WASHINGTON - Tobacco companies slashed their spending on lobbying by more than two-thirds this year as their battleground shifted from Capitol Hill to the courts.

Even so, five cigarette makers spent $11 million from January through June to lobby Congress, records show. It was a big drop from the first half of 1998, when the industry poured $37 million into an extraordinary effort to defeat legislation that would have raised cigarette taxes by $1.10 per pack. The bill, sponsored by Sen. John McCain, R-Ariz., also would have given the federal government new power to regulate nicotine. "Last year, we faced the McCain bill in Congress, which really would have threatened our future viability had it passed, so we put a lot of resources behind making sure our voice was heard," Brown & Williamson spokesman Mark Smith said. "This year, we did not face that terrible threat." Instead, Smith said, the industry has turned its attention to a Justice Department lawsuit seeking billions of dollars from the cigarette companies to reimburse the government for smokers' medical bills. The suit, filed on Wednesday, was anticipated for months. Cigarette companies reached a $206 billion settlement with 46 states last November, after the McCain bill died. To defeat the McCain bill, the tobacco companies brought in high-powered lobbyists such as former Senate Majority Leader George Mitchell, former White House Chief of Staff Howard Baker, former Texas Gov. Ann Richards and former Republican National Committee Chairman Haley Barbour. In addition, the industry spent $40 million on advertisements attacking the legislation. The efforts paid off; Senate Republicans killed the bill in June 1998. This year, lobbying costs are down 70 percent. Brown & Williamson's spending dropped from $18.2 million to only $1.2 million for the first half of the year, lobbying disclosure reports show. Philip Morris, whose subsidiaries makes food and beer, cut its lobbying expenses from $14.4 million to $7.5 million. Lorillard cuts its spending on lobbying from $1.9 million to $640,000, R.J. Reynolds from $868,600 to $700,000 and U.S. Tobacco from $1.3 million to $620,000. Fees paid by the tobacco industry to the powerhouse law firm of Verner, Liipfert, Bernhard, McPherson and Hand – whose ranks include Mitchell and Richards – declined from $7.1 million during the first six months of 1998 to $80,000 during the same period this year. "There's no legislation," explained John Merrigan, a partner in the firm. Still, a leading anti-tobacco group noted that the industry spent $11 million to lobby during the first six months of the year – even more than the $10 million the companies spent in 1997, before the tax battle. "The numbers are still very large and particularly large in a year where there is no tobacco legislation before the Congress," said Matthew Myers, executive vice president of the Campaign for Tobacco-Free Kids. "The tobacco industry hasn't withdrawn from the playing field." The tobacco industry also made more than $1 million in campaign contributions from January through June. Tobacco industry political action committees gave $648,136 to federal candidates. Philip Morris was the country's fifth biggest donor of unregulated "soft money" to political parties, giving $411,961. U.S. Tobacco gave $243,550.

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