Statement on the Tobacco Settlement
November 20, 1998
As all of you know, the United States Congress failed to achieve a
settlement of a lawsuit against the five leading tobacco companies of America. After
negotiations in Washington ended abruptly, a number of states then attempted to achieve
what the federal government was unable to do.
In that context, I have been working with a large group of state attorneys general in
negotiating a settlement directly with the tobacco companies to reimburse the states for
the cost of tobacco-related illnesses. Today, after months of effort, we have a proposed
settlement on the table.
Deciding whether South Carolina should accept the terms of the settlement has not been a
simple task. In fact, joining the lawsuit in the first place was not an easy decision. As
many of you know, I have questioned and still do question the legal theory that is the
basis for these suits. But I felt strongly that the tobacco farmers and at least one
tobacco producing state should have a place at the table. Otherwise we would indirectly be
governed by decisions over which we had no influence or input.
You have in front of you a fact sheet that summarizes the major elements of the proposed
settlement. I will not repeat every point in this statement.
However, it is clear that there are many positive features. If we accept this settlement,
our State will receive approximately $2.2 billion over a period of 25 years. Also, the
tobacco companies have agreed to new initiatives in public health, and they have agreed to
invest in new efforts at the national level to combat the use of tobacco products by
I am also pleased to say that we were able to gain from the tobacco companies a firm
commitment to pay farmers the current price for tobacco for the next ten years. Also, we
were able to gain protection for the sponsorship of NASCAR which is an important
institution in South Carolina.
And nothing in this agreement prevents individuals or private parties from seeking any
future legal remedies against the tobacco companies.
Finally, we were able to specify that any fees paid to the private lawyers involved in
this suit will be arbitrated directly with the tobacco companies in a separate
negotiation, and no legal fees at all will be paid from the amount designated for the
On the down side, this agreement will result in higher prices for tobacco products. I am
not pleased with that result. But the brutal truth is this: the cost of tobacco products
will increase regardless of whether or not South Carolina accepts the terms of the
settlement. The major issue - in fact the only issue - is whether South Carolina is
willing to accept its share of the settlement.
I have briefed the members of the Budget and Control Board and other state leaders on the
terms of this proposal to gain their input. And, after considering all elements of the
proposal, I am today providing official notice that South Carolina has agreed to the
As Attorney General, my legal role largely ends with that
acceptance. It is now up to the Governor and to the General Assembly to decide whether to
trigger the legislative mechanisms required and what to do with the funds received.
However, as counsel to the State of South Carolina, I feel a
responsibility to make a recommendation of principle in the strongest terms possible.
These funds - the $2.2 billion dollars designated for South Carolina - are reimbursements
- reimbursements to the taxpayers of our state for dollars already spent.
It would be a terrible injustice if those funds were used to pay for more government
programs and more bureaucracy or to grow the government in any way.
Therefore, in making this announcement, I would also like to issue a direct challenge to
Governor-elect Jim Hodges. My challenge is this: Will you join me in supporting the use of
these funds only for the purpose of giving tax relief to the people of South Carolina and
not for more government spending?
Let's give this money back to the taxpayers. That could take the form of car tax relief,
income tax relief for seniors or simply a scheduled rebate to all taxpayers. The point is
we should pledge this money to tax relief only.
I hope Governor-elect Hodges will join me in making that pledge without equivocation.