[House Report 106-782]
[From the U.S. Government Publishing Office]



                                                                       
106th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     106-782

======================================================================



 
                   ASBESTOS COMPENSATION ACT OF 2000

                                _______
                                

 July 24, 2000.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

 Mr. Hyde, from the Committee on the Judiciary, submitted the following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 1283]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on the Judiciary, to whom was referred the 
bill (H.R. 1283) to establish legal standards and procedures 
for the fair, prompt, inexpensive, and efficient resolution of 
personal injury claims arising out of asbestos exposure, and 
for other purposes, having considered the same, reports 
favorably thereon with an amendment and recommends that the 
bill as amended do pass.

                           TABLE OF CONTENTS

                                                                  

                                                                 Page
The Amendment..............................................           2
Purpose and Summary........................................          15
Background and Need for the Legislation....................          15
Hearings...................................................          21
Committee Consideration....................................          22
Votes of the Committee.....................................          22
Committee Oversight Findings...............................          31
New Budget Authority and Tax Expenditures..................          31
Congressional Budget Office Cost Estimate..................          31
Constitutional Authority Statement.........................          40
Section-by-Section Analysis and Discussion.................          41
Operating Cost Analysis....................................          64
Agency Views...............................................          66
Judicial Calls for Federal Legislation.....................          76
Dissenting Views...........................................          79

    The amendment is as follows:
    Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Asbestos 
Compensation Act of 2000''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.

                  TITLE I--ESTABLISHMENT AND PROCEDURE

Sec. 101. Establishment of the Office of Asbestos Compensation.
Sec. 102. Medical eligibility review.
Sec. 103. Election of administrative process; settlement offers.
Sec. 104. Claimant's choice of forum.
Sec. 105. Administrative adjudication.
Sec. 106. Appeals; judicial review.
Sec. 107. Gathering and maintenance of information.
Sec. 108. Legal assistance program.
Sec. 109. Time limits for dispositions.

          TITLE II--LAW APPLICABLE TO ASBESTOS ADJUDICATIONS.

Sec. 201. Medical eligibility.
Sec. 202. Damages.
Sec. 203. Statute of limitations or repose.
Sec. 204. Come back rights.
Sec. 205. Class actions, aggregations of claims and venue.
Sec. 206. Joint and several liability.
Sec. 207. Core claims
Sec. 208. Special rules applicable to section 105 adjudications.
Sec. 209. Special rules applicable to the trustee.

                TITLE III--ELIGIBLE MEDICAL CATEGORIES.

Sec. 301. Eligible medical categories.
Sec. 302. Asbestos-related non-malignant conditions with impairment.
Sec. 303. Asbestos-related mesothelioma.
Sec. 304. Asbestos-related lung cancer.
Sec. 305. Asbestos-related other cancer.
Sec. 306. Medical testing reimbursement.

                           TITLE IV--FUNDING.

Sec. 401. Assessment and enforcement.
Sec. 402. Fiscal and financial management of the asbestos compensation 
fund.
Sec. 403. Authorization for appropriations and offsetting collections.

                          TITLE V--TRANSITION

Sec. 501. Applicability; transitional civil actions.

                         TITLE VI--DEFINITIONS

Sec. 601: Definitions.

                  TITLE VIII--MISCELLANEOUS PROVISIONS

Sec. 701. Relationship to other laws.
Sec. 702. Annual reports.
Sec. 703. Enforcement.
Sec. 704. Qualifying national settlement plan.
Sec. 705. Severability.

                  TITLE I--ESTABLISHMENT AND PROCEDURE

SEC. 101. ESTABLISHMENT OF THE OFFICE OF ASBESTOS COMPENSATION.

    (a) Establishment of Program; Administrator.--There is established 
in the Department of Justice the Office of Asbestos Compensation (OAC) 
to be headed by an Administrator. The Administrator shall be appointed 
by the President by and with the advice and consent of the Senate. The 
Administrator shall serve for a term of 10 years, and may be removed by 
the Attorney General only for good cause. The Administrator shall have 
authority to promulgate all procedural and substantive rules necessary 
to administer this Act. All claims and other filings under this Act 
shall be lodged with the office designated by the Administrator.
    (b) Exclusive Jurisdiction.--Except as otherwise provided in this 
Act, the OAC shall have exclusive jurisdiction over proceedings to 
determine if a claimant is entitled to compensation for an asbestos 
claim and the amount of such compensation. The foregoing shall not 
apply to any claim brought under any workers' compensation law or 
veterans' benefits program.
    (c) Medical Director.--The Administrator shall appoint the Medical 
Director and may remove the Medical Director for good cause. The 
Medical Director shall, under the supervision of the Administrator, 
manage the medical review process under section 102 and shall have the 
authority to appoint or to contract for the services of claims 
examiners, physicians, and such other personnel as may be necessary or 
appropriate for the efficient conduct of the medical review process and 
to create the exceptional medical claims panel.
    (d) Asbestos Compensation Fund.--There is established in the OAC an 
Asbestos Compensation Fund for the purpose of providing payments to 
claimants under this Act. The Administrator shall appoint the Trustee 
of the Asbestos Compensation Fund and may remove the Trustee for good 
cause.
    (e) Office of Administrative Law Judges.--There is established in 
the OAC an Office of Administrative Law Judges for the purpose of 
providing expedited administrative adjudication of asbestos claims 
pursuant to section 105. The Administrator shall have authority to 
appoint Administrative Law Judges on a temporary or emergency basis and 
to remove such judges for good cause.
    (f) Medical Advisory Committee.--The Administrator shall appoint a 
Medical Advisory Committee which shall periodically evaluate this Act's 
medical review process and medical eligibility criteria. The 
Administrator shall set a term of appointment for members of the 
Medical Advisory Committee. The Committee shall make appropriate 
recommendations as and when it deems appropriate and shall submit an 
annual report to the Administrator and the Congress.

SEC. 102. MEDICAL ELIGIBILITY REVIEW.

    (a) Determination of Eligibility.--All claims when filed shall be 
immediately referred to the Medical Director. The Medical Director 
shall determine whether the claimant meets the requirements for medical 
eligibility in section 301 or the requirements for medical testing 
reimbursement in section 306
    (b) Information for Medical Review.--The Administrator shall issue 
rules for the expeditious conduct of the medical review process. Such 
rules at a minimum shall provide for the following:
            (1) Submission of the following information where relevant 
        and feasible: smoking history; occupational history; 
        description of the circumstances, intensity, time, and duration 
        of exposure; medical test results necessary for a decision as 
        to whether an exposed person meets the requirements for one or 
        more medically eligible categories under sections 301, 302, 
        303, 304, 305, or 306, including all of the supporting data for 
        any pulmonary function tests on which the claimant relies 
        (including all flow volume loops, spirographs, and any other 
        tracings for any test that is performed). The claimant shall 
        also provide such medical releases as the Administrator may 
        require allowing the OAC to obtain any and all medical 
        information relevant to the determination of medical 
        eligibility.
            (2) The Medical Director may require additional non-
        invasive medical tests at the expense of the OAC if necessary 
        for a determination of medical eligibility.
    (c) Procedures.--Upon receipt of a complete medical application, 
the Medical Director shall send notice to the claimant confirming the 
OAC's receipt of the claim. The Medical Director shall make an initial 
decision within 30 days of such receipt. If the application is 
initially denied, the claimant shall be so notified and, at the 
claimant's request, the application shall be immediately referred to--
            (1) a review panel of 2 qualified physicians, with a third 
        qualified physician available to resolve any disagreement 
        between the initial 2 qualified physicians; or
            (2) an exceptional medical claims panel.
The Medical Director shall be bound by a panel's decision. The rules 
shall also provide for the prioritization of claims, including enhanced 
priority for claimants who have mesothelioma, and set a time limit for 
a determination by the review panel.
    (d) Exceptional Medical Claims.--The rules of the medical review 
process shall provide the claimant with an opportunity to apply to an 
exceptional medical claims panel for a determination of whether the 
exposed person meets the requirements under section 301(b) for an 
exceptional medical claim for any category. This opportunity shall be 
provided both at the initial filing of a claim and after a claim has 
been denied under this subsection. The exceptional medical claims panel 
shall decide whether the claimant qualifies as an exceptional medical 
claim within 30 days of receipt of the claim. This time limit may be 
extended by the Administrator only for good cause. The Medical Director 
shall be bound by the decision of the exceptional medical claims panel. 
The Medical Director shall issue a final denial, along with a brief 
statement of reasons, if the claimant is found ineligible following an 
opportunity to submit the claim to a medical review panel and an 
exceptional medical claims panel.
    (e) Monitoring Accuracy of Determinations.--The Medical Director 
shall establish audit and personnel review procedures for evaluating 
the accuracy of medical eligibility determinations, including both 
erroneous approvals and erroneous denials.
    (f) Opt-Out.--After receiving a certificate of eligibility, a 
claimant may opt out of settlement proceedings provided for under 
sections 103 and 104 and elect to file suit in any State or Federal 
court of competent jurisdiction.

SEC. 103. ELECTION OF ADMINISTRATIVE PROCESS; SETTLEMENT OFFERS.

    (a) Naming and Notification of Defendants.--Medically eligible 
claimants, other than those who elect to file suit in court under 
section 102(f), shall name defendants. Defendants shall receive notice 
from the Administrator.
            (1) Identification of Defendants Associated with Work 
        Sites.--At the claimant's request, the Administrator will 
        provide information concerning person who may have provided 
        asbestos or asbestos-containing products or materials to work 
        sites named by the claimant and when such asbestos or asbestos-
        containing products or materials may have been provided as well 
        as the time such products or materials were located at the 
        named work sites The Administrator may implement this paragraph 
        through rulemaking.
            (2) Verified Particularized Statement.--Within such time 
        after receiving a certificate of medical eligibility as may be 
        provided by rule, a claimant shall provide, with respect to 
        each person that the claimant alleges is responsible for the 
        injury claimed, a verified particularized statement of the 
        basis for the allegation that the person is or may be 
        responsible for the injury. The particularized statement shall 
        include such information as the Administrator may require for 
        the purpose of providing the defendant with a reasonable basis 
        for making an offer of settlement. The claimant may incorporate 
        by reference any information required by this paragraph that 
        may already have been submitted to the OAC.
            (3) Notice.--Upon finding that the claimant's 
        particularized statement meets the requirements of paragraph 
        (2), the Administrator shall provide notice to each named 
        defendant. The defendant shall at the same time be furnished 
        with a copy of all particularized statements submitted by the 
        claimant under paragraph (2) and, subject to reasonable rules 
        protecting the confidentiality of information provided by the 
        claimant, a copy of all information submitted by the claimant, 
        records and other information obtained by the Medical Director 
        relating to the claim and the results of any medical tests 
        administered at the direction of the Medical Director. Any 
        defendant may provide any information relevant to the amount of 
        any recommended settlement under subsection (b), including 
        information regarding product identification, exposure, and 
        damages.
            (4) Third-Party Practice.--Defendants may assert third-
        party claims in accordance with rules adopted by the 
        Administrator. Third-party claimants shall provide a verified 
        particularized statement, meeting the requirements of paragraph 
        (2), substantiating the allegation that the third-party 
        defendant may be liable to the third-party plaintiff, wholly or 
        in part, for the claimant's injury. For good cause shown and 
        subject to reasonable limitations, an Administrative Law Judge 
        may allow discovery for the purpose of obtaining information 
        necessary to allow the claimant or any third-party plaintiff to 
        provide a particularized statement under paragraph (2) or this 
        paragraph.
    (b) Settlement Offers; Offer of Compensation by the Trustee.--
            (1) Mandatory offer from defendants.--Within 21 days 
        following the naming of all defendants, each defendant shall 
        provide to the claimant in writing a good faith settlement 
        offer, and shall provide a copy to the Trustee.
            (2) Mandatory offer from Asbestos Compensation Fund.--
        Within 10 days of receiving all of the defendants' offers, the 
        Trustee shall make an offer of compensation to the claimant, 
        based on a compensation grid which shall be established and 
        regularly revised by rule.

SEC. 104. CLAIMANT'S CHOICE OF FORUM.

    (a) In General.--The claimant shall notify each defendant and the 
Trustee whether the claimant accepts or rejects the defendant's 
settlement offer under section 103(b)(1). If the claimant accepts any 
such offer, or any other settlement offer, the Trustee's offer of 
compensation shall be automatically reduced by the amount of such 
settlements.
    (b) Notice.--The claimant shall notify the Trustee and any 
defendant within 60 days whether the claimant accepts or rejects an 
offer that has been provided pursuant to section 103(b)(1) or 
103(b)(2).
    (c) Orphan Shares.--The Trustee shall not make an offer to the 
claimant under section 103(b) if no solvent defendant has been named.
    (d) Acceptance.--If the claimant accepts the Trustee's offer of 
compensation, the Trustee shall assume the claim. The Trustee may 
accept any defendant's settlement offer under section 103(b)(1) or may 
prosecute the claim against any defendant as provided in section 105, 
or may prosecute the claim in any State or Federal court.
    (e) Rejection.--If the claimant rejects any defendant's settlement 
offer and also rejects the Trustee's offer of compensation, the 
claimant may elect an administrative adjudication under section 105 or 
opt out of further administrative proceedings and file suit in a State 
or Federal court.

SEC. 105. ADMINISTRATIVE ADJUDICATION.

    If a claimant elects adjudication under this section, the OAC shall 
assign an Administrative Law Judge to conduct a hearing on the record 
and to determine whether compensation is to be provided and the amount 
of such compensation. The Administrative Law Judge shall adhere to the 
law applicable to asbestos adjudications as contained in sections 201 
through 210. The Administrative Law Judge shall issue a decision, 
containing findings of fact and conclusions of law, as expeditiously as 
possible, but not later than 90 days after the case is assigned.

SEC. 106. APPEALS; JUDICIAL REVIEW.

    Any person aggrieved by a final decision of the Administrator under 
section 105 or a final denial by the Medical Director under section 
102, may seek review of that decision or denial in the United States 
Court of Federal Claims, which shall uphold the decision or denial if 
it is supported by substantial evidence and is not contrary to law. A 
decision by the Medical Director that a claimant has an eligible 
medical condition is not a final decision under this section. Decisions 
of the United States Court of Federal Claims are appealable, without 
regard to the amount in controversy or the citizenship of the parties, 
to a United States Court of Appeals for a judicial circuit.

SEC. 107. GATHERING AND MAINTENANCE OF INFORMATION.

    (a) Product Identification.--The OAC shall collect and regularly 
update information regarding product identification and shall make such 
information publicly available. The data base maintained by the OAC 
under this section is for information purposes only, and the presence 
of information in that database shall not lead to any presumption.
    (b) Settlements, Judgments, and Awards.--The OAC shall collect data 
on settlements, judgments, and awards in connection with asbestos 
claims and shall make such data publicly available. The OAC may require 
this data to be reported in such form as it may prescribe.
    (c) Subpoena Power.--The OAC may compel, by subpoena or other 
appropriate process, information from any person regarding past 
settlements or product identification for purposes of developing and 
maintaining a compensation grid under section 103(b)(2) and maintaining 
a database for purposes of naming defendants under section 103(a)(1). 
In addition, the subpoena power under this subsection may be used by 
the OAC in order to secure financial information from any defendant.
    (d) Confidentiality.--Any information or documentary material 
concerning settlements which is specific to a company, law firm, or 
plaintiff that is provided to the OAC pursuant to subsection (b) or 
(c), whether by subpoena or otherwise, shall be exempt from disclosure 
under section 552 of title 5, United States Code, and the disclosure of 
such information by the OAC or any person is prohibited.

SEC. 108. LEGAL ASSISTANCE PROGRAM.

    (a) In General.--The OAC shall implement a legal assistance program 
for the purpose of providing legal representation to claimants. The OAC 
shall maintain a roster of qualified counsel who agree to provide 
services to claimants under rules, practices, and procedures 
established by the Administrator.
    (b) Free Choice of Counsel.--Claimants shall not be required to use 
counsel provided or recommended by the OAC, but shall retain their 
right to be assisted by counsel of their choice.
    (c) Legal Assistance.--The OAC shall adopt rules concerning the 
reasonableness of fees, and all legal representation of persons 
asserting asbestos claims shall comply with such rules.

SEC. 109. TIME LIMITS FOR DISPOSITIONS.

    (a) In General.--If the Medical Director fails to meet the time 
limits for an initial decision provided under this Act with respect to 
more than 30 percent of claims, then the Administrator shall take such 
action as may be necessary, including increasing staff and 
administrative assessments under section 401, to ensure compliance with 
such time limit with regard to at least 70 percent of claims
    (b) No Offer.--If the Trustee fails to make an offer within 120 
days after the Administrator's receipt of a complete application under 
section 102 with respect to more than 30 percent of claims, then the 
Administrator shall take such action as may be necessary, including 
increasing staff and administrative assessments under section 401, to 
ensure compliance with such time limit with regard to at least 70 
percent of claims.
    (c) Duties.--The duties established by subsections (a) and (b) 
shall be non-discretionary and enforceable by an order of mandamus from 
any judge of the United States Court of Federal Claims.
    (d) Exceptions.--The Administrator may by rule establish exceptions 
to the time limits in this section. Such rules shall take into 
consideration the complexity of the case, the extent to which delays 
are attributable to the fault or neglect of the claimant or the 
claimant's attorney and other factors that are beyond the control of 
the OAC.

          TITLE II--LAW APPLICABLE TO ASBESTOS ADJUDICATIONS.

SEC. 201. MEDICAL ELIGIBILITY.

    A claimant may recover compensation for damages caused by an 
eligible medical condition only if the claimant presents a certificate 
of medical eligibility establishing its existence. A certificate of 
medical eligibility shall be conclusive unless rebutted by clear and 
convincing evidence. However, a certificate of medical eligibility 
shall not be conclusive as to allegations regarding exposure to 
asbestos or when medical eligibility is established pursuant to section 
304(b).

SEC. 202. DAMAGES.

    A claimant who establishes an eligible medical condition shall be 
entitled to compensatory damages to the extent provided by applicable 
law, including damages for emotional distress, pain and suffering, and 
medical monitoring where authorized. Such damages shall not include 
punitive damages or damages solely for enhanced risk of a future 
condition, except as provided in section 208(d).

SEC. 203. STATUTE OF LIMITATIONS OR REPOSE.

    No defense to an asbestos claim based on a statute of limitations 
or statute of repose, laches, or any other defense based on the 
timeliness of the claim shall be recognized or allowed, unless such 
claim was untimely as of the date of enactment of this Act. No claim 
shall be deemed to have accrued until and unless the claimant's 
condition would have qualified as an eligible medical condition under 
section 302, 303, 304, or 305.

SEC. 204. COME BACK RIGHTS.

    Notwithstanding any other provision of law, a judgment or 
settlement of an asbestos claim for a non-malignant disease shall not 
preclude a subsequent claim with respect to the same exposed person for 
an eligible medical condition pursuant to section 301(b), 303, 304, or 
305

SEC. 205. CLASS ACTIONS, AGGREGATIONS OF CLAIMS AND VENUE.

    (a) Consolidations.--No joinder of parties, aggregation of claims, 
consolidation of actions, extrapolation, or other device to determine 
multiple asbestos claims on a collective basis shall be permitted 
without the consent of all parties, except as provided in subsection 
(b) or unless the court, pursuant to an exercise of judicial authority 
to promote the just and efficient conduct of asbestos civil actions, 
orders such procedures, including the transfer for consolidation, to 
determine multiple asbestos claims on a collective basis.
    (b) Class Action Suits.--In any civil action asserting an asbestos 
claim, a class action may be allowed without the consent of all parties 
if the requirements of Rule 23, Federal Rules of Civil Procedure are 
satisfied.
    (c) Venue.--At the election of the claimant, an asbestos claim may 
be filed in any jurisdiction where the claimant is alleging that the 
claimant was exposed to asbestos or where the claimant is currently 
domiciled.
    (d) Removal.--Any party in a civil action that involves a violation 
of subsection (a), (b) or (c) of this section may remove such action to 
an appropriate district court of the United States. The district courts 
of the United States shall have jurisdiction of all civil actions 
removed pursuant to this section without regard to diversity of 
citizenship or amount in controversy.
    (e) Administrative Proceedings.--In any proceeding under section 
105, the Administrative Law Judge may order adjudication of claims on a 
collective basis.

SEC. 206. JOINT AND SEVERAL LIABILITY.

    This Act shall not be construed to limit joint and several 
liability under applicable Federal or State law. In any core claim that 
is successfully asserted against a defendant, such defendant shall be 
held jointly and severally liable for full compensatory damages to the 
claimant notwithstanding any contrary provision of law.

SEC. 207. CORE CLAIMS.

    In any core claim, the issues to be decided shall be limited to--
            (1) whether the exposed person with respect to whom a claim 
        is made has or had an eligible medical condition;
            (2) whether the exposure of the exposed person to the 
        product of the defendant was a substantial contributing factor 
        in causing that eligible medical condition; and
            (3) the amount of compensation to be provided.

SEC. 208. SPECIAL RULES APPLICABLE TO SECTION 105 ADJUDICATIONS.

    (a) Applicable Law.--Unless otherwise provided in this Act, in 
claims based on State law, the Administrative Law Judge shall, with 
respect to each defendant, apply the substantive law of the State which 
has the most significant relationship to the exposure and the parties.
    (b) Full Compensatory Damages in Wrongful Death Cases.--
Notwithstanding any contrary provision of State law, full compensatory 
damages, including damages for non-economic loss, shall be awarded in 
wrongful death claims involving mesothelima. In all other cases, 
damages for non-economic loss may be awarded to the extent that they 
are available pursuant to applicable law.
    (c) Penalty for Inadequate Offer.--In any proceeding against a 
defendant by a claimant under section 105, and in any proceeding by the 
Trustee, if the final offer made by any defendant is less than the 
share of the total liability awarded against that defendant, a penalty 
shall be added to the award equal to 100 percent of the difference 
between the defendant's settlement offer under section 103(b) and the 
lesser of--
            (1) the defendant's share of the offer made by the Trustee 
        under section 103(b); or
            (2) the defendant's share of the award made under section 
        105.
    (d) Punitive Damages.--Punitive damages may be awarded against a 
defendant if the claimant establishes by clear and convincing evidence 
that the conduct carried out by the defendant with a conscious, 
flagrant indifference to the rights or safety of others was the 
proximate cause of the harm that is the subject of the asbestos claim. 
Punitive damages may not exceed 3 times the amount of the award 
pursuant to a section 105 adjudication plus any penalties added to that 
award pursuant to subsection (c).

SEC. 209. SPECIAL RULES APPLICABLE TO THE TRUSTEE.

    In an action by the Trustee as assignee of the claimant, the award 
under section 104(d) shall include compensatory damages for the 
claimant's injury and all punitive damages under section 208(d), any 
penalties for inadequate offers by defendants, and the Trustee's costs 
in establishing the claim, including reasonable attorneys' fees and 
expenses and an allowance for interest on the amount paid by the Fund 
to the claimant under section 104. Interest shall be calculated from 
the time of such payments, and in accordance with Title IV. All 
economic and non-economic damages recovered by the Fund in excess of 
200 percent of the amount paid to the claimant pursuant to section 104 
and all punitive damages under section 208(d) shall be paid to the 
settling claimant. The fact that the claimant has accepted an offer of 
compensation by the Trustee, and the amount and terms of such offer, 
shall not be admissible in any adjudication of a claim brought by the 
Trustee against any defendant.

                TITLE III--ELIGIBLE MEDICAL CATEGORIES.

SEC. 301. ELIGIBLE MEDICAL CATEGORIES.

    (a) In General.--The eligible medical categories under this Act are 
asbestos-related non-malignant conditions with impairment, asbestos-
related mesothelioma, asbestos-related lung cancer, and asbestos-
related other cancer.
    (b) Establishing Existence.--A claimant may establish the existence 
of an eligible medical condition either by demonstrating that the 
exposed person meets the standard criteria provided in sections 302, 
303, 304, and 305 or by demonstrating to an exceptional medical claims 
panel, through reliable evidence, that the exposed person has an 
asbestos-related impairment that is substantially comparable to the 
condition of an exposed person who would satisfy the requirements of a 
given medical category. The Administrator, after consultation with the 
Medical Advisory Committee, may adopt rules consistent with this 
section to assure consistency and efficiency in the designation of 
claims as exceptional medical claims.

SEC. 302. ASBESTOS-RELATED NON-MALIGNANT CONDITIONS WITH IMPAIRMENT.

    (a) In General.--The standard criteria for asbestos-related non-
malignant conditions with impairment shall include--
            (1) clinical evidence of asbestosis,
            (2) pathological evidence of asbestosis, or
            (3) evidence of bilateral pleural thickening with 
        impairment.
    (b) Obstructive Lung Disease.--A claimant shall not be disqualified 
from compensation under this category solely because an exposed person 
who otherwise meets the requirements for impairment has a reduced FEV1/
FVC ratio indicating obstructive lung disease. In that event, the 
exceptional medical claims panel shall determine, giving due regard to 
the evidence that any impairment is related to obstructive disease and 
taking into consideration all available evidence, whether an asbestos-
related restrictive disease substantially contributes to the impairment 
of the exposed person. Such a contribution shall be presumed if the 
panel concludes, based upon the findings of a certified B-reader, that 
the exposed person's chest x-ray is ILO Grade 2/1 or more.

SEC. 303. ASBESTOS-RELATED MESOTHELIOMA.

    The standard criteria for asbestos-related mesothelioma shall 
include a diagnosis by a qualified physician of a malignant 
mesothelioma caused or contributed to by exposure to asbestos with a 
primary site in the pleura, peritoneum, or like tissue, or reasonably 
equivalent clinical diagnosis in the absence of adequate tissue for 
pathological diagnosis.

SEC. 304. ASBESTOS-RELATED LUNG CANCER.

    (a) In General.--The standard criteria for asbestos-related lung 
cancer shall include--
            (1) a diagnosis by a qualified physician of lung cancer 
        that the physician concludes was caused or contributed to by 
        exposure to asbestos;
            (2) a latency period of at least 10 years; and
            (3) either--
                    (A) evidence of asbestosis or bilateral pleural 
                thickening with impairment sufficient to meet the 
                requirements of section 302 or to qualify as an 
                exceptional medical claim under section 301(b); or
                    (B) chest x-rays which, in the opinion of a 
                certified B-reader, demonstrate asbestos-related 
                bilateral pleural plaques or thickening, and 7.5 
                equivalent-years of exposure to asbestos-containing 
                materials in employment regularly requiring work in the 
                immediate area of visible asbestos dust.
    (b) History of Smoking.--If a finding of asbestos-related lung 
cancer is made pursuant to paragraph (3)(B) and the exposed person has 
a substantial history of smoking, which shall be defined by rule, the 
claimant shall be medically eligible for compensation, but the finding 
of asbestos-related lung cancer shall not be conclusive as to causation 
for purposes of section 201.

SEC. 305. ASBESTOS-RELATED OTHER CANCER.

    The standard criteria for asbestos-related other cancer shall 
include a diagnosis by a qualified physician of a malignant primary 
tumor of the larynx, oral-pharynx, gastro-intestinal tract, or stomach, 
caused or contributed to by exposure to asbestos, together with 
evidence of a condition sufficient to meet the requirements of section 
302 or to qualify as an exceptional medical claim under section 301(b).

SEC. 306. MEDICAL TESTING REIMBURSEMENT.

    (a) Level A.--A claimant with at least 4 equivalent-years of heavy 
exposure to asbestos, whose chest x-ray shows either small irregular 
opacities of ILO Grade 1/0 or bilateral pleural thickening of ILO Grade 
B/2, shall be eligible for reimbursement of 100 percent of out-of-
pocket expenses for any medical testing required under section 102, up 
to a ceiling of $1500. Level A claimants shall be eligible at 3 year 
intervals for similar reimbursement of future medical testing expenses 
for up to 2 additional occasions. Level A reimbursements shall be 
treated as administrative expenses of the OAC and paid for by 
defendants under section 401.
    (b) Level B.--The Administrator shall, subject to the availability 
of appropriated funds, reimburse up to 100 percent of the out-of-pocket 
expenses for any medical testing required under section 102, up to a 
ceiling established by rule, with the approval of the Trustee, for any 
claimant with at least one equivalent-year of heavy exposure to 
asbestos who meets the medical but not the exposure requirements of 
Level A. Level B claimants may be eligible for similar reimbursement of 
future medical testing expenses for up to 2 additional occasions at 
least 3 years apart. The Administrator shall adjust periodically the 
amount of the cash payment to reflect changes in medical costs. Level B 
reimbursements shall be treated as administrative expenses of the OAC 
and paid for by defendants under section 401.
    (c) Certified Labs.--The Administrator is authorized to establish a 
program for the certification of laboratories to provide medical 
testing under this section.
    (d) Exposure Verification.--The Administrator shall establish audit 
and other procedures to provide reasonable assurance that statements 
concerning exposure made by claimants seeking medical testing 
reimbursement under this section are accurate.
    

                           TITLE IV--FUNDING.

SEC. 401. ASSESSMENT AND ENFORCEMENT.

    (a) Rules.--The Administrator shall adopt rules for calculating and 
collecting from defendants all costs associated with the determination 
of claims and payments to claimants.
    (b) Trustee.--The Trustee shall have authority to bring an action 
in the district courts of the United States to enforce any obligation 
imposed on any person by this section and such courts shall have 
exclusive jurisdiction of such actions without regard to the amount in 
controversy or citizenship of the parties. The district court shall not 
entertain any defense other than lack of jurisdiction in any action by 
the Trustee under this subsection.
    (c) Trustee Prevails.--In any action under subsection (b) in which 
the Trustee prevails, the Trustee shall be entitled to costs, including 
reasonable attorneys' fees, and interest on any unpaid amount.
    (d) Judicial Review.--A defendant may challenge the legality or 
amount of any assessment only by seeking judicial review in the United 
States Court of Federal Claims after paying the disputed amount. If 
successful, the defendant shall be awarded interest.

SEC. 402. FISCAL AND FINANCIAL MANAGEMENT OF THE ASBESTOS COMPENSATION 
                    FUND

    (a) Applicability of Credit Reform Act Principles; Fiscal 
Management Rules.--Except as provided in this section, the operations 
of the Fund related to settlement payments under section 104, and 
associated recoveries from defendants, shall be governed by the Federal 
Credit Reform Act of 1990 (2 U.S.C. 661 et seq.), notwithstanding the 
status of the Fund as a governmental entity. The Administrator shall 
promulgate rules, approved by the Office of Management and Budget, for 
the fiscal management of the Fund. Such rules and their application 
shall not be subject to judicial review and shall, as regards payments 
under section 104--
            (1) provide all reasonable assurance that, over an 
        appropriate time period, the subsidy rate associated with the 
        net litigation risk of the Fund is zero;
            (2) provide all reasonable assurance that, in any given 
        year, the subsidy rate associated with the net litigation risk 
        of the Fund is no more than 2 percent;
            (3) provide for the allocation of receipts from defendants 
        to various Fund accounts, including the Fund's financing 
        account, program account, and an account for salaries and 
        expenses (which shall include litigation costs); and
            (4) provide specific instructions for the Trustee to reduce 
        payments by the Fund when necessary to meet the solvency 
        requirements of this subsection.
    (b) Financing of the Fund, Settlement Payments to Claimants.--
            (1) Credit reform principles.--The Fund is authorized to 
        receive from defendants, as offsetting receipts, any amounts 
        related to settlements or judgments, including damages, 
        interest, litigation costs, specific administrative costs that 
        may be required by the Administrator through rulemaking, and 
        interest costs incurred by the Fund in connection with payment 
        of settlement offers made under section 103. Amounts received 
        from defendants as interest shall be sufficient to pay interest 
        costs due to the United States Treasury from the financing 
        account, plus the subsidy costs of the program account, 
        provided that the latter amounts may not exceed 3 percent of 
        the amount of any settlement or award. Recoveries on a claim by 
        the Fund in excess of the settlement amount paid to the 
        claimant and other costs of the Fund which are not paid to the 
        claimant under section 209 shall be available to the program 
        account as a reduction to subsidy costs in the current or any 
        subsequent year.
            (2) Authority.--The program account shall have permanent 
        indefinite authority, not subject to further appropriation, to 
        transfer funds to the finance account in accordance with 
        principles of the Credit Reform Act.

SEC. 403. AUTHORIZATION FOR APPROPRIATIONS AND OFFSETTING COLLECTIONS.

    (a) In General.--There are authorized to be appropriated--
            (1) to the OAC such sums as may be required to perform 
        responsibilities under this Act;
            (2) to the United States Court of Federal Claims, such sums 
        as may be required to carry out its responsibilities under this 
        Act; and
            (3) to the OAC an amount not to exceed $100 million, for a 
        one-time loan to the Fund in connection with startup expenses, 
        such loan to be repaid by the Fund with interest;
The total of appropriations provided under this subsection in the first 
year after the date of enactment not exceed $250 million and in any 
subsequent year not exceed $150 million.
    (b) Offsetting Collections of Administrative Assessments.--The OAC 
is authorized to receive and to expend in any year, as offsetting 
collections, all administrative assessments or prepaid administrative 
assessments and all costs and penalties paid to it.

                          TITLE V--TRANSITION

SEC. 501. APPLICABILITY; TRANSITIONAL CIVIL ACTIONS.

    (a) In General.--This Act shall be effective upon its date of 
enactment with respect to any civil action asserting an asbestos claim 
in which trial has not commenced as of that date.
    (b) Pending Claim.--A claimant with a pending civil claim on the 
date of enactment shall not be required to obtain a certificate of 
medical eligibility or otherwise exhaust the procedures set forth in 
title I if trial commences within 6 months of the date of enactment of 
this Act. This 6-month period may be extended by the Attorney General 
for up to an additional 6 months if required for the orderly 
implementation of this Act, and after reporting to the Congress the 
reasons for any such extension.
    (c) Right to Sue Letter.--If a claimant with--
            (1) a pending civil action on the date of enactment of this 
        Act, and
            (2) a scheduled trial date within one year after the date 
        of enactment of this Act
does not receive an initial decision on medical eligibility within the 
time period prescribed in section 102(c), the claimant may request a 
right-to sue letter from the Administrator at any time prior to the 
issuance of that initial decision. If the Attorney General determines 
that the 6-month period in subsection (b) should be extended, the one-
year period in the preceding sentence shall be similarly extended. The 
Administrator shall issue a right-to-sue letter or an initial decision 
under section 102 within 10 days following the receipt of the 
claimant's request. A claimant who receives a right-to-sue letter may 
assert the claimant's asbestos claim in any competent forum 
notwithstanding section 101(b).
    (d) Claim in Another Forum.--Any claimant who asserts his claim in 
a forum other than the OAC under subsections (b) or (c) must 
demonstrate that the exposed person has qualified for medical 
eligibility under section 301, 302, 303, 304, 305, or 306.

                         TITLE VI--DEFINITIONS

SEC. 601: DEFINITIONS.

    In this Act:
            (1) Asbestos claim.--The term ``asbestos claim'' means any 
        claim for damages or other relief, arising out of, based on, or 
        related to the health effects of exposure to asbestos, 
        including any claim for personal injury, death, mental or 
        emotional injury, risk of disease or other injury, or the costs 
        of medical monitoring or surveillance, and including any claim 
        made by or on behalf of any exposed person or any 
        representative, spouse, parent, child, or other relative of any 
        exposed person. The term does not include any claim for 
        workers' compensation benefits, or any claim by an employer or 
        insurer for reimbursement from a third-party for benefits paid 
        under a workers' compensation plan, or any claim for benefits 
        under a veterans' benefits program.
            (2) Asbestos trust.--The term ``asbestos trust'' means a 
        court-supervised trust established to resolve asbestos claims 
        arising directly or indirectly from exposure to asbestos or 
        asbestos-containing products, including a trust created 
        pursuant to the bankruptcy laws of the United States or Rule 23 
        of the Federal Rules of Civil Procedure.
            (3) Certificate of medical eligibility.--The term 
        ``certificate of medical eligibility'' means a certificate 
        issued to a claimant pursuant to this Act certifying that an 
        exposed person meets the requirements of one or more eligible 
        medical categories or qualifies as an exceptional medical 
        claim.
            (4) Certified B-reader.--The term ``certified B-reader'' 
        means an individual qualified as a ``final' or ``B-reader'' 
        under 42 C.F.R. 37.51(b) (1997) (and any subsequent revisions 
        thereof) whose certification is current.
            (5) Chest X-rays.--The term ``chest x-rays'' means chest 
        radiographs taken in at least 2 views (Posterior-Anterior and 
        Lateral) and graded quality 1 for reading according to the 
        criteria established by the ILO. If the claimant is unable to 
        provide quality 1 chest x-rays because of death or because of 
        an inability to have new chest x-rays taken, chest x-rays 
        graded quality 2 will be acceptable.
            (6) Civil action.--The term ``civil action'' means any 
        action, lawsuit, or proceeding in any State, Federal, or tribal 
        court, but does not include--
                    (A) a criminal action; or
                    (B) an action relating to State or Federal workers' 
                compensation laws, or a proceeding for benefits under 
                any veterans' benefits program.
            (7) Claimant.--The term ``claimant'' means any exposed 
        person or the person's legal representative, and any relative 
        of an exposed person or their legal representative, who asserts 
        an asbestos claim.
            (8) Clinical evidence of asbestosis.--The term ``clinical 
        evidence of asbestosis'' means a diagnosis of pulmonary 
        asbestosis by a qualified physician based on the minimum 
        objective criteria of--
            (A) Chest x-rays for which a B-reader report is furnished 
        showing small irregular opacities of ILO Grade 1/0 and 
        pulmonary function testing and physical examination that show 
        either--
                    (i) FVC <80% of predicted value with FEV1/FVC* 75% 
                (actual value); or
                    (ii) TLC <80% of predicted value, with either DLCO> 
                76% of predicted value or bilateral basilar crackles, 
                and also the absence of any probable explanation for 
                this DLCO result or crackles finding other than the 
                presence of asbestos lung disease; or
            (B) Chest x-rays for which a B-reader report is furnished 
        showing small irregular opacities of ILO Grade 1/1 or greater 
        and pulmonary function testing that shows either--
                    (i) FVC <80% of predicted value with FEV1/FVC* 72% 
                (actual value) or, if the individual tested is at least 
                68 years old at the time of the testing, with FEV1/FVC* 
                65% (actual value); or
                    (ii) TLC <80% of predicted value.
            (9) Compensatory Damages.--The term ``compensatory 
        damages'' means damages awarded for economic loss, such as 
        medical expenses, as well as non-economic loss. Non-economic 
        loss includes subjective, non-pecuniary loss, such as pain, 
        suffering, inconvenience, emotional distress, loss of society 
        and companionship, and loss of consortium.
            (10) Core claim.--The term ``core claim'' means an asbestos 
        claim against a defendant who either--
            (A) manufactured any asbestos-containing product which 
        released asbestos fibers to which the exposed person was 
        exposed, and paid out $ 50 million in respect of such claims 
        cumulatively over the 10 year period preceding the filing of 
        the claim; or
            (B) was not a manufacturer but paid out $ 100 million in 
        respect of such claims cumulatively over the 10 year period 
        preceding the filing of the claim; provided that the alleged 
        liability is not based upon the control or ownership of 
        property.
            (11) Defendant.--The term ``defendant'' means any person 
        who is or may be responsible for the asbestos-related condition 
        of the exposed person and who is so notified by the 
        Administrator pursuant to title I. The term does not include--
                    (A) an asbestos trust in existence as of the date 
                of enactment of this Act unless the trust elects to be 
                covered by this Act under section 701(b); or
                    (B) the United States Government or a State 
                government.
            (12) DLCO.--The term ``DLCO'' means single-breath diffusing 
        capacity of the lung (carbon monoxide), which is a measure of 
        the volume of carbon monoxide transferred from the alveoli to 
        blood in the pulmonary capillaries for each unit of driving 
        pressure of the carbon monoxide.
            (13) Equivalent-year.--The term ``equivalent-year'' means a 
        measure of exposure to asbestos adjusted to reflect varying 
        exposure levels typical of different occupations. Each year of 
        exposure in which an exposed person's primary occupation 
        involved the direct installation, repair, or removal of 
        asbestos-containing products, shall count as one year. Each 
        year of such occupational exposure in which the exposed 
        person's primary occupation involved either the direct 
        manufacture of asbestos-containing products using raw asbestos 
        fiber or the direct installation, repair, or removal of 
        asbestos-containing products in a shipyard during World War II, 
        shall count as 2 years. Each year of exposure in occupations 
        not described above shall count as one-half year.
            (14) Evidence of bilateral pleural thickening with 
        impairment.--The term ``evidence of bilateral pleural 
        thickening with impairment'' means a diagnosis of bilateral 
        pleural thickening by a qualified physician based on the 
        minimum objective criteria of either--
                    (A) Chest x-rays for which a B-reader report is 
                furnished showing bilateral pleural thickening of ILO 
                Grade B/2 with pulmonary function testing and physical 
                examination that show either--
                            (i) FVC <80% of predicted value with FEV1/
                        FVC* 75% (actual value) or
                            (ii) TLC <80% of predicted value, with 
                        either DLCO> 76% of predicted value or 
                        bilateral basilar crackles, and also the 
                        absence of any probable explanation for this 
                        DLCO result or crackles finding other than the 
                        presence of asbestos lung disease; or
                    (B) Chest x-rays for which a B-reader report is 
                furnished showing bilateral pleural thickening of ILO 
                Grade C/2 or greater; and pulmonary function testing 
                that shows either--
                            (i) FVC <80% of predicted value with FEV1/
                        FVC* 72% (actual value) or, if the individual 
                        tested is at least 68 years old at the time of 
                        the testing, with FEV1/FVC* 65% (actual value); 
                        or
                            (ii) TLC <80% of predicted value.
            (15) Exposed person.--The term ``exposed person'' means any 
        person who has been exposed in any State (or while working 
        aboard a United States vessel outside the United States) to 
        asbestos or to asbestos-containing products.
            (16) FEV1.--The term ``FEV1'' means forced expiratory 
        volume (1 second), which is the maximal volume of air expelled 
        in one second during performance of the spirometric test for 
        forced vital capacity (FVC).
            (17) Fund.--The term ``Fund'' means the Asbestos 
        Compensation Fund.
            (18) FVC.--The term ``FVC'' means forced vital capacity, 
        which is the maximal volume of air expired with a maximally 
        forced effort from a position of maximal inspiration.
            (19) ILO.--The term ``ILO'' means the International Labour 
        Organization.
            (20) ILO grade.--The term ``ILO grade'' means the 
        radiological ratings for the presence of lung or pleural 
        changes by chest x-ray as established from time to time by the 
        ILO.
            (21) Latency period.--The term ``latency period'' means the 
        period from the date of the exposed person's first exposure to 
        asbestos or an asbestos-containing product to the date of 
        manifestation of the condition claimed.
            (22) Lung cancer.--The term ``lung cancer'' means a primary 
        malignant bronchogenic tumor, of any cell type, caused or 
        contributed to by exposure to asbestos.
            (23) Manifestation.--The term ``manifestation'' means 
        either the date of the actual diagnosis of the condition 
        claimed, or the date upon which the clinical records and 
        available tests indicate that the condition could reasonably 
        have been diagnosed by a qualified physician.
            (24) Net litigation risk.--The term ``net litigation risk'' 
        means the risk to the Asbestos Compensation Fund that amounts 
        paid out to claimants, plus associated interest and litigation 
        expenses, will exceed amounts recovered from defendants, 
        expressed as a percentage of sums expended, and estimated for a 
        specific cohort of transactions. Losses on particular claims 
        are netted against excess recoveries on other claims.
            (25) OAC.--The term ``OAC'' means the Office of Asbestos 
        Compensation.
            (25) Occupational history.--The term ``occupational 
        history'' means a listing of all employment positions, 
        providing for the dates and location of employment, the 
        employer, and a description of job responsibilities and 
        activities.
            (26) Party.--The term ``party'' does not include the United 
        States Government or a State government.
            (27) Pathological evidence of asbestosis.--The term 
        ``pathological evidence of asbestosis'' means diagnosis of 
        pulmonary asbestosis by a qualified physician based on a 
        finding that more than one representative section of lung 
        tissue otherwise uninvolved with any other process (e.g., 
        cancer or emphysema) demonstrates a pattern of peribronchiolar 
        or parenchymal scarring in the presence of characteristic 
        asbestos bodies, and also that there is no other more likely 
        explanation for the presence of the fibrosis.
            (28) Person.--The term ``person'' means an individual, 
        trust, firm, corporation, association, partnership, or joint 
        venture. The term does not include--
                    (A) an asbestos trust in existence as of the date 
                of enactment of this Act unless the trust elects to be 
                covered by this Act under section 701(b); or
                    (B) the United States Government or any State 
                government.
            (29) Physician.--The term ``physician'' means a medical 
        doctor or doctor of osteopathy currently licensed to practice 
        medicine in any State who has not, within the 5-year period 
        prior to the date of enactment of this Act, spent more than one 
        half of the doctor's professional time, or derived more than 
        one-half of the doctor's professional income, either annually 
        or in total, either reviewing or testifying in any forum on 
        medical-legal issues related to asbestos.
            (30) Predicted value.--The term ``predicted value'' means a 
        published reference to the normal breathing capacity of healthy 
        populations based on age, height, and gender, as approved by 
        the Medical Director, pursuant to a rule, issued within 120 
        days of the date of enactment. For the purposes of this Act, 
        the use of any published, predicted values that are generally 
        accepted in the medical community shall be acceptable and such 
        values may not be adjusted for race.
            (31) Pulmonary function testing.--The term ``pulmonary 
        function testing'' means tests for forced vital capacity, lung 
        volume, and diffusing studies using equipment, tests and 
        standards generally accepted in the medical community, as 
        approved by the Medical Director, pursuant to a rule, issued 
        within 120 days of enactment of this Act. Such pulmonary 
        function test shall not be adjusted for race.
            (32) Punitive damages.--The term ``punitive damages'' means 
        damages, in addition to compensatory damages, awarded against 
        any person to punish past conduct or deter that person, or 
        others, from engaging in similar conduct in the future.
            (33) Qualified physician.--The term ``qualified physician'' 
        means, with respect to a diagnosis or other medical judgment or 
        procedure under this Act, an internist, pulmonary specialist, 
        pathologist, radiologist, oncologist, or specialist in 
        occupational medicine with an appropriate subspecialty, as 
        appropriate, who is certified by the relevant medical specialty 
        board.
            (34) Qualifying National Settlement Plan.--The term 
        ``Qualifying National Settlement Plan'' means a written 
        agreement or related series of written agreements with 
        claimants or with attorneys or law firms representing 
        claimants, pursuant to which a person who is or may be 
        responsible for such claims has resolved or agreed to resolve 
        at least 50 percent of the asbestos claims that were pending 
        against such person.
            (35) State.--The term ``State'' means any State of the 
        United States, the District of Columbia, Commonwealth of Puerto 
        Rico, the Northern Mariana Islands, the Virgin Islands, Guam, 
        American Samoa, and any other territory or possession of the 
        United States or any political subdivision of any of the 
        foregoing.
            (36) TLC.--The term ``TLC'' means total lung capacity, 
        which is the volume of air in the lung after maximal 
        inspiration.
            (37) Trustee.--The term ``Trustee'' means the Trustee of 
        the Asbestos Compensation Fund.
            (38) Veterans' Benefits Program..--The term ``veterans' 
        benefits program'' means any program for benefits in connection 
        with military service administered by the Veterans' 
        Administration under Title 38, United States Code.
            (39) Workers' Compensation Law.--The term ``workers' 
        compensation law'' means a law respecting a program 
        administered by a State or the United States to provide 
        benefits, funded by a responsible employer or its insurance 
        carrier, for occupational diseases or injuries or for 
        disability or death caused by occupational diseases or 
        injuries. The term includes the Longshore and Harbor Workers' 
        Compensation Act, (33 U.S.C. 901-944, 948-950), but does not 
        include the Employer's Liability Act, (45 U.S.C. chapter 2).

                  TITLE VII--MISCELLANEOUS PROVISIONS

SEC. 701. RELATIONSHIP TO OTHER LAWS.

    (a) Applicability of Other Federal Laws.--The OAC may, with the 
approval of the Director of the Office of Management and Budget, waive 
the applicability in whole or in part of personnel and procurement laws 
and regulations, provided that any such waiver must be specific, must 
be subject to periodic review and evaluation, and must be reasonably 
related to the goals of expeditious, professional, efficient, cost-
effective and fair resolution of asbestos claims.
    (b) Application to Existing Asbestos Trusts.--
            (1) In general.--This Act shall not apply to any asbestos 
        trust in existence as of the date of enactment of this Act, 
        except as provided in paragraph (2).
            (2) Election.--An asbestos trust may elect to be subject to 
        this Act by providing written notice of such election to the 
        OAC, in which case the trust will have the same rights and 
        responsibilities under this Act as any person who is not a 
        trust. A valid election under this paragraph shall be 
        irrevocable.
    (c) Settlements Preserved.--Nothing in this Act--
            (1) invalidates any settlement of asbestos claims entered 
        into prior to the date of enactment of this Act; or
            (2) revokes or negates any asbestos defendant's standing 
        offer to settle existing asbestos claims.
    (d) Other Compensation.--This Act shall not be construed to affect 
the scope or operation of any workers' compensation law or veterans' 
disability benefit program, to affect the exclusive remedy provisions 
of any such law, or to authorize any lawsuit which is barred by any 
such provision of law.
    (e) Successor Liability.--Nothing in this Act is intended to 
displace otherwise applicable law governing any liability arising from 
the defendants' status as transferee or successor with respect to a 
change in ownership of corporate assets.

SEC. 702. ANNUAL REPORTS.

    The Administrator shall submit an annual report to the President 
and Congress.

SEC. 703. ENFORCEMENT.

    The Administrator may enforce any obligation imposed on any person 
by this Act in a district court of the United States, and such courts 
shall have exclusive jurisdiction over such actions without regard to 
the amount in controversy or citizenship of the parties. The 
Administrator, if successful, shall be entitled to costs, including 
attorney's fees.

SEC. 704. QUALIFYING NATIONAL SETTLEMENT PLAN.

    Any defendant which is party to a Qualifying National Settlement 
Plan may elect to defer the application of this Act (other than 
sections 201 through 207 and section 501) to asbestos claims against 
that defendant for a period not exceeding 7 years from a date relative 
to the commencement of the Qualified National Settlement Plan. The 
Administrator shall, by rule, adopt procedures for processing requests 
for deferral under this section. If the request for deferral is 
accepted, the deferred defendant and any asbestos claims or third party 
asbestos claims against the deferred defendant shall not be subject to 
the provisions of this Act (other than sections 201 through 207 and 
section 501).

SEC. 705. SEVERABILITY.

    If any provision of this Act or the application of such provision 
to any person or circumstance is held invalid, it is the intent of 
Congress that the remainder of this Act and application of such 
provision to other persons or circumstances shall not be affected 
thereby.

SEC. 706. SETTLEMENTS.

    For a period of 7 years after the date of enactment of this Act, a 
claimant or a defendant may specifically enforce, in any applicable 
Federal or State court where the claimant is alleging that the claimant 
was exposed to asbestos or where the claimant is currently domiciled, 
any written settlement agreement which was agreed to by the claimant or 
the claimant's attorney and the defendant before such date of 
enactment.

                             The Amendment

    Inasmuch as H.R. 1283, the Asbestos Compensation Act of 
2000, was ordered reported with a single amendment in the 
nature of a substitute, as amended, the contents of this report 
constitute an explanation of the bill as so amended.

                          Purpose and Summary

    H.R. 1283 establishes a comprehensive asbestos compensation 
program pertaining to asbestos-related personal injury 
lawsuits. The purpose of H.R. 1283 is to provide all asbestos 
victims with efficient and fair compensation by ensuring that 
claimants suffering from an asbestos-related impairment will be 
given priority over other asbestos related claims.
    The heart of the bill's compensation program is a non-
adversarial determination of medical eligibility. Claimants 
that are determined to be medically eligible may assert their 
claim by proceeding to State or Federal court at anytime, or 
electing non-adversarial settlement offers or an administrative 
adjudication under the administrative program. In addition, a 
determination of medical eligibility creates a presumption that 
the claimant has an asbestos related illness, this presumption 
may only be rebutted by ``clear and convincing'' evidence.
    H.R. 1283 also contains a comprehensive set of rules 
pertaining to asbestos litigation. These rules eliminate 
practices that may diminish an individual's claim and hold 
major asbestos manufacturers and distributors to a higher 
standard of liability. In addition, a legal assistance program 
will assure that asbestos victims can retain counsel for a 
reasonable fee set by the Office of Asbestos Compensation.

                Background and Need for the Legislation

                               Background

    On May 20, 1998, Representative Henry J. Hyde, Chairman of 
the Committee on the Judiciary, introduced H.R. 3905, the 
``Fairness in Asbestos Compensation Act of 1998.'' While H.R. 
3905 expired at the conclusion of the 105th Congress with 12 
cosponsors, the committee was consumed with impeachment 
proceedings. Accordingly, on March 25, 1999, Chairman Hyde 
introduced a virtually identical bill, H.R. 1283 the ``Fairness 
in Asbestos Compensation Act of 1999,'' which has 75 
cosponsors.

                        Need for the Legislation

    Asbestos: The Public Health Tragedy. Asbestos is a fibrous 
mineral that has been widely used as insulation and as a fire 
retardant in a wide variety of applications. Asbestos can 
produce dust that, when inhaled, becomes deposited in the 
lungs. Asbestos dust causes a number of serious, and sometimes 
fatal, diseases. These include asbestosis, mesothelioma (a 
malignant tumor in the lining of the lungs or the abdominal 
cavity), and lung cancer. Asbestos exposure has also been shown 
by medical studies to contribute to certain other cancers.
    Although it was known early in the 20th century that 
exposure to asbestos in high concentrations could lead to 
asbestosis, the full range of asbestos hazards only came to be 
appreciated in the late 1960's. A turning point in this tragedy 
came years ago in the form of a decision made by the United 
States Government to require its use in ships during World War 
II and for decades beyond. That one decision by our Government 
led to the exposure of hundreds of thousands Americans and 
prompted wider use of the fibrous mineral for both public and 
private purposes.
    Through litigation and regulatory action, the widespread 
use of asbestos in the United States began a rapid decline in 
the 1970's and largely ended in the early 1980's. For almost 30 
years, workplace exposures have been regulated by the 
Government. Several Federal and State agencies have the 
authority to regulate asbestos, most notably the Occupational 
Safety and Health Administration (OSHA) and the U.S. 
Environmental Protection Agency (EPA). Since the 1970's, the 
domestic consumption of asbestos has fallen by more than 97 
percent. Further, the manufacture of ``friable'' asbestos 
products (material that can be crumbled by hand pressure, 
releasing asbestos fibers into the air), which pose the highest 
risk of exposure, has been virtually eliminated in the United 
States. Today, the production and use of asbestos is at a 
historic low, with substitute materials now taking its place in 
all but a few instances where there is no realistic substitute.
    In the decades before strict Federal regulation, exposure 
to asbestos in many occupations was heavy. It has been 
estimated that over 27 million Americans have been exposed. 
While these people can expect a latency period up to 40 years 
before an asbestos related disease will manifest, many will 
continue to produce serious asbestos-related illnesses well 
into the 21st century. Although the first legislative attempt 
to extend benefits to enable asbestos victims to receive 
compensation dates back as far as 1973, no Federal program has 
been adopted for the purposes of compensating asbestos victims.
    Asbestos: The Litigation Crisis. Prior to the 1970's, 
asbestos lawsuits were relatively rare. Workers injured by 
exposure to asbestos typically sought to recover benefits from 
their employers, through the workers' compensation system, 
although statutes of limitations and other barriers often 
prevented substantial recoveries. At that time, tort suits 
against manufacturers and distributors of asbestos-containing 
products were usually unsuccessful.
    This situation began to change in the early 1970's. In 
Borel v. Fibreboard Corp., 493 F.2d 1076 (5th Cir. 1973), a 
Federal appeals court affirmed a verdict against an asbestos 
defendant on a theory of strict liability for failure to warn. 
This decision facilitated liability for asbestos related 
illnesses, led to thousands of claims by individuals sick or 
dying from exposure to asbestos, and revealed the unknown 
dangers of asbestos. The most troubling revelation from these 
lawsuits was that many of the largest asbestos manufacturers 
and distributors, as well as the United States Government, had 
known of the dangers of asbestos exposure well before they had 
previously acknowledged.
    In the late 1970's, the lawsuits began to multiply. By 
1982, the Johns Manville Corporation, the largest manufacturer 
of asbestos products, faced over 17,000 pending tort claims. 
Under the weight of these lawsuits, Manville declared 
bankruptcy.\1\ While at the time, Manville was the largest 
defendant, this liability was, in part, transferred to other 
companies that either manufactured or distributed asbestos 
through joint and several liability. Many of these companies 
also faced the same fate as Manville. Recently two additional 
major asbestos defendants filed for bankruptcy protection, 
Babcock & Wilcox filed on February 22, 2000 and the Pittsburgh 
Corning Corporation filed on April 16, 2000.
---------------------------------------------------------------------------
    \1\ In re Joint Eastern & Southern Dist. Asbestos Litig., 129 B.R. 
710, 751 (E. & S.D.N.Y. 1991).
---------------------------------------------------------------------------
    Following the Manville bankruptcy in 1982, the number of 
tort lawsuits against other major asbestos defendants rose 
dramatically. These lawsuits proved very complex. Studies by 
the RAND Corporation showed that they involved large 
transaction costs--approximately 61% of the resources expended 
by defendants went to lawyers for plaintiffs and defendants and 
other litigation expenses, with only 39% going to the 
plaintiffs.\2\ In 1985, a group of major asbestos producers and 
insurers agreed to pool resources and handle claims on a 
collective basis under what became known as the Wellington 
Agreement. In 1998 the Wellington Agreement collapsed and 
several more bankruptcies followed.
---------------------------------------------------------------------------
    \2\ James S. Kakalik et al., Variation in Asbestos Litigation 
Compensation and Expenses, p. xviii (Rand 1984).
---------------------------------------------------------------------------
    By the late 1980's, the sheer number of asbestos personal 
injury cases in the Federal and State courts had presented 
serious caseload and backlog problems. In September 1990, Chief 
Justice William Rehnquist appointed an Ad Hoc Committee on 
Asbestos Litigation. The committee was composed of seven 
Federal judges with extensive experience in asbestos 
litigation, and it was chaired by Judge Thomas M. Reavley of 
the Fifth Circuit. The committee made its report to the Chief 
Justice and the members of the Judicial Conference of the 
United States in March 1991. The committee's report contained 
the following observation, and recommendation:

          ``The most objectionable aspects of asbestos 
        litigation can be briefly summarized: dockets in both 
        Federal and State courts continue to grow; long delays 
        are routine; trials are too long; the same issues are 
        litigated over and over; transactions costs exceed the 
        victims' recovery by nearly two to one; exhaustion of 
        assets threatens and distorts the process; and future 
        claimants may lose altogether.
          It is easy to describe the problems. It is not easy 
        to fashion an appropriate remedy in the context of our 
        Federal system.
          The committee firmly believes that the ultimate 
        solution should be legislation recognizing the national 
        proportions of the problem both in Federal and State 
        courts and creating a national asbestos dispute 
        resolution scheme. . . .'' Report of the Judicial 
        Conference Ad Hoc Committee on Asbestos Litigation 
        (March, 1991), p. 3.

    In the 102nd Congress, the Subcommittee on Intellectual 
Property and Judicial Administration of the House Judiciary 
Committee held hearings focusing on the impact of asbestos 
litigation on the Federal and State courts and on the findings 
of the Ad Hoc Committee's report.\3\ The Subcommittee on Courts 
and Administrative Practice of the Senate Judiciary 
subsequently held similar hearings.\4\ While no legislation was 
introduced in either house to implement the recommendations 
provided by the Ad Hoc Committee or any of these hearings, it 
was clear that asbestos victims were bearing enormous delays 
and costs through this complex litigation.
---------------------------------------------------------------------------
    \3\ Asbestos Litigation Crisis in Federal and State Courts: 
Hearings Before The Subcomm. On Intellectual Property and Judicial 
Admin. of the Comm. on the Judiciary, House of Representatives, 102nd 
Cong. 1st and 2nd Sess. (1992).
    \4\ The Problems in Asbestos Litigation: Hearing Before the 
Subcomm. on Courts and Admin. Practice of the Comm. on the Judiciary, 
United States Senate, 102nd Cong. (1993).
---------------------------------------------------------------------------
    At approximately the same time that the Ad Hoc Committee 
issued its report, all pending Federal asbestos cases were 
consolidated for pretrial purposes by the Judicial Panel on 
Multi-District Litigation (``MDL Panel''). The MDL Panel 
transferred those cases to the Eastern District of 
Pennsylvania, where they were assigned to Judge Charles Weiner. 
The Panel found that the more than 30,000 asbestos-related 
personal injury or wrongful death actions then pending in the 
Federal courts had ``reached a magnitude . . . that threatens 
the administration of justice and that requires a new, 
streamlined approach.'' In re Asbestos Prods. Liab. Litig. (No. 
VI), 771 F. Supp. 415, 418 (J.P.M.L. 1991).
    The Panel urged Judge Weiner to consider innovative 
approaches to managing the litigation, including establishing 
``deferral programs'' for plaintiffs ``who have been exposed to 
asbestos but do not presently show any signs of impairment.'' 
Id. at 420. Studies showed that the volume of asbestos claims 
by unimpaired plaintiffs was very large,\5\ and deferral of 
these claims was considered crucial to providing timely 
disposition of claims involving asbestos-related impairment or 
malignancy. Accordingly, Judge Weiner implemented an order 
(Administrative Order No. 3) establishing a mandatory 
negotiation process and setting priority for remand based on 
the severity of the plaintiff's medical condition.
---------------------------------------------------------------------------
    \5\ See, e.g., In re Joint Eastern and Southern Dist. Asbestos 
Litig., 129 B.R. at 935 (app. C) (showing ``pleural'' claims accounting 
for 54.4% of all claims involving the Manville Trust).
---------------------------------------------------------------------------
    Notwithstanding Judge Weiner's limited progress at the 
Federal level, the asbestos litigation problem seriously 
deteriorated throughout the 1990's. Even before the 
consolidation of Federal cases by the MDL Panel, asbestos cases 
had begun to flow from the Federal courts to the State courts. 
Following the MDL order, the rate of asbestos related filings 
in State courts accelerated. Thus, despite a reduction in 
Federal filings, the overall backlog in both Federal and State 
courts, estimated by the Judicial Conference at 100,000 claims 
in 1990, doubled to over 200,000 claims in 1999.\6\ A survey of 
the most recent SEC filings by major asbestos defendants, 
reporting pending claims through the third quarter of 1999, 
shows that this estimate appears quite conservative.\7\
---------------------------------------------------------------------------
    \6\ H.R. 1283 the ``Fairness in Asbestos Compensation Act of 
1999'': Hearing Before the House Committee on the Judiciary, 106th 
Cong., 1st Sess. (1999)(testimony of Prof. Christopher Edley, Jr.).
    \7\ For example, in their filings on Form 10Q with the Securities 
and Exchange Commission for the third quarter of 1999, Armstrong World 
Industries reported 182,000 pending claims, GAF Corporation reported 
114,000, USG Corporation reported 100,000, W.R. Grace & Co. reported 
102,894, and Kaiser Aluminum reported 110,599.
---------------------------------------------------------------------------
    This large increase in the pending backlog indicates that 
the rate of settlements and trials was not keeping up with new 
filings. From 1997 through 1999 new filings against some 
defendants ranged from 40,000 to over 60,000 per year--figures 
that would have been staggering just a few years before.\8\ A 
survey of State court dockets in 1999 also showed a serious 
pattern of delays, with asbestos cases pending on average for 
several years.\9\ The Department of Justice reported in 
September 1999 that asbestos cases took, on average, twice as 
long as other tort cases to reach verdict, with cases taking an 
average of 4 years.\10\
---------------------------------------------------------------------------
    \8\ These figures are supported by the most recent figures reported 
by major defendants to the Securities and Exchange Commission on Form 
10Q, covering the first three quarters of 1999. On these forms, 
Armstrong World Industries reports receiving 40,200 claims for the 
first three quarters of 1999 and 71,000 claims for all of 1998. Kaiser 
Aluminium reports 29,700 new claims for the first three quarters of 
1999 and 22,900 claims for calander year 1998. GAF Corporation reports 
42,200 new claims during the first three quarters of 1999. W.R. Grace & 
Co. reports 20,629 new claims during the first three quarters of 1999. 
USG Corporation reports 38,000 new personal injury claims in the first 
three quarters of 1999, 80,000 new claims for the entire year in 1998, 
and 23,500 new claims in 1997. In Owens Corning's Form 10Q filed with 
the Securities and Exchange Commission in November 1998 (covering the 
first three quarters of 1998), which is the last SEC form available in 
which Owens Corning reports figures for pending cases and new filings, 
Owens Corning reported receiving 27,100 new claims for the first three 
quarters of 1998, and 36,500 new claims for the entire year in 1997.
    \9\ H.R. 1283 the ``Fairness in Asbestos Compensation Act of 
1999'': Hearing Before the House Committee on the Judiciary, 106th 
Cong., 1st Sess. (1999)(testimony of Prof. Christopher Edley, Jr.).
    \10\ Carol J. DeFrances & Marika F.X. Litras, Bureau of Justice 
Statistics, Civil Trial Cases and Verdicts in Large Counties, 1996, at 
p. 13, table 11 (September 1999).
---------------------------------------------------------------------------
    Bankruptcies continued throughout the 1990's. At least 24 
known asbestos defendants have declared bankruptcy. 
Bankruptcies resulted in serious hardship for plaintiffs with 
claims against those companies.\11\ For example, most claimants 
against the Manville Trust, which filed for bankruptcy in 1982, 
had to wait 12 years before they could pursue their claims--and 
even then they were entitled to receive only 10 cents on the 
dollar. Other bankruptcies have involved similar delays, and 
have left claimants with even less. In addition to plaintiffs, 
bankruptcies have harmed--shareholders, employees, and 
communities affected, as well as future claimants who now must 
look elsewhere for compensation.
---------------------------------------------------------------------------
    \11\ H.R. 1283 the ``Fairness in Asbestos Compensation Act of 
1999'': Hearing Before the House Committee on the Judiciary, 106th 
Cong., 1st Sess. (1999)(testimony of Prof. Christopher Edley, Jr.).
---------------------------------------------------------------------------
    Amchem Prods. v. Windsor, Class Action Settlement. When the 
Multi District Litigation (MDL) Panel transferred all pending 
Federal asbestos cases to the Eastern District of Pennsylvania, 
Steering Committees for the plaintiffs and defendants were 
formed in an effort to produce a global settlement. When those 
broad-based negotiations reached an impasse, plaintiffs' class 
counsel and representatives of the Center for Claims Resolution 
(CCR)--which comprised 20 defendant companies--began 
negotiations to resolve CCR's asbestos liability. After a year 
of discussions, the two sides reached a settlement agreement 
and filed a class action to implement the agreement. The 
settlement agreement also received the backing of Robert 
Georgine of the Building and Construction Trades Department of 
the AFL-CIO.
    The settlement was approved and the settlement class was 
certified on August 16, 1994. Georgine v. Amchem Prods., Inc., 
157 F.R.D. 246 (E.D. Pa. 1994). However, certain persons who 
would have been members of the affected class under the 
settlement, objected to the parties' subsequent motion for a 
preliminary injunction that would have barred class members 
from initiating claims against any CCR defendant pending a 
final judgment in this case. See Georgine v. Amchem Prods., 
Inc., 878 F. Supp. 716 (E.D. Pa. 1994). On appeal, the Third 
Circuit Court of Appeals overturned the decision to grant class 
certification, finding that it failed to meet the commonality 
and predominance requirements of Federal rule 23(a) and 
23(b)(3). Georgine v. Amchem Prods., Inc., 83 F.3d 610 (3rd 
Cir. 1996). Essentially, the Court determined that the class 
was too large and too disparate to meet the requirements of 
Federal rule 23. In the course of his opinion, however, Judge 
Becker made numerous favorable comments about the innovative 
approach taken in the Amchem settlement and, in fact, referred 
to it at one point as an ``arguably brilliant partial 
solution'' to the asbestos litigation crisis. 83 F.3d at 617. 
Nevertheless, the Court felt obligated by a literal 
interpretation of Federal rule 23 to overturn the settlement. 
On June 25, 1997, in Amchem Prods., Inc. v. Windsor, 117 S. Ct. 
2231 (1997), the Supreme Court affirmed the Third Circuit's 
decision that the settlement class failed to meet the 
requirements of Federal rule 23.
    Ortiz v. Fibreboard, Class Action Settlement. On June 23, 
1999 the Supreme Court reversed and remanded another massive 
asbestos-related global settlement that had been certified 
under rule 23 of the Federal Rules of Civil Procedure. Ortiz v. 
Fibreboard, 119 S. Ct. 2295 (1999).
    The Supreme Court Speaks. In Amchem Prods. v. Windsor, 
Justice Ruth Bader Ginsburg, writing for the Court, suggested 
that Congress might be the most appropriate body to resolve the 
asbestos litigation crisis:

        ``The argument is sensibly made that a nationwide 
        administrative claims processing regime would provide 
        the most secure, fair and efficient means of 
        compensating victims of asbestos exposure. Congress, 
        however, has not adopted such a solution. And rule 23 . 
        . . cannot carry the large load heaped upon it.'' 
        Amchem Prods., Inc. v. Windsor, 117 S. Ct. 2231, 2253 
        (1997).

    Bills responding to the Supreme Court's invitation were 
introduced in the 105th Congress by Rep. Henry Hyde (H.R. 3905) 
and Sen. Orrin Hatch (S. 2546) of the House and Senate 
Judiciary Committees. The 105th Congress came to an end, 
however, without action on either bill. Similar bills were 
reintroduced in the 106th Congress in both the House (H.R. 
1283) and the Senate (S. 758).
    While these bills were pending, and in the wake of the 
Amchem decision, the Supreme Court handed down the decision in 
Ortiz v. Fibreboard. Writing for the Court, Justice David 
Souter opined that Congress was the most appropriate body to 
resolve the asbestos litigation crisis:

        ``[T]he elephantine mass of asbestos cases . . . defies 
        customary judicial administration and calls for 
        national legislation.'' Ortiz v. Fibreboard Corp., 119 
        S. Ct. 2295, 2302 (1999).

Chief Justice William Rehnquist, joined by Justices Scalia and 
Kennedy, also called for a legislative solution in a concurring 
opinion:

        ``[T]he Court's opinion correctly states the existing 
        law, and I join it. But the `elephantine mass of 
        asbestos cases,' . . . cries out for a legislative 
        solution.'' Id. at 2324.

    The Asbestos Compensation Act of 2000. Following these 
failed attempts to address asbestos litigation under existing 
law, legislation is needed addressing the underlying causes of 
the problem. The critical need is to separate the claims of 
those who are impaired by asbestos-related disease from the 
claim of those who are not impaired. This will alleviate the 
serious backlog of mostly unimpaired asbestos claims and focus 
resources on compensating the sick.
    This basic reform requires objective and administrative 
medical criteria. But, it is not enough just to establish an 
impairment line. Legislation needs to expedite the claims of 
the sick and eliminate arbitrary barriers to recovery. There 
needs to be a streamlined administrative process with strict 
time limits. Early settlements should be encouraged, and 
claimants should be guaranteed fair settlement offers as soon 
as medical eligibility is established. The statute of 
limitations and other timeliness rules, which have prompted 
many unimpaired plaintiffs to file lawsuits prematurely, should 
be abolished. And, legislation should simplify the issues, at 
least with respect to the main defendants, to provide more 
reliable and even handed compensation for the sick.
    Legislation is also needed to put an end to abusive forum 
shopping and to control punitive damages awards that divert a 
limited pool of resources from compensation for the sick and 
accentuate the inequities of the current litigation system.

                                Hearings

    The committee's Subcommittee on Intellectual Property and 
Judicial Administration held a series of hearings in October 
1991 and February 1992 to begin to assess the complex 
litigation that had been caused by the prevalent use of 
asbestos in America. While legislation had not been introduced, 
voluminous testimony detailed the horrors of asbestos 
litigation. Six years later on May 20, 1998, Henry J. Hyde, 
Chairman of the Committee on the Judiciary, introduced H.R. 
3905, the ``Fairness in Asbestos Compensation Act of 1998.'' 
Later that year, a hearing on H.R. 3905, scheduled for 
September 15, 1998 was canceled following the arrival of the 
Report from the Independent Counsel. Accordingly, after the 
conclusion of the impeachment trial of William Jefferson 
Clinton in the United States Senate, Chairman Hyde introduced 
H.R. 1283, the ``Fairness in Asbestos Compensation Act of 
1999,'' which was virtually identical to H.R. 3905.
    On July 1, 1999 the Committee on the Judiciary held an 
extensive hearing on H.R. 1283. The hearing consisted of ten 
witness on two panels. Witnesses on the first panel included 
Professor Christopher F. Edley Jr of Harvard University School 
of Law; Louis W. Sullivan, President of the Morehouse School of 
Medicine and former Secretary of the Department of Health and 
Human Services; Richard H. Middleton, President of the 
Association of Trial Lawyers of America; Samuel J. Heyman, 
Chairman and Chief Executive Officer of the GAF Corporation; 
Dr. Christine Oliver, Associate Physician at Massachusetts 
General Hospital; and Dr. Gary Epler, Associate Physician at 
Brigham & Women's Hospital in Massachusetts. The second panel 
included Maura J. Abeln Smith, Senior Vice President and 
General Counsel of Owens Corning; Thomas J. Donohue, President 
of the United States Chamber of Commerce; Johnathan Hiatt, 
General Counsel of the AFL-CIO; and Conrad L. Mallett Jr., 
former Chief Justice of the Michigan Supreme Court.

                        Committee Consideration

    On March 9, 15, and 16, 2000, the Committee on the 
Judiciary met in open session to consider this bill and on 
March 16 ordered favorably reported the bill H.R. 1283, with a 
single amendment in the nature of a substitute as amended, by a 
recorded vote of 18 to 15, a quorum being present.

                Amendment in the Nature of a Substitute

    Mr. Hyde offered an amendment in the nature of a substitute 
which, without objection, was considered as the original text 
for purposes of markup.

                         Votes of the Committee

    1. An amendment offered by Mr. Berman to the amendment in 
the nature of a substitute to H.R. 1283, which would have 
struck the effective date and inserted new language 
establishing March 15, 2000, as the effective date. Defeated by 
voice vote.
    2. An amendment offered by Mr. Scott to the amendment in 
the nature of a substitute to H.R. 1283, which would have 
struck all tort reform provisions. Defeated by voice vote.
    3. Amendment offered by Mr. Conyers, Mr. Nadler, Mr. Scott 
to the amendment in the nature of a substitute to H.R. 1283, 
which would have struck the medical criteria and inserted new 
language requiring the National Institute for Occupational 
Safety and Health to establish a uniform medical criteria. 
Defeated 10 ayes to 10 nays.

                                                   ROLLCALL NO. 1
----------------------------------------------------------------------------------------------------------------
                                                                       Ayes            Nays           Present
----------------------------------------------------------------------------------------------------------------
Mr. Sensenbrenner...............................................  ..............              X   ..............
Mr. McCollum....................................................  ..............  ..............  ..............
Mr. Gekas.......................................................  ..............  ..............  ..............
Mr. Coble.......................................................  ..............              X   ..............
Mr. Smith (TX)..................................................  ..............  ..............  ..............
Mr. Gallegly....................................................  ..............  ..............  ..............
Mr. Canady......................................................  ..............              X   ..............
Mr. Goodlatte...................................................  ..............  ..............  ..............
Mr. Chabot......................................................  ..............              X   ..............
Mr. Barr........................................................  ..............  ..............  ..............
Mr. Jenkins.....................................................  ..............              X   ..............
Mr. Hutchinson..................................................  ..............  ..............  ..............
Mr. Pease.......................................................  ..............              X   ..............
Mr. Cannon......................................................  ..............  ..............  ..............
Mr. Rogan.......................................................  ..............              X   ..............
Mr. Graham......................................................  ..............  ..............  ..............
Ms. Bono........................................................  ..............              X   ..............
Mr. Bachus......................................................  ..............              X   ..............
Mr. Scarborough.................................................  ..............  ..............  ..............
Mr. Vitter......................................................  ..............  ..............  ..............
Mr. Conyers.....................................................  ..............  ..............  ..............
Mr. Frank.......................................................              X   ..............  ..............
Mr. Berman......................................................  ..............  ..............  ..............
Mr. Boucher.....................................................  ..............  ..............  ..............
Mr. Nadler......................................................  ..............  ..............  ..............
Mr. Scott.......................................................              X   ..............  ..............
Mr. Watt........................................................              X   ..............  ..............
Ms. Lofgren.....................................................              X   ..............  ..............
Ms. Jackson Lee.................................................              X   ..............  ..............
Ms. Waters......................................................              X   ..............  ..............
Mr. Meehan......................................................              X   ..............  ..............
Mr. Delahunt....................................................              X   ..............  ..............
Mr. Wexler......................................................  ..............  ..............  ..............
Mr. Rothman.....................................................              X   ..............  ..............
Ms. Baldwin.....................................................  ..............  ..............  ..............
Mr. Weiner......................................................              X   ..............  ..............
Mr. Hyde, Chairman..............................................  ..............              X   ..............
                                                                 -----------------------------------------------
    Total.......................................................             10              10   ..............
----------------------------------------------------------------------------------------------------------------

    4. An amendment offered by Mr. Conyers, Mr. Scott, Mr. Hyde 
to the amendment in the nature of a substitute to H.R. 1283, 
striking the definition of ``predicted value'' and pulmonary 
function testing and inserting new language requiring the 
Medical Director to approve acceptable predicted values and 
pulmonary function testing through an administrative rule. 
Adopted by unanimous consent.
    5. An amendment offered by Mr. Hutchinson to the amendment 
in the nature of a substitute to H.R. 1283, striking the 5 year 
limitation for Qualifying National Settlement Plans and 
inserting new language limiting Qualifying National Settlement 
Plans to 7 years. The amendment inserted new language which 
applied all tort reform provisions to any claim filed against a 
defendant with a Qualifying National Settlement Plan. In 
addition, this amendment struck the July 1, 1999 requirement 
from the definition of Qualifying National Settlement Plan. 
Passed by voice vote.
    6. An amendment offered by Ms. Jackson Lee to the amendment 
in the nature of a substitute to H.R. 1283, which would have 
created an additional eligible medical category for Bilateral 
Pleural Disease. Defeated 11 ayes to 14 nays.

                                                   ROLLCALL NO. 2
----------------------------------------------------------------------------------------------------------------
                                                                       Ayes            Nays           Present
----------------------------------------------------------------------------------------------------------------
Mr. Sensenbrenner...............................................  ..............              X   ..............
Mr. McCollum....................................................  ..............              X   ..............
Mr. Gekas.......................................................  ..............              X   ..............
Mr. Coble.......................................................  ..............              X   ..............
Mr. Smith (TX)..................................................  ..............  ..............  ..............
Mr. Gallegly....................................................  ..............  ..............  ..............
Mr. Canady......................................................  ..............              X   ..............
Mr. Goodlatte...................................................  ..............  ..............  ..............
Mr. Chabot......................................................  ..............              X   ..............
Mr. Barr........................................................  ..............              X   ..............
Mr. Jenkins.....................................................  ..............              X   ..............
Mr. Hutchinson..................................................  ..............  ..............  ..............
Mr. Pease.......................................................  ..............              X   ..............
Mr. Cannon......................................................  ..............  ..............  ..............
Mr. Rogan.......................................................  ..............              X   ..............
Mr. Graham......................................................  ..............              X   ..............
Ms. Bono........................................................  ..............              X   ..............
Mr. Bachus......................................................  ..............              X   ..............
Mr. Scarborough.................................................  ..............  ..............  ..............
Mr. Vitter......................................................  ..............  ..............  ..............
Mr. Conyers.....................................................              X   ..............  ..............
Mr. Frank.......................................................              X   ..............  ..............
Mr. Berman......................................................  ..............  ..............  ..............
Mr. Boucher.....................................................  ..............  ..............  ..............
Mr. Nadler......................................................              X   ..............  ..............
Mr. Scott.......................................................              X   ..............  ..............
Mr. Watt........................................................              X   ..............  ..............
Ms. Lofgren.....................................................              X   ..............  ..............
Ms. Jackson Lee.................................................              X   ..............  ..............
Ms. Waters......................................................              X   ..............  ..............
Mr. Meehan......................................................              X   ..............  ..............
Mr. Delahunt....................................................  ..............  ..............  ..............
Mr. Wexler......................................................  ..............  ..............  ..............
Mr. Rothman.....................................................              X   ..............  ..............
Ms. Baldwin.....................................................  ..............  ..............  ..............
Mr. Weiner......................................................              X   ..............  ..............
Mr. Hyde, Chairman..............................................  ..............              X   ..............
                                                                 -----------------------------------------------
    Total.......................................................             11              14   ..............
----------------------------------------------------------------------------------------------------------------

    7. An amendment offered by Mr. Pease to the amendment in 
the nature of a substitute to H.R. 1283, which would have 
allowed States to enact a law to be excluded from the 
jurisdiction of the Office of Asbestos Compensation. Adopted 15 
ayes to 14 nays.

                                                   ROLLCALL NO. 3
----------------------------------------------------------------------------------------------------------------
                                                                       Ayes            Nays           Present
----------------------------------------------------------------------------------------------------------------
Mr. Sensenbrenner...............................................  ..............              X   ..............
Mr. McCollum....................................................  ..............              X   ..............
Mr. Gekas.......................................................  ..............              X   ..............
Mr. Coble.......................................................  ..............              X   ..............
Mr. Smith (TX)..................................................  ..............  ..............  ..............
Mr. Gallegly....................................................  ..............  ..............  ..............
Mr. Canady......................................................  ..............              X   ..............
Mr. Goodlatte...................................................              X   ..............  ..............
Mr. Chabot......................................................  ..............              X   ..............
Mr. Barr........................................................  ..............              X   ..............
Mr. Jenkins.....................................................              X   ..............  ..............
Mr. Hutchinson..................................................  ..............              X   ..............
Mr. Pease.......................................................              X   ..............  ..............
Mr. Cannon......................................................              X   ..............  ..............
Mr. Rogan.......................................................  ..............              X   ..............
Mr. Graham......................................................  ..............              X   ..............
Ms. Bono........................................................  ..............              X   ..............
Mr. Bachus......................................................  ..............              X   ..............
Mr. Scarborough.................................................  ..............  ..............  ..............
Mr. Vitter......................................................  ..............              X   ..............
Mr. Conyers.....................................................              X   ..............  ..............
Mr. Frank.......................................................              X   ..............  ..............
Mr. Berman......................................................  ..............  ..............  ..............
Mr. Boucher.....................................................  ..............  ..............  ..............
Mr. Nadler......................................................              X   ..............  ..............
Mr. Scott.......................................................              X   ..............  ..............
Mr. Watt........................................................              X   ..............  ..............
Ms. Lofgren.....................................................              X   ..............  ..............
Ms. Jackson Lee.................................................              X   ..............  ..............
Ms. Waters......................................................              X   ..............  ..............
Mr. Meehan......................................................              X   ..............  ..............
Mr. Delahunt....................................................  ..............  ..............  ..............
Mr. Wexler......................................................  ..............  ..............  ..............
Mr. Rothman.....................................................              X   ..............  ..............
Ms. Baldwin.....................................................  ..............  ..............  ..............
Mr. Weiner......................................................              X   ..............  ..............
Mr. Hyde, Chairman..............................................  ..............              X   ..............
                                                                 -----------------------------------------------
    Total.......................................................             15              14   ..............
----------------------------------------------------------------------------------------------------------------

    8. An amendment offered by Mr. Conyers, Mr. Scott, Ms. 
Lofgren, Mr. Watt to the amendment in the nature of a 
substitute to H.R. 1283, which would have made the Office of 
Asbestos Compensation completely voluntary and would have 
struck the prerequisite of medical eligibility before an 
asbestos-related claim could be filed in State or Federal 
court. Defeated 11 ayes to 18 nays.

                                                   ROLLCALL NO. 4
----------------------------------------------------------------------------------------------------------------
                                                                       Ayes            Nays           Present
----------------------------------------------------------------------------------------------------------------
Mr. Sensenbrenner...............................................  ..............              X   ..............
Mr. McCollum....................................................  ..............              X   ..............
Mr. Gekas.......................................................  ..............              X   ..............
Mr. Coble.......................................................  ..............              X   ..............
Mr. Smith (TX)..................................................  ..............  ..............  ..............
Mr. Gallegly....................................................  ..............              X   ..............
Mr. Canady......................................................  ..............              X   ..............
Mr. Goodlatte...................................................  ..............              X   ..............
Mr. Chabot......................................................  ..............              X   ..............
Mr. Barr........................................................  ..............              X   ..............
Mr. Jenkins.....................................................  ..............              X   ..............
Mr. Hutchinson..................................................  ..............              X   ..............
Mr. Pease.......................................................  ..............              X   ..............
Mr. Cannon......................................................  ..............              X   ..............
Mr. Rogan.......................................................  ..............              X   ..............
Mr. Graham......................................................  ..............              X   ..............
Ms. Bono........................................................  ..............  ..............  ..............
Mr. Bachus......................................................  ..............              X   ..............
Mr. Scarborough.................................................  ..............  ..............  ..............
Mr. Vitter......................................................  ..............              X   ..............
Mr. Conyers.....................................................              X   ..............  ..............
Mr. Frank.......................................................  ..............  ..............  ..............
Mr. Berman......................................................  ..............  ..............  ..............
Mr. Boucher.....................................................  ..............  ..............  ..............
Mr. Nadler......................................................              X   ..............  ..............
Mr. Scott.......................................................              X   ..............  ..............
Mr. Watt........................................................              X   ..............  ..............
Ms. Lofgren.....................................................              X   ..............  ..............
Ms. Jackson Lee.................................................              X   ..............  ..............
Ms. Waters......................................................              X   ..............  ..............
Mr. Meehan......................................................              X   ..............  ..............
Mr. Delahunt....................................................              X   ..............  ..............
Mr. Wexler......................................................  ..............  ..............  ..............
Mr. Rothman.....................................................              X   ..............  ..............
Ms. Baldwin.....................................................  ..............  ..............  ..............
Mr. Weiner......................................................              X   ..............  ..............
Mr. Hyde, Chairman..............................................  ..............              X   ..............
                                                                 -----------------------------------------------
    Total.......................................................             11              18   ..............
----------------------------------------------------------------------------------------------------------------

    9. A motion by Mr. Cannon to reconsider the vote by which 
the Pease amendment to the amendment in the nature of a 
substitute was adopted. Adopted 16 ayes to 14 nays.

                                                   ROLLCALL NO. 5
----------------------------------------------------------------------------------------------------------------
                                                                       Ayes            Nays           Present
----------------------------------------------------------------------------------------------------------------
Mr. Sensenbrenner...............................................              X   ..............  ..............
Mr. McCollum....................................................              X   ..............  ..............
Mr. Gekas.......................................................              X   ..............  ..............
Mr. Coble.......................................................              X   ..............  ..............
Mr. Smith (TX)..................................................  ..............  ..............  ..............
Mr. Gallegly....................................................  ..............              X   ..............
Mr. Canady......................................................              X   ..............  ..............
Mr. Goodlatte...................................................              X   ..............  ..............
Mr. Chabot......................................................              X   ..............  ..............
Mr. Barr........................................................              X   ..............  ..............
Mr. Jenkins.....................................................  ..............              X   ..............
Mr. Hutchinson..................................................              X   ..............  ..............
Mr. Pease.......................................................  ..............              X   ..............
Mr. Cannon......................................................              X   ..............  ..............
Mr. Rogan.......................................................              X   ..............  ..............
Mr. Graham......................................................              X   ..............  ..............
Ms. Bono........................................................              X   ..............  ..............
Mr. Bachus......................................................              X   ..............  ..............
Mr. Scarborough.................................................  ..............  ..............  ..............
Mr. Vitter......................................................              X   ..............  ..............
Mr. Conyers.....................................................  ..............              X   ..............
Mr. Frank.......................................................  ..............  ..............  ..............
Mr. Berman......................................................  ..............  ..............  ..............
Mr. Boucher.....................................................  ..............  ..............  ..............
Mr. Nadler......................................................  ..............              X   ..............
Mr. Scott.......................................................  ..............              X   ..............
Mr. Watt........................................................  ..............              X   ..............
Ms. Lofgren.....................................................  ..............              X   ..............
Ms. Jackson Lee.................................................  ..............              X   ..............
Ms. Waters......................................................  ..............              X   ..............
Mr. Meehan......................................................  ..............              X   ..............
Mr. Delahunt....................................................  ..............              X   ..............
Mr. Wexler......................................................  ..............  ..............  ..............
Mr. Rothman.....................................................  ..............              X   ..............
Ms. Baldwin.....................................................  ..............  ..............  ..............
Mr. Weiner......................................................  ..............              X   ..............
Mr. Hyde, Chairman..............................................              X   ..............  ..............
                                                                 -----------------------------------------------
    Total.......................................................             16              14   ..............
----------------------------------------------------------------------------------------------------------------

    10. A motion by Mr. Weiner to postpone consideration of the 
Pease amendment to a time certain. Defeated 11 ayes to 18 nays.

                                                   ROLLCALL NO. 6
----------------------------------------------------------------------------------------------------------------
                                                                       Ayes            Nays           Present
----------------------------------------------------------------------------------------------------------------
Mr. Sensenbrenner...............................................  ..............              X   ..............
Mr. McCollum....................................................  ..............              X   ..............
Mr. Gekas.......................................................  ..............              X   ..............
Mr. Coble.......................................................  ..............              X   ..............
Mr. Smith (TX)..................................................  ..............  ..............  ..............
Mr. Gallegly....................................................  ..............              X   ..............
Mr. Canady......................................................  ..............              X   ..............
Mr. Goodlatte...................................................  ..............  ..............  ..............
Mr. Chabot......................................................  ..............              X   ..............
Mr. Barr........................................................  ..............              X   ..............
Mr. Jenkins.....................................................  ..............              X   ..............
Mr. Hutchinson..................................................  ..............              X   ..............
Mr. Pease.......................................................  ..............              X   ..............
Mr. Cannon......................................................  ..............              X   ..............
Mr. Rogan.......................................................  ..............              X   ..............
Mr. Graham......................................................  ..............              X   ..............
Ms. Bono........................................................  ..............              X   ..............
Mr. Bachus......................................................  ..............              X   ..............
Mr. Scarborough.................................................  ..............  ..............  ..............
Mr. Vitter......................................................  ..............              X   ..............
Mr. Conyers.....................................................              X   ..............  ..............
Mr. Frank.......................................................  ..............  ..............  ..............
Mr. Berman......................................................              X   ..............  ..............
Mr. Boucher.....................................................  ..............  ..............  ..............
Mr. Nadler......................................................              X   ..............  ..............
Mr. Scott.......................................................              X   ..............  ..............
Mr. Watt........................................................              X   ..............  ..............
Ms. Lofgren.....................................................              X   ..............  ..............
Ms. Jackson Lee.................................................              X   ..............  ..............
Ms. Waters......................................................              X   ..............  ..............
Mr. Meehan......................................................              X   ..............  ..............
Mr. Delahunt....................................................  ..............  ..............  ..............
Mr. Wexler......................................................  ..............  ..............  ..............
Mr. Rothman.....................................................              X   ..............  ..............
Ms. Baldwin.....................................................  ..............  ..............  ..............
Mr. Weiner......................................................              X   ..............  ..............
Mr. Hyde, Chairman..............................................  ..............              X   ..............
                                                                 -----------------------------------------------
    Total.......................................................             11              18   ..............
----------------------------------------------------------------------------------------------------------------

    11. Reconsideration of an amendment offered by Mr. Pease to 
the amendment in the nature of a substitute to H.R. 1283, which 
would have allowed States to enact a law to be excluded from 
the jurisdiction of the Office of Asbestos Compensation. 
Defeated 14 ayes to 15 nays.

                                                   ROLLCALL NO. 7
----------------------------------------------------------------------------------------------------------------
                                                                       Ayes            Nays           Present
----------------------------------------------------------------------------------------------------------------
Mr. Sensenbrenner...............................................  ..............              X   ..............
Mr. McCollum....................................................  ..............              X   ..............
Mr. Gekas.......................................................  ..............              X   ..............
Mr. Coble.......................................................  ..............              X   ..............
Mr. Smith (TX)..................................................  ..............  ..............  ..............
Mr. Gallegly....................................................              X   ..............  ..............
Mr. Canady......................................................  ..............              X   ..............
Mr. Goodlatte...................................................  ..............  ..............  ..............
Mr. Chabot......................................................  ..............              X   ..............
Mr. Barr........................................................  ..............              X   ..............
Mr. Jenkins.....................................................              X   ..............  ..............
Mr. Hutchinson..................................................  ..............              X   ..............
Mr. Pease.......................................................              X   ..............  ..............
Mr. Cannon......................................................  ..............              X   ..............
Mr. Rogan.......................................................  ..............              X   ..............
Mr. Graham......................................................  ..............              X   ..............
Ms. Bono........................................................  ..............              X   ..............
Mr. Bachus......................................................  ..............              X   ..............
Mr. Scarborough.................................................  ..............  ..............  ..............
Mr. Vitter......................................................  ..............              X   ..............
Mr. Conyers.....................................................              X   ..............  ..............
Mr. Frank.......................................................  ..............  ..............  ..............
Mr. Berman......................................................              X   ..............  ..............
Mr. Boucher.....................................................  ..............  ..............  ..............
Mr. Nadler......................................................              X   ..............  ..............
Mr. Scott.......................................................              X   ..............  ..............
Mr. Watt........................................................              X   ..............  ..............
Ms. Lofgren.....................................................              X   ..............  ..............
Ms. Jackson Lee.................................................              X   ..............  ..............
Ms. Waters......................................................              X   ..............  ..............
Mr. Meehan......................................................              X   ..............  ..............
Mr. Delahunt....................................................  ..............  ..............  ..............
Mr. Wexler......................................................  ..............  ..............  ..............
Mr. Rothman.....................................................              X   ..............  ..............
Ms. Baldwin.....................................................  ..............  ..............  ..............
Mr. Weiner......................................................              X   ..............  ..............
Mr. Hyde, Chairman..............................................  ..............              X   ..............
                                                                 -----------------------------------------------
    Total.......................................................             14              15   ..............
----------------------------------------------------------------------------------------------------------------

    12. An amendment offered by Mr. Scott to the amendment in 
the nature of a substitute to H.R. 1283, which created a 
provision to allow claimants to enforce asbestos-related 
written settlement agreements in any applicable State or 
Federal court. On unanimous consent, Mr. Scott modified his 
amendment to insert ``or defendant'' after claimant on line 3. 
Adopted by voice vote.
    13. Amendment offered by Mr. Scott to the amendment in the 
nature of a substitute to H.R. 1283, which would have allowed 
claimants to proceed to State or Federal court if the Office of 
Asbestos Compensation failed to act within 60 days from the 
date the claim was filed with the Office of Asbestos 
Compensation. Defeated 11 ayes to 17 nays.

                                                   ROLLCALL NO. 8
----------------------------------------------------------------------------------------------------------------
                                                                       Ayes            Nays           Present
----------------------------------------------------------------------------------------------------------------
Mr. Sensenbrenner...............................................  ..............              X   ..............
Mr. McCollum....................................................  ..............              X   ..............
Mr. Gekas.......................................................  ..............              X   ..............
Mr. Coble.......................................................  ..............              X   ..............
Mr. Smith (TX)..................................................  ..............  ..............  ..............
Mr. Gallegly....................................................  ..............  ..............  ..............
Mr. Canady......................................................  ..............              X   ..............
Mr. Goodlatte...................................................  ..............  ..............  ..............
Mr. Chabot......................................................  ..............              X   ..............
Mr. Barr........................................................  ..............              X   ..............
Mr. Jenkins.....................................................  ..............              X   ..............
Mr. Hutchinson..................................................  ..............              X   ..............
Mr. Pease.......................................................  ..............              X   ..............
Mr. Cannon......................................................  ..............              X   ..............
Mr. Rogan.......................................................  ..............              X   ..............
Mr. Graham......................................................  ..............              X   ..............
Ms. Bono........................................................  ..............              X   ..............
Mr. Bachus......................................................  ..............              X   ..............
Mr. Scarborough.................................................  ..............  ..............  ..............
Mr. Vitter......................................................  ..............              X   ..............
Mr. Conyers.....................................................              X   ..............  ..............
Mr. Frank.......................................................  ..............  ..............  ..............
Mr. Berman......................................................              X   ..............  ..............
Mr. Boucher.....................................................  ..............  ..............  ..............
Mr. Nadler......................................................              X   ..............  ..............
Mr. Scott.......................................................              X   ..............  ..............
Mr. Watt........................................................              X   ..............  ..............
Ms. Lofgren.....................................................              X   ..............  ..............
Ms. Jackson Lee.................................................              X   ..............  ..............
Ms. Waters......................................................              X   ..............  ..............
Mr. Meehan......................................................  ..............  ..............  ..............
Mr. Delahunt....................................................  ..............  ..............  ..............
Mr. Wexler......................................................              X   ..............  ..............
Mr. Rothman.....................................................              X   ..............  ..............
Ms. Baldwin.....................................................  ..............  ..............  ..............
Mr. Weiner......................................................              X   ..............  ..............
Mr. Hyde, Chairman..............................................  ..............              X   ..............
                                                                 -----------------------------------------------
    Total.......................................................             11              17   ..............
----------------------------------------------------------------------------------------------------------------

    14. An amendment offered by Mr. Weiner to the amendment in 
the nature of a substitute to H.R. 1283, which struck the 
original ``Assessment and Enforcement'' section of title IV and 
inserted new language requiring the Administrator to adopt 
rules for calculating and collecting assessments from 
defendants. Adopted by voice vote.
    15. Amendment offered by Mr. Scott to the amendment in the 
nature of a substitute to H.R. 1283, which would have extended 
the date of enactment until 90 days after the later of the 
appointment of the Office of Asbestos Compensation officers, 
implementation of all rules, or the collection of all necessary 
funds to pay claimants. Defeated 12 ayes to 17 nays.

                                                   ROLLCALL NO. 9
----------------------------------------------------------------------------------------------------------------
                                                                       Ayes            Nays           Present
----------------------------------------------------------------------------------------------------------------
Mr. Sensenbrenner...............................................  ..............              X   ..............
Mr. McCollum....................................................  ..............              X   ..............
Mr. Gekas.......................................................  ..............              X   ..............
Mr. Coble.......................................................  ..............              X   ..............
Mr. Smith (TX)..................................................  ..............  ..............  ..............
Mr. Gallegly....................................................  ..............  ..............  ..............
Mr. Canady......................................................  ..............              X   ..............
Mr. Goodlatte...................................................  ..............  ..............  ..............
Mr. Chabot......................................................  ..............              X   ..............
Mr. Barr........................................................  ..............              X   ..............
Mr. Jenkins.....................................................  ..............              X   ..............
Mr. Hutchinson..................................................  ..............              X   ..............
Mr. Pease.......................................................  ..............              X   ..............
Mr. Cannon......................................................  ..............              X   ..............
Mr. Rogan.......................................................  ..............              X   ..............
Mr. Graham......................................................  ..............              X   ..............
Ms. Bono........................................................  ..............              X   ..............
Mr. Bachus......................................................  ..............              X   ..............
Mr. Scarborough.................................................  ..............  ..............  ..............
Mr. Vitter......................................................  ..............              X   ..............
Mr. Conyers.....................................................              X   ..............  ..............
Mr. Frank.......................................................  ..............  ..............  ..............
Mr. Berman......................................................              X   ..............  ..............
Mr. Boucher.....................................................  ..............  ..............  ..............
Mr. Nadler......................................................              X   ..............  ..............
Mr. Scott.......................................................              X   ..............  ..............
Mr. Watt........................................................              X   ..............  ..............
Ms. Lofgren.....................................................              X   ..............  ..............
Ms. Jackson Lee.................................................              X   ..............  ..............
Ms. Waters......................................................              X   ..............  ..............
Mr. Meehan......................................................              X   ..............  ..............
Mr. Delahunt....................................................  ..............  ..............  ..............
Mr. Wexler......................................................              X   ..............  ..............
Mr. Rothman.....................................................              X   ..............  ..............
Ms. Baldwin.....................................................  ..............  ..............  ..............
Mr. Weiner......................................................              X   ..............  ..............
Mr. Hyde, Chairman..............................................  ..............              X   ..............
                                                                 -----------------------------------------------
    Total.......................................................             12              17   ..............
----------------------------------------------------------------------------------------------------------------

    16. The Hyde amendment in the nature of a substitute was 
adopted by a voice vote.
    17. Motion by Mr. Hyde to report favorably the bill as 
amended by the amendment in the nature of a substitute to H.R. 
1283, as amended. Adopted 18 ayes to 15 nays.

                                                   ROLLCALL NO. 10
----------------------------------------------------------------------------------------------------------------
                                                                       Ayes            Nays           Present
----------------------------------------------------------------------------------------------------------------
Mr. Sensenbrenner...............................................              X   ..............  ..............
Mr. McCollum....................................................              X   ..............  ..............
Mr. Gekas.......................................................              X   ..............  ..............
Mr. Coble.......................................................              X   ..............  ..............
Mr. Smith (TX)..................................................              X   ..............  ..............
Mr. Gallegly....................................................  ..............  ..............  ..............
Mr. Canady......................................................              X   ..............  ..............
Mr. Goodlatte...................................................  ..............  ..............  ..............
Mr. Chabot......................................................              X   ..............  ..............
Mr. Barr........................................................              X   ..............  ..............
Mr. Jenkins.....................................................              X   ..............  ..............
Mr. Hutchinson..................................................              X   ..............  ..............
Mr. Pease.......................................................              X   ..............  ..............
Mr. Cannon......................................................              X   ..............  ..............
Mr. Rogan.......................................................              X   ..............  ..............
Mr. Graham......................................................  ..............              X   ..............
Ms. Bono........................................................              X   ..............  ..............
Mr. Bachus......................................................              X   ..............  ..............
Mr. Scarborough.................................................  ..............              X   ..............
Mr. Vitter......................................................              X   ..............  ..............
Mr. Conyers.....................................................  ..............              X   ..............
Mr. Frank.......................................................  ..............              X   ..............
Mr. Berman......................................................  ..............              X   ..............
Mr. Boucher.....................................................  ..............              X   ..............
Mr. Nadler......................................................  ..............              X   ..............
Mr. Scott.......................................................              X   ..............  ..............
Mr. Watt........................................................  ..............              X   ..............
Ms. Lofgren.....................................................  ..............              X   ..............
Ms. Jackson Lee.................................................  ..............              X   ..............
Ms. Waters......................................................  ..............  ..............  ..............
Mr. Meehan......................................................  ..............              X   ..............
Mr. Delahunt....................................................  ..............              X   ..............
Mr. Wexler......................................................  ..............              X   ..............
Mr. Rothman.....................................................  ..............              X   ..............
Ms. Baldwin.....................................................  ..............              X   ..............
Mr. Weiner......................................................  ..............  ..............  ..............
Mr. Hyde, Chairman..............................................              X   ..............  ..............
                                                                 -----------------------------------------------
    Total.......................................................             18              15   ..............
----------------------------------------------------------------------------------------------------------------

    18. Mr. Scott moved to reconsider the vote (rollcall no. 
10) by which the bill was ordered favorably reported, a non-
debatable motion, which was superceded by a motion offered by 
Mr. Sensenbrenner to table the Scott motion. No vote on the 
Scott motion. Adopted 17 ayes to 16 nays.

                                                   ROLLCALL NO. 11
----------------------------------------------------------------------------------------------------------------
                                                                       Ayes            Nays           Present
----------------------------------------------------------------------------------------------------------------
Mr. Sensenbrenner...............................................              X   ..............  ..............
Mr. McCollum....................................................              X   ..............  ..............
Mr. Gekas.......................................................              X   ..............  ..............
Mr. Coble.......................................................              X   ..............  ..............
Mr. Smith (TX)..................................................              X   ..............  ..............
Mr. Gallegly....................................................              X   ..............  ..............
Mr. Canady......................................................              X   ..............  ..............
Mr. Goodlatte...................................................  ..............  ..............  ..............
Mr. Chabot......................................................              X   ..............  ..............
Mr. Barr........................................................              X   ..............  ..............
Mr. Jenkins.....................................................              X   ..............  ..............
Mr. Hutchinson..................................................              X   ..............  ..............
Mr. Pease.......................................................  ..............  ..............  ..............
Mr. Cannon......................................................              X   ..............  ..............
Mr. Rogan.......................................................              X   ..............  ..............
Mr. Graham......................................................  ..............  ..............  ..............
Ms. Bono........................................................              X   ..............  ..............
Mr. Bachus......................................................              X   ..............  ..............
Mr. Scarborough.................................................  ..............              X   ..............
Mr. Vitter......................................................              X   ..............  ..............
Mr. Conyers.....................................................  ..............              X   ..............
Mr. Frank.......................................................  ..............              X   ..............
Mr. Berman......................................................  ..............              X   ..............
Mr. Boucher.....................................................  ..............              X   ..............
Mr. Nadler......................................................  ..............              X   ..............
Mr. Scott.......................................................  ..............              X   ..............
Mr. Watt........................................................  ..............              X   ..............
Ms. Lofgren.....................................................  ..............              X   ..............
Ms. Jackson Lee.................................................  ..............              X   ..............
Ms. Waters......................................................  ..............  ..............  ..............
Mr. Meehan......................................................  ..............              X   ..............
Mr. Delahunt....................................................  ..............              X   ..............
Mr. Wexler......................................................  ..............              X   ..............
Mr. Rothman.....................................................  ..............              X   ..............
Ms. Baldwin.....................................................  ..............              X   ..............
Mr. Weiner......................................................  ..............              X   ..............
Mr. Hyde, Chairman..............................................              X   ..............  ..............
                                                                 -----------------------------------------------
    Total.......................................................             17              16   ..............
----------------------------------------------------------------------------------------------------------------

                      Committee Oversight Findings

    In compliance with clause 3(c)(1) of rule XIII of the Rules 
of the House of Representatives, the committee reports that the 
finding and recommendations of the committee, based on 
oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

               New Budget Authority and Tax Expenditures

    Clause 3(c)(2) of House Rule XIII is inapplicable because 
this legislation does not provide new budgetary authority or 
increased tax expenditures.

               Congressional Budget Office Cost Estimate

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, July 13, 2000.
Hon. Henry J. Hyde, Chairman,
Committee on the Judiciary,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 1283, the Asbestos 
Compensation Act of 2000.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Lanette 
Keith (for federal costs), who can be reached at 226-2860, and 
John Harris (for the private-sector impact), who can be reached 
at 226-2618.
            Sincerely,
                                  Dan L. Crippen, Director.

Enclosure
cc:
        Honorable John Conyers Jr.
        Ranking Democratic Member
H.R. 1283--Asbestos Compensation Act of 2000.

                                SUMMARY

    H.R. 1283 would establish a process to attempt to resolve 
claims made by individuals whose health has been impaired by 
exposure to asbestos. CBO estimates that implementing H.R. 1283 
would cost about $1.4 billion over the 2001-2005 period, 
assuming the appropriation of the necessary amounts. In 
addition, the legislation would authorize the recovery of 
federal funds used to pay individual asbestos claimants, and 
the spending of any funds recovered. Those cash flows would 
affect direct spending; therefore, pay-as-you-go procedures 
would apply. CBO expects that the collection and spending of 
recovered funds would nearly offset each other over the next 
several years, but we estimate collections would exceed 
spending by $40 million over the 2002-2005 period.
    H.R. 1283 contains no intergovernmental mandates as defined 
in the Unfunded Mandates Reform Act (UMRA) and would impose no 
costs on state, local, or tribal governments. H.R. 1283 would 
create new private-sector mandates for individuals filing new 
claims for compensation for injuries caused by exposure to 
asbestos, for all attorneys representing those individuals, and 
for businesses named as defendants by such individuals. Because 
reliable data on current asbestos litigation is scarce, CBO 
cannot produce a precise estimate of the total cost of those 
mandates. CBO expects, however, that the total cost to the 
private sector of complying with the mandates in the bill would 
fall below the threshold established in UMRA ($109 million in 
2000, adjusted annually for inflation).

                            MAJOR PROVISIONS

    H.R. 1283 would establish the Office of Asbestos 
Compensation (OAC) within the Department of Justice. The bill 
would authorize appropriations for the new office of up to $250 
million in the first year after enactment and up to $150 
million in each year thereafter. The OAC would review the 
medical eligibility of claimants under the bill, adjudicate 
cases, reimburse claimants for medical examination and testing 
expenses, pay individuals to settle certain claims, and seek to 
recover compensation payments made to individuals from liable 
firms in the asbestos industry.
    Under H.R. 1283, the OAC would have to issue a certificate 
of medical eligibility to claimants before cases could be tried 
in federal or state court. The bill would require the OAC and 
all defendants named in asbestos litigation cases to offer 
settlements to each medically eligible claimant in a timely 
manner. If the OAC's settlement offer is accepted by the 
claimant, the OAC would pay the claim and seek reimbursement 
from the named defendants.
    H.R. 1283 would authorize the OAC to recover its 
administrative expenses, medical reimbursements, and settlement 
payments from the defendants. The OAC also would have the 
authority to spend these collections without further 
appropriation action.

                ESTIMATED COST TO THE FEDERAL GOVERNMENT

    The estimated budgetary impact of H.R. 1283 is shown in the 
following table. The costs of this legislation fall within 
budget function 750 (administration of justice). CBO expects 
that, after 2005, the number of cases settled each year would 
decline. As a result, net discretionary costs would decrease to 
about $100 million annually by fiscal year 2010. Both the 
claims reimbursement and settlement payments from those 
collections also would decline gradually after 2005.

                           BASIS OF ESTIMATE

    CBO estimates that implementing H.R. 1283 would have gross 
discretionary costs of $1.6 billion over the 2001-2005 period. 
Some of these costs would be offset by assessments on asbestos 
defendant firms to cover certain administrative and medical 
examination costs under the bill. Over the 2001-2005 period we 
estimate the OAC would collect about $260 million from such 
assessments. Therefore, CBO estimates that implementing H.R. 
1283 would result in net discretionary spending of $1.4 billion 
over the 2001-2005 period.
    In addition, we estimate that enactment of the bill would 
result in the collection from defendant firms of some of the 
federal funds paid to compensate asbestos claimants. The 
collections would be recorded as offsetting receipts (a credit 
against direct spending). Over the 2002-2005 period, we 
estimate $1 billion would be collected, and all but about $40 
million would be paid to settle additional asbestos claims 
during those years.

                                     By fiscal year, in millions of dollars
----------------------------------------------------------------------------------------------------------------
                                                                       2001     2002     2003     2004     2005
----------------------------------------------------------------------------------------------------------------
SPENDING SUBJECT TO APPROPRIATION
Administrative and Medical Examination Costs                              20       70       85       90       95
  Estimated Budget Authority
  Estimated Outlays                                                       15       65       85       90       95

Settlement Payments to Claimants                                         100      150      340      350      360
  Estimated Budget Authority
  Estimated Outlays                                                        0      230      330      350      360

Offsetting Collections from                                                0      -35      -70      -75      -80
Administrative and Medical Reimbursements
  Estimated Budget Authority
  Estimated Outlays                                                        0      -35      -70      -75      -80

  Total Discretionary Spending                                           120      185      355      365      375
    Estimated Budget Authority
    Estimated Outlays                                                     15      260      345      365      375

DIRECT SPENDING
Offsetting Receipts from                                                   0      -70     -180     -330     -420
Claims Reimbursements
  Estimated Budget Authority
  Estimated Outlays                                                        0      -70     -180     -330     -420

Settlement Payments to Claimants                                           0       70      180      330      420
  Estimated Budget Authority
  Estimated Outlays                                                        0       65      170      315      410

  Total Direct Spending                                                    0        0        0        0        0
    Estimated Budget Authority
    Estimated Outlays                                                      0       -5      -10      -15      -10
----------------------------------------------------------------------------------------------------------------

    This estimate assumes that the funds that would be 
appropriated to implement the bill would exceed the amounts 
specifically authorized by the legislation. CBO estimates that 
additional funds would be required to expedite the settlement 
of outstanding claims--as required by the legislation.
    While H.R. 1283 would authorize the appropriation of $850 
million over the 2001-2005 period for the costs of the OAC, CBO 
estimates this amount would not be sufficient for the OAC to 
certify applicants and make compensation offers. We estimate 
that additional appropriations of $810 million would be needed 
over the five-year period. The bill would require that the OAC 
quickly certify the medical eligibility of all claimants, 
including those involved in the 200,000 cases currently 
pending. Claimants could not seek damages in court until 
certified. CBO expects that the OAC would attempt to certify as 
many applicants as possible. Further, the OAC would not have 
the discretion to delay its offer of compensation to claimants. 
The bill would require that the OAC offer compensation to each 
certified claimant within 10 days of the defendants' offers.
    CBO estimates that the OAC would not be successful in 
recovering all claims paid to eligible claimants from 
defendants. If the OAC does successfully achieve a 
reimbursement rate higher that our estimate, the net cost of 
this legislation to the government would be lower. H.R. 1283 
also would authorize the OAC to recover from the defendants 
administrative expenses, medical reimbursements, and settlement 
payments. Based on the experience of similar programs and our 
assessment of the capacity of the asbestos industry to pay 
claims, CBO expects that the OAC will collect over 80 percent 
of its administrative costs and about 65 percent of settlement 
payments to claimants. We expect that most defendants' payments 
would occur over a three-year period.
Asbestos Claims Background
    H.R. 1283 would establish the OAC to attempt to resolve a 
large backlog of cases involving individuals seeking 
compensation from private companies connected to the 
manufacture of asbestos. Approximately 200,000 such cases 
remain outstanding and about 30,000 new cases are filed each 
year. The majority of cases that are resolved each year result 
in settlement payments before the cases are tried in federal or 
state court.
Asbestos Claims Process Under the Bill
    The OAC would serve two major functions under the bill. 
First, it would issue certificates of medical eligibility that 
all claimants must receive prior to pursuing damages in court. 
The bill specifies the medical criteria that would qualify 
individuals to seek such compensation. Second, the OAC would 
make settlement offers to each qualifying applicant. These 
offers would vary depending on the age of the applicant, the 
degree of impairment, and other factors. The OAC would 
establish a schedule of compensation payments offered by the 
OAC and such offers would be made public. Qualifying 
individuals could accept a compensation offer from the OAC or 
from the private companies named in their claim. The bill would 
authorize the appropriation of funds for the administrative 
costs of the OAC and for settlement payments to claimants.
OAC Administrative Costs
    Because the intent of H.R. 1283 is to provide a timely 
resolution to asbestos claims, CBO expects that the OAC would 
be fully staffed and able to review claims by the beginning of 
fiscal year 2002, with a headquarters in Washington, D.C., and 
six regional offices. Based on the experience of other program 
startups and the magnitude of the task facing the OAC, we 
anticipate that the staff of the OAC would total about 400 
persons by 2002 and would grow by 10 percent annually through 
fiscal year 2005. The number of OAC staff would gradually 
decrease thereafter as the total number of outstanding claims 
decreases. Assuming that the OAC is reasonably efficient at 
handling claims, we estimate that the office could process 
60,000 claims in 2002 and would clear the existing backlog of 
roughly 200,000 claims by the end of 2005. CBO estimates that 
administrative expenses of the OAC would total $200 million 
over the five-year period.
Medical Expenses Reimbursement
    H.R. 1283 would provide for the reimbursement of certain 
medical expenses of claimants, up to $1,500 per claim. Such 
expenses could include chest X-rays and lung capacity testing. 
Under current law, settlement offers by the defendants often 
include reimbursements for medical expenses. Absent this offer, 
the claimants are responsible for such costs.
    Based on information from asbestos industry experts, CBO 
expects that most claimants who do not meet the bill's 
requirements for medical eligibility would apply for and 
receive reimbursement at an average cost of $1,200 per claim. 
CBO estimates that this provision would apply to over 30,000 
individuals for each of fiscal years 2001 through 2005 and 
would cost increase discretionary spending byabout $150 million 
over the 2001-2005 period.
Settlement Payments To Claimants
    H.R. 1283 would authorized the director of the OAC to 
establish a schedule of compensationgrid payments that would be 
offered to individuals with varying degrees of asbestos 
impairment to determine the value of the OAC's settlement 
offers to claimants and to make settlement offers to all 
medically eligible claimants based on this gridschedule. CBO 
estimates that the OAC would be able to process about 60,000 
claims in 2002, with the annual amount increasing to about 
80,000 by 2005. Based on information from consultants to the 
defendant companies, CBO expects that just under half of these 
claims would meet the bill's medical eligibility requirements.
    In addition, we assume that thatthe settlement amounts 
offered by the OAC would be are similar to the payments that 
individuals can expect under current law., wCBO estimates that 
total settlement payments to claimants by the OAC would be 
about $2.2 billion over the 2002-2005 period, including $1.3 
billion from appropriated funds and direct spending of $960 
million from amounts recovered from defendant companies.
    Under current law, settlement offers vary widely and are 
determined, in part, by jurisdiction, age of claimant, number 
of years of exposure, and type of illness. For example, 
claimants with mesothelioma (a severe and terminal disease 
caused by exposure to asbestos) are likely to receive a private 
compensation settlement of over $1 million, while a case 
withinvolving a claimant whose X-rays shows exposure to 
asbestos but whose medical tests do not show advanced signs of 
disease may receive $5,000 and the right to seek future 
compensation if a disease develops. Furthermore, claimants who 
present the same facts in different jurisdictions throughout 
the United States could receive widely disparate awards. Based 
on past settlement payments made by the defendantss, CBO 
estimates that the average settlement payment made by the OAC 
to claimants would be about $50,000.
    CBO expects that some individuals, especially those with 
the severest levels of impairment (mesothelioma claimants, for 
example) would opt out of the OAC's compensation processes and 
seek higher compensation payments in court. Because the 
compensation gridschedule would be publicly available, CBO 
expects that the defendants would offer claimants from 
jurisdictions with historically high compensation levels 
greater settlement amounts than what they would receive from 
the OAC to avoid the high cost of a jury award in such 
jurisdictions. CBO estimates that only about 40 percent of the 
eligible claimants (or about 10,000 to 15,000 claimants each 
year over the five-year period) would accept the OAC's 
settlement offer.
    Section 402 would authorize the appropriation of $100 
million for a loan to the OAC to settle claims. For the purpose 
ofthis estimate, CBO considers the $100 million as an 
authorization for the appropriation of funds in fiscal year 
2001. Even though the bill characterizes that authority as a 
loan subject to the Federal Credit Reform Act, a payment cannot 
be considered a loan under Credit Reform if the duty to repay 
the government arises from an exercise of sovereign power, tort 
liability, or some other non-contractual obligation.
U.S. Court of Federal Claims
    The bill would transfer the jurisdiction of cases in which 
the claimant accepts the OAC's offer from the U.S. District 
Court to the U.S. Court of Federal Claims. CBO estimates that 
H.R. 1283 would cost the U.S. Court of Federal Claims $1 
million annually over the five-year period for additional 
attorneys and support staff. Because of the large backlog of 
cases in U.S. District Court, CBO estimates that enacting H.R. 
1283 would not result in savings for that court over the 2001-
2005 period.
Cost Recovery
    CBO estimates that the OAC would collect $240 million over 
the 2001-2005 period from asbestos defendants for 
administrative and medical reimbursement costs. (Such 
collections would offset appropriated spending.) In addition, 
CBO estimates the OAC would collect $1 billion from asbestos 
defendants to settle cases over the five-year period. Because 
the OAC would be authorized to spend these receipts without 
further appropriation action, these collections would be 
recorded as offsetting receipts (a form of direct spending) and 
their expenditure would be recorded as direct spending.
    Administrative and Medical Reimbursements. The legislation 
would authorize the collection of funds to reimburse the OAC 
for administrative and medical examination expenses, and for 
the cost of paying claims to individuals. Based on the 
experience of similar programs, CBO estimates that the OAC will 
collect nearly $260 million over the 2001-2005 period--about 85 
percent of medical and administrative expenses.
    Claims Reimbursements. H.R. 1283 would authorize the OAC to 
pursue claims against the defendant companies after paying 
settlement offers to claimants. CBO estimates the OAC would 
receive $1 billion over the 2001-2005 period from defendant 
companies--or about two-thirds of the total amount paid to 
individuals. The amount of such receipts is highly uncertain. 
Because of the large number of cases involved and the history 
of asbestos litigation, CBO expects that the OAC and defendant 
companies will settle most of the OAC claims out of court. 
Based on information from defendants and groups representing 
asbestos claimants, CBO expects that the above total is at or 
near the maximum amount the industry can pay to settle such 
claims without risking insolvency of the firms involved.
    Under current law, asbestos defendants report a liability 
for asbestos compensation claims that exceeds $8 billion. 
Information on the total amount of cash compensation payments 
made by defendants to individuals is incomplete but probably 
exceeds $3 billion, based on limited information from public 
reports. Those payments represent a substantial financial 
burden for defendants, and present a significant risk that some 
firms will become insolvent. This year alone, two of the major 
asbestos defendants entered bankruptcy. This burden is 
increasing as juries award larger damages and claimants demand 
larger settlements.
    Thus, to avoid insolvency, we expect most companies would 
negotiate either to repay the federal government amounts less 
than those paid by the OAC to settle claims, or to make 
scheduled payments over a number of years. The amount of OAC 
settlement payments to claimants that is reimbursed would 
depend in part on how much the OAC offers on an annual basis. 
We expect that defendant companies would be unable to pay total 
settlement amounts to claimants significantly in excess of 
their current spending level. Information on annual amounts 
paid by asbestos defendants to settle asbestos claims is not 
uniformly or consistently reported, however, based on 
information from some defendant firms we expect defendants 
would seek to negotiate reimbursements of up to 90 percent of 
the OAC's annual compensation costs over the five-year period. 
As the total amount of compensation paid by the OAC declines we 
expect the recovery rate from defendant firms would increase.
    In addition to negotiated reimbursement amounts, settlement 
agreements with the OAC would expose the government to the risk 
that defendants would become insolvent before paying the agreed 
amounts. To estimate this risk, CBO consulted with industry 
experts and examined the credit ratings of defendants. The 
information on credit ratings is useful because different 
credit ratings reflect analysts' expectations of insolvency. 
Most defendants have credit ratings around ``BBB''; however, 
one credit-ratings company announced that it is considering 
lowering the rating of a defendant as a result of the recent 
increase in asbestos liabilities. CBO assumes that the payments 
by defendants under settlement agreements with OAC would have a 
credit risk comparable to debt rated as ``B.'' Debt with this 
rating typically has a default rate of around 30 percent.
    Considering both the capacity of asbestos defendants to 
reimburse the OAC and the risk to the government that such 
firms may default in their agreements to reimburse the OAC, CBO 
estimates the OAC would collect about 65 percent of the cost of 
settlement agreements from defendants. The precise amount of 
recoveries is very uncertain, but is unlikely to approach 100 
percent. If the total claims paid by the OAC are significantly 
more than CBO estimates, we expect this recovery rate would be 
lower. Alternatively, if the OAC can achieve a higher recovery 
rate, the net cost of the bill would be lower than we have 
estimated.

                      PAY-AS-YOU-GO CONSIDERATIONS

    The Balanced Budget and Emergency Deficit Control Act sets 
up pay-as-you-go procedures for legislation affecting direct 
spending or receipts. The net changes in outlays that are 
subject to pay-as-you-go procedures are shown in the following 
table. For the purposes of enforcing pay-as-you-go procedures, 
only the effects in the current year, budget year, and the 
succeeding four years are counted.

                                                         By fiscal year, in millions of dollars
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   2000    2001    2002    2003    2004    2005    2006    2007    2008    2009    2010
--------------------------------------------------------------------------------------------------------------------------------------------------------
Changes in outlays                                                     0       0      -5     -10     -15     -10       0      10      15       5       0
Changes in receipts
                        Not applicable

--------------------------------------------------------------------------------------------------------------------------------------------------------

        ESTIMATED IMPACT ON STATE, LOCAL, AND TRIBAL GOVERNMENTS

    H.R. 1283 contains no intergovernmental mandates as defined 
in UMRA and would impose no costs on state, local, or tribal 
governments.

                 ESTIMATED IMPACT ON THE PRIVATE SECTOR

    H.R. 1283 would create new private-sector mandates for 
individuals filing new claims for compensation for injuries 
caused by exposure to asbestos, for all attorneys representing 
those individuals, and for businesses named as defendants by 
such individuals. CBO estimates, that the total cost to the 
private sector of complying with the mandates in the bill would 
fall below the threshold established in UMRA ($109 million in 
2000, adjusted annually for inflation).
    H.R. 1283 would create a new private-sector mandate for 
individuals filing new claims for compensation for injuries 
caused by exposure to asbestos. The bill would require such 
individuals to obtain certificates of medical eligibility from 
the Office of Asbestos Compensation before filing suit in state 
or federal court. For individuals who meet the bill's medical 
requirements, the cost of the mandate would be small. Section 
102 would require the OAC to make determinations of eligibility 
within 30 days of receiving a claim. After receiving 
certificates of eligibility, those individuals could proceed to 
file suit as under current law.
    The costs of the mandate for individuals whom the OAC deems 
ineligible would be the value of the settlements and judgments 
that they would be able to obtain under current law but not 
under H.R. 1283. The bill would prevent individuals whom the 
OAC judges do not meet the medical eligibility requirements 
from obtaining compensation for their exposure to asbestos 
through the courts. (The bill would, however, toll the statute 
of limitations for such injuries, so that if such individuals 
did develop eligible conditions they could seek compensation at 
a later date.)
    Because comprehensive data relating to asbestos exposure, 
litigation, and compensation are difficult to obtain, CBO 
cannot precisely estimate the costs of the bill's mandate for 
claimants. Based on the information available to CBO from 
academic, industry, and other sources, CBO expects that the 
cost of the mandate on ineligible claimants could fall between 
$10 million and $40 million annually by 2005. (Costs would be 
lower in the early years because many claimants receive 
settlement payments over the course of several years.) The 
uncertainty in those estimates stems from the difficulty in 
predicting the number of claimants who would receive 
compensation under current law but would be ineligible under 
H.R. 1283.
    The bill would create a new private-sector mandate for 
claimants' attorneys by directing the OAC to regulate 
attorneys' fees and compensation. Most attorneys representing 
claimants in asbestos cases charge contingent fees; that is, 
they take a percentage of any settlement or damages awarded to 
the claimant as payment for their services. Although the bill 
does not contain specific rules or guidelines for the OAC to 
follow, CBO expects that the OAC would limit attorneys' fees to 
some maximum allowable percentage of a claimant's recovery, 
perhaps comparable to the fees that federal courts allow 
claimants' attorneys in product liability class-action suits to 
charge. Because the bill contains few guidelines for OAC 
regulation and because asbestos cases are tried in multiple 
state and federal courts, CBO cannot estimate the costs of this 
mandate to claimants' attorneys.
    H.R. 1283 would create a new private-sector mandate for 
defendants by requiring them to pay assessments to the OAC. 
Section 401 would direct the OAC to collect assessments from 
asbestos defendants to defray administrative and certain other 
costs. The bill would not provide specific rules for 
calculating or collecting assessments, however, CBO expects 
that assessments levied on individual defendants would be 
proportional to the OAC's expenditures relating to that 
defendant. CBO estimates that asbestos defendants would be 
required to pay assessments totaling $35 million in 2002, $70 
million in 2003, $75 million in 2004, and $60 million in 2005.
    Overall, however, the bill would result in substantial 
benefits to asbestos defendants. H.R. 1283 would encourage 
claimants to choose administrative adjudication through the OAC 
rather than go to court. Out-of-court settlements are typically 
lower than court-awarded judgments. Participation in the bill's 
administrative adjudication process would eliminate the risk of 
punitive damages for some defendants. More significantly, the 
bill would benefit defendants by reducing the number of new 
claims against them.

                         ESTIMATE PREPARED BY:

Federal Costs: Lanette J. Keith, Mark Grabowicz, and Mark 
        Hadley (226-2860)
Impact on State, Local, and Tribal Governments: Shelley 
        Finlayson (225-3220)
Impact on the Private Sector: John Harris (226-2618)

                         ESTIMATE APPROVED BY:

Peter H. Fontaine
Deputy Assistant Director for Budget Analysis

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the committee finds the authority for 
this legislation in Article I, section 8, clauses 3 and 18 and 
in Article III of the Constitution.
    While State and Federal courts have acknowledged the 
judiciary's inability to fashion a solution to the problems 
created by asbestos litigation, as recently as 1999, the United 
States Supreme Court has called on Congress to craft Federal 
legislation to handle the massive backlog of asbestos claims. 
See Amchem Products v. Windsor, Cass Action Settlement, and 
Ortiz v. Fibreboard, Class Action Settlement under Need For the 
Legislation.

               Section-by-Section Analysis and Discussion

                  Title I. Establishment and Procedure

Section 101. Establishment of the Office of Asbestos Compensation
    Subsection (a) establishes an Office of Asbestos 
Compensation (OAC) within the United States Department of 
Justice (DOJ). The Administrator is vested with authority to 
promulgate all procedural and substantive rules necessary to 
administer this act. In addition, the Administrator will 
designate an office or offices where all asbestos claims will 
be filed. The OAC is headed by an Administrator who is 
appointed by the President with the advice and consent of the 
Senate. Accordingly, the Administrator will serve for a term of 
10 years and will be removable by the Attorney General only for 
good cause.
    Subsection (b) provides the OAC with exclusive jurisdiction 
over proceedings to determine liability and compensatory awards 
for asbestos-related claims. However, claims for workers' 
compensation, veterans' benefits, claims against existing 
asbestos trusts (unless the trusts opt in to the administrative 
process), or claims relating to certain private settlements are 
excluded from the OAC's exclusive jurisdiction. In addition, 
claimants that have receive a certificate of medical 
eligibility, under Section 102 (f) of this act, may opt out of 
the OAC's jurisdiction and proceed to State or Federal court.
    Subsection (c) requires the Administrator to appoint a 
Medical Director to manage a medical review procedure, retain 
needed medical personnel to conduct the medical review, as well 
as create the exceptional medical claims panel.
    Subsection (d) establishes an Asbestos Compensation Fund 
(Fund) which will be managed by a Trustee that is appointed by 
the Administrator. The Fund will make settlement payments to 
claimants under Section 104 (d) of this act. In addition, 
reimbursement for medical testing expenses does not come out of 
the Fund. These expenses are paid for by defendants pursuant to 
assessments for administrative expenses under section 401. 
Under Section 401, administrative expenses relating to the 
general operations of the OAC are collected by the 
Administrator directly and under subsection 403 (b) may be 
appropriated directly to the OAC. The Fund is there only to 
manage settlement payments and recoupment from defendants and 
has nothing to do with the OAC's general administrative 
expenses.
    Subsection (e) establishes an Office of Administrative Law 
Judges within the OAC for purposes of conducting administrative 
adjudications under Section 105 of this act. The Administrator 
will appoint administrative law judges (ALJ's) and may remove 
ALJ's for good cause. This subsection does not prohibit the 
Administrator from appointing ALJ's from other agencies in 
order to process the enormous backlog of pending asbestos 
claim.
    Subsection (f) establishes a Medical Advisory Committee 
(committee) which is appointed by the Administrator. The 
committee will periodically review the medical review 
procedures and eligibility criteria, make appropriate 
recommendations to the Administrator, and submit an annual 
report to the Administrator and the Congress. The composition 
of the Medical Advisory Committee is within the discretion of 
the Administrator, this committee should embody a cumulative 
view that is supported by a majority of professional 
organizations in relevant medical and scientific fields. In 
addition, the Administrator may contract for staff to support 
the committee in carrying out its functions.
Section 102. Medical eligibility review
    Section 102 creates an administrative procedure to 
determine whether the claimant meets the statutory medical 
criteria or qualifies as an ``exceptional medical claim.'' This 
proceeding is administered by the Medical Director and is 
completely non-adversarial. The Administrator will retain 
qualified physicians for the medical review process on a 
contract basis. These physicians would be treated as ``special 
governmental employees.''
    The Administrator will promulgate rules and procedures 
under subsection 101 (a) to govern the medical review process. 
Those rules will be designed to provide a prompt and efficient 
procedure for making reliable determinations of medical 
eligibility. Claims will be prioritized so that the most 
urgent, including those in which the claimant has a malignancy, 
are resolved first.
    Asbestos claims filed under subsection 101(a) will be 
immediately referred to the Medical Director, who will issue a 
notice of acceptance unless additional information is needed. 
The information to be provided in an application will be 
established by rule. This information will include occupational 
history, information about exposure, medical history, and the 
results of specific medical tests. Where necessary, applicants 
may be required to undergo additional non-invasive medical 
testing at the expense of the OAC. The OAC will assist 
claimants in filing their claims by providing clear 
explanations of what is required and by providing standardized 
application forms and guidance.
    The Medical Director must make an initial determination of 
medical eligibility within 30 days of the issuance of the 
notice of acceptance. If an application is initially denied, 
the claimant may elect to have the application reviewed by a 
two physician review panel. In the event of disagreement, a 
third physician would be added.
    Although most qualified claimants will meet the standard 
criteria contained in sections 302, 303, 304, and 305 of the 
act, some claimants will not meet those criteria but will 
provide equally reliable evidence of an asbestos-related 
impairment and may qualify for medical eligibility under 
Section 301. For example, a claimant could provide CAT scan 
evidence of asbestosis which could be considered equivalent to 
the x-ray evidence normally required. Similarly, a claimant 
with a smoking-related obstructive lung disease such as 
emphysema could provide evidence that asbestosis significantly 
contributed to his breathing impairment. Cases of this kind 
would be decided, on the basis of all relevant evidence, by an 
exceptional medical claims panel. While no criteria has been 
created for the exceptional medical claims criteria, the 
Administrator is authorized to establish rules and procedures 
for reviewing these claims. The Administrator will consult with 
the Medical Advisory Committee and the Medical Director to 
formulate similar but not identical requirements for 
exceptional medical claims; however, the purpose of this 
subsection is to include all individuals with an asbestos 
related impairment that do not satisfy the existing criteria.
    Claimants may designate their claims as exceptional medical 
claims either in their initial application or following an 
initial denial by the Medical Director. Under subsection 
102(d), the exceptional medical claims panel is required to 
make a determination within 30 days of its receipt of the 
claim. The exceptional medical claims panel may extend the time 
for rendering its decision for ``good cause.'' This authority 
should be used sparingly. Good cause extensions may be 
appropriate when the claimant has not provided necessary 
information in a timely way, when further medical testing is 
needed, or in cases of unusual medical complexity.
    The Medical Director is bound by the determinations of the 
appellate panel, the exceptional medical claims panel or an 
initial approval. The decision of the Medical Director may be 
appealed to the United States Court of Federal Claims under 
Section 106.
    The Medical Director will establish audit and review 
procedures under section 102(e) to evaluate the efficiency and 
effectiveness of medical review. The evaluation of the 
procedures should include examination of errors in approving 
and denying eligibility, as well as timeliness and other 
measures of performance.
    Those who meet the eligibility requirements of the act will 
receive a certificate of medical eligibility. Claimants with a 
certificate of medical eligibility may proceed to State or 
Federal court under subsection 102 (f) or obtain settlement 
offers under section 103.
Section 103. Election of administrative process; settlement offers
    Under this section claimants may elect to receive non-
adversarial settlement offers from named defendants and the 
Asbestos Compensation Fund. Claimants must first identify 
potential defendants with the assistance of the OAC under 
subsection 103 (a)(1). For each such defendant, the claimant 
will provide the OAC with a verified ``particularized 
statement'' of the basis for the defendant's potential 
liability. Under subsection 103 (a)(2) the statement will 
include information that the OAC, by rule, concludes is 
necessary to provide the named defendant with a reasonable 
basis for making a settlement offer. The required information 
are the dates of exposure, work sites, the nature and frequency 
of the exposure, and a description of the exposed person's job 
and working conditions during the relevant time period. The OAC 
will also help claimants identify defendants by providing 
information gathered through the exercise of its subpoena 
power, under Section 107.
    Under subsection 103 (a)(3), after reviewing the statement 
to ensure compliance with the act, the OAC will provide a copy 
of each statement to each defendant, and, subject to privacy 
rules, each defendant will also receive a copy of the records 
of the medical review process. Under subsection 103 (a)(4), 
defendants named by the claimant will have limited additional 
time, which will be established by the Administrator, to name 
``third-party defendants,'' following the same procedure that 
claimants follow for naming defendants. Also under subsection 
103 (a)(4), discovery may be allowed to obtain information that 
is necessary to allow the claimant or any third-party plaintiff 
to provide a particularized statement.
    Under Section 103 (b)(1), once the time for adding 
additional defendants has expired, defendants will have 21 days 
to provide to the claimant with a good faith written settlement 
offer. Rules will require that all offers will also be 
submitted to the Trustee. Under Section 208 defendants will be 
penalized for making an inadequate settlement offer. Under 
subsection 103 (b)(2), the Trustee of the Asbestos Compensation 
Fund is required to make an aggregate settlement offer within 
an additional 10 days. The Trustee's offer will be based on a 
compensation grid, established and regularly revised by rule 
under subsection 103 (b)(2).
    The compensation grid will not be a mere average of past 
settlements. The Administrator will take into consideration all 
relevant factors in determining the grid. Among these factors 
is the type of claim, nature and extent of asbestos disease or 
injury, smoking history, disability, age, number and age of 
dependents, amount of exposure to products of named defendants, 
job history, geographic location and any other relevant 
criteria generally used in the settlement of asbestos cases. In 
addition, the settlement values adopted by the Administrator 
will reflect the act's deferral of the claims of the 
unimpaired, which may be included in some pre-enactment 
settlement averages, as well as the act's limitations on venue. 
In short, the grid should reflect the current value of asbestos 
claims based on accumulated historical data, also taking into 
account the effect of this act.
    The compensation grid is a crucial element in the effort to 
provide fast and fair settlements. The Administrator may 
utilize the good cause exception to the notice-and-comment 
requirements of the rule-making process as provided under 
Section 553 of the Administrative Procedures Act in order to 
issue emergency interim final regulations to establish the 
grid. These regulations will be final, following full notice 
and comment procedures, and to update them regularly to reflect 
new information.
Section 104. Claimant's choice of forum
    This section explains how settlement offers are rejected 
and accepted. Claimants will receive settlement offers from 
each named defendant and the Trustee of the Asbestos 
Compensation Fund. Under subsection 104 (a), the Trustee's 
offer will be reduced dollar-for-dollar by the amount of any 
defendants' offers that are accepted by the claimant. Under 
subsection 104 (b), claimant's are required to provide notice 
of acceptance or rejection of any offer within 60 days from the 
delivery of the receipt of the last offer. Under subsection 104 
(c), no offers are required unless the claimant can name a 
solvent defendant. Those claimants who cannot name a solvent 
defendant, also known as orphan claims, must pursue their claim 
in State or Federal court.
    Under subsection 104 (d), if the claimant accepts the 
Trustee's offer, the Trustee will assume the claim and may 
accept any remaining offers from the defendants or prosecute 
the claim either in administrative proceedings under Section 
105 or in court. By accepting the Trustee's offer, the claimant 
agrees to cooperate in future proceedings against defendants. 
Such cooperation may include appearing as a witness in 
proceedings by the Trustee against defendants. Under Section 
209, the claimant would retain the right to any recovery by the 
Trustee that exceeds 200 percent of the Trustee's offer, plus 
any punitive damages awarded in the administrative process. 
Under subsection 104 (e), claimants who reject the Trustee's 
offer and do not settle with all defendants may seek to resolve 
their claim in State or Federal court or invoking an expedited 
administrative adjudication under Section 105.
Section 105. Administrative adjudication
    Under Section 105, claimants are provided the option of 
electing a 90 day administrative adjudication. An 
administrative law judge (ALJ) will be assigned to the claim 
and a ``de novo'' hearing (hearing on the record) will be 
conducted. The hearing will be governed by the procedures for 
formal adjudications provided under the Administrative 
Procedures Act. The ALJ will apply the law set out in Sections 
201-210; however, Section 208 explicitly pertains to 
administrative adjudications. Section 208 contains rules for 
applicable law, special damages in wrongful death cases, and 
penalties for inadequate offers made pursuant to Section 103.
Section 106. Appeals; judicial review
    Under Section 106, a claimant may obtain judicial review of 
adverse decisions by the Medical Director under Section102, and 
any party may obtain judicial review of final awards by the ALJ 
under Section 105. These proceedings will be in the United 
States Court of Federal Claims, which will apply the familiar 
``substantial evidence'' standard of review. Review will be 
based on the record before the OAC, and additional evidence 
before the court will be unnecessary. In addition, while the 
Court is located in Washington, D.C., it presently hears cases 
throughout the United States, this will provide accessibility 
for claimants seeking review.
    A Medical Director's favorable ruling on medical 
eligibility is not a final decision appealable under this 
section. Thus, defendants will not be able to delay 
consideration of an asbestos claim by appealing a finding of 
medical eligibility. Of course, defendants may try, at trial or 
in an administrative proceeding, to rebut the finding of 
medical eligibility by clear and convincing evidence, and they 
may appeal a judgment of an adverse final decision of an 
administrative or court proceeding. Decisions of the United 
States Court of Federal Claims in turn may be appealed to any 
United States Court of Appeals.
Section 107. Gathering and maintenance of information
    Section 107 requires the OAC to establish databases 
containing product identification information, information 
regarding settlements, judgments and awards, which will be used 
to establish a settlement grid pursuant to subsection 103 
(b)(2). The purpose of the product identification database, 
under subsection 107 (a), is to help claimants obtain access to 
the information necessary to identify the asbestos products to 
which they were exposed. Product identification includes work 
sites, location of a product within a work site, the 
occupations of exposed persons, and time period the product was 
located at the work site. As well as, the location and 
identification of asbestos found outside of work sites, this 
includes locations where raw asbestos fibers have been released 
into the ambient air or various other asbestos containing 
products. This information will be made publicly available.
    Information on past settlements, judgments, and awards, 
under subsection 107 (b) will assist the OAC to establish 
values for settlement based on a settlement grid (grid). In 
addition under subsection 107 (d), any information obtained for 
purposes of Section 107 that is specific to individual 
plaintiffs, defendants or law firms will be kept confidential 
and is exempt from the Freedom of Information Act. Subsection 
107 (c) provides the OAC with subpoena power to obtain 
information regarding production identification, settlement 
values, judgements, or awards and to secure financial 
information from any defendant.
Section 108. Legal assistance program
    Under Section 108, claimants are free to retain the counsel 
of their choice; however, the OAC will also maintain a roster 
of qualified counsel to assist claimants. The OAC will adopt 
rules on reasonable attorney fees, which will govern legal 
representation of persons asserting asbestos claims before the 
OAC. In addition, only those counsel agreeing to comply with 
these rules will be placed on the roster of qualified counsel 
to assist claimants. Rules on reasonable attorney fees will not 
prohibit contingency fee contracts.
Section 109. Time limits for dispositions
    Section 109 provides claimants with a procedure to require 
the Administrator to comply with time limitations established 
by this act. Under subsections 109 (a), (b), and (c), if either 
the Medical Director or the Trustee fails to meet the time 
limits for an initial decision of eligibility or making a 
settlement offer, respectively, with respect to more than 30 
percent of claims, the Administrator has a nondiscretionary 
duty, enforceable by mandamus, to take remedial action. Such 
action may include increasing staff and administrative 
assessments against defendants. In addition to the procedures 
established in this section for enforcing time limits on a 
system-wide basis, the Administrator has authority under 
section 101(a) to adopt rules for enforcing time limits case-
by-case.

           Title II. Law Applicable to Asbestos Adjudication

Section 201. Medical eligibility
    Section 201 of the bill establishes when claimants may 
recover compensatory damages for an asbestos claim. This 
certificate establishes a presumption of an asbestos related 
illness that is rebuttable only by clear and convincing 
evidence. The presumption is subject to two qualifications, 
however. First, insofar as the certificate of medical 
eligibility is based on the claimant's allegations regarding 
exposure under Section 306, no presumption is created. This 
limitation is required because there is no mechanism to 
accurately determine what degree of the claimant's condition 
was caused by asbestos. Second, as explained under section 
304(b), lung cancer claimants who smoke and who do not have a 
qualifying non-malignant disease must establish that asbestos 
caused their lung cancer.
Section 202. Damages
    Medically eligible claimants may recover compensatory 
damages under applicable law, including damages for emotional 
distress, pain, and medical monitoring where authorized. They 
may not, however, recover for ``enhanced risk'' for other 
diseases, such as cancer, since Section 204 eliminates statute 
of limitations and statute of repose defenses. Punitive damages 
are limited to administrative proceedings in accordance with 
subsection 208(d).
Section 203. Statute of limitations or repose
    Section 203 eliminates timeliness defenses except as to 
claims already untimely as of the date of enactment of the act. 
This section also provides that a claim will not accrue before 
the exposed person has an eligible medical condition under the 
act. Regardless of any State statute that would dictate 
otherwise. The policy of the bill is to preserve the claims of 
asbestos victims who delay bringing lawsuits until they are 
impaired.
Section 204. Come back rights
    Section 204 allows claimants to recover additional awards 
for subsequent asbestos-related cancers, regardless of any 
contrary State law, although the claimant may have already 
received an award for a claim based on medical eligibility 
under Section 302 (Asbestos Related Non-malignant Condition 
With Impairment). However, this provision does not override 
private settlement agreements in which claimants may have 
bargained for a general release which would cover subsequent 
cancer claims. This is reinforced under Section 701 (c).
Section 205. Class actions, aggregations of claims and venue
    Section 205 establishes comprehensive rules for the 
consolidation and venue of asbestos claims. Under subsections 
205 (a) and (b) class actions, consolidations, and other 
aggregative procedures may be employed in judicial proceedings 
in Federal or State courts (1) with the consent of the parties; 
(2) with respect to class actions, if they meet the 
requirements of Federal Rule of Civil Procedure 23, and (3) 
with respect to all such aggregations, if the court orders such 
procedures to promote the just and efficient conduct of the 
case. ALJ's presiding over administrative claims under section 
105 proceedings may aggregate any number of claims. However, 
all claimants must qualify for an eligible medical criteria 
under Sections 301, 302, 303, 304, or 305 and must receive a 
certificate of medical eligibility under Section 102 before 
their claims may be consolidated, bundled or grouped in any 
other method.
    Under section 205 (c) venue is provided for an asbestos 
claim in the State where the exposure occurred or where the 
claimant is domiciled. These venues will generally be 
convenient for the claimant and will prevent forum shopping.
    Under subsection 205 (d), in any case where there is an 
alleged violation of the rules regarding aggregation or venue 
under this section, the case may be removed to Federal court 
pursuant to the guidelines of chapter 28 of title 28 of the 
United States Code.
Section 206. Joint and several liability
    Section 206 establishes joint and several liability with 
respect to claims against major asbestos manufacturers and 
distributors. Claims against these defendants are named ``core 
claims'' and defined in paragraph (10) of Section 601. For this 
class of defendants, therefore, the bill substantially broadens 
joint and several liability. For non-``core claims,'' the bill 
preserves currently applicable State (or Federal) rules 
regarding joint and several liability.
Section 207. Core claims
    Section 207 simplifies the resolution of ``core claims'' by 
limiting the issues to be decided in each ``core claim''. 
Claimants are only required to prove medical eligibility, 
product identification, and the amount of compensation. By 
limiting the issues, defenses such as ``contributory 
negligence'' and ``state of the art'' will not be allowed. 
However, by limiting the issues in this way, State law 
regarding contribution among joint tortfeasors is not modified.
Section 208. Special rules applicable to Section 105 adjudications
    Section 208 sets out special rules to govern administrative 
proceedings before ALJs under Section 105. First, under 
subsection 208 (a), ALJ's are required to apply the substantive 
law of the State which has the most significant relationship to 
the exposure and the parties. Second, under subsection 208 (b), 
full compensatory damages are provided for wrongful death 
actions based on mesothelioma, notwithstanding contrary State 
law. This corrects an anomaly found in the law of some States, 
where damages for pain and suffering are available in 
mesothelioma cases only if the case reaches judgment before the 
victim dies. Third, under subsection 208(c), a penalty may be 
imposed on defendants whose offer under section 103 turns out 
to be below the defendant's share of the total liability 
awarded by the ALJ. The amount of the penalty is the difference 
between the defendant's settlement offer and the defendant's 
share of either the aggregate offer made by the Trustee or the 
ALJ's aggregate award, whichever is less. This penalty is not 
``punitive damages'' and is considered to be a portion of the 
claimant's award for purposes of calculating the limit on 
``punitive damages'' under subsection 208 (d). Under subsection 
208 (d), ``punitive damages'' may be awarded by an ALJ and are 
only allowed through an administrative adjudication. Punitive 
damage awards under this subsection are limited to 300 percent 
of the claimant's total compensatory award. In order to receive 
punitive damages, the claimant must establish by clear and 
convincing evidence that the defendant's conduct was carried 
out ``with a conscious, flagrant indifference to the rights and 
safety of others'' and that the defendant's conduct was the 
proximate cause of the harm to the claimant.
Section 209. Special rules applicable to the Trustee
    Section 209 sets out rules governing actions brought by the 
Trustee as assignee of asbestos claimants who have accepted the 
Trustee's settlement offer pursuant to Section 104. First, this 
section provides that in addition to any compensatory or 
punitive damages, or penalty for inadequate offers, that the 
claimant could have recovered, the Trustee may also recover (1) 
its own costs in establishing the claim, including reasonable 
attorneys' fees and expenses and (2) interest on any amount 
paid to claimants from the Asbestos Compensation Fund under 
section 104. A Trustee may recover from defendants more than it 
actually paid to the settling claimant under section 104. 
However, any compensatory damages recovered by the Trustee in 
excess of 200 percent of the amount by the Trustee to the 
claimant, and all punitive damages, are to be paid over to the 
claimant. Finally, the fact that a claimant settled with the 
Trustee, and the amount paid to the claimant in that 
settlement, is not admissible in the Trustee's action against 
the defendant. This rule will avoid any practical prejudice 
that might flow from the fact that the Trustee, rather than the 
claimant, is pursuing the claim against the defendant.

                 Title III. Eligible Medical Categories

Section 301. Eligible medical categories
    Section 301 establishes eligible medical categories, 
asbestos-related non-malignant conditions with impairment, 
mesothelioma, lung cancer, and other cancer. Claims may qualify 
for compensation under the bill if they (1) meet the standard 
criteria set forth in sections 302, 303, 304, and 305, or (2) 
are found by an exceptional medical claims panel to be based 
upon comparably reliable evidence of these medical conditions. 
The exceptional medical claims panel will take into 
consideration innovative or non-standardized diagnostic 
techniques, including CAT scans and other forms of computer-
assisted imaging.
    Section 301(b) authorizes the Administrator, after 
consultation with the Medical Advisory Committee, to adopt 
rules to assure consistency and efficiency in the designation 
of claims as exceptional medical claims. Such rules could, for 
example, establish methods for evaluating claims based on non-
occupational exposure to asbestos, or provide guidance on the 
interpretation of new or unusual diagnostic procedures which 
are not specified in sections 302 through 305 of the act. The 
Administrator will use rule-making authority provided in this 
section to establish guidelines for exceptional medical claims 
rather than announcing such guidelines in decisions on 
particular cases.
Section 302. Asbestos-related non-malignant conditions with impairment
    Section 302 sets out objective criteria to determine 
whether a claimant suffers from a medically eligible non-
malignant condition--either asbestosis or bilateral pleural 
thickening with impairment. Asbestosis is a scarring of the 
tissue inside the lung that can adversely affect breathing. In 
contrast, pleural thickening affects not lung tissue but the 
membranes surrounding the lung--the so-called ``pleura.''
    There are two types of pleural thickening. ``Pleural 
plaques'' are circumscribed thickened areas that, according to 
the overwhelming weight of medical evidence, are without 
clinically significant effects,\14\ and do not increase cancer 
risk above that of similarly exposed individuals who do not 
have plaques.\15\ The other kind of pleural thickening is so-
called ``diffuse pleural thickening.'' Here, the thickening of 
the pleura is not circumscribed but generalized, and in extreme 
cases this condition can cause restrictive breathing 
impairment.\16\ Diffuse pleural thickening has a number of 
causes other than asbestos exposure.\17\
---------------------------------------------------------------------------
    \14\ See American Medical Association, Guides to the Evaluation of 
Permanent Impairment 158 (4th ed. 1999)[hereinafter ``AMA, Guides'']; 
Roggli, V., et al., Pathology of Asbestos-Associated Diseases 176 
(1992); Doll, R. & Peto, J., Asbestos: Effects on Health of Exposure to 
Asbestos 2 (1985); Epstein, P.E., Asbestos Inhalation and the 
Nonmalignant Abnormalities of the Chest, Sem. Roentgenology 1992; 
27:85-93, 91).
    \15\ See Roggli, et al., supra, at 176; Hillerdal, G., Radiological 
Criteria: Pleural Changes, in Finnish Inst. Occ. Health, Asbestos, 
Asbestosis and Cancer: Proceedings of an International Expert Meeting 
41, 44 (1997) (reviewing medical literature; finding that ``whether 
[pleural plaques] indicate an increased risk of lung cancer has not 
been proven.''); Smith, D., Plaques, Cancer, and Confusion, Chest 1994; 
105:8-9, 9). Pleural plaques are a marker of asbestos exposure, 
although there are also other causes. See Light, R.D., Pleural Diseases 
224 (1983) (``Asbestos exposure is not the only cause'' of pleural 
plaques); Craighead, J.E. et al., The Pathology of Asbestos-Associated 
Diseases of the Lungs and Pleural Cavities: Diagnostic Criteria and 
Proposed Grading Schema, Arch. Pathol. Lab. Med. 1982; 106:544-597, 551 
(pleural plaques ``have been considered one of the pathologic and 
radiologic hallmarks of [asbestos] exposure.'').
    \16\ See, e.g., AMA, Guides, supra, at 158 (``[I]n an unusual case 
of diffuse massive thickening, respiratory movement may be impeded and 
a restrictive abnormality may result.'')
    \17\ See Roggli, et al., supra, at 177.
---------------------------------------------------------------------------
    Asbestosis can be demonstrated through either clinical or 
pathological evidence. The definition of ``clinical evidence of 
asbestosis'' is found in Section 601(8). A person will be able 
to qualify under this definition with the minimum chest x-ray 
reading consistent with a finding of asbestosis (a 1/0 reading 
on the ILO scale) together with pulmonary function tests that 
demonstrate ``restrictive'' impairment--the type of breathing 
abnormality typical of asbestos-related disease. If the x-ray 
evidence is stronger (a 1/1 or greater on the ILO scale), the 
PFT requirements are somewhat relaxed.
    Pulmonary functions tests measure impairment and help to 
distinguish restrictive impairment, which may be associated 
with asbestos exposure, from impairment due to ``chronic 
obstructive pulmonary disease,'' which is typically caused by 
smoking. Breathing impairment is indicated by a lung capacity 
(either ``forced vital capacity'' (FVC) or ``total lung 
capacity'' (TLC)) that falls even minimally below the normal 
range. The principal indicator of obstructive disease is the 
ratio of the amount of air the exposed person can breath out in 
1 second (FEV1) compared to the amount of air he can breath out 
in a single forced breath (FVC). A ratio of less than 75 
percent indicates obstructive rather than restrictive lung 
disease.\18\ In addition, an abnormally low total lung capacity 
indicates restrictive rather than obstructive disease, since in 
the early stages, at least, obstructive lung disease leads to 
overinflation of the lung and thus an abnormally high total 
lung capacity.\19\
---------------------------------------------------------------------------
    \18\ See American Thoracic Society, Evaluation of Impairment/
Disability Secondary to Respiratory Disorders, Am. Rev. Respir. Dis. 
1986; 134:1205-1209, 1205.
    \19\ See American Thoracic Society, Lung Function Testing: 
Selection of Reference Values and Interpretive Strategies, Am. Rev. 
Respir. Dis. 1991; 144:1202-1218, 1210 (``A restrictive ventilatory 
defect is characterized physiologically by a reduction in TLC.'').
---------------------------------------------------------------------------
    The bill's criteria for clinical diagnosis of asbestosis 
are more favorable to the plaintiffs than the diagnostic 
criteria adopted by the American Thoracic Society (ATS) in 
1986.\20\ The ATS requires an ``appropriate'' latency period--
generally a minimum of 15 years--while the bill does not have 
any latency requirement at all.\21\ Moreover, the ATS states 
that a chest x-ray rated 1/1 or greater is indicative of 
asbestosis, and ``considerable caution'' should be observed 
before arriving at a diagnosis of asbestos if that criterion is 
not met.\22\ The bill, however, requires only a 1/0 x-ray.
---------------------------------------------------------------------------
    \20\ See American Thoracic Society, The Diagnosis of Nonmalignant 
Diseases Related to Asbestosis, Am. Rev. Respir. Dis. 1986; 134:363-368 
[hereinafter ``ATS, Diagnosis''].
    \21\ Id. at 365, 367.
    \22\ Id. at 367.
---------------------------------------------------------------------------
    Asbestosis can also be demonstrated through Pathological 
Evidence. ``Pathological evidence of asbestosis'' is defined in 
Section 601(27). The key elements of this definition are a 
pattern of scarring (fibrosis) in the lungs together with the 
presence of characteristic asbestos bodies. This definition is 
similar to the College of American Pathologists of the National 
Institute for Occupational Safety and Health (CAP-NIOSH) 
criteria for pathological diagnosis of asbestosis. CAP-NIOSH, 
in an influential joint study, adopted the following guideline: 
``[T]he minimal features that permit the diagnosis [of 
asbestosis] are the demonstration of discrete foci of fibrosis 
in the walls of respiratory bronchioles associated with 
accumulations of asbestos bodies.'' \23\ This standard has been 
formally adopted by the ATS.\24\ The act's pathological 
criteria similarly require discrete occurrences of 
peribronchiolar or parenchymal scarring (that is, fibrosis) in 
association with asbestos bodies. The additional requirement 
that there be no more likely cause does not significantly 
deviate from the CAP-NIOSH standard, but merely represents 
prudent diagnostic practice.
---------------------------------------------------------------------------
    \23\ Craighead et al., supra, at 559 (emphasis in original)
    \24\ See ATS, Diagnosis, supra, at 364-65.
---------------------------------------------------------------------------
    Claimants may also recover by showing evidence of 
``Bilateral Pleural Thickening with Impairment,'' which is 
defined in section 601(14). This definition is similar to the 
definition of clinical evidence of asbestosis. A claimant with 
x-ray evidence of pleural changes (B/2 chest x-ray on the ILO 
scale) is medically eligible if his pulmonary function tests 
meet the same requirements that apply to asbestosis claimants 
with a 1/0 x-ray. If the x-ray evidence of pleural thickening 
is stronger (a C/2 on the ILO scale), the pulmonary function 
requirements are reduced, as they are for asbestosis claimants 
with stronger x-ray evidence.
    Claimants suffering from obstructive diseases will not be 
disqualified from qualifying for asbestosis. In some cases, 
breathing impairment may be caused by both obstructive lung 
disease (smoking) and restrictive disease (asbestos). Section 
302(b) directs the exceptional medical claims panel to qualify 
claimants in this situation if it finds, on the basis of all 
the evidence, that asbestos-related disease is a substantial 
contributing factor to the claimant's impairment. The panel 
must presume that asbestos is a substantial contributing factor 
if the exposed person's chest x-ray is graded 2/1 or higher on 
the ILO scale. This will ensure that claimants will be 
medically eligible if asbestos is a substantial contributing 
factor to their breathing impairment, even if smoking is also a 
cause.
Section 303. Asbestos-related mesothelioma
    Section 303 designates mesothelioma as an eligible medical 
category. Where possible, diagnosis of mesothelioma should be 
based upon pathological evidence; however, clinical evidence 
may be used in the absence of adequate tissue for a 
pathological diagnosis.
Section 304. Asbestos-related lung cancer
    Section 304 designates asbestos-related lung cancer as an 
eligible medical category. The act provides two independent 
ways for a claimant with lung cancer to show that the cancer is 
related to asbestos. The first is by showing that, in addition 
to cancer, the exposed person has a qualifying non-malignant 
condition--the claimant also has asbestosis or bilateral 
pleural thickening that would meet the requirements of section 
301(b) or 302. The second is to show substantial exposure, 
which is measured by work history in certain occupations in 
which exposure is likely, and confirmed by pleural plaques, 
which are a biological marker of exposure.
    When eligibility is established on the basis of exposure, 
the amount of exposure required is measured in equivalent-
years, as defined in Section 601(13), which adjusts real-time 
years of employment to reflect typical levels of exposure in 
different occupations. Individuals who received non-
occupational exposures would apply for medical eligibility 
through the exceptional medical claims panel. Similarly, 
individuals with indirect occupational exposure who could show 
that they were exposed to levels of asbestos comparable to the 
exposure levels of people who worked directly with asbestos 
could make that case to the exceptional medical claims panel.
    Individuals whose lung cancer is attributed to asbestosis 
on the basis of exposure, without a qualifying non-malignant 
disease, are entitled to a certificate of medical eligibility 
regardless of their smoking history. See Section 304(b). 
However, because of the causation problems that arise when lung 
cancer victims were exposed both to tobacco and to asbestos, 
smokers without a qualifying non-malignant disease do not 
receive the benefit of a presumption of an asbestos caused 
illness under Section 201. The Administrator will promulgate 
rules to define what constitutes a ``substantial history of 
smoking.''
Section 305. Asbestos-related other cancer
    Section 305 establishes other cancers as an eligible 
medical category. Claimants can recover for asbestos-related 
other cancer if they can demonstrate (1) the presence of a 
cancer set forth in this section that is caused or contributed 
to by asbestos exposure, and (2) evidence of a non-malignant 
condition that would satisfy either Section 301(b) or Section 
302.
Section 306. Medical testing reimbursement
    Section 306 establishes a medical testing reimbursement 
benefit for claimants who have a chest x-ray consistent with 
asbestosis or substantial pleural thickening but who are not 
yet impaired. The benefit allows reimbursement of 100 percent 
of out-of-pocket expenses for medical tests required under 
Section 102. These expenses include radiographic exams and 
pulmonary function tests and will not duplicate payments from 
other sources, including Medicare, Medicaid, private insurance, 
or employer-provided medical benefits This benefit would be 
available for up to three testing occasions at least 3 years 
apart. All benefits under this section will be funded by 
administrative assessments against defendants under Section 
401.
    Claimants who have at least four equivalent-years of 
exposure, the medical testing reimbursement is capped at $1500 
per occasion. The Administrator will establish by rule a cap 
for claimants with less exposure. The Administrator is required 
under section 306(d) to establish procedures to ensure accuracy 
in statements by claimants concerning their history of 
exposure. The Administrator is authorized under section 306(c) 
to establish a certification program for laboratories that 
provide medical testing for claimants under this act. The 
purpose of the certification program is to ensure that testing 
done under this section is performed at laboratories that meet 
industry standards for the administration and interpretation of 
tests, including appropriate quality assurance and control. 
Claimants are not required to use certified laboratories under 
Section 102, although they will be encouraged to do so. 
Standards for certification of laboratories will be developed 
in consultation with the Medical Advisory Committee.

                           Title IV. Funding

Section 401. Assessments and enforcement
    This section directs the Administrator to adopt rules for 
calculating and collecting from defendants all costs associated 
with the determination of claims and payments to claimants. 
Rules will allocate costs in accordance with a general 
principle of proportionality and will provide an exclusion for 
defendants whose involvement in asbestos litigation is de 
minimis. Also, while costs will be deferred for select 
defendants pursuant to Section 704, administrative costs for 
these defendants are limited to those claims that are not 
covered by the approved Qualifying National Settlement Plan.
    Section 401 further provides special procedures for 
streamlined collection actions. The Trustee is empowered to 
bring an action in any Federal district court to enforce a 
section 401 assessment, notwithstanding amount in controversy 
or citizenship of the parties, and subject only to 
jurisdictional defenses. A defendant may challenge the legality 
or amount of the assessment only by seeking review in the 
United States Court of Federal Claims, and only after paying 
the disputed amount. Moreover, the Trustee is entitled to costs 
and reasonable attorneys' fees in any successful action under 
this section. Rules and procedures for calculating and 
developing assessments will ensure that Funds for the 
administration of the OAC will be made available from 
defendants rather than the Federal Government.
Section 402. Fiscal and financial management of the Asbestos 
        Compensation Fund
    This section governs the operations of the Asbestos 
Compensation Fund relating to settlement payments by the Fund 
under section 104, and associated recoveries by the Fund from 
defendants. Except as otherwise provided in this section, the 
operations of the Fund will be governed by the Federal Credit 
Reform Act of 1990, notwithstanding the status of the Fund as a 
governmental agency. The Federal Credit Reform Act governs a 
wide range of Federal funding programs, including SBA loans, 
farm loans, Federal student loans, and various forms of foreign 
credit assistance.
    Under this section, the Fund is required to recover 
sufficient amounts from defendants to offset all payments made 
under section 104 together with all other associated costs of 
the Fund. The Administrator must promulgate rules, which are to 
be approved by the Office of Management and Budget, for the 
fiscal management of the Fund. Those rules will not be subject 
to judicial review and must provide, among other things, that 
over a reasonable period of time there will be no net taxpayer 
subsidy to the program.
    The Fund may borrow from the Treasury, under Credit Reform 
Act principles, amounts sufficient to pay claimants under 
section 104. The Fund is authorized to receive, as offsetting 
receipts, any amounts paid by defendants in connection with 
settlements and judgments of the claims assigned to the Fund 
under that section. These amounts include, among other things, 
damages, interest, litigation costs, and administrative costs. 
These amounts will offset amounts borrowed from the Treasury to 
finance section 104 payments to claimants together with a 
premium for all of the Fund's litigation risk.
    The Trustee will be seeking, at a minimum, to recover from 
defendants the amount it borrowed from the Treasury to pay 
claimants, plus interest, plus its litigation costs. The Fund 
assumes the litigation risk when it settles with individual 
claimants, and that risk includes both the possibility that 
recovery will fall short of the settlement amount and the 
possibility that it will be higher. The Trustee is allowed to 
use amounts recovered from defendants, over and above the 
amount paid to claimants (but subject to a cap of 200 percent 
of that amount), to offset the Fund's litigation risk. In 
addition, the Trustee is entitled to prejudgment interest, 
litigation expenses, and in appropriate cases a penalty for 
inadequate offers by defendants. Finally, the Trustee has full 
flexibility to adjust the settlement amount it offers any 
claimant to reflect not only the litigation risk in the 
specific claim, but also the financial condition of the Fund. 
Accordingly, the Fund can and should be managed so that, over 
an appropriate period of time, the risk that the Fund will be 
unable to recover from defendants the full amount that it paid 
to claimants plus its costs.
Section 403. Authorization for appropriations and offsetting 
        collections
    Section 403(b) authorizes the OAC to receive as offsetting 
collections, and spend, the administrative assessments, costs, 
and penalties paid to it under section 401. This is the basic 
funding mechanism for administrative expenses under the bill.
    Section 403(a) authorizes additional appropriations to the 
OAC and the United States Court of Federal Claims for carrying 
out their responsibilities under the act. These appropriations, 
if approved by Congress, would supplement administrative 
assessments against defendants. These appropriations are not 
essential, the OAC can function perfectly well using funds 
available to it from defendants under section 403(b). The 
consequence of an appropriation under section 403(a) (1) for 
administrative expenses of the OAC would be to reduce the 
amounts otherwise assessed against defendants.
    In addition, section 403(a) authorizes a one-time loan of 
$100 million to defray start-up costs for the fund, which will 
be repaid with interest from amounts collected from defendants. 
Total appropriations under section 403(a) may not exceed $250 
million during its first year of operation and $150 million 
thereafter.

                          Title V. Transition

Section 501. Applicability; transitional civil actions
    Section 501 provides that the bill will be effective on the 
date of enactment with respect to all claims that have not 
begun trial by that time.
    There are two exceptions to the application of the 
provisions of this section. First, claimants with pending 
claims as of the date of enactment would not have to obtain a 
certificate of medical eligibility if a trial begins within 6 
months. This 6-month transition period may be extended by the 
Attorney General for an additional 6 months. Claimants covered 
by this provision would be required to show medical eligibility 
(as defined in the bill) at trial, but would not be required to 
receive a certificate of medical eligibility from the Medical 
Director. In addition, a claimant who has a trial date within 6 
months after the end of the formal transition period may 
receive a right-to-sue letter if the OAC is not able to meet 
the 30-day statutory deadline for issuing an initial decision 
on medical eligibility. At trial, claimants who have a right to 
sue letter would have to prove medical eligibility, which does 
not include claims for medical expenses.

                         Title VI. Definitions

Section 601. Definitions
    Section 601 defines terms used in the act. The most 
important of these terms are described here. Terms relating to 
medical eligibility, procedure and administration, and 
applicability are discussed separately.
            Terms Relating to Medical Eligibility
    A number of the definitions in Section 601 are important 
for determining medical eligibility. Certain terms--e.g., 
clinical evidence of asbestosis, pathological evidence of 
asbestosis, and evidence of bilateral pleural thickening with 
impairment--have been discussed in connection with title III, 
and that discussion will not be repeated here.
    ``Chest x-ray,'' under paragraph (5), means chest 
radiographs taken in at least two views (Posterior and Lateral) 
and graded quality 1 for reading according to the criteria 
established by the ILO. If the claimant is unable to provide 
quality 1 x-rays, chest x-rays graded quality 2 are acceptable. 
Because of the importance of x-rays in the medical eligibility 
process, the committee believes that where possible those x-
rays should be of sufficient quality to minimize the risk of 
interpretive errors.
    ``Equivalent-years,'' under paragraph (13), are used to 
calculate periods of exposure for purposes of the lung cancer 
criteria in section 304 and medical testing in section 306. 
Equivalent-years are used rather than real-time years to 
reflect the fact that levels of asbestos exposure varied 
between different occupations. A year spent in occupations 
involving direct installation, repair, or removal of asbestos 
products is the standard. Years spent in occupations 
characterized by very high levels of exposure--e.g., 
shipbuilding in World War II and manufacturing of asbestos 
products--are weighted more heavily, while years in occupations 
involving only indirect exposure to asbestos are weighted less 
heavily.
    Some individuals exposed in non-occupational settings may 
have received exposures equivalent to workplace exposures. 
Similarly, some who received indirect exposure may have had a 
level of exposure typical of workers who directly installed, 
repaired, or removed asbestos. Claims of this kind should be 
addressed by the exceptional medical claims panels.
    The ``latency period,'' under paragraph (21), of a disease 
is the time between first exposure to asbestos and 
manifestation of the disease. The first exposure to asbestos 
under this definition does not need to meet any threshold of 
``significance,'' but exposure to background levels of 
asbestos, similar to those to which the public generally is 
exposed should not be considered a first exposure under this 
definition.
    ``Physician,'' under paragraph (29), means a licensed 
medical doctor who has not, in the 5 years prior to the date of 
enactment, spent more than half of his professional time, or 
derived more than half of his professional income, either 
annually or in total, on medico-legal issues related to 
asbestos. This definition will help ensure that the doctors who 
serve vital functions under the bill will be impartial treating 
physicians, and not doctors whose professional life has come to 
center on asbestos litigation, usually as witnesses testifying 
predominantly for one side or the other.
    ``Predicted value,'' under paragraph (30), means a 
published reference to the normal breathing capacity of healthy 
populations based on age, height, and gender. Such values must 
be generally accepted in the medical community, and may not be 
adjusted by race. The Medical Director will approve such 
predicted values by rule adopted within 120 days of the date of 
enactment.
    ``Pulmonary function testing,'' under paragraph (31), means 
tests for forced vital capacity, lung volume, and diffusing 
studies, using equipment, tests, and standards generally 
accepted in the medical community. The results of pulmonary 
function testing may not be adjusted by race. The Medical 
Director will adopt rules relating to pulmonary function 
testing within 120 days after the date of enactment. The 
Medical Director will take into consideration, as applicable, 
existing rules on pulmonary function testing adopted by the 
Department of Labor in consultation with NIOSH and published in 
20 CFR 718.013 (1997) and Appendix B thereto. Information 
provided to the OAC must be sufficient to enable the agency to 
determine whether pulmonary function tests were properly 
administered. This will require submission of all spirometry 
tests including the designated ``best test,'' both volume time 
graphs and flow volume loops, and values for any other attempt 
or trial.
            Procedural and Administrative Terms
    ``Compensatory damages,'' under paragraph (9), include both 
economic damages and non-pecuniary losses like pain, suffering, 
inconvenience, or emotional distress.
    ``Core claim,'' under paragraph (10), means an asbestos 
claim against certain primary asbestos defendants--i.e., (a) 
defendants who manufactured an asbestos-containing product to 
which the exposed person was exposed and who have paid out $50 
million cumulatively over the 10 years prior to the filing of 
the claim or (b) defendants who were not manufacturers, and 
whose liability is not based on ownership or control of 
property, who have paid out $100 million over the preceding 10 
years. The bill subjects these primary defendants to joint and 
several liability, notwithstanding contrary State law, and it 
eliminates most of the those defendants' traditional defenses.
            Applicability
    ``Asbestos claim,'' under paragraph (1), means any claim 
for damages or other relief arising out of, based on, or 
relating to the health effects of exposure to asbestos. It 
includes claims for personal injury, death, emotional distress, 
and medical monitoring. It also includes claims brought by 
family members, such as loss of consortium. It does not, 
however, include claims for workers' compensation benefits, or 
any claim by an employer or insurer against the third party for 
reimbursement of workers' compensation benefits, or any claim 
for veterans' benefits.
    ``Asbestos Trust,'' while this definition excludes certain 
trusts established to pay asbestos claims, other trusts that 
may or may not be court-supervised which have also been 
established to pay asbestos claims are not excluded by this 
definition. In particular, trusts that essentially function as 
an escrow account for purposes of paying asbestos claims or 
trusts established pursuant to class action settlements are not 
intended to be excluded by this definition. Only those trusts 
that are active participants in asbestos litigation would 
qualify as an ``asbestos trust''.
    ``Claimant,'' under paragraph (7), means the exposed person 
or that person's legal representative, and any relative of an 
exposed person, or their legal representative, who asserts an 
asbestos claim. The committee notes that the claimant will 
often not be the exposed person himself, but rather family 
members and personal representatives.
    ``Defendant,'' under paragraph (11), means any person who 
is or may be responsible for the asbestos-related condition of 
the exposed person and who is named under title I. The term 
does not include asbestos trusts, the Federal Government, or 
State Governments. The committee intends that asbestos claims 
against the Federal Government and State Governments will not 
be subject to the jurisdiction of the OAC but may be brought in 
other forums with jurisdiction under other law.
    ``Qualifying National Settlement Plan,'' under paragraph 
(34), sets forth the criteria that a defendant's settlement 
plan must satisfy in order to qualify for a 7-year exemption 
from the act under section 704. Defendants may reapply for an 
extended exemption.
    ``State,'' under paragraph (35), includes any State of the 
United States, the District of Columbia, Commonwealth of Puerto 
Rico, the Northern Mariana Islands, the Virgin Islands, Guam, 
American Samoa, and any other territory or possession of the 
United States. The term also includes any political subdivision 
of the foregoing.

                  Title VII. Miscellaneous Provisions

Section 701. Applicability to Other Federal Laws
    This section specifies the manner in which the bill is 
intended to interact with other laws as well as with existing 
trusts and settlements or settlement offers. First, the 
Administrator may waive personnel and procurement laws and 
regulations with the approval of the Director of the Office of 
Management and Budget. Any such waivers granted by OMB must be 
periodically reconsidered. The flexibility to be exempt from 
certain of these statutes and regulations is indispensable if 
the OAC is to address over 200,000 asbestos claims and achieve 
the bill's strict time limits for processing claims. OMB should 
act expeditiously and favorably on such requests, in 
consultation with interested agencies such as The Office of 
Personnel Management and the General Services Administration. 
Second, the bill will not apply to existing asbestos trusts 
(such as the Manville Trust) unless the trust elects to be 
subject to the bill and notifies the Administrator of that 
decision in writing. A trust's decision to be subject to the 
bill cannot be revoked. Third, the bill does not invalidate any 
settlement of asbestos claims entered into before the date of 
enactment or revoke or negate any standing offer to settle 
claims. This preserves both actual settlements and so-called 
``futures agreements'' between defendants and certain law firms 
representing asbestos claimants. Fourth, the bill does not 
affect the scope or operation of either workers' compensation 
or veterans benefits programs. In particular, the bill would 
not authorize any lawsuit that is barred by the exclusive 
remedy provision of workers' compensation laws. ``Workers' 
compensation laws'' includes the Federal Longshore and Harbor 
Workers Compensation Act, 33 U.S.C. sections 901-944, 948-50, 
but it does not include the Federal Employer's Liability Act 
(FELA), 45 U.S.C. chapter 2. FELA applies to occupational 
injuries arising out of railroad work and resembles tort 
litigation more than traditional workers' compensation 
programs. See Metro-North Commuter R.R. Co. v. Buckley, 521 
U.S. 424 (1997). Fifth, the bill does not affect any law 
governing successor or transferee liability.
Section 702. Annual Reports
    Section 702 requires the Administrator of the OAC to submit 
an annual report to the President and the Congress.
Section 703. Enforcement
    This provision allows the Administrator to seek enforcement 
of the bill's provisions in Federal district courts. The 
Federal courts have exclusive jurisdiction over such 
proceedings without regard to amount in controversy or 
diversity. If the Administrator's action is successful, the 
Administrator will be entitled to costs and attorney's fees. 
Thus, this provision gives the Administrator the authority to 
enforce administrative assessments against defendants and, 
through the award of costs and attorneys fees, provide another 
incentive for defendants to avoid engaging in litigation with 
the Administrator.
Section 704. Qualifying National Settlement Plan
    The bill permits a defendant who is part of a Qualifying 
National Settlement Plan to apply with the Administrator to 
defer application of the bill to that defendant for up to 7 
years. The term ``Qualifying National Settlement Plan'' is 
defined in section 601(34) and would include, for example, the 
``National Settlement Plan'' concluded between Owens Corning 
Fibreboard and numerous plaintiffs' attorneys in 1998-1999. The 
Administrator will determine whether to accept a defendant's 
request for deferral according to rules that the Administrator 
will promulgate. If the deferral is granted, claims against 
that defendant will not be subject to the provisions of the 
bill, except for those provisions relating to medical 
eligibility, damages, the statute of limitations, come back 
rights, class actions, joint and several liability, core claims 
and the transition period. See Sections 201-207 and 501. 
``Deferral applies to all costs for claims covered by the 
deferred defendant's Qualifying National Settlement Plan. This 
includes administrative costs. However, a deferred defendant 
may not be assessed administrative costs for claims that are 
resolved by the approved Qualifying National Settlement Plan.''
Section 705. Severability
    If any part of the bill is found to be invalid, the 
remainder of the bill will remain in effect.
Section 706. Settlement
    For a period of 7 years after the date of enactment, a 
claimant or a defendant may specifically enforce any written 
settlement agreement that was agreed to by the claimant, or the 
claimant's attorney, and the defendant before the date of 
enactment. Such enforcement actions must be brought in a 
Federal or State court where the claimant is currently 
domiciled or where the claimant alleges exposure to asbestos. 
Where the claimant is not the exposed person (as happens, for 
example, with loss of consortium claims), that enforcement 
action may be brought where the exposed person was exposed.

                         Operation of the Bill


                        Operating Cost Analysis


                      Introduction and Background

    Operating costs under the committee bill fall into three 
broad categories:
         LOverhead and medical review costs;
         LCosts of administrative adjudications; and
         LCosts to the Trustee of administration and 
        litigation associated with the Trustee's settlement or 
        prosecution of claims against the defendants.
The bill contemplates that all of these operating costs (in 
addition to any amounts paid to claimants in settlements or as 
damages) will be borne by the defendants.
    Peterson Worldwide (``Peterson''), a wholly owned 
subsidiary of Navigant Consulting, Inc., has prepared an 
analysis of these operating costs to defendants. Peterson's 
analysis estimates start-up costs and annual operating costs 
for each of the first five years after the Office of Asbestos 
Compensation (OAC) becomes operational. Settlement payments 
would not be treated as operating costs under Credit Reform Act 
principles, and thus are not included in the Peterson analysis 
because those costs must be accounted for in the credit 
analysis of the Fund's costs and risks under that distinct 
feature of the legislation. (See sections 103(b)(2) and 403. 
The Fund's administrative and litigation costs, however, are 
included.) Peterson also does not try to estimate the costs of 
the medical testing program under section 306. The assumptions 
that Peterson used to prepare its analysis were based on 
industry experience, available data from defendants and others, 
and estimates of projected impaired claimants prepared by 
Chambers Associates.
    Peterson concludes that the total cost of the program to 
defendants, including start up and the first five years of 
operation, would be $287 million. Start up expenses account for 
$23.8 million of this total. The program would cost $85.2 
million annually in the first two years of operation, which is 
the amount of time the OAC will need to process the existing 
backlog of pending cases. In the next three years, costs drop 
to $30.9 million per year. During the last three years of 
operation, the program will require 326 full time equivalent 
(FTE) personnel. During the first two years, extra personnel 
will be required to handle the existing backlog of claims and 
the anticipated initially high rate of new filings.

                              Assumptions

    Claim Flow Assumptions. The OAC will process the current 
backlog of 200,000 cases within two years, not including some 
months of startup time to hire and train staff. In the first 
year, new claims will be filed at current levels (about 
40,000), but new filings will decline over time. This is a 
conservative assumption, since some portion of the current 
backlog and the first year's new filings will consist of 
unimpaired claims that will not be filed.
    Peterson then projects the number of claims that will 
qualify under the medical criteria of the bill, based on 
Chambers Associates' projection of the incidence of impairing 
asbestos-related disease. Peterson then estimates the number of 
claimants who will opt out at various stages of the process, 
the number who will settle with defendants or the trustee, and 
the number that will proceed to administrative adjudication by 
an Administrative Law Judge.
    Organizational Assumptions. The Peterson model makes some 
assumptions about how the OAC will be organized to process 
claims efficiently and conveniently. Among these assumptions 
are the following:
         LThere will be one headquarters and six 
        regional offices.
         LThe Administrator, Medical Director and 
        Trustee of the Asbestos Compensation Fund will each 
        head a division of the OAC with sufficient support 
        staff to perform their duties.
         LMuch of the OAC's work, including medical 
        review, optional settlement proceedings involving the 
        Trustee of the Asbestos Compensation Fund, and hearings 
        before Administrative Law Judges, will take place in 
        the regional offices.

                              Conclusions

    Peterson concludes that the following full time equivalent 
(FTE) personnel will be required to handle the steady stream of 
new asbestos cases following the first two years (after the OAC 
has processed the existing backlog of cases):


------------------------------------------------------------------------
                                                Total Personnel (FTE)
------------------------------------------------------------------------
Administrator's Office.....................   41
ALJ Offices (including Legal Assistance       60
 Program).
Medical Director's Office..................  169
Trustee of Asbestos Compensation Fund......   44
  Total OAC................................  314
U.S. Court of Federal Claims...............    7
National Medical Advisory Committee........    5
  Total....................................  326
------------------------------------------------------------------------


    In order to handle the existing backlog of pending claims 
and claims for medical testing reimbursements during the first 
two years of operation, an additional 380-390 personnel (FTE) 
will be required on a temporary basis. (Moreover, Peterson 
estimates an initially higher rate of new filings that will 
require 46 and 31 additional personnel (FTE), respectively, in 
the first and second years of the program.) Under section 
701(a), the OAC may, with the approval of the Office of 
Management and Budget (OMB), waive personnel and procurement 
laws and regulations to expedite the handling of asbestos 
claims. The OAC is expected to use this authority, as 
necessary, to hire additional short term staff and contract for 
the needed facilities to meet the objective of processing the 
backlog of pending claims as soon as possible, but in any event 
within the first two years of operations.
    Peterson estimates the cost of salaries and benefits for 
the required positions--as well as the cost of necessary 
equipment and facilities--based on price data in the locations 
where the OAC is expected to have offices. Peterson concludes 
that in the first two years the overall cost of the program 
will be approximately $85 million per year. This declines to 
$31 million per year in the last three years, after the backlog 
of pending claims and claims for medical testing reimbursements 
has been processed. The report's estimates of cost are as 
follows:


------------------------------------------------------------------------
                Year                                 Costs
------------------------------------------------------------------------
Start-Up............................  $23.8
1 (including backlog)...............  $85.2
2 (including backlog)...............  $85.2
3...................................  $30.9
4...................................  $30.9
5...................................  $30.9
Total Start-Up plus 5 Years.........  $286.9
------------------------------------------------------------------------


    In conclusion, Peterson predicts that the total operating 
costs of the Asbestos Compensation Act of 2000, will be $287 
million for start up and the first five years of operation. In 
its size and scope, the OAC would be roughly comparable to the 
Federal Mediation and Conciliation Service, which assists labor 
and management in resolving disputes through mediation and 
arbitration services. The Federal Mediation and Conciliation 
Service has an annual budget of $39 million, and personnel of 
292 (FTE).

                              Agency Views

                        U.S. Department of Justice,
                             Office of Legislative Affairs,
                                     Washington, DC, March 8, 2000.
Hon. Henry J. Hyde, Chairman,
Committee on the Judiciary,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: This letter presents the views of the 
Administration, updating the preliminary views of the 
Department of Justice presented to you on October 26, 1999, 
regarding H. R. 1283, the ``Fairness in Asbestos Compensation 
Act of 1999.'' H.R. 1283 has changed considerably since our 
last letter, which raised a number of issues and questions that 
we have spent the last several months analyzing. In recent 
weeks, we have received several amendments, including the 
latest amendment, in the nature of a substitute, on March 3.\1\ 
We understand that the Committee has spent substantial time 
crafting the legislation, and we have met with your staff and 
others working on behalf of the proposed legislation. As we 
have informed your staff, we remain interested in continuing 
our dialogue about these very important and difficult issues.
---------------------------------------------------------------------------
    \1\ While the latest amendment has not yet been introduced, we 
understand that the Committee intends to make it a substitute for the 
currently pending bill. Therefore, in this letter, ``H.R. 1283'' refers 
to this amendment, entitled ``Asbestos Compensation Act of 2000.''
---------------------------------------------------------------------------
    Like the Committee, the Department of Justice wants to see 
asbestos claims processed fairly, efficiently, and quickly. We 
share the same concerns and sympathies for the victims of 
asbestos exposure. As the Committee knows, the diseases that 
result from exposure to asbestos can cause great suffering, and 
often lead to quick and painful deaths. Like the Committee, we 
have considered at great length the question of how to ensure 
prompt and appropriate compensation for individuals harmed by 
exposure to asbestos. The question for both the Department and 
the Committee, we believe, is whether the proposed solution 
improves upon the status quo by ensuring faster and more 
equitable compensation to asbestos victims. We could not 
support any proposal that fails to improve the present system 
or hinders the progress made in compensating asbestos victims.
    We oppose H.R. 1283 for a number of reasons, including:
         LThe process of compensating asbestos victims 
        has improved since the 1980s, when the last 
        comprehensive study on asbestos litigation was 
        completed. While the current system is not ideal, we 
        believe a new administrative process would undermine 
        progress that has been made.
         LH.R. 1283 would deprive asbestos victims of 
        fair compensation, including victims who are 
        demonstrably sick as a result of exposure to asbestos;
         LH.R. 1283 would transfer costs now borne by 
        defendant companies--who have been found legally 
        responsible for the harm caused--to asbestos victims 
        and the taxpayers; and
         LH.R. 1283 would delay and worsen, rather than 
        accelerate and improve, compensation to the sick.

I. The Asbestos Litigation and Compensation Process Has Improved

    Like the Committee, we have been concerned by reports that 
the asbestos litigation and compensation process is an 
``elephantine'' morass in need of reform.\2\ In evaluating the 
state of asbestos litigation, the Supreme Court relied on a 
study using data from the mid-1980s. For the past several 
months, we have attempted to analyze the situation in asbestos 
litigation today. To some extent, our efforts have been 
hampered by the paucity of data and the absence of any more 
recent comprehensive study of asbestos caseloads, settlements 
and the like. Nevertheless, we are persuaded that the process 
for compensating victims of asbestos exposure has improved 
since the mid-1980s.
---------------------------------------------------------------------------
    \2\ See Ortiz v. Fibreboard, 119 S. Ct. 2295, 2302 (1999).
---------------------------------------------------------------------------
    First, in recent years the parties to the asbestos 
controversy have settled hundreds of thousands of claims, a 
marked improvement over the more adversarial culture that 
permeated much of asbestos litigation at the time of the last 
major study. Working together, the plaintiff and defense bars 
have created a number of these private settlement mechanisms 
and national settlement programs, all of which have hastened 
the payment of claims to sick individuals, reduced the burden 
on the courts, and brought greater financial certainty to a 
number of defendants. For example, as the Committee was 
informed in its July 1999 hearing, Owens Corning alone has 
settled over 200,000 claims through the National Settlement 
Program it initiated in 1998. Another example is the Louisiana 
settlement agreement entered into by plaintiffs and defendants 
in 1998, which is creating numerous additional settlements.
    Second, as to the claims that do remain on the court 
dockets, the courts have made considerable progress in managing 
these caseloads. In particular, state and federal courts around 
the country have instituted several case management controls 
that harness the volume of asbestos claims and permit the 
claims of the sickest victims to be expedited. These tools 
include multi-district consolidation in the Federal courts, the 
consolidation of similar claims for discovery and trial, and 
procedures for those with less serious diseases to file claims 
in court without actively prosecuting them (i.e., pleural 
registries). This latter technique has resulted in a de facto 
stay for many claims of the less impaired. Thus, in courts 
utilizing pleural registries, even though the cases of the less 
impaired constitute a large part of the pending case backlog, 
they consume comparatively few judicial resources. In addition, 
several states have created distinct causes of action for 
different asbestos-related injuries, eliminating the incentive 
for victims to rush to court at the first physical sign of 
injury and permitting those who initially recover small amounts 
for minimal injury to return to court if their condition 
subsequently deteriorates.
    Third, asbestos has become a ``mature'' tort, with many of 
the basic liability questions resolved. Over the past decade, 
the litigants have clarified some of the medical issues, made 
progress on product identification, causation, and 
apportionment of liability issues, and the defendant companies 
have resolved a number of disputes with their insurers. This 
has resulted in fewer disputes, less discovery, less repetition 
in depositions and trials, and, as a consequence, a higher 
percentage of available dollars going to the victims.
    This is not to say, however, that the present state of 
asbestos litigation is ideal. There are still a large number of 
cases pending in the courts, and not every court system has 
instituted the case management and prioritization techniques 
used successfully by other courts. As a consequence, some cases 
migrate to forums that are historically more favorable to 
plaintiffs, resulting in inconsistent verdicts and settlements, 
and some deserving victims are still compensated too slowly.
    For the Administration, a key question is whether the 
imperfections in the current system justify the substitution of 
untested administrative procedures and standards for the 
traditional court system. Given our concerns that the system 
would not work as hoped and would benefit culpable defendants 
at the expense of the victims and taxpayers, we think the case 
for this untested system has not been made.

II. H.R. 1283 Would Exclude Many Asbestos Victims From Fair 
        Compensation

    H.R. 1283 would create medical criteria according to which 
asbestos victims would be determined to be medically eligible 
or ineligible for compensation. At the outset, we note that 
legislating medical criteria to limit recipients of asbestos-
related compensation sets standards that overstate the 
precision of existing diagnostic testing; and it precludes the 
incorporation of advances in medical knowledge by prescribing 
standards that may soon be outdated. Further, the proposed 
legislation does not foster fairness for people with diseases 
resulting from asbestos exposure.
    First, the medical criteria in H.R. 1283 would result in 
sick people being denied compensation for their injuries. Even 
if we were to accept the proponents' avowed purpose of 
eliminating the claims of the non-sick while preserving the 
claims of the sick, the medical criteria in H.R. 1283 would not 
accomplish that goal. Experts from the Department of Health and 
Human Services, as well as many in the medical community, have 
indicated that the proposed medical criteria are too 
restrictive and would result in the denial of compensation to 
many injured and impaired patients.
    For example, the proposed medical criteria for asbestosis 
would require a claimant with evidence of obstructive disease 
on lung function testing to demonstrate high levels of fibrosis 
on chest x-rays as well. Yet, as our colleagues at HHS have 
informed us, asbestos exposure may cause a mixed obstructive 
and restrictive pattern and, in some instances, cause 
predominantly obstructive disease. In addition, the use of 
objective norms to measure the lung function of every claimant 
treats all claimants as if their normal lung function is 
identical. This, of course, is not the case. Some patients may 
have pre-exposure lung functions well above average and may 
lose more than 20% of their lung capacity, yet fail to meet the 
lung function criteria in the proposed bill. H.R. 1283 would 
deny compensation to these people who have been demonstrably 
impaired by their exposure to asbestos. Further, patients with 
asbestosis may have shortness of breath with exertion and 
functional impairment demonstrated by reduced arterial 
oxygenation during exercise, yet not meet the lung function 
criteria in the bill. In addition, H.R. 1283 understates the 
degree of injury experienced by individuals with pleural 
disease who fail to meet the lung function criteria, and does 
not adequately provide screening for these individuals. As a 
result of the proposed medical criteria, we are informed that 
physically impaired asbestos victims would be denied 
compensation.
    Second, the medical criteria of H.R. 1283 would eliminate 
many existing causes of action and injuries compensable under 
current state law. In many jurisdictions, for example, 
plaintiffs are entitled to sue and recover for scarring of the 
lungs or for an increased risk of lung cancer as a result of 
exposure to asbestos, regardless of impairment. Under H.R. 
1283, those claims would no longer be recognized, prohibiting 
claimants exposed to asbestos from obtaining compensation. At 
best, the claimants alleging such injuries could recover 
reimbursement of medical monitoring costs, as compared to the 
significant compensation they might receive today. Section 
306(a). In a system in which those who are not yet physically 
impaired are denied the right to bring a claim, it is unlikely 
that the plaintiffs' bar, which currently finances and 
facilitates much of the medical monitoring of the less 
seriously impaired, would have the necessary financial 
incentive to pursue claims for medical monitoring. As a result, 
many victims who today receive the peace of mind and prompt 
medical attention that results from medical monitoring--at 
little or no cost to the victims--would be denied that benefit.
    Third, H.R. 1283 would make it effectively impossible for 
many victims of asbestos exposure, who also were smokers, to 
recover compensation from asbestos defendants for the damage 
done to them by asbestos. H.R. 1283 would prohibit presumptive 
eligibility for lung cancer victims, where the claimant has a 
``substantial history of smoking'' and does not have a 
qualifying non-malignant condition. Section 304(b). As many 
experts have stated, the interaction of smoking and asbestos 
exposure is synergistic, and smokers exposed to asbestos are at 
an exponentially greater risk of developing lung cancer than 
smokers without asbestos exposure. Among those heavily exposed, 
for example, 80% of all lung cancers would have been eliminated 
in the absence of asbestos exposure, even had smoking habits 
not been changed.\3\ Thus, contrary to the implication of H.R. 
1283, many lung cancers involving both a substantial history of 
smoking and significant asbestos exposure would not have 
occurred but for the asbestos exposure. As for the requirement 
that lung cancer be accompanied by a qualifying non-malignant 
condition, HHS advises us that many studies have clearly shown 
that asbestos is a carcinogen and causes cancer independent of 
causing non-malignant disease, again contrary to the 
implication of H.R. 1283. In short, H.R. 1283 would prevent 
many victims of lung cancer from recovering compensation for a 
primary cause of their cancer--asbestos exposure.
---------------------------------------------------------------------------
    \3\ See, e.g., A. Ritzen and L. Rosenstock, The Misuse of 
Epidemiology and Apportionment in Compensation for Occupational 
Disease, New Solutions, Winter 1993, at 29-36. R. Saracci, Interaction 
and Synergism. 12 American Journal of Epidemiology 465-466 (1980).
---------------------------------------------------------------------------
    Fourth, H.R. 1283 would prohibit courts from awarding 
punitive damages to victims. Section 202. Under H.R. 1283, 
punitive damages would be available only in administrative 
adjudications, thus diluting any right to opt out to a 
traditional court and eliminating the already-rare phenomenon 
of court-imposed punitive damages. Yet, even in the 
administrative context, where any possible concerns over jury-
applied punitive damages would be eliminated, the legislation 
would make punitive damages available only where a ``conscious, 
flagrant indifference'' to a claimant was ``the proximate 
cause'' of the injury. And even if the claimant could satisfy 
this standard, he or she would be severely limited as to the 
amount of punitive damages available for past bad acts by 
culpable companies. Section 208(d). As we have stated with 
regard to other tort reform legislation, punitive damages serve 
an important deterrent function.

III. H.R. 1283 Would Impose Unwarranted Costs on Asbestos Victims and 
        Taxpayers

    In addition to our concerns with the medical criteria and 
the exclusion of asbestos victims, we have a number of concerns 
with the economic impact of the legislation. Specifically, we 
believe that H.R. 1283 would provide unwarranted benefits to 
asbestos companies to the detriment of victims of asbestos and 
the taxpayers.
    First, to the extent that it is unable to recover from 
defendants the recommended aggregate settlement that it has 
already paid to claimants, the Asbestos Compensation Fund--the 
entity charged with paying claimants--would be required to 
reduce future recommended aggregate settlements, taking into 
account the outstanding deficit. Section 402(a)(4). This 
provision, in effect, creates an incentive for defendants to 
avoid paying the government in a timely manner, if at all, on 
the assumption that a deficient Fund reduces settlement values 
and therefore defendants' ultimate expense. Ultimately, this 
would lead to lower settlement values for deserving victims.
    Second, although the stated intention of the program is for 
defendants ultimately to cover all expenses, under H.R.1283, 
the Federal Treasury could advance the Office of Asbestos 
Compensation (the ``OAC'') up to $100 million in start-up 
funds. Section 403(a). Past programs in which the Federal 
government has advanced funds have been largely unsuccessful in 
trying to recover from responsible parties. In programs such as 
the Black Lung Benefits Act and the Comprehensive Environmental 
Response, Compensation and Liability Act (the CERCLA 
Superfund), the government spent considerable resources to seek 
reimbursement from responsible parties, and yet in many 
instances failed, leaving the taxpayers to subsidize the 
programs, or reducing future settlements to cover the 
shortfall. Similarly, we are concerned that the defendant 
companies may not pay for all of the costs associated with the 
administration of the OAC.
    Third, to the extent that less seriously injured claimants 
seek medical monitoring expenses, it is likely that the U.S. 
government would be left holding the bill. Unlike other parts 
of the legislation, no mechanism is even proposed for the 
defendants to fund medical monitoring. By contrast, the bill 
contemplates yearly non-administrative appropriations by the 
U.S. of up to $150 million, which would not be reimbursable. 
Section 403. It appears that payment for medical monitoring 
would be drawn from these appropriations.\4\ In the coming 
years, therefore, the government could be required to pay 
billions of dollars for injuries caused by the asbestos 
companies. We see no justification for the taxpayers to assume 
such a liability from the defendant companies, particularly in 
light of the fact that courts consistently have found the 
asbestos companies legally responsible for asbestos-related 
harm.
---------------------------------------------------------------------------
    \4\ An earlier draft of the bill specified appropriations of $200 
million annually for certain medical monitoring reimbursements. That 
provision has been excised from the current draft with no new provision 
to provide such funding.
---------------------------------------------------------------------------
    As we understand it, one of the justifications offered for 
this taxpayer subsidy is that the United States should share in 
paying for the asbestos problem. This argument does not fully 
account for the substantial sums that the United States already 
has spent as a result of the asbestos problem. Over the past 
thirty years, the government has paid billions of dollars in 
health, medical, research, and abatement costs to address the 
problems created by the marketing and sale of asbestos 
products. Similarly, in the coming years U.S. taxpayers can 
expect to pay additional billions in such costs, without the 
additional financial burden placed on them by this legislation. 
To the extent the Committee believes the government should pay 
even more because the United States shares culpability with the 
asbestos companies for the sale and distribution of asbestos 
products, we believe that premise is misguided. Virtually every 
court has rejected the assertion that the United States is 
culpable for the harms inflicted by asbestos. Significantly, 
these rulings were based not on immunity doctrines but on 
factual findings that the liability of asbestos defendants 
should not be placed upon the United States. As one court 
concluded, the effort by the asbestos companies to transfer 
culpability to the government is a ``grossly misplaced'' 
attempt to ``impose the woes of asbestos compensation upon the 
customer [the United States] whom they actively pursued.'' \5\ 
Another court, after conducting a six-week trial on the issue, 
rejected the assertion that ``the Government sacrificed the 
health of shipyard workers to the war effort.'' Instead, the 
court concluded, based on the facts, that ``the Government took 
reasonable health and safety measures regarding asbestos use in 
the shipyard environment. . . .'' \6\
---------------------------------------------------------------------------
    \5\ Glover v. Johns Manville, 525 F. Supp. 984, 986 (E.D. Va. 
1979), aff'd in part, vacated in part and remanded, 662 F.2d 225 (4th 
Cir. 1981).
    \6\ Johns Manville v. United States, 13 Cl. Ct. 72, 133 (1987), 
vacated on jurisdictional grounds, 855 F.2d 1571 (Fed. Cir. 1988); see 
also GAF v. United States, 19 Cl. Ct. 490, 499 (1990) (rejecting GAF's 
assertion that ``the Government knowingly exposed its employees to 
asbestos hazards''), aff'd, 932 F.2d 947 (Fed. Cir. 1991), cert. 
denied, 502 U.S. 1071 (1992).
---------------------------------------------------------------------------
    Taken together, these various provisions, along with the 
elimination of many claims through the imposition of H.R. 
1283's medical criteria, result in a massive transfer of 
funds--billions of dollars--to the defendant companies, 
financed by asbestos victims and taxpayers. We see no 
justification for such a significant subsidy, particularly 
given the fact that so many courts and juries have found 
asbestos companies liable to the people who have been exposed 
to their products.
    We understand that some have asserted that cost-shifting is 
required to ensure the continued viability of defendant 
companies so that they will continue to have the capacity to 
compensate sick victims in the future. We agree that preserving 
the assets of companies in order to compensate sick victims is 
vital. However, proponents of H.R. 1283 have not demonstrated 
that the financial health of asbestos defendants, taken as a 
whole, is so dire as to require a large subsidy of the sort 
envisioned by H.R. 1283. The Treasury Department has examined 
publicly available information regarding a number of asbestos 
defendants. While the industry has seen bankruptcies in the 
past two decades, public filings (10K and 10Q reports) by many 
major industry participants do not indicate financial distress; 
to the contrary, their statements often inform shareholders and 
others that asbestos-related liabilities will not have a 
material impact upon the present or future financial 
performance of the companies. In fact, over the past decade, 
many of these companies successfully have recovered, or made 
agreements to recover, billions of dollars in insurance 
coverage. We do not doubt that some companies may be in 
distress due to asbestos-related liabilities, but we have not 
seen the kind of compelling financial data, on an industry-wide 
basis, to justify shifting the economic responsibility of these 
injuries from the culpable corporate defendants and their 
shareholders to the victims and the taxpayers. In addition, the 
Treasury Department informs us that some companies that have 
chosen to work cooperatively with plaintiffs to resolve their 
asbestos-related liabilities could be placed at a competitive 
disadvantage by H.R. 1283. Public policy should not seek to 
reward defendants that have chosen not to settle at the expense 
of those firms that have acknowledged their responsibility.

IV. H.R. 1283's Administrative System Would Delay Compensation to the 
        Sick, Not Make It Better or Faster

    While one of the stated goals of H.R. 1283 is to speed 
compensation to deserving claimants, our analysis of the 
proposal indicates the opposite. In our view, H.R. 1283 would 
delay compensation to sick victims of asbestos exposure.
            A. Start-up Delays
    The creation of an administrative structure to handle a 
large number of claims inherently requires a multitude of steps 
and decisions before that structure can begin to process the 
claims of the sick. Of necessity, these steps and decisions 
delay the processing of claims for those cases that are already 
pending. Based on our experience administering several 
compensation programs, we are convinced such delay would result 
were H.R. 1283 to be adopted.
    First, we believe it would take a considerable amount of 
time to establish and effectively operate the proposed Office 
of Asbestos Compensation (``OAC''), which would serve both 
administrative and adjudicatory functions. As we read H.R. 
1283, the OAC likely would need to hire and/or contract with 
hundreds, and perhaps over a thousand employees--including 
lawyers, physicians, claims reviewers, and administrative 
personnel--before it could adequately handle the large number 
of cases that would confront the OAC initially.
    In this regard, a comparison to the National Vaccine Injury 
Compensation Program, established more than a decade ago, is 
instructive. That program processes cases that, while often 
medically complex, are nevertheless more streamlined than the 
average asbestos case in that vaccine cases do not require 
resolution of difficult and fact-intensive issues such as 
allocation, apportionment, or the exercise of subrogation 
rights against the industry. Yet, the vaccine program utilizes 
approximately 100 staffers in various agencies to handle the 
approximately 700 cases currently pending before it, and has 
resolved approximately 5,000 cases in its entire eleven-year 
history. We are concerned that, given similar staff-to-claim 
needs and even assuming some economies of scale accompanying 
the larger volume of asbestos cases, the OAC may need to hire a 
very large number of people to process the tens of thousands of 
claims that would be filed upon the commencement of OAC 
operations.
    Second, in addition to hiring and training all of these 
people, the OAC, no matter how well-intentioned and diligent in 
purpose, would face further delays in opening due to the 
complex and controversial rules that would have to be 
promulgated before any claim could be processed. For example, 
as we read H.R. 1283, before processing a claim, the OAC must 
develop, based on difficult-to-obtain historical data, a 
``compensation grid'' on which offers to the asbestos claimants 
would be based. Section 103(b)(2). The legislation appears to 
recognize the difficulty of this exercise by providing the OAC 
with subpoena power to collect information about prior 
settlements. Section 107(c). It is almost certain that 
litigants would challenge the process of developing this grid. 
This is precisely what occurred in the vaccine program, which 
has developed and modified its own compensation grid. 
Litigation and disputes over the development of the 
compensation grid would further delay compensation to the sick.
    Third, the processing of asbestos claims would be further 
delayed by satellite litigation on at least two significant 
issues. First, even once developed, the ``compensation grid'' 
would lead to more litigation when affected parties were not 
satisfied by the outcome. Second, the medical criteria, and the 
controversy surrounding them, would lead to new litigation and 
multiple appeals. For example, the parties to the asbestos 
claims process almost certainly would litigate and appeal 
multiple questions involving claimants with asbestos-related 
lung cancer and a history of smoking. The uncertainty resulting 
from this litigation over new questions--which the parties, not 
the OAC, would initiate--would further delay compensation to 
asbestos victims facing progressive asbestos-related illness.
    This delay in establishing the OAC is crucial because 
during this interim, start-up period, most of the pending 
asbestos claims would almost certainly grind to a halt. 
Although the bill allows for current claimants to continue with 
their case in court if trial commences within six months of the 
bill's enactment (Section 501(b)), only a marginal percentage 
of asbestos cases currently make it to trial, let alone within 
six months. Similarly, although the bill permits claimants to 
demand ``right to sue'' letters from the OAC if they do not 
receive an initial decision on medical eligibility quickly, 
that right is limited to those rare claimants with ``a 
scheduled trial date within one year'' after enactment. Section 
501(c). In any event, even if a few claimants could return to 
court before the OAC was operational, the prospective change in 
the law that the bill represents (and, in particular, the 
development of the compensation grid) almost certainly would 
alter the defendants' litigating positions and create 
incentives to defer litigating and settling the pending cases 
until the OAC process sorted itself out. Therefore, for the 
years that it would take for the OAC to become operational, 
while many victims' disease would progress, their claims would 
not.
    Again, a comparison to the vaccine program is illuminating. 
Although the National Childhood Vaccine Injury Act was passed 
by Congress in 1986, the vaccine program did not issue its 
first award for several years. In the interim, during the years 
it took to establish the vaccine office, most cases were stayed 
by the courts and little settlement progress was made. Once the 
vaccine claims resolution process commenced, it took twice as 
long to resolve claims as was predicted at the time the 
legislation was drafted (two years instead of one). Indeed, 
with the backlog created by the initial filing of approximately 
4,300 cases by 1990, the vast majority of vaccine cases were 
not resolved in even two years. Thus, our experience indicates 
that, with the erection of any new administrative structure, 
pending cases tend to be delayed far longer than anticipated, 
no matter how well intentioned or diligent the staff. The 
result is delayed justice for deserving victims.
            B. Delays in the Claims Resolution Process
    Once the OAC was finally up and running, the proposed 
claims resolution process would not, in our view, materially 
improve upon the traditional court system. H.R. 1283's claims 
processing procedures would require a number of steps for each 
individual. First, as we understand the bill, a claimant would 
have to submit a detailed, complete medical file before a claim 
was considered filed. Section 102(b). Our experience with 
asbestos litigation indicates that it would often take months 
to complete such a file. Second, once the claim was 
successfully filed, the claimant would be required to wait up 
to thirty days for the Medical Director to make an initial 
decision regarding eligibility. If initially denied, the 
claimant would then be obligated to petition for review by a 
panel of two qualified physicians or an exceptional medical 
claims panel. Section 102(c). If the denial were affirmed by 
the review panel, the claimant would then seek further review 
through an appeal to the Court of Federal Claims, and 
ultimately to a U.S. Court of Appeals. Section 106.
    Third, for a claimant determined to be medically eligible, 
if the claimant decided to use the administrative system, he/
she would have to name all defendants and submit a verified, 
particularized statement providing, with respect to each 
defendant, the basis for the allegation. The amount of time 
permitted for such a filing is not yet determined. Section 
103(a)(2). Fourth, upon finding that the claimant's statement 
met the requirements of the bill, the Administrator would have 
to provide notice to each named defendant. The Administrator is 
not given a deadline for doing so. Section 103(a)(3).
    Fifth, each named defendant in turn would have the right to 
assert third party claims, and likely would be entitled to 
discovery for the purpose of obtaining information necessary to 
identify all such additional defendants. This discovery, to be 
determined by an Administrative Law Judge, would not be subject 
to statutory or regulatory deadlines and could itself take 
months, particularly given the history of disputes regarding 
the allocation of responsibility among asbestos defendants. 
Section 103(a)(4).
    As we read H.R. 1283, it is only after these five events 
occur that the claimant would be entitled to receive a good 
faith settlement offer from the named defendants. It is 
entirely likely that a claimant under the new administrative 
system would face a substantial wait before receiving even an 
initial settlement offer, let alone full compensation. That is 
not a material improvement over the current system. Indeed, for 
many claimants, the wait to work their way through the system 
would follow the wait for the system to be erected, resulting 
in years of delay in compensation to the sick.
    Moreover, even if a claimant is able to resolve his or her 
claim, H.R. 1283 would create the likelihood of bitter 
litigation over one of the most contentious issues in asbestos 
suits: apportionment of liability among the defendant 
companies. In many cases, it is this dispute which occupies the 
most time and resources. Rather than attempt to reduce this 
litigation, the legislation would insert the U.S. government 
further into the maelstrom, by obliging the Trustee to litigate 
against defendants in an effort to recover the funds awarded to 
the claimant. Section 104. The Trustee would be prohibited from 
even acknowledging in court the fact or the amount of the 
settlement for which it is seeking reimbursement. Section 209. 
Meanwhile, the defendants would remain as capable and likely as 
they are today to attempt to elude paying their appropriate 
share of liability. Given the litigation history over 
apportionment of liability, we believe years of litigation 
would be likely, involving the U.S. government in matters that 
previously have remained a private dispute, and--to the extent 
the defendants were successful individually in defeating U.S. 
attempts to recover the full settlement amount--leaving the 
taxpayer to pay the difference and reducing the funds available 
to victims in future settlements.
    Finally, one aspect of H.R. 1283 raises constitutional 
concerns. H.R. 1283's provision for the appointment of the 
OAC's Medical Director by the Administrator of the OAC, Section 
101(c), appears to run afoul of the Appointments Clause. The 
Director is an inferior officer whose appointment must be 
vested ``in the President alone, in the Courts of Law, or in 
the Heads of Departments.'' Because the Attorney General may 
remove the Administrator of the OAC for cause (see Section 
101(a)), we do not believe the Administrator to be the head of 
a department for purposes of the Appointments Clause.\7\
---------------------------------------------------------------------------
    \7\ In addition to this concern, and the constitutional concern we 
raised in our letter of October 26, 1999, H.R. 1283 contains no 
congressional findings regarding the problems caused by the current 
approach to asbestos litigation, including its impact on victims, on 
the judicial system, and, most importantly, on interstate commerce. 
This may make it less likely that H.R. 1283 would withstand 
constitutional challenge under the Commerce Clause.
---------------------------------------------------------------------------
    To be clear, the concerns we express about H.R. 1283 do not 
stem from a ``can't-do'' attitude, or from any objection that 
the Department of Justice, as opposed to another federal 
agency, is tasked with developing this proposed administrative 
process. If this bill were enacted, the Department of Justice 
would embrace this challenge with dedication to our statutory 
responsibilities and to the need to speed compensation to 
deserving claimants. Our concerns arise, regrettably, from our 
experience with similar administrative systems and our decades-
long experience with asbestos litigation.

                                    * * * *
    As we noted at the outset, we remain interested in a 
dialogue with the Committee on how to improve the present state 
of asbestos compensation, which is far from perfect. However, 
to the extent that any legislation would improve the process, 
one might do better by building upon developments in the 
current system than by erecting new structures of the type 
proposed by H.R. 1283. As we have informed your staff, we 
remain willing to work with the Committee on this issue and to 
evaluate any other proposal for improving the present state of 
asbestos compensation.
    Thank you once again for this opportunity to present our 
views. The Office of Management and Budget has advised us that 
from the standpoint of the Administration, there is no 
objection to submission of this letter. Please do not hesitate 
to call upon us if we may be of further assistance.
            Sincerely,
                  Robert Raben, Assistant Attorney General.

cc:
        Honorable John Conyers, Jr.
        Ranking Minority Member

                 Judicial Calls for Federal Legislation

    Federal Courts. Many in the judiciary have long recognized 
the need for legislative action to resolve the asbestos 
litigation crisis. In 1991, the U.S. Judicial Conference Ad Hoc 
Committee on Asbestos Litigation, appointed by Chief Justice 
William Rehnquist, found that the typical asbestos case took 31 
months--nearly three years--to wind its way to resolution 
through the court system, compared with 18 months for the 
typical liability suit. The report issued by the Ad Hoc 
Committee called on Congress to address the asbestos litigation 
crisis, writing that ``the ultimate solution should be 
legislation recognizing the national proportions of the 
problem,'' and that ``[i]n the final analysis . . . 
Congressional action is necessary.'' These findings were 
supported by statistics developed by the Rand Institute for 
Civil Justice, which found that attorneys' fees and other 
transaction costs consumed sixty-one percent of asbestos 
litigation, leaving only thirty-nine percent to compensate 
claimants.
    In 1993, the Third Circuit in Dunn v. HOVIC, 1 F.3d 1371 
(3d Cir. 1993)(en banc), the court wrote that:
        ``. . . both state and federal courts have recognized 
        that no single court can fashion an effective response 
        to the national problem flowing from mass exposure to 
        asbestos products.'' Id. at 1386.

    Again in 1996, the Third Circuit in Georgine v. Amchem 
Prods., Inc. 83 F.3d 610, (3d Cir. 1996), stated that asbestos 
litigation required:

        ``innovation in the management of mass tort litigation 
        . . . But reform must come from the policy-makers, not 
        the courts. . . . The most direct and encompassing 
        solution would be legislative action.'' Id. at 633.

    In 1997, the United States Supreme Court in Amchem Prods., 
Inc. v. Windsor, 117 S. Ct. 2231 (1997), ruled that a massive 
global settlement of asbestos-related claims was invalid under 
the Federal Rule of Civil Procedure 23 (b)(3)--the rule 
governing class actions in federal courts. Justice Ginsburg, 
writing for the Majority, stated:

        ``The argument is sensibly made that a nationwide 
        administrative claims processing regime would provide 
        the most secure, fair, and efficient means of 
        compensating victims of asbestos exposure. Congress, 
        however, has not adopted such a solution. And Rule 23 . 
        . . cannot carry the large load . . . heaped upon it.'' 
        Amchem, 117 S. Ct. at 2253.

    Justice Stephen Breyer, concurring in part and dissenting 
in part, observed that asbestos litigation has weakened the 
judiciary while leaving victims uncompensated. Id. at 2252. 
Justice Breyer pointed to the overwhelming evidence provided by 
the Ad Hoc Committee, which detailed the chaos asbestos 
litigation has levied upon the judiciary, to suggest that if 
the majority was unwilling to accept the global settlement as a 
means to fix the problem, some other solution was necessary. 
Id.
    In 1998, the Fifth Circuit in Cimino v. Raymark Industries, 
Inc., 151 F.3d 297, 313 (5th Cir. 1998) (quoting Jackson v. 
Johns Mansville Sales Corp, 750 F.2d 1314, 1327 (5th Cir. 
1985), cert. denied, 478 U.S. 1022 (1986)), the court wrote 
that:

        ``[T]here is no doubt that a desperate need exists for 
        Federal legislation in the field of asbestos 
        litigation. Congress' silence on the matter however, 
        hardly authorizes the federal judiciary to assume for 
        itself the responsibility for formulating what 
        essentially are legislative solutions.''

    In 1999, the United States Supreme Court in Ortiz v. 
Fibreboard Corp., 119 S. Ct. 2295 (1999), ruled that a massive 
global settlement of asbestos-related claims was invalid under 
the Federal Rule of Civil Procedure 23 (b)(1)(B)--the rule 
governing ``limited fund'' class actions in federal courts. 
Justice Souter, writing for the majority, stated:

        ``this case is a class action prompted by the 
        elephantine mass of asbestos cases, . . . this 
        litigation defies customary judicial administration and 
        calls for national legislation.'' Id. at 2302.

    Chief Justice Rehnquist, writing the concurring opinion, 
stated:

        ``Under the present regime, transactional costs will 
        surely consume more and more of a relatively static 
        amount of money to pay these claims . . . the 
        `elephantine mass of asbestos cases,' cries out for a 
        legislative solution.'' Id. at 2324.

    State Courts. State Courts, too, have recognized that a 
federal legislative solution to the asbestos litigation morass 
is required.
    In 1986, the Supreme Court of New Jersey in Fischer v. 
Johns-Manville Corp., 512 A.2d 466, 480 (N.J. 1986), wrote 
that:

        ``[a]t the state court level we are powerless to 
        implement solutions to the nationwide problems created 
        by asbestos exposure and litigation arising from that 
        exposure.''

    In 1994, the Supreme Court of Florida in W.R. Grace & Co.--
Conn. v. Waters, 638 So.2d 502, 506 (Fla. 1994), wrote that:

        ``[a]ny realistic solution to the problems caused by 
        the asbestos litigation in the United States must be 
        applicable to all fifty states. It is our belief that 
        such a uniform solution can only be effected by federal 
        legislation.''

    In 1996, the West Virginia Supreme Court of Appeals in 
Appalachian Power Co. v. MacQueen, 479 S.E.2d 300, 304 (W. Va. 
1996), also cited the need for Congressional action:

        ``Congress by not creating any legislative solution to 
        these problems, has effectively forced the courts to 
        adopt diverse, innovative and often non-traditional 
        judicial management techniques to reduce the burden of 
        asbestos litigation that seem to be paralyzing their 
        active dockets.'' Id.

    In 1998, the Supreme Court of Texas in Owens-Corning 
Fiberglass Corporation v. Malone, 972 S.W.2d 35, 53 (Tex. 
1998), wrote that:

        ``it may be that a truly uniform solution can only be 
        fashioned by either the Supreme Court or Congress.''
                            Dissenting Views

    We strongly oppose H.R. 1283, the so-called ``Asbestos 
Compensation Act of 2000.'' H.R. 1283 is an unjustified Federal 
intrusion into State tort law that purports to resolve the 
``asbestos litigation crisis'' by cutting off viable claims of 
exposed workers. Instead of creating an administrative 
alternative to the civil justice system to provide fair and 
speedy compensation to injured workers, the effect of this bill 
would be to free corporations from their responsibility to 
compensate victims injured by asbestos exposure. H.R. 1283 is 
opposed by the Department of Justice,\1\ the AFL-CIO,\2\ Public 
Citizen,\3\ the National Council of Senior Citizens \4\ and the 
Association of Trial Lawyers of America,\5\ among others. The 
legislation is expected to be vetoed should it reach the 
President's desk.
---------------------------------------------------------------------------
    \1\ See Letter from Assistant Attorney General Robert Raben, U.S. 
Department of Justice, Office of Legislative Affairs, to Chairman Henry 
Hyde, (March 8, 2000) (on file with the minority staff of the House 
Judiciary Committee) [hereinafter DOJ Letter].
    \2\ See Letter from Peggy Taylor, President, AFL-CIO, to Chairman 
Henry Hyde, (February 14, 2000) (on file with the minority staff of the 
House Judiciary Committee) [hereinafter AFL-CIO Letter].
    \3\ See Letter from Joan Claybrook, President, Public Citizen, to 
Ranking Member John Conyers, (March 7, 2000) (on file with the minority 
staff of the House Judiciary Committee) [hereinafter Public Citizen 
Letter].
    \4\ See Letter from George J. Kourpias and Steve Protulis, National 
Council of Senior Citizens, to Members of Congress, (February 9, 2000) 
(on file with the minority staff of the House Judiciary Committee).
    \5\ The Fairness in Asbestos Compensation Act of 1999: Hearing on 
H.R. 1283 Before the Comm. on the Judiciary, 106th Cong. (1999) 
(statement of Richard Middleton, Jr., President, ATLA) [hereinafter 
ATLA Testimony].
---------------------------------------------------------------------------
    H.R. 1283 establishes an Office of Asbestos Compensation 
(``OAC''), headed by an Administrator in the Department of 
Justice (``DOJ''), in which all asbestos complaints must be 
filed. Once the program is set up--which is likely to take 
several years--and a complaint is filed, a Medical Director 
determines whether a claimant meets the restrictive medical 
criteria outlined in the bill. If the criteria are met, the 
named defendants are then required to make settlement offers to 
the claimant. The Trustee of the Asbestos Compensation Fund is 
also required to make an offer of compensation to the claimant, 
based on a compensation grid to be established by rule. If the 
claimant accepts the defendants' offers, the claim is settled. 
If the claimant accepts the Fund's offer, the Trustee may then 
enforce the claim against the defendant companies through 
litigation before a DOJ administrative law judge or in State or 
Federal Court. If the claimant rejects both the Fund's offer 
and the defendants' offers, he may pursue the claim either 
before a DOJ administrative law judge or in State or Federal 
court, subject to numerous restrictions on their rights under 
State tort law. The legislation has a retroactive effective 
date and would preempt all asbestos claims currently pending in 
Federal and State court.
    In our view, the test for crafting asbestos legislation is 
whether it improves the situation of the victims of asbestos as 
a whole. Unfortunately, H.R. 1283 does not meet this test in a 
number of important respects. First and foremost, the bill's 
medical criteria provide that many victims who would be 
eligible for recovery under the longstanding traditions of tort 
law in our States would be shut out arbitrarily by Congress. 
The minimum exposure and latency requirements will deny 
compensation to many asbestos supervisors and clean-up workers. 
The criteria will also exclude many spouses and children of 
workers who contracted cancer from their contact with asbestos 
workers and their clothes--like those in Libby, Montana.
    In addition, we believe opt-in is effectively laying your 
fairness cards on the table. If you really believe this bill is 
fair, then why not give the victims the right to make that 
determination themselves? Under Amchem Products, Inc. v. 
Windsor (Georgine),\6\ a model the proponents of this bill 
repeatedly invoke, all of the victims had an absolute right to 
choose whether to opt into the plan, and 170,000 chose not to. 
However, the proponents propose a perverted version of this. 
You can ``opt-out'' of the administrative system and into the 
courts only if you survive the contorted medical criteria. That 
means that tens if not hundreds of thousands of victims will 
never get any choice.
---------------------------------------------------------------------------
    \6\ Amchem Products, Inc. v. Windsor, 117 S.Ct. 2231 (1997).
---------------------------------------------------------------------------
    Moreover, the new administrative maze will create more, not 
fewer, delays. Under the bill, every single claim--no matter 
how sick the victim--will be placed in legal limbo for as long 
as it takes to create the massive new legal bureaucracy, 
promulgate and litigate a dozen new rules, and obtain funding. 
Even once the bureaucracy is set up, the delays will go on and 
on. Claimants will face nearly a dozen separate steps--each one 
subject to lengthy delay and litigation--before they can obtain 
any compensation.
    The legislation's regressive new ``tort reforms'' will 
reduce the value of the few claims which become eligible for 
compensation. The bill narrows and caps punitive damages, 
limits legal fees, limits class actions, and narrows venue all 
on behalf of a special interest. Harm caused by asbestos 
constitutes perhaps the most grievous tort in American 
history--to date hundreds of thousands of individuals have been 
killed, and millions more have been harmed. Given that asbestos 
manufacturers have known since the early part of the 1900's 
that the fiber would kill workers and harm their families, and 
that they have sought to avoid responsibility for their actions 
and fight efforts to ban its use, these tort reforms send a 
shocking message about corporate accountability.
    We also strongly object to the legislation's retroactive 
effective date, which will preempt all 200,000 cases pending in 
the courts today. The so-called exemption for cases which reach 
trial within the next 6 months is next to worthless, since even 
these cases will be subject to the restrictive new medical 
criteria. The net effect will be to bail out wrongdoers and 
shift liability to victims and the Federal Government. For 
these and the following reasons, we dissent from this 
legislation.
I. The ``litigation crisis'' is vastly overblown and based on dated 
        information.
    The principal purported justification for this legislation 
is that we are in the midst of an asbestos litigation crisis, 
with a supposed ``elephantine mass'' of pending cases which 
will lead to the bankruptcy of most of the remaining asbestos 
companies.\7\ We cannot agree with this contention. First, 
there is no data showing that asbestos litigation is any more 
time consuming or expensive than any other type of product 
liability case. Indeed, because of the widespread harm caused 
by these products and the 25 years of litigation that have 
settled the major liability issues, asbestos is now a mature 
tort. Thus, asbestos cases today are less time consuming and 
less expensive to pursue than other types of tort actions. The 
vast majority of these cases are being settled--with the 20 
companies in the Center for Claims Resolution settling 
approximately 99.8% of their cases, and with defendants such as 
Owens Corning having agreed to a voluntary settlement program 
for 180,000 of its claims. At the committee hearing on H.R. 
1283, Owens Corning's General Counsel, Maura Abeln, stated that 
``there is a viable alternative to legislation--a settlement 
process which protects the rights of individual claimants and 
permits companies to manage their own financial destiny.'' \8\
---------------------------------------------------------------------------
    \7\ Ortiz v. Fibreboard Corp., No. 97-1704, 1999 WL 412604, at 5 
(U.S. June 23, 1999).
    \8\ See ATLA Testimony at 4.
---------------------------------------------------------------------------
    Moreover, Federal court procedures are particularly 
streamlined, with all Federal cases having been consolidated 
for procedural purposes in a single court in Philadelphia. 
According to ATLA President Richard Middleton:

        [I]t is simply inaccurate to any longer claim that 
        asbestos litigation is placing an undue burden on the 
        courts. As statistics clearly show, claims filed do not 
        translate into cases tried. The vast majority of cases 
        do not take up the time of the courts. Although many 
        new cases are filed each year, large numbers are placed 
        on inactive dockets and most other claims are settled 
        under private agreements. In fact, according to 
        Mealey's Asbestos Litigation Report, during 1998 only 
        55 asbestos cases involving 125 individuals proceeded 
        to verdict in the 50 States and all Federal courts, a 
        45% decline from 1997--and clearly a negligible number.

    We also note that the courts are already providing the 
needed flexibility so that cases involving persons who are 
seriously ill may move to the front of the litigation line. A 
Public Citizen survey has found that, at both the State and 
Federal levels, courts have adopted ``gatekeeper'' mechanisms 
which prioritize the claims of plaintiffs with more advanced 
illnesses and allow stays for less impaired individuals. This 
has been accomplished through the use of pleural registries 
(which allow persons with less serious diseases to file claims 
in court without actively prosecuting them) and by the 
widespread allowance of distinct causes of action for different 
asbestos-related injuries. Thus, it appears that because many 
of the problems that the courts confronted during the last 
decade have been eliminated, the federally mandated 
administrative system proposed in H.R. 1283 will only serve to 
create new and lengthy delays for injured asbestos victims.
    We also find little evidence to support the proponents' 
claim that the legislation is needed because we will otherwise 
face a growing stream of bankruptcies by defendant companies. 
It is instructive to note that the Treasury Department has 
examined publicly available information regarding a number of 
asbestos defendants and found the Majority's arguments 
unpersuasive. They concluded, ``[w]hile the industry has seen 
bankruptcies in the past two decades, public filings (10K and 
10Q reports) by many major industry participants do not 
indicate financial distress; to the contrary, their statements 
often inform shareholders and others that asbestos-related 
liabilities will not have a material impact upon the present or 
future financial performance of the companies. In fact, over 
the past decade, many of these companies successfully have 
recovered, or made agreements to recover billions of dollars in 
insurance coverage.'' \9\
---------------------------------------------------------------------------
    \9\ See DOJ Letter at 7.
---------------------------------------------------------------------------
    Our review of the specific liability statements by publicly 
traded asbestos defendants confirms that the principal 
remaining asbestos defendants are not facing any significant 
threat of bankruptcy. For example, in March of this year, Paul 
Norris, the Chairman and Chief Executive Officer of W.R. 
Grace--one of the largest remaining asbestos defendants, and 
the company allegedly responsible for the Libby, Montana 
asbestos deaths and illnesses--acknowledged that ``Grace 
generates ample cash to cover its asbestos-litigation burden.'' 
\10\ Similarly, Owens-Corning, another major asbestos 
defendant, admitted in a March 1, 2000 SEC filing that ``. . . 
we believe that the costs which may be associated with [the 
asbestos] matter will not have a materially adverse effect on 
Owens Corning's financial position or results of operations.'' 
\11\ The situation is much the same with other significant 
asbestos defendants--U.S. Gypsum,\12\ Federal Mogul,\13\ 
Armstrong World Industries,\14\ and Pfizer (parent company of 
Quigley) \15\ all have indicated there is little likelihood 
that asbestos liability could lead to bankruptcy.
---------------------------------------------------------------------------
    \10\ See Susan Warren, W.R. Grace Has New Business, but Needs a New 
Image, Wall Street Journal, March16, 2000, at B4.
    \11\ Owens Corning, SEC 10k filing, March 1, 2000; Yahoo! Finance 
(December 31, 1999) .
    \12\ U.S. Gypsum acknowledged in its quarterly report filed with 
the SEC that, ``asbestos litigation is not expected to have a 
significant impact on [U.S. Gypsum's] liquidity or cash flows during 
1999.'' U.S. Gypsum Corporation, SEC 10Q filing, March 1, 2000.
    \13\ In its most recent securities filing with the SEC, Federal 
Mogul admitted, ``. . . [M]anagement believes that asbestos claims 
pending against the Company . . . will not have a material effect on 
the Company's financial position.'' Federal Mogul, SEC 10k filing, 
March 1, 2000. Federal Mogul has estimated a maximum of $1.1 billion in 
future asbestos liability while at the same time it reported 
shareholders' equity of more than 20 times that liability. Yahoo! 
Finance (December 31, 1999).
    \14\ In its annual report filed with the SEC, Armstrong World 
Industries characterized the cost of asbestos claims as not having, ``. 
. . [A]ny material after-tax effect on the financial condition of 
Armstrong or its liquidity.'' Armstrong World Industries, SEC 10k 
filing, March 1, 2000.
    \15\ Pfizer, the parent corporation of Quigley Company, Inc., a 
producer of asbestos, has stated that costs incurred in defending and 
ultimately disposing of the asbestos personal injury claims, as well as 
other asbestos-related costs, will be covered by insurance policies and 
ultimately will have no materially adverse effect on its financial 
position. Pfizer Inc., SEC 10k filing, March 1, 2000. At year end, 
Pfizer had a market value of approximately $122.6 billion. Yahoo! 
Finance (December 31, 1999).
---------------------------------------------------------------------------
    If the Majority was truly concerned that Congress' failure 
to legislate could cause these firms to file for bankruptcy, we 
would have expected them to have subpoenaed, or at least 
investigated the financial situation of these companies. 
However, that has not occurred, and the Majority has chosen 
instead to rely on self-serving statements of financial 
distress, rather than the companies' statements made to the SEC 
and their own shareholders.
II. Medical criteria will unfairly reduce the number of claimants.
    There are several problems with regard to the medical 
criteria.\16\ As a general matter, the medical criteria are not 
consensus standards generally accepted in the medical community 
as demonstrated by communications submitted to the committee by 
distinguished experts in the field.\17\ Rather, they represent 
litigation-driven standards, promoted by defendants, which are 
unsupported by the medical literature. Further, despite the 
majority's repeated attempts to characterize the criteria as 
merely representing a codification of negotiated private 
settlement standards ``agreed to by all the parties,'' the 
proponents have chosen the least favorable and the most 
restrictive standards from a menu of settlement agreements, the 
most restrictive of which was Amchem. At the same time, they 
have ignored whole cloth more liberal standards contained in 
numerous other settlements and judicially approved plans.\18\
---------------------------------------------------------------------------
    \16\ The original substitute would have allowed for racial 
profiling by referring to an article that provided that African 
Americans have worse lung functioning and therefore should have a 
higher bar to establish recovery (The original substitute's definition 
of ``pulmonary function testing'' referenced standards requiring race 
corrections and encouraged physicians to apply different standards 
blacks than whites). Fortunately, these concerns were alleviated as a 
result of an amendment offered by Representatives Scott, Conyers and 
Hyde which requires the Medical Director to eliminate predicted values 
and pulmonary function tests that incorporate adjustments based on 
race.
    \17\ The Fairness in Asbestos Compensation Act of 1999: Hearing on 
H.R. 1283 Before the Comm. on the Judiciary, 106th Cong. (1999) 
(statement of Christine Oliver, M.D.).
    \18\ See In re Johns-Manville Corp., 837 F.2d 89 (2d Cir. 1988) and 
In re Asbestos Litigation v. Gerald Ahearn, 90 F.3d 963 (5th Cir. 
1996).
---------------------------------------------------------------------------
    Moreover, we believe it is inappropriate for Congress to 
specify detailed and fixed medical criteria governing tort 
actions. To the extent there is any role for the Federal 
Government in this regard, it would be far preferable to assign 
the responsibility to an entity with actual expertise in the 
area, such as the National Institute of Occupational Safety and 
Health (``NIOSH''), rather than Congress.\19\ Also, under the 
bill, the value to a victim of meeting the medical criteria is 
somewhat limited, given that the medical certificate is subject 
to rebuttal by defendants,\20\ and even if it is not rebutted, 
it does not automatically entitle the claimant to 
compensation.\21\
---------------------------------------------------------------------------
    \19\ Representatives Conyers, Scott and Nadler offered an 
amendment, which the Majority rejected, that would have required the 
Department of Justice, in consultation with NIOSH, to draft medical 
criteria.
    \20\ Sec. 201. The certificate can be rebutted by ``clear and 
convincing evidence.'' The defendants could easily argue that a 
contradictory diagnosis obtained from their own experts would meet this 
standard. Accordingly, the required procedure for obtaining a 
certificate of eligibility simply delays the adjudication of the 
plaintiff's claim and coerces him to disclose his entire medical case 
and all of his evidence of exposure before he is permitted to file 
suit. This effectively gives the defendants an unlimited time to 
prepare its defense.
    \21\ Sec. 207.
---------------------------------------------------------------------------
    A related concern is that under the procedures in the bill, 
asbestos manufacturers would appear to be guaranteed a right to 
a jury trial with regard to the claimant's medical condition, 
but the claimant's right to a jury trial may be eliminated by 
the medical panels or the Federal court of claims. 
Additionally, the medical review process unfairly prevents some 
of the most qualified physicians--e.g., those who have spent a 
significant amount of their time working as asbestos experts--
from serving as an eligible physician for medical review 
purposes and requires thousands of workers to submit themselves 
to new chest x-rays to meet the bill's more stringent testing 
requirements.\22\ Finally, we take issue with the notion that 
the so-called ``less sick'' or ``unimpaired'' should be barred 
from receiving any compensation.
---------------------------------------------------------------------------
    \22\ Sec. 601(28). Sec. 601(5) requires quality one rather than 
quality 2 x-rays.
---------------------------------------------------------------------------
    We also have a number of specific problems with the 
individual categories of asbestos related harm, particularly 
with regard to lung cancer and non-malignant conditions (i.e., 
``less sick'' or ``unimpaired'' individuals).
            A. Lung cancer
    The criteria for asbestos related lung cancer is unduly 
restrictive and discriminatory. Even if a claimant meets the 
arbitrary exposure requirement, the whole issue of medical 
eligibility and causation may be fully relitigated at trial if 
the lung cancer claimant has a history of smoking. Thus, for 
these claimants, the certificate of medical eligibility is 
illusory in that it does not establish even a rebuttable 
presumption of eligibility.\23\ This presumption against 
smokers is inconsistent with the jurisprudence \24\ and could 
leave tens of thousands of workers with little chance of 
obtaining compensation from either the asbestos or tobacco 
industry (notwithstanding determinations by OSHA and the 
Surgeon General which have found that persons exposed to 
asbestos who smoke have a 50 times greater likelihood of 
contracting lung cancer than ordinary individuals).\25\
---------------------------------------------------------------------------
    \23\ Sec. 304(b).
    \24\ See Brisboy v. Fibreboard, 418 N.W. 2d 650 (1988, MI Sup. Ct); 
Alvin J. Acosta v. Babcock & Wilcox, No. 90-3714 (5th Cir. 1992) 
(applying ``substantial causation'' standard for asbestos claims 
brought by smokers, rather than the bill's suggested standard that 
asbestos exposure must be the sole and ``but for'' cause).
    \25\ An individual with asbestos exposure who is a non-smoker has a 
5x greater risk of contracting lung cancer than an unexposed person. 
Regular smokers have a 10x greater risk of contracting lung cancer than 
persons who do not smoke. However, persons with both asbestos exposure 
history and a smoking history have an increased risk of lung cancer 
that is 50 to 90 times greater than normal. Health Consequences of 
Smoking and Cancer, report of the Surgeon General (1992), pages 189-
190. See also Bldg. & Construction Trades Dept. v. Brock, 838 F.2d 
1258, 1265-66 (D.C. Cir. 1986) (citing OSHA Regulations, 51 Fed. Reg. 
22,612 et seq., finding that non-smokers exposed to asbestos have a 2x 
greater risk of contracting lung cancer than the general population, 
smokers have a 10x greater risk, and smokers exposed to asbestos have a 
20x greater risk).
---------------------------------------------------------------------------
    Another concern is that the legislation denies compensation 
to lung cancer victims who cannot show a latency period from 
their first exposure to asbestos to the date of illness of at 
least 10 years. In addition, victims who are unable to 
establish they were regularly exposed to visible asbestos dust 
in their workplace for at least 7.5 years (and as a practical 
matter, in most cases, 15 years) \26\ unless their lung cancer 
is accompanied by a qualifying non-malignant disease, are also 
denied compensation under H.R. 1283. These time requirements 
bar recovery by persons subject to shorter latency or exposure 
periods (the scientific literature contains numerous examples 
of individuals developing lung cancer with shorter latency and 
exposure periods),\27\ and make it almost impossible for 
spouses and children exposed as a result of contact with an 
asbestos worker to recover.
---------------------------------------------------------------------------
    \26\ Sec. 304(a). As a general matter, asbestos dust is not visible 
except at levels that are 1,000 times greater than the OSHA standard of 
.1 fibers per cubic centimeter of air. Sec. 304. Further, exposure to 
asbestos is often mixed with exposure to other nuisance dusts making 
the percentage of asbestos dust present hard to determine. Workers are 
unlikely to have access to exposure records of dust levels. Also, with 
regard to the issue of ``equivalent years of exposure'' which is 
defined in Sec. 601(13), the only persons who would qualify to obtain 
full year exposure for each year of work are those persons whose 
primary occupation involved the direct installation, repair, or removal 
of asbestos-containing products (this would include supervisors, 
bystanders, clean-up workers, inspectors, or anyone else who worked in 
the same area and breathed the same dust).
    \27\ Letter from L. Christine Oliver, Assistant Clinical Professor 
of Medicine, Harvard Medical School, et al., to Congressman John 
Conyers, Jr., Ranking Minority Member, U.S. House Judiciary Committee, 
(February 1, 2000) (on file with the Judiciary Committee Minority 
Staff).
---------------------------------------------------------------------------
    Asbestos-related lung cancer can be caused by minimal 
exposure. The medical criteria in H.R. 1283 will result in the 
exclusion of a substantial proportion of the lung cancer 
victims that are currently compensated in the tort system for 
their injuries. The provisions of the bill, therefore, only 
serve to emphasize that the proposed medical criteria are not 
designed to be fair to exposed victims, but simply to cut off 
liability for the defendants. As the Department of Justice 
wrote in its letter to the committee, ``HHS advises us that 
many studies have clearly shown that asbestos is a carcinogen 
and causes cancer independent of causing non-malignant disease, 
again contrary to the implication of H.R. 1283.\28\
---------------------------------------------------------------------------
    \28\ See DOJ Letter at 4.
---------------------------------------------------------------------------
    Yet another concern with regard to the lung cancer medical 
criteria is that claimants must either have a qualifying non-
malignant condition or evidence of pleural plaques and many 
years of very heavy exposure to visible asbestos dust.\29\ The 
weight of scientific evidence is that the presence of 
asbestosis or other non-malignant disease is not a precondition 
for asbestos-related lung cancer.\30\ Lung cancer, asbestosis 
and pleural disease are separate and distinct diseases, each of 
which are caused by asbestos exposure. They are not a continuum 
or progression of a simple disease. Consequently, there is no 
scientific or logical basis for requiring one to be a 
precondition for eligibility to receive compensation for 
another. Moreover, private settlement agreements such as In re 
Asbestos Litigation v. Gerald Ahearn \31\ provide compensation 
for lung cancer without regard to whether the claimant has a 
non-malignant condition.
---------------------------------------------------------------------------
    \29\ Sec. 304.
    \30\ David Egilman, Lung Cancer and Asbestos Exposure: Asbestosis 
is Not Necessary, American Journal of Industrial Medicine 30:398-406 
(1996).
    \31\ 90 F.3d 963 (5th Cir. 1996) (prior class action settlement 
with Fiberboard corporation).
---------------------------------------------------------------------------
            B. Non-Malignant conditions
    The criteria for non-malignant conditions are based on the 
flawed notion that no recovery should be permitted unless an 
asbestos victim can show they are impaired. Tort law 
traditionally has provided compensation for those injured by 
the wrongdoing of another. The amount of damages varies with 
the level of harm caused to the victim. Under H.R. 1283, 
asbestos victims would have to show greater damage to obtain 
recovery--proof of impairment rather than injury--than would 
other victims of wrongdoing. We do not agree that asbestos 
victims should be held to such a high standard of proof.
    Even if impairment, and not injury, were the proper 
standard for recovery, the medical criteria in the bill could 
deny compensation (other than reimbursing a portion of some 
medical tests) for many persons suffering from pleural 
thickening and pleural plaques, which are an alteration to the 
lining of the lung, based on arbitrarily defined limits on lung 
functioning.\32\ Again, this flies directly in the face of 
established court precedent,\33\ and private settlements \34\ 
and will operate to deny justice to persons facing real 
suffering--both from the fear of the increased likelihood of 
dying as well as from pleural thickening in their lungs and 
plaques leading to shortness of breath.
---------------------------------------------------------------------------
    \32\ Sec. 302.
    \33\ See e.g,. Verryke v. Owens-Corning Fiberglass Corp., 616 N.E. 
2d 1162 (Ohio Ct. of App. 1992) (rejecting defendant's assertion that 
pleural thickening cases should not be compensable, because ``a pleural 
plaque or thickening meets the definition of `bodily harm,' which is a 
subspecies of `physical harm,' and thus satisfies the injury 
requirement of the Restatement of Torts.''); In Re Cuyahoga County 
Asbestos Cases, 713 N.E. 2d 20 (1988); Sullivan v. Combustion Eng., 590 
A.2d 944 (Md. Ct. Of Special Appeals 1998).
    \34\ See In re Johns-Manville Corp., 837 F.2d 89 (2d Cir. 1988) and 
In re Asbestos Litigation v. Gerald Ahearn, 90 F.3d 963 (5th Cir. 
1996), settlements.
---------------------------------------------------------------------------
    The medical criteria are also unduly restrictive in denying 
compensation to those with asbestosis. The bill requires 
asbestosis victims to meet arbitrary, rigid x-ray and lung 
function criteria to qualify for compensation. These medical 
criteria do not conform to the diagnostic guidelines of the 
American College of Chest Physicians and the America Thoracic 
Society. Experts in chest disease and pulmonary function agree 
that there is no clear and consistent correlation between chest 
x-ray findings, pulmonary function, and clinical signs such as 
basilar crackles, yet H.R. 1283 requires such a rigid 
correlation as a prerequisite to medical eligibility.
    In this regard, scholarly studies have found that 
``[i]ndividuals with pleural plaques and thickening . . . 
generally . . . have between 2\1/2\ and 3 times increased risks 
of cancer.'' \35\ Another study found that breathlessness of 
exertion was reported by 95% of subjects found to have 
asbestos-related pleural thickening and a history of wheezing 
was found in 55% of subjects, with a regular cough in 53% and 
occasional sputum production in 47%. 56% of this population of 
individuals with only pleural thickening noted chest pain and a 
history of pleural effusions was elicited in 37%.\36\ Yet 
another study determined that ``subjects with pleural 
thickening appear to have more shortness of breath as assessed 
by questionnaire and more dyspnea with major activities such as 
walking up a steep hill or climbing two flights of stairs.'' 
\37\
---------------------------------------------------------------------------
    \35\ Fletcher, A Mortality Study of Shipyard Workers with Pleural 
Plaques, 29 Bit. J. Industr. Med 142 (1972) & Hillerdal, Pleural 
Plaques and Risk for Bronchial Carcinoma and Mesothelioma, 105 Chest 
144 (1994).
    \36\ Yates, et al, Asbestos-related Bilateral Diffuse Pleural 
Thickening: Natural History of Radiographic and Lung Function 
Abnormalities, 153 Am. J. Respir. Crit. Care Med. 301 (1966).
    \37\ Borbeau, et al, The Relationship Between Respiratory 
Impairment and Asbestos-Related Pleural Abnormality in an Active Work 
Force, 142 Am. Rev. Respir. Dis. 837 (1990).
---------------------------------------------------------------------------
            C. Other cancers
    In terms of asbestos related ``other cancer,'' the bill 
only identifies certain types of cancers for which there can be 
compensation (e.g., larynx, oral-pharynx, gasto-intestinal and 
stomach).\38\ To our knowledge, no basis exists--nor has any 
evidence been proffered--for excluding any additionally 
recognized asbestos-related cancers from eligibility for 
compensation.
---------------------------------------------------------------------------
    \38\ Sec. 305.
---------------------------------------------------------------------------
III. The tort limitations will unfairly reduce the size of the 
        settlements without any meaningful offsetting benefit to 
        claimants and will protect reckless and dangerous misconduct.
            A. Nature of tort reform
    We also object to the inclusion of a number of extraneous 
``tort reforms'' in the legislation, which include: (1) limits 
on claimants legal fees (sec. 108(c)); (2) elimination of 
damages from enhanced risk of a future condition (sec. 202); 
(3) limitations on class actions to those that meet Federal 
requirements (sec. 205); (4) limiting venue to jurisdictions 
where the exposure occurred or the claimant resides (sec 205 ( 
c); (5) mandating choice of law (sec. 208(a)); and (6) 
increasing the evidentiary standard for establishing punitive 
damages and capping punitive damages at three times 
compensatory damages for administrative proceedings (sec. 
208(d)) and totally eliminating punitive damages in court 
proceedings (sec. 202).\39\
---------------------------------------------------------------------------
    \39\ Representative Scott offered unsuccessfully an amendment to 
strike all of the tort reform provisions in the bill.
---------------------------------------------------------------------------
    These ``tort reforms'' tilt the playing field against 
workers and unfairly shield defendants from legal 
responsibility for their past misconduct. For example, the 
restrictions on legal fees (which could include bans on 
contingency fee arrangements), constitute a limitation on an 
asbestos victim's ability to obtain the most competent legal 
advice and are also discriminatory because they apply to 
claimants but not defendants. The limits on class actions will 
limit victims' access to the courts and prevent States from 
being able to resolve mass asbestos claims in the manner they 
deem most efficient. The venue limits preclude actions in 
defendants' home States or where they are found to be doing 
business--even though these may be the only locales where 
jurisdiction may lie or service of process can be effectuated.
    Finally, the limits on punitive damages will mitigate the 
liability of the most egregious offenders. AFL-CIO General 
Counsel John Hiatt emphasized this point in his hearing 
testimony when he suggested that the committee be mindful of 
incentives it creates for industrial decision makers as it 
considers whether to create exceptions to State tort law: ``I 
am sure the committee would not want to suggest to business 
executives making decisions in the future that if the scale of 
the risk their product poses is truly awe inspiring, Congress 
will step in to save them from the consequences of their 
actions under State tort law.'' \40\
---------------------------------------------------------------------------
    \40\ The Fairness in Asbestos Compensation Act of 1999: Hearing on 
H.R. 1283 Before the Comm. on the Judiciary, 106th Cong. (1999) 
(statement of John Hiatt, General Counsel, AFL-CIO at 8).
---------------------------------------------------------------------------
            B. No offsetting benefit
    Traditionally, workers' compensation programs have been 
based on a quid pro quo with both injured workers and employers 
giving up some common law rights in exchange for administrative 
compensation programs. Under this quid pro quo, workers receive 
prompt, limited administrative compensation but forfeit their 
right to common law remedies for negligence. Employers give up 
their right to raise certain defenses to recovery in exchange 
for greater certainty as to the amount of recovery. By 
contrast, H.R. 1283 contains no quid pro quo. Workers give up 
their right to common law recovery, but gain neither prompt 
remedy nor certainty as to the amount of compensation. Further, 
asbestos defendants give up few of the defenses to recovery 
they may currently raise. A victim who obtains a medical 
certificate must continue on a long, contentious road before 
compensation is provided and is subject to many defenses 
including rebuttal of medical eligibility, and causation and 
product identification.\41\
---------------------------------------------------------------------------
    \41\ Sec. 207.
---------------------------------------------------------------------------
    There is also little analogy between the legislation and an 
insolvency proceeding--bankruptcy only applies to businesses 
whose debts exceed their assets and requires debtors to subject 
themselves to a number of legal and financial constraints. By 
contrast, H.R. 1283 fails to ascertain in advance whether the 
defendants are able to pay their obligations, and fails to 
include any protection against fraudulent conveyances to 
insiders or limitation on other transactions which could impair 
the defendants' ability to make asbestos payments.
            C. Previous reckless conduct
    It is particularly inappropriate to mandate limitations on 
legal liability in asbestos cases, given the perniciousness and 
long term harm caused, and the culpability of the industry. In 
contrast to previous tort reform bills approved by this 
committee, which at least purport to limit ``frivolous suits'' 
against blameless defendants, this legislation would safeguard 
reckless conduct which has already killed and harmed hundreds 
of thousands of individuals.
    For example, medical articles detailing the dangers of 
asbestosis appeared as early as 1902, with a landmark article 
by Dr. Merewether published in 1930 that describes in detail 
the clinical characteristics of asbestosis, the dust control 
requirements that are necessary to prevent the disease, the 
importance of educating workers about the hazards of asbestos, 
and the future risk to industries such as shipbuilding.\42\ In 
1932, medical personnel discovered over 300 cases of asbestosis 
at the Johns-Manville plant.\43\ By the 1940's, even more 
widespread evidence of asbestos harm was published by the 
medical community.\44\
---------------------------------------------------------------------------
    \42\ Barry I. Castleman, Asbestos: Medical and Legal Aspects 1,12 
(3d ed. 1990).
    \43\ Id. at 24.
    \44\ Id. at 59.
---------------------------------------------------------------------------
    Culpability in the asbestos industry extends well beyond 
Manville. For example, in the 1950's and 1960's, Owens Corning 
Fiberglass distributed pipe covers and block known as Kaylo, 
even though the final report on the product in 1952 concluded, 
``Kaylo dust is capable of producing a peribroncheolar fibrosis 
typical of asbestosis . . . the results of the study indicate 
that every precaution should be taken to protect workers 
against inhaling the dust.'' \45\ In the early 1960's, Philip 
Carey Manufacturing Company, a producer of asbestos 
pipecovering, hired Dr. Thomas Mancuso to investigate its 
asbestos problem.\46\ After the completion of his study, 
Mancuso advised the Philip Carey officials to end their 
practice of putting sub-contractors and insulators on the 
payroll because of the occupational disease liability.\47\ 
Philip Carey ignored Dr. Mancuso's warning and continued 
manufacturing asbestos insulation without labels, throughout 
the 1960's.\48\
---------------------------------------------------------------------------
    \45\ Paul Brodeur, Outrageous Misconduct: The Asbestos Industry on 
Trial 151 (1985).
    \46\ Id. at 195.
    \47\ Id. at 196.
    \48\ Id. at 197.
---------------------------------------------------------------------------
    In 1964, Dr. Irving Selikoff convened an international 
conference of doctors and scientists in New York City to sound 
the alarm about epidemic levels of asbestosis, lung cancer and 
mesothelioma that he found in a study of 17,000 industrial 
workers in the New York/New Jersey area.\49\ The study 
concluded that up to 80% of asbestos insulators were 
contracting asbestosis after a latency period of 20 years, that 
the risk of lung cancer for asbestos workers (especially that 
who smoked) was 90 times greater than expected, and that 
asbestosis was killing hundreds of asbestos insulators.\50\ 
Immediately after the Selikoff Conference, John Brown, 
President of the Asbestos Textile Institute, writes to J.T. 
Griffus of H.K. Porter Company (an asbestos textile 
manufacturer): ``This subject [the Selikoff Conference on 
asbestosis and lung cancer] should not be brought to the 
attention of [persons] other than management of our several 
companies, as any discussion of this situation by sales 
personnel with users of our products could possibly aggravate 
the situation and result in individual opinions which could be 
damaging.'' \51\
---------------------------------------------------------------------------
    \49\ Annals of Industry: Causalities of the Workplace, The New 
Yorker, October 29, 1973, at 49.
    \50\ Id. at 48-49.
    \51\ Paul Brodeur, Outrageous Misconduct: The Asbestos Industry on 
Trial (1985).
---------------------------------------------------------------------------
    Also, through the 1960's, W.R. Grace appears to have 
intentionally and knowingly exposed vermiculite mine workers 
(and their families) to dangerous levels of asbestos. 
Vermiculite was mined in Libby, Montana--where at least 192 
people have died and another 375 have been diagnosed with 
asbestosis--and shipped to expansion sites throughout the 
country.\52\ Testimony to date indicates that Grace knew of the 
problem, yet continued to expose workers and their families 
while covering up the dangers.\53\
---------------------------------------------------------------------------
    \52\ In a letter to Judiciary Committee Ranking Member John 
Conyers, Jr., the attorney for 125 Libby asbestos disease patients 
(suffering from mesothelioma, asbestosis and lung cancer) stated that 
the medical criteria in H.R. 1283 could shut out 74% of the victims he 
represents. See Letter from Roger M. Sullivan, Esq., McGarvey, 
Heberling, Sullivan & McGarvey, to The Honorable John Conyers, Jr., 
U.S. House Judiciary Committee Ranking Member, (March 8, 2000) (on file 
with the minority staff of the House Judiciary Committee). See also 
Letter from Senator Max Baucus (Montana) to The Honorable Henry J. Hyde 
and the Honorable John Conyers, Jr., (February 29, 2000) (urging the 
committee to take more time to find out whether the medical criteria in 
H.R. 1283 unreasonably restricts and clearly screens out large numbers 
of individuals exposed to asbestos) (on file with the minority staff of 
the House Judiciary Committee).
    \53\ See Finstadt v. W.R. Grace, No. DV-98-139 (19th Dist. Mont. 
1999).
---------------------------------------------------------------------------
    Although most asbestos products were discontinued in the 
mid-1970's, after OSHA mandated a series of employer 
safeguards, the threat from asbestos is still ongoing. In 1983, 
the value of imported asbestos was $80.6 million.\54\ In 1992, 
the U.S. consumed 31.6 thousand metric tons of asbestos,\55\ 
and despite widespread knowledge of asbestos dangerous effects, 
its use remains. Moreover, industry objections delayed OSHA 
action to prevent cancer risk until 1986 when a Federal appeals 
court found further regulation necessary to prevent worker 
exposure to significant risks.\56\ EPA's 1989 efforts to ban 
the manufacture, importation, and distribution of asbestos 
products failed in the face of industry legal challengers.\57\
---------------------------------------------------------------------------
    \54\ OSHA RIA at II-3, 1986.
    \55\ 59 Fed. Reg. 41026.
    \56\ Building & Constr. Trades Dept. v. Brock, 838 F.2d 1258 (D.C. 
Cir. 1986).
    \57\ Corrosion Proof Fittings v. EPA, 947 F.2d 1201 (5th Cir. 
1991).
---------------------------------------------------------------------------
    Finally, the courts have consistently held that the 
asbestos industry demonstrated reckless, if not intentional, 
misconduct. In Fischer v. Johns-Manville,\58\ the Superior 
Court, Appellate Division of New Jersey held: ``The jury here 
was justified in concluding that both defendants, fully 
appreciating the nature, extent and gravity of the risk (in 
exposing plaintiffs to asbestos), nevertheless made a conscious 
and cold-blooded business decision, in utter and flagrant 
disregard of the rights of others, to take no protective or 
remedial action.'' Similarly, the Supreme Court of New Jersey, 
in Fischer v. Johns-Manville,\59\ stated ``[i]t is indeed 
appalling to us that the company had so much information on the 
hazards to asbestos workers as early as the mid-1930's and that 
it not only failed to use that information to protect these 
workers but, more egregiously, that it also attempted to 
withhold this information from the public.'' And, in Ballard v. 
Owens-Corning Fiberglas Corp.,\60\ the Supreme Court of Florida 
held: ``The clear and convincing evidence in this case revealed 
that for more than thirty years the company concealed what it 
knew about the dangers of asbestos. In fact, the company's 
conduct was even worse than concealment, it also included 
intentional and knowing misrepresentations concerning the 
danger of its asbestos containing products.'' Despite this 
unconscionable conduct, we are considering unprecedented 
legislation written, in large part, by that very industry.
---------------------------------------------------------------------------
    \58\ 472 A.2d 577 (N.J. Super. 1984).
    \59\ 512 A.2d 466 (N.J. 1986).
    \60\ 1999 WL 669026 (Fla. 1999).
---------------------------------------------------------------------------
IV. The new bureaucracy will severely delay payment of claims.
    Rather than expediting claims, H.R. 1283 will delay the 
payment of compensation, including payments to victims who are 
seriously ill and at or near death. As the AFL-CIO complained, 
``the proposed legislation would slam the courthouse door shut 
on hundreds of thousands of poisoned workers to the benefit of 
the very companies that poisoned them.'' \61\ In essence, the 
legislation will overturn a court system which has adapted over 
time to the massive load of asbestos cases, and substitute a 
completely new and untested legal regime.
---------------------------------------------------------------------------
    \61\ See AFL-CIO letter at 1.
---------------------------------------------------------------------------
    Under the legislation, every single claim--no matter how 
compelling the merits or how sick the victim--will be placed on 
hold for as long as it takes to create the massive new legal 
bureaucracy. The prejudice from this delay will be especially 
severe for living victims of lung cancer and mesothelioma who 
currently can expect to receive prompt trial dates because of 
preferential treatment the courts give to these cases. 
Moreover, H.R. 1283 cuts off these claimants' right to trial 
and provides no mechanism to preserve their testimony by 
videotape or any other method. At a minimum, tens of thousands 
of victims will now need to schedule new physical examinations 
under new standards in an attempt to comply with the numerous 
requirements of H.R. 1283. These examinations will be costly 
and time-consuming and will provide no benefit to the claimant.
    Setting up the OAC will require hiring hundreds if not 
thousands of new employees within four separate Justice 
Department divisions. Public Citizen has noted that questions 
have been raised about the Federal Government's ability to 
create and run such a large bureaucracy: ``While the National 
Vaccine Injury Compensation Program is held up as model, it has 
only dealt with 5,735 cases over 11 years, not the hundreds of 
thousands of asbestos cases that would have to be processed 
immediately.'' \62\ In addition, the OAC will not be able to 
begin to process any claims until it adopts at least 11 complex 
new administrative rules,\63\ which are subject to notice and 
comment, and in most cases, to extensive legal review and 
appeals. It is likely that this hiring and rulemaking process 
will take several years at a minimum, by which time scores of 
thousands of new claims will be waiting in line for 
compensation.
---------------------------------------------------------------------------
    \62\ See Public Citizen Letter at 4.
    \63\ See Secs. 102(b); 103(b)(2); 108(c); 109(d); 301(b) [likely 4 
separate rules]; 304(b); 306(a); 306(b); 401(a); 402(a); & 704.
---------------------------------------------------------------------------
    Even once the OAC is set up and running, it will be subject 
to further delays. The legislation envisions from 10-15 
proceedings before a claimant's case can finally be resolved, 
with some steps scheduled to take up to 90 days.\64\ Even 
worse, in some cases no deadline is imposed and there is no 
legal guarantee that any of the formal deadlines will be 
observed for individual claimants, because they are subject to 
waiver by the OAC \65\ and because there is no individual 
enforcement remedy or mechanism.\66\ The fact that the 
legislation includes a mandamus mechanism in the event 
deadlines are not complied with more than 30% of the time 
constitutes a tacit admission that delays are fully expected 
and anticipated.\67\
---------------------------------------------------------------------------
    \64\ The possible proceedings include:

       1. GFiling of Claim.
       2. GDetermination by Medical Director regarding Medical 
      Criteria within 30 days (sec. 102(c)).
       3. GPossible appeal of Medical Director's decision to 
      review panel of physicians, no deadline (sec 102(c)).
       4. GPossible appeal to exceptional medical claims panel, 
      determination due within 30 days (sec. 102(d)).
       5. GClaimant must file particularized statement for each 
      defendant (sec. 103(a)(2)).
       6. GNotice to defendants (sec. 103(a)(3)).
       7. GOpportunity for defendants to bring in third parties 
      (sec. 103 (a)(4)).
       8. GEach defendant to make ``good faith offer,'' due 
      within 21 days of naming all defendants (sec. 103(b)(1)).
       9. GTrustee to make offer of compensation to claimant 
      based on compensation grid. (sec. 103(b)(2), due within 10 
      days of receiving defendants offers.
      10. GClaimant to accept or reject defendant and trustee 
      offers within 60 days (sec. 104).
      11. GIf claimant accepts, Trustee must decide whether to 
      accept defendant offer or prosecute claim administratively 
      or in court (sec. 104(d)).
      12. GIf claimant rejects, may elect administrative 
      resolution or file suit in court (sec. 104(e)).
      13. GAdministrative decision on claimant's claim due within 
      90 days (sec. 105).
      14. GALJ decision subject to appeal to Court of Federal 
      Claims by either claimant or defendant, no deadline (Sec. 
      106).
      15. GIf claimant elects to pursue claim in court, no 
      deadline specified.
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    \65\ Sec. 109(d).
    \66\ Representative Scott offered an amendment, which the Majority 
rejected, that, among other things, provided that if specified time 
limits in the bill are not met, the claimant could leave the 
administrative system and file a claim in State or Federal court.
    \67\ Sec. 109. And even this mechanism is designed merely to get 
the OAC to start working on the problem, not to fix it.
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    Rather than simplifying the processing of asbestos claims, 
H.R. 1283 gives defendants the power to make the prosecution of 
these claims more complex than they have ever been in the tort 
system. The vehicle for this complexity is a specific statutory 
allowance for third-party practice \68\ injected into the 
government bureaucracy that was allegedly conceived to speed 
payments to claimants. This procedure gives asbestos 
manufacturers the ability to add unlimited numbers of third-
party defendants to each and every claim for the purpose of 
either denying, delaying or diluting their liability to the 
claimant and the OAC. Although the committee belatedly acted to 
remove the United States government as one of these third-
parties, virtually every other entity can and will be named 
including employers (who currently have immunity and a 
subrogation lien), tobacco companies, peripheral suppliers and 
manufacturers of asbestos products, insurance companies and 
others. As the recent experience with the Compensation and 
Liability Act (CERCLA/Superfund) has amply demonstrated, 
mechanisms such as this when incorporated either directly or 
otherwise into statutory schemes inevitably lead to decades of 
judicial gridlock.
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    \68\ Sec. 103(a)(4).
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V. The retroactive effective date will deny court access to thousands 
        of pending claims.
    Another major concern with the bill is that it will force 
all existing cases to proceed under the new legal regime 
beginning with the date of enactment. This retroactivity 
provision--which is unprecedented in scope and application--
provides a very significant financial and tactical benefit to 
all asbestos defendants. Efforts to modify the manifest 
injustice of the provision have been only cosmetic and provide 
nothing meaningful for victims.
    H.R. 1283's effective date provision will terminate the 
processing of virtually every asbestos case pending in the 
courts today (estimated at 200,000) and render worthless the 
work product of the pretrial preparation in every such 
case.\69\ The problem derives from the fact that the 
legislation applies to all cases for which a trial is not 
commenced within 6-12 months of the date of enactment.\70\ Even 
the few claims which proceed to court within the 6-12 month 
time period will be impaired because they will be subject to 
the bill's medical eligibility criteria \71\ (even though such 
claims will not benefit from any of the nominally pro-claimant 
provisions, such as the restriction on defenses (sec. 207), 
comeback rights for the non-sick (sec. 204), and penalties for 
inadequate offers (sec. 208(c)). Even worse is the fact that 
the legislation appears to create a dangerous ``Catch-22'' 
situation for victims, because it requires a determination of 
whether the medical criteria apply before a trial may commence, 
yet it may take longer than the statutory deadline of 6-12 
months before the OAC issues the medical criteria rules and it 
can be determined whether they apply in a pending case.\72\
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    \69\ Sec. 501.
    \70\ Sec. 501(b). The Attorney General may extend the initial 6 
month period for an additional 6 months if required for ``orderly 
implementation of the Act.''
    \71\ Sec. 501(d).
    \72\ The right to sue letter provided in section 501 to the 
Attorney General offers little protection to victims, since it is 
totally discretionary.
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    It is highly unusual for tort legislation to ``change the 
rules in the middle of the game'' by applying to pending 
claims. For example, the Volunteer Protection Act--signed into 
law during the 105th Congress--only applies to claims filed 
more than 90 days after the date of enactment, and only if the 
harm that is the subject of the claim occurred after such 
effective date.\73\ Other recently enacted tort laws, such as 
the General Aviation Reform Act of 1994,\74\ the Bill Emerson 
Good Samaritan Food Donation Act,\75\ and the Biomaterials 
Access and Assurance Act of 1998 \76\ were all written to apply 
prospectively. The most recent tort reform bills approved by 
this committee--the Small Business Liability Reform Act (H.R. 
2366),\77\ the statute of repose bill (H.R. 2005),\78\ and the 
class action bill (H.R. 1875) \79\--were all drafted to 
safeguard pending claims from the proposed new statutory 
restrictions.\80\
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    \73\ 42 U.S.C. Sec. 14501.
    \74\ 49 U.S.C. Sec. 40101 note.
    \75\ 42 U.S.C. Sec. 1791.
    \76\ 21 U.S.C. Sec. 1601-06.
    \77\ H.R. 2366, sec. 301.
    \78\ H.R. 2005, sec. 4.
    \79\ H.R. 1875, sec. 5.
    \80\ In an effort to address the concerns about the bill's effect 
on pending cases, Representative Berman offered an amendment to make 
the effective date the date of the markup of the bill, and 
Representative Scott offered an amendment to make the effective date 
the latter of the date the of the appointment of the Administrator, the 
Medical Director and the Trustee, the date the rules are promulgated, 
and the date on which the authorized monies have been appropriated. 
Neither of the amendments, however, were accepted by the Majority.
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VI. The funding mechanisms are illusory.
    We also have deep-seated concerns regarding the reliability 
of the bill's funding mechanisms. The entire legal regime rests 
on three highly questionable sources of revenue--discretionary 
Federal funding, legal reimbursement actions brought against 
defendants, and defendant assessments of administrative costs 
and payments made to claimants. Although the legislation 
authorizes Federal funds ranging up to $150-250 million/year 
(in order to set up the legal bureaucracy and loan funds to the 
Asbestos Compensation Fund),\81\ there is no guarantee that any 
funding (let alone the full amount) will be forthcoming. The 
legislation is written in this manner in order to avoid being 
subject to a budget point of order, yet the provision raises 
the very real risk that the OAC will not be funded or will be 
severely underfunded, leaving plaintiffs with little ability to 
pursue their claims.
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    \81\ Sec. 405.
---------------------------------------------------------------------------
    A second far larger source of funds is to be derived from 
the defendants by way of government reimbursement litigation. 
Here again, there is little certainty that such funds will 
materialize, as real life experience with reimbursement schemes 
in the context of the Black Lung Benefits Act and the 
Comprehensive Environmental Response and Superfund have not 
been promising. To the extent there is a shortfall in such 
reimbursements, claimants will again be left at risk and facing 
reduced or no payments, even though they will have already 
forfeited their common law rights under the legislation.
    An alternative funding mechanism, which vastly improved the 
bill, was introduced by Representative Weiner (D-NY), and 
accepted by the committee. The effect of the Weiner amendment 
is twofold: first, it requires the Administrator to promulgate 
rules for calculating and collecting from defendants all costs 
associated with the determination of claims and payments to 
claimants. Second, if the amount assessed through the 
Administrator's rules is inadequate to cover the payments to 
claimants, the trustee must bring an action against the 
defendant company to recoup payments by the Fund. In addition, 
the Weiner amendment removed from the defendants the ability to 
assert any defense in such a proceeding other than lack of 
jurisdiction.\82\ Notwithstanding the adoption of this 
amendment, there remains a major concern that the bill imposes 
undue financial risks on claimants (e.g., if a defendant 
company contests its assessed amount or if the government 
reimbursement litigation is protracted or unsuccessful).
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    \82\ The original funding scheme allowed a defendant to litigate 
whether so-called ``core claims'' had been asserted against it in order 
to obtain an exemption from or reduction in its assessment by the 
Administrator.
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VII. The opt-out is illusory.
    We also do not believe the legislation's supposed ``opt-
out'' under section 102(f), offers meaningful relief for 
victims. First, the opt-out is only available to persons who 
obtain a certificate of medical eligibility--perhaps the most 
onerous statutory requirement imposed under the bill. Second, 
even those claimants who receive a medical certificate and 
bring their claim in court would continue to be subject to many 
of the bill's ``tort reform'' provisions (such as the 
elimination of punitive damages and special statutory 
limitations on class actions and venue),\83\ even though they 
would not benefit from any of the bill's nominally pro-victim 
provisions. The net result is an ``opt-out'' right which will 
be very difficult to exercise and will be of very little real 
value. While the Majority rejected an amendment that 
Representatives Conyers, Scott, Lofgren and Watt offered to 
make the administrative system completely voluntary, we believe 
that if the legislation provided a demonstrably streamlined and 
fair administrative procedure, a true opt-out would not be 
problematic.
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    \83\ Sec. 205(d).
---------------------------------------------------------------------------
VIII. The medical monitoring benefits are inadequate.
    Under Sec. 306, medical testing benefits are provided only 
to those who can show certain amounts of ``heavy'' \84\ 
exposure to asbestos at work and establish certain radiographic 
injury. Therefore, spouses and children who have been exposed 
when asbestos dust was brought home cannot get compensation for 
medical monitoring. In addition, it would appear that 
supervisors, cleanup workers, inspectors and any other trade 
that did not directly have hands-on use of the asbestos product 
would not be eligible for medical monitoring.
---------------------------------------------------------------------------
    \84\ The bill includes no definition of ``heavy exposure'' to 
asbestos (as opposed to ``equivalent years of exposure'').
---------------------------------------------------------------------------
    The medical monitoring benefits provide for a maximum of 3 
sets of medical tests during a victim's lifetime. By contrast, 
OSHA regulations require more frequent medical testing for 
workers exposed to asbestos, and for workers with 10 years of 
exposure over age 45, annual physicals with chest x-ray are 
required by rules.\85\
---------------------------------------------------------------------------
    \85\ 29 C.F.R. 1910.1001(L)(3)(ii) Table 2.
---------------------------------------------------------------------------
    Another concern is that exposure verification is required 
by the bill to qualify for medical testing. Yet, few companies 
have exposure monitoring records for asbestos before the mid-
1970's. Exposure records may have been lost or destroyed, and 
imposing on workers the obligation to prove the levels of their 
exposure means many will not be able to obtain medical 
monitoring benefits.
IX. H.R. 1283 raises serious constitutional concerns.
    Finally, the Federal Government's intrusion into State tort 
law raises very serious federalism and constitutional concerns. 
Since Congress has traditionally deferred to the States 
regarding tort law in general and product liability law in 
particular, preempting State law in the area of asbestos 
litigation would constitute a dramatic shift in this balance. 
And given the direction of recent Supreme Court decisions, the 
attempts to impose rules on State court civil justice systems 
raises serious constitutional questions. The bill--which 
contains no interstate commerce jurisdictional requirement--may 
run afoul of the constitutional requirement under the Commerce 
Clause. The Commerce Clause limits congressional authority to 
the regulation of interstate commerce and under the Tenth 
Amendment, which reserves all of the unenumerated powers to the 
States. This is a particular concern in light of the recent 
Supreme Court decisions such as Lopez v. United States 
(striking down a Federal gun-free school zone law which had no 
interstate commerce requirement),\86\ and New York v. United 
States \87\ and Printz v. United States \88\ in which the Court 
showed extreme scepticism regarding Congress' ability to 
dictate State legal policies.
---------------------------------------------------------------------------
    \86\ 514 U.S. 549 (1995).
    \87\ 505 U.S. 144 (1992) (invalidating a Federal law requiring 
States to assume ownership of radioactive waste or accept legal 
liability for damages caused by the waste because it was found to 
``commandeer the legislative processes of the States'').
    \88\ 521 U.S. 898; 117 S.Ct. 2365; 138 L.Ed. 2d 914; 65 U.S.L.W. 
4731 (U.S. June 27, 1997) (invalidating portions of the Brady Act 
requiring local law enforcement officials to conduct background checks 
on prospective gun purchasers).
---------------------------------------------------------------------------
    There is also an apparent constitutional flaw under the 
``Appointments Clause.'' According to the Department of 
Justice, ``H.R. 1283's provision for the appointment of the 
OAC's Medical Director by the Administrator of the OAC, Section 
101(c), appears to run afoul of the Appointments Clause. The 
Director is an inferior officer whose appointment must be 
vested in the President alone, in the Courts of Law, or in the 
Heads of Departments. Because the Attorney General may remove 
the Administrator of the OAC for cause (see Section 101(a)), we 
do not believe the Administrator to be the head of the 
Department for purposes of the Appointments Clause.'' \89\
---------------------------------------------------------------------------
    \89\ See DOJ Letter at 11.
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Conclusion
    We oppose H.R. 1283 because it constitutes an unjustified 
corporate bail-out at the expense of victims and taxpayers. The 
legislation creates an unmanageable Federal bureaucracy, 
excludes hundreds of thousands of individuals from eligibility 
for compensation, reduces and delays compensation payments to 
those who remain eligible, throws most if not all existing 
cases out of court, and unfairly preempts State law. We cannot 
support this extreme legislation, which rewards the 
perpetrators of one of the country's most serious and deadly 
torts, while punishing the victims and their families.

                                   John Conyers, Jr.
                                   Howard L. Berman.
                                   Rick Boucher.
                                   Robert C. Scott.
                                   Melvin L. Watt.
                                   Zoe Lofgren.
                                   Sheila Jackson Lee.
                                   Maxine Waters.
                                   William D. Delahunt.
                                   Steven R. Rothman.
                                   Tammy Baldwin.
                                   Anthony D. Weiner.

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