Senate Kills $140 Billion Asbestos Fund Over Budget Rule

February 15, 2006

On a procedural budget vote, the U.S. Senate yesterday killed a proposed $140 billion private asbestos victims fund that has been years in the making. The final vote was 58 to 41, with 60 votes needed to keep it alive.

The bill is designed to remove asbestos cases from the civil courts and speed payments to victims of asbestos exposure from a private fund paid for by manufacturers, suppliers, insurers and other businesses affected by asbestos litigation, which has bankrupt 80 firms. Under the act, the Department of Labor would administer payments.

Just last week, the Senate voted overwhelmingly 98 to 1 to proceed to consideration of S. 852, The Fairness in Asbestos Injury Resolution Act, as opponents of the measure went along with the majority because they lacked sufficient votes to defeat it.

However, yesterday’s vote saw some conservative Republicans join Democrats in refusing to support the bipartisan measure. Some opponents fear that the fund may not be sufficient to cover all the claims and will eventually require a taxpayer bailout, while others object to it as a bailout of large corporations that could shortchange victims.

Sen. Arlen Specter (R-Pa.), chairman of the Judiciary Committee, and Sen. Patrick Leahy (D- Vt.), the panel’s ranking Democrat, who are co-sponsors of the bipartisan measure, vowed to try to bring the measure back for another vote.

Specter has tried for years to forge a compromise among insurers, asbestos manufacturers, labor and the trial bar. He has asserted that the trust fund is necessary to “solve the worst litigation crisis in the history of the American judicial system.”

Nevada Sen. John Ensign, a Republican, raised the budget technicality issue that defeated the fund. A Senate rule requires at least 60 votes on bills that are expected to cost more than $5 billion over a 10- year period. Ensign argued that the rule applied because if the fund falls short, the government budget would be affected.

Sen. Leahy and other supporters argued that the measure does not affect the federal budget because the funds come from the private sector and it is adequately funded. Leahy cited a new Congressional Budget Office report.

“This point of order is a procedural mechanism intended to promote fiscal discipline. In light of CBO’s explicit statement that “CBO concludes that the legislation would be deficit-neutral over the life of the fund,” no point of order should prevent such important, completely privately funded legislation as the FAIR Act,” Leahy said.

Sen. Daniel Inouye, (D-Hawaii) missed the vote due to his wife’s illness. Sen. Specter raised the possibility of having another vote when Inouye, a supporter, is available.

In yesterday’s vote, Senate Majority Leader Bill Frist, (R-Tenn.), switched his vote to “no” at the end to preserve his right to force reconsideration of the trust fund, making the final vote 58-41.
“We’ll make a decision on that at some point in the future,” Frist said about a possible new vote on the FAIR act.

Republicans split
Although the bill is a priority for President Bush and Republican leaders in Congress, Republicans are split over the measure.

Some opponents argue that the plan favors large manufacturers while others, including some conservatives, worry it will eventually require a taxpayer bailout or more money from businesses. They cite a Congressional Budget Office report that suggested the fund would fall $10 billion short.

Senate Democratic Leader Harry Reid (D-Nev.) led the opposition to proceeding on the bill in last week’s proceedings. “The problem seems to be that the so-called FAIR Act places the needs of a few large companies with asbestos liability above the needs of those suffering from asbestos-related illness. This is the fundamental flaw of the legislation itself,” Reid said.

Insurers are worried that the fund is not as exclusive as it should be, that the insurance industry’s $46 billion contribution would not be the end of its liability, and that the medical criteria used for deciding who gets awards are insufficient.

“The last thing that a national trust fund should do is to allow asbestos litigation to continue after the bill is signed into law, or be constructed in a way that ever allows a return to the same litigation system that has created the problem in the first place,” testified Craig Berrington, the American Insurance Association’s general counsel.

The debate has attracted considerable political money. According to Political Money Line (, a nonpartisan organization that reports on Congressional financial disclosure, found that for the first six months of 2005 alone, 25 lobbying firms reported receiving more than $8 million for lobbying on the asbestos issue.

According to a May, 2005, report by the RAND Institute for Civil Justice, the number of asbestos claims continues to rise, with over 730,000 claims filed already and some 200,000 pending.

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