NEW YORK, May 17 (Reuters) - Big tobacco is again drawing the wrath of state attorneys general who are investigating allegations that the industry is violating their historic 1998 settlement by seducing teens with magazine ads.

The timing of the probe, which could land tobacco companies back into courts across the country, is particularly bad for the industry as it faces what could be a massive punitive damage verdict from the Florida jury in a huge smokers' class action case. The punishment phase of the landmark Engle lawsuit begins next week. ``We have an active, very focused investigation,'' Washington State Attorney General Christine Gregoire said in a telephone interview. Gregoire, who is president of the National Association of Attorneys General and was a key negotiator of the landmark settlement, said the probe started about three or four months ago with complaints about the nature of the ads. Since that time the attorneys general have also been collecting publishing data about an increase in cigarette magazine advertising. A spokesman for Philip Morris Cos Inc. said the company was unaware of the investigation, that it has been in active discussions with the attorneys general about marketing issues and has been taking steps to reduce the visibility of tobacco ads to youth including dropping those on magazine back covers. The latter will be replaced with messages aimed at getting adults to discourage children from smoking. ``We have gone above and beyond what is required of us,'' said the spokesman Brendan McCormick. The dispute stems from the $246 billion settlement reached between the states and the tobacco industry in late 1998 to resolve suits aimed at recouping Medicaid costs spent on sick smokers. As part of the agreement, the tobacco industry agreed to stop certain types of outdoor advertising including on billboards and in stadiums and shopping malls. While there was no specific language about magazines, the industry vowed that it would not take any action to target youths in the sale of cigarettes. While Big Tobacco promptly pulled billboard ads after the agreement was signed, ``there were problems right off the dime,'' Gregoire said explaining that tobacco ads appeared in hockey and soccer magazines popular with teens. Since then cigarette ads have continued to run in a gamut of magazines read by teens including Glamour, Rolling Stone, TV Guide and Sports Illustrated. However McCormick said Philip Morris uses a comprehensive review procedure to determine which magazines are appropriate. It reviews circulation data supplied by publishers as well as the magazines' content ``to make sure the focus of those magazines is not on kids.'' He said that the company dropped ads in Spin and Vibe because they looked too youth oriented. However, if the attorneys general are not convinced tobacco companies are in compliance with the settlement, they can take manufacturers back to court and seek contempt orders and penalties. Gregoire said that each attorney general would have to go to court in his or her own state because the industry signed individual consent decrees. She said that the attorneys general and tobacco company representatives have continued to meet about every six months since the deal was finalised. ``This issue has been raised practically every time,'' she said. As recently as Wednesday health groups released two studies that show tobacco companies have greatly increased the amount of advertising spending in magazines read by children. One study conducted by the Massachusetts Department of Public Health found that tobacco advertising in magazines with at least 15 percent of readers aged 12 to 17 had increased by a third to nearly $120 million in 1999 -- after the settlement was reached. The Massachusetts study found that while tobacco companies did spend less money on billboard advertising, they redirected the money to magazines. It found that four of the five brands most popular among youths -- Kool, Marlboro, Camel and Newport -- increased spending in youth-oriented publications. The American Legacy Foundation, which was created by the settlement, said it found that eight of the top 10 cigarette brands reached at least 70 percent of 12 to 17 year olds five or more times, which is considered to be optimal exposure. Matthew Myers, president of the Campaign for Tobacco-Free Kids, said that health groups were calling on the attorneys general to take action to enforce the settlement. ``The data is pretty powerful...it tells an absolutely devastating story. This will put real pressure on the attorneys general to take some action. It they don't, they will be soundly criticised for letting tobacco off the hook.'' Gregoire said that while the states were aggressively investigating the problem they are not close to taking legal action because of ``cooperation problems'' with the industry. She said that Big Tobacco denies it is advertising to teens because readership is based on magazines' subscriptions. ``We think that is an inaccurate measure,'' said Gregoire adding that most teens see the ads in magazines they have purchased from newsstands or in their homes where the subscribers are adults.

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