Sources tell CBS News that a federal task force investigating possible fraud charges against the industry has been disbanded, and the chances of indictments are now "virtually nonexistent."
Lawmen had been looking into whether the industry lied when its executives testified before Congress that tobacco was not addictive and whether they had submitted false statements to the government about their products.
Even tobacco critics admit it would have been a hard case to prove.
"These executives were well rehearsed by their lawyers to say what they wanted to say, but to try to avoid criminal perjury charges, and they may very well have succeeded," said Rep. Henry A. Waxman, D-Calif.
Most recently, investigators had concentrated their efforts on statements about a secret double-strength tobacco grown in Brazil for the Brown & Williamson Tobacco Co.
But, despite obtaining the help of a smaller company that helped genetically alter the plant, the probe fizzled.
Now the Justice Department is concentrating on fulfilling a pledge made by President Clinton during his State of the Union address.
That night, President Clinton said, "the Justice Department is preparing a litigation plan to take the tobacco companies to court and with the funds we recover, to strengthen Medicare."
But even that pledge appears in jeopardy.
Sources say there is little heart within the Justice Department for filing such a suit, nor is it at all certain that Congress would fund it.