Asbestos Settlement Blocked in Senate

WASHINGTON (Dow Jones)--Legislation to create a $140 billion industry-funded asbestos-injury trust fund was sent back to the Senate Judiciary Committee on Tuesday evening after proponents failed to muster the 60 votes they needed to overcome a procedural hurdle.
The bill's proponents say the defeat was only temporary. The one senator to miss the vote is on their side. And Senate Majority Leader Bill Frist, R-Tenn., already is considering bringing the bill back to the Senate floor.
But even if Frist wins the vote the second time around, further hurdles remain, and senators who may have backed him on the procedural vote may oppose him as the measure gets closer to passage from the Senate floor.
The twist is just the latest for a bill long since thought dead that simply refuses to die.
The measure would create a trust funded by contributions from companies with asbestos injury liabilities and their insurers. The trust would also seize the assets of private asbestos injury trusts. Workers with asbestos-related injuries would be paid set amounts depending on the severity of their injuries, up to $1.1 million for victims suffering from mesothelioma. In exchange for funding the trust, business and their insurers would be excused from any future liability for any asbestos-related injury claim.
Most Democrats and many Republicans oppose the bill, but the author, Senate Judiciary Committee Chairman Arlen Specter, R-Pa., simply refuses to quit.
The vote Tuesday was on waiving certain budget rules to allow the bill to progress. Specter needed the OK of 60 of 100 senators, a tough sell on a controversial bill.
The outcome was uncertain to the end, teetering at 59 to 40 for minutes as senators waited to see how Sen. Daniel Inouye, D-Hawaii, would vote.
But Inouye, who was home tending to his sick wife, never arrived.
Frist eventually changed his vote, bringing the final tally to 58 to 41 and maintaining a lifeline for the measure.
Under Senate rules, a senator voting on the side that prevails - in this case the side asking that budget rules not be waived - can ask that the vote be reconsidered.
Specter said later that Inouye had said he would have voted to waive the budget rules, giving the bill the 60 votes it would need to survive another day.
"As John Paul Jones said, 'we have just begun to fight'," Specter said.
Lobbyists from all interests watched the bill's progress nervously all day.
The bill's demise would be a huge financial loss to dozens of companies with asbestos liabilities such as Owens Corning (OWC), USG Corp. (USG), and W.R. Grace & Co. (GRA).
According to the consumer advocacy group Public Citizen, 10 asbestos companies including Owens Corning, USG, and W.R. Grace would have see their future liabilities fall from an estimated $25.9 billion to $5.6 billion under the legislation.
Another eight companies - Fortune 500 businesses that used asbestos in their production - were also expected to reap substantial savings under the bill, according to Public Citizen.
These companies include Dow Chemical Co. (DOW) - which faces asbestos claims through its wholly owned subsidiary Union Carbide - General Electric Co. (GE), Ford Motor Co. (F), General Motors Corp. (GM), Georgia-Pacific Corp. (GP), Honeywell International Inc. (HON), Pfizer Inc. (PFE) and Viacom Inc. (VIA), according to Public Citizen.
Honeywell International faces asbestos liabilities through its former brick and cement-making unit, the North American Refractories Co. Pfizer faces asbestos liabilities through its subsidiary Quigley Co., while Viacom bought into the asbestos issue by purchasing CBS, which in turn owned Westinghouse.
A specific list of who would have won and by how much is impossible to write, said Public Citizen legislative council Jillian Aldebron, because the bill's sponsors refused to release a confidential list of companies with potential asbestos liabilities.
Those benefitting from defeat of the bill would include small and mid-sized companies that would have seen their asbestos liabilities increase, and defendant company insurers.
Asbestos is a mineral used in flame-resistant insulation in the automotive, construction and defense industries. It has been linked to a number of lung diseases, including a particularly virulent form of lung cancer, mesothelioma.
More than 730,000 people in the United States filed compensation claims for asbestos-related injuries from the early 1970s through the end of 2002, according to the RAND Corp. Those claims have cost businesses and their insurers more than $70 billion. About 40% of that money has gone to asbestos victims, while defendant and plaintiff legal expenses consumed roughly equal halves of the remainder.
Claims on the fund are expected to come quickly, while the bulk of contributions to the fund would be paid gradually over years. As a result, the fund would need to borrow from the federal government to remain solvent, and therefore was vulnerable to certain budget rules.
"People think this is some technical jargon," said Sen. John Ensign, R-Ariz. But the budget rules were put in place "to make sure that the Senate carefully weigh whether or not we are putting undue burdens and obligations on future Congresses and generations of Americans."
Sen. Orrin Hatch, R-Utah, said Ensign and others were "using the mantle of fiscal responsibility as an excuse not to legislate."
The bill states that the trust fund's manager couldn't borrow more than could be paid back and that over the fund's lifetime all money borrowed, plus interest, would be repaid.
Bill co-author Sen. Patrick Leahy, D-Vt., told fellow senators that by voting against the bill, "you are telling thousands upon thousands of victims 'You are on your own and probably have no chance of recovering the recovery you'd have here (under the bill).'"
Public Citizen's Aldebron said the bill's defeat "means that asbestos victims will get their day in court."
Employees injured by asbestos exposure can still sue for damages as could consumers, residents near asbestos operations and others who would have been precluded from making any claims under the bill, Aldebron said.