacco industry. Their agreement would not only settle the approximately 40 lawsuits filed by state attorneys general, but would also almost completely immunize the tobacco industry from past and future legal responsibility for the harm caused by their deadly products. In return, tobacco companies would agree to modifications in the way they advertise their products, and would pay a sum of money inadequate to cover even a fraction of the health costs already associated with tobacco.

Because the state attorneys general have no authority to excuse Big Tobacco from their legal responsibility, their deal must be enacted into legislation by Congress. And this is exactly the deal Big Tobacco is banking on. Tobacco companies typically spend tens of millions of dollars every year to influence legislation in Congress. Some of this money is spent on campaign contributions, but much more actually goes toward hiring political insiders to lobby Members of Congress on Big Tobacco's behalf. These insider lobbyists have special access to Congress, and are doing their best to convince legislators to pass this deal and give the tobacco industry the legal immunity it so desperately craves.

Now, Big Tobacco is intensifying its lobbying campaign. In an effort to persuade Congress to approve their deal, tobacco companies spent record amounts in 1997 pushing their agenda in the halls of Congress and hiring high-priced, high-influence outside lobbyists to do the same. This stepped-up lobbying effort by Big Tobacco included $35.5 million in expenditures in 1997, a 23% percent increase from 1996. Tobacco companies also besieged the Capitol with 208 lobbyists in 1997, 86 more than the year before (a 70% increase). Not only do they employ a huge number of lobbyists, but this year they are deploying many big-name Washington insiders. Big Tobacco's lobbying army included former U.S. Senators and Representatives, ex-staffers for current Members of key committees, and big political fund-raisers. The industry is counting on its record expenditures and these hired guns to convince Congress to sign off on its deal.

The Battle Over the Tobacco Deal

The fight over proposed tobacco legislation is heating up in Congress. Various tobacco control bills that would codify many aspects of the proposed deal have been introduced in the Senate. In contrast, other bills have been introduced that would enact strong public health programs to reduce tobacco-caused illnesses without granting special concessions to the industry.

In anticipation of the debate over tobacco legislation, tobacco industry CEOs were called to testify before the House and Senate Commerce Committees in 1998. Under persistent questioning, the CEOs were still reluctant to admit the extent of tobacco's deleterious impact on health. Meanwhile, tobacco companies have launched a $20 million ad campaign in support of their deal. A recently released confidential advertising memo revealed plans to try to coerce Congress into passing legislation by threatening to withdraw from the agreed-upon deal and then to pin blame on legislators for the breakdown of the settlement. Clearly, pressure is building for Congress to act soon on the industry's version of the deal.

Pressure is also building to deny the tobacco industry the legal bailout contained in their deal. Opposition to the settlement has centered around provisions in the deal that virtually exempt the tobacco industry from civil liability for the decades of harm caused by their products. A broad coalition of national and state health and consumer groups -- Save Lives, Not Tobacco -- has formed to oppose granting any legal protections to the tobacco industry. This alliance of over 300 national, state and local groups including the American Lung Association and Public Citizen points out that the legal provisions of the deal are unfair to the public and will undermine public health goals. The deal would prevent courts from allowing plaintiffs to file suits as a class, or even allowing two plaintiffs with similar cases to join their suits together. In addition, juries would be prohibited from assessing punitive damages against tobacco companies, no matter how bad or deceptive their behavior, for any acts that occurred before June 1997. Together, these provisions would make it all but impossible to sue the makers of products that kill over 400,000 Americans each year, and cost more than $50 billion annually in health-care expenditures.

Furthermore, under the proposed tobacco deal, the industry would have many tools to prevent disclosure of documents that reveal the extent of their wrongdoing. Already, since the announcement of the deal, documents extremely damaging to the tobacco industry have been flooding into newspaper accounts. These include marketing plans aimed at 12- and 14-year-old smokers, evidence that industry scientists and executives knew of the addictive power of nicotine long ago, and strategy documents detailing industry plans for "creating doubt about the health charge[s]" leveled at tobacco products. Despite the tobacco industry's repeated promises to make more documents public, many industry papers have only been revealed as a result of court cases brought against the tobacco companies. Ongoing legal action in a Minnesota case against tobacco companies has served as an important vehicle to make damaging documents public, but it's clear to legal experts that it will take years and many other legal battles before the bulk of industry documents are revealed. The legal restrictions on lawsuits contained in Big Tobacco's deal would dramatically reduce the chance that "smoking gun" documents revealing the industry's wrongdoing will be adequately exposed, thereby curtailing an important tool needed to uncover information Congress must have to protect public health and assess industry misconduct.

Opposition to the tobacco settlement is building quickly, as more and more evidence of industry double-dealing and concealment comes to light. Hoping to foreclose debate before any more lawsuits can be brought to trial and damaging revelations made, the tobacco industry is moving quickly to push its deal through Congress. In anticipation of the certain legislative battle, Big Tobacco brought on new hired guns and shelled out tens of millions of dollars over the last year to sell the industry version of the deal to Senators and Representatives.

Tobacco's 1997 Lobbying Activities

In 1997, the tobacco industry mounted an unprecedented lobbying effort aimed at convincing Congress to support the industry's sweetheart deal. Tobacco companies and industry associations spent more than $35.5 million lobbying Congress and the Executive Branch last year, or more than $66,000 for every Member of Congress. This money paid for legions of prominent law firms and well-connected political insiders, including former Members of Congress, former Capitol Hill staffers, an ex-Governor, and the former Republican party leader. The top spender was Philip Morris Company, Inc., which shelled out $15.8 million to push this dirty deal, followed by RJR Nabisco which spent $5.4 million to promote the bailout.

The number of lobbyists unleashed is startling. Big Tobacco fielded a small army of 208 different lobbyists on Washington in 1997, 39 working for the tobacco companies directly, and another 169 hired from outside lobbying firms. This meant there was a tobacco lobbyist for every two and a half Members of Congress representing the tobacco industry's interests on Capitol Hill.

Companies 1997
Expenses
In-House Lobbyists Outside Lobbyists
Philip Morris Co, Inc. $15,800,000* 17 98
RJR Nabisco, Inc. $5,366,340 6 66
US Tobacco, Inc. $4,100,000 5 40
Brown and Williamson $3,680,000 2 33
Loews Corp. $2,610,000 0 39
The Tobacco Institute $2,080,000 4 5
Smokeless Tobacco Council $1,834,000 3 29
Swisher International N/A 1 0
Cigar Association N/A 1 6
Totals $35,470,340 39 169**

* Philip Morris figure is from the company's self-report filed as "Philip Morris Management Corp." Figure may not include an additional $3.11 million paid to outside lobbying firms who listed their client as "Philip Morris Companies, Inc." We were unable to confirm whether these figures are included in the self-report. If these amounts were not included then the total Philip Morris expenses were $18.91 million.
**Figures do not sum because many lobbyists are employed by more than one company.


1997 Lobbying Expenditures to Leading Outside Lobbying Firms

Though the tobacco industry employs a number of lobbyists directly, the bulk of tobacco lobbying is conducted by high-profile independent lobbying firms and well-connected individuals retained by the company for this purpose. Small wonder these hired guns cost so much -- among the many lobbying firms retained by the tobacco industry were Verner, Liipfert, Bernhard, McPherson & Hand, a top law firm with Democratic links, and the firm of former Senate Majority Leaders Bob Dole and George Mitchell and former Texas Governor Ann Richards. That firm topped the list with earnings of $10.3 million for their efforts on behalf of Big Tobacco in 1997. Also, Baker, Donelson, Bearman and Caldwell, headed by former Senate Majority Leader Howard Baker, was paid $750,000 by tobacco companies in 1997. Former Republican National Committee Chairman Haley Barbour's lobbying firm was paid $1.7 million from tobacco's coffers for their lobbying in 1997. Official income figures for several of the leading law firms hired by Big Tobacco, and those for several firms paid smaller amounts by the industry, were not yet available.

Leading Outside Lobbying Firms Tobacco Company Clients Income
Verner, Liipfert, Bernhard, McPherson & Hand PM, RJR, UST, B&W, Loews $10,300,000
Barbour Griffiths & Rogers PM, RJR, UST, B&W, Loews $1,700,000
Baker, Donelson, Bearman & Caldwell PM, RJR, UST, B&W, Loews $750,000
Patton Boggs, L.L.P. Smokeless Tobacco Council $660,000
Michael Barrett (self-employed) Philip Morris $500,000
Winburn, Jenkins & Wheat Philip Morris $480,000
Oldaker, Ryan, Phillips & Utrecht Philip Morris, U.S. Tobacco $440,000
Stanton & Associates Philip Morris $400,000
Dickstein, Shapiro, Morin & Oshinsky, L.L.P. Cigar Association, STC, Loews $340,000*
Hecht, Spencer & Associates, Inc. B&W $320,000*
McGlotten & Jarvis PM, TI $240,000
Bergner, Bockorny, Clough & Brain, Inc. PM $160,000*
Covington & Burling PM, RJR, B&W, Loews N/A
Total   $16,290,000

*Official year-end income figures were not yet available for these lobbying firms for all of 1997. These figures are only for the first half of the year.

1996 vs. 1997
Tobacco Lobbying

The tobacco industry dramatically stepped up its lobbying in 1997. The $35.5 million spent by tobacco in 1997 far exceeded 1996's total of $28.8 million, an increase of 23%. Though it is impossible under the 1995 Lobbying Disclosure Act to specifically identify work solely in support of the tobacco deal (see Methodology), it is difficult to imagine that this dramatic increase is not due primarily to the pending fight over this sweeping national tobacco legislation. Big Tobacco, already powerful in the halls of Congress, is sparing no expense to sell its bailout deal to Congress.

Lobbying Expenditures by Tobacco Company -- 1996 and 1997

Overall, tobacco spending on lobbying increased by 23% percent from 1996 to 1997. Though Philip Morris spent $15.8 million in 1997 (a 19% drop from their record $19.6 million in 1996), each of the other "big five" tobacco companies more than doubled their spending as the industry dramatically stepped up the pressure on Congress. (It appears that the other large tobacco companies have begun to help Philip Morris foot the bill for the industry's outside lobbying operations.) RJR Nabisco, the second leading spender, upped its lobbying expenditures enormously from $1.6 to $5.4 million, a three-fold increase.

Company 1996 1997 $ Increase % Increase
Philip Morris $19,580,000 $15,800,000 -$3,780,000 -19%
RJR Nabisco $1,637,688 $5,366,340 $3,728,312 228%
US Tobacco, Inc. $1,940,000 $4,100,000 $2,160,000 111%
Brown and Williamson $584,000 $3,680,000 $3,096,000 530%
Lorillard/Loews $140,000 $2,610,000 $2,470,000 1764%
Tobacco Institute $3,320,000 $2,080,000 -$1,240,000 -37%
Smokeless Tobacco Council $1,504,000 $1,834,000 $330,000 22%
Swisher International $60,000 N/A N/A 0%
Cigar Association of America $20,000 N/A N/A 0%
Totals $28,785,688 $35,470,340 $6,684,312 23%

 

Number of Tobacco Lobbyists -- 1996 vs. 1997

The tobacco industry hired at least 208 lobbyists in 1997 as part of its push for a tobacco settlement (final, forthcoming 1997 figures should push the number even higher). That figure includes 7 more in-house lobbyists (from 32 in 1996 to 39 in 1997) working for tobacco companies, but the real explosion was in the number of high-priced outside lobbyists, which went from 90 in 1996 to 169 in 1997 (an 88% increase). Overall, the tobacco industry hired 86 more lobbyists than in 1996, an increase of 70% percent.

Number of Tobacco Lobbyists by Firm -- 1996 vs. 1997
Each and every major tobacco company brought in more lobbyists in 1997 than in 1996. Industry leaders Philip Morris hired 53 new lobbyists last year, and major player RJR Nabisco tripled its contingent (from 24 to 72). In addition, U.S. Tobacco, Inc. sent more than four times as many lobbyists to Capitol Hill than they had the year before.

Company 1996 1997 # Increase % Increase
Philip Morris 62 115 53 85%
RJR Nabisco 24 72 48 200%
US Tobacco, Inc. 10 45 35 350%
Lorillard/Loews 4 39 35 875%
Brown and Williamson 5 35 30 600%
Smokeless Tobacco Council 15 29 14 93%
Tobacco Institute 5 5 0 0%
Swisher International 1 1 0 0%
Cigar Association of America 2 6 4 200%
Totals 122* 208* 86 70

*Figures do not sum because many lobbyists are employed by more than one company.

Who's Who

Some of the biggest law firms in Washington and in the nation were associated with the tobacco lobbying effort in 1997. Former Members of Congress, former Congressional staffers, and other powerful Washington insiders are among the cadre of highly-priced outside lobbyists who worked for Big Tobacco. In 1997, the tobacco industry banded together to hire five of the biggest lobbying firms in Washington, some of them longtime friends of Big Tobacco, some of them brought on just in time for the tobacco industry push for settlement legislation. These firms, Verner, Liipfert, Bernhard, McPherson & Hand; Barbour, Griffiths & Rogers; Baker, Donelson, Bearman & Caldwell; Covington & Burling; and Dickstein, Shapiro, Morin & Oshinsky, each worked for all or most of the major tobacco companies covered by the tobacco deal. For instance, Verner, Liipfert, Bernhard, McPherson & Hand, the industry's lead law firm, collected $10.3 million in 1997, reporting $2,060,000 in income from each of the five largest tobacco companies.

Former Members of Congress Now Lobbying for Big Tobacco
Some of the most effective lobbyists are former Members of Congress. Having come recently from positions inside the House or Senate, these individuals have extensive knowledge of the legislative process and, even more important, close connections to current Members. Says Walter D. Huddleston, former Democratic Senator from Kentucky, "We have access that a nonmember would not have." Their instant clout allows ex-Members input into the legislative process that is difficult to match, and makes them highly sought-after advocates. Much of the industry's lobbying money went to firms employing former legislators. At least eight former Members of the House and the Senate now lobby for Big Tobacco:

Name Current Employer
George Mitchell (D-ME) Verner, Liipfert, Bernhard, McPherson & Hand
Howard Baker (R-TN) Baker, Donelson, Bearman & Caldwell
Walter D. Huddleston (D-KY) Self-employed
Ed Jenkins (D-GA-9) Winburn, Jenkins & Wheat
Alan Wheat (D-MO-5) Winburn, Jenkins & Wheat
Ray Kogovsek (D-CO-3) Black, Kelly, Scruggs & Healey
James V. Stanton (D-OH-20) Stanton & Associates
Stanford Parris (R-VA-8) Dickstein, Shapiro, Morin & Oshinsky

Former Staffers Now Lobbying
In addition to former Members of Congress now in the employ of Big Tobacco, many ex-Congressional staff members lobbied for the tobacco industry in 1997. These staffers, in many cases, worked closely with current Members of Congress who will be key players in any tobacco legislation.

Name Current Employer Formerly
Michael F. Barrett Self-employed Staff Director, House Commerce Cmte., Subcmte. on Oversight and Investigations
Elizabeth Beavin Bergner, Bockorny, et al. Leg. Asst., U. S. House of Rep.
Charles Brain The White House* Dep. Staff Dir., Ways & Means Cmte.
John Doney Washington Counsel, P.C. Asst. Secretary for the Majority, Senate
Jayne T. Fitzgerald Washington Counsel, P.C. Tax Counsel, Ways & Means Cmte.
Ed Gillespie Barbour, Griffiths, et al. Aide, House Majority Leader Armey (R- TX-26)
G. Stewart Hall G. Stewart Hall & Assoc. Leg. Dir., Sen. Shelby (R-AL)
Rodney C. Hoppe Oldaker, Ryan, et al. Dep. Press Sec., House Commerce Cmte.
Keith Kennedy Baker, Donelson, et al. Staff Dir., Senate Appropriations Cmte.
Graham Matthews Dickstein, Shapiro, et al. Minority Clerk, Senate Approps. Cmte.
Richard Meltzer Washington Counsel, P.C. Chief Counsel, Natural Resources Cmte.
James T. Molloy Self-employed Doorkeeper, U.S. House of Reps.
Darryl D. Nirenberg Patton Boggs Chief of Staff, Sen. Helms (R-NC)
William Nordwind O'Connor & Hannan Leg. Asst., Rep. Upton (R-MI-6)
Steven R. Phillips Verner, Liipfert, et al. Leg. Director, Sen. Helms (R-NC)
Karen A. Regan Oldaker, Ryan, et al. Leg. Asst., House Admin. Cmte.
Jeffrey Schlagenhauf Smokeless Tobacco Aide, Rep. Bliley (R-VA-7)
Thomas Spulak Shaw, Pittman, et al. General Counsel, U.S. House of Reps.
Jessica Wallace Verner, Liipfert, et al. Leg. Council, Rep. Stearns (R-FL-6)
Mark Weinberger Washington Counsel, P.C. Chief of Staff, Comm. on Entitlement and Tax Reform (Exec. Branch)

*Charles Brain lobbied for Bergner, Bockorny, et al. in the first half of 1997. He is now the head lobbyist to the House of Representatives for the Clinton administration.

Rogues Gallery

Howard Baker
Former Republican Senate Majority Leader Howard Baker heads a leading law firm (Baker, Donelson, Bearman & Caldwell) now working for Big Tobacco. The ex-Senator was forced to resign as chair of the Board of the Mayo Clinic after his lobbying relationship with the industry was revealed. Baker, whose first wife was a chain smoker who died of lung cancer, is now married to former Kansas Senator Nancy Kassebaum, former chair of the Senate Labor and Human Resources Committee.

Haley Barbour
Former Republican National Committee chairman Haley Barbour now heads his own lobbying firm and is employed by all five major tobacco companies. Barbour, who had great success raising money from tobacco companies as head of the RNC, is widely acknowledged as a lead player in the successful effort to slip a $50 billion tobacco industry tax break into the 1997 budget bill. (After this sneak attack was discovered, the Senate voted 95-3 to repeal it.) Barbour's interest in the tobacco industry is not new. In the spring of 1995, while Barbour headed the RNC, he reportedly intervened personally to urge the speaker of the Arizona House of Representatives to release a pro-tobacco bill that was being held up.

Ann Richards
The former Texas Governor, well-known for her folksy manner and her progressive politics, is now one of the top names at Verner, Liipfert, Bernhard, McPherson & Hand. She is registered specifically as lobbying on tobacco issues for Verner, Liipfert, Big Tobacco's top outside lobbying firm. Of the tobacco deal, Richards has said, "I think the agreement is, uh, I think it's going to be one of the greatest breakthroughs in public health in my lifetime."

George Mitchell
Mitchell, Democratic Senate Majority leader for the Democratic controlled Senate, is now a prized member of the Verner, Liipfert lobbying machine. The ex-Maine Senator, who solidifies Verner, Liipfert's Democratic contacts, is also President Clinton's representative to the Irish peace talks. As majority leader, Sen. Mitchell helped to lead the fight to pass environmentally-friendly amendments to the 1990 Clean Air Act. Working for Big Tobacco, whose products are the biggest source of lung disease in the country, is an about face for George Mitchell.

Conclusion

As the tide of anti-tobacco publicity mounts, the tobacco industry is becoming more and more desperate to receive special protection from their friends in Congress before any further damaging revelations are made. Big Tobacco wants to foreclose the possibility of lawsuits against itself and it is sparing no expense to ensure this result. Tobacco companies were willing to invest $35.5 million last year alone to lobby Congress to pass their version of tobacco policy and thereby virtually immunize themselves against the lawsuits they fear. On top of their lobbying efforts, the industry also contributed $4.5 million to federal candidates and political parties in 1997. These merchants of death have willingly placed their fate in the hands of the U.S. Congress because that is where they have traditionally wielded substantial power. They are now mounting an unprecedented effort to sway friend and foe alike.

It's time for our Senators and Representatives to stand up to Big Tobacco, and its high-priced lobbyists, and oppose the industry's proposed sweetheart deal on this important public health issue. Rather than bailing out the industry through tax giveaways and limits on corporate liability for health damages, Congress should consider sensible and effective tobacco control legislation that doesn't require cutting a deal with Big Tobacco.

Methodology

Tobacco lobbyists, lobbying firms and lobbying expenditures were identified using 1997 end-of-the-year reports and addendums filed with the Clerk of the House and the Secretary of the Senate pursuant to the Lobbying Disclosure Act of 1995. All the lobbyists working for tobacco product manufacturers or for the Tobacco Institute were included in our analyses unless the lobbyist specifically reported work on non-tobacco related issues only. The Act does not require lobbyists to specifically indicate the percentage of their time spent working on the tobacco settlement deal, which was being negotiated during the first half of 1997 and was formally announced on June 20. Many firms' disclosure reports are deliberately vague, stating only that they worked on "protocols and legislation related to the resolution of issues surrounding the manufacture, sale and use of tobacco products." These factors made it impossible to pinpoint the exact amount spent lobbying on the deal itself.

We analyzed lobbying expenses for each of the major tobacco manufacturers and industry trade associations. However, the Ligget Group was not included in this study because that company is not covered by the national tobacco deal and officially opposes the agreement. The Smokeless Tobacco Council and the Cigar Association, two tobacco industry trade associations that are also not included under the tobacco deal as currently formulated, have been lobbying Congress to be included in any national tobacco legislation and support the underlying deal in principle as long as they receive its special protections. Therefore, we included their lobbying expense figures in this study.

Several of the total tobacco company lobbying expense figures were taken directly from internal lobbying disclosure forms filed by the companies' in-house lobbying operations. The figures for RJR Nabisco were augmented by certain amounts paid to outside lobbyists which were not included in the internal lobbying reports that each company filed, but were reported by the outside lobbyists themselves. Loews Corp. has no in-house lobbyists and, therefore, did not file an expense report for 1996 or 1997. Their expenses were determined by summing the lobbyist firms' reports of income from Loews. Brown and Williamson and the Cigar Association of America also did not file internal reports for 1996, and therefore their 1996 expenses were also determined by summing the lobbyist firms' reports of income from outside lobbyists. The Tobacco Institute figures include the lobbying expenses of the Tobacco Institute's Labor and Management Committee. The United States Tobacco, Inc. figures include internal figures reported by UST Public Affairs, Inc..

Information about specific lobbying firms included in the "Who's Who" section of this report was derived from several sources. Lobbyists recently employed by the federal government are required to report this information under the 1995 Lobbying Disclosure Act and this information was taken directly from the disclosure forms. Additional information was derived from the following news accounts: Robert Bryce, Austin Chronicle, 10/24/1997; Tobacco Companies Lobbying Costs Surge: Industry Enlists Ex-politicians, Officials Before Settlement Debate in Congress, George Rodriquez, Dallas Morning News, 10/18/97, at www.dallasnews.com/business-nf/biz27.htm; Tobacco's Hard Road: Industry Raising Its Stakes in Era of Fewer Smoke-Filled Rooms, Alan K. Ota, Congressional Quarterly, 11/8/97, pgs. 2727-2739; and A Revolving Door Where Lobbying Rules Don't Apply, Dan Morgan, Washington Post, 6/21/97, at A6; Family Affair: Lots of Political Ties to Tobacco Talks, Ron Fournier, Associated Press, 4/25/97; Will Lawyers' Greed Sink the Tobacco Settlement?, Matthew Scully, Wall Street Journal, 2/10/98, at A18.

Acknowledgments

Public Citizen's Congress Watch Senior Researcher Jamie Willmuth and Researcher Sam Munger were the principal analysts and authors of this report. Congress Watch Legislative Counsel Joan Mulhern and Director Frank Clemente provided significant conceptual and editorial advice. Intern James Higgins provided research and technical support.


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