[Senate Report 108-118]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 239
108th Congress                                                   Report
                                 SENATE
 1st Session                                                    108-118

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



 
         THE FAIRNESS IN ASBESTOS INJURY RESOLUTION ACT OF 2003

                                _______
                                

    July 30 (legislative day, July 21), 2003.--Ordered to be printed

                                _______
                                

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

                              R E P O R T

                             together with

                     ADDITIONAL AND MINORITY VIEWS

                         [To accompany S. 1125]

    The Committee on the Judiciary, to which was referred the 
bill (S. 1125) to create a fair and efficient system to resolve 
claims of victims for bodily injury caused by asbestos 
exposure, and for other purposes, reports favorably thereon, 
with amendments, and recommends that the bill, as amended, do 
pass.

                                CONTENTS

                                                                   Page
  I. Purposes.........................................................2
 II. Legislative History..............................................4
III. Votes of the Committee...........................................5
 IV. Background and Need for Legislation.............................16
  V. How S. 1125 Works...............................................27
 VI. Section-by-Section Analysis and Discussion......................35
VII. Critics' Contentions and Rebuttals..............................58
VIII.Cost Estimate...................................................73

 IX. Regulatory Impact Statement.....................................73
  X. Additional Views................................................74
        Additional View of Senator Grassley......................    74
        Additional Views of Senators Grassley, Kyl, Sessions, 
            Craig, and Cornyn....................................    75
        Additional Views of Senators Kyl, Grassley, and Sessions.    78
        Additional View of Senator Kyl...........................    81
        Additional Views of Senators Feinstein and Kohl..........   184
 XI. Minority Views.................................................188
        Minority Views of Senator Leahy, Kennedy, Biden, Kohl, 
            Feinstein, Schumer, Durbin, and Edwards..............   188
        Minority View of Senator Biden...........................   216
XII. Changes in Existing Law........................................218

                              I. Purposes

    The Fairness in Asbestos Injury Resolution Act of 2003 
``FAIR Act'' S. 1125, is essential legislation that is needed 
to fix a broken system. It will create an alternative, but fair 
and efficient system to resolve the claims of victims for 
bodily injury caused by asbestos exposure. It is intended to 
bring uniformity and rationality to the system so that 
resources are directed toward those who are truly sick. It is 
also intended to provide economic stability by stemming the 
tide of runaway asbestos litigation that has clogged our 
courts, bankrupted companies, compensated those who are not 
sick at the expense of those who are, and endangered the jobs 
and pensions of employees.
    The FAIR Act, S. 1125, has five key components:
    First--S. 1125 compensates legitimate asbestos victims 
faster and on a ``no-fault'' basis. Under the FAIR Act, 
asbestos victims' claims are resolved under specific time 
limits that enable claims to be processed in under a year, not 
including appeals--which are also required to be timely 
resolved. In the tort system today, victims face delay and 
unpredictable results. Currently, victims must bear the burden 
of identifying a specific product, proving that it caused their 
illness and showing culpability of a particular defendant, 
usually years after the exposure occurred. Moreover, suits by 
unimpaired claimants have bankrupted companies and diminished 
the funds available for the truly ill. Often times there is no 
identifiable party for a claimant to sue, either because the 
culpable party has been driven into bankruptcy or it is 
impossible to identify the cause of the claimant's exposure. 
And when a suit is filed, it is usually several years before 
claimants see resolution, and far from certain that they will 
obtain compensation. Under S. 1125, victims will receive timely 
and certain compensation on a ``no fault'' basis. They will not 
need to prove causation or culpability or find a solvent party 
in order to be compensated. Instead, with this legislation they 
need only satisfy the eligibility requirements under the Act in 
order to receive compensation or medical monitoring 
reimbursement. S. 1125 establishes fair and balanced 
eligibility criteria to ensure that the $108 billion privately 
financed Asbestos Injury Claims Resolution Fund (the ``Fund'') 
directs compensation to those who are truly sick as a result of 
their exposure to asbestos. The mass screenings and other 
abuses in the current litigation system will be replaced with a 
sound medical diagnosis of an asbestos-related disease by the 
claimant's physician. The FAIR Act also takes into 
consideration that the most seriously ill should receive 
priority and provides for expedited payments. There are special 
exceptions for claimants in unique circumstances whose injuries 
are also asbestos-related, but who cannot, through no fault of 
their own, meet the requirements of the Act. The medical 
monitoring that will be available under the FAIR Act for those 
who have been exposed but are not sick preserves resources for 
those same claimants for the time, if and when, they become 
sick. The streamlined administrative process also diminishes 
the need for large attorney fees that currently can deplete 
claimant awards by as much as 40%.
    Second--S. 1125 provides certainty to asbestos victims. In 
the current system, claimants who are legitimately sick have no 
certainty they will ever be compensated due to the increasing 
number of bankrupt companies and the long delays of current 
litigation. While some may receive high awards, others receive 
nothing at all. S. 1125 sets up a $108 billion fund that is 
based on sound statistical data and is projected to be more 
than adequate to compensate all present and future eligible 
claims. To compound that certainty, S. 1125 includes several 
contingent additional funding mechanisms to address any 
unanticipated needs of the Fund.
    Third--S. 1125 provides economic stability and preserves 
jobs and pensions by offering certainty to defendants and 
insurers. The FAIR Act ensures that the allocation of payments 
into the fund will be fair, rational, and predictable. 
Companies are unable to plan for asbestos litigation spending 
because of the irrationality and unpredictability of the 
current tort system. Even companies with the most tangential 
relationship to asbestos have been crushed under the weight of 
overwhelming litigation, driving many into bankruptcy and 
hurting employees and investors. The legal burden of 
compensating victims and paying unimpaired claims is 
distributed irrationally. With most of the original asbestos 
manufacturers bankrupt, companies with little relationship to 
asbestos are targeted with massive suits. Insurers and 
reinsurers are affected as well, increasingly threatened with 
insolvency due to the current crush of asbestos claims. Under 
S. 1125, in return for contributing significant amounts of 
money to the Fund, businesses will be able to move forward, a 
step that will preserve jobs and pensions and result in broad 
economic benefits. An administrative system will provide for 
fair, balanced, reasonable, and predictable allocation of 
payments by defendant companies and their insurers.
    Fourth--S. 1125 ensures that the fund will be administered 
simply, fairly, and efficiently. The tort system today is 
backlogged and manifestly unfair. The flood of lawsuits in the 
tort system, moreover, has led to unacceptable delays; some 
seriously ill plaintiffs even die before their suits are 
resolved.1 One such victim was Texas resident Ronald 
Bailey who died of mesothelioma in June of 2000, about two 
months before his scheduled trial date.2 Under S. 
1125, claims will be processed efficiently and fairly by the 
U.S. Court of Federal Claims through a newly established Office 
of Special Asbestos Masters, pursuant to clear standards. Under 
this streamlined system, a Special Asbestos Master will 
determine eligibility and payments based on fair and balanced 
eligibility criteria, including a sound medical basis for all 
claims, and payments will be issued by the Fund which will be 
run by an Administrator solely for the benefit of asbestos 
victims.
---------------------------------------------------------------------------
    \1\ See Stephen J. Carroll, et al., Rand Institute for Civil 
Justice, ``Asbestos Litigation Costs and Compensation: An Interim 
Report,'' 35 (2002). [Hereinafter RAND 2002].
    \2\ Thomas Korosec, Enough to Make You Sick: In the struggle for a 
shrinking pot of money from asbestos litigation, the sickest victims 
are getting nickels and dimes while lawyers get their millions, Dallas 
Observer, Sept. 26, 2002.
---------------------------------------------------------------------------
    Finally--S. 1125 bans harmful asbestos to help prevent 
future illnesses. Although the use of asbestos has largely been 
reduced by federal regulations it has not been eliminated. The 
FAIR Act seeks to eliminate the risks of future injuries from 
asbestos use by prohibiting any further manufacture, 
processing, and distribution in commerce of harmful asbestos-
containing products, subject to certain exceptions. S. 1125 
would also require that prohibited asbestos-containing products 
be disposed of pursuant to federal, state and local 
requirements within three years of the date of enactment to 
ensure that such products are no longer in the stream of 
commerce.
    Above all, the purposes of this legislation are to ensure 
that people who become sick as a result of exposure to asbestos 
are compensated surely, fairly, and quickly, while protecting 
the economic viability of defendants, and the employees, 
investors, and the communities that depend on them.

                        II. Legislative History

    The asbestos litigation crisis has been under consideration 
by Congress for many years with several hearings and multiple 
legislative proposals. The most recent events that led to the 
introduction of S. 1125, The Fairness in Asbestos Injury 
Resolution Act of 2003 (FAIR Act), began in the 107th Congress 
when then Chairman Leahy held a hearing on September 25, 2002, 
``Asbestos Litigation.'' At that time the Committee heard 
testimony from Senator Max Baucus (D-MT) and Senator Ben Nelson 
(D-NE) as well as witnesses Fred Barron, Steven Kazan, General 
Counsel of the AFL-CIO Jonathan Hiatt, General Counsel of the 
Manville Personal Injury Settlement Trust David Austern, and 
former Solicitor General Walter Dellinger III. Chairman Hatch 
followed up with another hearing on March 5, 2003 ``The 
Asbestos Litigation Crisis: It Is Time for Congress to Act'' 
and testimony was given by Senator Max Baucus (D-MT) and 
Senator George Voinovich (R-OH) and witnesses Melvin 
McCandless, Brian Harvey, David Austern, President-elect of the 
American Bar Association Dennis Archer, Steven Kazan, and 
Jonathan Hiatt.
    S. 1125 the ``Fairness in Asbestos Injury Resolution Act of 
2003 (FAIR Act)'' was introduced in the Senate on May 22, 2003 
by Chairman Orrin Hatch (R-UT), Senator Ben Nelson (D-NE), 
Senator Mike DeWine (R-OH), Senator Zell Miller (D-GA), Senator 
George Voinovich (R-OH), Senator George Allen (R-VA), Senator 
Saxby Chambliss (R-GA) and Senator Chuck Hagel (R-NE) and 
reported to the Judiciary Committee. Chairman Hatch held a 
hearing on S. 1125 on June 4, 2003 ``Solving the Asbestos 
Litigation Crisis: S. 1125 the Fairness in Asbestos Injury 
Claims Resolution Act of 2003 (FAIR Act)'' and the committee 
heard testimony from Senator Patty Murray (D-WA), Senator Chuck 
Hagel (R-NE) and from witnesses Professor Laurence H. Tribe, 
Dr. James Crapo, Dr. Laura Stewart Welch, Dr. John E. Parker, 
Jennifer L. Biggs, FCAS, MAAA, Dr. Mark A. Peterson, Prof. 
Frederick C. Dunbar, Prof. Eric D. Green and Dr. Robert 
Hartwig.
    S. 1125 was considered by the committee during Executive 
Business meetings held on June 19, 24, 26, 2003 and July 10, 
2003. The Committee approved S. 1125 on July 10, 2003 by a 
rollcall vote of 10 yeas, 8 nays and 1 pass. The Committee then 
ordered S. 1125 favorably reported with amendments.

                      III. Votes of the Committee

    Pursuant to paragraph 7 of rule XXVI of the Standing Rules 
of the Senate, each Committee is to announce the results of 
rollcall votes taken in any meeting of the Committee on any 
measure or amendment. The Senate Judiciary Committee, with a 
quorum present, met on June 19, 24, 26, 2003 and July 10, 2003 
at 9:30 am to markup S. 1125. The following votes occurred on 
S. 1125.
    Vote on: Agreed Upon Amendments: Indexing all awards for 
future inflation; removing collateral source offsets; doubling 
the statute of limitations; coverage for claimant exposures on 
U.S. flag ships or while working for U.S. companies overseas; 
strengthening enforcement of contributions; recoupment 
authority for the administrator; criminal penalties for fraud 
or false information; bankruptcy certification; congressional 
oversight--administrator annual reports; and, Hatch technical 
amendments to S. 1125.
    Date of markup: June 24, 2003.

 [Approved by unanimous consent--members indicated were present when the
                            motion occurred]
------------------------------------------------------------------------
                          Members                              Present
------------------------------------------------------------------------
Mr. Grassley..............................................  ............
Mr. Specter...............................................            X
Mr. Kyl...................................................  ............
Mr. DeWine................................................            X
Mr. Sessions..............................................  ............
Mr. Graham................................................  ............
Mr. Craig.................................................            X
Mr. Chambliss.............................................  ............
Mr. Cornyn................................................            X
Mr. Leahy.................................................            X
Mr. Kennedy...............................................            X
Mr. Biden.................................................  ............
Mr. Kohl..................................................  ............
Mrs. Feinstein............................................            X
Mr. Feingold..............................................            X
Mr. Schumer...............................................  ............
Mr. Durbin................................................            X
Mr. Edwards...............................................  ............
Mr. Hatch, Chairman.......................................            X
------------------------------------------------------------------------

    Vote on: Agreed Upon Amendments: Hatch Asbestos Ban; 
Feinstein Second Degree to Hatch Asbestos Ban; Leahy FOIA 
amendment for the Commission; and, Leahy FOIA amendment for the 
Office of Asbestos Injury Claims Resolution.
    Date of markup: June 24, 2003.

 [Approved by unanimous consent--members indicated were present when the
                            motion occurred]
------------------------------------------------------------------------
                          Members                              Present
------------------------------------------------------------------------
Mr. Grassley..............................................  ............
Mr. Specter...............................................            X
Mr. Kyl...................................................  ............
Mr. DeWine................................................            X
Mr. Sessions..............................................  ............
Mr. Graham................................................  ............
Mr. Craig.................................................            X
Mr. Chambliss.............................................  ............
Mr. Cornyn................................................            X
Mr. Leahy.................................................            X
Mr. Kennedy...............................................            X
Mr. Biden.................................................  ............
Mr. Kohl..................................................  ............
Mrs. Feinstein............................................            X
Mr. Feingold..............................................            X
Mr. Schumer...............................................  ............
Mr. Durbin................................................            X
Mr. Edwards...............................................  ............
Mr. Hatch, Chairman.......................................            X
------------------------------------------------------------------------

    Vote on: Leahy/Hatch Medical Criteria Amendment.
    Date of markup: June 24, 2003.

 [Approved by unanimous consent--members indicated were present when the
                            motion occurred]
------------------------------------------------------------------------
                          Members                              Present
------------------------------------------------------------------------
Mr. Grassley..............................................  ............
Mr. Specter...............................................            X
Mr. Kyl...................................................  ............
Mr. DeWine................................................            X
Mr. Sessions..............................................  ............
Mr. Graham................................................  ............
Mr. Craig.................................................            X
Mr. Chambliss.............................................  ............
Mr. Cornyn................................................            X
Mr. Leahy.................................................            X
Mr. Kennedy...............................................            X
Mr. Biden.................................................  ............
Mr. Kohl..................................................  ............
Mrs. Feinstein............................................            X
Mr. Feingold..............................................            X
Mr. Schumer...............................................  ............
Mr. Durbin................................................            X
Mr. Edwards...............................................  ............
Mr. Hatch, Chairman.......................................            X
------------------------------------------------------------------------

    Vote on: Agreed Upon Amendments: Grassley/Leahy/Feinstein/
Durbin Asbestos Court Amendment; Grassley Federal Liability 
Amendment; Leahy Environmental Crimes Amendment; and Leahy 
Successor in Interest Amendment.
    Date of markup: June 24, 2003.

 [Approved by unanimous consent--members indicated were present when the
                            motion occurred]
------------------------------------------------------------------------
                          Members                              Present
------------------------------------------------------------------------
Mr. Grassley..............................................  ............
Mr. Specter...............................................            X
Mr. Kyl...................................................  ............
Mr. DeWine................................................            X
Mr. Sessions..............................................  ............
Mr. Graham................................................  ............
Mr. Craig.................................................            X
Mr. Chambliss.............................................  ............
Mr. Cornyn................................................            X
Mr. Leahy.................................................            X
Mr. Kennedy...............................................            X
Mr. Biden.................................................  ............
Mr. Kohl..................................................  ............
Mrs. Feinstein............................................            X
Mr. Feingold..............................................            X
Mr. Schumer...............................................  ............
Mr. Durbin................................................            X
Mr. Edwards...............................................  ............
Mr. Hatch, Chairman.......................................            X
------------------------------------------------------------------------

    Vote on: Durbin/Kyl Hardship Amendment that would double 
the caps for the financial hardship and inequity adjustments; 
permits the inequities panel to consider a participant's 
litigation successes when assessing prior asbestos 
expenditures; and requires a reduction in contribution 
allocation if a participant's exposure was remotely attenuated 
under certain circumstances.
    Date of markup: June 24, 2003.

 [Approved by unanimous consent--members indicated were present when the
                            motion occurred]
------------------------------------------------------------------------
                          Members                              Present
------------------------------------------------------------------------
Mr. Grassley..............................................  ............
Mr. Specter...............................................            X
Mr. Kyl...................................................  ............
Mr. DeWine................................................            X
Mr. Sessions..............................................            X
Mr. Graham................................................  ............
Mr. Craig.................................................            X
Mr. Chambliss.............................................            X
Mr. Cornyn................................................            X
Mr. Leahy.................................................            X
Mr. Kennedy...............................................            X
Mr. Biden.................................................  ............
Mr. Kohl..................................................  ............
Mrs. Feinstein............................................            X
Mr. Feingold..............................................            X
Mr. Schumer...............................................  ............
Mr. Durbin................................................            X
Mr. Edwards...............................................  ............
Mr. Hatch, Chairman.......................................            X
------------------------------------------------------------------------

    Vote on: Sessions Pro Bono Amendment that would require the 
Asbestos Court to provide information to claimants of the 
availability of pro bono representation. Attorneys would have 
to provide notice of pro bono representation.
    Date of markup: June 24, 2003.

 [Approved by unanimous consent--members indicated were present when the
                            motion occurred]
------------------------------------------------------------------------
                          Members                              Present
------------------------------------------------------------------------
Mr. Grassley..............................................  ............
Mr. Specter...............................................            X
Mr. Kyl...................................................  ............
Mr. DeWine................................................            X
Mr. Sessions..............................................            X
Mr. Graham................................................  ............
Mr. Craig.................................................            X
Mr. Chambliss.............................................            X
Mr. Cornyn................................................            X
Mr. Leahy.................................................            X
Mr. Kennedy...............................................  ............
Mr. Biden.................................................  ............
Mr. Kohl..................................................  ............
Mrs. Feinstein............................................            X
Mr. Feingold..............................................            X
Mr. Schumer...............................................  ............
Mr. Durbin................................................            X
Mr. Edwards...............................................  ............
Mr. Hatch, Chairman.......................................            X
------------------------------------------------------------------------

    Vote on: Kohl/Feinstein Contingent Call Amendment, which 
would require reductions of participants' contributions if the 
Administrator can certify the fund has and will continue to 
fully pay compensation awards. The amendment also allows the 
Administrator, if necessary, to request $1 billion in the 
aggregate from defendant participants and $1 billion from 
insurer participants beginning in the 28th year. This is a 
voluntary contribution, whereby non-payment subjects the 
participant to the tort system. If this occurs, the statute of 
limitations is tolled. This amendment was amended with a Hatch 
2nd degree amendment, allowing defendant companies to continue 
paying into the fund after year 27 or else re-enter the tort 
system in Federal Court only.
    Date of markup: June 26, 2003.

   [Approved--members indicated were present when the motion occurred]
------------------------------------------------------------------------
                          Members                              Present
------------------------------------------------------------------------
Mr. Grassley..............................................  ............
Mr. Specter...............................................            X
Mr. Kyl...................................................            X
Mr. DeWine................................................            X
Mr. Sessions..............................................            X
Mr. Graham................................................  ............
Mr. Craig *...............................................            X
Mr. Chambliss.............................................            X
Mr. Cornyn *..............................................            X
Mr. Leahy.................................................            X
Mr. Kennedy...............................................  ............
Mr. Biden.................................................  ............
Mr. Kohl..................................................            X
Mrs. Feinstein............................................            X
Mr. Feingold..............................................  ............
Mr. Schumer...............................................  ............
Mr. Durbin *..............................................            X
Mr. Edwards...............................................  ............
Mr. Hatch, Chairman.......................................           X
------------------------------------------------------------------------
* Members indicated opposed the Amendment.

    Vote on: Kyl Lock Box Amendment, that would insert a new 
Sec. 223(e) into S. 1125, as amended with new Hatch criteria, 
that requires a ``lock box account'' to ensure compensation 
will be available for claimants who fall into specified medical 
criteria categories with more significant impairment.
    Date: June 26, 2003.

                 [Approved by a vote of 10 yeas, 9 nays]
------------------------------------------------------------------------
                   Members                        Yeas          Nays
------------------------------------------------------------------------
Mr. Grassley................................            P   ............
Mr. Specter.................................            X   ............
Mr. Kyl.....................................            X   ............
Mr. DeWine..................................            X   ............
Mr. Sessions................................            X   ............
Mr. Graham..................................            X   ............
Mr. Craig...................................            X   ............
Mr. Chambliss...............................            X   ............
Mr. Cornyn..................................            X   ............
Mr. Leahy...................................  ............            X
Mr. Kennedy.................................  ............            P
Mr. Biden...................................  ............            P
Mr. Kohl....................................  ............            P
Mrs. Feinstein..............................  ............            P
Mr. Feingold................................  ............            P
Mr. Schumer.................................  ............            P
Mr. Durbin..................................  ............            P
Mr. Edwards.................................  ............            P
Mr. Hatch, Chairman.........................            X   ............
------------------------------------------------------------------------

    Vote on: Hatch Insurance Commission Amendment that would 
amend the Asbestos Insurance Commission by broadening criteria 
considered in allocations, clarifying insurer and re-insurer 
obligations.
    Date of markup: June 26, 2003.

 [Approved by unanimous consent--members indicated were present when the
                            motion occurred]
------------------------------------------------------------------------
                          Members                              Present
------------------------------------------------------------------------
Mr. Grassley..............................................  ............
Mr. Specter...............................................            X
Mr. Kyl...................................................            X
Mr. DeWine................................................            X
Mr. Sessions..............................................            X
Mr. Graham................................................            X
Mr. Craig.................................................            X
Mr. Chambliss.............................................            X
Mr. Cornyn................................................            X
Mr. Leahy.................................................            X
Mr. Kennedy...............................................  ............
Mr. Biden.................................................  ............
Mr. Kohl..................................................  ............
Mrs. Feinstein............................................  ............
Mr. Feingold..............................................  ............
Mr. Schumer...............................................  ............
Mr. Durbin................................................            X
Mr. Edwards...............................................  ............
Mr. Hatch, Chairman.......................................            X
------------------------------------------------------------------------

    Vote on: Agreed Upon Amendments: Hatch/Leahy Takehome 
Exposure Amendment; Revised Hatch Congressional Findings 
Amendment; Hatch Insurer Commission and Asbestos Ban Technical/
Non-technical Amendments and the Hatch Technical Amendment for 
Tier I Allocation.
    Date of markup: July 10, 2003.

 [Approved by unanimous consent--members indicated were present when the
                            motion occurred]
------------------------------------------------------------------------
                          Members                              Present
------------------------------------------------------------------------
Mr. Grassley..............................................            X
Mr. Specter...............................................            X
Mr. Kyl...................................................            X
Mr. DeWine................................................  ............
Mr. Sessions..............................................            X
Mr. Graham................................................  ............
Mr. Craig.................................................  ............
Mr. Chambliss.............................................            X
Mr. Cornyn................................................            X
Mr. Leahy.................................................            X
Mr. Kennedy...............................................            X
Mr. Biden.................................................  ............
Mr. Kohl..................................................  ............
Mrs. Feinstein............................................            X
Mr. Feingold..............................................  ............
Mr. Schumer...............................................  ............
Mr. Durbin................................................            X
Mr. Edwards...............................................  ............
Mr. Hatch, Chairman.......................................            X
------------------------------------------------------------------------

    Vote on: Leahy/Kennedy Claims Value Amendment would 
increase awarded values for the 10 disease categories under the 
bill.
    Date: July 10, 2003.

                 [Defeated by a vote of 10 nays, 9 yeas]
------------------------------------------------------------------------
                   Members                        Yeas          Nays
------------------------------------------------------------------------
Mr. Grassley................................  ............            X
Mr. Specter.................................  ............            X
Mr. Kyl.....................................  ............            X
Mr. DeWine..................................  ............            X
Mr. Sessions................................  ............            X
Mr. Graham..................................  ............            P
Mr. Craig...................................  ............            P
Mr. Chambliss...............................  ............            X
Mr. Cornyn..................................  ............            X
Mr. Leahy...................................            X   ............
Mr. Kennedy.................................            X   ............
Mr. Biden...................................            P   ............
Mr. Kohl....................................            X   ............
Mrs. Feinstein..............................            X   ............
Mr. Feingold................................            P   ............
Mr. Schumer.................................            P   ............
Mr. Durbin..................................            X   ............
Mr. Edwards.................................            X   ............
Mr. Chairman................................  ............            X
------------------------------------------------------------------------

    Vote on: Feinstein $108 Billion Claims Values Amendment 
would raise the amount of money many victims can recover under 
the fund with an aggregate cost of $108 billion.
    Date: July 10, 2003.

                 [Defeated by a vote of 10 nays, 9 yeas]
------------------------------------------------------------------------
                   Members                        Yeas          Nays
------------------------------------------------------------------------
Mr. Grassley................................  ............            X
Mr. Specter.................................  ............            X
Mr. Kyl.....................................  ............            X
Mr. DeWine..................................  ............            P
Mr. Sessions................................  ............            X
Mr. Graham..................................  ............            X
Mr. Craig...................................  ............            X
Mr. Chambliss...............................  ............            X
Mr. Cornyn..................................  ............            X
Mr. Leahy...................................            X   ............
Mr. Kennedy.................................            P   ............
Mr. Biden...................................            P   ............
Mr. Kohl....................................            P   ............
Mrs. Feinstein..............................            X   ............
Mr. Feingold................................            P   ............
Mr. Schumer.................................            P   ............
Mr. Durbin..................................            X   ............
Mr. Edwards.................................            X   ............
Mr. Chairman................................  ............            X
------------------------------------------------------------------------

    Vote on: Graham/Feinstein/DeWine Claims Values Amendment 
with new values.
    Date: July 10, 2003.

         [Approved by a vote of 14 yeas, 3 nays, 2 voting pass]
------------------------------------------------------------------------
                   Members                        Yeas          Nays
------------------------------------------------------------------------
Mr. Grassley................................  ............            P
Mr. Specter.................................            X   ............
Mr. Kyl.....................................  ............            X
Mr. DeWine..................................            X   ............
Mr. Sessions................................  ............            P
Mr. Graham..................................            X   ............
Mr. Craig...................................            X   ............
Mr. Chambliss...............................            P   ............
Mr. Cornyn..................................            X   ............
Mr. Leahy...................................            X   ............
Mr. Kennedy.................................            P   ............
Mr. Biden *.................................  ............  ............
Mr. Kohl....................................            P   ............
Mrs. Feinstein..............................            X   ............
Mr. Feingold................................            P   ............
Mr. Schumer.................................            P   ............
Mr. Durbin..................................            X   ............
Mr. Edwards *...............................  ............  ............
Mr. Chairman................................            X   ............
------------------------------------------------------------------------
* Voting pass.

    Vote on: Kohl/Leahy Financing Amendment that would increase 
the amount of contributions to the Fund by defendant and 
insurer allocations from $45 billion to $52 billion each and 
strikes the ``additional contributing participants'' section 
(Sec. 225).
    Date of markup: July 10, 2003.

 [Approved by unanimous consent--members indicated were present when the
                            motion occurred]
------------------------------------------------------------------------
                          Members                              Present
------------------------------------------------------------------------
Mr. Grassley..............................................  ............
Mr. Specter...............................................            X
Mr. Kyl...................................................            X
Mr. DeWine................................................            X
Mr. Sessions..............................................  ............
Mr. Graham................................................            X
Mr. Craig.................................................            X
Mr. Chambliss.............................................  ............
Mr. Cornyn................................................  ............
Mr. Leahy.................................................            X
Mr. Kennedy...............................................  ............
Mr. Biden.................................................            X
Mr. Kohl..................................................  ............
Mrs. Feinstein............................................            X
Mr. Feingold..............................................  ............
Mr. Schumer...............................................  ............
Mr. Durbin................................................            X
Mr. Edwards...............................................  ............
Mr. Hatch, Chairman.......................................            X
------------------------------------------------------------------------

    Vote on: Feinstein Start-up Amendment would provide that 
none of the preemption, removal or dismissal provisions of the 
bill would become effective until the Trust Administrator 
determines that the fund is fully operational and processing 
claims. This amendment was approved subject to Kyl provisions 
prohibiting claimant double dipping and the offsetting of 
payments made by defendants and insurers post enactment but 
prior to the fund being up and running.
    Date of markup: July 10, 2003.

 [Approved by unanimous consent--members indicated were present when the
                            motion occurred]
------------------------------------------------------------------------
                          Members                              Present
------------------------------------------------------------------------
Mr. Grassley..............................................  ............
Mr. Specter...............................................            X
Mr. Kyl...................................................            X
Mr. DeWine................................................            X
Mr. Sessions..............................................  ............
Mr. Graham................................................            X
Mr. Craig.................................................            X
Mr. Chambliss.............................................            X
Mr. Cornyn................................................            X
Mr. Leahy.................................................            X
Mr. Kennedy...............................................  ............
Mr. Biden.................................................            X
Mr. Kohl..................................................  ............
Mrs. Feinstein............................................            X
Mr. Feingold..............................................  ............
Mr. Schumer...............................................  ............
Mr. Durbin................................................            X
Mr. Edwards...............................................  ............
Mr. Hatch, Chairman.......................................            X
------------------------------------------------------------------------

    Vote on: Durbin Mesothelioma Amendment would exempt from 
trust fund and leave in the tort system pending claims dealing 
with levels IV through VIII which were filed on or before the 
FAIR Act was introduced.
    Date: July 10, 2003.

                 [Defeated by a vote of 10 nays, 9 yeas]
------------------------------------------------------------------------
                   Members                        Yeas          Nays
------------------------------------------------------------------------
Mr. Grassley................................  ............            P
Mr. Specter.................................  ............            X
Mr. Kyl.....................................  ............            P
Mr. DeWine..................................  ............            X
Mr. Sessions................................  ............            P
Mr. Graham..................................  ............            X
Mr. Craig...................................  ............            X
Mr. Chambliss...............................  ............            X
Mr. Cornyn..................................  ............            X
Mr. Leahy...................................            X   ............
Mr. Kennedy.................................            P   ............
Mr. Biden...................................            X   ............
Mr. Kohl....................................            P   ............
Mrs. Feinstein..............................            X   ............
Mr. Feingold................................            P   ............
Mr. Schumer.................................            P   ............
Mr. Durbin..................................            X   ............
Mr. Edwards.................................            P   ............
Mr. Chairman................................  ............            X
------------------------------------------------------------------------

    Vote on: Durbin Federal Employers' Liability Act (FELA) 
Amendment removes the FAIR Act's preemption of FELA claims for 
asbestos injuries, and would leave those claims in the tort 
system.
    Date: July 10, 2003.

                 [Defeated by a vote of 10 nays, 9 yeas]
------------------------------------------------------------------------
                   Members                        Yeas          Nays
------------------------------------------------------------------------
Mr. Grassley................................  ............            P
Mr. Specter.................................  ............            X
Mr. Kyl.....................................  ............            P
Mr. DeWine..................................  ............            X
Mr. Sessions................................  ............            P
Mr. Graham..................................  ............            X
Mr. Craig...................................  ............            X
Mr. Chambliss...............................  ............            X
Mr. Cornyn..................................  ............            X
Mr. Leahy...................................            X   ............
Mr. Kennedy.................................            P   ............
Mr. Biden...................................            X   ............
Mr. Kohl....................................            P   ............
Mrs. Feinstein..............................            X   ............
Mr. Feingold................................            P   ............
Mr. Schumer.................................            P   ............
Mr. Durbin..................................            X   ............
Mr. Edwards.................................            P   ............
Mr. Chairman................................  ............            X
------------------------------------------------------------------------

    Vote on: Biden Sunset Amendment would insert into the bill 
a provision that requires the FAIR Act to immediately sunset 
after 90 days if, in the Administrators' annual report, he 
cannot certify that at least 95% of all of the previous years' 
claims have been paid. Any applicable statute of limitations 
for filing asbestos claims will be deemed tolled.
    Date: July 10, 2003

                 [Approved by a vote of 15 yeas, 4 nays]
------------------------------------------------------------------------
                   Members                        Yeas          Nays
------------------------------------------------------------------------
Mr. Grassley................................  ............            P
Mr. Specter.................................            X   ............
Mr. Kyl.....................................  ............            P
Mr. DeWine..................................            X   ............
Mr. Sessions................................  ............            P
Mr. Graham..................................            X   ............
Mr. Craig...................................            X   ............
Mr. Chambliss...............................            X   ............
Mr. Cornyn..................................            X   ............
Mr. Leahy...................................            X   ............
Mr. Kennedy.................................            P   ............
Mr. Biden...................................            X
Mr. Kohl....................................            P   ............
Mrs. Feinstein..............................            X   ............
Mr. Feingold................................            X   ............
Mr. Schumer.................................            P   ............
Mr. Durbin..................................            X   ............
Mr. Edwards.................................            P   ............
Mr. Chairman................................  ............            X
------------------------------------------------------------------------

    Vote on: Biden Inequity Amendment would permit an inequity 
adjustment for a company whose contribution rate, as a 
percentage of gross revenues, is exceptionally high compared to 
the median contribution rate for other companies in the same 
tier.
    Date of markup: July 10, 2003.

 [Approved by unanimous consent--members indicated were present when the
                            motion occurred]
------------------------------------------------------------------------
                          Members                              Present
------------------------------------------------------------------------
Mr. Grassley..............................................  ............
Mr. Specter...............................................            X
Mr. Kyl...................................................  ............
Mr. DeWine................................................            X
Mr. Sessions..............................................  ............
Mr. Graham................................................            X
Mr. Craig.................................................            X
Mr. Chambliss.............................................            X
Mr. Cornyn................................................            X
Mr. Leahy.................................................            X
Mr. Kennedy...............................................  ............
Mr. Biden.................................................            X
Mr. Kohl..................................................  ............
Mrs. Feinstein............................................            X
Mr. Feingold..............................................            X
Mr. Schumer...............................................  ............
Mr. Durbin................................................            X
Mr. Edwards...............................................  ............
Mr. Hatch, Chairman.......................................            X
------------------------------------------------------------------------

    Vote on: Feingold Payments Amendment as modified to ensure 
all payments should be paid within 3 years, no more than 4 
years.
    Date of markup: July 10, 2003.

 [Approved by unanimous consent--members indicated were present when the
                            motion occurred]
------------------------------------------------------------------------
                          Members                              Present
------------------------------------------------------------------------
Mr. Grassley..............................................  ............
Mr. Specter...............................................            X
Mr. Kyl...................................................            X
Mr. DeWine................................................            X
Mr. Sessions..............................................  ............
Mr. Graham................................................            X
Mr. Craig.................................................            X
Mr. Chambliss.............................................  ............
Mr. Cornyn................................................  ............
Mr. Leahy.................................................            X
Mr. Kennedy...............................................  ............
Mr. Biden.................................................            X
Mr. Kohl..................................................  ............
Mrs. Feinstein............................................            X
Mr. Feingold..............................................  ............
Mr. Schumer...............................................  ............
Mr. Durbin................................................            X
Mr. Edwards...............................................  ............
Mr. Hatch, Chairman.......................................            X
------------------------------------------------------------------------

    Vote on: Leahy Subrogation Amendment that would remove 
subrogation rights currently permitted under state laws of 
entities that may have provided benefits to a claimant.
    Date: July 10, 2003.

                 [Defeated by a vote of 10 nays, 9 yeas]
------------------------------------------------------------------------
                   Members                        Yeas          Nays
------------------------------------------------------------------------
Mr. Grassley................................  ............            X
Mr. Specter.................................  ............            X
Mr. Kyl.....................................  ............            P
Mr. DeWine..................................  ............            X
Mr. Sessions................................  ............            P
Mr. Graham..................................  ............            X
Mr. Craig...................................  ............            X
Mr. Chambliss...............................  ............            X
Mr. Cornyn..................................  ............            X
Mr. Leahy...................................            X   ............
Mr. Kennedy.................................            P   ............
Mr. Biden...................................            X   ............
Mr. Kohl....................................            P   ............
Mrs. Feinstein..............................            X   ............
Mr. Feingold................................            X   ............
Mr. Schumer.................................            P   ............
Mr. Durbin..................................            X   ............
Mr. Edwards.................................            P   ............
Mr. Chairman................................  ............            X
------------------------------------------------------------------------

    Vote on: Leahy Reimbursable Medical Costs Amendment would 
expand the monitoring provision so that the award also covers 
the claimant's initial diagnosis as well as monitoring 
regardless of insurance coverage. It would also expand 
monitoring provision so that award covers other tests that the 
doctor may deem appropriate for the initial diagnosis under 
121, and every three years thereafter.
    Date: July 10, 2003.

                 [Defeated by a vote of 10 nays, 9 yeas]
------------------------------------------------------------------------
                   Members                        Yeas          Nays
------------------------------------------------------------------------
Mr. Grassley................................  ............            X
Mr. Specter.................................  ............            X
Mr. Kyl.....................................  ............            P
Mr. DeWine..................................  ............            X
Mr. Sessions................................  ............            X
Mr. Graham..................................  ............            X
Mr. Craig...................................  ............            X
Mr. Chambliss...............................  ............            X
Mr. Cornyn..................................  ............            X
Mr. Leahy...................................            X   ............
Mr. Kennedy.................................            P   ............
Mr. Biden...................................            X   ............
Mr. Kohl....................................            P   ............
Mrs. Feinstein..............................            X   ............
Mr. Feingold................................            X   ............
Mr. Schumer.................................            P   ............
Mr. Durbin..................................            X   ............
Mr. Edwards.................................            P   ............
Mr. Chairman................................  ............            X
------------------------------------------------------------------------

    Vote on: Hatch Technical Amendment 2c that would revise the 
Durbin/Kyl amendment adopted previously in order to narrow the 
scope of the Kyl hardship language and ensure it does not place 
a substantial drain on the fund.
    Date of markup: July 10, 2003.

 [Approved by unanimous consent--members indicated were present when the
                            motion occurred]
------------------------------------------------------------------------
                          Members                              Present
------------------------------------------------------------------------
Mr. Grassley..............................................            X
Mr. Specter...............................................            X
Mr. Kyl...................................................  ............
Mr. DeWine................................................            X
Mr. Sessions..............................................            X
Mr. Graham................................................            X
Mr. Craig.................................................            X
Mr. Chambliss.............................................            X
Mr. Cornyn................................................            X
Mr. Leahy.................................................            X
Mr. Kennedy...............................................  ............
Mr. Biden.................................................  ............
Mr. Kohl..................................................  ............
Mrs. Feinstein............................................            X
Mr. Feingold..............................................  ............
Mr. Schumer...............................................  ............
Mr. Durbin................................................            X
Mr. Edwards...............................................  ............
Mr. Hatch, Chairman.......................................            X
------------------------------------------------------------------------

    Vote on: Motion to report S. 1125 as amended.
    Date: July 10, 2003.

       [Reported out by a vote of 10 nays, 8 yeas, 1 voting pass]
------------------------------------------------------------------------
                   Members                        Yeas          Nays
------------------------------------------------------------------------
Mr. Grassley................................            X   ............
Mr. Specter.................................            X   ............
Mr. Kyl*....................................  ............  ............
Mr. DeWine..................................            X   ............
Mr. Sessions................................            X   ............
Mr. Graham..................................            X   ............
Mr. Craig...................................            X   ............
Mr. Chambliss...............................            X   ............
Mr. Cornyn..................................            X   ............
Mr. Leahy...................................  ............            X
Mr. Kennedy.................................  ............            P
Mr. Biden...................................  ............            P
Mr. Kohl....................................  ............            P
Mrs. Feinstein..............................            X   ............
Mr. Feingold................................  ............            X
Mr. Schumer.................................  ............            P
Mr. Durbin..................................  ............            X
Mr. Edwards.................................  ............            P
Mr. Chairman................................            X   ............
------------------------------------------------------------------------
* Voting pass.

                IV. Background and Need for Legislation

    ``I don't think there can be any doubt that the crisis in 
asbestos litigation is a serious problem, and it continues to 
get worse as the abuse continues and Congress fails to act.''--
Chairman Orrin Hatch, at a March 5, 2003 Senate Judiciary 
Committee Hearing.

    The testimony presented at multiple hearings on this issue, 
and the recent studies written by independent research 
organizations confirm the fact that the asbestos litigation 
crisis in the United States is real. It has failed deserving 
claimants, who are ill, often fatally ill, because of their 
occupational exposure to asbestos. First, these claimants must 
often wait years for compensation, and they may ultimately be 
denied any compensation at all because the defendant 
responsible for their injury has been bankrupted by lawsuits 
brought by others who are not sick. Second, the compensation 
that claimants do receive is arbitrary and inequitable. People 
who bring their claims in certain jurisdictions can receive 
huge awards, even when they are not sick--while people fatally 
injured by asbestos exposure may receive far less and often 
nothing. Third, only a small percentage of the amount of money 
defendants and insurers spend on asbestos litigation reaches 
the claimants who have been injured. The majority of these 
funds find their way into the pockets of lawyers on both sides.
    The current asbestos litigation system does not serve the 
public interest. Since 1982, when the Johns-Manville 
Corporation entered Chapter 11, nearly 70 companies, large and 
small, have been driven into bankruptcy by asbestos litigation. 
These bankruptcies have had tragic consequences for employees, 
who have lost their jobs and often their savings, and for the 
communities that depended on the bankrupt firms. Moreover, this 
litigation is no longer confined to a few asbestos 
manufacturers. Asbestos litigation today touches thousands of 
companies in almost every sector of the American economy. Many 
of these companies never made asbestos products and have been 
drawn into the litigation only because the companies truly 
responsible for asbestos injuries, the asbestos manufacturers, 
are no longer available to sue.
    Our nation's state and federal courts simply cannot 
adequately manage the problems in the current asbestos 
litigation system. As the United States Supreme Court stated in 
Ortiz v. Fibreboard Corporation, 527 U.S. 815, 821 (1999), 
``the elephantine mass of asbestos cases * * * defies customary 
judicial administration and calls for national legislation.'' 
The Court has called upon the Congress three times since 1997 
to address this issue: in Amchem Products Inc. v. Windsor, 521 
U.S. 591 (1977), in Ortiz, and most recently a few months ago 
in Norfolk & Western Railway. Co. v. Ayers, 123 S. Ct. 1210 
(2003). The Committee believes that it is time to answer that 
call.
    Today, asbestos is seldom used in comparison to its 
widespread use in the early 1970s. Nonetheless, the Committee 
believes that continued asbestos use, however limited it may 
be, should be banned except in those instances where it 
presents no reasonable risk to health and it has no reasonably 
safe substitute, or where it is necessary to national security.

                   A. HISTORY OF ASBESTOS LITIGATION

    Asbestos is a fibrous mineral used in many products due to 
its resistance to fire, corrosion, and acid. In the early part 
of the 20th Century, asbestos was regarded as a miracle fiber 
because it was versatile enough to weave into textiles, 
integrate into insulation, line the brakes of automobiles, and 
construct flame-retardant hulls for naval and merchant ships. 
Annual asbestos production climaxed some 30 years ago, and had 
been incorporated into thousands of products by this time.
    This Committee received testimony from a number of 
witnesses regarding the scope and effects of asbestos 
exposure.\3\ Asbestos is ubiquitous in the environment, and 
practically all Americans are exposed to some degree. Such 
everyday exposures do not usually result in health problems. 
But, substantial occupational exposure to asbestos can lead to 
a variety of medical conditions. Some of these conditions--for 
example, pleural plaques and most cases of pleural thickening--
do not measurably interfere with the individual's breathing. 
Similarly, most cases of asbestosis--scarring of the tissue 
inside the lung--do not result in impairment. Severe 
asbestosis, however, can cause very serious breathing 
impairment and even death. Asbestos-related illnesses also 
include some kinds of cancer, including mesothelioma and lung 
cancer (although smoking remains by far the most common cause 
of lung cancer). At this time, mesothelioma is almost 
invariably fatal within a short period of time after diagnosis. 
The diseases caused by asbestos can have long latency periods, 
sometimes up to 30 or 40 years.
---------------------------------------------------------------------------
    \3\ See, e.g., Hearing on Solving the Asbestos Litigation Crisis: 
S. 1125, the Fairness in Asbestos Injury Resolution Act of 2003, Before 
the Senate Committee on the Judiciary, 108th Cong. (June 4, 2003) 
(prepared testimony of Dr. James D. Crapo and prepared testimony of Dr. 
John E. Parker).
---------------------------------------------------------------------------
    The first wave of lawsuits began in the late 1960s, when 
victims brought actions against asbestos manufacturers and 
suppliers. These lawsuits increased significantly in 1973 when 
the 5th Circuit Court of Appeals decided the Borel case, which 
applied strict liability in asbestos lawsuits. Borel v. 
Fibreboard Paper Prods. Corp., 493 F.2d 1076 (5th Cir. 1973). 
By the early 1980s, the principal asbestos defendant, Johns-
Manville, was unable to sustain the onslaught any longer, and 
in 1982 it filed for protection under chapter 11 of the 
bankruptcy laws. Six years later, the Manville bankruptcy 
resulted in the formation of a trust to pay asbestos claims, 
but after a brief (and disastrous) rush of claims on the trust 
in 1988-89, the trust was forced to reorganize and reduce 
benefits to claimants to 10 cents on the dollar in 1995.\4\ 
Today, asbestos claims have so overwhelmed the Manville Trust 
that it pays only 5 cents on the dollar.\5\
---------------------------------------------------------------------------
    \4\ http://www.mantrust.org/history.htm
    \5\ Id.
---------------------------------------------------------------------------
    Experts estimate that nearly 70 more companies have 
followed Manville into bankruptcy in the last 20 years--with 
more than a third of them filing in the last three years alone. 
Some of these bankruptcies have resulted in trusts for the 
payment of victims, and some have not. None of the existing 
trusts pay claims at their full value. By now, practically all 
of the former asbestos industry is bankrupt. As a result, 
asbestos litigation today affects companies that never made 
asbestos and often have only the most attenuated connection 
with it.
    The heaviest asbestos exposures occurred decades ago. After 
the federal government began regulating the use asbestos in the 
early 1970s, and with the sharp decline in asbestos use towards 
the end of that decade, occupational exposures to asbestos have 
been drastically reduced in recent years. This has greatly 
reduced the incidence of significant non-malignant disease, 
especially asbestosis. A leading pathologist of asbestos 
diseases stated that the ``progressive lowering of standards 
for permitted occupational exposure to asbestos has markedly 
decreased the incidence and severity of asbestosis.'' \6\ Dr. 
James Crapo, a nationally renowned expert in asbestos diseases 
and former president of the American Thoracic Society, 
testified before the Committee on June 19, 2003, that in his 
practice, serious asbestosis cases, which still occurred in the 
early 1990s, have now become exceedingly rare. At the same 
time, because of long latency periods, there will be 
significant numbers of mesothelioma and lung cancer claims for 
many years to come.
---------------------------------------------------------------------------
    \6\ Neoplastic Asbestos-Induced Disease, in Pathology of 
Occupational Lung Disease (Churg & Green, ed., 2nd 1998) at 339, cited 
in ``Babcock & Wilcox Company Report to the Court Regarding Asbestos 
Developments Generally and The Proofs of Claims Filed Here,'' In re: 
The Babcock & Wilcox Company, et al, Civil Action No. 00-0558, 2000 
U.S. Dist. Lexis 5626, Eastern Dist. Louisiana, decided April 17, 2000.
---------------------------------------------------------------------------
    Asbestos claims steadily increased during the 1990s, and 
then exploded during the end of the decade. The vast majority 
of those claims, however, were filed by people who claimed non-
malignant diseases such as asbestosis--the very diseases that 
had become less and less common during the 1990s. The RAND 
Institute for Civil Justice reports that ``[a]lmost all the 
growth in the asbestos caseload can be attributed to the growth 
in the number of these claims [for nonmalignant conditions], 
which include claims from people with little or no current 
functional impairment.'' \7\ Furthermore, more than 90% of all 
filings with the Johns-Manville bankruptcy trust in 2001 were 
brought by individuals with non-cancer claims.\8\ The great 
majority of these non-cancer claims were brought by people with 
no impairment. This threatens funding available to compensate 
those who may become sick in the future.
---------------------------------------------------------------------------
    \7\ RAND Institute for Civil Justice, ``Asbestos Litigation Costs 
and Compensation: An Interim Report,'' September 2002, at 45 (RAND 
2002).
    \8\ Hearing on Asbestos Litigation, Before the Senate Comm. on the 
Judiciary 107th Cong. (Sept. 25, 2002) (FNS Unofficial Transcript of 
oral statement of David Austern).
---------------------------------------------------------------------------

        B. COURTS UNABLE TO HANDLE VOLUME OF ASBESTOS LITIGATION

    The tens of thousands of asbestos claims filed every year 
have overwhelmed the ability of the courts to provide fair, 
individualized justice in a timely way. Judges, facing a tidal 
wave of asbestos cases, have adopted a variety of procedural 
short cuts to deal with the flood of claims. By reducing the 
traditional scrutiny given to tort claims, these expedients 
have encouraged the filing of even more claims. The result has 
been disastrous for deserving claimants and defendants alike. 
For claimants, the flood of cases has meant delay, inequitable 
compensation, and increasing uncertainty that the defendants 
responsible for their injury will remain solvent and able to 
compensate their claims. For defendants, the out-of-control 
tort system has caused companies who never manufactured 
asbestos and who have little or no connection with it to face 
the possibility of devastating liabilities against which they 
have little practical defense. Asbestos litigation has touched 
almost every sector of American industry, and no company can be 
sure it is not at risk.
    Among distortions in the judicial system that work to deny 
justice to victims and defendants alike are venue shopping, 
consolidations, aberrations in individual courts, lax 
standards, and failures by the courts to provide the resources 
necessary to consider cases fully:
     Forum Shopping: The evidence before the Committee 
showed a disturbing nationwide commerce in asbestos cases. 
These claims are not filed in the courts where claimants live 
or worked. Instead, they flow to the jurisdictions with the 
greatest potential for huge settlements and verdicts, even 
though those jurisdictions may have no connection whatsoever to 
the parties or to the factual basis of the case.\9\ Venue 
shopping warps the judicial system and results in delays for 
victims. Many plaintiffs' lawyers only file asbestos cases in 
jurisdictions they identify as having the most sympathetic 
judges and juries. Former U.S. Solicitor General Walter 
Dellinger testified before this Committee that ``increasingly 
one is able to forum shop and go to a jurisdiction, which will 
allow cases to be brought first of all by people who are not 
demonstrating that they're sick.'' \10\ Five states--
Mississippi, New York, West Virginia, Ohio and Texas--handled 
66% of filings between 1998 and 2000.\11\ In Jefferson County, 
Mississippi--population 9,700--21,000 plaintiffs filed asbestos 
cases between 1995 and 2000.\12\ The concentration of a huge 
number of filings in a small number of jurisdictions only 
exacerbates the delays and inequities inherent in the current 
system--forcing victims to wait too long to receive benefits.
---------------------------------------------------------------------------
    \9\ Hearing on Asbestos Litigation, Before the Senate Comm. on the 
Judiciary, 107th Cong., (Sept. 25, 2002) (prepared testimony of Steven 
Kazan at 25-26) (Kazan, Sept. 25, 2003).
    \10\ Hearing on Asbestos Litigation, Before the Senate Comm. on the 
Judiciary 107th Cong. (Sept. 25, 2002) (FNS Unofficial Transcript of 
oral statement of Walter E. Dellinger); see also Kazan Sept. 25, 2002, 
at 26.
    \11\ RAND 2002, at 32.
    \12\ Albert B. Crenshaw, For Asbestos Victims, Compensation Remains 
Elusive, The Washington Post, Sept. 25, 2002, at E01.
---------------------------------------------------------------------------
     Mass Consolidations: Consolidated cases often 
compromise justice for individual claimants. The claims of 
seriously ill asbestos victims are often combined with claims 
made by people who are not sick into large consolidated cases. 
As a result, the most seriously injured victims receive less 
because they are forced to share awards with claimants who are 
not ill.\13\ In a recent West Virginia case, Mobil Corp. v. 
Adkins, 8,000 claimants with varying degrees of exposure and 
illness were grouped together for trial against 250 
defendants.\14\
---------------------------------------------------------------------------
    \13\ See Kazan, Sept. 25, 2002, at 27.
    \14\ See Application to Stay Mandate of the Supreme Court of 
Appeals of West Virginia and to Stay the Commencement of Trial Pending 
This Court's Decision on Petition for Writ of Certiorari Or, in the 
Alternative, Suggestion to Expedite Decision on the Petition, Mobil 
Corporation v. Adkins, (No. 01-C-1847, Cir. Ct. Kanawha Cty, W. Va.), 
cert. denied, 123 S. Ct. 346 (Oct. 7, 2002) (No. 02-132) (Application 
to Stay).
---------------------------------------------------------------------------
     Inequitable Compensation: The vagaries of the 
courts where victims' cases are filed can have a greater impact 
on the outcome than the merits of a case. Current asbestos 
litigation payouts vary significantly by what state victims 
live in, which court their cases are tried in, and who the 
judge and jury are that day. For example, in late 1999, 
attorneys for 18 defendants reached a $160 million settlement 
with lawyers for almost 4,000 plaintiffs in cases filed in 
Jefferson County, Mississippi. Allocation of the settlement 
money was based on how far plaintiffs lived from the 
courthouse. The Mississippi residents each received $263,000, 
while plaintiffs from Ohio, Pennsylvania, and Indiana, despite 
having similar conditions, received only $14,000 each. The 
Texas plaintiffs recovered $43,500 each.\15\ David Austern, the 
General Counsel of the Manville Personal Injury Settlement 
Trust told the Committee that ``the amount of victim awards 
diverge wildly--some victims receive grand slam awards, while 
others receive little or nothing.'' \16\ The Committee concurs 
with that conclusion.
---------------------------------------------------------------------------
    \15\ David Cosey, et al. v. E.D. Bullard, et al., No. 99-60373, 5th 
Cir. and Leroy Rankin Jr., et al. v. A-Bex Corporation, et al., No. 99-
0086, Miss. Super., Jefferson Co., at 3 (Jan. 28, 2000); See 
Jurisdiction and Injury Basis for CCR Settlement Agreement in 
Mississippi, Mealey's Litigation Report: Asbestos, Feb. 17, 2000.
    \16\ Hearing on The Asbestos Litigation Crisis Continues: It Is 
Time for Congress to Act, Before the Senate Comm. on the Judiciary, 
108th Cong. (March 5, 2003) (prepared testimony of David Austern, at 2) 
(Austern March 5, 2003).
---------------------------------------------------------------------------
     Abrogation of Tort Principles: The rights of 
defendants are also compromised by failures of the judicial 
system. First, many courts have made it easier for plaintiffs 
to pursue claims against companies without demonstrating that 
the companies' actions or products directly caused a claimant's 
illness. Causation is traditionally an element of tort law; in 
other words, a defendant's product must have caused a 
plaintiff's injury. In asbestos cases, however, ``the system 
rarely accommodates a determination of whether plaintiffs made 
valid product identification, one of the most basic elements of 
establishing an asbestos tort.'' \17\ This abrogation of tort 
principles has led to arbitrary results. Companies that may, in 
reality, have played minimal or no part in causing a 
plaintiff's disease are held liable, and in jurisdictions that 
adhere to joint and several liability rules, may end up 
responsible for the entirety of the plaintiff's damages.
---------------------------------------------------------------------------
    \17\ Griffin B. Bell, Asbestos Litigation and Judicial Leadership: 
The Courts' Duty to Help Solve the Asbestos Litigation Crisis, National 
Legal Center for the Public Interest, June 2002, at 15 (Bell).
---------------------------------------------------------------------------
    Relaxed standards of proof enable plaintiffs to sue an ever 
broader range of peripheral defendants who, under traditional 
tort standards, would not ever be haled into court. In addition 
to causing arbitrariness in verdicts, the effective relaxation 
of standards of proof gives plaintiffs' attorneys who represent 
large numbers of plaintiffs undue settlement leverage. Because 
they can choose which companies to bring to trial for 
plaintiffs with the most serious injuries, counsel have 
leverage to negotiate large settlements with particular 
defendants for their entire ``inventory'' of claims, including 
those of unimpaired plaintiffs. This makes the filing of claims 
on behalf of the unimpaired persons profitable, which has been 
a factor in the acceleration of such filings in recent years. 
Oakland, California, lawyer Steven Kazan testified before this 
Committee that ``we've gone from a medical model in which a 
doctor diagnoses an illness and the patient then hires a 
lawyer, to an entrepreneurial model in which clients are 
recruited by lawyers who then file suit even when there's no 
real illness. These are not patients, they are plaintiffs 
recruited for profit.'' \18\
---------------------------------------------------------------------------
    \18\ Hearing on Asbestos Litigation, Before the Senate Committee on 
the Judiciary, 107th Cong. (Sept. 25, 2002) (FNS Unofficial Transcript 
of oral statement of Steven Kazan).
---------------------------------------------------------------------------
    Second, defendants' rights are further compromised when 
courts lack the resources to monitor medical evidence submitted 
by plaintiffs. A study by neutral academics showed that in 41% 
of audited claims of alleged asbestosis or pleural disease, the 
Trust's physicians found that the claimant either had no 
disease or a less severe disease than alleged (for example, 
pleural disease rather than asbestosis).\19\ Such evidence 
contradicted the plaintiffs' experts. This systematic 
overreading of x-rays by plaintiffs' experts doubtless figured 
into the court cases filed by the same claimants.
---------------------------------------------------------------------------
    \19\ Bell, at 18.
---------------------------------------------------------------------------
    Third, large consolidated cases compromise the rights of 
defendants as well as victims. In Mobil v. Adkins, the 8,000 
cases were consolidated against 250 diverse defendants for 
trial. Such circumstances offer little chance to present 
individual defenses. Compounding and exacerbating the 
unfairness, the court structured the trial essentially backward 
so that findings of fault and punitive damages would come 
before the finding of causation.\20\ Huge consolidations such 
as the West Virginia proceeding in Adkins put defendants in a 
``bet-the-company'' situation that forces settlements of 
undeserving cases. But, even much smaller consolidations can 
make it impossible for juries to sort out the evidence in 
individual cases, significantly increasing the size of 
verdicts.\21\
---------------------------------------------------------------------------
    \20\ Application to Stay, Mobil Corporation v. Adkins, at 5.
    \21\ See Hearing on H.R. 1283, The Fairness in Asbestos 
Compensation Act, Before the House Comm. on the Judiciary, 106th Cong. 
(1999) (prepared testimony of William N. Eskridge); Michelle White, The 
Role of Procedural Innovations in Mass Tort (NBER 2002).
---------------------------------------------------------------------------
    One can only conclude that the current asbestos litigation 
system is a failure. It is slow, expensive, and inequitable for 
both plaintiffs and defendants alike. The courts have used a 
variety of judicial management techniques to cope with the 
influx of asbestos cases. Attempts to solve the problem within 
the present tort system have been rejected by the Supreme 
Court. In one case, the parties agreed to a class action 
settlement that would have provided an alternative dispute 
resolution mechanism for asbestos claims against all defendants 
(who had stopped manufacturing asbestos products some 18 years 
before the settlement). The Supreme Court rejected the 
settlement. Amchem Products, Inc. v. Windsor, 521 U.S. 591 
(1997). The Supreme Court also rejected a class action 
settlement that would have required all claimants against the 
defendant company to seek compensation from a fund established 
by the defendant's insurer. Ortiz v. Fibreboard, 527 U.S. 815 
(1999). And recently, the Supreme Court rejected an attempt to 
limit damages in asbestos cases under federal law, holding that 
a defendant that played only a small part in the victim's total 
exposure could be held liable for the entire damage where the 
firms primarily responsible were bankrupt or otherwise 
unreachable, and that a person with only mild impairment due to 
asbestosis could receive a very large award based only on fear 
of developing cancer at some future date. Norfolk & Western 
Railway Co. v. Ayers, 123 S.Ct. 1210 (2003).
    In these cases, the Supreme Court recognized that the 
asbestos problem ``defies customary judicial administration and 
calls for national legislation.'' Norfolk & Western, 123 S.Ct. 
at 1228, quoting Ortiz, 527 U.S. at 821. As far back as 1997, 
Justice Ruth Bader Ginsburg wrote for the Court that ``[t]he 
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.'' Amchem, 521 U.S. at 628. Specifically, the Court 
has endorsed the Judicial Conference's recommendation that 
``[r]eal reform * * * require[s] federal legislation creating a 
national asbestos dispute-resolution scheme.'' Id. at 598. The 
FAIR Act is the ``real reform'' called for by the Supreme 
Court.

            C. VICTIMS FACE LONG DELAYS, UNCERTAIN OUTCOMES

    Jonathan Hiatt, General Counsel of the AFL-CIO, testified 
before this Committee in September of 2002 that, compounding 
the tragedy of asbestos illness, ``the legal system has offered 
lengthy delays, followed by limited compensation, compensation 
that often comes too late.'' \22\ A flood of asbestos cases is 
overwhelming the courts, causing delays for victims. An 
estimated 300,000 cases are currently pending.\23\ More than 
600,000 individuals have brought claims.\24\ Some experts 
estimate that as many as 2.7 million additional claims will be 
filed by people who were exposed to asbestos.\25\ While the 
majority of these claims are expected to be filed by unimpaired 
claimants, this onslaught will inevitably cause extensive 
delays.
---------------------------------------------------------------------------
    \22\ Hearing on Asbestos Litigation, Before the Senate Comm. on the 
Judiciary, 107th Cong. (Sept. 25, 2002) (prepared statement of Jonathan 
Hiatt, General Counsel, American Federation of Labor and Congress of 
Industrial Organizations, at 1) (Hiatt Sept. 25, 2002).
    \23\ Hearing on Solving the Asbestos Litigation Crisis: S. 1125, 
the Fairness in Asbestos Injury Resolution Act of 2003, Before the 
Senate Comm. on the Judiciary, 108th Cong. (June 4, 2003) (prepared 
testimony of Jennifer Biggs, at 5) (Biggs June 4, 2003).
    \24\ RAND, at 40.
    \25\ Austern Sept. 25, 2002, at 4.
---------------------------------------------------------------------------
    Some fatally ill victims die before their claims are 
resolved. As discussed above, one worker whose claim against 
Avondale shipyard was buried in a consolidated case involving 
more than 1,000 plaintiffs, died of mesothelioma before the 
Louisiana trial involving his claim even got underway.\26\ 
While some courts give priority to plaintiffs with 
mesothelioma, elsewhere plaintiffs with mesothelioma may die 
before they get to trial.\27\ Senator Kohl noted at our 
September 25, 2002, hearing that, ``[s]imply put, some of the 
most seriously injured are just not getting their day in court 
quickly enough.''
---------------------------------------------------------------------------
    \26\ 16-7 Mealey's Litig. Rep. Asb. 2 (May 4, 2001) at 1.
    \27\ RAND 2002, at 35.
---------------------------------------------------------------------------
    The flood of asbestos litigation has resulted in nearly 70 
bankruptcies, which further diminish the prospect that truly 
ill victims will be timely and adequately compensated. The 
average amount of time between filing a bankruptcy petition 
andapproval of a reorganization plan is about six years, during which 
time victims are not paid.\28\
---------------------------------------------------------------------------
    \28\ Austern March 5, 2003, at 2.
---------------------------------------------------------------------------
    Not only do victims have to wait too long for compensation, 
awards are frequently inequitable, with large awards often 
going to claimants who are not sick. For example, in a recent 
Mississippi case, six plaintiffs who were not sick were awarded 
a total of $150 million. The plaintiffs did not claim to have 
ever missed a day of work because of asbestos injury, they did 
not claim any medical expenses related to asbestos, and they 
did not have asbestos-related physical impairment. One 
plaintiff told the court he suffers no shortness of breath and 
walks up to four miles per day for exercise.\29\
---------------------------------------------------------------------------
    \29\ Bell, at 14.
---------------------------------------------------------------------------
    Too many seriously ill victims do not fare so well, and 
many find that the defendants have filed for bankruptcy and 
will only pay pennies on the dollar, if anything. Senator 
DeWine noted at our September 25, 2002 hearing that ``[t]he 
status quo is just not fair. It is grossly unfair to the 
victims. What you find is an inconsistency in how victims are 
treated--a horrible inconsistency that I don't think you'll 
find anyplace else in our country or our judicial system.''
    Asbestos-related bankruptcies severely diminish the 
prospects that sick victims will be adequately compensated. 
Overwhelmed by the enormous number of claims by the unimpaired 
in recent years, the Johns-Manville bankruptcy trust is now 
paying victims just five cents on the dollar.\30\ Moreover, 63% 
of the funds paid out by the Manville trust have gone toward 
claims by those with non-malignant conditions.\31\ The General 
Counsel of the Manville Personal Injury Trust, David Austern, 
testified before this Committee that none of the existing 
asbestos trusts, nor any of the 20 trusts pending in bankruptcy 
court, will pay any more than a fraction of the value of claims 
submitted to them.\32\
---------------------------------------------------------------------------
    \30\ Austern Sept. 25, 2002, at 2.
    \31\ Claims Resolution Management Corporation, Hearing Exhibit No. 
8 at 5, In Re: Asbestos Litigation, (E.D.N.Y. Hearing on Dec. 13, 2001) 
(Nos. CV-91-875, CV-90-3973).
    \32\ Austern March 5, 2003, at 2.
---------------------------------------------------------------------------
    According to New York Senior District Judge Jack B. 
Weinstein, the flood of new claims, the reduction in amounts 
paid pro rata by the Johns-Manville bankruptcy trust on claims, 
and the increasing number of bankruptcy filings ``suggests that 
there may be a misallocation of available funds, inequitably 
favoring those who are less needy over those with more pressing 
asbestos-related injuries.'' \33\
---------------------------------------------------------------------------
    \33\ Order of Judge Jack B. Weinstein, Senior District Judge, 
E.D.N.Y., In re: Johns-Manville Corporation et. al., Nov. 7, 2001, 
Brooklyn, New York.
---------------------------------------------------------------------------
    Even for those sick victims who are able to recover monies, 
those awards are diminished by high transaction costs. 
Plaintiffs' lawyers fees alone are typically 40% of any 
settlement, and with expenses can take more than half of the 
claimants' recovery.
    Today's system is very costly, and victims could be well 
compensated under a more efficient system. Tillinghast-Towers 
Perrin actuary Jennifer Biggs testified before this Committee 
that the future loss and expense for asbestos liability will 
amount to $130 billion (to which might be added the $70 billion 
that has already been paid).\34\ Of that $130 billion, roughly 
$28 billion (21.5%) goes to defense costs and $41 billion (40%) 
to plaintiffs' attorneys. So, while today's system has a cost 
impact of $130 billion (future), less than half--$61 billion--
will actually reach claimants. A compensation system that 
removes these transaction costs could compensate victims while 
at the same time have the benefit of shepherding more funds to 
sick victims rather than to legal and other fees. S. 1125 
provides for $108 billion, nearly all of which would go 
directly to claimants. Contrasting these numbers with the $61 
billion that would actually go to claimants under our current 
tort system, it becomes evident that S. 1125 is a far superior 
option.
---------------------------------------------------------------------------
    \34\ Biggs, June 4, 2003, at 1-3.
---------------------------------------------------------------------------

              D. ECONOMY, JOBS SUFFER UNDER CURRENT SYSTEM

    Almost all of the original asbestos manufacturers were 
driven into bankruptcy by asbestos litigation. Plaintiffs' 
attorneys now seek to recoup funds ``lost'' to bankruptcy by 
targeting a widening list of solvent companies, thus triggering 
a new wave of bankruptcies. The growth in litigation against 
this expanding list of defendants threatens jobs, workers' 
401(k) and retirement accounts, and the American economy. As 
Senator Leahy noted at our March 5, 2003, hearing, ``[n]ot only 
do the victims of asbestos exposure continue to suffer, and 
their numbers to grow, but the businesses involved in the 
litigation, along with their employees and retirees, are 
suffering from the economic uncertainty surrounding the 
litigation. * * * These bankruptcies created a lose-lose 
situation. Asbestos victims deserving fair compensation do not 
receive it and bankrupt companies cannot create new jobs nor 
invest in our economy.''
    Given that nearly 70 defendant corporations have filed for 
bankruptcy related to asbestos litigation, and as many as 2.7 
million asbestos claims still may be filed, bankruptcies are 
likely to continue. More than 20 of the almost 70 bankruptcies 
have been filed since 2000; as many asbestos-related 
bankruptcies have been declared in the last two years as in 
either of the past two decades.\35\ Recent bankruptcies include 
Armstrong World Industries, Owens Corning, Pittsburgh Corning, 
G-I Holdings Inc. (the successor to GAF Corp.), W.R. Grace & 
Co., U.S. Gypsum Co., Federal Mogul, Babcock & Wilcox, and 
Kaiser Aluminum.\36\ Asbestos liabilities accounted for 84% of 
total contingent liabilities for Owens Corning, 67% for W.R. 
Grace, and 93% for USG.\37\
---------------------------------------------------------------------------
    \35\ RAND 2002, at 71.
    \36\ Keith M. Buckley, Asbestos: Impact on the U.S. Insurance 
Industry, Fitch Ratings, July 25, 2002, at 13.
    \37\ Joseph E. Stiglitz, The Impact of Asbestos Liabilities on 
Workers in Bankrupt Firms, Sebago Associates, Dec. 2002, at 10 
(Stiglitz).
---------------------------------------------------------------------------
    As the first wave of asbestos defendants filed for 
bankruptcy and their resources dried up, the number of 
companies named as defendants in asbestos suits began to rise. 
Increasingly, companies with a limited link to asbestos 
liability are being targeted. Senator Hatch noted at our 
September 25, 2002, hearing that ``[b]ecause of this surge in 
litigation, companies--many of whom never manufactured asbestos 
nor marketed it--are going bankrupt paying people who are not 
sick and may never be sick, and who, therefore, may not need 
immediate compensation.'' Approximately 8,400 firms have been 
named defendants in asbestos suits,\38\ up from 300 listed in 
1983.\39\
---------------------------------------------------------------------------
    \38\ Hearing on Solving the Asbestos Litigation Crisis: S. 1125, 
the Fairness in Asbestos Injury Resolution Act of 2003, Before the 
Senate Committee on the Judiciary, 108th Cong. (June 4, 2003) (prepared 
testimony of Robert P. Hartwig, Insurance Information Institute, at 2).
    \39\ RAND 2002, at 49.
---------------------------------------------------------------------------
    Asbestos litigation has reached nearly all parts of the 
U.S. economy. Companies representing 75 of 83 American 
industries (using the Commerce Department's classifications) 
have been hit. ``Nontraditional'' defendants account for 60% of 
asbestos-related expenditures. Companies ranging from America's 
largest corporations to small businesses with less than two 
dozen employees are now the target of asbestos litigation.\40\ 
According to Senior U.S. District Judge Jack Weinstein, ``[i]f 
the acceleration and expansion of asbestos lawsuits continues 
unaddressed, it is not impossible that every company with even 
a remote connection to asbestos may be driven into 
bankruptcy.'' \41\
---------------------------------------------------------------------------
    \40\ Id., at 49-50.
    \41\ Remarks of Judge Jack Weinstein, at a symposium held by the 
Bar Association of the City of New York titled: ``Asbestos: What Went 
Wrong?'' Oct. 21, 2002, at 12.
---------------------------------------------------------------------------
    The negative impact of asbestos liability is so serious; 
the mere specter of it has the effect of chilling or even 
halting transactions. Goldman Sachs Managing Director Scott 
Kapnick told this Committee that ``the large uncertainty 
surrounding asbestos liabilities has impeded transactions that, 
if completed, would have benefited companies, their 
stockholders and employees, and the economy as a whole.'' \42\ 
The asbestos problem also has serious consequences for 
insurers, who now pay about 57% of the cost of asbestos 
liability.
---------------------------------------------------------------------------
    \42\ Hearing on Solving the Asbestos Litigation Crisis: S. 1125, 
the Fairness in Asbestos Injury Resolution Act of 2003, Before the 
Senate Committee on the Judiciary, 108th Cong. (June 4, 2003) (prepared 
testimony of Scott Kapnick, at 2).
---------------------------------------------------------------------------
    A national economic research specialist testified before 
this Committee on the economic effects caused by asbestos 
litigation: ``Asbestos-related bankruptcies and the associated 
layoffs will have ripple effects that harm many groups beyond 
company stockholders. Workers will suffer in many ways, 
including temporary or long-term unemployment, lower long-term 
earnings, and inadequate and/or more expensive interim health 
coverage.'' \43\
---------------------------------------------------------------------------
    \43\ Hearing on Solving the Asbestos Crisis: S. 1125, the Fairness 
in Asbestos Injury Resolution Act of 2003, Before the Senate Committee 
on the Judiciary, 108th Cong. (June 4, 2003) (prepared testimony of 
Frederick C. Dunbar, of the National Economic Research Associates, at 
1).
---------------------------------------------------------------------------
    Asbestos-related bankruptcies have a devastating impact on 
workers' jobs and their economic security. Companies that have 
declared bankruptcy related to asbestos litigation employed 
more than 200,000 workers before their bankruptcies. Asbestos-
related bankruptcies led to the direct loss of as many as 
60,000 jobs, while each displaced worker will lose an average 
of $25,000 to $50,000 in wages over his or her career.\44\ The 
need for congressional intervention is clear, testified former 
U.S. Solicitor General Walter Dellinger: ``We need to stop the 
hemorrhaging of hundreds of millions of dollars going to those 
who are not sick, to protect American jobs, pensions and 
shareholders.'' \45\
---------------------------------------------------------------------------
    \44\ Stiglitz, at 3.
    \45\ Dellinger Sept. 25, 2002.
---------------------------------------------------------------------------
    When asbestos defendant Federal-Mogul declared bankruptcy 
in 2001, employees reportedly lost more than $800 million in 
their 401(k)s.\46\ For example, one 82-year-old Federal-Mogul 
employee saw his $1 million retirement nest egg shrivel to 
$20,000.\47\ Bankrupt Owens Corning saw its shares lose 97% of 
their value in the two years before its filing. Approximately 
14% of those shares were held by employees.\48\
---------------------------------------------------------------------------
    \46\ Hearing on Asbestos Litigation, Before the Senate Committee on 
the Judiciary, 107th Cong. (Sept. 25, 2002) (FNS Unofficial Transcript 
of oral testimony of The Honorable Senator Benjamin Nelson, United 
States Senator, Nebraska) (Nelson Testimony).
    \47\ Mark Truby, Asbestos Ruined Federal-Mogul, The Detroit News, 
Mar. 31, 2002.
    \48\ Hearing on Asbestos Litigation, Before the Senate Committee on 
the Judiciary, 107th Congress, September 25, 2002. The Honorable 
Benjamin Nelson, United States Senator, Nebraska.
---------------------------------------------------------------------------
    The AFL-CIO has told Congress that ``[u]ncertainty for 
workers and their families is growing as they lose health 
insurance and see their companies file for bankruptcy 
protection.'' \49\ Many companies had high unionization rates 
when they filed for bankruptcy: Johns-Manville, 42%; Eagle-
Picher, 33%; Federal-Mogul, 33%; Armstrong, 57%; and Todd 
Shipyards, 75%.\50\
---------------------------------------------------------------------------
    \49\ Hearing on Asbestos Litigation Crisis: S. 1125, the Fairness 
in Asbestos Injury Resolution Act of 2003, Before the Senate Committee 
on the Judiciary, September 25, 2002, Jonathan Hiatt at 2.
    \50\ Stiglitz, at 22.
---------------------------------------------------------------------------
    There is no question that the escalating numbers of claims 
and costs is a threat to workers' jobs and retirement savings. 
The AFL-CIO testified that ``[The tort system] is damaging 
business far more then it is compensating victims.'' \51\ 
Businesses with only a remote connection to asbestos are being 
targeted in the same way that original manufacturers were, 
despite the differences in culpability.
---------------------------------------------------------------------------
    \51\ Hiatt at 2, Sept. 25, 2002.
---------------------------------------------------------------------------
    Six years ago, the Supreme Court endorsed a ``national 
dispute resolution scheme'' to remedy this crisis, and the FAIR 
Act is the vehicle to implement this mechanism. Without it, the 
current system will continue exacerbating the devastating 
consequences it has wrought for over 20 years.

                            E. ASBESTOS BAN

    Dangers associated with exposure to asbestos fibers are 
well known, and have prompted efforts to reduce and in some 
cases ban asbestos use. EPA and OSHA have severely restricted 
the use of asbestos since 1986. In 1989, EPA attempted to 
finalize a ban on asbestos use in the United States; however, 
that ban was subsequently overturned on non-substantive 
grounds, by the United States Court of Appeals for the Fifth 
Circuit in 1991. A number of products and processes still use 
asbestos. Today, asbestos may be present in such products as 
brake pads and linings, roofing materials, ceiling tiles, 
garden materials containing vermiculite, and cement products. 
According to the United States Geologic Survey, approximately 
13,000 to 15,000 metric tons of asbestos are consumed in the 
United States every year. Numerous countries have banned, or 
are working to ban, the manufacture and importation of 
asbestos. Despite its continued (albeit limited) use in the 
United States, some types of asbestos remain a dangerous 
substance. Therefore, a ban on the import and manufacture of 
harmful forms of asbestos and asbestos containing products is 
needed to prevent the well known risks associated with these 
products, and to reduce the number of future victims of 
asbestos-related diseases. The only exceptions are for uses 
that present no unreasonable risks to health (e.g., diaphragms 
in chlorine solvent) and for national security (e.g., use in 
missile liners).

                             F. CONCLUSION

    It is evident that the asbestos litigation system is 
fundamentally flawed. Victims and defendants alike face 
inequity and uncertainty, which will only get worse. The 
Supreme Court has concluded that only federal legislation can 
create a fair and efficient asbestos resolution system. The 
FAIR Act offers just such a resolution.

                          V. How S. 1125 Works

    The FAIR Act takes asbestos claims out of the existing 
broken tort system and processes them through a federally 
administered trust fund that compensates current and future 
asbestos claimants on a no-fault basis according to 
standardized medical criteria and corresponding claims awards. 
Reduced to its essence, and as discussed further below, the 
trust fund operates on two fronts: (i) through the collection 
and management of contributions received from defendant and 
insurer participants and existing asbestos compensation trusts; 
and (ii) through the payment of such funds to compensate 
claimants who can show eligibility based on standardized 
medical criteria.
    The Committee believes that a national trust fund is the 
best answer to the current asbestos litigation crisis. By 
funneling existing asbestos tort claims into an administrative 
funding system, claimants should see quicker compensation while 
defendants and insurers benefit from increased economic 
certainty and stability--an outcome that the current tort 
system is ill-suited to provide.
    Claimants would benefit because the FAIR Act eliminates 
expensive and time consuming litigation. A claimant can recover 
from the trust fund if that person can meet the Act's 
standardized medical criteria, which is categorized in various 
funding levels based on the severity of the asbestos-related 
disease. Unlike the current tort system, claimants would not be 
required to prove causation with respect to a pool of 
defendants or show that their claim was somehow not caused by 
their own negligence.
    Defendants and insurers would also benefit from a trust 
fund because their future asbestos liabilities become more 
predictable. The trust fund will be financed through a 
structured payment scheme involving defendants and insurers 
with asbestos liabilities. As long as these payments are made 
into the Fund, these contributing participants are immune from 
the tort system with regard to asbestos personal injury claims 
and its inherent pitfalls.

                  A. THE FAIR ACT'S FUNDING MECHANISMS

    To first ensure that claimants can be properly compensated, 
the FAIR Act requires defendant and insurers to capitalize the 
trust fund. This injection of funds is achieved through four 
layers of funding that break down as follows: (i) $108 billion 
in mandatory contributions from defendants and insurers spread 
over 27 years; (ii) the Administrator's access to supplemental 
accounts and borrowing authority; (iii) the contingent call 
funding vehicle; and (iv) the back-end funding vehicle. 
Although the Committee believes that the first layer of 
mandatory funding contributions from defendants and insurers 
will be more than adequate to pay all pending and future 
asbestos claims, the FAIR Act contains these three additional 
layers of funding to ensure that the Fund adequately 
compensates eligible asbestos victims in the event of 
unanticipated contingencies.

1. The $108 billion in mandatory funding

    The primary source of funding comes from mandatory annual 
contributions by defendant participants and insurers during the 
first 27 years of the Fund's life. The aggregate level of 
mandatory contributions is established at $108 billion: $104 
billion shared equally between defendants and their insurers 
and at least $4 billion from existing confirmed asbestos 
trusts.
            a. The $104 billion contribution from defendants and 
                    insurers
    The Fund will be financed through allocated contributions 
of $52 billion each by defendants and insurers that have been 
exposed to asbestos claims in the tort system. Although 
insurers and defendants share this funding obligation equally, 
the mechanics of how these amounts will be assessed towards 
each contributing group necessarily differs.
            For defendants
    With respect to the defendants, the Administrator must 
first assign companies into tiers that are defined by prior 
company expenditures incurred defending asbestos claims in the 
tort system. These expenditures include defense, indemnity, 
judgment and settlement costs. In addition, the FAIR Act 
establishes separate tiers for debtor companies currently in 
bankruptcy and companies subject to claims under the Federal 
Employer's Liability Act.
    Once companies have been assigned to tiers, the 
Administrator's next step is to assign companies into subtiers 
based on revenue levels--amounts calculated by each company's 
reported earnings for the most recent fiscal year ending before 
December 31, 2002. After a company is assigned to a subtier, 
the Administrator can then identify with ease a corresponding 
annual contribution amount that the assigned company is 
obligated to pay into the Fund. In other words, each subtier 
identifies the annual contribution amount into the Fund.
    The Committee believes that a dual tiering system that 
accounts for past asbestos expenditures and company revenues is 
a fair measure of a company's ability to fund the assessments 
under the FAIR Act. But in the event a tiering assignment 
unduly burdens a contributing company, the FAIR Act provides 
for limited payment adjustments based on severe financial 
hardship or exceptional cases of demonstrated inequity.
            For insurers
    Unlike the assessment formula for defendants, the FAIR Act 
takes a different approach with respect to the asbestos 
insurers. Rather than establish an allocationformula, the FAIR 
Act creates a separate Asbestos Insurers Commission, which holds 
responsibility to determine the amount that each insurer is obligated 
to pay into the Fund. The Committee believes that delegating such a 
task to a separately commissioned entity makes abundant sense given the 
necessary technical expertise that is required in developing a fair and 
appropriate allocation formula. The FAIR Act requires the Commission to 
determine contributions based on several factors, including premiums 
from asbestos policies, losses paid, reserve levels, and future 
liability. However, if the insurers agree on a fair division of 
contributions among themselves, such an agreement may be used to 
determine the insurer allocation. This agreement is subject to approval 
by the Commission after a finding that the agreed upon allocation 
formula meets all of the requirements of the Act.
    Moreover, to ensure that the Fund receives early funding 
while the Commission develops an allocation formula, the FAIR 
Act authorizes the Administrator to collect payments from the 
asbestos insurers in an amount that does not exceed the 
ultimate financial obligation of an insurer participant. Such 
payments are to be assessed on an equitable basis and credited 
against future payments that may be required after the 
Commission develops an allocation formula.
            b. The $4 billion contribution from existing bankruptcy 
                    trusts
    The remaining $4 billion is provided by existing asbestos 
compensation trusts that have been established to compensate 
asbestos claims, including but not limited to those established 
under section 524(g) of the Bankruptcy Code. The Committee 
understands that the total amount of all existing bankruptcy 
and other asbestos compensation trusts is valued to be at least 
$4 billion. Because the FAIR Act requires that all trust assets 
be transferred to the Fund within 6 months of the date of 
enactment pursuant to the provisions of the Act, these trusts 
represent an immediate source of funding for the Administrator 
to begin processing claims.

2. The administrator's access to supplemental accounts and borrowing 
        authority

    To ensure sufficient funds are available to compensate 
eligible claimants if funding is necessary beyond the mandatory 
$108 billion contribution, the FAIR Act provides a second layer 
of funding that contains three components. First, the 
Administrator holds access to additional funds through a 
guaranteed payment account. This account collects a mandatory 
surcharge (in addition to the assessed amount) on every 
defendant and insurer contribution made into the Fund. The 
proceeds from this surcharge are used to cover shortages 
attributable to the non-payment by any participant. Second, the 
Administrator holds access to an orphan share account that 
collects amounts paid in excess of the maximum aggregate 
contribution by insurers and defendants. These amounts are used 
to cover losses caused by participants that proceed with 
Chapter 11 bankruptcies and for losses caused by financial 
hardship and inequity determinations made in favor of certain 
participants. Third, the Administrator holds authority to 
borrow from commercial lending institutions amounts to offset 
short term losses in an amount that does not exceed anticipated 
contributions for the following year.

3. The contingent call funding vehicle

    This funding vehicle is the next line of defense to offset 
potential, though unlikely, shortages during the first 27 years 
of the Fund. The contingent call provision gives the 
Administrator the discretion to withhold step-downs after year 
5 of the Fund. As currently structured, the Fund envisions a 
payment schedule that begins with at least $5 billion annually 
during years 1 through 5 with a gradual reduction in the amount 
of such payment beginning year 6. But if the Administrator 
certifies that the Fund is encountering financial difficulties 
in paying claims, the Administrator is authorized to assess 
participants at the initial year 1-5 minimum contribution 
levels.

4. The back-end funding vehicle

    As the term suggests, this funding vehicle addresses 
potential shortages to pay claims that may exist after year 27 
of the Fund. The back end provision gives participants the 
option to either continue contributing into the Fund in an 
aggregate amount not to exceed $2 billion annually or have the 
remaining claims resolved in the tort system in Federal Court.

                       B. FAIR ACT CLAIMS PROCESS

    The FAIR Act creates a no-fault system to compensate those 
who meet sound, fair and balanced eligibility criteria to 
establish the existence of a legitimate asbestos-related 
disease. The eligibility criteria include diagnostic, latency, 
medical and exposure requirements. Flexibility is built into 
the system, providing for exceptional claims and special cases. 
The FAIR Act then provides fair and equitable claim values to 
eligible claimants. To ensure the integrity of the system, 
however, auditing procedures and independent reviews by 
objective, experienced physicians are also provided.
    The FAIR Act's nationalized, streamlined claims processing 
system provides compensation to eligible claimants promptly 
without creating a new or large bureaucracy. It works as 
follows:

1. Court procedure

    The compensation system will be administered by the Court 
of Federal Claims, which will establish and supervise an Office 
of Special Asbestos Masters (OSAM) to process and make initial 
decisions on claims for compensation. OSAM will facilitate the 
claims handling process, so that the Court's docket does not 
become backlogged as occurs in the current tort system. 
Claimants begin the process by filing a claim form listing 
their asbestos exposure, work history, medical records 
(including diagnoses and test results), tobacco use and prior 
claims and recovery. Claims are referred to claims examiners 
for an initial review. If the claim form is complete, a special 
asbestos master has 60 days to determine the amount of any 
award to which the claimant is eligible. Thespecial asbestos 
masters, with recommendations by a Medical Advisory Committee made up 
of objective and experienced physicians when requested or where 
required, need only determine whether the claimant meets the 
diagnostic, latency, medical, and exposure criteria established in the 
Act. A claimant may appeal a decision to a panel of three Special 
Asbestos Masters within 30 days of receiving notice of a decision. The 
panel must make a determination within 60 days after receipt of an 
appeal. Claimants have 30 days to appeal this panel's decision to a 3-
judge panel of the Court of Federal Claims. When such panel is 
constituted, it is known as the Court of Asbestos Claims (``Asbestos 
Court''). Claimants then have 30 days to file an appeal to the U.S. 
Court of Appeals for the Federal Circuit.
    Claims must be filed with the Court within 4 years from the 
date the claimant knew or should have known of the claim, and 
claimants have the right to seek appeal eligibility 
determinations. The FAIR Act establishes a claimant assistance 
program to provide assistance to claimants in preparing and 
submitting claims, including a legal assistance program to 
assist them with legal representation issues. Notification is 
provided of available pro bono legal services.
    The purpose of the FAIR Act is to establish an 
administrative compensation system to replace the tort system 
for asbestos victims, in much the same manner that workers' 
compensation systems have replaced tort liability as a means of 
compensating workplace injuries. In accordance with this 
purpose, the FAIR Act preempts asbestos personal injury claims 
made under state or other federal law, including pending claims 
that have not proceeded to final judgment before the date of 
enactment. Pursuant to an amendment in committee, the 
preemption of pending claims will not become effective until 
the Fund is fully operational and processing claims. However, a 
participant's contributions to the Fund shall be reduced by the 
amount of any claims made payable by the operation of this 
amendment after the enactment of this Act. Workers' 
compensation and veterans' benefits claims are excepted from 
preemption, because workers' compensation and veterans' 
benefits programs generally do not suffer from the 
uncertainties, unfairness, delay and expense of the tort 
system.

2. Prompt payment of claims

    Unlike the current system, in which results are slow, 
inequitable and unpredictable, the Fair Act ensures rapid, 
fair, and predictable payments, while still maintaining the 
stability of the Fund. In contrast to the long delays 
associated with current asbestos litigation, payments are 
expected to be paid over a period of 3 years, and no longer 
than 4 years. Living mesothelioma claimants are entitled to 
accelerated payments. Expedited payments also may be provided 
in cases of exigent circumstances or extreme hardship caused by 
the asbestos related injury. The reduced transaction costs of 
the administrative system and the more than adequate funding 
provided under the FAIR Act ensure that eligible claimants 
receive the compensation to which they are entitled, unlike 
current bankruptcy trusts where claimants receive pennies on 
the dollar or current settlements and awards where claimants 
often lose more than half of the recovery in attorneys' fees 
and expenses. Pursuant to an amendment in Committee, if in any 
year the Administrator is unable to certify that 95% of claim 
obligations owed in that year are being paid (and after a 90 
day period to cure), the fund shall immediately sunset and 
return claimants to the tort system.
    In the event the claimant has a timely filed pending claim, 
the claimant has 4 years from the date of enactment of this Act 
to file the claim with the Court. Claimants who meet the 
statute of limitations under the FAIR Act, and have already 
received a prior settlement or judgment for their injury, will 
have any recovery from the Fund reduced by the amount of those 
prior recoveries.

3. Diagnostic and latency criteria

    Claimants must meet diagnostic and latency criteria to be 
compensated by the Fund. The Committee intends the diagnostic 
criteria to reflect the typical components of a true medical 
diagnosis by a claimant's doctor, including an in-person 
physical examination (or pathology in the case where the 
injured person is deceased) and a review of the claimant's 
medical, smoking and exposure history by the doctor diagnosing 
an asbestos-related disease. These requirements ensure that the 
claimant will be given a true diagnosis related to the 
claimant's condition. The diagnosis must also include 
consideration of other more likely causes of the condition to 
ensure that asbestos exposure was the cause of any claimed 
nonmalignant disease (as opposed to other industrial dust 
exposure) or a substantial contributing factor in causing a 
malignant disease.
    Because asbestos-related diseases have a long latency 
period before symptoms begin to manifest, the FAIR Act also 
requires that the claimant demonstrate that his or her first 
exposure to asbestos occurred at least ten years prior to the 
initial diagnosis.

4. Medical criteria

    Claimants must meet medical criteria to ensure that 
resources are protected for those who are currently suffering 
from asbestos-related disease. The medical criteria establishes 
requirements for 10 disease levels, 5 of which relate to 
nonmalignant asbestos-related diseases, such as asbestosis, and 
5 of which relate to malignant diseases, such as lung cancer 
and mesothelioma. The medical criteria for three of the 
nonmalignant categories are based on increasing severity of the 
claimant's impairment. Because these impairments may have other 
causes, such as other airborne contaminants including cotton 
dust, medical evidence is required to establish that asbestos 
exposure is the cause of the claimant's impairment. The medical 
criteria for the malignant categories similarly reflect the 
need to have medical evidence to support a finding that the 
claimant's exposure to asbestos is a substantial contributing 
factor in causing the claimant's asbestos-related disease.

5. Exposure criteria

    Claimants must meet exposure criteria to be compensated. 
Because the risk of developing an asbestos-related disease 
increases with the amount and intensity of exposure to 
asbestos, the Committee has set exposure requirements for each 
disease level to ensure that the FAIR Act compensates only 
asbestos-related diseases. The number of years of occupational 
exposure are weighted based on industry and occupations and by 
the dates of exposure, so as to serve as a proxy for 
approximating the dose of exposure associated with various 
types of occupational exposures typically associated with 
asbestos-related diseases. The intensity and regularity of 
asbestos exposures associated with certain industries and 
occupations were significantly greater prior to the 1970's, at 
which time federal regulations limiting its use and for the 
protection of workers were first put in place. Such exposures 
often occurred in the manufacture of asbestos. Because 
mesothelioma can develop, in some instances, from more limited 
exposure, the exposure requirements for mesothelioma are the 
least stringent, requiring minimal exposure to asbestos. 
Nonetheless, the criteria are meant to ensure that only 
diseases caused by asbestos exposures versus other causes are 
compensated by the Fund.

6. Exceptional and special cases

    The FAIR Act provides some limited exceptions to the above 
standards for compensation. Exceptional cases where the medical 
criteria under the Act cannot be met but the claimant has 
comparable and reliable medical evidence are eligible for 
review by a Medical Advisory Committee, made up of objective, 
experienced physicians, to determine whether the claimant is 
eligible.
    Special provisions are established for review by the 
Medical Advisory Committee in other unique circumstances, 
including those related to ``take home'' exposures where 
asbestos was brought into the home by an occupationally exposed 
person and those related to the high levels of environmental 
exposures of residents and workers in Libby, Montana. Because 
the medical conditions of the residents of Libby are currently 
being studied by various agencies, claims filed by Libby 
claimants are to be automatically designated as exceptional 
medical claims and referred to the Medical Advisory Committee 
for review of the claimant's eligibility.

7. Claim values

    The FAIR Act provides for carefully constructed, rational, 
and fair claims values. Many of the illnesses that are 
compensated under the Act could be caused or contributed to by 
factors other than asbestos exposure, such as smoking and other 
airborne contaminants. Therefore, claims values have been 
carefully constructed to provide increased compensation in 
those cases where there is greater confidence that the asbestos 
exposure was the cause of the claimant's injury. To those ends, 
mesothelioma and lung cancer claims where the claimant has been 
diagnosed with underlying asbestosis and is a nonsmoker have 
been given the highest values. Claims values for claimants with 
severe asbestosis and other lung cancer claims where the causal 
connection between the asbestos exposure and the injury is more 
substantiated similarly reflect the purpose of the Act to 
direct monies to the most serious injuries caused by exposure 
to asbestos.
    In the case of other cancers and lung cancers where smoking 
is considered a predominant or likely cause of the cancer, 
claims values are reduced for smokers. Lifetime nonsmokers and 
former smokers who had not smoked at least 12 years prior to 
diagnosis are eligible for increased compensation based on a 
review of their smoking history by the Medical Advisory 
Committee. Such claimants, however, bear the burden of 
providing sufficient evidence of the limits of their smoking 
behavior. This Fund is not intended to be a compensation system 
for tobacco-related diseases, which would overwhelm the Fund 
leaving no money for asbestos victims.
    The FAIR Act recognizes that claimants with significant 
occupational exposure to asbestos may be at risk of developing 
a serious asbestos-related illness. As such, claimants meeting 
the minimum exposure criteria will be reimbursed reasonable 
costs for medical monitoring. In the event these claimants 
develop into a compensable illness, they may then seek 
compensation from the Fund.

8. Quality control

    Because of the subjectivity of many of these medical tests 
and because these illnesses have other causes, including 
smoking, industrial dusts, aging, etc., provisions are made to 
ensure the quality of the medical and exposure evidence 
submitted to support claims. The FAIR Act is designed to 
eliminate the abuses found in the current system, where mass 
screenings conducted by facilities associated with plaintiffs' 
law firms often result in claims with questionable medical 
support. The FAIR Act requires the implementation of audit 
procedures as quality control on the evidence being submitted, 
which includes independent review by certified B-readers of x-
rays submitted in support of claims. Similarly, in light of the 
history of abuse and the potential for misrepresentations by 
claimants or their representatives, the FAIR Act authorizes the 
Court to request additional information, including medical 
records and blood tests, to review and confirm a claimant's 
declared smoking history and behavior. Finally, the FAIR Act 
also provides for criminal penalties in the event a claimant or 
other person (including contributors) submits false information 
related to compensation of an asbestos claim under the Fund.

              C. THE TIMING OF THE FAIR ACT UPON ENACTMENT

1. The funding

    The Fund will start receiving assets at least six months 
after the date of enactment. Confirmed bankruptcy and other 
trusts created to pay asbestos claims must transfer the bulk of 
their assets to the Fund within 6 months of the date of 
enactment, which is expected to infuse at least $4 billion 
dollars into the Fund at the outset. As a result, in less than 
a year the Fund will have substantial funding to begin the 
payment of claims
    The Administrator begins the defendant assessment process 
by sending notice within 60 days of appointment. This notice 
requires all recipients to provide the Administrator within 30 
days information necessary to calculate the amount of required 
contributions into the Fund. Upon the Administrator's receipt 
of such information, the FAIR Act gives the Administrator 60 
days to make a determination assessing defendant contributions. 
Although a defendant participant has the right to obtain 
rehearing of the determination and has the right of review, the 
payment obligation is not stayed during this review.
    The Asbestos Insurers Commission, which is established to 
expedite the assessments of contributions to the Fund from 
insurers, reinsurers, and run-off entities established to pay 
costs associated with asbestos claims, is under strict 
deadlines to assess contributions to insurer participants. 
Within 30 days of being appointed, the Commission is required 
to meet to begin the process of developing an allocation 
formula. Once the Commission develops the allocation formula 
and assesses contributions to the insurer participants, the 
insurer participants are given only 30 days to provide a 
consensus agreement on allocation, which may replace the 
Commission's determination as long as the Commission certifies 
that it meets the requirements of the Act.

2. The payment of claims

    The FAIR Act is designed to ensure that claimants are 
compensated quickly, and under the FAIR Act resolution of a 
claim can occur in less than a year. Upon filing a claim with 
the Court of Federal Claims, a claimant should receive an 
eligibility determination from a special asbestos master in 
less than three months. As discussed above, the FAIR Act 
requires the Court of Federal Claims to refer a claim to the 
Office of Special Asbestos Masters within 20 days of filing. 
The Special Asbestos Master must then make an eligibility 
determination within 60 days after receiving the claim and 
requisite medical information.
    In the event a claimant challenges an eligibility decision 
by a special asbestos master, the claimant is given a 
structured appeals process with established deadlines. A 
claimant may seek further review by a panel of three Special 
Asbestos Masters within 30 days of receiving notice of a 
Special Asbestos Master decision. The FAIR Act requires that 
this panel deliver its decision within 60 days of receipt of an 
appeal.
    The claimant may seek further review of a panel decision by 
appealing to a three judge panel of the Federal Court of 
Claims. This panel is referred to as the United States Court of 
Asbestos Claims and is required under the FAIR Act to make a 
decision within 60 days of its receipt of an appeal. If the 
U.S. Court of Asbestos Claims remands the claim for further 
action, the special asbestos masters is given an additional 30 
days to make a determination.
    Claimants are also given the option to pursue further 
judicial review before the United States Court of Appeals for 
the Federal Circuit upon filing an appeal within 30 days after 
issuance of a final decision by the U.S. Court of Asbestos 
Claims. Decisions by the Federal Circuit are subject to review 
by the United States Supreme Court.

             VI. Section-by-Section Analysis and Discussion


Sec. 1. Short title

Sec. 2. Findings and purpose

Sec. 3. Definitions

                  TITLE I. ASBESTOS CLAIMS RESOLUTION


           Subtitle A. United States Court of Federal Claims


Sec. 101. United States Court of Federal Claims

    Office of Special Asbestos Masters: The United States Court 
of Federal Claims (``Court of Claims''), through the newly 
created Office of Special Asbestos Masters, shall have the 
authority to examine asbestos claims and make awards. The chief 
judge of the Court of Federal Claims appoints Special Asbestos 
Masters, including one Chief Special Asbestos Master, as 
necessary to facilitate claims processing. A concurrence of a 
majority of the court is required on all appointments and 
reappointments. No more than 20 Special Asbestos Masters may be 
appointed without Congressional approval.
    The Chief Special Asbestos Master serves for a term of 4 
years, and may be reappointed for 2-year terms. The Chief 
Special Asbestos Master, in consultation with the Chief Judge, 
prescribes rules and procedures for claims processing, and 
appoints or contracts for services personnel to carry out the 
duties of the Office of Special Asbestos Masters. All special 
masters are subject to removal by the concurrence of a majority 
of the active judges of the court for good cause. The 
compensation of special masters is set by the chief judge and 
cannot exceed Level V of the Executive Schedule.

        Subtitle B. Asbestos Injury Claims Resolution Procedures


Sec. 111. Filing of claims

    Claimants file claims with the United States Court of 
Federal Claims (the Court), through the Office of Special 
Asbestos Masters. The Chief Special Asbestos Masters, in 
consultation with the Chief Judge of the Court, issues rules as 
to who may file as a representative of another individual. 
Claims must be notarized and give detailed information about 
the claimant, including their asbestos exposure, medical 
records, tobacco use, collateral sources of compensation and 
any other information that the Court elects to add. Claims must 
be brought within 4 years from the time the claimants knew or 
should have known of their injury. Persons with pending claims 
in the tort system must file within 4 years of the date of 
enactment. Claimants who develop an additional condition or 
disease may file for additional benefits.

Sec. 112. General rule concerning no-fault compensation

    It is the intent of the FAIR Act to provide a process to 
compensate claimants faster and with more certainty than the 
current system The FAIR Act therefore removes the burden a 
claimant would ordinarily have to overcome of establishing that 
the injury was the fault of a particular party. Under the FAIR 
Act claimants need not establish that his/her injury resulted 
from the negligence or other fault of another person.

Sec. 113. Essential elements of eligible asbestos claim

    Claimants must prove by a preponderance of the evidence 
that they have an eligible disease or condition, and that they 
meet the latency and exposure criteria requirements.

Sec. 114. Eligibility determinations

    Within 20 days of filing, claims are referred to a Special 
Asbestos Master. Claims examiners then make the initial review 
for each claim under the Special Asbestos Masters' direction. 
Claims examiners will notify claimants if additional 
information is needed to determine eligibility, including 
requiring a medical examination and/or tests. Once a claims 
examiner has all the necessary information, the claim and a 
recommendation are sent to a Special Asbestos Master who has 60 
days after receipt of a completed claim to provide a written 
recommendation, including findings of facts.
    The Court will establish expedited procedures for exigent 
cases. Claimants must either waive their right to judicial 
review or have exhausted their judicial review to receive their 
award. The Court will establish audit procedures for reviewing 
the accuracy of the Special Asbestos Master's recommendation.
    Appeal to 3 Special Asbestos Master panel: Within 30 days 
after receiving a notice of a decision by the Special Asbestos 
Master, a claimant may appeal to a panel of 3 Special Asbestos 
Masters. Such panel may reverse the decision of the individual 
Special Asbestos Master within 60 days if the decision was 
based on clear error or if new, material evidence is available. 
Accepting a payment extinguishes all claims related to such 
payment.\52\
---------------------------------------------------------------------------
    \52\ See section 141 for claimant's appeal of a decision by panel 
of 3 Special Asbestos Masters to panel of 3 Judges of the Federal Court 
of Claims.
---------------------------------------------------------------------------

Sec. 115. Medical evidence auditing procedures

    The Court will establish audit procedures for medical 
evidence submitted as part of claims to ensure accuracy of x-
ray readings and pulmonary function tests. If the Court finds 
certain providers are not complying with prevailing medical 
practices, records from such providers will be deemed 
inadmissible for a claim. A provider who is deemed non-
compliant may appeal such determination under procedures 
established by the Court.

Sec. 116. Claimant assistance program

    This section authorizes the Court to establish a legal 
assistance program to aid claimants in legal representation 
issues. As part of this program, the Court will maintain a list 
of attorneys who are willing to provide their services on a pro 
bono basis and provide to claimants notice of and information 
relating to pro bono legal services available to those 
claimants and any limitations on attorney fees. Before a person 
becomes a client of an attorney with respect to an asbestos 
claim that attorney shall provide notice to that person of pro 
bono legal services available for that claim.

                      Subtitle C. Medical Criteria


Sec. 121. Medical criteria requirements

    This section establishes the latency, diagnostic, exposure 
and medical criteria required to establish an asbestos claim 
for each of 10 disease levels. Levels I through V include 
nonmalignant asbestos-related disease or conditions and levels 
VI through X include malignant diseases.
    Latency: Although the latency period for asbestos-related 
disease can be as long as 30-40 years, part of the consensus 
agreement by the Committee was to require only a 10-year 
latency period in order to ensure that all potential asbestos 
victims were being compensated. Claimants must provide a 
statement from a doctor or a history of exposure that shows at 
least 10 years elapsed from the date of the initial exposure to 
the date of the initial diagnosis of any asbestos-related 
injury.
    Diagnostic Criteria: This section recognizes that a medical 
diagnosis is a key component of the eligibility requirements in 
order to maintain the integrity of the Fund and to fulfill the 
purpose of the Act to compensate asbestos victims. This section 
sets forth diagnostic criteria that track the typical elements 
of a medical diagnosis, such as an in-person physical 
examination by the claimant's doctor, a thorough review of the 
claimant's medical, smoking and exposure history by the 
claimant's doctor, and a review of other potential causes of 
the claimant's illness.\53\ Injuries due to other causes, such 
as smoking, can present themselves in similar ways as asbestos-
related injuries. This Fund, however, is intended to compensate 
injuries caused by asbestos exposure, and, therefore, a 
diagnosis of an asbestos-related injury is required under the 
Act.
---------------------------------------------------------------------------
    \53\ See, e.g., The Diagnosis of Nonmalignant Disease Related to 
Asbestos, Offical Statement of the American Thoracic Society, March 
1986 (noting that ``[a]ll alternative diagnoses must be considered 
before accepting the presumptive diagnosis of asbestosis'').
---------------------------------------------------------------------------
    For levels I through V, a diagnosis must be based on an in-
person physical examination by the claimant's doctor providing 
the diagnosis, an evaluation of smoking history and exposure 
history before making a diagnosis, an x-ray reading by a 
certified B-reader, and a pulmonary function test for levels 
III through V. Deceased claimants may provide a diagnosis 
supported by physician report based on pathological evidence or 
an x-ray reading by a certified B-reader. For disease levels VI 
through X, the diagnosis must be based on a physical 
examination or on findings by a board-certified pathologist.
    Exposure Criteria: A claimant must demonstrate meaningful 
and credible evidence of exposure to asbestos in the United 
States, or while a U.S. citizen employed by a U.S. company or 
employed on a U.S. flagged ship. There must be a causal link 
between the asbestos exposure related to the employment 
overseas for a U.S. company or on the U.S. flagged ship and the 
asbestos-related injury. Since asbestos fibers are present in 
the ambient air and water in very small amounts it is the 
intent of the committee that any exposure must be in excess of 
the amount of asbestos in the ambient air.
    ``Take-Home'' Exposure: Claimants may alternatively satisfy 
the requirements under the Act based on exposures to asbestos 
brought into the home by an occupationally exposed person, 
i.e., take home exposures, if the occupationally exposed person 
can satisfy the exposure requirements of the disease or 
condition claimed and the claimant lived with the 
occupationally exposed person during the required exposure 
period. This requirement of ``living with'' a person requires 
that the claimant have used the residence of the 
occupationally-exposed person as his/her regular residence for 
the time period necessary to satisfy the exposure requirement 
for the disease level that the claimant is asserting. It is 
understood that household members may travel to a certain 
extent for work or vacationand still be considered as ``living 
with'' another member of the household. Because take home exposures 
generally do not rise to the same level and intensity of exposure as 
the occupationally exposed worker, such claims will be referred to the 
Medical Advisory Committee for a determination as to whether the take 
home exposures are sufficient to establish a causal relationship to the 
claimed disease comparable to that of the occupational exposed person.
    Libby, Montana: In addition, the unique nature of the 
exposures to asbestos associated with the vermiculite mining 
and milling operations in Libby, Montana have resulted in a 
number of asbestos-related injuries among the residents of 
Libby. Under the FAIR Act, the occupational exposure 
requirements are waived for workers in the mining and milling 
operations in Libby, Montana, and persons who lived or worked 
within a 20-mile radius of Libby, Montana for at least 12 
consecutive months prior to December 31, 2003. The mining and 
milling operations in Libby ended in 1990, and the United 
States Environmental Protection Agency, among others, has been 
working to address and eliminate the environmental and health 
risks in Libby since 1999.
    Non-malignant Conditions: For nonmalignant conditions 
(Levels I to V), the medical criteria generally require a 
diagnosis of bilateral pleural plaques or thickening, bilateral 
pleural calcification, diffuse pleural thickening, bilateral 
pleural disease of grade B2, or asbestosis based on x-ray 
readings or pathology. Level II includes claimants with mixed 
obstructive and restrictive disease based on pulmonary function 
testing and supporting medical documentation that asbestos 
exposure was a contributing factor to the disease. Mild, 
moderate and severe impairment is required for Levels III, IV, 
and V, respectively, based on pulmonary function test results 
and supporting medical documentation that there are no other 
more likely causes of the claimant's impairment than the 
claimant's asbestos exposure. The Committee intends that such 
medical documentation would be provided by a physician with 
knowledge and expertise in diagnosing occupational lung 
disease. With respect to Nonmalignant Levels III, IV, and V the 
Committee intends to the extent feasible that the documentation 
would be provided by an appropriately board certified physician 
in occupational medicine or pulmonary medicine. The Committee 
recognizes, however, that access to appropriately board-
certified physicians may not be feasible for all claimants due 
to geographical constraints. The exclusion of other more likely 
causes of the impairment is a typical component of a medical 
diagnosis due to the fact that there are a number of other 
potential causes for such conditions which may have similar 
characteristics of an asbestos-related condition. For example, 
individuals exposed to other dusts or airborne contaminants may 
be at risk for silicosis or other diseases which also may show 
up as an abnormality in the lung.
    In addition, Level I requires 5 years cumulative 
occupational exposure, while levels II through V require 5 
years substantial occupational exposure weighted based on time 
and industry (``weighted years''). Because it is well 
recognized in the medical community that, except for 
mesothelioma, asbestos-related diseases are dose dependent, 
i.e., the risk increases as the amount of exposure increases, 
the industry and time weighting of years of exposure are 
necessary to act as a measure of dose. Certain industries and 
occupations involve higher levels of exposures to asbestos 
fibers due to the direct handling of the asbestos itself, and 
is reflected in the industry weighing component. On the other 
hand, persons who work with asbestos-containing products, such 
as auto mechanics who work on brakes and related occupations, 
are generally not exposed to asbestos fibers in harmful amounts 
in the course of their occupation. Such occupations do not 
involve the same type of exposure as a person who manufactured 
products using raw asbestos.
    The intent of the weighted exposure requirement is to 
recognize that federal regulations implemented in the 1970's 
and 1980's have dramatically reduced asbestos exposures and 
resulted in significantly less exposures to asbestos that 
simply do not compare to the levels of asbestos exposures that 
occurred prior to 1970. As found by the District Courts, 
``Mesothelioma and asbestos-related lung cancers are expected 
to result primarily from the sort of direct occupational 
exposure that was phased out as a result of increasingly 
stringent federal regulation.'' \54\ Also, as noted by the 
American Thoracic Society in its March 1986 guidance, ``[w]ith 
exposures below the current recommended permissible exposure 
limit value [under OSHA standards], asbestosis is not likely to 
be found during the course of a working career. With proper 
engineering controls, work practice, and where necessary, 
personal respiratory protective devices, asbestosis should not 
occur.'' \55\ These differences in the exposure intensity and 
amount of exposure to asbestos fibers are reflected in the 
industry and time-weighting formula.
---------------------------------------------------------------------------
    \54\ In re Joint E & S Dists. Asbestos Litig., 237 F Supp.2d 297, 
311 (E. & S.D.N.Y. 2002) (citations omitted).
    \55\ The Diagnosis of Nonmalignant Disease Related to Asbestos, 
Official Statement of the American Thoracic Society, March 1986.
---------------------------------------------------------------------------
    Malignant Conditions: For malignant conditions (Levels VI 
to X), the medical criteria require a diagnosis of 
mesothelioma, primary lung cancer, or other cancer. For other 
cancers, level VI, requirements of a claim include (i) evidence 
of a bilateral asbestos-related nonmalignant disease; (ii) 15 
weighted years of exposure to asbestos; and (iii) supporting 
medical documentation that the claimant's exposure to asbestos 
was a contributing factor in causing the claimant's other 
cancer. These claims are referred to the Medical Advisory 
Committee for a determination that the claimant's asbestos 
exposure was a substantial contributing factor in causing the 
claimant's other cancer. The intent behind this provision is to 
reflect the testimony before this Committee, which indicated 
that a majority of the medical community has found little 
association between asbestos exposure and other cancers, 
particularly colorectal cancer. Because there is some evidence 
that may support an association, the Committee has provided 
compensation for such cancers. Because of the evidence finding 
no association, however, the Committee believes it is 
reasonable to require that a claimant establish a causal 
connection between his/her asbestos exposure and his/her other 
cancer. The Committee may review any studies, including the 
Institute of Medicine study to be commissioned, in making this 
determination.
    Lung Cancer: The testimony before this Committee indicated 
that the majority of the medical community has found that lung 
cancer is generally not related to asbestos exposure unless the 
claimant has underlying asbestosis or, at least, sufficient 
exposure to asbestos to have caused asbestosis.\56\ The United 
States Supreme Court recognized that ``studies provide strong 
support for the notion that asbestosis is crucial to the 
development of asbestos-associated lung cancers.'' \57\ Workers 
with only pleural plaques, on the other hand, have not been 
shown to be at a higher risk for lung cancer, although pleural 
plaques are considered a marker of prior exposure to 
asbestos.\58\ The consensus medical criteria established under 
this section thus provides three levels of lung cancers, with 
increasing evidence of causation.
---------------------------------------------------------------------------
    \56\ Testimony of Dr. James D. Crapo, Professor of Medicine, 
National Jewish Center and University of Colorado Health Sciences 
Center, Before the Senate Committee on the Judiciary Concerning S. 
1125, the Fairness in Asbestos Injury Resolution Act of 2003, June 4, 
2003, at 6.
    \57\ Norfolk & W. Railway Co. v. Ayers, 123 S. Ct. 1210, 1222 
(2003) (citing A. Churg & F. Green, Pathology of Occupational Lung 
Disease 343 (2d ed. 1998)).
    \58\ Testimony of Laura Welch, MD, Medical Director, Center to 
Protect Workers Rights, On Asbestos Related Diseases--Medical Criteria, 
Populations at Risk and Disease Projections, Before the Senate 
Judiciary Committee, June 4, 2003, at 7.
---------------------------------------------------------------------------
    For lung cancer I, level VII, evidence of 15 weighted years 
of exposure to asbestos is required. For lung cancer II, level 
VIII, the requirements include (i) evidence of bilateral 
pleural plaques, bilateral pleural thickening or bilateral 
pleural calcification, and (ii) 12 weighted years of exposure 
to asbestos. For lung cancer III, level IX, the claimant must 
provide either (i) a diagnosis of asbestosis and evidence of 8 
or 10 weighted years, depending on the x-ray reading, or (ii) 
diagnosis of asbestosis by pathology and evidence of 10 
weighted years. Supporting medical documentation as used 
throughout this section refers to a medical diagnosis or 
opinion related to the claimant's condition and does not 
include general medical literature related to the claimed 
disease or condition.
    All lung cancer claims are paid pursuant to a matrix of 
classes for each level which the Administrator develops. This 
matrix is based on the claimant's smoking history, their age, 
and the intensity and duration of the exposure. A former smoker 
is defined as a person who quit smoking at least 12 years prior 
to date of diagnosis. A nonsmoker is a person who has never 
smoked at any time during his or her life. Because of the 
potential for misrepresentations related to one's smoking 
behavior, the claimant bears the burden of producing meaningful 
and credible evidence of their smoking history as part of their 
claim submission.
    The intent behind paying less money to smokers is to 
reflect the fact that smoking also plays an important factor in 
causing lung cancers. According to the American Lung 
Association, about 87% of lung cancer cases are caused by 
smoking.\59\ Early studies showing a synergistic effect between 
smoking and asbestos exposure have not been substantiated by 
later studies. Studies have also shown that the risk of lung 
cancer, while diminished for those who quit smoking, never 
reaches the same levels as those for lifetime nonsmokers.\60\ 
This is particularly true where the claimant smoked 40-50 packs 
of cigarettes a year for many years prior to quitting. The Fund 
is not intended to be a compensation system for smokers, which 
would otherwise overwhelm the Fund leaving no money for 
asbestos victims.
---------------------------------------------------------------------------
    \59\ ALA, Facts About Lung Cancer, available at www.lungusa.org/
diseases/lungcanc.html. Radon is considered to be the second leading 
cause of lung cancer in the United States today. Id.
    \60\ See, e.g., Donald R. Shopland, et al., Smoking-Attributable 
Cancer Mortality in 1991: Is Lung Cancer Now the Leading Cause of Death 
Among Smokers in the United States?, 83 J. of the Cancer Inst. 1142, 
1145 (1991); National Cancer Institute, SEER Statistics, Effect of 
Quitting Smoking on Lung Cancer Risk Among Male and Female Former 
Smokers, by Length of Time Off Cigarettes and Number of Cigarettes 
Smoked Daily, (Table 3, based on data in Shopland et al., 1991), 
available at http://seer.cancer.gov/publications/raterisk/risks71.html.
---------------------------------------------------------------------------
    For mesothelioma, level X, the claimant must provide 
credible evidence of identifiable exposure to asbestos based on 
occupational exposures, take home exposures, or exposures from 
living in the proximate vicinity of a plant or other industrial 
operation that has emitted asbestos fibers into the air 
resulting in asbestos being present in the environment well 
above normal background levels. Claimants may allege any other 
specific, identifiable exposure to asbestos as the cause of the 
mesothelioma, but such cases shall be referred to the Medical 
Advisory Committee for a determination as to eligibility. This 
identifiable exposure is not intended to include mere exposure 
to asbestos insulation in homes, except in the unusual 
circumstance that the claimant was exposed to friable asbestos 
in large amounts or on a repeated basis, in which case the 
claim shall be subject to review by the Medical Advisory Panel.
    Study of ``other cancers'' and causation: No later than 2 
years after the date of enactment, the Institute of Medicine of 
the National Academy of Sciences must complete a study of the 
causal link between asbestos exposure and the other cancers: 
colorectal, laryngeal, esophageal, pharyngeal and stomach 
cancers. The study must be transmitted to Congress, the Court 
of Federal Claims and the Medical Advisory Committee. The Court 
and Medical Advisory Committee may consider the results of the 
report for purposes of determining whether asbestos exposure is 
a substantial contributing factor to causing claimant's other 
cancer. The Court also may request additional study regarding 
other cancers if warranted by advancements of science.
    Exceptional Medical Claims: The FAIR Act recognizes that in 
some cases, through no fault of the claimant, claimants may not 
have certain medical tests that are required under the medical 
criteria, but may have results from comparable tests and that 
there may be advances in science that result in new testing 
methods not anticipated by the Committee at this time. As such, 
this provision allows a claimant to seek designation of his or 
her claim as an exceptional medical claim if the claimant 
states that claim does not meet medical criteria requirements 
or has been found ineligible for compensation based on the 
failure to meet the medical criteria only. The claimant must 
provide a report from a physician meeting the requirements of 
section 121, such as a diagnosis based on an in person physical 
examination that finds asbestos exposure as a contributing 
factor to causing the relevant disease, and which includes (i) 
a complete review of the claimant's medical history and current 
condition, (ii) additional material as required by the Court, 
and (iii) a detailed explanation as to why the claim meets the 
standard for designating exceptional medical claims.
    All applications for designation as an exceptional medical 
claim are referred to the Medical Advisory Committee, which 
must find that the claimant, for reasons beyond his or her 
control, cannot meet the requirements but can through 
comparably reliable evidence establish a condition similar to 
one that would satisfy the requirements. TheMedical Advisory 
Committee may request additional reasonable testing, and CT Scans may 
be submitted in addition to an x-ray. CT Scans are generally used only 
after an x-ray has already been taken and the physician believes a CT 
Scan may shed additional light on the claimant's condition. In such 
cases, a CT Scan may be used to supplement the submission of an x-ray 
reading. Because of the lack of any clear, objective standards similar 
to those for x-ray readings, however, the Committee does not intend 
that CT Scans become normal practice for the filing of claims, and as 
such, they are limited to optional use by the Medical Advisory 
Committee in assessing exceptional medical claims.
    If the Medical Advisory Committee certifies a claim as an 
exceptional medical claim, it must designate the disease 
category for which compensation may be sought and refer the 
claim to a special asbestos master for a determination on 
eligibility on the remaining diagnostic, latency and exposure 
requirements. A claimant may resubmit application based on new 
evidence, stating the new evidence that is the basis of the 
resubmission. The Chief Judge will promulgate rules governing 
the procedures for seeking designation of a claim as an 
exceptional medical claim. Because the medical conditions of 
the residents of Libby, Montana are currently being studied by 
various agencies, claims filed by Libby, Montana claimants are 
to be automatically designated as exceptional medical claims 
and referred to Medical Advisory Committee for review of the 
claimant's eligibility.

                           Subtitle D. Awards


Sec. 131. Amounts

    Because there are other causes for many of the illnesses 
that are compensated under the Act, claims values have been 
carefully constructed providing increased compensation not only 
for more severe degrees of illness, but also in those cases 
where there is increased confidence that the asbestos exposure 
was the cause of the claimant's injury. Mesothelioma, where 
asbestos is currently considered the only known cause, and lung 
cancer claims where the claimant has been diagnosed with 
underlying asbestosis and is a nonsmoker, have been given the 
highest values. Claims value for claimants with severe 
asbestosis and other lung cancer claims where the causal 
connection between the asbestos exposure and the injury is more 
substantiated similarly reflect the purpose of the Act to 
direct monies to the most seriously injured claimants whose 
injuries were caused by exposure to asbestos.
    With this purpose in mind, eligible claims will be paid as 
follows:

------------------------------------------------------------------------
                       Disease/condition         Amount of award \1\
------------------------------------------------------------------------
Level I............  Asbestosis/Pleural     Medical Monitoring \2\
                      Disease A.
Level II...........  ``Mixed'' Disease....  $20,000
Level III..........  Asbestosis/Pleural     $75,000
                      Disease B.
Level IV...........  Severe Asbestosis....  $300,000
Level V............  Disabling Asbestosis.  $750,000
Level VI...........  Other Cancers........  $150,000
Level VII..........  Lung Cancer I........  $25,000--$75,000 \3\
                         Former Smokers...  $75,000--$225,000 \3\
                         Nonsmokers.......  $225,000--$600,000 \3\
Level VIII.........  Lung Cancer II.......  $125,000--$225,000 \3\
                         Former Smokers...  $400,000--$600,000 \3\
                         Nonsmokers.......  $600,000--1,000,000 \3\
Level IX...........  Lung Cancer III......  $300,000--$400,000 \3\
                         Former Smokers...  $550,000--$850,000 \3\
                         Nonsmokers.......  $800,000--$1,000,000 \3\
Level X............  Mesothelioma.........  $1,000,000
------------------------------------------------------------------------
\1\ Scheduled awards will be indexed for future inflation based on a
  cost of living adjustment.
\2\ Claimants meeting Level I requirements are eligible for medical
  monitoring reimbursement only.
\3\ All Lung Cancer values are to be determined based on a matrix which
  the Administrator must develop. This matrix will reflect different
  values based on a claimant's smoking history, age and level and
  duration of exposure. An ``ex-smoker'' is someone who has not smoked
  in the 12-year period before diagnosis of lung cancer. A ``non-
  smoker'' is a claimant who has never smoked. There are some
  occupations, such as automotive repair, in which a claimant would meet
  the definition of ``substantial occupational exposure,'' ``moderate
  exposure,'' and ``heavy exposure'' because he or she was working with
  a product containing asbestos for a sufficient period of time--yet,
  because of the low level of asbestos fibers to which the claimant
  would be exposed during this period, the exposure would not in reality
  be substantial and would not be capable of causing an asbestos-related
  disease. The bill therefore requires the Administrator to make a
  determination, based on studies of industrial hygiene and
  epidemiology, of the industries and occupations in which the airborne
  fiber levels of asbestos would indeed be at a level where exposure is
  considered substantial. Claimants whose primary occupation falls
  outside those industries or occupations where exposure has been
  determined to be substantial should not be presumed to have met the
  exposure requirements but such claims may be evaluated by the Medical
  Advisory Committee as exceptional medical claims.

Sec. 132. Medical monitoring

    Although the intention of the FAIR Act is to direct monies 
away from the unimpaired and to those truly sick from asbestos 
exposure, the Committee recognizes that claimants with 
significant occupational exposure to asbestos may be at risk of 
developing a serious asbestos-related illness in the future. As 
such, claimants meeting the criteria for Level I will be 
reimbursed for all reasonable costs (which are not covered by 
insurance) for x-rays, physical examinations, and pulmonary 
function tests every three years, which will provide the 
claimant with information as to whether he or she has a 
compensable illness. Although the claimant may choose which 
physician conducts such tests, the Administrator will provide 
eligible claimants with a list of providers in the claimant's 
area that can provide such services. Filing a claim for 
reimbursement of medicalmonitoring costs shall not commence the 
4 year statute of limitations for filing a claim for compensation for 
an eligible condition or disease.

Sec. 133. Payments

    Payments should be disbursed over a period of 3 years and 
in no event more than 4 years from the date of final 
adjudication of the claim, and can be accelerated for 
mesothelioma claimants who are alive on the date of 
determination. Claimants may also elect to receive their 
benefits in the form of an annuity. All benefits are non-
taxable and not deemed to be a Medicare benefit.

Sec. 134. Reduction in benefit payments for collateral sources

    All awards will be reduced by the amount of collateral 
source a claimant has received, or is entitled to receive. 
Collateral source is defined in section 3 as compensation that 
the claimant received or is entitled to receive from a 
defendant or its insurer, or compensation trust as a result of 
judgment or settlement for an asbestos related injury that is 
the subject of a claim filed under section 111. Worker's 
compensation and veteran's benefits are not included as 
collateral sources.

                        Subtitle E. Panel Review


Sec. 141. Panel review

    United States Court of Asbestos Claims: Claimants may 
appeal determinations of a panel of 3 Special Asbestos Masters 
to a panel of 3 randomly-assigned judges from the United States 
Court of Federal Claims. Such panel shall be known as the 
United States Court of Asbestos Claims (``Asbestos Court'') and 
may sustain decisions, set aside arbitrary and capricious 
decisions, or remand for further action. Remands are limited to 
30 days. The Administrator may appoint counsel to represent the 
Fund in oral arguments and to submit briefs. The Court will 
make its rulings based on the record, and not later than 30 
days after oral argument, and in no event later than 60 days 
after receipt of the notice of appeal. Accepting payment of an 
award under this Act extinguishes all further right to appeal 
related to such payment.

            TITLE II. ASBESTOS INJURY CLAIMS RESOLUTION FUND


Sec. 201. Definitions

Sec. 202. Authority and tiers

    The Administrator shall identify all defendants with $1 
million or more in prior asbestos expenditures and assign them 
to tiers as appropriate pursuant to this Act. Defendants will 
generally be placed in tiers based on historical expenditures 
on asbestos claims, including costs related to defense and 
indemnity, and further subdivided based on revenues.\61\
---------------------------------------------------------------------------
    \61\ It is the intent of the Committee that the amounts contributed 
by defendants and insurers be tax deductible and that claim awards and 
the growth of the Asbestos Claims Resolution Fund be tax-free, 
consistent with good public policy. The Judiciary Committee and Finance 
Committee will work together to insert the appropriate language for 
Senate floor consideration of this bill.
---------------------------------------------------------------------------
    Assessment of Defendant Participant Contributions: The 
Administrator shall determine the amount that each defendant 
participant will be required to pay into the fund to compensate 
claimants for asbestos injuries based on the following formula:
    (1) Tier I--Persons with Prior Asbestos Expenditures that 
have a case pending under a chapter of title 11 of the United 
States Code, before January 1, 2002, shall be assigned to Tier 
I if such Chapter 11 filing was caused by asbestos liability.
    Bankruptcies not caused by asbestos liability--However, it 
is the intent of the FAIR Act and the Committee that a 
bankruptcy not caused by asbestos liabilities be permitted to 
proceed with filing and approval of the bankruptcy 
reorganization plan. And any asbestos compensation trust 
established pursuant to such plan, will pursuant to other 
provisions in this Act, be incorporated in the Asbestos Injury 
Claims Resolution Fund. Therefore, for any company that filed 
for chapter 11 protection prior to the date of enactment of 
this Act and has not confirmed a plan of reorganization as of 
the date of enactment of this Act, it may petition to proceed 
with its bankruptcy filing if its bankruptcy was not caused by 
asbestos liabilities. The presiding bankruptcy court shall make 
the determination of whether or not the filing was caused by 
asbestos liabilities after notice and a hearing upon motion 
filed by the entity within 30 days of the effective date of 
this Act, which motion shall be supported by an affidavit or 
declaration of the Chief Legal Officer of the business entity, 
and copies of the entity's public statements and filing for 
chapter 11 protection that asbestos liability was not the sole 
or precipitating cause of the entity's chapter 11 filing. The 
bankruptcy court shall hold a hearing and make its 
determination within 60 days of when the motion is filed. Any 
judicial review of this determination must be an expedited 
appeal and limited to whether the decision was against the 
weight of the evidence presented.
    If the bankruptcy court's determination is in favor of the 
entity's motion, that entity may proceed with the filing, 
solicitation and confirmation of a plan or reorganization, 
including a trust and channeling injunction pursuant to section 
524(g) of the bankruptcy code, notwithstanding any other 
provisions of this Act, provided that:
          (1) the bankruptcy court determines that confirmation 
        is necessary to permit the reorganization of the 
        company and assure that all creditors and the company 
        are treated fairly and equitably;
          (2) an order confirming the plan of reorganization is 
        entered by the bankruptcy court within nine months 
        after the effective date of the Act, or such longer 
        period approved by the bankruptcy court for good cause 
        shown. To the extent such company successfully confirms 
        a plan of reorganization including a 524(g) trust and 
        channeling injunction that involves payments by 
        insurers who are otherwise subject to this Act, such 
        insurers shall obtain a corresponding reduction in the 
        amount otherwise payable by that insurer under this 
        Act.
    (2) Other Tiers--Except as otherwise provided, Persons or 
Affiliated Groups shall be assigned to Tiers II, III, IV, V, VI 
or VII according to their Prior Asbestos Expenditures as 
follows:
          Tier II: $75 million or greater.
          Tier III: $50 million or greater but less than $75 
        million.
          Tier IV: $10 million or greater but less than $50 
        million.
          Tier V: $5 million or greater but less than $10 
        million.
          Tier VI: $1 million or greater but less than $5 
        million.
          Tier VII: $5 million or More in FELA Liability. 
        (Note: Tier VII is discussed in Sec. 203).
    Total Contributions: Defendants' contributions shall total 
$52 billion collectively over a 27-year period, unless 
otherwise provided.

Sec. 203. Subtier assignment

    Except as otherwise provided, the Administrator shall 
assess contributions to Persons or Affiliated Groups within 
Tiers I through VII as follows--
    Tier I--The Administrator shall assess an annual 
contribution to each debtor in Tier I based on a percentage of 
its revenues, according to the following tiers:
          Subtier 1: 1.5184% of its Revenues in years 1-5, 
        declining gradually to .1518% of Revenues in year 27.
          Subtier 2: For non-operational companies--all of 
        assets earmarked for asbestos contributed to fund.
          Subtier 3: Non-operational and no assets earmarked 
        for asbestos--50% of all unencumbered assets 
        contributed to fund.
    For Tiers II through VII--The Administrator shall assess 
annual contributions to each participant, according to the 
following allocation:
    Tier II--Based on Revenues the Person or Affiliated Group 
shall be assigned to subtiers and shall pay, on an annual 
basis, the following:
          Subtier 1: $25 million (those with highest revenues).
          Subtier 2: $22.5 million (those with next highest 
        revenues).
          Subtier 3: $20 million (those remaining).
          Subtier 4: $17.5 million (those with the next to the 
        lowest revenues).
          Subtier 5: $15 million (those with the lowest 
        revenues).
    Tier III--Based on Revenues the Person or Affiliated Group 
shall be assigned to subtiers and shall pay, on an annual 
basis, the following:
          Subtier 1: $15 million (those with the highest 
        revenues).
          Subtier 2: $12.5 million (those with the next highest 
        revenues).
          Subtier 3: $10 million (those remaining).
          Subtier 4: $7.5 million (those with the next lowest 
        revenues).
          Subtier 5: $5 million (those with the lowest 
        revenues).
    Tier IV--Based on Revenues, the Person or Affiliated Group 
shall be assigned to subtiers and shall pay, on an annual 
basis, the following:
          Subtier 1: $3.5 million (those with the highest 
        revenues).
          Subtier 2: $2.25 million (those with the next highest 
        revenues).
          Subtier 3: $1.5 million (those remaining).
          Subtier 4: $0.5 million (those with the lowest 
        revenues).
    Tier V--Based on Revenues, the Person or Affiliated Group 
shall be assigned to subtiers and shall pay, on an annual 
basis, the following:
          Subtier 1: $1 million (those with the highest 
        revenues).
          Subtier 2: $0.5 million (those remaining).
          Subtier 3: $0.2 million (those with the lowest 
        revenues).
    Tier VI--Based on Revenues, the Person or Affiliated Group 
shall be assigned to subtiers and shall pay, on an annual 
basis, the following:
          Subtier 1: $0.5 million (those with the highest 
        revenues).
          Subtier 2: $0.25 million (those remaining).
          Subtier 3: $0.1 million ((those with the lowest 
        revenues).
    Tier VII--In addition to an assignment in Tiers II through 
VI, persons who are assigned to Tier VII if they are subject to 
claims under FELA liability and shall pay, on an annual basis, 
the following:
          Subtier 1: Railroad common carriers with revenues of 
        at least $5 billion shall pay $10 million.
          Subtier 2: Railroad common carriers with revenues of 
        at least $3 billion but less than $5 billion shall pay 
        $5 million.
          Subtier 3: Railroad common carriers with revenues of 
        at least $0.5 billion but less than $3 billion shall 
        pay $500,000.
    Revenues: ``Revenues'' shall be determined by reported 
earnings for the year ending December 31, 2002, or, if 
applicable, the earlier fiscal year that ends during 2002.

Sec. 204. Assessment administration

    Decreased contributions: Except as otherwise provided, the 
Administrator will assess contributions based on the values set 
forth for each Person or Affiliated Group covered by this 
subsection for the first five years of the Fund's operation. 
After year five, the Administrator shall reduce the 
contribution amount for each Defendant Participant in Tiers II, 
III, IV, V, VI and VII.
    Small business exemption: Persons or Affiliated Groups 
meeting the definition of ``small business'' as defined by the 
Small Business Administration pursuant to the SmallBusiness 
Act, 15 U.S.C. Sec. 632, on December 31, 2002 are exempt from any 
contribution requirement under this subtitle.
    Exceptions: Under expedited procedures established by the 
Administrator, a Defendant Participant may seek adjustment of 
the amount of its contribution based on severe financial 
hardship or demonstrated exceptional inequity. The 
administrator shall appoint two advisory panels--one on 
financial hardship and one on inequity adjustment--to make 
recommendations.
    Hardship adjustments--may not exceed in the aggregate 6% of 
the total annual contributions otherwise required of all 
Defendant Participants
    Inequity adjustments--may not exceed 4% of the total annual 
contributions otherwise required of all Defendant Participants.
    A defendant may qualify for an inequity adjustment by 
demonstrating that the amount of its contribution under the 
statutory allocation is exceptionally inequitable when measured 
against:
          (i) that percentage of the prior asbestos 
        expenditures of the defendant that were incurred with 
        respect to claims that neither resulted in an adverse 
        judgment against the defendant nor were the subject of 
        a settlement that required a payment to a plaintiff by 
        or on behalf of that defendant; or
          (ii) the amount of the likely cost to the defendant 
        of its future liability in the tort system in the 
        absence of the Fund; or
          (iii) the contribution rate of the defendant is 
        exceptionally inequitable when compared to the median 
        contribution rate for all defendants in the same tier 
        (contribution rate for purposes of this section is the 
        contribution amount of the defendant as a percentage of 
        such defendant's gross revenues for the year ending 
        December 31, 2002); or
    A defendant shall qualify for a two-tier main tier and a 
two-tier sub-tier adjustment reducing the defendant's 
contribution based on inequity by demonstrating that not less 
than 95% of such person's prior asbestos expenditures arose 
from claims related to the manufacture and sale of railroad 
locomotives and related products, so long as such person's 
manufacture and sale of railroad locomotives and related 
products is temporally and causally remote. For purposes of 
this paragraph, a person's manufacture and sale of railroad 
locomotives and related products shall be deemed to be 
temporally and causally remote if the asbestos claims 
historically and generally filed against such person relate to 
the manufacture and sale of railroad locomotives and related 
products by an entity dissolved more than 25 years prior to the 
date of enactment of this Act.
    Term and Renewal--The adjustments granted under this 
section shall apply for a period of 3 years and may be renewed.
    Recoupment Authority--Following expiration of the hardship 
or inequity adjustment period granted under this section, the 
Adminstrator shall annually determine whether there has been a 
material change in conditions which would support a finding 
that the allocation was not inequitable or that the defendant 
that was the recipient of a hardship is now capable of paying 
its full allocation amount plus past reduction amounts and if 
so reinstate the original contribution that was not paid during 
the inequity or hardship adjustment term. The intent of this 
section is to protect the integrity of the fund by permitting 
recoupment of prior adjustments. However, it is intended that 
this recoupment is not mandatory but that the Administrator 
shall have discretion to ensure that any such recoupment will 
not result in a hardship on the participant.
    Determination of Prior Asbestos Expenditures: Payments by 
indemnitors prior to December 31, 2002 shall be counted as part 
of the indemnitor's prior asbestos expenditure.
    Statutory Minimum Contributions: Statutory minimums for the 
aggregate contributions of Defendant Participants to the Fund 
in any single year shall be as follows:
    (1) For each of the first five years of the Fund, the 
aggregate contributions of Defendant Participants to the Fund 
shall be at least $2.5 Billion.
    (2) After year five, the statutory minimum shall be reduced 
as follows:
          (A) For years 6 through 8, $2.25 billion;
          (B) For years 9 through 11, $2 billion;
          (C) For years 12 through 14, $1.75 billion;
          (D) For years 15 through 17, $1.5 billion;
          (E) For years 18 through 20, $1.25 billion;
          (F) For years 21 through 26, $1 billion;
          (G) For year 27, $250 million.
    Identification of Defendant Participants: The Administrator 
shall identify defendants that have paid or been assessed 
through legal judgment or settlement, greater than $1 million 
in defense and indemnity costs relating to asbestos personal 
injury claims and these defendants shall be mandatory 
participants in the fund. The Administrator shall directly 
notify all reasonably identifiable Defendant Participants of 
the requirement to submit information necessary to calculate 
the amount of any required contribution to the Fund; and 
publish in the Federal Register a notice requiring any person 
who may be a Defendant Participant to submit such information.
    Several Liabilities: Each Defendant Participant's 
obligation to contribute to the Fund is several. There is no 
joint liability and the future insolvency of any Defendant 
Participant shall not affect the assessment assigned to any 
other Defendant Participant.
    Application of FOIA and confidentiality of information:The 
Freedom of Information Act shall apply to the Office of Asbestos Injury 
Claims Resolution. Any person may designate any record submitted under 
this section as a confidential commercial or financial record.

                Subtitle B. Asbestos Insurers Commission


Sec. 211. Establishment of Asbestos Insurers Commission

    No later than 60 days after enactment, the President, in 
consultation with Congress, shall appoint five commissioners 
with sufficient expertise. The commissioners shall be appointed 
for the life of the Commission. No member of the Commission may 
be an employee or immediate family member of an employee of an 
insurer participant. No member of the commission may be a 
former employee or shareholder of any insurer participant 
unless that fact is fully disclosed. However, the meaning of 
shareholder is defined to exclude a broadly based mutual fund 
that may from time to time include the stocks of insurer 
participants. A commissioner shall not be an officer or 
employee of the Federal Government, except in relation to this 
commission. The Commission shall select a chairman from among 
its members. No later than thirty days after all the members 
have been appointed, the Commission shall hold its first 
meeting. Subsequently, the Commission shall meet at the call of 
the Chairman as necessary to carry out the duties. No business 
may be conducted or hearings held without the participation of 
all members of the Commission.

Sec. 212. Duties of the Asbestos Insurers Commission

    Subsection (a)(1)--Determination of Insurer Liability for 
Asbestos Injuries: The Commission shall determine the amount 
that each Insurer Participant will be required to pay into the 
Fund to compensate claimants for asbestos injuries. The terms 
``Insurer Participant'' and ``Mandatory Insurer Participant'' 
includes direct insurers, reinsurers and any run-off entity 
established to review and pay asbestos claims.
    Subsection (a)(2)--Allocation Agreement: Not later than 30 
days after the Commission issues its initial determination, the 
direct insurers and reinsurers have the option of submitting an 
allocation agreement that establishes the respective insurer 
payments into the Fund. The agreement must be approved by all 
of the participants from both groups and submitted to the 
Congress. The Commission's authority terminates on the day 
after the Commission certifies that an allocation agreement 
meets the requirements of Subtitle B.
    Subsection (a)(3)--General Provisions: The total aggregate 
contributions required of all Insurer Participants equals $52 
billion. Unless provided otherwise, the annual contributions 
from Insurer Participants are expected to decline over time and 
the proportionate share of each Insurer Participant's 
contributions will remain the same throughout the life of the 
Fund. Unless provided otherwise, each Insurer Participant's 
obligation to contribute to the Fund is several. There is no 
joint liability and the future insolvency of any Insurer 
Participant shall not affect the assessment assigned to any 
other Insurer Participant.
    Subsection (a)(4)--Assessment Criteria: Insurers that have 
paid or been assessed through legal judgment or settlement, 
greater than $1 million in defense and indemnity costs relating 
to asbestos personal injury claims shall be considered 
Mandatory Insurer Participants to the Fund. Direct insurers 
licensed and domiciled in the United States shall be 
responsible for a portion of the total insurer fund 
contribution of $52 billion. All other Insurer Participants, 
shall also be responsible for a portion of the $52 billion in 
total contributions. In determining the respective allocations 
among these Insurer Participants, the Commission is required to 
apply the following factors: historic premium lines for 
asbestos liability coverage; recent loss experiences for 
asbestos liabilities; the likely costs to each Insurer 
Participant of its future liabilities under applicable 
insurance policies; and other factors the Commission deems 
relevant and appropriate. This subsection gives Insurer 
Participants the ability to seek hardship adjustments of the 
amount of its contribution based on severe financial hardship. 
This subsection also provides that captive insurers of 
Defendant Participants should not be assessed a funding 
obligation as Insurer Participants to the extent that their 
asbestos exposure remains within the corporate family. Payments 
are to be made annually into the Fund, however, direct insurers 
are required to pay 100% of their allocated amount within three 
years of the effective date of this Act. Unless provided 
otherwise, Insurer Participants who have fully paid their 
allocation obligations to the Fund shall have no further 
responsibilities under the Act. An interested party may obtain 
judicial review of any final regulation of the Commission with 
regard to an allocation formula under this subsection.
    Notification to and request for information from Insurer 
Participants: Subsection (b)(1)--Within 30 days after its 
initial meeting, the Commission is required to directly notify 
all reasonably identifiable Insurer Participants of the 
requirement to submit information necessary to calculate the 
amount of any required contribution to the Fund; and publish in 
the Federal Register a notice requiring any person who may be 
an Insurer Participant to submit such information.
    Response to the Commission: Subsection (b)(2)--Any person 
meeting the criteria established in the notice shall respond 
and submit the required information within thirty days after 
receipt of the direct notice or thirty days after the 
publication of the notice in the Federal Register. The response 
shall be signed by a responsible corporate officer, general 
partner, proprietor, or individual of similar authority, who 
shall certify under penalty of law the completeness and 
accuracy of the information submitted.
    Notice of Initial Determination: Subsection (b)(3)--Not 
later than 120 days after the initial meeting of the 
Commission, the Commission shall send each participant a notice 
of the initial determination assessing a contribution to the 
Fund. If no response is received from the participant, or if 
the response is incomplete, the initial determination assessing 
a contribution from the participant shall be based on the best 
information available to the Commission.
    Review Period: Subsection (b)(4)(A)--Not later than 30 days 
after receiving notice of the initial determination from the 
Commission, an Insurer Participant may provide the Commission 
with additional information to support limited adjustments to 
the assessment received to reflect exceptional circumstances.
    Additional Participants: Subsection (b)(4)(B)--If before 
the final determination of the Commission, the Commission 
receives information that an additional person may qualify as 
an Insurer Participant, the Commission shall require such 
person to submitinformation necessary to determine whether a 
contribution from that person should be assessed.
    Revision Procedures: Subsection (b)(4)(C)--The Commission 
is authorized to adopt procedures for revising initial 
assessments based on information received under subparagraphs 
(A) and (B).
    Subpoena Power: Subsection (b)(5)--The Commission may 
request the Attorney General to subpoena persons to compel 
testimony, records, and other information relevant to its 
responsibilities under this section. This subpoena power shall 
be enforced in the U.S. district court for the district in 
which the person to whom the subpoena was addressed resides, 
was served, or transacts business.
    Escrow Payments: Subsection (b)(6)--Notwithstanding an 
Insurer Participant's allocation obligation, any escrow or 
similar account established before the enactment of this Act by 
an Insurer Participant in connection with an asbestos trust 
fund that has not been judicially confirmed by the date of 
enactment of this Act shall be returned to that insurer 
participant.
    Notice of Final Determination: Subsection (b)(7)--Not later 
than 60 days after the notice of initial determination is sent 
to the Insurer Participants, the Commission shall send each 
Insurer Participant a notice of final determination of the 
assessment amount and payment schedule. A participant has a 
right to obtain judicial review of the Commissions final 
determination under Title III.
    Determination of Relative Liability for Asbestos Injuries: 
Subsection (c)--The Commission shall determine the percentage 
of total liability of each participant identified under 
subsection (a).
    Report: Subsection (d)--Not later than one year after the 
date of enactment of this Act, the Commission shall submit a 
report regarding the amount of the assessments and payment 
schedule of contributions to the Senate Judiciary Committee, 
the House Judiciary Committee and the U.S. Court of Federal 
Claims.

Sec. 213. Powers of the Asbestos Insurer Commission

    This section authorizes the Commission to conduct 
rulemakings for the purpose of implementing its authority under 
the Act. The Commission may hold hearings, sit and act at such 
times, take testimony and receive evidence as it considers 
advisable. The Commission may secure directly from any Federal 
agency such information as the Commission considers necessary 
to carry out this act, and may use the United States mails in 
the same manner and under the same conditions as other 
departments and agencies of the Federal government. The 
Commission may not accept, use, or dispose of gifts or 
donations of services or property. The Commission may also 
enter into contracts as it deems necessary to obtain expert 
advice and analysis.
    In addition to establishing the powers of the Commission, 
this section establishes related powers of the Administrator. 
The Administrator may require Insurer Participants to make 
payments to the Fund prior to the Commission's establishment of 
an allocation formula. Such payments shall be assessed on an 
equitable basis and equal, in total, the funding obtained from 
Defendant Participants for the same period of time.
    Enforcement--The Administrator also holds authority to 
pursue a civil action in federal court against any reinsurer 
that fails to comply with its obligations under the Act. The 
Administrator is authorized to seek treble damages and is 
authorized to seek relief against the direct insurer, an 
obligated party, if unable to collect from the reinsurer.

Sec. 214. Personnel matters of the Asbestos Insurers Commission

    Each member of the Commission shall be paid a daily 
equivalent of the annual rate for level IV of the Executive 
Schedule. Members of the Commission shall be allowed travel 
expenses including per diem in lieu of subsistence consistent 
with that permitted for federal agency employees. The Chairman 
of the Commission may appoint and terminate an executive 
director and such other additional personnel as may be 
necessary to enable the Commission to perform its duties. The 
employment of the executive director shall be subject to 
confirmation by the Commission. The Chairman of the Commission 
may set the rate of compensation of staff but it must not 
exceed Level V of the Executive Schedule. Any federal 
government employee may be detailed to the Commission without 
reimbursement, and such detail shall be without interruption or 
loss of civil service status or privilege. The Chairman of the 
Commission may procure temporary and intermittent services at 
rates that do not exceed Level V of the Executive Schedule.

Sec. 215. Application of FOIA and confidentiality of information

    The Freedom of Information Act shall apply to the 
Commission. Any person may designate any record submitted under 
this section as a confidential commercial or financial record.

Sec. 216. Termination of the Asbestos Insurers Commission

    The Commission shall terminate 60 days after the date on 
which the Commission submits its report.

Sec. 217. Expenses and costs of Commission

    All expenses and costs of the Commission shall be paid by 
the Asbestos Injury Claims Resolution Fund.

        Subtitle C. Office of Asbestos Injury Claims Resolution


Sec. 221. Establishment of the Office of Asbestos Injury Claims 
        Resolution

    The office shall be responsible for administering the Fund, 
providing compensation from the Fund to asbestos claimants who 
are deemed eligible for such compensation; and any other 
activities deemed appropriate. The President shall appoint an 
Administrator, with the advice and consent of the Senate. The 
Administrator shall serve for a term of five years and may be 
removable for good cause.

Sec. 222. Powers and duties of the Administrator and management of the 
        fund

    The Administrator shall promulgate such regulations as the 
Administrator deems necessary to implement provisions of this 
title; appoint employees or contract for the services of other 
personnel; make expenditures as may be necessary and 
appropriate in the administration of this subtitle; and take 
all actions necessary to prudently manage the Fund.
    This section also requires the Administrator to refer any 
information relating to violation of the Toxic Substances 
Control Act, the Clean Air Act, or the Occupational Safety and 
Health Act to the Secretary of Labor, the Administrator of the 
EPA or the United States Attorney for possible civil or 
criminal prosecution and penalties.
    This section also directs the United States Sentencing 
Commission to review and amend, as appropriate, the United 
States Sentencing Guidelines regarding environmental crimes 
relating to asbestos to ensure that the penalties are 
sufficient to deter and punish future activity and for other 
reasons.

Sec. 223. Asbestos Injury Claims Resolution Fund

    There is established in the Office of Asbestos Injury 
Claims Resolution, the Asbestos Injury Claims Resolution Fund 
which shall be available to pay claims deemed eligible for 
compensation for an eligible disease or condition, 
reimbursement for medical monitoring, principal and interest on 
amounts borrowing, and administrative expenses under the 
authority of this subsection. Except as otherwise provided, the 
aggregate contributions of all mandatory participants to the 
Fund may not exceed $5 billion in any calendar year. The 
Administrator is authorized to borrow, in any calendar year, an 
amount not to exceed anticipated contributions to the Fund in 
the following year, for purposes of carrying out this Act.
    Orphan Share Reserve Account: To the extent the total 
amount of contributions of the Defendant Participants in any 
given year exceed the statutory minimum under section 204(h), 
the excess monies will be placed in an Orphan Share reserve 
account established by the Administrator. These excess 
contributions are not intended to include contributions from 
contingent call funding. Monies from the Orphan Share reserve 
account shall be preserved and administered like the remainder 
of the Fund, but shall be reserved and may be used only (A) in 
the event that a petition for relief is filed and not withdrawn 
for the Defendant Participant under title 11 of the United 
States Code after date of enactment and the Defendant 
Participant cannot meet its obligations under paragraphs (4) 
and (5) of sections 202 and 212, and (B) to the extent the 
Administrator grants a Defendant Participant relief for severe 
financial hardship or exigent circumstances under paragraph (9) 
demonstrated inequity under section 204(d).
    Guaranteed Payment Surcharge Account: The Administrator 
shall impose on each Mandatory Participant an amount in 
addition to contributions a reasonable surcharge to insure 
against the risk of nonpayment of required contributions. These 
amounts are to be put in a reserve account to be used in the 
event contribution obligations are not met.
    Lockbox for Severe Asbestos-Related Injury Claimants: This 
section authorizes the Administrator to establish four separate 
lockbox accounts to protect the funds needed to compensate the 
victims with the most severe asbestos-related injuries: 
mesothelioma, lung cancer with asbestosis, lung cancer with 
pleural disease, other cancer and disabling asbestosis. The 
Administrator shall allocate to each of these accounts a 
portion of contributions to the Fund to compensate anticipated 
claimants for each account. Funds will be allocated to these 
accounts based on the best epidemiological and statistical 
studies.
    Contingent Call for Additional Mandatory Funding: This 
section provides a contingent source of funding during the 27 
year mandatory funding period. This contingent call authority 
is intended to be truly contingent and only used in the event 
that claims cannot be paid in a timely manner after other 
reserve funds are utilized, including borrowing authority. The 
section requires the Administrator to certify, before making 
any reduction adjustments to annual contributions under section 
204(a) or section 212(a)(3)(B), that the Fund will have 
adequate funds available to compensate past, pending and 
projected future claimants at the scheduled award values 
provided in section 131(b) of the Act. If the Administrator 
fails to make such certification for any given 1 year, 3 year, 
or 6 year reduction adjustment period, the Administrator has 
the authority to delay or reduce any scheduled step-down. For 
example, if in year 9 and defendant companies' aggregate 
contributions are scheduled to go down to $2 billion from $2.25 
billion. The Administrator has the discretion to allow the step 
down to go forward as projected to $2 billion, or the 
Administrator can reduce the contribution partially to $2.1 
billion or keep the contributions at the year 8 level of $2.25 
billion. To meet the contingent call, defendant companies have 
a prorated assessment based on their original section 203 
subtier funding levels. Insurer funding levels to meet 
contingent calls will be established by the Insurers 
Commission.
    Credit for surplus funds--The section also grants the 
Administrator the authority to provide contributing 
participants a credit for surplus funds that may be generated 
through a contingent call. These credits are applied by 
authorizing the Administrator to provide an additional 
reduction adjustment to participants in addition to any 
reduction adjustment already made. The total reduction 
adjustment, however, cannot exceed the amount of additional 
contributions required under this section.
    Back-End Payments: This section addresses funding shortages 
should they occur after expiration of the 27 year mandatory 
funding period. The section authorizes the Administrator to 
request annually $1 billion in the aggregate from Defendant 
Participants and $1 billion in the aggregate from Insurer 
Participants starting in year 28. The Administrator is required 
to determine, after consulting with appropriate experts, 
whether additional contributions are necessary to assure 
adequate funding for claimants eligible to receive compensation 
under the Act at the scheduled awards and the scheduled rates. 
Payments are voluntary. But if the participant decides not to 
make such voluntary payments, that participant would be subject 
to a civil action in federal court. For civil actions against 
participants that fail to make voluntary payments under this 
section, the statute of limitations is tolled until a qualified 
claimant knows or should have known that the participant failed 
to make a voluntary contribution.

Sec. 224. Enforcement of contributions

    If any participant fails to make any payment in the amount 
and according to the schedule specified in the assessment, 
after demand and 30 days opportunity to cure the default, there 
shall be a lien in favor of the United States for the amount of 
the delinquent payment (including interest). In the case of a 
bankruptcy or insolvency proceeding, the lien shall be treated 
in the same manner as a lien for taxes due and owing to the 
United States. In any case where there has been a refusal or 
neglect to pay an assessment, the Administrator may bring a 
civil action in the Federal district court for the District of 
Columbia to enforce such liability.
    Availability of punitive damages and fines--In any action 
involving a willful refusal to pay, the Administrator is 
authorized to recover punitive damages, includingcosts and 
attorneys fees, and may collect a fine equal to the total amount of the 
liability not collected. In any enforcement proceeding, the participant 
shall be barred from bringing any challenge to the assessment if such 
challenge could have been made during the review period specified under 
section 102(b)(4)204(i)(8) or 112(b)(4), or a judicial review 
proceeding under Title III.

                       TITLE III. JUDICIAL REVIEW


Sec. 301. Judicial review of decisions of the Asbestos Court (which is 
        within the U.S. Court of Federal Claims)

    The United States Court of Appeals for the Federal Circuit 
has exclusive jurisdiction over any action to review a final 
decision of the Asbestos Court. Appeals must be filed within 30 
days of the final decision of the Asbestos Court. All decisions 
will be upheld unless deemed to be arbitrary and capricious, in 
which case they will be remanded to the United States Court of 
Federal Claims.

Sec. 302. Judicial review of final determinations of the Administrator 
        and the Asbestos Insurers Commission

    The U.S. District Court for the District of Columbia has 
exclusive jurisdiction over any action to review the final 
determinations of the Insurer Commission regarding contribution 
allocations, and contribution allocation decisions by the 
Administrator. Final determinations will be upheld unless 
arbitrary and capricious, in which case it will be remanded to 
the Administrator or the Commission with instructions to 
modify. No stays of payments pending appeal are allowed.

Sec. 303. Exclusive review

    No judicial review other than as set forth in sections 301 
and 302 is allowed. Any decision of the federal court finding 
any part of the FAIR Act to be unconstitutional shall be 
reviewable as a matter of right by direct appeal to the Supreme 
Court within 30 days of such ruling.

Sec. 304. Private right of action against reinsurers

    An insurer participant may bring an action in the U.S. 
District Court for the District of Columbia against any 
reinsurer that is contractually obligated to reimburse such 
insurer for some or all of its costs incurred in an asbestos 
related claim. Such claims must be decided within 30 days after 
filing, and will be reviewed under an arbitrary and capricious 
standard. Appeals may be filed in the Court of Appeals for the 
District of Columbia and will be reviewed under an arbitrary 
and capricious standard.

                   TITLE IV. MISCELLANEOUS PROVISIONS


Sec. 401. False information

    This section amends Title 18, Chapter 63 of the U.S. Code 
by adding a new section 1348 to impose criminal penalties for 
fraud against the Asbestos Insurers Commission and the Office 
of Asbestos Injury Claims Resolution, and false statements made 
against the Asbestos Injury Claims Resolution Fund by any 
party.

Sec. 402. Effect on bankruptcy laws

    Contribution obligations are not dischargeable and may not 
be stayed when a participant files for bankruptcy. Claims by 
the Court or U.S. against a participant are allowed even in 
bankruptcy. Participants' payment pending bankruptcy or in 
bankruptcy are not avoidable as preferences or executory 
contract.
    Transfer of Existing Asbestos Trusts: Existing trusts, 
including 524(g) trusts, will be incorporated into the Asbestos 
Injury Resolution Fund. The Administrator shall have discretion 
when transferring assets of these trusts. This incorporation is 
estimated to provide an additional $4-6 billion in 
contributions to the fund.

Sec. 403. Effect on other laws and existing claims

    This section provides that there will be no other forum for 
recovery of an asbestos injury claim other than under S. 1125. 
Claims pending as of the date of enactment will be preempted by 
S. 1125, except those ``actions for which an order or judgment 
has been duly entered by a court that is no longer subject to 
any appeal or judicial review. * * *'' Nonfinal settlements and 
judgments that are still subject to appeal are included in the 
preemption. If a state court does not dismiss a claim, it may 
be removed to federal court, which will rule on the motion to 
dismiss.
    As amended in Committee, the preemption, removal and 
dismissal provisions of this section are not effective until 
the Administrator determines that the fund is fully operational 
and processing claims. However, any claims made payable by 
operation of this amendment will reduce a participant's 
contribution obligations under this Act.

Sec. 404. Administrator's annual reports

    This section requires the Administrator to submit an annual 
report to the Senate Committee on the Judiciary and House 
Committee on the Judiciary concerning the operation of the 
Asbestos Injury Claims Resolution Fund. The section specifies 
the contents of the report which includes summaries, estimates 
and recommendations.
    Fund Sunset provision--In the Annual Report, the 
Administrator is required to certify that 95% or more of 
eligible asbestos claimants who filed claims during the prior 
calendar year, have been paid and received compensation 
according to the terms of section 133. If the Administrator 
fails to make such certification, the Administrator is given 90 
days to remedy the situation. But if the Administrator fails to 
make the required certification after expiration of the 90 
days, the Fund will terminate, and claimants will have the 
opportunity to pursue their claims in the appropriate court.
    The Committee is concerned that this Amendment was adopted 
without a full understanding of the actual language and the 
harsh consequences, ramifications and implications thereof. The 
sponsor of the Amendment, Senator Biden, has agreed to work 
with Members to develop appropriate language to mitigate any 
unintended consequences of this provision before floor 
consideration of S.1125.

Sec. 405. Rule of construction relating to liability of the United 
        States government

    Except as otherwise specifically provided in this Act, 
nothing in this Act may be construed as creating a cause of 
action against the United States government, any entity 
established under this Act, or any officer or employee of the 
United States government or such entity. In addition it should 
not be construed in any way to create an obligation of funding 
from the United States government, other than funds for 
personnel or support as specifically provided in this 
legislation.

Section 406. Effect of insurance and reinsurance contracts

    Because most insurance policies cover multiple liabilities, 
it was necessary to account for ``erosion'' of a policy that 
covers not only asbestos liabilities, but potentially other 
liabilities such as property or other environmental liabilities 
when assessing contribution obligations to the fund in order to 
avoid depriving insureds of coverage for other non-asbestos 
related claims. This section establishes how contributions to 
the Fund by insurers and reinsurers reduce the limits of 
existing insurance policies held by the Defendant Participants. 
The quantum of erosion is based on the collective payment 
obligations to the Fund by the insurer and reinsurer 
participants, and are deemed as of the date of enactment to 
erode remaining aggregate product limits available to a 
Defendant Participant in an amount of 74.51% of each Defendant 
Participant's scheduled assessment amount. The erosion 
principles apply to the mandatory payment obligations to the 
Fund, the contingent call payments and back-end payments.

          TITLE V. PROHIBITION OF ASBESTOS CONTANING PRODUCTS

    This section amends chapter 39 of Title 18 to prohibit the 
manufacture, distribution and importation of consumer products 
to which harmful asbestos is deliberately or knowingly added. 
This section also contains specific exemptions and authorizes 
the Administrator to hear and grant exemptions on a case by 
case basis. The Committee found precedence and structured this 
section in large part on an asbestos ban implemented by the 
Environmental Protection Agency in 1989. Although this 
regulatory ban was invalidated by the Fifth Circuit on mainly 
procedural grounds, this section implements it legislatively 
and it is the Committee's intent that the Administrator use the 
1989 Environmental Protection Agency regulations as a guide 
towards implementing the ban and relevant exceptions under this 
section. The Committee recommends that the EPA consider, 
consistent with its prior regulations, among other issues: (1) 
whether to create a two-stage ban with a manufacturing ban 
first and a distribution in commerce ban phased in after a 
proper time delay; (2) whether to provide a labeling mechanism 
to identify an asbestos containing product as soon as 
practicable after date of enactment; and (3) whether to provide 
an enforcement standard that requires a violation under the ban 
to be knowing and willful.

                VII. CRITICS' CONTENTIONS AND REBUTTALS

    Critics' Contention No. 1: Critics contend that the funding 
provided for in S. 1125 is inadequate to pay all asbestos 
victims.
    Response: The FAIR Act as amended obligates defendant and 
insurer participants to contribute $52 billion equally to the 
Asbestos Injury Claims Resolution Fund (hereinafter ``Fund''). 
In addition, at least another $4 billion would be contributed 
to the Fund from confirmed bankruptcy and other asbestos 
compensation trusts, bringing the total level of mandatory 
contributions to the Fund to $108 billion. The size of the Fund 
is based on sound statistical data and economic models, and is 
more than adequate to compensate all victims of asbestos-
related disease. Indeed, a leading actuary with Tillinghast-
Towers Perrin, testified convincingly before the Committee on 
June 4, 2003 that ``$108 billion appears to be more than 
adequate * * *'' 62
---------------------------------------------------------------------------
    \62\ Statement of Jennifer L. Biggs, FCAS, MAAA, Tillinghast-Towers 
Perrin, Hearing Before the Senate Committee on the Judiciary, ``Solving 
the Asbestos Litigation Crisis: S. 1125, the Fairness in Asbestos 
Injury Resolution Act of 2003,'' 108th Cong., June 4, 2003, at 7.
---------------------------------------------------------------------------
    The total estimated cost of ultimate asbestos loss and 
expense, which includes both past payments and projected future 
payments, is $200 billion.63 The RAND Institute for 
Civil Justice recently estimated that $70 billion has already 
been paid through year-end 2002.64 By reducing the 
total estimated cost of asbestos-related loss and expense by 
the $70 billion already paid out through 2002, the remaining 
future cost of asbestos-related loss and expense is an 
estimated $130 billion.
---------------------------------------------------------------------------
    \63\ Id. at 1.
    \64\ Steve Carroll, RAND Institute for Civil Justice, ``The 
Dimensions of Asbestos Litigation'' presentation at the Spring Meeting 
of the Casualty Actuarial Society, May 19, 2003.
---------------------------------------------------------------------------
    One of the most beneficial features of the FAIR Act is that 
it will significantly reduce the substantial transaction costs 
of the current tort system--amounts which most experts agree 
currently consume more than half of the total 
costs.65 By substituting the tort system for an 
administrative no-fault system for compensation, the FAIR Act 
will wring out these transaction costs and further reduce the 
future projected costs. Of the $130 billion of asbestos-related 
spending remaining outstanding, Tillinghast-Towers Perrin 
estimates that approximately $28 billion (or 21.5%) is 
attributable to defense costs. Of the remaining $102 billion, 
Tillinghast estimates that approximately $41 billion (or 40%) 
will go to plaintiffs' attorneys. In the current system, as a 
result of these transaction costs, only $61 billion of the $130 
billion estimate of future asbestos-related loss and expense, 
or less than half, is expected to be paid to asbestos 
victims.66 Moreover, the FAIR Act will correct the 
current misallocation of payments being made to unimpaired 
claimants who are flooding the court system today. Therefore, 
the $108 billion to be contributed to the Fund by defendant and 
insurer participants will be more than double the $61 billion, 
thus giving victims the certainty that they will receive 
compensation under the new system.
---------------------------------------------------------------------------
    \65\ See id; see also Biggs, supra Note 1 at 2-3.
    \66\ See Biggs, supra Note 1 at 2.
---------------------------------------------------------------------------
    As an added protection against the unlikely risk of 
insufficient funding, the FAIR Act provides several funding 
safeguards to ensure Fund solvency. First, the Administrator 
holds access to additional funds through a guaranteed payment 
account. This account collects a mandatory surcharge (in 
addition to the assessed amount) on every defendant and insurer 
contribution made into the Fund. The proceeds from this 
surcharge are used to cover shortages attributable to non-
payment by any participant. Second, the Administrator holds 
access to an orphan share account that collects amounts paid in 
excess of the maximum aggregate contribution by insures and 
defendants. These amounts are used to cover losses caused by 
participants that proceed with Chapter 11 bankruptcies and for 
losses caused by financial hardship and inequity determinations 
made in favor of certain participants. Third, the Administrator 
holds authority to borrowfrom commercial lending institutions 
amounts to offset short term losses in an amount that does not exceed 
anticipated contributions for the following year.
    In the unlikely event that these funding mechanisms are 
exhausted, the Administrator next holds access to a significant 
source of contingency funding. In addition to the obligation of 
defendant and insurer participants to contribute $108 billion 
to the Fund, the Administrator can assess additional 
contributions from the defendant and insurer participants, 
unless the Administrator of the Fund certifies that there are 
adequate funds available to compensate claimants in years six 
through twenty-seven of the Fund. This ``contingency call'' 
authority would provide for up to an additional $45 billion of 
funding that would be available to compensate victims, if 
needed. Moreover, after year twenty-seven of the Fund, the 
Administrator will also have the authority to request 
additional contributions of up to $1 billion a year from both 
defendant and insurer participants, thereby providing for 
additional ``back-end'' contingency funding. But based on all 
reasonable cost estimates, it is not anticipated that any of 
the contingency funding will be necessary because the $108 
billion will be more than adequate to meet all future claims. 
However, in combination with the $108 billion, these 
contingency provisions will provide more than enough funding to 
compensate asbestos claimants.
    Critics' Contention No. 2: Critics contend that given the 
significant amount of time that will be involved in 
establishing the Fund and getting it funded and fully 
operational, asbestos victims may have to wait years before 
they receive any compensation.
    Response: This argument lacks merit because it completely 
ignores the FAIR Act's explicit timing provisions that ensure 
Fund liquidity and operation. Upon enactment, the Fund will 
receive within the first 6 months at least $4 billion in assets 
from existing bankruptcy and other trusts that have been 
established to pay asbestos claims. The FAIR Act is also 
structured so that the Fund can start receiving the mandatory 
annual contributions from defendant and insurer participants 
within an estimated five months after the Administrator's 
appointment by the President. If so, this source of funding 
will boost the Fund's assets to at least $9 billion within the 
first year of the Fund's existence.
    As for the insurers, the FAIR Act requires the Insurer 
Commission to begin developing an allocation formula within 30 
days after appointment. In the interim, however, the 
legislation authorizes the Administrator to assess up-front 
contributions from insurer participants with the proviso that 
any amounts paid will be adjusted later to reflect the 
appropriate allocations formula that is later developed.
    To the extent the critics argue that potential delays will 
be caused by judicial challenges to the assessment decisions by 
the Administrator or Insurance Commission or constitutional 
challenges to the FAIR Act itself, these arguments are belied 
by the legislation's expedited judicial review provisions. 
First, any judicial challenges to the assessment decisions of 
the Administrator or Insurance Commission must be filed within 
thirty days of a final decision with the United States District 
Court for the District of Columbia. To avoid further delays, 
the FAIR Act explicitly prohibits the district court from 
issuing any stay of payment into the fund. Second, any 
constitutional challenge to the Act is subject to a direct 
appeal process to the Supreme Court. The likelihood of a 
successful constitutional challenge is remote given the hearing 
testimony from several renowned constitutional experts who have 
opined on the constitutional validity of the Fair Act.
    Finally, these contentions are further undermined when 
compared with the significant delays that asbestos victims face 
in our tort system today. Indeed, the Supreme Court has 
practically begged the Congress to fix the widespread problems 
in the court system caused by the massive number of filed 
asbestos tort claims. It is typical for claimants to have to 
wait years before they are awarded compensation, if any. In 
some cases, victims die before receiving any compensation. One 
of the chief attributes of the FAIR Act is that it creates a 
streamlined, administratively simple claims processing system 
that compensates victims in an expedited manner. The specific 
time deadlines for claims processing included in the FAIR Act 
enable claims to be resolved in under a year, unlike the 
current tort system. The FAIR Act drafted specifically to 
expedite the process of getting the Fund up and running as 
quickly as possible after the enactment of the legislation.
    Critics' Contention No. 3: Critics contend that if the Fund 
runs out of money, asbestos victims will have no place to turn 
for compensation.
    Response: As explained in detail in response to Critics' 
Contention No. 1, based on all reasonable estimates, the Fund 
will not run out of funds or be unable to meet all of its 
obligations to all claimants. First, the Fund will have funding 
of $108 million in order to process and pay out what has been 
estimated to be a substantially smaller remaining outstanding 
liability for all future asbestos claims of $61 billion, after 
reducing the substantial transaction costs of the current tort 
system. Second, the Administrator holds access to supplemental 
accounts and borrowing authority. Third, although it is fully 
expected that the $108 billion will be more than necessary to 
meet all anticipated claims over the life of the Fund, the 
Administrator of the Fund will, in years five through twenty-
seven, have ``contingency call'' authority to collect 
additional funds from defendant and insurer participants if 
needed, as well as the authority, after year twenty-seven of 
the Fund, to seek additional, ``back-end,'' contingency funding 
from the program participants. Therefore, the $108 billion 
funding, when combined with the additional contingency funding 
will ensure that the Fund has more than adequate monies to pay 
all deserving asbestos claimants.
    But in the extremely unlikely event the FAIR Act does not 
ultimately provide adequate funding to compensate all asbestos 
victims deemed entitled to compensation, S. 1125 provides 
victims the right to pursue their claims in the tort system. As 
amended, the FAIR Act provides that if the Administrator is 
unable to certify in any year that 95% of the claimants who 
were determined to be eligible to receive compensation have 
received the compensation for which they are entitled, and the 
Administrator is unable to remedy the situation within 90 days, 
the legislation would sunset and all claimants would be able to 
pursue their claims in the tort system.\67\ Additionally, after 
year twenty-seven of the Fund, if any participant fails to pay 
its back-end, contingency contribution determined by the 
Administrator to be necessary in order to be able to compensate 
victims, any claimant may pursue an action against that 
participant in federal court.
---------------------------------------------------------------------------
    \67\ The Committee is concerned that this Amendment was adopted 
without a full understanding of the actual language and the harsh 
consequences, ramifications and implications thereof. The sponsor of 
the Amendment, Senator Biden, has agreed to work with Members to 
develop appropriate language to mitigate any unintended consequences of 
this provision before floor consideration of S.1125.
---------------------------------------------------------------------------
    Critics' Contention No. 4: Critics contend that victims 
will be paid less under the FAIR Act than they could get in the 
tort system.
    Response: The Committee has adopted S. 1125 in recognition 
that the tort system is broken and the status quo cannot be 
sustained for either victims or defendants. Under S. 1125, 
claimants will receive fair, consistent and equitable 
compensation without the delays inherent in litigation. 
Moreover, most appropriately, those that are most seriously ill 
and whose diseases have the most direct causal link to asbestos 
will receive the most compensation under the legislation, 
including up to $1 million for Level X, Mesothelioma. Those 
individuals who have been exposed to asbestos but are not 
impaired will be eligible for medical monitoring, and their 
claims will be preserved should they later develop impairment.
    In sharp contrast to S. 1125, the current tort system is 
unfair to asbestos victims and plagued with uncertainty. 
Whether asbestos victims receive compensation at all, and, if 
so, how much they might receive, depends on where and when they 
file claims, who the defendants happen to be, whether those 
defendants are solvent, and the leverage and skill of their 
trial lawyers. The amount of compensation victims receive 
diverges widely, with some victims receiving very large 
amounts, and others receiving little or nothing. And sadly, 
some victims die before their cases can be heard in court. 
These distortions in the current tort system are further 
exacerbated by jurisdictional idiosyncrasies. Only five states 
had two-thirds of all asbestos case filings between 1998 and 
2000. The concentration of an overwhelming number of filings in 
a small number of jurisdictions only increases the delays and 
inequities inherent in the current system.
    While the tort system bestows large awards for some 
victims, it all too often leaves the unfortunate without fair 
compensation, and the system is only getting worse with time. 
In order for victims to be compensated, they need to be able to 
look to solvent companies for resources. However, to date, at 
least 67 companies have declared bankruptcy because of asbestos 
claims, with more than 20 of these bankruptcies having occurred 
in the past two years. While bankruptcy trust funds can be an 
efficient way of compensating victims, a study of a number of 
major asbestos defendant bankruptcies showed that the average 
time from petition to confirmation of a reorganization plan was 
six years. During these proceedings, claimants are not paid. 
Even worse, after a company declares bankruptcy, it has very 
limited resources with which to compensate victims. The 
Manville Trust, for example, can only pay victims 5% of the 
value of their claims. Moreover, not one single existing 
asbestos trust or any of the 20 or more trusts currently 
pending in bankruptcy court can or will be able pay any more 
than a fraction of the value of the claims that will be 
presented.\68\
---------------------------------------------------------------------------
    \68\ See Statement of David Austern, General Counsel for the 
Manville Personal Injury Settlement Trust, Hearing before the Senate 
Committee on the Judiciary, The Asbestos Litigation Crisis Continues--
It is Time for Congress to Act, 108th Cong., March 5, 2003.
---------------------------------------------------------------------------
    Also, importantly, another benefit of S. 1125 is that most 
claimants will receive compensation much faster than they would 
under the current system, where individual need and 
consideration is too often lost in the trial lawyers' inventory 
of thousands and thousands of claims that are resolved on a 
wholesale bargaining basis that often plays out over a period 
of years.
    As noted in the response to Critic's Contention No. 1, by 
reducing the substantial transaction costs of the current 
system and directing resources to those who are injured from 
asbestos related diseases, S. 1125 will deliver more 
compensation to victims in a timely and certain manner.
    The scheduled values of S. 1125 are some of the highest of 
any federal or state compensation program in existence. The 
values in S. 1125 compare very favorably to the statutory, 
maximum disability and death benefits of all other federal 
compensation programs. The values in S. 1125 are also higher 
than the benefits offered under state workers' compensation 
programs. In January of 2002, of the 23 states reporting a 
calculated, maximum death benefit, the lowest reported amount 
was $46,900 in Maryland; the highest reported amount was 
$390,000 in Minnesota. By contrast, under S. 1125, the benefit 
for Level X, Mesothelioma, is $1 million.
    The values in S. 1125 also compare favorably to the other 
bankruptcy trusts. By example, the Manville Trust provides for 
a scheduled value of $350,000 for mesothelioma claimants, and 
is only able to pay 5 cents on the dollar on all claims. A 
mesothelioma claimant would, therefore, only receive a payment 
of $17,500 from the Manville Trust, but under S. 1125 would 
receive $1 million. While claimants typically sue a number of 
trusts, the results are likely to be similar.
    Critics' Contention No. 5: Critics contend that S. 1125 is 
supposed to embody a ``no fault'' system, but the medical 
criteria are overly stringent.
    Response: S. 1125 establishes a truly non-adversarial, no-
fault system in which claimants, in sharp contrast to the tort 
system, will not have to prove fault on the part of defendants 
or have to provide specific product identification in order to 
receive compensation. In addition, those individuals that have 
been exposed to asbestos but are not ill will be eligible for 
medical monitoring and will remain eligible to receive 
compensation at a later time should they become ill in the 
future.
    S. 1125's medical criteria, the product of a bipartisan 
consensus of the Committee, are fair and reasonable and are 
appropriately designed to provide certainty to claimants. 
Indeed, the starting point for the medical criteria provided 
for under S. 1125 were those from the Manville Trust, which 
were adopted with the overwhelming support of the claimants and 
their counsel and which have been substantially followed by 
other bankruptcy trusts because of their credibility.
    In exchange for establishing a no-fault, non-adversarial 
system, however, the criteria in the Act require a medical 
diagnosis by the claimant's doctor and sufficient evidence to 
establish that the claimed illness is asbestos related. In such 
a system, the defendant does not have the opportunity to 
present contrary evidence or the testimony of its own, 
competent experts to refute the contentions of experts hired by 
the plaintiff's attorneys. Such criteria are also necessary to 
keep the problems associated with mass screenings and the 
current abuses found in the tort system from being transferred 
to the Fund. To ensure the integrity of the Fund and to promote 
the purpose of the bill to direct funds to those claimants who 
are truly ill from their exposure to asbestos, therefore, the 
criteria in the bill reflects compromises, yet is based on 
sound, diagnostic, medical, latency and exposure criteria.
    Critics' Contention No. 6: Critics contend that smokers are 
receiving unfair discounts in compensation for lung cancer 
under S. 1125.
    Response: The Committee's intention is to compensate 
victims who are sick as a result of their exposure to asbestos. 
While exposure to asbestos has been identified as increasing 
the risk of lung cancer, there are many other causes. Smoking 
is, by far, the predominant contributing factor to lung cancer, 
even where an individual has quit smoking for many years. 
Compensation for lung cancers in this context is particularly 
difficult to value due to the high incidence of smoking in the 
population that is estimated to have asbestos exposure. The 
absence of an underlying asbestos-related nonmalignant disease 
makes the causal connection between the asbestos exposure and 
the lung cancer tenuous, and the weight of the medical evidence 
does not show that risks are increased in the absence of 
exposures sufficient to have caused underlying asbestosis.\69\ 
Despite this evidence, S. 1125 does provide for a specific 
disease level, lung cancer one, that does not require an 
underlying disease for compensation, and lung cancer two, that 
only requires pleural plaques or thickening or calcification, 
all asbestos exposure markers. S. 1125, however, is meant to 
compensate victims of asbestos exposure and is not a 
compensation fund for tobacco use. It, therefore, appropriately 
adjusts the claims values for lung cancers based on the 
claimant's smoking history, especially in the absence of 
asbestosis.
---------------------------------------------------------------------------
    \69\ Testimony of Dr. James D. Crapo, Professor of Medicine, 
National Jewish Center and University of Colorado Health Sciences 
Center, Before the Senate Committee on the Judiciary Concerning S. 
1125, the Fairness in Asbestos Injury Resolution Act of 2003, June 19, 
2003, at 6.
---------------------------------------------------------------------------
    It is not disputed that there was a high rate of smoking in 
the blue-collar industries where asbestos exposure was 
particularly high.\70\ There is a vigorous dispute, however, as 
to whether asbestos exposure alone, without underlying 
asbestosis, increases lung cancer risks. Critics often cite to 
early epidemiological studies conducted by Dr. Irving Selikoff 
or to reports that rely on these early studies for the 
proposition that there is a strong synergistic relationship 
between asbestos exposure and smoking, such that smokers with 
asbestos exposure alone face a multiplicative risk of lung 
cancer. These early Selikoff studies of lung cancer among 
smoking asbestos-exposed workers were based on much higher 
asbestos exposure levels than occur today and in the recent 
past. The Selikoff studies also did not adequately account or 
control for other disease risk factors, including smoking.\71\ 
Subsequent studies, particularly of chrysotile, ``have shown 
fewer or no interactions.'' \72\
---------------------------------------------------------------------------
    \70\ RAND, Asbestos Litigation Costs and Compensation: An Interim 
Report, 2002, at 17.
    \71\ Testimony of Dr. James D. Crapo, Professor of Medicine, 
National Jewish Center and University of Colorado Health Sciences 
Center, Before the Senate Committee on the Judiciary Concerning S. 
1125, the Fairness in Asbestos Injury Resolution Act of 2003, June 19, 
2003, at 44.
    \72\ Tee L. Guidotti, Case Study 3: Apportionment of Asbestos-
Related Disease, in Science on the Witness Stand 397, 398 (Tee L. 
Guidotti, MD, MPH and Susan G. Rose, MPH, JD, eds., 2002).
---------------------------------------------------------------------------
    More importantly, Dr. Selikoff's study did not look at the 
presence or absence of asbestosis in the study population. The 
United States Supreme Court has recognized, and the testimony 
of Dr. James D. Crapo before this Committee confirmed, that 
``studies provide strong support for the notion that asbestosis 
is crucial to the development of asbestos-associated lung 
cancers.'' \73\ In a letter to Senator Kyl responding to 
questions on his view of the current values in the Committee 
bill, Dr. Crapo expanded on his testimony before the Committee, 
stating:
---------------------------------------------------------------------------
    \73\ Norfolk & W. Ry. Co. v. Ayers, 123 S. Ct. 1210, 1222 (2003) 
(citing A. Churg & F. Green, Pathology of Occupational Lung Disease 343 
(2d ed. 1998)).

          From a medical perspective, the trust should not 
        provide compensation to claimants who have lung cancer 
        and exposure, but who do not have asbestosis (i.e., 
        Malignant Levels VII and VIII). The medical literature 
        shows that, while lung-cancer risk increases when 
        significant asbestosis is present, there is no such 
        increase in risk in workers who are exposed to 
        asbestos, with or without pleural plaques, but who do 
        not have asbestosis. [Weiss, W., Asbestos-related 
        pleural plaques and lung cancer. Chest 103:1954-1959, 
        1993; Weiss, W., Asbestosis: a marker for the increased 
        risk of lung cancer among workers exposed to asbestos. 
        Chest 115:536-549, 1999.]
          The medical literature also shows that asbestos 
        exposed individuals who are at greatest risk of 
        developing lung cancer are those with clinically 
        diagnosable asbestosis. Prospective studies that have 
        focused upon the question whether exposure alone, 
        without accompanying asbestosis, is associated with 
        increased lung cancer risk have found that lung cancer 
        risk is associated with asbestosis and not with 
        asbestos exposure alone. For example, Hughes and Weill 
        separated asbestos cement workers into groups with and 
        without chest x-ray evidence of asbestosis. * * * 
        [W]orkers without asbestosis had no increased frequency 
        of lung cancer while those with asbestosis had a 
        significantly elevated lung cancer frequency.\74\
---------------------------------------------------------------------------
    \74\ Letter from Dr. James D. Crapo, National Jewish Medical and 
Research Center, to Senator Jon Kyl, July 22, 2003, at 8 (see 
Additional Views of Senator Jon Kyl).

    The results of these studies led Dr. Crapo to conclude that 
the categories without a requirement of underlying asbestosis 
will result in a large number of false positives.\75\
---------------------------------------------------------------------------
    \75\ Id.
---------------------------------------------------------------------------
    For example, one study of power plant workers exposed to 
asbestos found that ``[o]nly when asbestosis was also detected 
in association with plaques did the risk ofcancer increase, 
thus signifying heavier asbestos exposure as the cause of increased 
risk, rather than the mere presence of pleural plaques.'' \76\ 
Epidemiological studies show that the risk of lung cancer among smokers 
with asbestosis is much greater than that of non-smokers with 
asbestosis. The risk of mortality from lung cancer for smokers with 
asbestosis is 39%, while it is just 2.5% for nonsmokers.\77\ As noted, 
studies also suggest that, while quitting smoking reduces the risk, it 
will not reduce it to the same risk level as that for an exposed worker 
who has never smoked.\78\
---------------------------------------------------------------------------
    \76\ Lester Brickman, Asbestos Litigation: Malignancy in the 
Courts?, 40 Civil Justice Forum 1, 10n.14 (Aug. 2000). (citing Dr. 
Joseph M. Miller, Benign Exposure to Asbestos Among Power Plant Workers 
(1990) (unpublished)).
    \77\ Norfolk & W. Ry. Co., 123 S. Ct. at 1215 n.3.
    \78\ 29 C.F.R. Sec. Sec. 1910, 1915.1001, and 1926.1101 (2003).
---------------------------------------------------------------------------
    While these claimants with lung cancer but no asbestosis 
are regrettably seriously ill, the cause of the injury cannot 
be shown to be related to asbestos exposure. Paying all lung 
cancer victims the same amount risks the financial viability of 
the Fund to pay true victims of asbestos exposure. The Manville 
Trust and subsequent trusts reduce awards for claimants that 
cannot show an underlying asbestos-related nonmalignant 
disease, especially in the case where the claimant is a smoker. 
Under the Manville Trust, claims under lung cancer one (Level 
VI), which show no evidence of an underlying asbestos-related 
nonmalignant disease or significant occupational exposure, are 
not expected to have any significant value, especially if the 
claimants are smokers. There is no presumption of validity for 
these claims. They have no scheduled value, and have a maximum 
value of $50,000.\79\ Lung cancer two in the Manville Trust 
(Level VII) requires a showing of both an underlying asbestos-
related nonmalignant disease and significant occupational 
exposure. Claims in this level are not individually evaluated 
to take smoking into account, but the scheduled value is 
$95,000.
---------------------------------------------------------------------------
    \79\ Manville 2002 TDP, at 10-11.
---------------------------------------------------------------------------
    In addition, the fund contemplates a no-fault system to 
reduce the burden on the claimant and to reduce transaction 
costs. This no-fault system gives claimants a large incentive 
to file claims. In the litigation context, defendants are able 
to present evidence regarding causation. Defendants often 
dispute causation in the case of smokers.\80\ Defendants do not 
have the same opportunity here. Defendants also do not have the 
opportunity to review or dispute the claimant's evidence that 
he or she is a nonsmoker or former smoker. Treatment of 
causation varies by court, and smoking has often been used to 
reduce awards and/or the percent liability of defendant in a 
jury trial despite the presence of large verdicts in other 
jurisdictions. In one case, for example, the jury reduced the 
claimant's award by 95%, finding that smoking was the cause of 
the claimant's lung cancer.\81\ Similarly, compensation is 
reduced and even denied in workers' compensation schemes on the 
basis that smoking was the cause of the lung cancer.\82\ The 
legislation attempts to reach a compromise and adjust this 
disparity, while ensuring that the Fund remains viable to 
provide fair and equitable compensation to all victims.
---------------------------------------------------------------------------
    \80\ RAND, Asbestos Litigation Costs and Compensation: An Interim 
Report, 2002, at 17.
    \81\ See, e.g., Zarow-Smith v. N.J. Transit Rail Operations, 953 F. 
Supp. 581 (D. N.J. 1997). The jury in Zarow-Smith calculated 
plaintiff's total damages to be $898,665.00, but then found that 95 
percent of the cause of the claimant's illness and death was 
attributable to his cigarette smoking, reducing the total damages award 
to $44,934.00.
    \82\ See, e.g., Bath Iron Works Corp. v. Office of Workers' 
Compensation Programs, 137 F.3d 673 (1st Cir. 1998) (reinstating denial 
of claim based on non-causation).
---------------------------------------------------------------------------
    The Fund cannot become a compensation system for smoking 
related diseases, directing funds away from those who are most 
clearly sick due to asbestos exposure. Because of the high 
incidence rates of lung cancers caused by smoking, the absence 
of an underlying bilateral asbestos-related nonmalignant 
disease and a claimant's smoking history are appropriate to 
consider in reducing the compensation, especially for smokers. 
Otherwise, the Fund could be overwhelmed financially by lung 
cancer cases that are not attributable to asbestos exposures, 
but, instead, have other causes, such as smoking.
    Critics' Contention No. 7: Critics contend that small 
businesses that rely on their insurance will be harmed under S. 
1125 because they will be forced to contribute to the Fund and 
will not be able to use their insurance in order to do so.
    Response: Under the FAIR Act, small businesses, as defined 
under Section 3 of the Small Business Act, are explicitly 
exempt from having to contribute to the Fund, but will receive 
the very protections provided to all of the other defendant 
participants under the legislation. Also, small companies that 
have not incurred asbestos liability-related payments of $1 
million or more before December 31, 2002 are exempt from having 
to contribute to the Fund. For those companies that are not 
exempt from having to contribute to the Fund, S. 1125 tiers 
companies by size and liability, such that no company would 
have to contribute to the Fund an amount out of line with their 
resources. In stark contrast, the current tort system provides 
no protections for small businesses and allows any company of 
any size, no matter how small, to be sued into bankruptcy. 
Furthermore, S. 1125 provides the Administrator of the Fund the 
authority to adjust defendant participants' contributions based 
on severe financial hardship and demonstrated inequity, further 
protecting the interests of all businesses of all sizes.
    Critics Contention No. 8: Critics contend that S. 1125 will 
primarily benefit businesses and insurance companies.
    Response: This contention is unwarranted. S. 1125 benefits 
victims who have been inadequately served by the current tort 
system while providing economic stability to businesses that 
have been overwhelmed by abusive litigation in the current tort 
system, driving many into bankruptcy and impacting the jobs and 
pensions of their employees.
    S. 1125 will benefit victims significantly because they 
will receive fair, certain and equitable compensation without 
the delays and uncertainties inherent in the current tort 
system. Moreover, claimants will not have to worry whether 
their defendant is or will become bankrupt, and they will not 
bear the burden to prove liability, causation or to establish 
product identification as in litigation.
    Further, under the funding provisions in S. 1125, more 
resources will be available to compensate victims than under 
the current system. As estimated by leading actuaries, because 
of the substantial transaction costs of the current tort 
system, only a total of about $61 billion will go to asbestos 
victims in the future, while an estimated $69 billion will go 
to plaintiff and defense lawyers.\83\ In contrast, under S. 
1125, $108 billion, with additional contingency funding, if 
necessary, will go directly to compensate victims.
---------------------------------------------------------------------------
    \83\ See Jennifer L. Biggs, supra at 2.
---------------------------------------------------------------------------
    Victims will be much better protected once S. 1125 is 
enacted because the current awards some receive from the tort 
system are not sustainable into the future. With most of the 
original asbestos manufacturers bankrupt, companies with little 
or no connection to asbestos are increasingly targeted with a 
massive number of cases and often driven into bankruptcy. To 
date, over sixty companies have been driven into bankruptcy as 
a result of asbestos liability, and without reform, more 
companies will be at risk in the future. The Committee's 
hearing record is replete with the devastating impact the 
current asbestos crisis is having on businesses, workers, 
retirees, shareholders and the U. S. economy.\84\ S. 1125 will 
ensure that asbestos victims no longer face the risk that their 
only recourse will be trusts created out of bankruptcies paying 
pennies on the dollar.
---------------------------------------------------------------------------
    \84\ See Statement of Frederick C. Dunbar, Hearing before the 
Senate Committee on the Judiciary, ``Solving the Asbestos Litigation 
Crisis: S. 1125, the Fairness in Asbestos Injury Resolution Act of 
2003,'' 108th Cong., June 4, 2003; See also Statement of Robert P. 
Hartwig, Insurance Information Institute, supra.
---------------------------------------------------------------------------
    In short, S. 1125 provides fair compensation to those who 
are injured by asbestos exposure and ensures that scarce 
resources will not be spent on the unimpaired at the expense of 
those with asbestos-related injuries now and into the future. 
Too often those most deserving do not get their fair share out 
of the current system. Victims will benefit substantially from 
the new system.
    While defendants and their insurance companies will be 
provided a certain degree of economic certainty from the 
stability provided through implementation of the Fund. They 
will each be required to contribute $52 billion under S. 1125 
and, if deemed necessary by the Administrator, could be 
required to contribute substantial contingency funding to 
ensure that victims will receive compensation for future 
asbestos-related illnesses. This is a substantial obligation by 
any assessment. For many of these defendants, particularly 
those with significant amounts of insurance coverage remaining, 
this represents a substantial increase in their out-of-pocket 
spending for asbestos liability because they cannot seek 
insurance coverage for their payments under S. 1125.
    Finally, there is an unfortunate misperception by some who 
believe defendant companies that have announced proposed 
settlements will be able to walk away from these settlements 
and pay substantially less under S. 1125. First, the intent of 
this bill is to fix a system that is broken and badly in need 
of repair. The vast majority of claimants with pending cases 
are the unimpaired who may be eligible for monitoring under S. 
1125 but will not and should not be compensated at the expense 
of those who are sick. Second, pending settlements are exactly 
that, pending, and are as a matter of course contingent on a 
number of factors, and in some cases, any of the parties to the 
pending settlements are free to walk away from the settlements 
at anytime for any reason. Third, in comparing how defendants 
will fare under S. 1125 versus the current system, for many of 
the pending or announced settlements, insurance coverage 
constitutes a significant portion of the funding of the 
settlement and a portion of these settlements may also cover 
liabilities other than asbestos claims. Finally, in making 
comparisons to how asbestos victims would fare under S. 1125 as 
opposed to pending settlements, opponents of the legislation do 
not account for the substantial amounts of funding that will be 
siphoned away towards the costs of the bankruptcy and to 
plaintiffs' attorneys' fees. In many cases, claimants will be 
paid more under S. 1125 than they would under their pending 
settlements.
    In conclusion, S. 1125 is fair and balanced and will 
produce substantial benefits for victims, workers, retirees, 
shareholders and the U.S. economy.
    Critics' Contention No. 9: Critics contend that S. 1125 
unfairly eliminates settlement agreements, jury verdicts and 
pending cases.
    Response: Before addressing the merits of fairness, the 
Committee believes that it is important to set the record 
straight concerning the misinformation in the Minority Views. 
S. 1125 is intended only to preempt those claims, verdicts and 
settlement agreements that are not final, i.e., no longer 
subject to appeal. The Minority Views assert that the FAIR Act 
would ``completely negate all legally binding settlement 
agreements between asbestos manufacturers and victims, even 
settlements that have been made by asbestos defendants with 
claimants that have already been partially paid would be voided 
under this legislation.'' To the contrary, section 403(d)(2) of 
S. 1125 specifically excludes from preemption ``actions for 
which an order or judgment has been duly entered by a court 
that is no longer subject to any appeal or judicial review * * 
* ''. Court-approved settlements with an individual who has 
begun receiving payments would certainly fall within that 
exclusion. But to ensure that all such finalized settlement 
agreements receive the same protection as final judgments, the 
Chairman agreed during Committee markup that he would work with 
Members to clarify the language of that particular provision of 
the bill to eliminate any confusion.
    The purported unfairness of preempting non-final settlement 
agreements, jury verdicts and pending cases rests on the faulty 
premise that the existing system is somehow fair. Nothing could 
be further from the truth--especially from the perspective of 
the asbestos victims. Potential claimants who would potentially 
be awarded a higher dollar amount in a non-final settlement, 
judgment or existing claim will see their recoveries, if any, 
reduced significantly by plaintiffs' attorney's fees.
    S. 1125's limited preemption of non-final settlements and 
judgments is important for yet another reason: to bring more 
stability and reason to the system. Included in the preemption 
are settlements of ``inventory agreements'' which are non-final 
settlement agreements that do not become effective for an 
individual claimant until they are ``perfected.'' Perfection 
occurs when a claimant comes forward and submits the 
information necessary to substantiate their claim under the 
criteria set forth in the settlement. The majority of these 
inventory agreement settlements are entered into with 
attorneys, not claimants. These agreements are typically not 
even binding on claimants, who in many instances have not yet 
been identified.
    These types of agreements make the filing of claims on 
behalf of the unimpaired persons profitable, which has been a 
factor in the acceleration of such filings in recent years. 
Steven Kazan, a California lawyer with a long history of 
representing true victimsof asbestos exposure, testified before 
this Committee that ``we've gone from a medical model in which a doctor 
diagnoses an illness and the patient then hires a lawyer, to an 
entrepreneurial model in which clients are recruited by lawyers who 
then file suit even when there's no real illness. These are not 
patients, they are plaintiffs recruited for profit.'' \85\ As such, S. 
1125's preemption provision is designed to address these types of non-
final settlement agreements.
---------------------------------------------------------------------------
    \85\ Hearing on Asbestos Litigation, Before the Senate Comm. on the 
Judiciary 107th Cong. (Sept. 25, 2002) (FNS Unofficial Transcript of 
oral statement of Steven Kazan).
---------------------------------------------------------------------------
    Moreover, many of these non-final settlement agreements, 
judgments and pending lawsuits include claims by those who are 
not even sick. The RAND Institute for Civil Justice reports 
that: ``Almost all the growth in the asbestos caseload can be 
attributed to the growth in the number of these claims [for 
non-malignant conditions], which include claims from people 
with little or no current functional impairment.'' \86\ More 
than 90% of all filings with the Johns-Manville bankruptcy 
trust in 2001, for example, were brought by individuals with 
non-cancer claims.\87\ Using the values cited by the minority 
for unimpaired claimants (from $40,000 to $125,000), allowing 
pending claims to continue could direct anywhere from $10.8 
billion to $33.8 billion or more to unimpaired claimants. It 
simply defies fundamental fairness for the Minority to support 
a Trust Fund that deprives the truly sick of critical 
resources.
---------------------------------------------------------------------------
    \86\ RAND, ``Asbestos Litigation Costs and Compensation: An Interim 
Report,'' Sept. 2002, at 45.
    \87\ Senate Judiciary Comm. Hr'g on Asbestos Litig. (2002), FNS 
Unofficial Transcript of oral statement of David Austern.
---------------------------------------------------------------------------
    When compared to what the current tort system provides via 
proposed settlements, non-final jury verdicts and even existing 
bankruptcy trusts, legitimately sick claimants will fare much 
better under the fund created by S. 1125. First, the claim 
award amounts provided in S. 1125 exceed the amounts provided 
in bankruptcy trusts and in these proposed settlements. The 
Manville Trust has a scheduled value of $350,000 for 
mesothelioma victims, but is only able to pay 5% of that or 
$17,500, both values far below the $1 million award provided 
under S. 1125. And what opponents conveniently ignore is that 
the claim values set forth in the proposed settlements are far 
below the amounts a legitimately sick claimant would receive 
under S. 1125.
    Second, claimants will have certainty that money will be 
available to pay their awards. No longer will claimants be left 
without a remedy because a defendant has gone bankrupt. Because 
S. 1125 provides a streamlined no-fault process for resolving 
claims, the awards need not be reduced by large attorney fees, 
allowing more money to actually go to the claimant. Currently, 
claim awards may be reduced as much as 40% by attorney fees. It 
is clear that enforcing proposed, non-final, settlement 
agreements would not benefit the claimants, but instead benefit 
their attorneys, whose fees under S. 1125 would likely be 
drastically reduced.
    In addition to providing fairness from a policy 
perspective, S. 1125's preemption provision falls squarely 
within Constitutional mandates. Substantial judicial precedent, 
dating back to the early part of the 20th century, supports the 
constitutionality of Congress' authority to preempt tort claims 
and to preempt settlement agreements entered under a pre-
existing system that Congress has improved. Among others 
supporting the constitutionality of the Act, Harvard 
constitutional law scholar Professor Laurence H. Tribe, 
testifying before the Committee on June 4, 2003, concluded 
``that the FAIR Act is well within Congress' authority to enact 
and does not offend the constitutional guarantees of due 
process, equal protection, or right to jury trial. Nor does it 
represent an uncompensated taking of private property, an 
unconstitutional impairment of contracts, or a violation of the 
separation of powers.'' \88\ Congress, therefore, should 
exercise the full reach of its ability, consistent with the 
goals of S. 1125 to target available resources toward true 
victims of asbestos exposure.
---------------------------------------------------------------------------
    \88\ See Statement of Lawrence H. Tribe, Hearing Before the Senate 
Committee on the Judiciary, ``The Asbestos Litigation Crisis 
Continues--It is Time for Congress to Act,'' 108th Cong., March 5, 
2003, p. 2.
---------------------------------------------------------------------------
    In a very real sense, the minority would ``have their cake 
and eat it too.'' By preserving pending claims and non-final 
settlements and judgments under the pretext of fairness, the 
Minority would allow the trial lawyers and the vast majority of 
unimpaired claimants to continue draining resources out of the 
system while forcing defendants and insurance companies to pay 
twice--once to perpetuate the current system through paying 
pending claims and proposed settlements and then again (through 
the trust) to compensate those truly ill from asbestos 
exposure.
    The minority would preserve the current inequities of 
asbestos litigation, where payouts vary significantly by what 
state victims live in, which court their cases are tried in, 
and who the judge and jury are that day. For example, in a 
recent Mississippi case, six plaintiffs who were not sick were 
awarded a total of $150 million. The plaintiffs did not claim 
to have ever missed a day of work because of asbestos injury, 
they did not claim any medical expenses related to asbestos, 
and they did not have asbestos-related physical impairment. One 
plaintiff told the court he suffers no shortness of breath and 
walks up to four miles per day for exercise.\89\ The minority 
would also preserve the windfalls to plaintiffs' attorneys that 
result from these large jury verdicts where 40 to 50% of these 
recoveries go to attorney's fees and expenses. As Senator 
DeWine noted at our September 25, 2002 hearing, ``[t]he status 
quo is just not fair. It is grossly unfair to the victims. What 
you find is an inconsistency in how victims are treated--a 
horrible inconsistency that I don't think you'll find anyplace 
else in our country or our judicial system.'' It is these 
inequities that the FAIR Act is meant to address.
---------------------------------------------------------------------------
    \89\ Griffin B. Bell, Asbestos Litigation and Judicial Leadership: 
The Courts' Duty to Help Solve the Asbestos Litigation Crisis, National 
Legal Center for the Public Interest, June 2002, at 14.
---------------------------------------------------------------------------
    As a final note, the Committee would like to respond to the 
Minority Views' reference to high profile settlement agreements 
that have been reported in the media. The Minority's attempt to 
equate the total amount of a proposed settlement to a company's 
estimated obligations under the Fund is, at best, comparing 
``apples to oranges,'' and at worst, misleading. Contrary to 
the Minority views'' assertion that these settlement agreements 
are ``legally binding,'' they are in fact only proposed, and 
still contingent upon several factors, including court approval 
of a bankruptcy plan, a review of claims to determine if they 
meet the criteria set forth in the proposed agreement, 
confirmation of necessary financing and receipt of insurance 
proceeds among other things. In addition, when comparing the 
size of the proposed settlement to a particular company's 
estimated contribution under S. 1125, it is important to 
recognize that a significant portion of the proposed settlement 
will be funded by insurers. From these proposed settlements, it 
is all but certain that the plaintiffs' lawyers will recover 
handsome attorneys' fees and other costs--amounts that victims 
will never see. As for the victims, it is the Committee's 
understanding that most of these claimants who stand to gain 
from these proposed settlements are unimpaired or suffer from 
injuries unrelated to asbestos.
    Critics' Contention No. 10: Critics contend that S. 1125 is 
unconstitutional and will lead to years of litigation over its 
constitutionality.
    Response: S. 1125 has been very carefully written to avoid 
running afoul of the U.S. Constitution. Indeed, it is important 
to note that more than ten years ago a committee of the United 
States Judicial Conference, appointed by the Chief Justice of 
the U.S. Supreme Court, studied the special features of 
asbestos litigation and concluded that the ``ultimate solution 
should be [federal] legislation recognizing the national 
proportions of the problem...and creating a national asbestos 
dispute resolution scheme * * * '' \90\ Since that time, the 
U.S. Supreme Court has called repeatedly for an administrative 
solution as provided for in S. 1125. In 1997, in Amchen Prods., 
Inc. v. Windsor, 521 U.S. 628-629 (1997), Justice Ginsburg 
wrote: ``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.'' \91\ Most recently, in March of this year, 
in writing for the Court in Norfolk & Western Ry. v. Ayers, 123 
S. Ct. 1210, 1228 (2003), Justice Ginsburg again stated: ``The 
`elephantine mass of asbestos cases' lodged in the state and 
federal courts, we again recognize, `defies customary judicial 
administration and calls for national legislation.' '' The 
Committee has heeded the explicit call of both the U.S. 
Judicial Conference and the U.S. Supreme Court in establishing 
the no-fault, publicly-administered, privately-funded 
administrative claims process provided for in S. 1125.
---------------------------------------------------------------------------
    \90\ Report of the Judicial Conference Ad Hoc Committee on Asbestos 
Litigation 3 (March 1991); see also id. at 42 (dissenting statement of 
Hogan, J.) (agreeing that ``a national solution is the only answer'' 
and suggesting ``passage by Congress of an administrative claims 
procedure * * *'')
    \91\ See also Ortiz v. Fibreboard Corp., 527 U.S. 815, 821 (1999).
---------------------------------------------------------------------------
    In reviewing the constitutionality of S. 1125, at the 
specific request of the Committee, preeminent Harvard 
constitutional law scholar Professor Laurence H. Tribe, 
testifying before the Committee on June 4, 2003, confirmed the 
constitutionality of the legislation:

          My conclusion, in brief, is that the FAIR Act is well 
        within Congress' authority to enact and does not offend 
        the constitutional guarantees of due process, equal 
        protection, or right to jury trial. Nor does it 
        represent an uncompensated taking of private property, 
        an unconstitutional impairment of contracts, or a 
        violation of the separation of powers.\91a\
---------------------------------------------------------------------------
    \91a\ See Statement of Lawrence H. Tribe, Hearing Before the Senate 
Committee on the Judiciary, Solving the Asbestos Litigation Crisis: S. 
1125, The Fairness in Asbestos Injury Resolution Act of 2003, 108th 
Cong., June 4, 2003, at 2.

With regard to the concerns of some that the preemption of 
common law tort claims may violate due process or create a 
claim under the Takings Clause of the Constitution, Professor 
Tribe testified further on the ability of Congress to preempt 
---------------------------------------------------------------------------
common law tort claims:

          The legislative precedents illustrate the breath of 
        Congress' power to adjust, restrict, or even abolish 
        common-law and statutory causes of action. Thus, 
        Congress has ample authority to rationalize asbestos 
        claims, by creating an Article I procedure in the 
        asbestos court for the orderly payment of such claims 
        and thereby avoiding a race-to-the-bottom situation in 
        which relatively unimpaired plaintiffs are overpaid, 
        transaction costs are high, and grievously injured 
        plaintiffs risk getting little or no compensation at 
        all * * *. It has long been settled, ever since the 
        states began adopting workers' compensation statutes, 
        that a legislature is free to modify or abolish common-
        law causes of action without violating due process or 
        creating a claim for compensation under the Takings 
        Clause.\92\
---------------------------------------------------------------------------
    \92\ Tribe testimony at 6.

In written testimony submitted to the Committee by former 
Solicitor General Seth Waxman supports this analysis, he 
explains that ``[t]here is further no doubt that in pursuing 
proper national goals, Congress may, to the extent it deems 
necessary or desirable, preempt and supersede the operation of 
state law.''\93\
---------------------------------------------------------------------------
    \93\ Hearing on Solving the Asbestos Litigation Crisis: S. 1125, 
the Fairness in Asbestos Injury Resolution Act of 2003, Before the 
Senate Comm. on the Judiciary, 108th Cong. 4 (2003) (testimony 
submitted for the record by Seth P. Waxman, Wilmer, Cutler & 
Pickering).
---------------------------------------------------------------------------
    Nevertheless, should the constitutionality of S. 1125 be 
challenged, the legislation explicitly provides for an 
expedited appeal directly to the Supreme Court as a matter of 
right within thirty days of any decision of a federal court 
finding any part of S. 1125 to be unconstitutional. This 
ensures that any such litigation will be resolved quickly.

            VIII. Congressional Budget Office Cost Estimate

    The cost estimate from the Congressional Budget Office 
requested on S. 1125 has not yet been received. Due to time 
constraints, the CBO letter will be printed in the 
Congressional Record.

                    IX. Regulatory Impact Statement

    Pursuant to Rule XXVI, of the Standing Rules of the Senate, 
the Committee, after due consideration anticipates that S. 1125 
will have the following regulatory impact:
    A. (i) Businesses regulated.--Under S. 1125 companies and 
insurers with asbestos liability will be required to submit 
necessary financial documentation to the Asbestos Injury Claims 
Resolution Fund and the Insurers Commission respectively for 
proper assessment of contributions. With respect to the ban on 
certain asbestos containing products in S. 1125, it is 
anticipated the regulatory burden will be minimal especially in 
light of regulation promulgated in the late 1970's and early 
1980's that limited occupational exposure to asbestos.
    (ii) Individuals regulated.--Individuals seeking 
compensation from the Asbestos Injury Claims Resolution Fund 
will be required to submit necessary documentation to support 
their claim.
    B. Economic Impact.--S. 1125 will have a positive economic 
impact on businesses by providing greater certainty with regard 
to asbestos liability exposure, which in turn will enable 
businesses to preserve jobs and pension of employees.
    C. Personal Privacy Impact.--Claimants must provide written 
consent for claims examiners to obtain information necessary to 
evaluate their claim, including their medical and smoking 
history in order to make a determination of eligibility. It is 
anticipated that the impact will be comparable to requirements 
under the current tort system.

                          X. Additional Views

                              ----------                              


                  ADDITIONAL VIEW OF SENATOR GRASSLEY

    Although I support finding a solution to the asbestos 
litigation crisis, there are a number of problems with this 
bill as currently drafted regarding the tax treatment of the 
asbestos fund. These problems affect the tax treatment of the 
amounts paid into and received from the asbestos fund. If not 
remedied, there could be serious adverse tax consequences to 
the companies, the asbestos fund, and, most importantly, the 
beneficiaries. These tax issues are within the jurisdiction of 
the Finance Committee. Prior to and during the markup I 
requested that S. 1125 be referred to the Finance Committee so 
that we could fix these problems. If the bill is not referred 
to the Finance Committee, the Finance Committee may report a 
separate tax title for floor consideration. I will work with 
the Chairman of the Judiciary Committee, Senator Hatch, on how 
to proceed with this bill and hopefully address the tax issues 
raised in it.
                                                    Chuck Grassley.

 ADDITIONAL VIEWS OF SENATORS GRASSLEY, KYL, SESSIONS, CRAIG AND CORNYN

    Although the goal of this legislation to compensate those 
harmed from asbestos exposure is both noble and necessary, the 
means chosen are susceptible to abuses that could bankrupt the 
fund and, ultimately, impose financial obligations upon the 
taxpayer. It is also troubling that the bill does not contain 
any limitations on attorneys' fees or mandatory sanctions for 
abusive filings. The bill could also be underfunded if certain 
settlements are not accounted for by the fund, and it creates 
disturbing inequities among defendants and insurers. Finally, 
the bill includes a provision requiring certification of 
payment of claims that could prematurely dismantle the fund and 
return all claims to the tort system. These flaws must be 
corrected prior to final passage.
    The most significant failing of the bill is its medical 
criteria and claims values. Two categories in particular are 
ripe for abuse. First, claim level two allows payment of up to 
$20,000 for ``mixed-dust'' cases. Exposure to multiple 
industrial elements is commonplace. A mixed-dust claimant's 
respiratory injuries may well have been caused by something 
other than asbestos, yet under the bill's medical criteria, 
that claimant can obtain an award simply by showing qualifying 
exposure. Second, claim levels seven and eight allow current 
and former smokers to obtain large awards for lung cancer that 
(according to expert testimony presented to the Committee) 
medical science conclusively links to smoking, not asbestos. 
Abuse of these two categories could rapidly bankrupt the fund 
and deny relief to truly injured claimants. The fact that 
bystander claimants can also recover from the fund only adds to 
the risk.
    In addition, the fund sets up a non-adversarial process, 
but does not place any limitation on attorneys' fees. Attorneys 
will remain over-incentivized, and likely will file frivolous 
claims and appeals that could unnecessarily stress the fund. 
While any cap on attorneys' fees must be generous enough to 
ensure that those who believe they need to hire legal 
representation are able to entice qualified counsel, it should 
also maximize award dollars for worthy claimants--and not act 
as an incentive to file frivolous suits. The majority of claims 
filed in this no-fault system should be routine and non-
controversial, and not require significant legal work. 
Moreover, claimants may take advantage of pro bono services and 
the fund's legal assistance office. Reasonable caps should be 
placed on attorneys' fees to allow maximum recovery of awards 
for claimants. We are pleased that Senator Sessions offered and 
won acceptance of an amendment that requires attorneys to 
notify claimants of the availability of free legal services. 
This amendment will prevent claimants from being victimized 
twice--once by asbestos, and a second time by the trial bar.
    Limits on attorneys fees alone, however, will not prevent 
abuse. Appropriate sanctions should be available, and their use 
encouraged, to thwart abusive practices by attorneys. This is 
so because even a cap on attorneys fees of, for example, 10%, 
could provide $100,000 for an attorney claiming to represent an 
asbestos victim with lung cancer. The promise of a $100,000 
payday may be too much incentive for an unscrupulous attorney 
to file a frivolous claim and, accordingly, sanctions will 
control abusive filings. The bill needs to clarify that 
sanctions will be mandatory for lawyers who abuse the asbestos 
fund claims process.
    Also, to preserve the integrity of the Fund, it is 
imperative that the only settlement agreements to be paid 
outside of the trust be final settlement agreements that are 
based on a current injury, where there is no contingency other 
than payment. Questions continue to be raised about what 
settlement agreements are covered by S. 1125. For example, some 
argue that inventory or matrix settlements--which bind 
defendant companies to pay future claims meeting specific 
criteria--or bankruptcy settlements subject to bankruptcy court 
approval are not included in the language of the bill. In 
either of these cases, failure to include the settlement in the 
trust will expose companies to dual liability and entitle 
claimants to dual recovery, by forcing defendant companies to 
both contribute to the Fund and pay settlement costs. As a 
result, billions of dollars, thousands of claimants, and the 
fundamental premise of the FAIR Act will be removed from the 
asbestos trust fund.
    The bill also has the potential to create hardships for 
companies who adequately insured themselves against asbestos 
litigation exposure. Certain companies could have expected 
minimal out-of-pocket exposure but, by virtue of previous 
litigation expenses that insurance covered, will qualify for a 
more expensive tier. One company, which expected only ten 
million dollars in out-of-pocket expenses, calculates that its 
obligation under the bill would be $500,000,000 over the 27 
year life of the fund. During the markup, the Chairman 
committed to working to resolve this problem prior to floor 
action because of this type of gross unfairness. Resolution of 
this issue is critical.
    In addition, the bill poses potential inequities 
particularly in the allocation of contingent call funding 
between defendant companies and their insurers. The contingent 
call funding provision of the bill charges additional billions 
to participants should the Fund run out of money during the 
mandatory funding period. We must make sure that the ultimate 
allocation is fair and reasonable between both sides.
    The potential of collusive default judgments against 
insurers under the bill also is troubling. These judgments are 
entered as a result of a defendant company's agreement not to 
contest certain asbestos claims, in exchange for plaintiffs' 
agreement to enforce the judgment only against insurers, not 
against the defendant company. One company, a distributor of 
asbestos products, allowed billions of dollars of default 
judgments to be entered against it in exchange for agreements 
from plaintiff's counsel that enforcement would be sought only 
against insurers. The Insurer/Defendant Coverage Claims 
Amendment proposed by Chairman Hatch would remedy this problem 
by preempting collection of these judgments against insurers. 
In addition to this amendment, language prohibiting all direct 
actions against insurers should be considered to ensure that 
insurers enjoy the same kind of certainty that defendant 
companies and claimants receive under the bill.
    Finally, the Biden sunset amendment could seriously 
jeopardize the relief that the fund is intended to provide 
victims of asbestos. Senator Biden correctly noted that 
claimants could be left without recourse in the event that the 
Fund runs out of money prior to year 27's additional payments. 
Even those of us who voted for the Biden amendment, however, 
believe there are better ways to address this problem. The 
effect of the Biden amendment is to dismantle the Fund and 
return all claims to the tort system if income in a given year 
does not meet 95% of all claims--regardless of whether 
sufficient funds will be available in the next year of the 
Fund. The Biden amendment thwarts the purpose of the bill, 
which is to find a viable solution outside of the tort system. 
This issue should be revisited and corrected in order to allow 
the Fund to function and claimants to receive payments with 
some flexibility to address temporary funding shortfalls.
                                   Chuck Grassley.
                                   Jon Kyl.
                                   Jeff Sessions.
                                   Larry E. Craig.
                                   John Cornyn.

        ADDITIONAL VIEWS OF SENATORS KYL, GRASSLEY, AND SESSIONS

    This bill must meet three criteria in order to be worthy of 
support: it must provide adequate compensation to persons with 
asbestos injures; its cost must be reasonable; and it must 
provide a permanent solution to the asbestos-litigation crisis.
    The bill meets the first criterion. It compensates those 
who have been made sick by asbestos exposure, though it errs 
towards compensating many people with no asbestos-related 
injury. With the inclusion of a lockbox amendment to protect 
victims with serious asbestos-related injuries, we can be 
confident that the bill will provide adequate compensation to 
those who are actually sick from asbestos. A letter from Dr. 
James Crapo, describing the need for this amendment, is 
attached to this statement.
    It is no longer clear if the committee-reported bill meets 
the second criterion. With the addition of the contingent-call 
amendment, the bill now may cost as much as $139 billion. As 
noted elsewhere, see infra ______, total asbestos tort 
judgments and settlements to date have amounted to 
approximately $70 billion, with much of that amount going to 
plaintiffs with no injury or impairment. Also, medical 
professionals agree that actual asbestos injuries have been 
declining for the last decade, see infra ______. It is not 
apparent to us that it is reasonable to pay twice as much in 
the future as has already been spent in the past to provide 
compensation for a health problem that peaked more than a 
decade ago.
    This is not to say that we do not think that the Trust Fund 
will exhaust the entire $139 billion available to it. Medical 
professionals already have warned us that much of the disease 
criteria employed by the bill is medically unsound and will 
compensate persons who are not sick from asbestos, see infra 
______. Although this bill, unlike past bankruptcy trust funds, 
requires some evidence of impairment for all compensation 
levels, it is uncertain how many persons with common, non-
asbestos-related diseases and injuries will qualify for awards 
under this bill's criteria.
    Finally, with the addition of the sunset amendment, the 
bill clearly fails the last test: it does not offer a permanent 
or even stable solution to the litigation system. That 
amendment provides that if, in any year, the fund is unable to 
pay 95% of ``eligible'' claimants, the entire fund terminates 
and all claims are returned to the tort system. Particularly 
given the inflated claim values approved by the committee, and 
the bill's compensation of people who are not sick from 
asbestos, it is very likely that ``eligible'' claims will in 
some year exceed the resources of the trust fund.
    Under the sunset amendment, defendants and insurers could 
pay into the fund for five years, for a total of $25 billion 
dollars, and then, in year six, if claims exceed funds, the 
whole system would be scrapped and everyone would be back where 
they started--but minus $25 billion. This amendment was adopted 
during the last hour of four days of Judiciary Committee 
executive consideration of the bill. It was one of a large 
number of amendments that had been filed but was never 
discussed before it was called up. We believe that our 
colleagues did not consider all of the details and 
ramifications of this amendment. We are confident that, in the 
full Senate, a majority will agree that a hair-trigger self-
destruct mechanism should not be included in this bill, and 
will vote to remove the sunset amendment.
                                   Jon Kyl.
                                   Chuck Grassley.
                                   Jeff Sessions.

ATTACHMENT

               National Jewish Medical and Research Center,
                                         Denver, CO, June 23, 2003.
Hon. Jon Kyl,
Senate Hart Building,
Washington, DC.
    Dear Senator Kyl: You have asked that I elaborate on my 
reasons for recommending that the proposed asbestos trust fund 
include a lock box to protect payments to victims with serious 
asbestos-related conditions
    As I stated in my answers to written questions from the 
Judiciary Committee, I believe that a lock box for the most 
seriously ill claimants ``could prevent depletion of the trust 
by individuals with asymptomatic asbestos related diseases or 
processes which are not clearly associated with asbestos 
exposure.'' Ideally, the lock box would protect funds needed to 
compensate claimants with mesothelioma, moderate and severe 
asbestosis, and lung cancer accompanied by clinically 
significant asbestosis. As I indicated during last Thursday's 
hearing, these are the claimants who have a significant 
impairment that is most likely caused by asbestos. These 
conditions also have had a fairly steady incidence over the 
past decade and their frequency should decrease as more time 
passes since the federal controls on occupational asbestos 
exposure were implemented in the 1970's and 1980's.
    The other categories compensated by the bill, by contrast, 
either have fluctuated wildly when employed in past trust 
funds, or are too novel to be reasonably predictable. All of 
these other categories pay compensation for illnesses that, 
according to the clear weight of medical evidence, either are 
not caused by asbestos or do not result in a significant 
impairment--i.e., are not generally regarded by the medical 
profession as an illness. Projection of these claims is 
inherently uncertain. Simply put, when medical research 
concludes that a condition is not caused by asbestos, or is not 
an illness at all, medical research will not be able to predict 
the number of such claims.
    While political compromise may require you to compensate 
these other categories, you should not allow the uncertainty 
inherent in these claims to prejudice those with serious 
asbestos-related injuries. In my view, if the other 
compensation categories are included in the trust fund, a lock 
box-type mechanism is critical to protecting the rights of the 
most seriously ill claimants. The proposed trust fund should 
include such a guarantee to these claimants.
            Sincerely,
                                              Dr. James Crapo, M.D.

                     ADDITIONAL VIEW OF SENATOR KYL

    Throughout this Committee's consideration of this 
legislation, lobbyists for interests that favor the bill 
frequently have invoked the U.S. Supreme Court's admonitions to 
Congress to address the asbestos-litigation crisis. Many have 
noted that in 1999, the Justices characterized asbestos 
lawsuits as an ``elephantine mass'' that ``defies customary 
judicial administration and calls for national legislation.'' 
(Ortiz v. Fibreboard Corp., 527 U.S. 815, 821 (1999).) 
Supporters also have reminded us that the Court had hinted, two 
years earlier, that a ``sensibl[e]'' argument could be made 
``that a nationwide administrative claims processing regime 
would provide the most secure, fair, and efficient means of 
compensating victims of asbestos exposure.'' (Amchem Products, 
Inc. v. Windsor, 521 U.S. 591, 628-29 (1997).) And industry 
lobbyists surely must have found it propitious when, just four 
months ago, the Supreme Court elevated its call for federal 
legislation to a plea that ``a national solution is the only 
answer.'' (Norfolk & Western Ry. Co. v. Ayers, 123 S.Ct. 1210, 
1218 (2003).)
    I share the sense of urgency over the asbestos-litigation 
crisis felt by many supporters of this bill. Asbestos lawsuits 
have descended on the American economy like a plague of 
locusts. They have grown to include claims by more than 600,000 
plaintiffs filed against at least 8,400 businesses, resulted in 
the payment of more than $70 billion in legal judgments or 
settlements, and have devoured at least 78 companies through 
bankruptcy.\1\ Almost every industrial sector has been hit by 
this phenomenon. And, increasingly over the years and almost 
exclusively today, the companies being sued are ones that had 
no direct role in causing any asbestos injuries, and the 
plaintiffs filing suit do not have any asbestos-related 
injuries, diseases, or impairments. Yet, despite the size and 
seemingly unlimited scope of this litigation, many victims who 
do have serious asbestos-related injuries remain unable to 
secure adequate compensation. For these reasons, I would 
support a national legislative solution along the lines 
proposed by Chairman Hatch. As I explain in another statement 
issued with Senators Grassley and Sessions, it is only the 
presence of a few remediable but serious flaws that precludes 
me from supporting the committee-reported bill.
---------------------------------------------------------------------------
    \1\ Written Statement of Jennifer L. Biggs, FCAS, MAAA, Before the 
Senate Committee on the Judiciary Concerning S. 1125, The Fairness in 
Asbestos Injury Resolution Act of 2003 (June 4, 2003); Michelle J. 
White, Why the Asbestos Genie Won't Stay in the Bankruptcy Bottle, 70 
U. Cin. L. Rev. 1319, 1320 (2002) (bankruptcy data); Stephen J. Carroll 
et al., Asbestos Litigation Costs and Compensation: An Interim Report 
40, RAND/DB-397-ICJ (2002) (noting that ``our total [estimate] of 
600,000 claimants to date [i.e., end of 2000] is probably an 
understatement'').
---------------------------------------------------------------------------
    I write separately here to discuss the asbestos-litigation 
crisis generally--and to offer a reply to the Supreme Court's 
several entreaties to Congress. I believe that the Court fails 
to appreciate the true nature of the asbestos-lawsuit problem. 
The Court has stated, for example, that ``the most 
objectionable aspects of asbestos litigation'' are the fact 
that ``dockets in both federal and state courts continue to 
grow'' and that ``trials are too long.'' (Amchem, 521 U.S. at 
598.) I think that a better description of the most 
objectionable aspects of asbestos litigation is that provided 
by law professor Lester Brickman, who states that ``asbestos 
litigation today is, for the most part, a massively fraudulent 
enterprise that can rightfully take its place among the 
pantheon of * * * great American swindles.'' \2\
---------------------------------------------------------------------------
    \2\ Lester Brickman, Asbestos Litigation: Malignancy in the Courts, 
Civil Justice Forum of the Manhattan Institute no. 40 (Aug. 2002), at 7 
(hereinafter ``Brickman, Malignancy in the Courts'').
---------------------------------------------------------------------------
    This statement of additional views explains why I believe 
that Professor Brickman appears to be correct in his 
conclusion. The statement surveys the publicly available 
evidence that fraud is the predominant feature of asbestos 
litigation as it is conducted today. This evidence indicates 
that the large asbestos-litigation plaintiffs firms routinely 
coach their clients to lie under oath about their exposure to 
asbestos products; that these law firms routinely rely on 
fraudulent readings of chest x-rays and pulmonary-function 
tests, in order to manufacture false evidence of asbestos 
injury; and that invalid medical testimony routinely is 
employed in litigation to support the existence of asbestos 
injuries that do not or could not exist.
    In pursuit of the last point, the statement also summarizes 
the best medical evidence about asbestos injury--including 
several letters that I have received from the nation's most 
respected pulmonary-medicine specialists, explaining what types 
of injuries asbestos does and does not cause. This evidence 
also suggests that much of the criteria employed by the present 
bill for identifying asbestos injuries is medically 
unsupportable. Indeed, it appears that a majority of the 
compensation categories created by the committee-reported bill 
would only be used to pay people who we know are not sick from 
asbestos.
    This statement concludes by returning to the subject of the 
judiciary's role in this crisis. Because the Supreme Court has 
shown such a sustained interest in asbestos litigation, and has 
even made recommendations for reform to this branch of 
government, I think it only fair to return the favor and offer 
some suggestions to the courts. The judiciary's failure to 
police its processes has played no small part in this 
phenomenon. In particular, there are several gross violations 
of due process that make fraudulent asbestos litigation 
possible, and that deserve the attention of the highest court 
in the land. These include the practices of allowing unreliable 
and invalid medical testimony to be introduced before a jury, 
and allowing unrestricted intangible damages to distort a civil 
justice system that was designed only for allocating the costs 
of actual harms.
The Disconnect Between Rates of Asbestos Injury and Asbestos Legal 
        Claiming
    As an initial matter, in defense of the legislative and 
executive branches, it bears mention that Congress and the 
President have acted to address actual asbestos health hazards. 
Federal legislation and regulations virtually have eliminated 
the asbestos exposures that cause disease or injury. According 
to Dr. James Crapo, one of the nation's leading specialists in 
pulmonary medicine, ``[d]ue to federal regulation of asbestos 
that began in the early 1970s, current occupational exposure 
levels are a tiny fraction of those that existed in the 1940s 
and 1950s. All of the asbestos-related diseases are considered 
dose-dependent, and the pre-1973 exposures to asbestos that 
resulted in severe asbestosis and lung cancer are not present 
today.'' \3\
---------------------------------------------------------------------------
    \3\ Written Statement of Dr. James Crapo, Professor of Medicine, 
Nation Jewish Center and University of Colorado Health Sciences Center, 
Before the Senate Committee on the Judiciary Concerning S. 1125, The 
Fairness in Asbestos Injury Resolution Act of 2003 (June 4, 2003). See 
also Carroll et al., supra note 1, at 13. Dr. Crapo served for more 
than 20 years on the medical faculty of Duke University; during 17 of 
those years, he served as Chief of the Division of Pulmonary and 
Critical Care Medicine. He is a past president of the American Thoracic 
Society and is the co-author of several leading textbooks on pulmonary 
medicine.
---------------------------------------------------------------------------
    Today, ``[i]t has been more than 30 years since the 
government began imposing strict limits on workplace exposure 
to asbestos dust,'' and ``[i]t has been 20 to 30 years since 
most asbestos-containing products were phased out of production 
completely.'' \4\ Therefore, ``[b]ased upon the latency periods 
associated with asbestos-related disease, rates of disease 
manifestation and claims based on such manifestation should 
have begun to decline significantly by no later than the mid-
1990s.'' \5\
---------------------------------------------------------------------------
    \4\ Roger Parloff, The $200 Billion Miscarriage of Justice: 
Asbestos Lawyers Are Pitting Plaintiffs Who Aren't Sick Against 
Companies that Never Made the Stuff--And Extracting Billions for 
Themselves, FORTUNE, February 17, 2002.
    \5\ Lester Brickman, article forthcoming in a Pepperdine Law Review 
Symposium on Asbestos Litigation (hereinafter ``Brickman, Pepperdine 
Symposium'') (draft on file with the Judiciary Committee).
---------------------------------------------------------------------------
    With regard to disease manifestation, this is exactly what 
has occurred. According to the doctors, ``the number of new 
cases of asbestos-related disease has been falling * * *. Very 
few new plaintiffs have serious injuries, even their lawyers 
acknowledge.'' \6\ ``John Dement, an associate professor for 
environmental and occupational medicine at Duke University and 
the former deputy director for lung disease research at the 
National Institute for Occupational Safety and Health, [has] 
said there were far fewer cases of serious asbestosis today 
than 5 to 10 years ago.'' According to Dr. Dement, ``What we're 
seeing right now is the downswing.'' \7\ Epidemiological data 
confirm these observations. ``[C]ancer deaths in the United 
States attributable to asbestos exposure are already falling, 
and are estimated to have peaked in 1992 at 9700 per year.'' 
\8\ Indeed, almost a decade ago--in 1994--``the medical text 
Occupational Lung Disorders describe[d] asbestosis as a 
`disappearing disease.' '' \9\
---------------------------------------------------------------------------
    \6\ Alex Berenson, A Surge in Asbestos Suits, Many by Healthy 
Plaintiffs, The New York Times, A1, April 10, 2002.
    \7\ Id.
    \8\ White, supra note 1 (citing Barry I. Castleman, Asbestos: 
Medical and Legal Aspects 784 (4th ed. 1996)).
    \9\ Parloff, $200 Billion Miscarriage of Justice, supra note 4.
---------------------------------------------------------------------------
    Asbestos-injury legal claims, on the other hand, have 
``prov[en] impervious to the predictions of medical science.'' 
\10\ ``Contrary to expectations, the numbers of claims filed 
increased rapidly during the 1990s.'' \11\ Only 
``[a]pproximately 20,000 claims were filed annually against 
major asbestos defendants in the early 1990s.'' \12\ But in 
2001, at least 90,000 new asbestos claims were filed--a three-
fold increase over the number filed in 1999.\13\ Also, ``[t]he 
number of defendants named in asbestos claims has risen 
dramatically from around 300 in the early 1980s to 
approximately 2,000 identified in 2001 to 8,400 cited in the 
most recent RAND findings.'' \14\ Bankruptcies also have 
increased sharply. Of the 78 firms driven to bankruptcy by 
asbestos lawsuits since 1982, 30 have filed between 2000 and 
2002.\15\
---------------------------------------------------------------------------
    \10\ Brickman, Pepperdine Symposium, supra note 5.
    \11\ White, supra note 1, at 1319 (citing S.J. Carroll et al., 
Asbestos Litigation in the U.S.: a New Look at an Old Issue, RAND DB-
362.0-ICJ, August 2001).
    \12\ Biggs, supra note 1, at n. 3.
    \13\ Brickman, Malignancy, supra note 2, at 1.
    \14\ Biggs, supra note 1, at n. 5.
    \15\ White, supra note 1, at 1320.
---------------------------------------------------------------------------

Persuasive Evidence of Fraud

    How is it possible that asbestos-injury legal claims have 
skyrocketed during a period when rates of actual asbestos 
injury have declined sharply? An answer might begin with a 
letter to the American Journal of Industrial Medicine from Dr. 
David Egilman, a Clinical Associate Professor at Brown 
University. Dr. Egilman notes that ``[f]or the past several 
years,'' he has ``served as an expert witness in areas related 
to state-of-the-art and liability primarily at the request of 
plaintiff lawyers,'' and has ``reviewed the medical records and 
X-rays of workers in the cases in which [he has] testified.'' 
\16\ He concludes that ``[o]ver the past 2 years, I have noted 
that many of these individuals could not (due to inadequate 
latency or exposure) and did not manifest any evidence of 
asbestos-related disease.''
---------------------------------------------------------------------------
    \16\ Dr. David Egilman, Asbestos Screenings, American Journal of 
Industrial Medicine 42:163 (2002) (Letter to the Editor).
---------------------------------------------------------------------------
    This phenomenon--of asbestos claims brought by people who 
are not sick--is quantified in several sources. It has been 
noted in the experience of the Manville Trust.\17\ According to 
a recent report, ``90% of the Trust's last 200,000 claims have 
come from attorney-sponsored x-ray screening programs, * * * 
91% of all claims allege only non-malignant asbestos `disease,' 
and these cases currently receive 76% of all Trust funds.'' 
\18\ A recent RAND study has identified the same pattern in the 
tort system as a whole: ``Claims for nonmalignant injuries grew 
sharply through the last half of the [1990s].'' \19\ The study 
notes that ``[a]lmost all the growth in the asbestos caseload 
can be attributed to the growth in the number of these claims, 
which include claims from people with little or no current 
functional impairment.'' These claims grew as a fraction of all 
claims ``through the late 1980s and early 1990s, finally 
stabilizing at about 90 percent of annual claims in the late 
1990s.'' \20\
---------------------------------------------------------------------------
    \17\ The Manville bankruptcy trust pays claims on behalf of the 
former Johns-Manville Corporation, ``which mined virtually all of the 
asbestos used in the United States and was, by far, the leading 
manufacturer of asbestos-containing materials.'' Brickman, Malignancy 
in the Courts, supra note 2. Johns-Manville declared bankruptcy in 
1982. It is generally believed that most--and probably two-thirds--of 
all asbestos plaintiffs file claims with the Manville bankruptcy trust.
    \18\ Letter from Steven Kazan to the Honorable Jack B. Weinstein, 
July 23, 2002 (included as Attachment ``A'' to this statement). Mr. 
Kazan is a plaintiffs attorney who specializes in representing asbestos 
claimants with cancer.
    \19\ Carroll et al., supra note 1, at 45.
    \20\ Id. at 46. See also id. at 64-65 (discussing Tillinghast-
Powers Perrin estimate that ``[n]onmalignant claims accounted for about 
89 percent of claims and 65 percent of the dollars'' awarded to 
asbestos claimants from 1991 to 2000); id. at 20 (citing studies 
concluding that unimpaired claimants account for two-thirds to 90 
percent of all current claimants). See also Thomas Korosec, Enough to 
Make You Sick, Dallas Observer, September 26, 2002 (``You could see as 
early as a decade ago this unnatural proliferation of nonmalignant 
cases being filed around the country * * * * [W]e have 10 times more 
nonmalignant cases being filed today than in 1990. A nonmalignant 
asbestos disease is whatever a willing physician says it is, so a 
lawyer and physician can go out and create however many cases they 
want'') (quoting plaintiffs attorney Mark Iola).
---------------------------------------------------------------------------
    These data invite the question, how are plaintiffs able to 
recover money for asbestos claims if they have not been 
injured? The Supreme Court recently has noted that, ``[i]n the 
1970's and 1980's, plaintiffs' lawyers throughout the country, 
particularly in East Texas, honed the litigation of asbestos 
claims'' by ``improving the forensic investigation of diseases 
caused by asbestos'' and ``refining theories of liability.'' 
(Ortiz, 527 U.S. at 822.) The role of several other plaintiffs-
lawyers practices and ``refinements'' also bears mention:
            1. Coaching Asbestos Plaintiffs to Lie
    Questions about how asbestos litigation is conducted today 
can be answered by examining the practices of just a limited 
number of law firms. A few plaintiffs firms dominate the field. 
According to a recent RAND study, ``[b]y 1995, ten firms * * * 
represented three-quarters of the annual filings against the[] 
defendants'' from whom RAND was able to obtain data.\21\ And 
one academic expert has estimated that just two law firms--
Baron & Budd of Dallas, and Ness Mottley of South Carolina--
``probably account for half the asbestos docket in the 
country.'' \22\
---------------------------------------------------------------------------
    \21\ Carroll et al., supra note 1, at 30 (emphasis in original).
    \22\ Samuel Issacharoff, ``Shocked'': Mass Torts and Aggregate 
Asbestos Litigation After Amchem and Ortiz, 80 Tex. L. Rev. 1925, 1930 
(2002). See also Korosec, Enough to Make You Sick, supra note 20 
(estimating that Baron & Budd and its subsidiaries ``control a double-
digit percentage of the roughly 250,000 asbestos claims pending 
nationwide'').
---------------------------------------------------------------------------
    Several years ago, a first-year associate at Baron & Budd 
accidentally produced to defense counsel a memo that provides a 
startling insight into how asbestos claims are created. The 
memo, titled ``Preparing for Your Deposition,'' gives clients 
detailed instructions how to credibly testify that they worked 
with particular asbestos products. The memo also instructs 
clients to assert particular things that will increase the 
value of their claim, without regard to whether those things 
are true. The memo even informs clients that a defense attorney 
will have no way of knowing whether they are lying about their 
exposure to particular asbestos products.
    Baron & Budd has admitted that the memo was produced by its 
employees, but denies that the memo instructs clients to lie, 
and has argued that statements from the memo have been taken 
out of context by the press. In order to allow the reader to 
draw his own conclusions, I have included the entire memo as 
Attachment ``B'' to this statement.
    The memo effectively resolves one mystery that has 
bedeviled asbestos defendants for several years. As the major 
asbestos producers have gone bankrupt, lawsuits have shifted to 
defendants with an increasingly minor role in the asbestos 
industry. These companies often produced only a small volume of 
asbestos-containing products, yet plaintiffs have been able to 
identify these products in very large numbers. ``Many of the 
remaining asbestos manufacturers complain that they couldn't 
possibly have sold enough product to expose even a fraction of 
the men who claim to remember seeing their goods.'' \23\ 
According to one defense lawyer,

    \23\ Christine Biedermman, Thomas Korosec, Julie Lyons, and Patrick 
Williams, Toxic Justice, Dallas Observer, August 13, 1998.
---------------------------------------------------------------------------
          I'd be surprised if [my client] actually sold enough 
        product to expose half the people who claimed to have 
        been exposed. We know, for example, of locations where 
        not only was our product not there, but [it] would have 
        no function there. Yet in case after case, Baron & Budd 
        sues us and gets product ID and comes up with at least 
        three or four co-workers [who identify the products].
            A. The Baron & Budd Script Memo
    ``Preparing for Your Deposition'' shows how Baron & Budd 
gets that product ID. The first half of this 20-page memo 
consists of separate sections providing detailed descriptions 
of the uses of 14 different asbestos products: insulating 
cement, refractory cement, gun mix, pre-cut gaskets, sheet 
gaskets, rope packing, pipe covering, block insulation, plastic 
cement, fireproofing, asbestos boards and panels, joint 
compound, cloth and felt, and firebrick.
    For each of these 14 products, the memo gives a detailed 
account of which types of workers used the product, for what 
purposes, in what places, how it was mixed and applied, and 
what types of containers held the product. Each description 
goes well beyond what one would think necessary simply to 
refresh the memory of someone who had actually worked with the 
product. Instead, the memo appears to anticipate that clients 
will not have any previous familiarity with the product. For 
example, the memo reminds clients: ``Insulating cement is NOT 
like sidewalk concrete! * * * It was typically used to insulate 
steampipes.'' The memo provides sufficient information about 
all aspects of the product to allow any person to credibly 
testify that he worked with the product.
    The memo also repeatedly reminds readers of the importance 
of memorizing the information about the products. It informs 
readers from the outset, ``How well you know the name of each 
product and how you were exposed to it will determine whether 
that defendant will want to offer you a settlement.'' Later, 
the memo continues:

          Your responses to questions about asbestos products 
        and how you were exposed to them is the most important 
        part of your deposition. You must PROVE you worked with 
        or around the products listed on your Work History 
        Sheets. You must be CONFIDENT about the NAMES of each 
        product, what TYPE of product it was, how it was 
        PACKAGED, who used it and HOW it was used. You must be 
        able to show that you were close to it often enough 
        while it was being applied to have inhaled the fibers 
        given off while it was being mixed, sanded, sawed, 
        compressed, drilled or cut, etc.
          You will be required to do all this from MEMORY, 
        which is why you MUST start studying your Work History 
        Sheets NOW! * * * [I]t is best to MEMORIZE all your 
        products and where you saw them BEFORE your deposition.

           *         *         *         *         *

          You must be able to pronounce the product names 
        correctly and know WHICH products are pipecovering, 
        WHICH are insulating cements and WHICH are plastic 
        cements, for instance. Many of the product names should 
        sound very similar to each other (Kaylo and Kaytherm, 
        or Raybestos and Unibestos, for instance), but they 
        might be different products entirely! Have a family 
        member quiz you until you know ALL the product names 
        listed on your Work History Sheets by heart.

    ``Preparing for Your Deposition'' also gives instructions 
on what to do if defense attorneys suspect that you were 
coached, on blaming discrepancies on ``the Baron & Budd girl,'' 
and on letting the Baron & Budd lawyer fix your mistakes:

          You may be asked how you are able to recall so many 
        product names. The best answer is to say that you 
        recall seeing the names on the containers or on the 
        product itself. The more you thought about it, the more 
        you remembered! If thedefense attorney asks you if you 
were shown pictures of products, wait for your attorney to advise you 
to answer, then say that a girl from Baron & Budd showed you pictures 
of MANY products, and you picked out the ones you remembered.
          If there is a MISTAKE on your Work History Sheets, 
        explain that the ``girl from Baron & Budd'' must have 
        misunderstood what you told her when she wrote it down.

           *         *         *         *         *

          If you are answering a question and your Baron & Budd 
        attorney interrupts you, STOP TALKING IMMEDIATELY! Your 
        attorney is trying to fix something you said wrong, or 
        stop you from saying something that contradicts your 
        earlier testimony.

    Perhaps the most disturbing parts of ``Preparing for Your 
Deposition'' are those that advise clients to say particular 
things that have clear import for various legal defenses and 
the value of the plaintiff's claim. The memo instructs all 
clients to say these things, without regard to whether they are 
true. For example:

          You will be asked if you ever saw any WARNING labels 
        on containers of asbestos. It is important to maintain 
        that you NEVER saw any labels on asbestos products that 
        said WARNING or DANGER. * * *
          You will be asked if you ever used respiratory 
        equipment to protect you from asbestos. Listen 
        carefully to the question! If you did wear a mask for 
        welding or other fumes, that does NOT mean you wore it 
        for protection from asbestos! The answer is still 
        ``NO''!

           *         *         *         *         *

          Make sure you concentrate on your exposure to 
        asbestos products in the 1950s, 1960s and early 1970s. 
        Do NOT talk about what went on at work in the 1980s and 
        1990s. The reason for this is that by the mid 1970s 
        most insulating products being installed no longer 
        contained asbestos.

           *         *         *         *         *

          Do NOT mention product names that are not listed on 
        your Work History Sheets. The defense attorneys will 
        jump at a chance to blame your asbestos exposure on 
        companies that were not sued in your case.
          Do NOT say you saw more of one brand than another, or 
        that one brand was more commonly used than another. At 
        some jobs there may have been more of one brand. At 
        other jobs there may have been more of another brand, 
        so throughout your career you were probably exposed 
        equally to ALL the brands. You NEVER want to give 
        specific quantities or percentages of any product 
        names. The reason for this is that the other 
        manufacturers can say you were exposed more to another 
        brand than to theirs, and so they are NOT as 
        responsible for your illness! Be CONFIDENT that you saw 
        just as much of one brand as all the others. All the 
        manufacturers sued in your case should share the blame 
        equally!

           *         *         *         *         *

          Unless your Baron & Budd attorney tells you 
        otherwise, testify ONLY about INSTALLATION of NEW 
        asbestos material, NOT tear-out of the OLD stuff. This 
        is because it is almost impossible to prove what brand 
        of material was being torn out, since heat probably 
        destroyed any name printed on the product itself. You 
        can only prove what the product name was when it was 
        being installed in the first place, when the name was 
        clearly marked on the material or on the container it 
        came out of.

    But undoubtedly the most damning parts of the script memo 
are its assurances to the client that defense attorneys will 
not be able to know if he is lying--and its warnings that no 
one must know about the memo itself:

          Keep in mind that these [defense] attorneys are very 
        young and WERE NOT PRESENT at the jobsites you worked 
        at. They have NO RECORDS to tell them what products 
        were used on a particular job, even if they act like 
        they do.

           *         *         *         *         *

          The only documents you should ever refer to in your 
        deposition are your Social Security Print Out, your 
        Work History Sheets and photographs of products you 
        were shown, but ONLY IF YOU ARE ASKED ABOUT THEM AND 
        ONLY IF YOUR BARON & BUDD ATTORNEY INSTRUCTS YOU TO 
        ANSWER! Any other notes, such as what you are reading 
        right now, are ``privileged'' and should never be 
        mentioned.

    Professor Brickman makes the following assessment of 
``Preparing for Your Deposition:'' ``In my opinion, * * * this 
is subornation of perjury.'' He also concludes that ``[i]t is 
also a principal, if not the principal, method of processing 
unimpaired asbestos claims today.'' \24\
---------------------------------------------------------------------------
    \24\ Brickman, Malignancy in the Courts, supra note 2, at 6.
---------------------------------------------------------------------------
            B. ``What I was doing was fraudulent. There was never any 
                    doubt in my mind.''
    After ``Preparing for Your Deposition'' was discovered, the 
Dallas Observer, a weekly newspaper in Baron & Budd's hometown, 
conducted an investigation of the firm's practices. The 
Observer found that ``a number of former Baron & Budd employees 
say that the information and techniques contained in the memo 
are widely used, even taught to employees. They say the * * * 
memo was not truly an aberration, but a written example of how 
the product-identification staff works at Baron & Budd.'' \25\ 
The Observer's investigative stories provide additional insight 
into how asbestos litigation is conducted. Highlights include:
---------------------------------------------------------------------------
    \25\ Biederman et al., supra note 23.
---------------------------------------------------------------------------
     ``[Two former paralegals who traveled] to upstate 
New York in the winter of 1991 to do `product ID' interviews * 
* * both say that a client-coaching system was in place at the 
firm. Workers were routinely encouraged to remember seeing 
asbestos products on their jobs that they didn't truly recall, 
the women say.''
     ``Paralegals say * * * that workers are 
selectively shown pictures of asbestos products they should 
identify. [One paralegal] says that in meetings with clients, 
she would bring a `3- or 4- or 5-inch binder with pictures of 
asbestos products, divided up according to manufacturer. I'd go 
through page by page and encourage the client to recall the 
products they used. It would be pretty strong encouragement. 
Most of the time when I left, I had ID for every manufacturer 
that we needed to get ID for.' She already had the answers, she 
says. [The paralegal] just needed the worker to agree she had 
the correct ones. Most would wise up pretty quickly, she says. 
`Clients understood that products needed to be ID'd for the 
manufacturers we sued,' she says.''
     ``[The paralegal] says that in many cases, the 
client had no specific recollection of some products before she 
interviewed them. `My original caseload was a thousand, but I 
didn't interview that many people. It was in the hundreds. I'd 
say that probably in 75 percent of those cases I had people 
identify at least one product they couldn't recall originally.' 
''
     ``[According to the paralegals], their job didn't 
stop with implanting memories; there were also the asbestos 
products they had to encourage clients not to recall. In New 
York, [the paralegal] says, `everybody could remember something 
from Johns-Manville,' which was the largest U.S. distributor of 
asbestos products. But [the paralegal] claims that her 
supervisors, two lawyers, told her to discourage identification 
of Johns-Manville products because the Manville Trust was not 
paying claims rendered against it at the time. * * * Thus, when 
a client would say he saw, for instance, a Johns-Manville pipe 
covering, [the paralegal] says, she would hand them a line. 
`You'd say, `You know, we've talked to some other people, other 
witnesses, and they recall working with Owens Corning's Kaylo. 
Don't you think you saw that?' And they'd say, `Yeah, maybe 
you're right.' Later, she says, Johns-Manville began paying 
settlements, and she was ordered to go out and `meet these guys 
again' and get them once again to name Johns-Manville 
products.''
     ``[The paralegal] says she learned some of these 
methods and techniques from `other paralegals I worked with.' 
But she has no doubt that her supervisors and at least one of 
the firm's partners knew what was going on. `I remember 
specifically there was a case in the Mobile, Alabama, area that 
was set for trial, and I was specifically sent down there to 
get product ID. I was basically told, `Don't come back without 
the IDs.' [One of two Baron & Budd attorneys] told me that.' ''
     ``[According to the paralegal,] `There was at 
least one time, maybe more, that I went to [a particular Baron 
& Budd attorney] and said I didn't think a particular 
settlement was right. That I can't believe we're doing this. I 
was basically told to be quiet or leave.' * * * `There were 
clients we were getting money for, and some people just didn't 
deserve a dime.' ''
     ``[Another former paralegal] recalls being asked 
to falsify product-ID information the very first week she was 
on the job. `They were having me fill out the product IDs 
[forms that the paralegals had gathered from clients] . . . 
There was a man, he was some sort of contractor. He had 
absolutely no exposure to asbestos--none. There was nothing in 
his work history.' As she scanned the paperwork, [a Baron & 
Budd partner] walked by the office she was working in. `I got 
up and walked out and said, `I don't know what to do. This man 
has not had exposure at all.' He looked at me and said, `Oh 
you're a smart lady. Be creative,' and he turned and he walked 
away.' She says she then went to her immediate supervisor, who 
she recalls also told her to `fill it in, make up stuff.' `I 
was shocked,' she says. When she refused to fill in product 
names, the supervisor simply took over the file, she says. `I 
don't know what happened to the case after that.' ''
     ``[A former Baron & Budd attorney] describes * * * 
an atmosphere where attorneys and paralegals were not only 
taught that manufacturing testimony was their duty, but 
disciplined if the `proper' testimony was not obtained. She 
says she lasted a few years. `Slowly, you begin to question 
whether the means you are using to achieve the ends are 
legitimate. And if not, what is your involvement in that?' she 
says. `And you either leave or you accept it.' She still 
recalls one of the first depositions she ever defended at Baron 
& Budd by herself. `I knew my guy wasn't prepared to tell the 
lie,' she says. `This gentleman did not know Kaylo [a product 
manufactured by an important defendant], had never seen pipe 
covering and never worked with it. It was on his work-history 
sheet. And for me not to get the testimony that some paralegal 
got * * * I'd have caught shit for that if that group went to 
trial. I pulled him out [of the deposition],' she says. `And I 
said, `Could you just read off your work-history sheet?' * * * 
He goes, `I don't know why it's on there. It shouldn't be on 
there. I don't remember it.' ` * * * And I was in fear and 
feeling totally inadequate and knowing that in getting what I 
needed to get, I was crossingthe line.' She got the 
identification. `And this was a good man,' she recalls--though he 
wasn't particularly sick.'' \26\
---------------------------------------------------------------------------
    \26\ Biederman et al., supra note 23.
---------------------------------------------------------------------------
     ``[Yet another former Baron & Budd paralegal] says 
he would at times be given rush jobs that took him out of his 
daily, witness-finding duties. As the firm reached mass 
settlements with manufacturers, it needed to produce sworn 
affidavits from every client who had sued, he recalls. The 
mostly retired workers had to swear they had been exposed, 30, 
40 or 50 years ago, to specific products the company made. 
Industry officials say they require the statements to validate 
claims and present them to insurers. [The paralegal] says some 
clients had already identified the products in prior talks with 
the firm, and sometimes they had not. Frequently, he says, he 
was the first person to mention the products, and clients who 
didn't remember them were hesitant and worried about signing. 
`They'd ask, ``Do I have to go court? Do I have to come to 
Dallas?'' ' [The paralegal] says he would assure them all they 
had to do was sign the document, have it notarized, send it in, 
and money would be coming their way. `It was like telephone 
marketing * * * a marketing approach,' [the paralegal] says. 
But it didn't take much savvy to close the sale. Everyone would 
sign, he says. `When you are offering someone the ability to 
get money in their pocket when they're not expecting money for 
any particular reason, it's not all that difficult.' ''
     ``[The former paralegal also] says he was assigned 
to find witnesses who could support claims by Baron & Budd 
plaintiffs that they were exposed to asbestos products at 
various workplaces from the early 1940s until the late 1960s. 
The problem was, almost nobody could remember these facts 
without being told what to say, [the paralegal] recalled in an 
interview earlier this month. It was his job to get them to 
name 20 or 30 different products from the multiple companies 
Baron & Budd would typically sue. * * * [The paralegal] says he 
was pretty good at his job, and he'd usually end up getting 
many men to say many things they had no idea about before he 
called. `I'd get 'em to identify every one,' he says of his 
list of 20 or more products. Clerical staff managers and a 
`product ID' paralegal he worked under taught him his 
techniques. * * * Truth got lost in the process, he says, and 
[the paralegal] recalls being uncomfortable from the start with 
telling witnesses how to testify. `What I was doing was 
fraudulent. There was never any doubt in my mind about it.' '' 
\27\
---------------------------------------------------------------------------
    \27\ Thomas Korosec, Homefryin' with Fred Baron, Dallas Observer, 
March 29, 2001.
---------------------------------------------------------------------------
    Other documents obtained by the Dallas Observer ``appear to 
track what these former paralegals say about how the firm's 
product-identification process works''--and provide 
instructions similar to those in ``Preparing for Your 
Deposition.'' For example, a document titled ``P.I.D. Study 
Sheet,'' written by a former paralegal, also contains detailed, 
deposition-relevant product-use information. In a handwritten 
1993 memo to several attorneys, the Baron & Budd paralegal who 
produced the document ``writes that she gives the attached 
`study sheet' to `all my clients who can read [and] ask them to 
be familiar [with] the information for their deposition.' '' 
\28\ Another document obtained by the Observer consisted of 
``handwritten notes apparently taken by [a Baron & Budd 
attorney] during an internal training session.'' The notes 
state: ``Warn [plaintiffs] not to say you were around it--even 
if you were--after you knew it was dangerous.'' Elsewhere, 
under a section titled ``name that product,'' the notes state: 
``Show client filled out sheet showing what [client] picked 
out. Get him to agree he picked out * * * Products: explain in 
the context of who will be in depo[sition]--emphasize those 
products.'' \29\ Another set of notes obtained by the Observer, 
which were prepared by a Baron & Budd attorney, simply state: 
``If client is asked if any other doctors told him about his 
condition before the diagnosing doctor named in the 
[interrogatory], client should answer NO.'' \30\
---------------------------------------------------------------------------
    \28\ Biederman et al., supra note 23.
    \29\ Id.
    \30\ Id.
---------------------------------------------------------------------------
    Interestingly, statements made by former Baron & Budd 
employees even confirm what epidemiological studies have 
projected for asbestos disease generally--that as exposures 
were eliminated in the 1970s and latency periods lapsed, the 
number of sick workers diminished. This change was reflected in 
the composition of the firm's caseload. One former paralegal 
noted that ``she witnessed how, as the pool of very sick 
clients shrunk, the firm lowered the bar on which cases it 
would take.'' The paralegal states: ``Initially [in the late 
`80s], if somebody just had pleural plaques [benign spots on 
the pleura, or lining of the lung] or something like that, they 
wouldn't take the case. Later on that's all they had * * * 
Later on they made these into cases. I could see the shift 
during my period [with the firm].'' Similarly, a former Baron & 
Budd attorney states: ``As the '90s went on, you got more and 
more people with marginal exposure to the stuff. You went from 
insulators and pipe fitters to having the maintenance guys in 
the paper mill. Yes, there was asbestos in that mill equipment, 
but they didn't work with it, and the medical evidence you get 
reflects that.'' \31\ A former paralegal also effectively 
explains why means like the script memo were used: ``Overall, 
she says, workers in asbestos plants and insulators `really did 
know the products * * * But when you got to the electricians 
and carpenters and the brick masons * * * they didn't work with 
the products that much.' '' \32\
---------------------------------------------------------------------------
    \31\ Korosec, Enough to Make You Sick, supra note 20.
    \32\ Biederman et al., supra note 23.
---------------------------------------------------------------------------
            C. A Pattern of Intimidation and Retaliation
    Perhaps as disturbing as the script memo itself, and the 
statements of Baron & Budd's former employees, is the firm's 
partly successful efforts to suppress any investigation of its 
activities. After ``Preparing for Your Deposition'' was 
discovered, a state district judge referred the matter to the 
local district attorney's office for criminal prosecution. 
According to the assistant district attorney in charge of the 
matter, local authorities did not act because ``our 
investigation has been taken over federally.'' \33\ The local 
U.S. attorneys office, however, gave a different account of why 
the local DA did not pursue the case: ``Because of the politics 
of it, [the DA's office] wanted to drop it, and so it ended up 
here.'' \34\
---------------------------------------------------------------------------
    \33\ Id.
    \34\ Id.
---------------------------------------------------------------------------
    That was in 1998. No federal investigation has ever taken 
place. In 2001, the Observer provided the following 
explanation:

          Former U.S. Attorney Paul Coggins told the Observer 
        recently he recused himself from participating in his 
        office's investigation of the memo because of a 
        conflict of interest posed by the firm's political 
        contributions to his wife, Regina Montoya Coggins, in 
        her run last year for Congress. He said contributions 
        to his wife from the national trial lawyers group, 
        where Baron earlier served as vice president, also 
        drove his decision to remove himself from making 
        decisions in the case.
          Baron's critics question how vigorously Coggins' 
        troops pursued Baron & Budd without support from the 
        top, and whether Baron's massive fund raising for the 
        Democrats, which stepped up in early 1998, might have 
        influenced Coggins' superiors in Washington as well. 
        ``In my humble opinion,'' says one lawyer who provided 
        information to the FBI, ``that investigation was a 
        joke.'' \35\
---------------------------------------------------------------------------
    \35\ Korosec, Homefryin' with Fred Baron, supra note 27.

    The Observer also provided the following account of what 
happened to the Texas state district judge who originally had 
referred the matter of the script memo to the District 
---------------------------------------------------------------------------
Attorney's office:

          [Judge John] Marshall, a lifelong Republican who drew 
        no opponents when he ran in 1992 and 1996, found 
        himself the next year in the fight of his life, with 
        Baron leading the charge. Before the 2000 primary, 
        Baron urged a Dallas trial lawyers group to target the 
        judge with campaign money, enlisting the firm's lawyers 
        in his cause. Campaign records show Baron & Budd was an 
        early donor to Marshall's opponent, Mary Murphy, who 
        said Baron was one of the first to urge her to run.

           *         *         *         *         *

          Several lawyers interviewed for this story said 
        Marshall's defeat sent a signal that it's hazardous to 
        threaten Baron & Budd. ``If I liked my comfortable seat 
        on the bench, I'd think twice about ruling against them 
        on these things,'' says one attorney, who declined to 
        be named. Says another who was close to the memo case, 
        ``No judge in Dallas will cross Baron & Budd after what 
        happened in that election. They are scared to death.'' 
        \36\
---------------------------------------------------------------------------
    \36\ Id.

    It bears mention, however, that Baron & Budd is not all 
stick and no carrot. The Observer also reports that Baron & 
Budd attorneys initiated an effort to hire a lobbyist to 
represent state judges in their requests for additional funding 
from the state legislature. Attorneys at the firm also led a 
drive to buy every civil judge in Dallas County a new personal 
computer.\37\ The firm also has managed to retain a University 
of Texas legal-ethics professor, who has written law-review 
articles about the script memo favorable to Baron & Budd--
without disclosing that he has been hired by the firm. \38\
---------------------------------------------------------------------------
    \37\ Id.
    \38\ Id.
---------------------------------------------------------------------------
    Some lawyers representing companies sued by Baron & Budd 
have attempted to pursue the matter of the script memo. Three 
lawyers who did so quickly found that ``Baron & Budd stepped up 
asbestos litigation against [their] clients.'' Two of these 
lawyers' clients soon negotiated settlements with Baron & Budd. 
According to one of the lawyers, Elizabeth Pfifer, ``I've never 
seen anything like them in my 17 years of practice. * * * 
Everyone understood that if we took them on, they would go 
after our clients.'' The third lawyer, Bill Skepnek, eventually 
lost his client, Raymark Corp., when it went bankrupt. 
``[W]ithin months, Baron & Budd turned the tables on Skepnek. 
It filed contempt motions against him in 165 courts * * * [and] 
tied up Skepnek's legal fees from Raymark in a contentious 
bankruptcy fight that itself spawned a crop of lawsuits.'' \39\
---------------------------------------------------------------------------
    \39\ Id.
---------------------------------------------------------------------------
    Another company that has been driven into bankruptcy by 
asbestos litigation, G-1 Holdings, Inc., of Wayne, New Jersey, 
also has attempted to investigate Baron & Budd's use of the 
script memo. G-1 Holdings has sued Baron & Budd, as well as 
South Carolina-based Ness Motley and New York asbestos 
litigators Weitz & Luxenberg, under the federal racketeering 
statutes in New York federal district court. Judicial opinions 
summarizing the pleadings in that case provide an excellent 
overview of the evolution of asbestos litigation, and describe 
significant additional misconduct by these law firms. Excerpts 
from two of those opinions are include as Attachment ``C'' to 
this statement.
    G-1 Holdings also has encountered substantial difficulty in 
investigating Baron & Budd's practices. According to the Dallas 
Observer:

          To pursue its allegations that Baron & Budd has 
        suborned perjury and fabricated evidence to produce 
        dubious cases, G-1 dispatched investigators to Dallas 
        in 1999. Baron & Budd met them head-on. The firm 
        obtained a temporary injunction from state District 
        Judge Merrill Hartman, forbidding them from 
        ``communicating in any manner'' with former Baron & 
        Budd employees. Such information was likely 
        ``privileged and confidential,'' Hartman ruled.

           *         *         *         *         *

          This January [of 2001], after filing its racketeering 
        lawsuit, G-1 employed a new set of investigators, Kroll 
        & Associates, and by the end of the month, they were 
        busy tracking down former employees. On January 30, 
        they telephoned former Baron & Budd lawyer Amy 
        Blumenthal, who in turn telephoned her former firm, 
        which appears to have gone immediately on alert.

           *         *         *         *         *

          The next day, state District Judge Ann Ashby granted 
        Baron & Budd's quickly drafted motion for a temporary 
        restraining order. It barred Kroll from contacting the 
        firm's employees and ordered Kroll's investigators to 
        submit themselves to questioning by Baron & Budd about 
        what they had learned.\40\
---------------------------------------------------------------------------
    \40\ Korosec, Homefryin' with Fred Baron, supra note 27. The 
Observer's investigative news stories also have drawn Baron & Budd's 
attention to that newspaper. The Observer has characterized the firm's 
actions toward the paper as ``a pattern of intimidation and paranoia 
such as the Observer has never seen before.'' Julie Lyons, The Control 
Freak, Dallas Observer, August 13, 1998.

    G-1 Holdings's RICO suit against Baron & Budd still is 
pending in a New York federal district court--and still is in 
the discovery phase.\41\
---------------------------------------------------------------------------
    \41\ See, e.g., G-1 Holdings, Inc. v. Baron & Budd, 213 F.R.D. 146 
(S.D.N.Y. 2003).
---------------------------------------------------------------------------
    According to a 1994 estimate, Baron & Budd had, by that 
year, grossed more than $800 million from asbestos 
litigation.\42\
---------------------------------------------------------------------------
    \42\ See Biederman et al., supra note 23.
---------------------------------------------------------------------------
            2. Fraudulent Pulmonary-Function Tests and Fraudulent X-Ray 
                    Interpretations
    Asbestos legal claims cannot be manufactured with witness 
testimony alone. Such claims also require evidence of reduced 
lung capacity and x-ray evidence of lung damage.
    A thorough description of how such evidence is produced is 
available in a recent law-review article by Professor 
Brickman.\43\ That article, for example, quotes from a 
complaint brought by Owens-Corning Fiberglass, Inc., against 
businesses that administer pulmonary-function tests for 
asbestos plaintiffs lawyers. (A pulmonary-function test gauges 
lung impairment by measuring the subject's ability to blow on a 
tube for different intervals.) The complaint describes how 
these testing companies systematically disregard well-
established requirements for conducting a valid pulmonary-
function test; charge plaintiffs attorneys ``$700 if the tests 
were positive for diminished lung function but only $400 if the 
tests were negative;'' and, on one occasion, have agreed to 
perform such tests for a 15% contingency fee from the attorney 
who would be using the results.\44\
---------------------------------------------------------------------------
    \43\ Lester Brickman, Lawyers' Ethics and Fiduciary Obligation in 
the Brave New World of Aggregative Litigation, William and Mary 
Environmental Law and Policy Review 243, Winter 2001 (hereinafter 
``Brickman, Aggregative Litigation'').
    \44\ Id. at 282 n. 110.

          Similar practices have infected the reading of chest 
        x-rays:
          One doctor who has evaluated 14,000 individuals for 
        two different screening companies admitted under oath 
        that he has no experience in diagnosing asbestosis, and 
        that he is not even practicing medicine. That doctor 
        has concluded that every single person that he has 
        evaluated--all 14,000--had asbestosis.\45\
---------------------------------------------------------------------------
    \45\ Brickman, Pepperdine Symposium, supra note 5 (quoting Written 
Statement of Steven Kazan (Kazan, McClain, Edises, Abrams, Fernandez, 
Lyons & Farrise), Hearing on Asbestos Litigation before the Committee 
on the Judiciary, U.S. Senate, Sept. 25, 2002). See also Egilman, 
Asbestos Screenings, supra note 16.
---------------------------------------------------------------------------
          Another example:
          A United States District Court judge, using impartial 
        medical experts and excluding the parties' use of their 
        own experts, determined that of 65 plaintiffs claiming 
        to have contracted asbestosis--who, but for the court's 
        order, would have offered their own medical experts' 
        testimony in support of their claims and on that basis 
        would very likely have been awarded significant 
        compensation by the jury--only 10 (15%) had in fact 
        contracted asbestosis.\46\
---------------------------------------------------------------------------
    \46\ Brickman, Aggregative Litigation, supra note 43, at 284-85

    An even more extreme example of consistent misdiagnosis of 
asbestosis was provided directly to this committee by Mr. Otha 
Linton, who served for 25 years on the principal staff of the 
American College of Radiology Task Force on Pneumoconiosis, and 
Dr. Joseph Gitlin, a faculty member of the department of 
radiology at the Johns Hopkins Medical Institutions. Mr. Linton 
and Dr. Gitlin were asked to review over 500 chest x-rays that 
originally had been provided by an asbestos plaintiffs firm. 
That firm's medical experts had given 91.7% of these x-rays an 
ILO score of 1/0 or higher. (Which itself is only marginal 
evidence of asbestosis, see infra Attachment ``E'' (Letter of 
Dr. Crapo.).) Mr. Linton and Dr. Gitlin arranged for a blind 
reading of those same x-rays by six consultants in chest 
radiology who were also B readers. These independent experts 
gave the same x-rays an ILO score of at least 1/0 in only 4.5% 
of their reports.\47\
---------------------------------------------------------------------------
    \47\ Mr. Linton's Letter to Senator Grassley, and an abstract of an 
article submitted for publication that describes his findings, is 
included as Attachment ``D'' to this statement.
---------------------------------------------------------------------------
    And the Manville Trust's experience, again, has matched 
that of the wider asbestos-litigation world:

          In 1995, the Trust instituted a medical audit program 
        providing for a random audit of 5% of each law firms' 
        claims submitted per payment cycle. The core of the 
        audit program was a process of review of claimants' x-
        rays by independent medical experts.\48\
---------------------------------------------------------------------------
    \48\ Brickman, Pepperdine Symposium, supra note 5.

    The initial results of the Trust's review led it to 
conclude that it should audit all claims submitted by some law 
firms. Plaintiffs firms resisted this approach, and instead 
---------------------------------------------------------------------------
offered a proposal to audit the doctors directly.

          Reasonable though that proposal might sound, [then-
        Trust Executive Director Patricia] Houser resisted it 
        for * * * eyebrow-raising reasons * * * [that] stemmed 
        from the trust's early analyses of the audit data. In 
        mid-1996, the trust had commissioned biostatisticians 
        at Penn State University and the University of 
        Pennsylvania to help them with that task. Houser 
        quickly discovered that the failure rate of any given 
        doctor often correlated with which law firm that doctor 
        was working for at the time! A physician's failure rate 
        might be markedly elevated when working for one firm, 
        but quite average when retained by another. In fact, 
        the biostatisticians concluded, in a written report 
        submitted to the trust in February 1998, that the 
        particular law firm that submitted any given claim was 
        ``a strikingly significant predictor'' of whether that 
        claim would fail the audit, and that those findings 
        exhibited ``huge levels of statistical significance.'' 
        \49\
---------------------------------------------------------------------------
    \49\ Roger Parloff, Mass Tort Medicine Men, The American Lawyer, 
January 15, 2003. See also Parloff, $200 Billion Miscarriage of 
Justice, supra note 4 (noting that ``[j]ust eight screening doctors 
accounted for more than 70% of all claims filed with the Manville Trust 
between January 1995 and April 1998'').

    Ultimately, the Manville Trust was made to disband its 
audit program by U.S. District Court Judge Jack Weinstein.\50\ 
But during the time that the program was in place, the Trust 
was able to collect data on how often different doctors' 
diagnoses ``failed'' a review by independent examiners. The 
failure rate was high. ``According to an April 1998 Manville 
Trust memorandum, the 10 physicians most frequently used by 
plaintiffs' firms at the time of the audits had an average 
failure rate of 63 percent. Nine had failure rates ranging from 
50 percent to 70 percent, while the 10th failed 36 percent of 
the time.'' \51\
---------------------------------------------------------------------------
    \50\ For an account of the consequences of Judge Weinstein's 
actions, see Brickman, Aggregative Litigation, supra note 43, pp. 290-
93.
    \51\ Parloff, Mass Tort Medicine Men, supra note 49.
---------------------------------------------------------------------------
    In a forthcoming law-review article, Professor Brickman 
also provides a detailed description of the operations of the 
testing enterprises that conduct mass screenings on behalf of 
asbestos plaintiffs firms. These businesses often are full-
service providers: they recruit workers for screenings, conduct 
pulmonary-function tests, and make, develop, and read chest x-
rays. These businesses find workers for screenings through 
labor unions, or sometimes by direct mail and mass 
advertisements. The article describes several enterprises that 
were started by individuals with no medical background--or any 
substantial education of any sort. These screening companies 
include: a company that produced test results in exchange for a 
25% contingency fee from the lawyer using the result; a company 
that screened eight persons per hour; another company that 
charged lawyers $775 for a positive result, but only $175 for a 
negative result; a screening company that allowed plaintiffs 
attorneys to determine what predicted values should be employed 
in pulmonary function tests; and a screening-company owner who 
testified that test subjects openly discussed during pulmonary-
function tests how failing to fully exhale would ``earn'' them 
a settlement check.\52\
---------------------------------------------------------------------------
    \52\ Brickman, Pepperdine Symposium, supra note 5 (citing 
Deposition of Charles Lewis in In Re: Asbestos Cases (ACR XXIII 
Asbestos Cases), No. 89-2-18455-9-SEA, Superior Court, King County, 
Washington at 14, 29, 159 (Sept. 12, 2002); Deposition of Lloyd Criss 
in DeForest et al. v. American Optical, et al., Dist. Ct., Brazoria 
County, Tx. (Dec. 10, 2002); Deposition of Charles Foster, in Morehouse 
v. North American Refractories Co., et. al., Circuit Court, Mobile Cty, 
Ala. (Aug 6, 2002); Deposition of Dr. Jose E. Roman-Candelaria, in 
Koontz and Koontz v. AC&S, Inc., et. al., Superior Ct., Marion Cty., 
Ind., Cause No. 49D02-9601-MI-0001-668 (Oct. 11, 2002); Deposition of 
Guy Wayne Foster, American Medical Testing, Inc., in Bentley v. Crane 
Co., Civ. Action No. 11-2064, Circuit Ct., Jasper Cty, Miss. (Dec. 12, 
2001).) See also id. (quoting Andrew Schneider, Asbestos Lawsuits Anger 
Critics, St. Louis Post-Dispatch, February 9, 2003, at A1).
---------------------------------------------------------------------------
    Professor Brickman estimates that the number of workers who 
have undergone attorney-sponsored asbestos screenings since the 
mid-1980s exceeds 1,000,000 and may approach 2,000,000. He also 
concludes, based on the evidence that he has collected, that 
these screeningcompanies identify positive evidence of 
asbestos-related disease in at least 40% and sometimes as many as 85% 
of the workers that they screen.\53\
---------------------------------------------------------------------------
    \53\ Id. Professor Brickman also notes that it is exceedingly 
difficult to gather evidence about the positive rates generated by 
these screening companies. Although such information must be readily 
available to these enterprises, company representatives and the doctors 
who make the diagnoses almost uniformly have refused to provide it.
---------------------------------------------------------------------------
    To sum up all that has been discussed so far, I quote 
another commentator who, having reviewed evidence similar to 
that described here, has come to the following concise 
conclusion about the nature of asbestos litigation as it is 
conducted today: ``Among ordinary people, there is a word for 
this: fraud. This is a legalized fraud.'' \54\
---------------------------------------------------------------------------
    \54\ Robert J. Samuelson, Asbestos Fraud, Washington Post, November 
20, 2002, A25.
---------------------------------------------------------------------------

Medical Facts About Asbestos Injury

    At this point, it is appropriate to examine what modern 
medicine tells us about what types of injuries asbestos does 
and does not cause. There has been considerable uncertainty 
about this question both in this committee and in the legal 
community generally. For example, one Supreme Court Justice 
recently noted that ``[a]bout half of the [asbestos] suits have 
involved claims for pleural thickening and plaques--the 
harmfulness of which is apparently controversial.'' Amchem, 521 
U.S. at 631 (Breyer, J., dissenting).
    Justice Breyer, of course, is limited to considering only 
those facts presented to him in the record by the parties. The 
Senate is not. Thus I have asked Dr. James Crapo, who has 
provided very helpful and credible testimony to this Committee, 
to analyze the final committee-reported bill, and to address 
several issues that have been controversial in this committee. 
His letter is include as Attachment ``E'' to this statement. I 
also have posed three questions to Dr. William Weiss (Emeritus 
Professor of Medicine, Drexel University), Dr. Michael Goodman 
(Senior Managing Scientist, Exponent Health Group), and Dr. J. 
Bernard L. Gee (Emeritus Professor of Medicine, Yale University 
School of Medicine). Their responses are included as 
Attachments ``F,'' ``G,'' and ``H'' to this statement, 
respectively.
    I have selected these three doctors because they are 
eminent scientists who have done extensive reviews of the 
literature on asbestos and have written critical reviews that 
are highly regarded in the field. It is fair to say that no one 
knows more about the issues raised here than do these doctors.
    The three questions posed to all of these doctors are as 
follows: 1. Do pleural plaques or pleural thickening constitute 
an injury or impairment? Are they a useful predictor of future 
injury? 2. If an asbestos exposure was not sufficient to cause 
clinically significant asbestosis, could it nevertheless have 
caused lung cancer? 3. Can asbestos exposure cause colorectal 
cancer, or cancer of the larynx, pharynx, esophagus, or 
stomach?
    Not every doctor addressed every question. The doctors' 
answers are as follows:
    1. Do pleural plaques or pleural thickening constitute an 
injury or impairment? Are they a useful predictor of future 
injury?
    Dr. Gee: ``[Plaques] generally do not cause impairment of 
either the lung or breathing apparatus nor cause any disease to 
the worker.''
    ``In summary, plaques (common) as opposed to diffuse 
pleural fibrosis (now rare) do not cause disease or impairment. 
Neither plaques alone nor diffuse pleural fibrosis imply an 
increased risk of malignancy.''
    Dr. Weiss: ``Pleural plaques are an injury which generally 
does not cause any impairment unless they are very extensive. 
They do not predict an increased risk of lung cancer. Pleural 
thickening is an injury which varies in degree and impairment 
from negligible to moderate and even severe.''
    Dr. Crapo: ``Changes of the pleura, such as pleural plaques 
or pleural thickening, due to asbestos exposure should not be 
characterized as asbestosis. These pleural changes do not 
affect lung function unless they are extensive, and they do not 
increase the risk of an asbestos-related lung cancer.'' (Citing 
studies.)
    ``When compared to other individuals with similar asbestos 
exposure but no pleural manifestations, patients with pleural 
plaques have not been shown to be at increased risk of more 
serious asbestos-related diseases.''
    2. If an asbestos exposure was not sufficient to cause 
clinically significant asbestosis, could it nevertheless have 
caused lung cancer?
    Dr. Gee: ``[A]sbestosis is clearly quantitatively the major 
associate of lung cancer risk.''
    ``Where an asbestos exposure was not sufficient to cause 
clinical asbestosis, the chances of its being the cause of or a 
substantial contributing factor to lung cancer in smokers is 
between small and absent. In the absence of plaques, there is 
no reason to implicate asbestos in lung cancer.''
    Dr. Crapo: ``From a medical perspective, the [proposed 
federal] trust should not provide compensation to claimants who 
have lung cancer and exposure, but who do not have asbestosis 
(i.e., Malignant Levels VII and VIII). The medical literature 
shows that, while lung-cancer risk increases when significant 
asbestosis is present, there is no such increase in risk in 
workers who are exposed to asbestos, with or without pleural 
plaques, but who do not have asbestosis.''
    ``Prospective studies that have focused upon the question 
whether exposure alone, without accompanying asbestosis, is 
associated with increased lung cancer risk have found that lung 
cancer risk is associated with asbestosis and not with asbestos 
exposure alone.''
    ``In my view, medical science would support requiring 
asbestosis before a significant contribution of asbestos 
exposure to lung cancer risk is accepted.''
    Dr. Weiss: ``No.''
    Dr. Weiss cites to his own review of the literature 
regarding this question, which was published in 1999.\55\ In 
that review, Dr. Weiss analyzed cohort studies that provided 
evidence bearing on ``the hypothesis that excess lung cancer 
risk occurs only among those workers who develop asbestosis.''
---------------------------------------------------------------------------
    \55\ Weiss, W: Asbestosis: A Marker for the Increased Risk of Lung 
Cancer Among Workers Exposed to Asbestos. Chest 115:536-549, 1999.
---------------------------------------------------------------------------
    Dr. Weiss' review concluded that:

          Only a few cohort studies have addressed directly the 
        issue of asbestosis as a marker for increased lung 
        cancer among workers exposed to asbestos. What evidence 
        exists supports the hypothesis that asbestosis is such 
        a marker as reviewed in the first section above. 
        Additional circumstantial evidence has been described 
        in subsequent sections: (1) there is no excess risk of 
        lung cancer in cohorts with no deaths from asbestosis; 
        (2) workers with pleural plaques but no asbestosis have 
        no increased risk of lung cancer in well-designed 
        studies; and (3) the association between asbestosis and 
        excess lung cancer rates is much stronger than the 
        association between cumulative asbestos exposure and 
        the relative risk of lung cancer.
          The literature also contributes support for the 
        hypothesis in two other lines of investigation: animal 
        research and epidemiological studies of lung cancer 
        risk in other diseases characterized by diffuse 
        pulmonary fibrosis.\56\
---------------------------------------------------------------------------
    \56\ Id. at 546.

    3. Can asbestos exposure cause colorectal cancer, or cancer 
of the larynx, pharynx, esophagus, or stomach?
    Dr. Crapo: ``Compensation by the FAIR Act for forms of 
cancer other than lung cancer and mesothelioma is not justified 
by current medical science. While the evidence suggests an 
association between asbestos and laryngeal carcinoma, no other 
form of cancer is clearly associated with asbestos exposure. 
Moreover, the suggested association between asbestos exposure 
and laryngeal cancer is suspect because of the absence of a 
dose-response relationship.''
    ``While it is accepted that exposure to asbestos is 
associated with mesothelioma and lung cancer, there is no 
persuasive scientific evidence of meaningful association with 
cancer at other sites.''
    Discussing Dr. Goodman's study, Dr. Crapo notes that 
``[b]esides lung cancer and mesothelioma, the only other cancer 
for which a possible association exists is laryngeal cancer, 
where the meta-analysis showed an SMR with latency of 1.57. (An 
SMR of 1.0 would indicate an absence of any increased risk, 
while an SMR of 2.0 would indicate a doubling of the risk.) 
However, variance in the studies relating to laryngeal cancer 
was so large that the possibility of no increased risk could 
not be excluded, and there was no evidence of a dose-response 
effect, raising serious question as to whether cancer of the 
larynx has a true correlation with asbestos exposure.''
    Dr. Weiss: ``For colorectal cancer the evidence indicates 
no causality between asbestos and colorectal cancer. I have not 
reviewed the studies on cancers of the larynx, pharynx, 
esophagus, or stomach so I will not comment on these.''
    Dr. Gee: With regard to cancer of the larynx and pharynx: 
``The confounding factors previously mentioned, namely smoking 
and alcohol, remain major often-unadjusted factors in these 
diseases. * * * We reviewed 24 prospective and 17 retrospective 
studies out of which only three or four showed any excess risk. 
We concluded that asbestos exposure does not cause these 
cancers, as did Liddell reporting for the U.K. health 
authorities.''
    With regard to esophageal cancer: ``[T]here is no evidence 
relating them to asbestos.''
    With regard to kidney cancer, Dr. Gee quotes an analysis 
summarizing both published data and data from additional 
inquiries: ``this analysis pointed toward a lack of an 
association between asbestos exposure and renal cancer.''
    Discussing Dr. Goodman's study, Dr. Gee concludes that it 
``noted an overall excess laryngeal cancer risk rate that was 
about 1.6 but there was no dose response, no correlation with 
increasing mesothelioma rates and importantly, no adjustment in 
the original cohort data for the confounding effects of 
smoking, alcohol or their combination. Thus, this value of 1.6 
is suspect and the absence of a dose response with asbestos 
exposure suggests alternative factors cause these cancers. 
Other data show a correlation between the lung and laryngeal 
cancer rates that is most likely due to a common smoking 
origin.''
    Dr. Goodman: He notes that his 1999 study, Cancer in 
Asbestos-Exposed Occupational Cohorts: A Meta-Analysis,\57\ 
``confirmed a causal link between asbestos exposure and lung 
cancer.''
---------------------------------------------------------------------------
    \57\ Cancer Causes and Control 10:453-465, 1999.
---------------------------------------------------------------------------
    ``Data for urinary cancers (bladder, kidney, prostate), 
gastrointestinal cancers (esophagus, stomach, colon, rectum) 
and lymphohematopoietic cancers (lymphoma, myeloma, leukemia) 
failed to demonstrate a consistent statistically significant 
increase in risk. Analysis for laryngeal cancer was suggestive 
of a causal association, but not as conclusive as the analysis 
for lung cancer.''
    ``With respect to most cancers, the latency period is 
typically 20 years or more. For this reason, studies that 
examine latency are considered more reliable and a true causal 
relationship is expected to become more evident after latency 
is taken into account. We re-analyzed the data by including 
only studies that took into consideration latency of at least 
10 years. The results for lung cancer showed further elevation 
in risk, the risk of laryngeal cancer was somewhat higher, but 
was no longer statistically significant, while the risks of 
other cancers either decreased or remained essentially 
unchanged.''
    ``Another set of analyses in our study examined the 
exposure-response relationship between asbestos and cancer. If 
the risk of disease increases with increasing level of 
exposure, the relationship is more likely to be causal. * * * 
Our analyses demonstrated that lung cancer risk was strongly 
associated with and statistically significantly related to the 
proportionate mesothelioma mortality. However, this observation 
did not hold true for other cancers including laryngeal cancer 
and thus, did not support the causal association between 
asbestos exposure and other cancer sites.''
    ``It is important to point out that our meta-analysis is 
not the only publication reviewing the scientific evidence on 
the association between asbestos exposure and malignancies 
other than mesothelioma and lung cancer. For example, a 2000 
article by Browne and Gee entitled, `Asbestos Exposure and 
Laryngeal Cancer' concluded that the available evidence does 
not support the contention that asbestos causes laryngeal 
carcinoma. According to the authors of this article, their 
review is in agreement with five or six other reviews of this 
topic published since 1985. Similarly, a 1994 article entitled 
`Asbestos and Colon Cancer: A Weight-of-the-Evidence Review' by 
J. Gamble concluded that asbestos exposure, `does not appear to 
increase the risk of colon cancer.' ''
    ``In summary, the epidemiological literature on balance 
does not support a causal association between asbestos exposure 
and the development of cancers other than mesothelioma and lung 
cancer.''
    4. The Medical Criteria Employed by the Committee-Reported 
Bill.
    The information provided by these doctors casts doubt on 
this bill's standards for identifying asbestos injury. To all 
three of the questions discussed above, the doctors 
overwhelmingly answer ``no.'' But the committee-reported bill 
appears to assume that the answer to each questions is ``yes,'' 
or at least ``maybe.''
    First, the bill assumes that pleural plaques are meaningful 
indicia of injury. As Dr. Crapo notes:

          The x-ray findings required for compensation in Non-
        Malignant Levels III, IV, and V are generous. In the 
        first place, it is possible to recover in each of these 
        categories with an x-ray indicating pleural plaques or 
        diffuse pleural thickening that register B2 on the ILO 
        scale. It is rare, however, that people with only 
        pleural conditions of this kind will have a genuine 
        impairment.\58\
---------------------------------------------------------------------------
    \58\ Infra at Attachment ``E.''

    Second, the bill assumes that lung cancer can be attributed 
to asbestos even in the absence of clinically significant 
asbestosis. Again, Dr. Crapo notes: ``From a medical 
perspective, the [proposed federal] trust should not provide 
compensation to claimants who have lung cancer and exposure, 
but who do not have asbestosis (i.e., Malignant Levels VII and 
VIII).''
    Dr. Crapo goes on to warn that the bill's ``Malignant 
Levels VII and VIII will allow a significant number of people 
to qualify for compensation who do not in fact have a lung 
cancer caused by asbestos exposure. In other words, there will 
be a substantial number of `false positives.' ''
    Finally, the committee-reported bill assumes that other 
cancers--including colorectal cancer--are caused by asbestos. 
Dr. Crapo bluntly notes that ``[c]ompensation by the FAIR Act 
for forms of cancer other than lung cancer and mesothelioma is 
not justified by current medical science.'' He goes on to state 
that ``[i]n my view there is a danger that the limited 
resources of the Fund will be diverted to paying the claims of 
people with `other cancers,' many of which are quite common and 
could give rise to numerous claims in a no-fault system.''
    The committee-reported bill's inclusion of colorectal 
cancer is particularly disappointing. The original bill did not 
include this cancer. Indeed, during the introductory hearing on 
the bill, Dr. Crapo praised this omission, and specifically 
warned against awarding compensation for colorectal cancer. He 
noted that ``[a]ccording to the National Cancer Institute, 
there are 147,500 colo-rectal cancers each year. To allow 
recovery based on nothing more than plaques and the requisite 
exposure could expose the Trust to considerable, unpredictable 
liabilities in future years.''
    Dr. Crapo also noted that including colorectal cancer 
``would be ironic, since asbestos litigation as it is today 
involves few `other cancer' cases, presumably because of the 
difficulties of proof. There is a danger that the medical 
criteria in the bill would open the door to many more claims of 
this kind than are currently seen.''
    In other words, attributing ``other cancers'' to asbestos 
exposure is an argument that even the tort system does not 
accept. But it is an argument accepted by this bill.
    It was to be expected that this committee would give 
claimants the benefit of the medical doubt when developing a 
national trust fund that will bar access to the tort system. It 
was not to be expected that the committee would also cast aside 
the overwhelming conclusions of the last thirty years of 
medical research.\59\
---------------------------------------------------------------------------
    \59\ As for why this committee even began with a bill that 
compensates any ``other cancers''-- despite the clear weight of the 
medical evidence that none of these cancers is caused by asbestos 
exposure--the explanation is simple: the existing bankruptcy trusts, 
particularly Manville, are a natural political default for designing a 
national trust fund, and most of those trusts--including Manville--
compensate claimants for ``other cancer.'' See White, supra note 1, at 
1324-26 & n. 25. The explanation for why these trusts make awards for 
``other cancers'' and other medically unsupportable claims is even 
simpler: ``[b]ecause an asbestos firm's bankruptcy reorganization plan 
must be approved by at least 75% of claimants, the [firm] managers' 
[bankruptcy] decision * * * depends on whether more than or less than 
75% of claims are fraudulent, i.e., whether the critical voter on the 
reorganization plan is a fraudulent or a valid claimant.'' Id. at 1339.
    Those who contend that asbestos exposure causes stomach or colon 
cancer usually rely on studies published in the mid-1960s by Irving 
Selikoff. Though all subsequent studies were unable to confirm his 
results, Selikoff dominated the field of occupational medicine during 
his lifetime, and frequently participated in litigation as an expert 
witness on behalf of plaintiffs. Any marginal deference due from this 
committee to Selikoff's findings certainly is further diminished by the 
fact that, as one scholar recently has noted, ``in terms of medical 
education and qualification, Selikoff was a fraud.'' P.W.J. Bartrip, 
Irving John Selikoff and the Strange Case of the Missing Medical 
Degrees, Journal of The History of Medicine and Allied Science 28, Vol. 
58 (2003). The author discovered that Selikoff lacked the medical 
degree that he had always represented himself as having--though he did 
have a PhD, earned in one year, from ``an unaccredited school of 
appalling quality on the verge of collapse.'' Id. at 22. The author 
concludes that ``[i]f Selikoff's evasions had been uncovered [during 
his lifetime], his credibility would almost certainly have been 
destroyed.'' Id. at 31-32.
---------------------------------------------------------------------------
    One potential consequence of this committee's inclusion in 
the trust fund of ``other cancers'' and other unjustified 
compensation categories is described in a letter received by 
Senator Sessions from Dr. E.B. Ilgren.\60\ Dr. Ilgren agrees 
with all of the conclusions reached by the doctors whose 
opinions are described above. He concurs that: ``[t]he medical 
literature provides very strong evidence that asbestos does not 
cause or enhance an individual's risk for cancer aside from 
mesothelioma and lung cancer,'' and that ``[t]here is no reason 
to include pleural plaques amongst the medical criteria of 
attributable changes that deserve compensation. Pleural plaques 
do not portend future malignancy.'' He additionally notes that 
an ILO score of 1/0--one of the criteria that the bill relies 
on as evidence of asbestosis--is also consistent with long-
term, heavy smoking.
---------------------------------------------------------------------------
    \60\ This letter is included as Attachment ``I'' to this statement.
---------------------------------------------------------------------------
    Dr. Ilgren also notes, however, that ``[i]nclusion of 
pleuro-pulmonary malignancies in the medical criteria 
potentially undermines present day evidentiary standards.'' 
Stated otherwise, this committee is setting a very bad 
precedent. Dr. Ilgren also points out--in the spirit of 
Jonathan Swift--that inclusion of these criteria argues for 
inclusion of numerous other premalignant conditions for 
numerous other cancers as well.\61\
---------------------------------------------------------------------------
    \61\ See infra at Attachment ``I.''
---------------------------------------------------------------------------

Some Suggestions to a Coordinate Branch of Government

    Over the course of this committee's consideration of this 
bill, Senators have heard from a large number of manufacturers, 
doctors, insurance carriers, union officials, and even trial 
lawyers about their stake in this matter. Each of these groups 
is divided into subgroups, which often have conflicting 
interests. Plaintiffs lawyers are divided between those who 
primarily represent cancer victims--and want strict medical 
limits placed on asbestos claims, in order to preserve funds 
for their clients--and those who pursue large numbers of 
manufactured claims, and who oppose any limits on the tort 
system. Business is divided between those facing massive 
asbestos liability (and possibly bankruptcy), who want a bill 
at any cost, and those who only will support legislation within 
certain limits. Each of these groups has its own story to tell.
    Members of this committee have been presented with a vast 
amount of information about asbestos litigation. We have heard 
numerous accounts, many of them first hand, about how these 
lawsuits are conducted. From all these accounts, certain 
patterns emerge, and certain aspects of the asbestos-litigation 
crisis come into relief. Two matters call out for the 
judiciary's attention.
    First, it is apparent that the truth-seeking function of a 
trial is completely undermined when courts allow illegitimate 
expert testimony to be presented to a jury. As a matter of 
federal due process, all unreliable expert testimony should be 
excluded from the courtroom.
    Asbestos lawsuits repeatedly have confirmed the finds of 
Milgram's experiment: that most people will believe what an 
expert tells them. When an expert testifies about scientific or 
technological facts, we believe what he says, not because of 
his credentials, or because we think ourselves obligated to do 
so, but because we believe that he has access to the truth. We 
believe that the expert is revealing to us a part of that 
truth. We are aware that we do not know as much as the expert 
does, and so we defer to him.
    Before an expert is allowed to exercise this power over a 
jury, the courts must be certain that he is, in fact, 
presenting the truth. The expert's power over the jury is not 
diminished when he presents inaccurate information. Rather, it 
is the trial itself that is compromised.\62\
---------------------------------------------------------------------------
    \62\ The Judiciary Committee encountered this very phenomenon 
during the first day of its executive consideration of this bill. In 
response to a question from a member of the committee, Dr. Laura Welch, 
a medical doctor affiliated with The Center to Protect Workers' Rights, 
stated that in her ``opinion, there are epidemiologic studies that show 
that substantial exposure to asbestos raises the risk of colon 
cancer.'' This opinion easily could have been persuasive to committee 
members had Dr. Crapo not been present to respond. He explained: 
``There is really only one cohort or study that has really 
significantly shown an association [of asbestos exposure] with 
colorectal cancer. It was an early one done. The problem with that 
cohort was that--and it was Selikoff's cohort of insulators--they had 
an 80 percent smoking incidence in that cohort, and the controls [the 
study] used to predict the rate of colorectal cancer in the group came 
from normal American males that had about a 40 to 50 percent smoking 
rate, and smoking is a major cause of colorectal cancer. So you can 
raise some concerns of, did they have the right control number when 
they estimated the increased rate? That epidemiological study has been 
redone in a total of 14 cohorts, and when you do a meta-analysis, which 
means [you] take all the cohorts, all the work that has been done on 
[the subject] * * * and say, is there an increased risk?, the answer is 
absolutely no. The SMR for that is 1.03, where no risk is 1.00. An 
elevated risk would be 2 or something. So you are talking about a 
profound amount of studies that say there is no increased risk if you 
properly control for smoking. And I would further add that if you go to 
most major medical textbooks under asbestosis and cancers and look it 
up, they will say colorectal [cancer] is not associated [with asbestos 
exposure].'' See also infra, Attachments ``E,'' ``F,'' ``G,'' ``H,'' 
and ``I.''
---------------------------------------------------------------------------
    Had all courts been required to exclude expert testimony 
that has not been tested for validity and relevance, the 
asbestos-litigation crisis probably never would have become a 
crisis.\63\ The pleural plaques-phase of the litigation, which 
dominated the mid-1990s, never would have occurred. The clear 
weight of the medical evidence indicates that pleural plaques 
are not substantial evidence of either present harm or the 
threat of future harm. No expert evidence to the contrary 
should be admissible in an American court. Nor, were invalid 
expert testimony excluded from the courtroom, would law firms 
be able to employ slipshod medical diagnoses to identify 
asbestosis.
---------------------------------------------------------------------------
    \63\ See Patrick M. Hanlon, Asbestos Legislation, SH043, ALI-ABA 
Course of Study Materials (Sept. 2002) (``Only a few thousand cancer 
cases are filed each year. If the judicial system merely had to resolve 
those cases, there would be no asbestos litigation crisis''). See also 
id. (``Most defendants, including many of those who have filed for 
bankruptcy, could manage the problem of compensating cancer victims and 
people with serious asbestosis. Compensating hundreds of thousands of 
people who have no breathing impairment whatever is a task not many 
companies can handle''). See also infra Attachment ``I'' (describing 
unsound medical theories employed in asbestos litigation) (Letter of 
Dr. Ilgren).
---------------------------------------------------------------------------
    Second, it is apparent that for many defendants, going to 
trial ceases to be an option when unrestricted intangible 
damages are threatened. By ``intangible damages,'' I refer to 
punitive damages, pain and suffering, and all other damages 
that are not based on a measurable harm and that are 
potentially unlimited in amount.\64\
---------------------------------------------------------------------------
    \64\ Common sense and practical experience suggest that these types 
of damages are interchangeable--where a jury can award one kind, it 
generally can find ways to award other kinds as well. See, e.g. Adam 
Liptak, Pain-and-Suffering Awards Let Juries Avoid New Limits, The New 
York Times, October 28, 2002, at A14 (noting that ``[a]s all sorts of 
limitations have recently been placed on punitive damages, creative 
lawyers have shifted their attention to pain and suffering, a little-
scrutinized form of compensation for psychic harm''). See also Parloff, 
The $200 Million Miscarriage of Justice, supra note 4 (describing 
Mississippi jury award of $150 million in ``compensatory''--not 
punitive--damages to six asbestos plaintiffs with no injury or 
impairment).
---------------------------------------------------------------------------
    These types of damages (particularly punitive damages) are 
at war with the principles and structure of the civil 
trial.\65\ The civil-justice system tolerates low standards of 
proof because it does not create or impose harm. Rather, it 
evaluates existing harms and determines which party most 
appropriately bears their costs. The civil-justice standard of 
proof is thus proportionate to the potential of compensatory 
liability. Because the harm at issue exists regardless of 
whether the court acts, it is appropriate to ask simply who, 
more likely than not, should bear the cost of that harm.
---------------------------------------------------------------------------
    \65\ See also Thomas H. Dupree, Jr. & Theodore J. Boutrous, Jr., 
Successfully Challenging Punitive Damage Awards: Winning Strategies 
After State Farm v. Campbell, National Legal Center for the Public 
Interest (forthcoming 2003) (noting that punitive damages ``do not 
serve a compensatory function, nor are they awarded with the 
protections of the criminal justice system'').
---------------------------------------------------------------------------
    But when unlimited intangible damages are permitted, the 
civil-justice system's low standard of proof becomes an 
invitation to abuse. Now the court creates new harms--and 
imposes them despite reasonable doubt about the facts. And, 
unlike even in the criminal justice system, the potential 
liability is unknowable. In the classes of cases where punitive 
damages often are awarded, the defendant, in every case, risks 
putting his entire business at stake.\66\ Given the 
uncertainties of a jury trial, the typical defendant will not 
take this risk, even if he believes that he can show that he is 
not liable.
---------------------------------------------------------------------------
    \66\ Just four months ago, for example, a Madison County, Illinois 
jury awarded an individual asbestos plaintiff $250 million--an amount 
that certainly would threaten the viability of most businesses. See 
Alex Berenson, 2 Large Verdicts in New Asbestos Cases, The New York 
Times, April 1, 2002, at C4. For a discussion of punitive damages' 
predominance in particular classes of cases, see Erik K. Moller et al., 
Punitive Damages in Financial Injury Verdicts, 28 J. Legal Stud. 283, 
304 (finding, based on review of financial-injury cases in five large 
jurisdictions, that ``[u]niformly, punitive damages represent a large 
portion of the total damages awarded * * * : from 43 percent of all 
damages in other contract verdicts to over 70 percent of all damages in 
insurance verdicts''). For data regarding the frequency with which 
punitive damages are awarded in particular classes of cases, see Erik 
K. Moller, Trends in Civil Jury Verdicts Since 1985 54 Table A.9 (RAND 
1996) (indicating that in some types of litigation, punitive damages 
are awarded in over a quarter of cases).
---------------------------------------------------------------------------
    This clearly is what occurs in much asbestos litigation. 
The threat of massive intangible damages has vastly magnified 
the bargaining power of the plaintiffs firms. As a direct 
consequence, these firms are now able to impose coercive 
settlements. In exchange for settling its few legitimate 
claims, a large-inventory firm can demand that defendants also 
settle thousands of manufactured claims involving no credible 
evidence of impairment.\67\ Even large defendants are afraid 
(with reason) to go before a jury even on a small number of 
claims.
---------------------------------------------------------------------------
    \67\ For examples of this phenomenon, see Parloff, $200 Billion 
Miscarriage of Justice, supra note 4 (discussing bouquet trials and 
David Cosey litigation).
---------------------------------------------------------------------------
    The Supreme Court recently again has held that the federal 
guarantee of due process places limits on the amount of a 
punitive-damage award.\68\ Once again, however, the court's 
analysis is restricted to formal punitive damages--it ignores 
other types of punitive-in-all-but-name intangible damages that 
have grown to massive size in recent years. Moreover, once 
again, the Court has ``eschew[ed] a bright-line limit'' even 
for punitive awards.\69\ As commentators have noted, this 
ambiguity already has been exploited by some courts.\70\
---------------------------------------------------------------------------
    \68\ See State Farm v. Campbell, 123 S.Ct. 1513 (2003).
    \69\ Dupree & Boutrous, supra note 65.
    \70\ See id. (discussing Trinity Evangelical Lutheran Church v. 
Tower Ins. Co., No. 01-1201, 2003 WL 21205367 (Wis. May 23, 2003), and 
TVT Records v. The Island Def Jam Music Group, 257 F. Supp. 2d 737 
(S.D.N.Y. 2003)).
---------------------------------------------------------------------------
    The federal high court should restrict intangible-damage 
awards to the value of transactions costs--i.e., to the amount 
of a reasonable attorneys fee. And, where additional damages 
are authorized by statute, they should be limited to a small 
multiple of concrete, calculable damages.
    Some jurists have taken the view that because exemplary 
damages were allowed at the time that the Fifth and Fourteenth 
Amendments were adopted, the due-process guarantee places no 
limits on such awards today. It thus bears emphasis that truly 
massive intangible-damage awards are a creature only of the 
last thirty years. As one commentator has noted, for example, 
the largest reported punitive-damage award upheld on appeal in 
California before 1960 was $10,000.\71\ The size of awards 
allowed at common law was relatively small--in fact, comparable 
to the limits suggested here. The due-process clauses guarantee 
no ``right'' to these types of awards, unless one takes the 
view that our Constitution acquired its current meaning in the 
1970s.
---------------------------------------------------------------------------
    \71\ Written Statement of Theodore B. Olson Concerning Civil 
Justice Reform, Before the U.S. Senate Subcommittee on Consumer 
Affairs, Foreign Commerce, and Tourism of the Committee on Commerce, 
Science, and Transportation, 1995 WL 152026 (April 4, 1995). See also 
id. (describing recent decade's exponential growth in size of Alabama 
and Texas punitive-damages awards); Dupree & Boutrous, supra note 65 
(describing Kentucky Supreme Court's recent approval of a punitive-
damages award ``more than twice as large as the aggregate of all 
punitive verdicts approved on appeal in Kentucky history'') (emphasis 
in original).
---------------------------------------------------------------------------
    For intangible damages--as for asbestos--it is the dose 
that makes the poison. The massive awards permitted today 
overwhelm the civil-justice system and frustrate its truth-
seeking function. Unless these awards are cabined within their 
historical limits, all other process guaranteed to those who 
are sued becomes illusory.
    To conclude, I think that it is fair to say that asbestos 
litigation has warped the American civil-justice system. The 
courts have been used to commit abuses that one would not have 
thought possible in America. Congress may yet enact this bill, 
and put an end to asbestos lawsuits. Even if Congress does so, 
however, the asbestos model of litigation is now too well-
practiced to permit hope that it will not reappear in some 
other form. The problems described here are ones that we will 
confront again in the coming years.

                                                           Jon Kyl.

ATTACHMENT A

                    Kazan, McClain, Edises, Abrams,
                               Fernandez, Lyons, & Farrise,
                                                     July 23, 2002.
Hon. Jack B. Weinstein,
U.S. District Court--EDNY,
Brooklyn, NY.
Hon. Burton Lifland,
U.S. Bankruptcy Court--Southern District,
New York, NY.
Re In Re Johns-Manville Corp., et al., Case Nos. 82 B11656 (BRL) 
        through 82 B11676 (BRL), Inclusive, NYAL Index No. 4000. 
        Bernadine K. Findley, et al. v. Leslie Gordon Fagen, et al., 
        E.D.N.Y. 90 CV 9373 (JBW), NYAL Index No. 4000.
    Dear Judge Weinstein and Judge Lifland: I had the privilege 
of attending the hearing held in your court on December 13, 
2001, and the even greater pleasure of being asked to comment 
following the presentations by the Manville Trust, the Futures 
Representative, and counsel for the SCB. At the conclusion of 
those proceedings, you asked the Trust to meet and confer with 
Mr. Fagen and the SCB and report back in 30 days. I understand 
that you gave them at least one additional extension. Although 
we have heard various rumors about progress in those 
discussions from time to time, nothing very specific has 
surfaced.
    Seven and a half months have gone by. Nothing has changed. 
The Trust has received some 40,000 additional cases. Last week, 
I co-chaired Mealey's ``Wall Street Forum: Asbestos'' seminar 
at which Mr. Austern presented some information. He reported 
that 90% of the Trust's last 200,000 claims have come from 
attorney-sponsored x-ray screening programs, that 91% of all 
claims allege only non-malignant asbestos ``disease,'' and that 
these cases currently receive 76% of all Trust funds.
    In my submission for the December hearing, titled 
``Memorandum by Interested Attorney,'' I made my own 
suggestions as to an appropriate revision of the disease matrix 
value system and also proposed as an alternative that the court 
consider taking steps to implement a useful and legitimate 
medical screening program.
    I do not write to point fingers at anyone, for I have no 
idea why nothing seems to have been accomplished to date, but 
simply to suggest with all respect that the time has come for 
your Honors to exercise the powers of the Chancellor and take 
whatever steps you think appropriate to fix this problem. 
Nothing you can do can make things worse; any changes you make 
can only be an improvement of the current intolerable 
situation.
            Respectfully,
                                                      Steven Kazan.



            ADDITIONAL VIEWS OF SENATORS FEINSTEIN AND KOHL

    We write separate views on S. 1125, the FAIR Act, to 
clarify certain amendments passed in Committee and to highlight 
our priorities as the legislation proceeds to the Senate Floor. 
The legislation passed out of Committee reflects a substantial 
improvement over the FAIR Act as introduced. But we strongly 
believe that additional changes are necessary before the bill 
is ready for final passage.
    Without question, our State and Federal courts face an 
asbestos litigation crisis. An estimated 18.8 million U.S. 
workers were exposed to high levels of asbestos from 1940 
through 1979. Claims resulting from related cancers and other 
ailments are expected to cost up to $210 billion. More than 
500,000 cases have been brought in the past 20 years, targeting 
8,400 companies. The court dockets are simply clogged with 
claims. As a result, the sickest victims must wait years before 
their claims are resolved and dozens of companies are filing 
for bankruptcy due to the overwhelming cost of lawsuits. The 
enormity of this crisis calls for a national solution.
    We support the concept of a comprehensive, no-fault 
national trust. However, any Trust Fund created by Congress 
must be fiscally responsible, establish fair compensation for 
asbestos victims, and provide certainty for all. We supported 
amendments in Committee to accomplish these goals, and many of 
those amendments passed. But there is more to be done.
Financial Risk Amendment
    The Feinstein-Kohl contingent call amendment passed by the 
Committee provides an important financial reserve in case of 
unexpected contingencies. As introduced, the FAIR Act provided 
no mechanism to raise additional funds from defendant companies 
or insurers if claims outstripped the resources of the Trust 
Fund. Our amendment addresses this deficiency and is explained 
below.
    S. 1125 separates contributions from defendant companies 
into eight time periods stretched over 27 years. Each time 
period has an annual aggregate amount that applies to defendant 
company contributions. For example, years one through five 
total $2.5 billion a year to be paid by defendant companies. In 
subsequent time periods, the annual aggregate number is reduced 
according to scheduled step-downs.
    Our amendment would require that these reductions only be 
allowed if the Administrator can certify that the Trust Fund 
has paid and will continue to fully pay the compensation awards 
afforded to asbestos claimants.
    Specifically, the Administrator must consult with experts 
in determining whether or not to certify a reduction. A 
contributor to the Trust Fund (defendant company or insurer) is 
allowed an opportunity to comment and offer additional 
information to support a determination that additional 
contributions are not necessary and hence, a reduction is in 
order.
    Denying a reduction in one time period does not restrict 
the Administrator from allowing a reduction in the future to 
the value allotted that future time period. Furthermore, the 
Administrator is allowed flexibility to partially limit a 
reduction so long as the contributions will be sufficient to 
meet current and future claims.
    Our amendment is not a one-way street. It would permit the 
Administrator to reduce the aggregate contribution levels and 
give defendants a credit if the defendants were denied 
deductions in earlier time periods. These credits would not 
exceed the amount of extra payments received earlier.
    Under the FAIR Act as reported out by the Committee, 
insurance company contributions will be determined by the 
Asbestos Insurers Commission, but shall equal the total amount 
($52 billion) paid by the defendant companies. For the purposes 
of our amendment, the insurance companies will be liable for 
the same amount for any contingent funding assessed upon 
defendant companies.
    Our amendment also offers a solution to the back-end 
problem. Namely, we need to address the possibility that the 
Trust Fund will require additional dollars beyond the initial 
27 year period. Our amendment permits continued contributions 
past year 27 if the Administrator finds that more funds are 
needed to cover claims. We do not require companies and 
insurers to pay this further obligation. If they choose, they 
can return to the tort system. Working with Senator Hatch, we 
agreed that this return to the tort system be the federal court 
system. Alternatively, companies and insurers can maintain 
their immunity by making payments into the Trust Fund. The 
choice is theirs to make based on each company's or insurer's 
self-interests.
    There must be a check to ensure that we aren't giving 
defendant companies and insurers a break on their contributions 
if we aren't able to guarantee a full compensation award 
allowed for by the Trust Fund. The amendment is a common-sense 
approach that provides accountability that asbestos victims are 
fairly and fully compensated per the law. Furthermore, this 
amendment still provides a measure of certainty for the 
companies of what their total contribution could be, even if it 
is higher than what the bill allows for now. We are pleased 
that Chairman Hatch worked with us to include this amendment 
which we feel greatly improves the FAIR Act.
Ban on Asbestos Products
    The legislation reported out of Committee includes an 
amendment we drafted with Senator Hatch banning the production, 
manufacture and distribution of asbestos-containing products. 
We believe this amendment is a crucial component of any 
comprehensive bill. Any resolution to the asbestos litigation 
crisis should also end the tragic legacy of disease and death 
that exposure to asbestos has wrought. We must minimize the 
creation of new asbestos victims by banning the use of this 
dangerous mineral in this country. The Judiciary Committee has 
become very familiar with the tremendous long-term human 
health, environmental and economic costs of reliance on 
asbestos. It makes no sense to develop a complex plan for 
mitigating these costs while still allowing this harmful 
substance to be used in workplaces across America.
    The asbestos ban amendment included in S. 1125 builds off 
of the asbestos phase-out and ban regulations that the 
Environmental Protection Agency (EPA) finalized in 1989 and 
that would have taken full effect by 1997. Unfortunately, the 
5th Circuit Courtof Appeals overturned these rules in 1991 and 
this decision was not appealed to the U.S. Supreme Court. The asbestos 
ban amendment also draws from Senator Murray's Ban Asbestos in America 
Act, S. 1115. The language requires the EPA within two years to 
finalize rules banning the manufacture, processing and distribution in 
commerce of asbestos containing products. The ban also applies to the 
importation of asbestos containing products from other countries. Prior 
to finalizing these rules, the EPA shall be required to conduct a study 
to determine whether certain roofing products should remain exempt from 
the ban. It is worth noting that in 1989, the EPA chose not to exempt 
this product category from its ban; however, in the spirit of 
compromise we agreed to defer this decision to EPA's expertise. 
However, we must stress the importance of EPA conducting this study 
prior to finalization of the asbestos ban.

Fair Claims Values

    As the bill goes forward, the legislation must ensure fair 
claims values. Senators Feinstein and Graham passed an 
amendment in Committee that substantially increases the award 
values for claims under the Trust Fund. Through these increased 
award values, the amendment would direct an estimated $11 
billion additional dollars to victims (from $96.2 to $107.8 
billion).
    The new claims values increase compensation for the more 
serious diseases. For example, under the Feinstein-Graham 
amendment, compensation for pleural disease rose from $60,000 
to $75,000, Compensation for disabling asbestos went up from 
$600,000 to $750,000; and the maximum compensation for non-
smoking lung cancer victims went up sharply. Lung cancer 
victims with 15 years of exposure can now get maximum awards of 
$600,000 (instead of $100,000). Those with pleural disease or 
disabling asbestosis can get maximum awards of $1,000,000.
    After adoption of the claims awards amendment, Senators 
Leahy and Kohl proposed another amendment to truly fund the 
FAIR Act at its purported $108 billion level. The Leahy-Kohl 
amendment provides an additional $14 billion of mandatory 
contributions--$7 billion each from defendant companies and 
insurers--and eliminates an ill-defined section that sought to 
raise $14 billion from companies that had less than $1 million 
in asbestos-related litigation expenses. We concur with the 
minority views of Senator Leahy that it is both the intention 
and the effect of this amendment that the contingent funding 
mechanism established by the Kohl-Feinstein amendment--and the 
amount of additional dollars available under that mechanism--
remain unchanged.

Transition to Trust Fund

    We remain very concerned about the adequacy of the bill's 
provisions regarding the transition of the 294,000 pending 
asbestos lawsuits into the Trust Fund. The Committee took one 
step forward by adopting the Feinstein amendment that delays 
implementation of the tort preemption provisions of the bill 
until the Trust Fund is fully operational and processing 
claims. As the bill was originally drafted, pending claims were 
barred from the court system upon the date of enactment. This 
preemption would have deprived mesothelioma patients and other 
victims any legal remedy while the Trust Fund was being set up. 
Since individuals with mesothelioma typically live for only a 
matter of months after diagnosis, the bill as introduced would 
have essentially denied them any remedy while they were alive. 
Under the bill as amended, individuals with asbestos-related 
diseases will maintain their legal rights during the transition 
period.
    The bill still has not fully addressed issues raised by 
final settlements. During Committee mark-up, Senator Feinstein 
offered language that would exempt from the Trust Fund 
settlements that were valid under state law as well as claims 
upon which a court rendered a judgment to pay money. Senator 
Feinstein withdrew her amendment after Chairman Hatch agreed 
with Senators of both parties to put language excluding 
settlements from the Trust Fund into the manager's package on 
the Floor.
    Many asbestos victims have reached settlements with 
corporate defendants that are only partly paid. The 
participants in these settlement agreements are counting on 
these payments to support their families and pay medical bills. 
Are we really going to replace a claimant's current stream of 
income with a future promise to pay? In some cases, individuals 
getting compensated under current settlement agreements will 
get less money or even no money under the Trust Fund. Exclusion 
of these settlements is necessary to preserve basic fairness 
and to protect the bill against constitutional challenges.
    In sum, we applaud the Chairman and Ranking Member for 
their efforts in shepherding this enormously complex 
legislation through Committee. However, we have more work to do 
before this legislation can become law.
                                   Dianne Feinstein.
                                   Herb Kohl.

                           XI. Minority Views

                              ----------                              


   MINORITY VIEWS OF SENATORS LEAHY, KENNEDY, BIDEN, KOHL, FEINGOLD, 
                      SCHUMER, DURBIN, AND EDWARDS

                            I. INTRODUCTION

    After weeks of Committee consideration of legislation to 
enact a national trust fund for victims of asbestos-related 
disease, we are disappointed that the Committee failed to reach 
consensus on S. 1125, the Fairness in Asbestos Injury 
Resolution Act of 2003 (``FAIR Act''). We had hoped a 
bipartisan dialogue over the past several months would result 
in the best means for providing fair and efficient compensation 
to the current victims and those yet to come, and we thank 
Senators on both sides of the aisle who have been working with 
us in good faith to try to achieve common ground.\93\
---------------------------------------------------------------------------
    \93\ We are particularly disappointed that the majority that passed 
the FAIR Act out of Committee has demanded that these minority views 
must be filed less than 24 hours after the text of the amended bill was 
available from legislative counsel. This has been a tremendously 
difficult piece of legislation to develop, and the long and involved 
mark-up in Committee included dozens of amendments and numerous 
agreements to work further on a variety of provisions. While it is not 
clear why the majority is forcing us to issue our views before we are 
permitted to carefully read the revised bill, it is clear that it makes 
no sense to do so. Nonetheless, we have drawn on the reserves of good 
will and energy that have characterized our efforts throughout the work 
on this legislation, and have drafted our views to the best of our 
ability given the extremely limited time the revised bill has been 
before us.
---------------------------------------------------------------------------
    We have all learned a great deal about the harms wreaked by 
asbestos exposure since Senator Leahy convened the first 
hearing on the asbestos litigation crisis last September. What 
we face first and foremost, as Senator Kennedy reminded the 
Committee during our final markup, is an asbestos-induced 
disease crisis--and the much publicized ``litigation crisis'' 
has arisen only because thousands of workers and their families 
have suffered debilitating disease, and death, due to asbestos 
exposure.
    Asbestos is the most lethal substance ever widely used in 
the workplace. Between 1940 and 1980, more than 27.5 million 
workers in this country were exposed to asbestos on the job, 
and nearly 19 million of them had high levels of exposure over 
long periods of time. That exposure has irrevocably changed 
many of their lives. Each year, 10,000 of these victims die 
from lung cancer and other diseases caused by asbestos. Each 
year, hundreds of thousands of them suffer from lung conditions 
which make breathing so difficult that they cannot engage in 
the routine activities of daily life. Even more have become 
unemployable due to their medical condition. And, because of 
the long latency period of these diseases, not only will the 
damage done by asbestos continue for decades but many of the 
exposed live in fear of a premature death due to asbestos-
induced disease. These are the real victims of the asbestos 
nightmare and must be the first and foremost focus of our 
concern.
    Not only do the victims of asbestos exposure continue to 
suffer, and their numbers to grow, but the businesses involved 
in the litigation, along with their employees and retirees, are 
suffering from the economic uncertainty created by this 
litigation. More than 60 companies have filed for bankruptcy 
because of their asbestos-related liabilities. As Senator Leahy 
observed at the Committee's March 5, 2003, hearing on asbestos 
litigation: ``These bankruptcies created a lose-lose situation. 
Asbestos victims deserving fair compensation do not receive it 
and bankrupt companies do not create new jobs nor invest in our 
economy.''
    Working with Chairman Hatch and others, we encouraged 
representatives from organized labor and industry to help us 
reach consensus on a national trust fund to fairly compensate 
asbestos victims and to provide financial certainty for 
asbestos defendants and their insurers. After much hard work, 
however, we have yet to craft a complete bill to create an 
effective and fair national trust fund.
    A successful trust fund--which would provide fair and 
adequate compensation to all victims and would bring reasonable 
financial certainty to defendant companies and insurers--
includes four essential components: appropriate medical 
criteria, fair award values, adequate funding, and an 
efficient, expedited system for processing claims that enables 
eligible claimants to obtain prompt payments without the 
complications, time and expense of a traditional lawsuit. Of 
course, there are many other important aspects of such a fund, 
including a functional administrative system, but these four 
components are the core requirements necessary to the 
foundation of a fair fund.
    During the first full mark-up session of the Committee on 
the FAIR Act, we unanimously adopted the Leahy-Hatch amendment 
on medical criteria, as well as a number of other bipartisan 
amendments. We then tackled the issue of solvency and, again, 
were able to make a bipartisan improvement by adopting a 
proposal by Senator Feinstein, Senator Kohl and Senator Hatch. 
More remains to be done on this issue, but an auspicious 
beginning left us hopeful of future agreements.
    That hope turned to disappointment when we next turned to 
the critical issue of determining award values for victims of 
asbestos-related diseases. Although the changes made to award 
values in the FAIR Act as introduced constitute movement in the 
right direction, the Committee did not move far enough toward 
providing fair compensation to all impaired victims of asbestos 
exposure. Indeed, seriously ill victims of asbestos exposure 
would receive less compensation, on average, under the current 
version of the FAIR Act than they would in the tort system. The 
FAIR Act is not yet fair. We are extremely disappointed that 
Senators from both parties have yet to reach consensus on this 
fundamental aspect of a fair and effective national trust fund.
    At times over the last month, we had genuine reason to 
believe that the Committee might agree upon a real solution to 
the asbestos crisis. We invested ourselves completely in a good 
faith effort to reach consensus. But that movement toward 
consensus stalled just as we addressed this fundamental issue 
of whether we were truly willing to compensate asbestos victims 
fairly.
    Since the first hearing on this issue, we have emphasized 
one bedrock principle: We cannot support a bill that gives 
inadequate compensation to victims. We will not adjust fair 
award values into some discounted amount just to make the final 
tally come within a pre-determined, artificial limit. Senator 
Leahy summed up this basic tenet during our markup of the FAIR 
Act: ``We will have failed if we leave those poisoned by 
asbestos without fair compensation.''
    Of course, other aspects of the bill need correction and 
modification. We must be certain that the administrative system 
we establish is a fair, no-fault process. In our zeal to remove 
cases from the tort system, we do not want to create a process 
that leaves victims facing years of delay before the new system 
is operational. It would be cruel to lock the doors to our 
courthouses before the administrative process is ready to award 
compensation to victims. And, we must determine a way to avoid 
the administrative process being swamped by 300,000 claims on 
the day it theoretically opens its doors, and thus delay 
victims' compensation for years.
    Given these serious problems, we believe that forcing the 
Act through the Senate, in its present form, would prove 
counterproductive, even fatal, to this legislative effort. The 
near party-line vote within the Committee on this legislation 
was more of a setback than a step forward. Proceeding without 
consensus would open this matter to weeks of debate on the 
floor, just as it has required weeks of consideration before 
the Judiciary Committee. Proceeding without consensus would 
likely result in numerous amendments and extended debate with 
no agreement emerging at the end of the process.
    We need to continue our work to achieve the common ground 
needed to enact a good law. Acting together through consensus 
remains, in our view, the best way to move a bill through the 
legislative process and into law.

                 II. BIPARTISAN IMPROVEMENTS TO S. 1125

    The Committee adopted more than 35 bipartisan amendments to 
improve S. 1125. We thank Chairman Hatch and other members of 
the Committee for working with us to achieve consensus on these 
improvements to the FAIR Act.
A. Collateral Sources, Indexing Awards For Inflation, Banning Asbestos 
        and Other Bipartisan Agreements
    During our first full mark-up of S. 1125, the Committee 
adopted numerous amendments to correct some of the 
unnecessarily harsh provisions in the original bill. For 
example, we unanimously adopted a Hatch-Leahy amendment to 
strike offsets to compensation for asbestos victims from 
previous payments from disability insurance, health insurance, 
Medicare, Medicaid, and death benefit programs. Left unchanged, 
these offsets would have marked a dramatic change from current 
law, and would have resulted in a cost shift of millions, or 
perhaps billions, of dollars from defendants and their insurers 
to other insurance companies, health care plans, and the 
federal government.
    Just as important, the use of these ``collateral sources'' 
in the original bill would have reduced or eliminated 
compensation pledged to asbestos victims. For instance, a 
mesothelioma victim, who had disability and medical insurance 
and who lived more than the usual 18-month survival time, might 
not receive any of the scheduled award under the original bill 
because of these collateral source offsets. Senator Durbin, 
Senator Feinstein, Senator Leahy and others pointed out this 
flawed approach at our June 4th hearing on the FAIR Act. We 
could not support reducing compensation to asbestos victims 
simply because they survived, or because they had the good 
fortune and foresight to purchase insurance. We are pleased 
that this section of the original bill has been revised to only 
offset past judgment or settlement payments for the same 
asbestos-related injuries from any awards made under the 
national trust fund.
    That first day of consideration of S. 1125, the Committee 
also adopted another bipartisan amendment authored by Senator 
Leahy, Senator Kohl and Senator Hatch to index the award values 
to asbestos victims for future inflation as a matter of basic 
fairness in a 50-year fund.
    We also announced an agreement by Senator Feinstein, 
Senator Kohl, Senator Hatch and Senator Murray that would ban 
the commercial manufacture, use and distribution of asbestos, 
which we were all pleased to support. Though many people 
believe asbestos is banned, it is in fact still commercially 
used today. As the Committee and the full Senate consider 
creating an alternative compensation system to address past 
exposures to asbestos, it is only sensible that we also prevent 
future asbestos-related illnesses from occurring by banning 
asbestos use.
    This bipartisan amendment directs the Environmental 
Protection Agency, within two years of enactment of the FAIR 
Act, to promulgate final regulations prohibiting the 
manufacture, processing, or distribution in commerce of 
asbestos-containing products. The provision allows affected 
companies to petition for an exemption from the ban for 
individual products if the product does not pose an 
unreasonable health risk and if there is no safer 
alternative.\94\ This ban will bring the United States into 
line with the 25 other countries that have already banned 
asbestos and with the European Union, which is slated to 
implement a similar ban in 2005.
---------------------------------------------------------------------------
    \94\ In addition, roofing cements that are totally encapsulated 
with asphalt are exempt, subject to an EPA review. The amended bill 
would direct the EPA to review the exemption for roofing sealants 
within 18 months of passage of the Act in order to determine the risks 
posed by these products and whether there are reasonable alternatives. 
The amendment would also give the EPA the authority to revoke the 
exemption for these products based on the findings of its review. In 
2001, 62% of the asbestos consumed in this country was in roofing 
products. That is why it is so important to direct EPA to revisit this 
question through a study within 18 months of passage of the Act and to 
give EPA the authority to revoke this exemption if EPA deems it 
appropriate to do so.
---------------------------------------------------------------------------
    The Committee also adopted an amendment by Senator Leahy to 
ensure future accountability of corporate participants in the 
Fund that are sold, or otherwise change hands. The Leahy 
amendment defines participants in the trust fund to include so-
called ``successors in interest'' based on the ``substantial 
continuity test'' to determine whether it is fair and 
appropriate to require a company to take on the obligations of 
its predecessor. This amendment adopts the precedent of number 
courts that have generally looked to a number of factors in 
determining ``substantial continuity'': whether the new company 
retains the same assets and facilities, the same employees and 
supervisors, the same jobs and working conditions, the same 
products and services, and the same customers and 
investors.\95\
---------------------------------------------------------------------------
    \95\ This ``substantial continuity'' rule has been routinely 
applied in cases involving tort plaintiffs and the beneficiaries of 
federal statutes, such as the NLRA (labor relations), the Family Leave 
Medical Act (FMLA), CERCLA (environmental crimes), Title VII (EEOC) and 
the Veterans' Readjustment Assistance Act.
---------------------------------------------------------------------------
    The Committee also adopted an amendment by Senators Durbin 
and Kyl, and later, a similar amendment offered by Senator 
Biden, to expand and clarify the scope of the financial 
hardship and inequity adjustments allowed for defendant 
participants' contribution to the Fund. The Durbin-Kyl 
amendment doubled the annual cap for the financial hardship 
adjustment from 3% to 6% of the total annual contributions 
required of all defendant participants, and likewise from 2% to 
4% for inequity adjustments.
    In determining who qualifies for an inequity adjustment, 
the Durbin-Kyl amendment distinguishes costs incurred defending 
claims that were lost or settled out of court from costs 
incurred defending claims that neither resulted in an adverse 
judgment against the defendant company nor settled requiring a 
payment to a plaintiff by that defendant company. The amendment 
mitigates the inequitable effect upon a defendant company with 
an exceptionally strong record of successfully defending 
asbestos claims that would be placed in a relatively high 
payment tier under the legislation only because significant 
defense costs were incurred in order to dispose of claims which 
ultimately turned out to be without merit. The amendment also 
recognizes that some corporate connections to the use of 
asbestos in manufacturing may be so remote, yet the impact of 
the FAIR Act may be so disproportionate that, as applied, it 
might have Due Process or Takings Clause implications. The 
amendment thus addresses this potential constitutional problem.
    The Biden amendment permits an inequity adjustment for a 
company whose contribution rate, as a percentage of gross 
revenues, is exceptionally high compared to the median 
contribution rate for other companies in the same tier, thereby 
bringing companies that are statistical outliers in terms of 
their contributions within the range of their peers. The 
amendment thus addresses the unfairness of the FAIR Act that 
allows large wealthy companies to receive a windfall, while 
smaller companies are asked to pay more than they would have 
spent in the tort system.
    In addition, the Committee adopted a number of other 
bipartisan amendments that address other matters in the bill, 
such as providing for annual Congressional oversight of the 
asbestos fund, imposing criminal penalties for false or 
fraudulent statements against the fund, establishing penalties 
for corporations that fail to make their contributions to the 
fund, establishing procedures for the families of deceased 
asbestos victims to apply for compensation, and applying the 
Freedom of Information Act to the new entities that will act 
like executive branch agencies--the Asbestos Insurance 
Commission and Office of Asbestos Injury Claims Resolution.

B. Consensus Medical Criteria

    While pursuing a legislative solution to the asbestos 
crisis, all Senators have been sounding a consistent theme: 
fair compensation to the truly sick. At the beginning of our 
third week of consideration of the FAIR Act, we were pleased 
that the Committee unanimously adopted an amendment by Senators 
Leahy and Hatch establishing medical criteria requirements with 
the national trust fund to identify legitimate victims of 
asbestos exposure. This amendment properly defined the truly 
sick, dividing them intoappropriate categories on the basis of 
sound medical diagnoses. Senator Graham declared that coming to this 
bipartisan agreement on medical criteria was a ``breakthrough'' for the 
Committee. We agree.
    We are grateful for the generosity of Dr. Laura Welch and 
Dr. James Crapo, who presented to the Committee an invaluable 
tutorial on the medical aspects of the asbestos problem during 
the Committee's initial mark-up session on the FAIR Act. Our 
bipartisan medical criteria amendment reflects the Committee's 
good use of their expertise. It defines ten categories of 
asbestos-related disease, five levels of non-malignant disease 
and five levels of cancer, which are described in the table 
below.

                       TABLE OF MEDICAL CATEGORIES
------------------------------------------------------------------------
                                                  Description of disease
  Level              Scheduled disease                 and symptoms
------------------------------------------------------------------------
I          Asbestosis/Pleural Disease A........  These individuals
                                                  clearly have asbestos-
                                                  related disease with a
                                                  history of exposure to
                                                  asbestos, but their
                                                  pulmonary function
                                                  tests are within the
                                                  normal range. They
                                                  experience non-
                                                  malignant conditions
                                                  in which asbestos
                                                  fibers are breathed
                                                  into the lungs and (i)
                                                  are transported to
                                                  outside of lungs,
                                                  causing scars to form
                                                  on the pleural lining
                                                  (the thin lining that
                                                  surrounds the heart),
                                                  or (ii) which remain
                                                  inside the lungs,
                                                  causing scarring,
                                                  while retaining at
                                                  least 80% of lung
                                                  capacity.
1II        Mixed Disease With Impairment.......  Every individual in
                                                  this group has a
                                                  medically significant
                                                  impairment, as defined
                                                  by the American
                                                  Medical Association.
                                                  They are impaired due
                                                  to a combination of
                                                  asbestosis and other
                                                  causes, such as
                                                  smoking or silicosis.
                                                  The requirement for a
                                                  1/1 ILO reading on a
                                                  chest x-ray ensures
                                                  that asbestos exposure
                                                  is an important
                                                  contributing factor to
                                                  the lung diseases and
                                                  impairment. Victims
                                                  experience increased
                                                  scarring on lungs,
                                                  with varying levels of
                                                  impairment, ranging
                                                  from shortness of
                                                  breath to being
                                                  homebound and
                                                  requiring oxygen
                                                  treatments.
III        Asbestosis/Pleural Disease B........  These individuals have
                                                  impairment that is
                                                  primarily due to
                                                  asbestosis. They
                                                  develop asbestos-
                                                  related respiratory
                                                  disease with
                                                  increasing losses of
                                                  pulmonary function,
                                                  with lung function
                                                  decreasing to as low
                                                  as 60% of normal.
                                                  Victims with this
                                                  level of impairment
                                                  will not be able to
                                                  continue working if
                                                  they have a physically
                                                  demanding job.
                                                  Approximately half of
                                                  these sick patients
                                                  were in construction
                                                  trades, e.g., plumbers
                                                  and pipe fitters, and
                                                  are prevented from
                                                  continuing these jobs.
IV         Severe Asbestosis...................  These individuals have
                                                  impairment that is
                                                  primarily due to
                                                  asbestosis. They
                                                  experience significant
                                                  loss of pulmonary
                                                  function, with lung
                                                  function between 50%
                                                  and 60% of normal.
                                                  Victims with this
                                                  level of impairment
                                                  will not be able to
                                                  continue working, and
                                                  will not be able to
                                                  perform some
                                                  activities of daily
                                                  living.
V          Disabling Asbestosis................  These individuals have
                                                  impairment that is
                                                  primarily due to
                                                  asbestosis. They
                                                  experience severe loss
                                                  of pulmonary function,
                                                  experiencing loss of
                                                  more than 50% of
                                                  normal lung capacity.
                                                  Victims with this
                                                  level of impairment
                                                  will not be able to
                                                  perform most
                                                  activities of daily
                                                  living. These
                                                  claimants will be
                                                  unable to perform
                                                  activities of daily
                                                  life, such as getting
                                                  dressed, taking a
                                                  shower, cooking
                                                  dinner, or doing even
                                                  minimal work around
                                                  the house. This
                                                  category often becomes
                                                  fatal.
VI         Other Cancer........................  The level of disability
                                                  for this group is
                                                  determined by the
                                                  extent of the cancer.
                                                  Victims suffer from
                                                  colon, laryngeal,
                                                  pharyngeal, stomach
                                                  (i.e., non-lung)
                                                  cancers, the risk of
                                                  which is increased by
                                                  asbestos exposure.
                                                  While some cancers may
                                                  be cured, many of the
                                                  individuals in this
                                                  group will undergo
                                                  surgery, radiation,
                                                  chemotherapy, and
                                                  still eventually die
                                                  of their cancer.
VII        Lung Cancer One.....................  These individuals
                                                  suffer from asbestos-
                                                  related lung cancer.
                                                  For those not
                                                  diagnosed early, the
                                                  life expectancy is 12
                                                  to 18 months. These
                                                  individuals develop
                                                  progressive shortness
                                                  of breath, loss of
                                                  appetite, coughing up
                                                  blood, chest pain, and
                                                  severe fatigue, as
                                                  well as other side
                                                  effects of radiation
                                                  or chemotherapy.
VIII       Lung Cancer With Pleural Disease....  These individuals
                                                  suffer from asbestos-
                                                  related lung cancer
                                                  with pleural scarring
                                                  outside the lung. For
                                                  those not diagnosed
                                                  early, the life
                                                  expectancy is 12 to 18
                                                  months. These
                                                  individuals develop
                                                  progressive shortness
                                                  of breath, loss of
                                                  appetite, coughing up
                                                  blood, chest pain, and
                                                  severe fatigue, as
                                                  well as other side
                                                  effects of radiation
                                                  or chemotherapy.
IX         Lung Cancer With Asbestosis.........  These individuals
                                                  suffer from asbestos-
                                                  related lung cancer
                                                  with pleural scarring
                                                  inside the lung. For
                                                  those not diagnosed
                                                  early, the life
                                                  expectancy is 12 to 18
                                                  months. These
                                                  individuals develop
                                                  progressive shortness
                                                  of breath, loss of
                                                  appetite, couching up
                                                  blood, chest pain, and
                                                  severe fatigue, as
                                                  well as other side
                                                  effects of radiation
                                                  or chemotherapy.
X          Mesothelioma........................  These individuals
                                                  suffer from a rare and
                                                  fatal cancer of the
                                                  chest lining (the
                                                  pleura) and abdomen
                                                  lining. Virtually all
                                                  instances of
                                                  mesothelioma in the
                                                  U.S. are a result of
                                                  past exposure to
                                                  asbestos. This cancer
                                                  is impossible to treat
                                                  and usually fatal
                                                  within 18 months of
                                                  diagnosis. The
                                                  symptoms of this
                                                  disease are similar to
                                                  those of lung cancer--
                                                  progressive shortness
                                                  of breath, loss of
                                                  appetite, coughing up
                                                  blood, chest pain, and
                                                  severe fatigue, as
                                                  well as other side
                                                  effects of radiation
                                                  or chemotherapy.
------------------------------------------------------------------------

    The Leahy-Hatch medical criteria amendment explicitly 
recognized that victims suffering from colorectal cancer 
related to asbestos exposure should be fairly compensated under 
a national trust fund in the Level VI, Other Cancer, category. 
The FAIR Act, as introduced, excluded colorectal cancer victims 
from any compensation, no matter how much exposure to asbestos 
those victims suffered. This surprised many members of the 
Committee given the fact that colorectal cancer is among one of 
the cancers that merit compensation in all of the asbestos 
trusts, including the Manville Trust. Indeed, the American 
Thoracic Society wrote to the Committee urging us to correct 
this injustice, which we are pleased was done as part of the 
consensus medical criteria with a strong presumption of 
eligibility for the scheduled value of compensation in this 
category.\96\
---------------------------------------------------------------------------
    \96\ Letter from Homer A. Boushey, Jr. MD, President, American 
Thoracic Society, to Senator Hatch and Senator Leahy, June 19, 2003: 
``The ATS notes that stomach cancer is listed as a qualifying disease, 
but that colon cancer is not. Evidence supporting the link between 
asbestos exposure and colon cancer is at least as strong or stronger 
than evidence linking asbestos exposure and stomach cancer. We strongly 
urge the Committee to consider the data linking asbestos exposure and 
colon cancer in drafting the list of qualifying diseases.''
---------------------------------------------------------------------------
    The Leahy-Hatch medical criteria provision also provides a 
mechanism for comparing various years of exposure, in various 
industries, on a correctly weighted basis. The amendment 
distinguishes between three time periods of asbestos exposure 
(pre-1976, 1976-1986, and post-1986). This recognizes that 
asbestos use in the workplace was much more prevalent in the 
mid-20th Century than in more recent years. The amendment also 
delineates three levels of exposure defined by occupation, 
which acknowledges that some workers (e.g., insulators) 
experience much more exposure to asbestos than others (e.g., 
mechanics). Thus, the amendment officially creates a nine-
segment grid, assigning greater weight to years spent in high 
exposure trades and earlier time periods, and lesser weight to 
more recent years of exposure and those spent in trades with 
less asbestos exposure generally. Thus, the years a shipyard 
worker worked during World War II--which were among the 
heaviest of asbestos exposures--will be counted as four times a 
normal year of exposure. Our ``weighted occupational exposure'' 
provision fairly accommodates the many scenarios that the 
victims of asbestos exposure will present to the fund to 
determine appropriate compensation. This weighting calculation 
will result in a significant assurance that victims receiving 
compensation from the Fund have experienced an indisputably 
harmful level of exposure, ensuring a medically sound basis for 
the classification of the victims into various disease 
categories.
    The Leahy-Hatch medical criteria amendment also requires 
in-person physician examinations to support the diagnoses of 
each victim, which will eliminate the mass screenings that have 
garnered so much attention in the asbestos litigation debate. 
The Leahy-Hatch medical criteria amendment also requires the 
use of the diagnostic tests and standards that the medical 
community agrees upon for diagnosing these lung diseases, to 
ensure the accuracy of the evidence presented to the Fund. 
Furthermore, it also permits the Fund Administrator to audit 
the doctors whose diagnoses are used by claimants, and to 
refuse to accept submissions from doctors whose diagnoses are 
not trustworthy.
    Finally, the amendment includes a ``take home exposure'' 
provision to allow recovery for spouses and family members who 
were exposed to asbestos from the work clothes of their loved 
ones and provides eligibility for compensation for victims of 
the community poisoning cases in Libby, Montana. During our 
June 4th hearing on the FAIR Act, we heard from Senator Murray 
about the importance of addressing ``take home'' exposure, and 
from Senator Baucus about the basic fairness of covering 
victims of tremolite asbestos exposure in Libby. We agree 
wholeheartedly with Senator Murray and Senator Baucus and we 
were pleased to include these provisions in the consensus 
medical criteria.

C. Safeguarding The Solvency of the Trust Fund

    In our fourth week of Committee consideration, we began to 
address the critical questions of maintaining the solvency of 
the fund, and related issues of ensuring that claimants are 
paid in full in a timely manner. As passed out of Committee, 
this bill still shifts the financial risk of the trust fund 
approach from defendants and insurers to asbestos victims. 
Before a final bill is passed we must determine what will be 
done if the trust fund runs out--or runs short--of money at any 
time during the next 50 years. The one constant in our 
experience with projections of asbestos liabilities is that 
they have invariably been too low. The risk of insolvency in a 
national trust fund--and the risk of inadequate funding short 
of insolvency--must be addressed in order to provide certainty 
to asbestos victims as well as to defendants and insurers.
    Indeed, there is no more fundamental concern underlying 
this bill. Twenty years ago, all the experts predicted that the 
Manville Trust Fund would be paying asbestos victims full 
compensation for many years. Now, asbestos victims get 5 cents 
on the dollar because the Manville Trust Fund is nearly 
insolvent. What has doomed earlier efforts is the fact that 
they were all unfunded or drastically under-funded.
    We must be wary of the Committee Report's repeated and 
erroneous assertions that the trust fund will reach $108 
billion in mandatory contributions from defendants and 
insurers. That $108 billion figure gained a life of its own in 
the mark-up of this bill, but we should remember that it is 
simply an analyst's projection of the likely payments into the 
fund, not a guaranteed minimum funding. What the bill does 
provide is a schedule of contributions, broken out into tiers 
for the defendant companies, with determinations about those 
companies' obligations to the fund depending on their revenues 
and their history of asbestos-related expenditures. But we do 
not even know which specific companies fall into these tiers 
since the amount of asbestos-related expenditures of most 
defendant companies is not publicly disclosed and efforts by 
members of the committee to obtain this information from 
representatives of the defendant companies has been futile to 
date. If analysts' projections are correct, the resulting 
contributions may reach $108 billion, but if the analysis is in 
error--or if the dire predictions of more bankruptcies among 
defendant companies come true--then that number may well be 
lower.
    Successful legislation cannot be predicated on a false 
promise. There must be money to compensate the victims. As 
Senator Feinstein pointed out during the markup: ``If you just 
take the experience of the Manville Trust, which is paying 5 
cents on the dollar, you know that this is not just pie in the 
sky, that this is real, and that the worry about inadequate 
funding is a real worry.''
    Addressing a key part of this critical issue, Senators 
Feinstein and Kohl joined together to craft an amendment that 
would create a contingent funding mechanism to bring in up to 
$45 billion in the first 27 years of the fund in case there is 
an unanticipated surge of claims. Defendant and insurance 
companies would split the responsibility ($22.5 billion each) 
for providing this contingent funding. These funds would only 
be called for in the event that the basic funding proved to be 
inadequate.
    In addition, the Feinstein-Kohl amendment permits the 
Administrator of the fund to request up to $2 billion annually 
to cover any funding shortfalls, beginning in year 28 of the 
fund. Up to $1 billion would come from insurer contributions 
and up to $1 billion would come from defendant company 
contributions. Companies and insurers could make the voluntary 
payments requested by the Administrator or instead could choose 
to opt-out of the fund and be subject to claims in Federal 
court under a compromise reached with Chairman Hatch.
    We supported the ultimate Feinstein-Kohl-Hatch amendment to 
help address the risk of trust insolvency, giving the trust 
Administrator limited authority to request additional funds 
from contributing insurers and defendant companies throughout 
the life of the fund. As a whole, this amendment gives victims 
of asbestos exposure greater certainty that they will receive 
compensation for their injuries.
    However, as discussed in Section III of these views, we are 
still concerned that the trust fund may become insolvent before 
providing all victims of asbestos exposure with fair 
compensation for their injuries. If Congress is to prevent an 
entire group of claimants from seeking justice in our courts, 
we must guarantee that a no-fault system established by this 
bill will not deplete its funds before the promise of this 
legislation can be fulfilled.

D. Fairer Compensation for Asbestos Victims

    The third cornerstone of federal asbestos compensation 
legislation must be fair, timely, and certain compensation for 
victims of asbestos-related diseases. During the mark-up, the 
Committee reached unanimous agreement on the Leahy-Hatch 
medical criteria, which established ten categories of disease. 
The Committee also reached an agreement on the principle that 
the legislation should provide monetary compensation to 
claimants who had suffered impairment, and should provide 
medical monitoring to those individuals with less serious 
asbestos-related conditions. Having reached agreement on 
disease criteria and on the principle that only those who are 
ill should receive a monetary award--and bearing constantly in 
mind that the exposed but less impaired claimants are often 
receiving substantial sums in settlements of tort suits--it is 
imperative that the legislation provide fair levels of 
compensation to impaired individuals who develop the covered 
diseases.
    All of the individuals who qualify for monetary awards 
under S. 1125 will have significant impairment from their 
asbestos-related disease. For many individuals these diseases 
will be fatal. Measured against the health impact and economic 
impact on victims and their family members, the compensation 
provided in the bill for many victims clearly is unfair.
    During the course of the markup, Senators Feinstein and 
Graham proposed, and the Committee approved, an amendment that 
increased claims values for most diseases over those originally 
proposed in S. 1125. We commend Senators Feinstein and Graham 
for working in a bipartisan manner to improve compensation 
values to asbestos victims. As discussed in Section III of 
these views, we believe the award values proposed by Senators 
Leahy and Kennedy, discussed in Section III of these views, 
would provide more appropriate levels of compensation for 
victims who meet the criteria established under this bill, and 
that for a number of diseases, and for most victims, the 
Feinstein-Graham amendment still does not provide fair 
compensation. We supported the Feinstein-Graham amendment, 
however, as a move towards the goal of providing fair and 
adequate compensation to victims.
    Following adoption of the Feinstein-Graham amendment, 
Senators Leahy and Kohl immediately proposed another amendment, 
to ensure that the increased promises of the new award values 
were not empty promises. The Feinstein-Graham schedule of award 
values would require another $14 billion in funding, so the 
Leahy-Kohl amendment provided a corresponding $14 billion of 
mandatory contributions--$7 billion each from defendant 
companies and insurers--and struck an illusionary section in 
the original bill that anticipated obtaining $14 billion in 
voluntary contributions from additional, unidentified 
participants that were ``likely to avoid future civil liability 
as a result of this Act.'' It is both the intention and the 
effect of this amendment that the contingent funding mechanism 
adopted in the Feinstein-Kohl amendment remain unchanged. As 
Senator Leahy said of the amendment, which was adopted by the 
Committee, ``This just puts the money in the bank to cash the 
check that we just signed on the amendment of Senator Feinstein 
and Senator Graham.''

E. Certainty for Asbestos Victims

    At our final markup, Senator Biden offered an amendment to 
complement the Feinstein-Kohl amendment adopted on June 26th. 
The Feinstein-Kohl amendment was a positive development to 
ensure solvency of the trust fund, with periodic checks of the 
funding levels, starting in 2010. As amended by Feinstein-Kohl, 
however, the FAIR Act requires a determination of the 
sufficiency of the trust's funding prospectively only eight 
times, beginning in 2010.
    Senator Biden's amendment would require a check on the 
funding of the system retrospectively every year by providing a 
sunset to the Act--and reverting asbestos claims to the tort 
system in the appropriate state or federal court--if the 
Administrator of the fund fails to certify for any given year 
that:
           95% or more of the asbestos claimants who 
        filed claims in that year, and who were determined to 
        be eligible to receive compensation, have received the 
        compensation, and
           95% or more of the total obligations of the 
        Fund owed to eligible claimants in that year have been 
        paid.
    We supported the Biden sunset amendment, which the 
Committee adopted by an overwhelming vote of 15-4, because we 
believe this bill must ensure compensation for victims every 
bit as much as it provides certainty for corporations and 
insurers facing asbestos liability. If this legislation fails 
to achieve that goal, it is only fair to allow victims back 
into the tort system, seeking justice in state or federal court 
as appropriate under the applicable law before enactment of 
this Act.
    In essence, we agree with Senator Specter, who during 
consideration of the Biden amendment summed up the need for 
certainty for asbestos victims:

          We are taking away a right to jury trial, which is 
        very substantial, it is a fundamental right, and I 
        think in the interest of the workers who are injured 
        and not being compensated that it is a tough balancing 
        act * * * But I want to be sure, Mr. Chairman, that if 
        the companies do not put up the money, or whatever 
        point the trust is out of money and there is no more 
        money to be collected by injured people, at least at 
        that stage, they have access to the courts.

    This principle received validation by the Committee, with 
only four Senators refusing to concede that if the trust proves 
an ineffective solution in paying deserving victims, the 
legislation must sunset so workers can attain just judgments in 
our state and federal courts.

                III. MORE IMPROVEMENTS NEEDED TO S. 1125

    Senator Specter captured precisely the challenges we face, 
when he spoke so eloquently of the need for fair and effective 
alternative evaluative processes if we are to approve 
legislation that restricts the rights of those harmed by 
asbestos. Unfortunately, the FAIR Act as reported by the 
Committee falls short of achieving fairness for all asbestos 
victims.
    Perhaps Senator Biden made the point most aptly at the 
Committee's first markup session on S. 1125: ``Whenever we deny 
an American citizen a right they now possess under the law, the 
burden should be on us to make the case overwhelmingly why we 
are denying that right. Therefore, the benefit of the doubt 
should be given to the party whom you are about to 
disenfranchise in some way.''
    While we agree with the evaluation that, in the case of 
asbestos, meaningful change in the system is needed, we believe 
that the benefit of the doubt has not been given to asbestos 
victims under this legislation.

A. Inadequate Compensation For Asbestos Victims

    Although the Committee improved the award values for 
asbestos victims on a bipartisan basis, and with our support, 
we believe the bill still fails to provide fair compensation to 
all victims of asbestos-related diseases.
    The key test of any legislative proposal on asbestos claims 
is whether, by reducing transaction costs, it would put more 
money into the pockets of seriously injured workers and their 
families than under the current system.\97\ As a Washington 
Post editorial noted just prior to the final day of the mark-
up, ``The more fully Congress can ensure that the average 
asbestos victim will do better under the trust than in court, 
the more credibility this important reform will have.'' \98\
---------------------------------------------------------------------------
    \97\ Dr. Mark Peterson, one of the foremost analysts of asbestos 
litigation, testified at the Committee's June 4, 2003 hearing on the 
FAIR Act, on the following average recoveries for asbestos-related 
diseases in the tort system:
    \98\ The Washington Post, ``An Asbestos Accord,'' p. A22, July 10, 
2003.
---------------------------------------------------------------------------
    We believe that a properly designed and implemented trust 
fund can move us toward that goal. Such a trust must not only 
use medical criteria that cover all workers who have sustained 
real injuries, but must provide fair levels of compensation for 
all those injured workers. Moreover, the alternative system 
must guarantee that all injured workers who qualify for awards 
will receive that full compensation on a timely basis.
    As it stands today, this legislation satisfies only one of 
these three criteria. Even with the Feinstein-Graham amendment, 
the bill sets levels of compensation that are substantially 
below what victims, especially those who are seriously ill, 
currently receive for their injuries. Furthermore, the current 
funding plan may well be inadequate to fully compensate all 
eligible victims in a timely manner.
    Proponents of this bill argue that in the tort system, too 
much money finds its way to victims who are not really impaired 
and not enough money is awarded to those who are truly sick. 
But their concern for the truly sick certainly finds no real 
expression in this bill. Lung cancer victims are ``truly sick'' 
by anyone's definition and many of them will have their lives 
cut short by these diseases. Yet, even in these, the most 
compelling cases, S. 1125 provides grossly inadequate 
compensation. We are deeply troubled by the way this 
legislation treats those with the most severe illnesses.
    As we have already noted, victims of asbestos with lung 
cancer who smoked receive particularly inappropriate treatment. 
As reported by the Committee, this legislation unfairly holds 
victims accountable for the synergistic effects of smoking and 
asbestos. When smoking and asbestos are combined, the 
likelihood, as well as the severity of the resulting disease, 
is greater than the sum of its parts. Numerous medical 
experts--in person and in writing--informed the Committee of 
this harmful combination, and the mutually aggravating effects 
of smoking and asbestos exposure have been demonstrated at the 
highest levels of medical science.

                             AVERAGE VALUE OF ASBESTOS CLAIMS BY DISEASE CATEGORIES
                          [Estimated total compensation across all asbestos defendants]
----------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------
$40,000 to $70,000..............................  Pleural plaques and thickening.
$50,000 to $125,000.............................  Asbestosis, without loss of lung function.
$200,000 to $400,000............................  Asbestosis, with loss of lung function.
$800,000 to $1,500,000..........................  Severe Asbestosis.
$450,000 to $600,000............................  Other cancers.
$1,000,000 to $1,500,000........................  Lung Cancer.
$2,000,000 to $3,000,000........................  Mesothelioma.
----------------------------------------------------------------------------------------------------------------

    As Dr. Laura Welch discussed in her testimony, the 
epidemiological studies conducted by Dr. Irving Selikoff have 
shown that for the more heavily exposed individuals (such as 
insulation workers), the risk of lung cancer from asbestos 
exposure is increased five times. Because there is a 
synergistic relationship between asbestos exposure and smoking, 
smokers who meet the bill's exposure requirements face a risk 
of lung cancer that is up to 50 times greater than that of 
individuals without a history of asbestos exposure or smoking. 
Moreover, because of this synergistic relationship, the risk of 
lung cancer for asbestos-exposed workers who smoked is far 
greater than the risk of lung cancer among those with a similar 
smoking history who were not exposed to asbestos.\99\ In 
addition, the American Thoracic Society noted in a letter to 
Chairman Hatch and Senator Leahy, ``Asbestos-related lung 
disease may aggravate or complicate a second disorder, making 
it more severe than it might be otherwise or tipping a claimant 
with poor lung function into serious impairment.'' \100\
---------------------------------------------------------------------------
    \99\ Testimony of Dr. Laura Welch, MD, Medical Director, Center to 
Protect Workers Rights, On Asbestos Related Diseases--Medical Criteria, 
Populations at Risk and Disease projections, Before the Senate 
Judiciary Committee, June 4, 2003.
    \100\ Letter from Homer A. Boushey, Jr. MD, President, American 
Thoracic Society, to Senator Hatch and Senator Leahy, June 19, 2003, 2.
---------------------------------------------------------------------------
    Had defendant corporations disclosed to workers the harmful 
effects of their occupations, victims would have been able to 
make more informed decisions about their lifestyles. As Doctors 
L. Christine Oliver and Edwin C. Holstein noted, ``If workers 
had been informed that dust, specifically in the case of 
asbestos, in their place of work could cause pulmonary 
impairment * * * we would not be writing this letter.'' \101\ 
But in S. 1125 as passed by the Committee, a smoker diagnosed 
with Disease Level VII--an illness that requires 15 weighted 
years of occupational exposure to asbestos--might receive just 
four percent of the award granted to a non-smoker. While we 
support award values that provide greater values where the 
causation is clearest, we cannot endorse the notion that 
smokers should find their awards unfairly reduced.
---------------------------------------------------------------------------
    \101\ Letter from Dr. L. Christine Oliver and Dr. Edwin C. 
Holstein, February 7, 2003, 2-3.
---------------------------------------------------------------------------
    The manner in which this bill treats smokers is 
particularly onerous in light of the association between 
asbestos exposure and the most dangerous jobs. As RAND's 
analysis of asbestos litigation points out, ``There were high 
rates of smoking in the blue-collar industries where asbestos 
exposure was particularly high.'' \102\ Yet this legislation 
automatically reduces awards for smokers, and thus fails to 
meet its stated goal of providing the most compensation to the 
sickest victims.
---------------------------------------------------------------------------
    \102\ RAND Institute for Civil Justice, ``Asbestos Litigation Costs 
and Compensation: An Interim Report,'' 17.
---------------------------------------------------------------------------
    We disagree with the claims made in the majority views on 
the scientific evidence establishing the relationship between 
asbestos exposure and lung cancer. Specifically, citing the 
testimony of Dr. James Crapo, the majority views state that 
``the majority of the medical community has found that lung 
cancer is generally not related to asbestos exposure unless the 
claimant has underlying asbestosis or, at least, sufficient 
exposure to asbestos to have caused asbestosis.'' The majority 
views go on to claim ``[e]arly studies showing a synergistic 
effect between smoking and asbestos exposure have not been 
substantiated by later studies.'' As noted above, numerous 
medical experts who testified and wrote to the Committee do not 
share this view. Similarly, the current body of scientific 
evidence and scientific consensus on asbestos does not support 
these statements and claims.
    The Tenth Report on Carcinogens issued in December 2002 by 
the Department of Health and Human Services National Toxicology 
Program clearly and unequivocally found that exposure to 
asbestos causes lung cancer and that there is a synergistic 
relationship between asbestos exposure and lung cancer:

          Asbestos and all commercial forms of asbestos are 
        known to be human carcinogens based on sufficient 
        evidence of carcinogenicity in humans (IARC 1982, 
        1987). Occupational exposure to chrysotile, amosite, 
        anthophyllite, and mixtures containing crocidolite has 
        resulted in a high incidence of lung carcinomas * * * 
        Both cigarette smoking and occupational exposure to 
        asbestos fibers increase lung cancer incidence 
        independently. When present together, they act 
        multiplicatively (IARC 1973, 1977, 1979, 1982).

    This is also the view of the National Cancer Institute, 
which in its Cancer Facts--Asbestos Questions and Answers, 
states that asbestos exposure increases the risk of lung 
cancer, pointing out that ``although it is known that the risk 
to workers increases with heavier exposure and longer exposure 
time, investigators have found asbestos-related disease in 
individuals with only brief exposures.'' The NCI document also 
states: ``many studies have shown that the combination of 
smoking and asbestos exposure is particularly hazardous. 
Smokers who are also exposed to asbestos have a greatly 
increased risk of lung cancer.'' \103\
---------------------------------------------------------------------------
    \103\ National Cancer Institute, Cancer Facts--Asbestos Questions 
and Answers (updated July 10, 2003) http://cis.nci.nih.gov/fact/----
21.htm) (emphasis in original).
---------------------------------------------------------------------------
    This is also the consensus scientific view internationally. 
The International Agency for Research on Cancer (IARC) in its 
1987 supplement to the monograph on asbestos found:

          The studies of the carcinogenic effect of asbestos 
        exposure, including evidence reviewed earlier [ref: 1], 
        show that occupational exposure to chrysotile, amosite 
        and anthophyllite asbestos and to mixtures containing 
        crocidolite results in an increased risk of lung 
        cancer, as does exposure to minerals containing 
        tremolite and actinolite and to tremolitic material 
        mixed with anthophyllite and small amounts of 
        chrysotile * * * The relationship between asbestos 
        exposure and smoking indicates a synergistic effect of 
        smoking with regard to lung cancer [ref: 1]. Further 
        evaluations indicate that this synergistic effect is 
        close to a multiplicative model [ref: 52,109].'' \104\
---------------------------------------------------------------------------
    \104\ IARC Monographs on the Evaluation of the Carcinogenic Risk of 
Chemicals to Humans. Overall evaluations of Carcinogenicity. Supplement 
7., IARC 1987.

    The Leahy-Kennedy award values amendment offers a more 
reasoned and fair approach for compensating victims--smokers 
and non-smokers alike--throughout all ten disease levels 
established under the bill. The vast majority of claimants, 
those with Level I sickness, would receive only medical 
monitoring. While these individuals have clearly suffered the 
impact of asbestos exposure, the only compensation most will 
receive is the peace of mind in knowing that if their disease 
should become more serious, they will be able to seek both 
treatment and compensation quickly.
    The Leahy-Kennedy award values for the other nine levels 
provide more appropriate measures of compensation than those 
numbers calculated in the Feinstein-Graham amendment in the 
midst of the Committee's markup. For example, those claimants 
suffering from Class II (Mixed Disease) would receive only 
$20,000 under the reported bill. These victims have real 
impairment, suffering from both restrictive disease and 
obstructive disease caused by a combination of asbestosis and 
other causes, such as smoking. Some of the people in this class 
will be totally disabled, unable to conduct activities of daily 
living. Providing only $20,000 for these victims and their 
families is just not right. Though this value is considerably 
higher than nothing at all, which is what an earlier Hatch 
amendment would have granted these impaired victims, the award 
is far lower than what might be attained in the tort system, 
with payments on average of $35,000 to $50,000. The Leahy-
Kennedy amendment proposes compensation at the low end of this 
range, offering $35,000 for these victims.
    It is estimated that more than 100,000 victims will file 
claims that will qualify for Level III compensation, which 
covers asbestosis or pleural disease that has resulted in a 20% 
to 40% loss of lung function. For these claimants, the Leahy-
Kennedy amendment would pay $110,000. As introduced, S. 1125 
set an award of $40,000, which the Feinstein-Graham amendment 
increased to $75,000--a step in the right direction, to be 
sure, but which will still leave victims to bear much of the 
cost of their asbestos exposure and its consequences. This is a 
group of workers with impairment so severe they might not be 
able to perform their labor-intensive jobs. Available claims 
data from the Manville Trust and the results of the Sheetmetal 
Workers asbestos disease screening program provided to the 
Committee by the AFL-CIO show that more than 40% of the 
individuals in this group are less than 57 years old, meaning 
that that many will lose years of employment and have 
significant economic loss.\105\
---------------------------------------------------------------------------
    \105\ Supporting Documentation for AFL-CIO Disease Distributions, 
Average Age Assumptions and Incidence projections, April 24, 2003.
---------------------------------------------------------------------------
    Level IV claimants suffer from severe asbestosis, and we 
think it only fitting to increase the $300,000 currently 
offered by S. 1125 to the more reasonable $400,000 award under 
the Leahy-Kennedy values. For some reason, the Feinstein-Graham 
amendment actually lowered the award values for this disease as 
compared to the original bill. For many with severe asbestosis, 
their disease will prevent even the most basic daily 
activities, and these victims will in many cases require 
regular oxygen in order to alleviate the physical discomfort.
    For the sickest non-malignant victims, those in Level V 
disease, with very severe asbestosis, the Leahy-Kennedy 
Amendment proposes an $850,000 award. This category consists of 
individuals who are totally disabled. Many will die from their 
disease. They are quite literally suffocated by the asbestos 
fibers in their lungs and, without question, they deserve more 
than the $750,000 approved by the Committee.
    Level VI disease--Other Cancers--should have resulted in 
easy compromise in Committee. The Feinstein-Graham Amendment 
sets the compensation for these cancer victims at $150,000. 
Remarkably, this is less than the $200,000 award set in the 
bill as introduced. Many of the other asbestos-related cancers, 
including stomach cancer, will often be fatal or cause 
significant disability. In cases where there is a determination 
that asbestos caused or significantly contributed to the 
cancer, victims should be appropriately compensated.
    The gravest injustice done by the bill is to lung cancer 
victims. All of the medical categories established by the bill 
are for asbestos-related diseases, including the lung cancer 
categories. For each of these lung cancer categories, a 
significant history of asbestos exposure is required, and for 
two of the lung cancer categories, underlying non-malignant 
asbestos disease must also be present, confirming that 
significant asbestos exposure has occurred. These individuals 
suffer due to their exposure to this toxin. For the lung cancer 
and mesothelioma disease levels (VII, VIII, IX, and X), the 
award values in the Leahy-Kennedy amendment are more in keeping 
with the severity of the illness and with what claimants would 
receive in the tort system. If the worker smoked--and 
unfortunately most of these workers did--the combination of 
tobacco and asbestos exposure dramatically increases the 
likelihood of contracting lung cancer.
    All of the individuals who would qualify for lung cancer 
compensation under S. 1125 are at greatly increased risk of 
lung cancer as a result of their asbestos exposure, and it is 
more likely than not that asbestos exposure significantly 
contributed to, or primarily caused, their lung cancer. Because 
there is a synergistic relationship between asbestos exposure 
and smoking, smokers who meet the bill's exposure requirements 
face a risk of lung cancer that is 20 to 90 times greater than 
that of individuals without a history of asbestos exposure or 
smoking. Moreover, because of this synergistic relationship, 
the risk of lung cancer for asbestos-exposed workers who smoked 
is far greater than the risk of lung cancer among those with a 
similar smoking history who were not exposed to asbestos.
    The compensation values for lung cancer claimants, in the 
bill as reported out of Committee, are woefully inadequate, 
particularly for individuals who smoked. S. 1125 as reported 
established three different categories of lung cancer--lung 
cancer with exposure (Level VII), lung cancer with pleural 
disease (Level VII), and lung cancer with asbestosis (Level 
VIII). For the victims with lung cancer who smoked, which is 
the vast majority of asbestos lung cancer claimants, awards are 
set at $25,000-$75,000 for Level VII, $125,000-$225,000 for 
Level VIII, and $300,000-$400,000 for Level IX. These award 
levels are unfair. For the majority of lung cancer victims, the 
disease will be fatal, usually within two years. Many of these 
victims will have significant medical costs associated with 
hospitalization, surgery, or chemotherapy. For some victims, S. 
1125 compensation awards will not even cover these medical 
costs, let alone provide compensation for a life-ending disease 
and financial assurance to those left behind.
    While it is reasonable to pay smokers less than non-
smokers, they should receive substantial awards which reflect 
the devastating effect that the disease has had on their lives. 
The lung cancer compensation levels in the Fair Act as reported 
are shamefully low. The Leahy-Kennedy Amendment would increase 
them to more reasonable levels. These values are fair for the 
victims, and with the financial security offered by a trust, 
defendants and their insurers will be more than capable of 
paying these sums.
    Our medical criteria have already eliminated what 
businesses contended were the most troublesome claims. We all 
say that we need to compensate the truly sick. But fair 
compensation is not free. We now need to ensure fair 
compensation for all 10 categories of asbestos-related disease, 
the five levels of non-malignant disease of increasing severity 
and the five levels of cancer, including colorectal cancer, 
lung cancer and Mesothelioma.
    The Committee's bipartisan agreement on medical criteria 
will be meaningless if we, in effect, rewrite the categories by 
failing fairly to compensate many who fall within them. Even 
with consensus on medical criteria, if the award values are 
unfair, the bill will be unfair and unworthy of our support.
    The Leahy-Kennedy proposal on awards values addresses the 
shortcomings of the bill as approved by the Committee. No 
payment, from a tort suit or a trust fund, can ever really make 
someone who has lost their health, or their life, ``whole'' 
again, but we should be both compassionate and reasonable as we 
set these values. We believe the Leahy-Kennedy award values, 
discussed in Section III of these views, better accomplish this 
goal. If we fail to achieve fair award values for victims, the 
Committee's bipartisan agreement on medical criteria will lose 
all meaning--determining who is truly sick is only useful 
inasmuch as it provides guidelines for adequately compensating 
those who suffer from asbestos-induced disease. We now know who 
is truly sick. We must next make certain that their 
compensation is fair.

B. Disease, Claims, and Cost Projections

    Developing sound and effective public policy and 
legislation on asbestos compensation requires an assessment and 
understanding of the extent of future asbestos related disease, 
numbers of expected claims for compensation and the resulting 
costs. During our consideration of the FAIR Act, various 
projections were made about possible future disease incidence, 
claims and costs. While attempts were made to harmonize these 
different estimates and reach agreement on a common set of 
expected and possible high-end projections, unfortunately, this 
did not happen. This lack of an agreement on a common set of 
projections has resulted in constantly changing estimates, 
which has caused great confusion and impeded reaching a 
consensus on asbestos compensation legislation.
    Projected estimates of future asbestos disease claims 
provided to the Committee have generally ranged between 1 
million and 2.5 million future claims, with the large majority 
of these claims involving non-malignant asbestos-related 
disease with no impairment. Many of these estimates are based 
upon a model developed by Nicholson and Perkel in 1982 to 
estimate asbestos related cancer mortality. The estimates use 
this model to develop projected incidence of asbestos-related 
cancer mortality from mesothelioma, lung cancer and other 
cancers and based upon claims filing experience, develop 
estimates of numbers of expected claims. Estimates for non-
malignant disease have come from ratios of the number of claims 
for non-malignant disease to claims for malignant disease.
    The major factor that drives all of the estimates is the 
assumption about filing rates, which has been based upon 
historical filing experience. As the number of claims for 
asbestos-related disease has increased over the years, so has 
the projected number of future claims. There is general 
agreement that the asbestos disease epidemic is now peaking, 
and that the number of future disease cases will decrease in 
coming years. What is less certain, however, is how many of 
these future cases will result in future claims.
    In developing cost estimates for national asbestos 
compensation legislation, the majority relied upon cost 
estimates developed by Goldman Sachs based upon projections and 
assumptions provided by the Asbestos Study Group (ASG) and the 
insurance carriers. Early in the process, there appeared to be 
agreement between the ASG, carriers and labor unions on a 
common set of projections and assumptions that allowed for 
comparison of alternative proposals and claim values. 
Unfortunately as the mark-up proceeded, the projections and 
assumptions provided by the ASG and insurance carriers changed, 
in some cases dramatically and with no apparent justification, 
with great impact on projected costs and claim values for 
asbestos victims.
    For example, on July 8 Goldman Sachs provided cost 
estimates for the Leahy-Kennedy and Graham proposed amendments 
on claims values that estimated 48,023 total future lung cancer 
claims for the most likely scenario, and 90,092 for the 
``stress'' case based upon modified projections from the ARPC. 
Two days later, on July 10, Goldman Sachs provided cost 
estimates for the Feinstein-Graham claims values amendment that 
projected future 115,385 lung cancer claims for the most likely 
case and 139,672 for the ``stress'' case. No explanation was 
provided for this change, other than a footnote in the July 10 
cost estimate that for the Lung Cancer VII category the cost 
estimate was utilizing projections provided by Navigant 
Consulting, not ARPC. This change more than doubled the number 
of estimated lung cancers. Since the Graham-Feinstein amendment 
was constructed based upon a fixed fund of $108 billion, the 
effect of this change was to significantly lower the award 
values that could be paid to claimants.
    Before final action is taken on any asbestos compensation 
legislation, it is imperative that a consensus be reached on a 
common set of disease, claims and cost projections for both the 
likely case and the high-end case. It is not possible or 
appropriate to make sound policy decisions or to craft 
responsible legislation without agreement on the fundamental 
issue of the extent of future asbestos-related disease 
andexpected claims. With such an agreement, we can move to develop 
legislation that provides adequate funding to ensure payment of fair 
compensation for the expected number of claims and contingent funding 
in the event that the number of expected claims is exceeded.

C. Retroactive Preemption of Settlement Agreements, Jury Verdicts and 
        Pending Cases

    As presently written, the FAIR Act would completely negate 
all legally binding settlement agreements between asbestos 
manufacturers and victims, even settlements that have been made 
by asbestos defendants with claimants that have already been 
partially paid would be voided under this legislation. In other 
words, if a victim agreed to take payment of a settlement over 
a period of time from a defendant in return for dismissing the 
case, even though the settlement agreement is an enforceable 
contract, the defendant gets the right to walk away from their 
obligation under this bill. Needless to say, this result is of 
questionable constitutionality and will undoubtedly result in 
expensive, lengthy litigation over its validity. Victims are 
punished under this statute for agreeing to settlement terms 
proposed by asbestos defendants.
    Thousands of asbestos claimants entered into such 
settlement agreements with asbestos manufacturers and have 
released their claims against asbestos defendants in pending 
lawsuits. In executing these releases, asbestos victims waived 
their right to have their claim heard before a judge and jury 
in exchange for monetary payment. These settlement agreements 
constitute binding and enforceable contracts, but the FAIR Act 
negates them all.
    Most settlement agreements in asbestos litigation provide 
for payment terms. Defendants are routinely given a year or 
more after the cases are settled to pay the claims and 
installment payments are often made. The FAIR Act would totally 
absolve defendants from their obligation to honor their 
contractual commitments and reward double-dealing and delay. 
That is hardly fair. During markup, several members of the 
majority joined us in voicing their strong concerns on the 
inclusion of these unfair provisions in the bill, and Chairman 
Hatch committed to addressing the bipartisan objections.
    Absolving defendants of their contractual obligation to pay 
settled claims would confer a windfall upon some corporate 
defendants by absolving them of responsibility to pay for a 
benefit they already received. An example of this unfairness is 
the financial windfall conferred on the Halliburton Corporation 
under the bill as currently written.
    On December 18, 2002, Halliburton announced a global 
settlement of its entire asbestos liability, which would 
resolve over 150,000 asbestos cases and involved agreements 
with more than 75 law firms. Under the terms of the settlement 
Halliburton would pay $2.8 billion in cash to present victims 
of asbestos disease and turn over 59.5 million shares of stock 
to a trust established to care for asbestos victims in the 
future. In exchange, the plaintiffs have agreed to provide 
Halliburton and its affiliates with complete release from each 
of the 150,000 plaintiffs with pending cases and an injunction 
under section 524(g) of the bankruptcy code barring any future 
cases against Halliburton and its affiliates.
    But now it appears that Halliburton is refusing to 
implement the settlement in an attempt to bide time to 
determine whether Congress will enact legislation which gives 
it a better deal. A June 6, 2003 press release from the company 
stated that:

         Halliburton continues to track legislative proposals 
        for asbestos reform pending in Congress. In determining 
        whether to proceed with the global settlement, 
        Halliburton's board of directors will take into account 
        the current status of these legislative 
        initiatives.\106\
---------------------------------------------------------------------------
    \106\ See also The Wall Street Journal, ``Halliburton to Request 
Extension on Stay for Asbestos obligations,'' p. A3, July 21, 2003.

    The enactment of the FAIR Act would confer a windfall on 
Halliburton's bottom line. Jim Wicklund, an analyst at Banc of 
America Securities was quoted in Reuters as opining that 
Halliburton's total liability under S. 1125 was $450 million. 
When one considers that Halliburton's $450 million commitment 
is amortized over a 27-year period, the present value of 
Halliburton's liability under S. 1125 is around $360 million. 
Because Halliburton is committed to pay $4.2 billion under the 
December 18, 2002 agreement, enactment of S. 1125 would result 
in a 92% reduction of Halliburton's asbestos liability.
    One does not have to be a securities analyst to predict 
what will occur to Halliburton's stock if S. 1125 is enacted. 
If S. 1125 as currently drafted becomes law, Halliburton will 
be suddenly relieved of 92% of its contractual liability and 
its stock price will skyrocket. In all likelihood, the increase 
in Halliburton's market capitalization accompanying the 
enactment of S. 1125 will greatly exceed Halliburton's $360 
million liability under the bill.
    Thus, S. 1125 not only represents a 92% bailout of 
Halliburton's acknowledged and agreed to liability, but it will 
also enable Halliburton and its executives to enjoy a windfall 
as the company's stock price shoots upward. Not only will S. 
1125 enable Halliburton to pay 92% less than it agreed to; 
passage of the FAIR Act, as reported by the Committee, will 
result in a windfall for its executives and shareholders. 
Again, that is hardly fair.
    The FAIR Act would also retroactively extinguish all 
pending asbestos cases regardless of the stage in the 
litigation. Asbestos cases currently in trial, or on the verge 
of trial, would immediately be brought to a halt, case with 
jury verdicts would end, and all appeals suspended. Again, this 
is hardly fair.

D. Front-End Funding and Payment Problems

    We are concerned that the FAIR Act, as presently written, 
fails to provide financial certainty for asbestos victims 
because of the structure of trust fund contributions and the 
wide fluctuations in projected estimates of future asbestos 
victims. As we have repeated again and again, financial 
certainty for asbestos victims is a fundamental foundation for 
an effective trust fund.
    In addition, the start-up of the national asbestos trust 
fund presents significant problems both from an administrative 
and a financial perspective. Unless the bill is amended to 
significantly contract the universe of claims pending in the 
tort system and in the bankruptcy trusts that will be 
extinguished under the bill as written, an estimated 300,000 
pending claims will be transferred to the trust. Each will have 
to be processed regardless of their current status in the tort 
system. This may result in long delays in payments to victims 
and perhaps the administrative and financial collapse of the 
system within a short period.
    It will take at least several years for the trust fund to 
process the 290,000-300,000 asbestos cases that are currently 
pending. According to expert testimony before the Committee, 
under the current funding scheme, it might take at least 8 
years to fully pay pending claims, even with the inadequate 
values provided in the reported bill.\107\ During this period 
an additional backlog of 200,000-300,000 cases may develop as 
new claims come into the system. Many of these victims may 
never be paid.
---------------------------------------------------------------------------
    \107\ See testimony of Dr. Mark Peterson, June 4, 2003 hearing on 
S. 1125.
---------------------------------------------------------------------------
    Professor Eric Green, who testified at the Committee's June 
4th hearing on the FAIR Act on behalf of all representatives of 
future asbestos victims in bankruptcy trusts, recently wrote to 
Senator Leahy about this potential front end problem in the 
trust fund. Professor Green wrote:

         Another extremely important issue to us is the timing 
        of the contributions to the Fund under the Act. We 
        believe that the Act will be seriously underfunded from 
        the outset and will never catch up. Our experience 
        shows us that approximately 40% of the total funding 
        under a 524(g) trust is needed within the first five 
        years after the trust is established. The Act, on the 
        other hand, calls for only 18% of the total funding to 
        be available in the first 5 years. This will result in 
        a payment backlog beginning on day one and increasing 
        for years to come. Payments to future asbestos victims 
        will be seriously delayed, if not put at risk 
        entirely.\108\
---------------------------------------------------------------------------
    \108\ July 7, 2003 letter Dr. Green to Senator Leahy.

    If this solution is to work, it cannot be predicated on a 
false promise. There must be money to compensate the victims. 
We cannot allow the money to simply dry up, with the victims 
left holding the bag.

E. Truly No-Fault Administrative System

    Any alternative compensation system must be truly no-fault 
to be fair to asbestos victims who will no longer have recourse 
to the courts. An effective, no-fault, non-adversarial system 
for processing compensation claims is as vital to the success 
of this legislation as ensuring adequate funding and fair 
compensation values, since if the claimants are unable to 
obtain the awards to which they are entitled in a timely and 
efficient manner, the system will fail.
    In its original version, S.1125 would have created an 
entirely new court, the U.S. Court of Asbestos Claims, to 
adjudicate claims for compensation from the Asbestos Injury 
Claims Resolution Fund. Under the bill as introduced, the 
President would have nominated a new slate of judges and the 
Senate would have needed the requisite time to review their 
backgrounds and consider them for confirmation. The time 
involved in appointing, confirming and funding a new court 
would have contributed to delays in processing victims' claims. 
We appreciate the efforts of Senators Feinstein, Grassley and 
Sessions who joined us in striking these provisions from S. 
1125. On a bipartisan basis, we agreed that a different 
approach was more desirable than merely clogging a new court 
with adversarial litigation proceedings.
    As amended, the FAIR Act would establish an Office of 
Special Asbestos Masters under the supervision of the existing 
U.S. Court of Federal Claims. These special masters are charged 
with making eligibility determinations within 60 days of 
receiving a completed file. An individual special master 
determination is initially reviewable by a panel of three 
Special Masters and subsequently reviewable by a panel of three 
judges from the Court of Federal Claims. These special asbestos 
masters would be under the supervision of the Court of Federal 
Claims. This structure mirrors the processing of claims under 
the Vaccine Injury Compensation Program. Only appeals from 
determinations of special masters' rulings would be heard in 
the court system.
    The FAIR Act as reported out of Committee, although an 
improvement over the bill as originally proposed, still falls 
short of providing an adequate administrative system for the 
following reasons. First, the proposed court-based system does 
not allow for centralized, uniform policy development. There is 
neither a representative board nor an administrator authorized 
to oversee the system, engage in substantive rulemaking, or 
guide policy development. Instead, there is only a chief 
special asbestos master, whose administrative authority is 
limited to prescribing procedural rules, contracting for 
necessary personnel and making expenditures necessary for the 
office to fulfill its functions. While the system is ostensibly 
intended to provide fair compensation in a non-adversarial 
manner, nothing in the structure appears to encourage or even 
permit the special masters or other personnel to engage in a 
consultative process that would assist individuals in filing 
claims and securing any compensation to which they are 
entitled.
    Second, delegating important rule-making authority to 
officers of the Court of Federal Claims is not the best method 
to ensure the unique goals of the FAIR Act. The court-based 
system in the existing bill does not involve a representative 
board or an administrator authorized to oversee the claims 
processing system. The same judicial officers who would be 
considering the victims' claims would also be promulgating 
rules that might dramatically affect victims' access to 
recovery. While the system is explicitlyintended to provide 
fair compensation in a nonadversarial manner, nothing in the structure 
appears to encourage or even permit the special masters or claims 
examiners to engage in a consultative process that would assist 
individuals in filing claims and securing any compensation to which 
they are entitled.
    The Court of Federal Claims is not well-suited to develop 
methods for auditing medical evidence, to prescribe rules for 
implementing diagnostic criteria requirements, or to develop 
rules for identifying presumptive industries for significant 
occupational exposure determinations as is expressly required 
by the bill's language. Nor is it an appropriate body for 
performing other administrative functions integral to the 
overall compensation system, including, for example, outreach 
activities, management of the trust fund, and rulemaking when, 
as a result of recommendations from the Medical Advisory 
Committee, it is necessary to update the medical or diagnostic 
criteria.
    To ensure a truly ``no-fault,'' non-adversarial system, 
with minimized transaction costs, this legislation should 
establish an independent agency or trust fund to administer the 
compensation program. The hallmarks of such a system would 
include:
          (a) Policy leadership by a board comprised of 
        representatives of the parties to this process--i.e., 
        claimants, defendant corporations and insurance 
        companies, labor representatives, and public health 
        professionals;
          (b) Centralized oversight of claims handling, to 
        provide quality assurance, to ensure that claims are 
        processed in a manner consistent with the fund's 
        objectives and are processed expeditiously;
          (c) A non-adversarial, ``user-friendly'' process, in 
        which personnel are charged with assisting the 
        claimants in presenting their claims and securing 
        necessary documentation, and decision makers are 
        authorized to engage in a consultative process with 
        claimants;
          (d) An independent process within the administrative 
        system to resolve disputes arising from claims 
        determinations; and
          (e) A final opportunity for judicial review on the 
        record at the court of appeals level.
    If the goal of the FAIR Act is to resolve the vast majority 
of claims without clogging the courts, an administrative review 
process is a better solution. Amending the current legislation 
to include an administrative process would resolve more claims 
in less time. In addition, an administrative agency would be in 
a better position to adopt standards consistent with the 
express purpose of an alternative to the tort system and to 
manage the initial consideration of the large volume of claims.
    Inserting an administrative review process would uphold the 
consensus goals of claims resolution in a no fault, non-
adversarial system. Judicial review would remain available but 
the need for such court-based resources would be reduced with 
the addition of an administrative process.

F. Other Unfair Provisions in S. 1125

    The Committee-reported bill, while establishing a 
presumption that awards will be paid within three years, does 
not require that any portion of a claimant's award be paid 
before the three years are up. Consequently, nothing in the 
bill would prevent the Fund from forcing claimants who have 
been determined to be eligible for an award to wait a full 
three years--and in some cases four years--before they are paid 
a penny of what they are due. If payments are to be spread out 
over a period of three years, there must be protections to 
ensure that they are spread at least evenly over that period, 
and that claimants begin receiving their compensation 
immediately upon receipt of a determination of eligibility. To 
enact this legislation without such protections would make a 
mockery of the bill's promise of prompt compensation.
    If the FAIR Act were enacted in its current form, railroad 
workers would lose their only recourse against an employer for 
compensation for injuries resulting from exposure to asbestos 
while all other workers would see their injury compensation 
program remain intact. Under S. 1125, railroad workers would be 
unfairly singled out because the bill preempts The Federal 
Employers' Liability Act (FELA).
    The FELA is both an injury compensation statute as well as 
a safety statute. Congress established the FELA for two primary 
reasons: (1) to provide compensation for injured railroad 
workers; and, (2) to provide an incentive to American railroads 
to operate safely by holding them accountable for the safety of 
their workers.
    The legislative effort to find a solution to the current 
asbestos crisis is laudable; however, any legislation aimed at 
providing a remedy should not come at the expense of one group 
of workers. S. 1125, as introduced, unfortunately does that by 
singling out railroad workers and treating their injury 
compensation rights differently than all other workers. S. 1125 
should be amended to remove this obvious inequity for railroad 
workers.\109\
---------------------------------------------------------------------------
    \109\ During Committee consideration of S. 1125, Senator Durbin 
offered an amendment to strike the preemption of FELA from the bill. 
Unfortunately, this amendment was defeated on a party-line vote, with 
all members of the majority voting against it and all members of the 
minority voting for it.
---------------------------------------------------------------------------
    In addition, we believe that the provisions for medical 
monitoring in the FAIR Act need to be improved to be both 
effective and fair. We agree that medical monitoring is 
appropriate compensation for Level 1 disease victims, and if 
these victims become sicker, they will be compensated according 
to their illness as it progresses and their health declines.
    But to be effective and fair to these victims of asbestos 
exposure, medical monitoring should not be offset by a victim's 
health insurance as is currently required by S. 1125. These 
costs are properly borne by the defendant and their insurers, 
and a worker should not be penalized because he or she had the 
foresight and means to purchase health insurance. Medical 
monitoring compensation by the Fund should alsoinclude the cost 
of the initial diagnosis of asbestos-related disease as a matter of 
basic fairness.\110\
---------------------------------------------------------------------------
    \110\ During Committee consideration of S. 1125, Senator Leahy 
offered an amendment to strike the requirement that the victim first 
resort to his or her health insurance to pay monitoring costs and to 
include the cost of the initial diagnosis of asbestos-related disease 
as part of medical monitoring compensation. Unfortunately, this 
amendment was defeated on a party-line vote, with all members of the 
majority voting against it and all members of the minority voting for 
it.
---------------------------------------------------------------------------
    Another clear unfairness in S. 1125 is that victims 
suffering from asbestos-related diseases may have their awards 
reduced to repay any insurance carrier, or any provider of 
workers' compensation. The failure to protect compensation 
awards from this subrogation is contrary to many existing 
victim compensation programs. For example, the Radiation 
Exposure Compensation Act of 1990, the Energy Employees 
Occupational Illness Compensation Program Act, and the Ricky 
Ray Hemophiliac Relief Fund Act of 1998 all contain strong 
anti-subrogation language to protect awards to victims under 
these compensation programs.\111\
---------------------------------------------------------------------------
    \111\ During Committee consideration of S. 1125, Senator Leahy 
offered an amendment to add the same anti-subrogation provisions from 
these three existing federal compensation programs to this bill. 
Unfortunately, this amendment was defeated on a party-line vote, with 
all members of the majority voting against it and all members of the 
minority voting for it.
---------------------------------------------------------------------------
    In addition, this bill fails to provide medical screening 
for high-risk workers. More than 27 million workers have been 
exposed to asbestos on the job. For an asbestos compensation 
program to be successful and truly serve workers, the program 
must provide a way to identify those workers at high risk and 
provide them information and medical screening and easy access 
to the system. The FAIR Act provides medical monitoring for 
individuals who have been diagnosed with pleural disease or 
asbestosis, but who are not yet ill, to evaluate if their 
conditions have worsened and if further medical treatment is 
needed. The bill, however, fails to provide medical screening 
of high risk workers to determine if they have developed 
disease.
    Medical screening of high-risk workers who have been 
exposed to toxic substances is an established practice. 
Virtually every health standard issued by the Occupational 
Safety and Health Administration requires medical surveillance 
of workers who are currently exposed above specified levels of 
toxic substances. The Mine Safety and Health Administration 
requires routine medical screening of coal miners to determine 
if they have developed coal workers pneumoconiosis. In 1993, 
the Department of Energy (DOE) established an outreach and 
screening program for former workers who had been employed at 
the DOE atomic weapons facilities who are at high risk of 
disease due to exposure to beryllium, radiation and other 
workplace hazards. Such initiatives are intended to identify 
possible health changes or disease as early as possible, so 
that steps can be taken to reduce exposures and risk and to 
facilitate appropriate medical treatment. While OSHA requires 
medical surveillance of workers currently exposed to asbestos, 
there is no requirement for medical screening for workers who 
were formerly exposed to asbestos and now at an increased risk 
of asbestos-related disease.
    Final asbestos compensation legislation should include 
provision for the establishment of an outreach and medical 
screening program for workers at high risk of disease. This 
program should be funded by the asbestos trust fund, but to 
ensure quality and independence should be overseen by the 
National Institute for Occupational Safety and Health (NIOSH), 
the government agency responsible for worker safety and health 
research. NIOSH should establish the medical protocols and 
standards for the screening program and identify those groups 
that should be included in a screening program due to their 
high levels of past exposures. In addition, NIOSH should 
identify and enter into contracts with qualified providers to 
carry out this screening. These providers should be 
organizations or institutions with experience and expertise 
that have the ability to reach individuals at high risk.
    Medical screening of workers who have had significant 
occupational exposure to asbestos and medical monitoring of 
claimants who meet the exposure and medical requirements for 
Category 1 will help to ensure that these individuals receive 
timely diagnosis and treatment and are educated about actions 
they can take to reduce their future health risk. The public 
health benefits of these measures will, however, be undermined 
if workers who take advantage of these opportunities are 
discriminated against by health plan or health insurers because 
their participation in these programs identifies them as being 
at high risk for serious asbestos disease.
    In 1996, Congress enacted the Health Insurance Portability 
and Accountability Act (HIPAA), to prohibit health plans and 
health insurers from discriminating against individuals on the 
basis of health status and various enumerated health status-
related factors. Although we believe that participation in 
medical screening or medical monitoring is a ``health-related 
factor'' that falls within the protection of that Act, there is 
some ambiguity in the statute. Therefore, we strongly support 
adding provisions to the FAIR Act to clarify that workers 
participating in any monitoring or screening program 
established in this bill cannot be denied or lose their health 
coverage for that reason.
    Moreover, we believe this legislation should exempt 
investment income in the fund from federal income tax in order 
to increase the funds available to compensate victims, much as 
the investment income in a 401(k) savings plan is currently 
treated under the Internal Revenue Code. This tax incentive is 
particularly appropriate given the federal government's role in 
exposing so many veterans to asbestos-related products. Under 
current law, trusts established for the sole purpose of 
compensating asbestos victims are taxed at the high rate of 
38%, thus limiting the funds available to asbestos 
victims.\112\ We also believe that defendant and insurer 
contributions and awards to claimants should be exempt from 
taxation. We look forward to working with Chairman Grassley and 
Ranking Member Baucus of the Finance Committee to increase 
asbestos victim compensation through appropriate tax treatment 
of the trust fund, contributions and awards.
---------------------------------------------------------------------------
    \112\ Indeed, in response to questions at Committee's hearing on 
asbestos litigation last September, David Austern, President of the 
Manville Trust, estimated that exempting investment income from federal 
taxation would increase the funds available to pay asbestos victims by 
$100 million for the Manville Trust alone.
---------------------------------------------------------------------------

                             IV. CONCLUSION

    Although we have authored and supported many bipartisan 
improvements to this legislation--from medical criteria to 
solvency safeguards to higher award values--this bill still has 
many problems that need to be worked out before we can support 
it.
    Our undertaking is complex and unprecedented. It has not 
been easy to work out the details necessary for consensus. But 
the stakes are too high for us to leave the field before trying 
our utmost to complete this task. We want to make every effort 
to solve this crisis, and we commend and encourage all who are 
working in good faith to help do that.
    Certainty for defendants and insurers is a fine objective 
but it must be coupled with fairness to the asbestos victims 
whose rights this bill takes away. We have emphasized again and 
again one basic, bedrock principle throughout this process: We 
will not support a bill that contains inadequate compensation 
for victims.
    As it currently stands, this is not a bill that reduces the 
high transaction costs in the current system, and puts more 
money in the pockets of injured workers while reducing the 
costs to businesses and their insurers. That would be a real 
solution. This is a bill which merely shifts more of the 
financial burden of asbestos-induced disease to the injured 
workers by unfairly and arbitrarily limiting the liability of 
defendants. Sick workers would receive lower levels of 
compensation than they receive on average in the current 
system, and payment of even those lower levels of compensation 
would not be guaranteed. That is no solution at all. For these 
reasons, we must vote ``no.'' We can do better than this.
    Because consensus remains the best hope for us to pass a 
bill this year, and because this matter is so important, as 
disappointed as we are in the final product of the Committee's 
deliberations, we intend to continue working for a fair 
solution to this problem. We seek a bill that we can support 
and that we can in good conscience urge our colleagues to 
support. We are discouraged, but not resigned.
    We need to continue our bipartisan work to achieve the 
common ground needed to enact a good law. Acting together 
through consensus remains, in our view, the only way to move a 
bill through the legislative process and into law.

                                   Patrick J. Leahy.
                                   Edward M. Kennedy.
                                   Joseph R. Biden, Jr.
                                   Herbert Kohl.
                                   Russell D. Feingold.
                                   Charles E. Schumer.
                                   Richard J. Durbin.
                                   John Edwards.

                     MINORITY VIEW OF SENATOR BIDEN

    Senator Biden joins in the minority views of Senators 
Leahy, Kennedy, Biden, Kohl, Feingold, Schumer, Durbin and 
Edwards, but finds it necessary to express separate views with 
regard to the majority's discussion of the sunset provision in 
Section 404 of S. 1125 (the ``Biden Sunset''), as well as 
footnote 67's discussion of the same provision. As accurately 
described in Senator Leahy's minority views, the Biden Sunset 
complements the Feinstein-Kohl provision to ensure solvency of 
the trust fund, which provides periodic checks of the funding 
levels, starting in 2010. The Biden Sunset will check solvency 
every year and permit reversion to the traditional tort system, 
including state and federal courts, the year after the fund 
fails to make its payments. It is only fair to return the 
victims to where they were beforehand--the tort system.
    Specifically, the Biden Sunset amendment would sunset the 
fund and revert asbestos claims to the traditional tort system 
if the Administrator of the Office of Special Asbestos Masters 
fails to certify for any given year that: (1) 95 percent or 
more of the asbestos claimants who filed claims in that year, 
and who were determined to be eligible to receive compensation, 
have received the compensation, and (2) 95 percent or more of 
the total obligations of the Fund owed to eligible claimants in 
that year have been paid.
    S. 1125 would abridge victims' rights as they currently 
exist under the tort system. If Congress abridges those rights, 
it must be certain that the solution it creates will work 100% 
as planned. The Biden Sunset makes certain that this 
legislation ensures compensation for victims to the same extent 
that it aids corporations facing asbestos liability. Just as 
corporations are to be granted certainty, victims must be 
granted the certainty that they will receive the compensation 
to which they are entitled. Under the Biden Sunset, if the 
legislation fails to achieve that goal, even after the various 
backstops and safety nets created by the fund have come into 
effect, it is only fair to put the victims back in the position 
they would have been in absent the legislation.
    Thus, the Biden Sunset serves as the ultimate backstop to 
insure fairness in the system, whether in year 1, or in year 29 
when the fund continues to operate only on a voluntary basis.
    Senator Biden strongly disagrees with the following 
statement in the majority report's discussion of Section 404:

          The Committee is concerned that this Amendment was 
        adopted without a full understanding of the actual 
        language and the harsh consequences, ramifications and 
        implications thereof. The sponsor of the Amendment, 
        Senator Biden, has agreed to work with Members to 
        develop appropriate language to mitigate any unintended 
        consequences of this provision before floor 
        consideration of S. 1125.

    First, this provision was more carefully debated and 
analyzed than virtually all other provisions of the bill. 
Indeed, in a very rare move, the roll call vote on the 
amendment was suspended so that all Senators could fully 
understand the provision. When the vote resumed, it passed by 
an overwhelming, bipartisan margin of 15-4. Second, the 
consequences of the provision are fairness, justice, and 
certainty, attributes that Senator Biden finds neither 
``harsh'' nor ``unintended.'' Third, as the majority well 
knows, Senator Biden has not ``agreed to work with Members to 
develop appropriate language to mitigate'' the effects of the 
Biden Sunset. He has consented to no changes in the provision, 
but, in a private conversation with Chairman Hatch and Senator 
Graham of South Carolina, agreed to consider possible proposals 
to modify the way the Biden Sunset is applied at the outset of 
the Fund.
                                                   Joseph R. Biden.

                      XII. Changes in Existing Law

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
S. 1125, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in brackets, new matter is 
printed in italic, and existing law in which no change is 
proposed is shown in roman):

UNITED STATES CODE

           *       *       *       *       *       *       *


                          TITLE 11--BANKRUPTCY

Chapter                                                          Section
    1. General Provisions.....................................       101
301. Case Administration....................................

           *       *       *       *       *       *       *


                     CHAPTER 3--CASE ADMINISTRATION


Subchapter Commencement of a Case

           *       *       *       *       *       *       *



                  Subchapter IV--Administrative Powers

361. Adequate protection.
363. Automatic stay.
     * * * * * * *

Sec. 362. Automatic stay

    (a) Except as provided in subsection (b) of this section, a 
petition filed under section 301, 302, or 303 of this title, or 
an application filed under section 5(a)(3) of the Securities 
Investor Protection Act of 1970, operates as a stay, applicable 
to all entities, of--

           *       *       *       *       *       *       *

    (b) The filing of a petition under section 301, 302, or 303 
of this title, or of an application under section 5(a)(3) of 
the Securities Investor Protection Act of 1970, does not 
operate as a stay--
          (1) under subsection (a) of this section, of the 
        commencement or continuation of a criminal action or 
        proceeding against the debtor;

           *       *       *       *       *       *       *

          (17) under subsection (a) of this section, of the 
        setoff by a swap participant, of any mutual debt and 
        claim under or in connection with any swap agreement 
        that constitutes the setoff of a claim against the 
        debtor for any payment due from the debtor under or in 
        connection with any swap agreement against any payment 
        due to the debtor from the swap participant under or in 
        connection with any sway agreement or against cash, 
        securities, or the property of the debtor held by or 
        due from such swap participant to guarantee, secure or 
        settle any swap agreement; [or]
          (18) under subsection (a) of the creation or 
        perfection of a statutory lien for an ad valorem 
        property tax imposed by the District of Columbia, or a 
        political subdivision of a State, if such tax comes due 
        after the filing of the petition[.]; or
          (19) under subsection (a) of this section of the 
        enforcement of any payment obligations under section 
        204 of the Fairness in Asbestos Injury Resolution Act 
        of 2003, against a debtor, or the property of the 
        estate of a debtor, that is a participant (as that term 
        is defined in section 3 of that Act).
The provisions of paragraphs (12) and (13) of this subsection 
shall apply with respect to any such petition filed on or 
before December 31, 1989.

           *       *       *       *       *       *       *


Sec. 365. Executory contracts and unexpired leases

    (a) Except as provided in sections 765 and 766 of this 
title and in subsections (b), (c), and (d) of this section, the 
trustee, subject to the court's approval, may assume or reject 
any executory contract or unexpired lease of the debtor.

           *       *       *       *       *       *       *

    (o) In a case under chapter 11 of this title, the trustee 
shall be deemed to have assumed (consistent with the debtor's 
other obligations under section 507), and shall immediately 
cure any deficit under, any commitment by the debtor to a 
Federal depository institutions regulatory agency (or 
predecessor to such agency) to maintain the capital of an 
insured depository institution, and any claim for a subsequent 
breach of the obligations thereunder shall be entitled to 
priority under section 507. This subsection shall not extend 
any commitment that would otherwise be terminated by any act of 
such an agency.
    (p) If a debtor is a participant (as that term is defined 
in section 3 of the Fairness in Asbestos Injury Resolution Act 
of 2003), the trustee shall be deemed to have assumed all 
executory contracts entered into by the participant under 
section 204 of that Act. The trustee may not reject any such 
executory contract.

           *       *       *       *       *       *       *


            CHAPTER 5--CREDITORS, THE DEBTOR, AND THE ESTATE


                   Subchapter I--Creditors and Claims

Sec.
501. Filing of proofs of claims or interests
     * * * * * * *
503. Allowance of administrative expenses.
     * * * * * * *

Sec. 503. Allowance of administrative expenses

    (a) An entity may timely file a request for payment of an 
administrative expense, or may tardily file such request if 
permitted by the court for cause.
    (b) After notice and a hearing, there shall be allowed 
administrative expenses, other than claims allowed under 
section 502(f) of this title, including--

           *       *       *       *       *       *       *

    (c)(1) Claims or expenses of the United States, the 
Attorney General, or the Administrator (as that term is defined 
in section 3 of the Fairness in Asbestos Injury Resolution Act 
of 2003) based upon the asbestos payment obligations of a 
debtor that is a Participant (as that term is defined in 
section 3 of that Act), shall be paid as an allowed 
administrative expense. The debtor shall not be entitled to 
either notice or a hearing with respect to such claims.
    (2) For purposes of paragraph (1), the term ``asbestos 
payment obligation'' means any payment obligation under 
subtitle B of title II of the Fairness in Asbestos Injury 
Resolution Act of 2003.

           *       *       *       *       *       *       *


              Subchapter II--Debtor's Duties and Benefits

521. Debtor's duties.
     * * * * * * *
523. Exceptions to discharge.
     * * * * * * *

Sec. 523. Exceptions to discharge

    (a) A discharge under section 724, 1141, 1228(a), 1228(b), 
or 1328(b) of this title does not discharge an individual 
debtor from any debt--
    (1) for a tax or a customs duty--

           *       *       *       *       *       *       *

    (e) Any institution-affiliated party of a \1\ insured 
depository institution shall be considered to be acting in a 
fiduciary capacity with respect to the purposes of subsection 
(a)(4) or (11).
---------------------------------------------------------------------------
    \1\ So in original. Probably should be ``an''.
---------------------------------------------------------------------------
    (f) A discharge under section 727, 1141, 1228, or 1328 of 
this title does not discharge any debtor that is a participant 
(as that term is defined in section 3 of the Fairness in 
Asbestos Injury Resolution Act of 2003) of the payment 
obligations that is a debtor under subtitle B of title II of 
that Act.

Sec. 524. Effect of discharge

    (a) A discharge in a case under this title--

           *       *       *       *       *       *       *

    (h) Application to existing injunctions.--For purposes of 
subsection (g)--

           *       *       *       *       *       *       *

    (i) Participant Debtors.--
          (1) In general.--Paragraphs (2) and (3) shall apply 
        to a debtor who--
                  (A) is a participant that has made prior 
                asbestos expenditures (as such terms are 
                defined in the Fairness in Asbestos Injury 
                Resolution Act of 2003); and
                  (B) is subject to a case under this title 
                that is pending--
                          (i) on the date of enactment of the 
                        Fairness in Asbestos Injury Resolution 
                        Act of 2003; or
                          (ii) at any time during the 1-year 
                        period preceding the date of enactment 
                        of that Act.
          (2) Tier i debtors.--A debtor that has been assigned 
        to tier I under section 202 of the Fairness in Asbestos 
        Injury Resolution Act of 2003 shall make payments in 
        accordance with sections 202 and 203 of that Act.
          (3) Treatment of payment obligations.--All payment 
        obligations of a debtor under sections 202 and 203 of 
        the Fairness in Asbestos Injury Resolution Act of 2003 
        shall--
                  (A) constitute costs and expenses of 
                administration of a case under section 503 of 
                this title;
                  (B) notwithstanding any case pending under 
                this title, be payable in accordance with 
                section 202 of that Act;
                  (C) not be stayed;
                  (D) not be affected as to enforcement or 
                collection by any stay or injunction of any 
                court; and
                  (E) not be impaired or discharged in any 
                current or future case under this title.
      (j) Asbestos Trusts.--
          (1) In general.--A trust shall assign a portion of 
        the corpus of the trust to the Asbestos Injury Claims 
        Resolution Fund (referred to in this subsection as the 
        ``Fund'') as established under the Fairness in Asbestos 
        Injury Resolution Act of 2003 if the trust qualifies as 
        a ``trust'' under section 201 of that Act.
          (2) Transfer of trust assets.--
                  (A) In general.--Except as provided under 
                subparagraphs (B) and (C), the assets in any 
                trust established to provide compensation for 
                asbestos claims (as defined in section 3 of the 
                Fairness in Asbestos Injury Resolution Act of 
                2003) shall be transferred to the Fund not 
                later than 6 months after the date of enactment 
                of the Fairness in Asbestos Injury Resolution 
                Act of 2003. Except as provided under 
                subparagraph (B), the Administrator of the Fund 
                shall accept such assets and utilize them for 
                any purposes of the Fund under section 223 of 
                such Act, including the payment of claims for 
                awards under such Act to beneficiaries of the 
                trust from which the assets were transferred. 
                After such transfer, each trustee of such trust 
                shall have no liability to any beneficiary of 
                such trust.
                  (B) Authority to refuse assets.--The 
                Administrator of the Fund may refuse to accept 
                any asset that the Administrator determines may 
                create liability for the Fund in excess of the 
                value of the asset.
                  (C) Allocation of trust assets.--If a trust 
                under subparagraph (A) has beneficiaries with 
                claims that are not asbestos claims, the assets 
                transferred to the Fund under subparagraph (A) 
                shall not include assets allocable to such 
                beneficiaries. The trustees of any such trust 
                shall determine the amount of such trust assets 
                to be reserved for the continuing operation of 
                the trust in processing and paying claims that 
                are not asbestos claims. Such reserved amount 
                shall not be greater than 3 percent of the 
                total assets in the trust and shall not be 
                transferred to the Fund.
                  (D) Sale of fund assets.--The investment 
                requirements under section 222 of the Fairness 
                in Asbestos Injury Resolution Act of 2003 shall 
                not be construed to require the Administrator 
                of the Fund to sell assets transferred to the 
                Fund under subparagraph (A).
                  (E) Liquidated claims.--A trust shall not 
                make any payment relating to asbestos claims 
                unless such claims were liquidated in the 
                ordinary course and the normal and usual 
                administration of the trust consistent with 
                past practices before the date of enactment of 
                the Fairness in Asbestos Injury Resolution Act 
                of 2003.
          (3) Injunction.--Any injunction issued as part of the 
        formation of a trust described in paragraph (1) shall 
        remain in full force and effect.
     * * * * * * *

                       Subchapter III--The Estate

541. Property of the estate.
     * * * * * * *
546. Limitations on avoiding powers.
     * * * * * * *

Sec. 546. Limitation on avoiding powers.

    (a) An action or proceeding under section 544, 545, 547, 
548, or 553 of this title may not be commenced after the 
earlier of--
     * * * * * * *
    (h) Notwithstanding the rights and powers of a trustee 
under sections 544, 545, 547, 548, 549, and 550 of this title, 
if a debtor is a participant (as that term is defined in 
section 3 of the Fairness in Asbestos Injury Resolution Act of 
2003), the trustee may not avoid a transfer made by the debtor 
pursuant to its payment obligations under section 202 or 203 of 
that Act.

                       CHAPTER 11--REORGANIZATION


               Subchapter I--Officers and Administration

     * * * * * * *

                        Subchapter II--The Plan

1121. Who may file a plan.
     * * * * * * *
1129. Confirmation of plan.
     * * * * * * *

Sec. 1129. Confirmation of plan

    (a) The court shall confirm a plan only if all of the 
following requirements are met:
          (1) The plan complies with the applicable provisions 
        of this title.
     * * * * * * *
          (14) If the debtor is a participant (as that term is 
        defined in section 3 of the Fairness in Asbestos Injury 
        Resolution Act of 2003), the plan provides for the 
        continuation after its effective date of payment of all 
        payment obligations under title II of that Act.

                TITLE 18--CRIMES AND CRIMINAL PROCEDURE

Part                                                             Section
    I. CRIMES.................................................         1
     * * * * * * *

                             PART I--CRIMES

Chapter                                                          Section
    1. General provisions.....................................         1
     * * * * * * *
    39. Explosives and combustibles...........................       831
    39A. Ban of asbestos containing products..................       838
     * * * * * * *

          CHAPTER 39--EXPLOSIVES AND OTHER DANGEROUS ARTICLES

Sec.
831. Prohibited transactions involving nuclear materials.
[832 to 835. Repealed.]
836. Transportation of fireworks into State prohibiting sale or use.
[837. Repealed.]
838. Ban of asbestos containing products.
     * * * * * * *

            CHAPTER 39A--BAN OF ASBESTOS CONTAINING PRODUCTS

Sec. 838. Ban of asbestos containing products

    (a) Definitions.--In this chapter:
          (1) Administrator.--The term ``Administrator'' means 
        the Administrator of the Environmental Protection 
        Agency.
          (2) Asbestos.--The term ``asbestos'' includes--
                  (A) chrysotile;
                  (B) amosite;
                  (C) crocidolite;
                  (D) tremolite asbestos;
                  (E) winchite asbestos;
                  (F) richterite asbestos;
                  (G) anthophyllite asbestos;
                  (H) actinolite asbestos;
                  (I) any of the minerals listed under 
                subparagraphs (A) through (H) that has been 
                chemically treated or altered, and any 
                asbestiform variety, type or component thereof.
          (3) Asbestos containing product.--The term ``asbestos 
        containing product'' means any product (including any 
        part) to which asbestos is deliberately or knowingly 
        added or used because the specific properties of 
        asbestos are necessary for product use or function. 
        Under no circumstances shall the term ``asbestos 
        containing product'' be construed to include products 
        that contain de minimus levels of naturally occurring 
        asbestos as defined by the Administrator not later than 
        1 year after the date of enactment of this chapter.
          (4) Distribute in commerce.--The term ``distribute in 
        commerce''--
                  (A) has the meaning given the term in section 
                3 of the Toxic Substances Control Act (15 
                U.S.C. 2602); and
                  (B) shall not include--
                          (i) an action taken with respect to 
                        an asbestos containing product in 
                        connection with the end use of the 
                        asbestos containing product by a person 
                        that is an end user, or an action taken 
                        by a person who purchases or receives a 
                        product, directly or indirectly from an 
                        end user; or
                          (ii) distribution of an asbestos 
                        containing product by a person solely 
                        for the purpose of disposal of the 
                        asbestos containing product in 
                        compliance with applicable Federal, 
                        State, and local requirements.
    (b) In General.--Subject to subsection (c), the 
Administrator shall, after consultation with the Assistant 
Attorney General for the Environmental and Natural Resources 
Division of the United States Department of Justice, 
promulgate--
          (1) not later than 1 year after the date of enactment 
        of this chapter, proposed regulations that--
                  (A) prohibit persons from manufacturing, 
                processing, or distributing in commerce 
                asbestos containing products; and
                  (B) provide for implementation of subsections 
                (c) and (d); and
          (2) not later than 2 years after the date of 
        enactment of this chapter, final regulations that, 
        effective 60 days after the date of promulgation, 
        prohibitpersons from manufacturing, processing, or 
distributing in commerce asbestos containing products.
    (c) Exemptions.--
          (1) In general.--Any person may petition the 
        Administrator for, and the Administrator may grant an 
        exemption from the requirements of subsection (b), if 
        the Administrator determines that--
                  (A) the exemption would not result in an 
                unreasonable risk of injury to public health or 
                the environment; and
                  (B) the person has made good faith efforts to 
                develop, but has been unable to develop, a 
                substance, or identify a mineral that does not 
                present an unreasonable risk of injury to 
                public health or the environment and may be 
                substituted for an asbestos containing product.
          (2) Terms and conditions.--An exemption granted under 
        this subsection shall be in effect for such period (not 
        to exceed 5 years) and subject to such terms and 
        conditions as the Administrator may prescribe.
          (3) Governmental use.--
                  (A) In general.--The Administrator of the 
                Environmental Protection Agency shall provide 
                an exemption from the requirements of 
                subsection (a), without review or limit on 
                duration, if such exemption for an asbestos 
                containing product is--
                          (i) sought by the Secretary of 
                        Defense and the Secretary certifies, 
                        and provides a copy of that 
                        certification to Congress, that--
                                  (I) use of the asbestos 
                                containing product is necessary 
                                to the critical functions of 
                                the Department;
                                  (II) no reasonable 
                                alternatives to the asbestos 
                                containing product exist for 
                                the intended purpose; and
                                  (III) use of the asbestos 
                                containing product will not 
                                result in an unreasonable risk 
                                to health or the environment; 
                                or
                          (ii) sought by the Administrator of 
                        the National Aeronautics and Space 
                        Administration and the Administrator of 
                        the National Aeronautics and Space 
                        Administration certifies, and provides 
                        a copy of that certification to 
                        Congress, that--
                                  (I) the asbestos containing 
                                product is necessary to the 
                                critical functions of the 
                                National Aeronautics and Space 
                                Administration;
                                  (II) no reasonable 
                                alternatives to the asbestos 
                                containing product exist for 
                                the intended purpose; and
                                  (III) the use of the asbestos 
                                containing product will not 
                                result in an unreasonable risk 
                                to health or the environment.
                  (B) Administrative procedure act.--Any 
                certification required under subparagraph (A) 
                shall not be subject to chapter 5 of title 5, 
                United States Code (commonly referred to as the 
                ``Administrative Procedure Act'').
          (4) Specific exemptions.--The following are exempted:
                  (A) Asbestos diaphragms for use in the 
                manufacture or chlor-alkali and the products 
                and derivative therefrom.
                  (B) Roofing cements, coatings and mastics 
                utilizing asbestos that is totally encapsulated 
                with asphalt, subject to a determination by the 
                Administrator of the Environmental Protection 
                Agency under paragraph (5).
          (5) Environmental protection agency review.--
                  (A) Review in 18 months.--Not later than 18 
                months after the date of enactment of this 
                chapter, the Administrator of the Environmental 
                Protection Agency shall complete a review of 
                the exemption for roofing cements, coatings, 
                and mastics utilizing asbestos that are totally 
                encapsulated with asphalt to determine 
                whether--
                          (i) the exemption would result in an 
                        unreasonable risk of injury to public 
                        health or the environment; and
                          (ii) there are reasonable, commercial 
                        alternatives to the roofing cements, 
                        coatings, and mastics utilizing 
                        asbestos that is totally encapsulated 
                        with asphalt.
                  (B) Revocation of exemption.--Upon completion 
                of the review, the Administrator of the 
                Environmental Protection Agency shall have the 
                authority to revoke the exemption for the 
                products exempted under paragraph (4)(B) if 
                warranted.
    (d) Disposal.--
          (1) In general.--Except as provided in paragraph (2), 
        not later than 3 years after the date of enactment of 
        this chapter, each person that possesses an asbestos 
        containing product that is subject to the prohibition 
        established under this section shall dispose of the 
        asbestos containing product, by a means that is in 
        compliance with applicable Federal, State, and local 
        requirements.
          (2) Exemption.--Nothing in paragraph (1)--
                  (A) applies to an asbestos containing product 
                that--
                          (i) is no longer in the stream of 
                        commerce; or
                          (ii) is in the possession of an end 
                        user or a person who purchases or 
                        receives an asbestos containing product 
                        directly or indirectly from an end 
                        user; or
                  (B) requires that an asbestos containing 
                product described in subparagraph (A) be 
                removed or replaced.
     * * * * * * *

                         CHAPTER 63--MAIL FRAUD

Sec.
1341. Frauds and swindles.
     * * * * * * *
1347. Health care fraud.
1348. Fraud and false statements in connection with participation in 
          Asbestos Injury Claims Resolution Fund.
     * * * * * * *

Sec. 1348. Fraud and false statement in connection with participation 
                    in Asbestos Injury Claims Resolution Fund

    (a) Fraud Relating to Asbestos Injury Claims Resolution 
Fund.--Whoever knowingly and willfully executes, or attempts to 
execute, a scheme or artifice to defraud the Asbestos Insurers 
Commission or the Office of Asbestos Injury Claims Resolution 
under title II of the Fairness in Asbestos Injury Resolution 
Act of 2003 shall be fined under this title or imprisoned not 
more than 20 years, or both.
    (b) False Statements Relating to Asbestos Injury Claims 
Resolution Fund.--Whoever, in any matter involving the Asbestos 
Insurers Commission or the Office of Asbestos Injury Claim 
Resolution, knowingly and willfully--
          (1) falsifies, conceals, or covers up by any trick, 
        scheme, or device a material fact;
          (2) makes any materially false, fictitious, or 
        fraudulent statements or representations; or
          (3) makes or uses any false writing or document 
        knowing the same to contain any materially false, 
        fictitious, or fraudulent statement or entry,
        in connection with the award of a claim or the 
        assessment of contributions under title I or II of the 
        Fairness in Asbestos Injury Resolution Act of 2003 
        shall be fined under this title or imprisoned not more 
        than 10 years, or both.
     * * * * * * *

                                
