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Steve Howe, the first player banned from baseball for life because of drugs, was reinstated Thursday by arbitrator George Nicolau.

Howe, 34, was suspended June 8 by then-Commissioner Fay Vincent following his seventh incident related to drugs or alcohol. The suspension followed Howe`s guilty plea to a misdemeanor charge of attempting to buy a gram of cocaine.

Howe was 3-0 with six saves and a 2.45 earned-run average for the Yankees last season. He became a free agent Sunday, but his agent said Howe would prefer to re-sign with New York.

Nicolau, baseball`s permanent arbitrator, heard the case following a grievance filed by the union of behalf of Howe.

”He can sign a contract subject to conditions (drug testing and aftercare) set forth in the arbitrator`s decision,” said Eugene Orza, associate general counsel of the players association.

Milwaukee Brewers owner Bud Selig, chairman of baseball`s ruling executive council, declined to comment. Vincent criticized the ruling.

”It makes baseball look silly, and I think there`ll be a lot of adverse reaction,” Vincent said.