[House Report 113-254]
[From the U.S. Government Publishing Office]


113th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                    113-254

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



 
                FURTHERING ASBESTOS CLAIM TRANSPARENCY 
                           (FACT) ACT OF 2013

                                _______
                                

October 30, 2013.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

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

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 982]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on the Judiciary, to whom was referred the 
bill (H.R. 982) to amend title 11 of the United States Code to 
require the public disclosure by trusts established under 
section 524(g) of such title, of quarterly reports that contain 
detailed information regarding the receipt and disposition of 
claims for injuries based on exposure to asbestos; and for 
other purposes, having considered the same, reports favorably 
thereon without amendment and recommends that the bill do pass.

                                CONTENTS

                                                                   Page

Purpose and Summary..............................................     2
Background and Need for the Legislation..........................     2
Hearings.........................................................    16
Committee Consideration..........................................    17
Committee Votes..................................................    17
Committee Oversight Findings.....................................    27
New Budget Authority and Tax Expenditures........................    27
Congressional Budget Office Cost Estimate........................    27
Duplication of Federal Programs..................................    29
Disclosure of Directed Rule Makings..............................    29
Performance Goals and Objectives.................................    29
Advisory on Earmarks.............................................    29
Section-by-Section Analysis......................................    29
Changes in Existing Law Made by the Bill, as Reported............    29
Dissenting Views.................................................    30

                          Purpose and Summary

    H.R. 982, the ``Furthering Asbestos Claim Transparency 
(FACT) Act of 2013'' or the ``FACT Act'' adds a paragraph to 
subsection (g) of section 524 of title 11 of the United States 
Code to require a trust established pursuant to that subsection 
to file, each quarter, a public report with the bankruptcy 
court listing the name and exposure history of those who have 
filed a claim with such trust and any payments made to 
claimants and the basis for such payments.\1\ The bill 
specifically prohibits the disclosure of confidential medical 
records and Social Security numbers of claimants. It further 
requires each such trust to provide, upon written request, 
information related to payment from, and demands for payment 
from, such trust to any party in an action involving liability 
for asbestos exposure.\2\ The purpose of the bill is to prevent 
fraud by requiring greater transparency for asbestos trusts so 
that future claimants who have been truly harmed by asbestos 
exposure will be able to receive compensation for their 
injuries.
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    \1\Furthering Asbestos Claim Transparency (FACT) Act of 2013, H.R. 
982, 113th Cong. Sec. 2 (2013).
    \2\Id.
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                Background and Need for the Legislation

            A. THE HISTORY OF ASBESTOS AND ASBESTOS-RELATED 
                           HEALTH CONDITIONS

    Asbestos is a commercial name given to six minerals--
amosite, crocidolite, tremolite, actinolite, anthophyllite, and 
chrysotile--that were widely used in the United States in 
industrial products throughout much of the 20th Century.\3\ 
Humans have used asbestos for centuries.\4\ The word 
``asbestos'' comes from the Greek word for ``indestructible,'' 
and the ancient world used asbestos for everything from fabrics 
to lamp wicks.\5\ In the 1860's, it was first commercially used 
in the United States as insulation. Because asbestos is strong, 
durable, and has excellent fire-retardant capability, it was 
widely used in industrial and other work and residential 
settings through the early 1970's. It was regarded as a miracle 
fiber, versatile enough to weave into textiles, integrate into 
insulation, line the brakes of automobiles, and construct 
flame-retardant hulls for naval and merchant ships. Asbestos 
consumption in the United States peaked in 1973 and then 
dropped dramatically over the next three decades.\6\
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    \3\S. Rep. No. 110-189, at 1 (citing Asbestos, National Institute 
for Occupational Safety and Health, www.cdc.gov/niosh/topics/asbestos 
(last visited May 23, 2013)); see also Wylie, A Report on the Asbestos 
Litigation Industry, Manhattan Institute's Center for Legal Policy, 
2008, at 4, available at http://www.triallawyersinc.com/pdfs/TLI-
ASBESTOS.pdf (last visited May 31, 2013).
    \4\Wylie, supra note 3, at 4.
    \5\Asbestos, Heritage Research Center, http://
www.heritageresearch.com/ourlibrary/histories/asbestos.html (last 
visited May 23, 2013).
    \6\Wylie, supra note 3, at 4.
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    Despite the usefulness of asbestos in industrial and 
residential products, it was uncovered that asbestos fibers 
cause serious diseases when inhaled.\7\ Inhalation of asbestos 
fibers has been linked to a number of diseases, including 
mesothelioma, lung cancer, asbestosis, and pleural 
abnormalities.\8\ Mesothelioma is a deadly cancer of the lining 
of the chest or abdomen.\9\ Exposure to asbestos is the cause 
for most cases of mesothelioma.\10\ Lung cancer is the other 
frequently claimed malignant disease that can be caused by 
asbestos, although some other forms of cancer may be related to 
asbestos exposure.\11\ Asbestosis, a chronic lung disease 
resulting from inhalation of asbestos fibers, can be 
debilitating and even fatal.\12\ Exposure to asbestos has been 
claimed to cause pleural abnormalities.\13\ Pleural plaques, 
pleural thickening, and pleural effusion are abnormalities of 
the pleura, the membrane that lines the inside of the chest 
wall and covers the outside of the lung.\14\ These 
abnormalities can affect breathing and may be an early warning 
sign for mesothelioma.\15\
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    \7\Asbestos Fibers and Other Elongate Mineral Particles: State of 
the Science and Roadmap for Research, National Institute for 
Occupational Safety and Health, Apr. 2011, at 1, available at http://
www.cdc.gov/niosh/docs/2011-159/pdfs/2011-159.pdf (last visited May 23, 
2013).
    \8\Id.
    \9\Asbestos Health Effects, Agency for Toxic Substances & Disease 
Registry, http://www.atsdr.cdc.gov/asbestos/asbestos/health_effects/ 
(last visited May 28, 2013).
    \10\Id.
    \11\See generally H.R. 4369, the ``Furthering Asbestos Claim 
Transparency (FACT) Act of 2012'': Hearing Before the Subcomm. on 
Courts, Commercial and Administrative Law of the H. Comm. on the 
Judiciary, 112th Cong. (2011) [hereinafter Courts Subcomm. Hearing] 
(testimony of Charles S. Siegel).
    \12\Agency for Toxic Substances & Disease Registry, supra note 9.
    \13\Id.
    \14\Id.
    \15\Id.
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                         B. ASBESTOS LITIGATION

    Asbestos litigation is the longest-running mass tort 
litigation in the United States.\16\ Personal injury litigation 
related to asbestos exposure ``has continued for over 40 years 
in the United States with hundreds of thousands of claims filed 
and billions of dollars in compensation paid.''\17\ Throughout 
this period asbestos litigation has evolved, presenting 
different challenges to the parties and courts involved.\18\ 
The focus of the litigation shifted from Federal to state 
courts, and now, increasingly, to bankruptcy courts and the 
resulting bankruptcy asbestos trusts.\19\
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    \16\Stephen J. Carroll et al., Asbestos Litigation, Rand Institute 
for Civil Justice, 2005, at xvii.
    \17\Lloyd Dixon et al., Asbestos Bankruptcy Trusts: An Overview of 
Trust Structure and Activity with Detailed Reports on the Largest 
Trusts, Rand Institute for Civil Justice, 2010, at xi.
    \18\Carroll et al., supra note 16, at xx.
    \19\Id.
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    Asbestos litigation arose as a result of individuals' long-
term and widespread exposure to asbestos, and as a result of 
many asbestos product manufacturers' failure to protect workers 
against exposure and failure to warn their workers to take 
adequate precautions against exposure. The U.S. Court of 
Appeals for the Fifth Circuit upheld the first successful 
asbestos liability suit in 1973.\20\ A worker sued the 
manufacturers of asbestos-containing products on a theory of 
product liability (a strict liability tort); the defendants' 
affirmative defense that their products contained ample warning 
about the dangers of using the product proved insufficient.\21\ 
Prior to the Fifth Circuit's decision, employees exposed to 
asbestos had recourse only to workers' compensation claims to 
recover for their asbestos-related injuries.
---------------------------------------------------------------------------
    \20\Borel v. Fibreboard Paper Prods. Corp., 493 F.2d 1076 (5th Cir. 
1973).
    \21\Id. at 1109.
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    After the Fifth Circuit's decision, the volume of asbestos 
litigation exploded--so much so that, in 1990, the Chief 
Justice of the United States Supreme Court appointed the Ad Hoc 
Committee on Asbestos Litigation to address what the Court 
later referred to as the ``asbestos-litigation crisis.''\22\ 
The volume of claims filed against asbestos defendants has not 
abated over time.\23\ On the contrary, annual claims filed 
against defendants have risen steadily, with sharp increases in 
recent years.\24\ During the 1990's, the number of asbestos 
cases pending nationwide doubled from 100,000 to more than 
200,000.\25\ By 2002, approximately 730,000 claims had been 
filed,\26\ with more than 100,000 claims filed in 2003 alone--
``the most in a single year.''\27\
---------------------------------------------------------------------------
    \22\Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 597 (1997).
    \23\Carroll et al., supra note 16, at xxiv.
    \24\Id.
    \25\The Fairness in Asbestos Compensation Act of 1999: Hearing on 
H.R. 1283 Before the H. Comm. on the Judiciary, 106th Cong. 67 (1999) 
(statement of Christopher Edley, Jr.) [hereinafter Edley Testimony].
    \26\Carroll et al., supra note 16, at xxiv.
    \27\Editorial, The Asbestos Blob, Cont., Wall St. J., Apr. 6, 2004, 
at A16.
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    The recent growth in the number of asbestos claims is 
largely attributable to the significant increase of claimants 
with nonmalignant injuries, including those with little or no 
current functional impairment.\28\ By the early 2000's, ``the 
overwhelming majority of claims--up to 90 percent--were filed 
on behalf of plaintiffs who were `completely asymptomatic.' 
These claimants may have had some marker of exposure, such as 
changes in the pleural membrane of their lungs, but `are not 
now and never will be afflicted by disease.'''\29\ Conversely, 
when asbestos litigation first arose in the 1960's, most 
claimants were ``workers suffering from grave and crippling 
maladies.''\30\
---------------------------------------------------------------------------
    \28\Carroll et al., supra note 16, at xxiv.
    \29\David C. Landin et al., Lessons Learned from the Front Lines: A 
Trial Court Checklist for Promoting Order and Sound Policy in Asbestos 
Litigation, 16 J.L. & Pol'y 589, 595-96 (2008) (internal citations 
omitted).
    \30\Edley Testimony, supra note 25.
---------------------------------------------------------------------------
    The number of asbestos litigation defendants has grown in 
commensurate fashion with the burgeoning asbestos claims. In 
1983, there were approximately 300 asbestos litigation 
defendants.\31\ By 2004, the number of asbestos litigation 
defendants increased to over 8,400, with over 90 percent of 
American industries subject to asbestos lawsuits.\32\ These 
defendants included miners and manufacturers of asbestos or 
asbestos-containing products, purchasers of asbestos products, 
insurers, and businesses that used asbestos or asbestos-
containing products in the course of their industry.\33\
---------------------------------------------------------------------------
    \31\Landin, supra note 29, at 597.
    \32\Carroll et al., supra note 16, at xxv (noting that the 8,400 
figure likely was conservative given the reporting methodology).
    \33\Dixon et al., supra note 17, at 2.
---------------------------------------------------------------------------
    Under the backdrop of amassing asbestos claims and an 
expanding defendant constituency, courts and affected parties 
have initiated several attempts to achieve a comprehensive 
resolution to asbestos litigation. Notwithstanding these 
efforts, no resolution has been reached. The Supreme Court 
rejected two comprehensive class action settlements and draft 
Federal legislative reforms were never enacted.\34\ 
Accordingly, asbestos claimants and defendants likely will 
continue to operate within the existing state and Federal 
asbestos framework for the foreseeable future.
---------------------------------------------------------------------------
    \34\See Amchem Products v. Windsor, 521 U.S. 591 (1997); see Ortiz 
v. Fibreboard Corp., 527 U.S. 815 (1999); see e.g., Asbestos 
Compensation Fairness Act, H.R. 1957, 109th Cong. (2005); Fairness in 
Asbestos Injury Resolution (FAIR) Act, S. 852, 109th Cong. (2005).
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                    C. ASBESTOS CLAIMS IN BANKRUPTCY

    Asbestos litigation has driven nearly 100 companies into 
bankruptcy, with more than half of such companies filing since 
the beginning of the year 2000.\35\ The cost of these 
bankruptcies is largely immeasurable but has been estimated to 
cost the American economy approximately 60,000 jobs and between 
$1.4 and $3.0 billion.\36\ One of the most prominent 
bankruptcies was that of John Mansville Corporation, the 
dominant American producer of asbestos products. The Mansville 
bankruptcy redefined many aspects of the asbestos litigation 
system, including the inception of a trust system to compensate 
asbestos claimants in exchange for a broad injunction against 
future asbestos liability.\37\
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    \35\Hanlon & Smetak, Asbestos Changes, 62 N.Y.U. Ann. Surv. Am. L. 
525, 526-7 (2007); see also Dixon et al., supra note 17, at xii.
    \36\Id. (citing Carroll et al., supra note 16, at 121 (data through 
2002) and Joseph E. Stiglitz et al., The Impact of Asbestos Liabilities 
on Workers in Bankrupt Firms, Sebago Associates, 2002, at 27-29, 42).
    \37\Hanlon & Smetak, supra note 35, at 541.
---------------------------------------------------------------------------
    Following the Mansville model and in response to a rising 
tide of asbestos defendants seeking relief from liability 
through chapter 11 bankruptcies, Congress amended the 
Bankruptcy Code in 1994 to include a provision, 11 U.S.C. 
Sec. 524(g), to allow for the resolution of asbestos liability 
claims against a debtor through a trust-based system.\38\ Under 
that section, a debtor is permitted to create, in its chapter 
11 plan, a trust that is to be the exclusive source of post-
confirmation compensation for the debtor's asbestos liability. 
If the trust meets certain prescribed requirements, the debtor, 
after its successful reorganization, is granted a channeling 
injunction that prohibits any asbestos plaintiff from suing the 
reorganized debtor for asbestos liability.\39\ The balance 
intended by section 524(g) is simple--the asbestos claimants 
receive a trust funded in an amount and administered in a 
manner that is satisfactory to the presiding bankruptcy court 
and a majority of the debtor's known asbestos claimants in 
exchange for the debtor's ability to gain certainty regarding 
its asbestos liability exposure and a shield against future 
claims in order to allow the debtor to continue its business 
operations.
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    \38\Bankruptcy Reform Act of 1994, Sec. 111, 103d Cong. (1994) 
(enacted) (codified at 11 U.S.C. Sec. 524).
    \39\11 U.S.C. Sec. 524(g)(2)(B).
---------------------------------------------------------------------------
    The institution of an asbestos trust has become a virtual 
inevitability in recent chapter 11 cases involving asbestos 
defendants. As of June 2012, 54 asbestos trusts had been 
formed, with an additional nine trusts expected in the near-
term and a considerable acceleration of trust formations in the 
second half of the 2000's.\40\ These trusts manage substantial 
assets reported in excess of $18.2 billion at the end of 
2008.\41\ The asbestos trusts review and pay damages on account 
of millions of claims a year; between 2007 and 2008, selected 
asbestos trusts satisfied over four million claims.\42\
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    \40\Dixon et al., supra note 17, at xii.
    \41\Id. (noting that this figure did not include the assets of at 
least four recently formed asbestos trusts).
    \42\Id.
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        D. FRAUD IN ASBESTOS LITIGATION THROUGH MASS SCREENINGS

    A commentator likened the scale of fraud in asbestos 
litigation to that of the scandals of ``Credit Mobilier, Teapot 
Dome, the Savings and Loan debacles, WorldCom, Enron and the 
vast Ponzi schemes that have recently unfolded.''\43\ Fraud in 
asbestos litigation largely stems from plaintiffs' lawyers 
utilizing mass screening measures to recruit hundreds of 
thousands of claimants.
---------------------------------------------------------------------------
    \43\How Fraud and Abuse in the Asbestos Compensation System Affect 
Victims, Jobs, the Economy, and the Legal System: Hearing Before the 
Subcomm. on the Constitution of the H. Comm. on the Judiciary, 112th 
Cong. 8 (2011) [hereinafter Constitution Subcomm. Hearing] (testimony 
of Professor Lester Brickman).
---------------------------------------------------------------------------
    Asbestos lawyers were found to have hired screening 
companies to recruit potential claimants who, although not 
currently suffering from asbestos-related injuries, exhibited 
symptoms of exposure. ``Labor unions, attorneys, and other 
persons with suspect motives caused large numbers of people to 
undergo X-ray examinations (at no cost), thus triggering 
thousands of claims by persons who had never experienced 
adverse symptoms.''\44\ These screening companies used mobile 
X-ray vans to seek out potential clients in the parking lots of 
hotels and restaurants. The sole object of these screenings was 
to generate evidence--X-rays, pulmonary function tests, and 
medical reports--to support claims of asbestos-related 
injuries.\45\ As former United States Attorney General Griffin 
Bell has observed, ``[t]here often is no medical purpose for 
these screenings and claimants receive no medical follow-
up.''\46\
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    \44\Owens Corning v. Credit Suisse First Boston, 322 B.R. 719, 723 
(D. Del. 2005).
    \45\Lester Brickman, The Use of Litigation Screenings in Mass 
Torts: A Formula for Fraud?, 61 SMU L. Rev. 1221, 1233 (2008).
    \46\Griffin B. Bell, Asbestos & The Sleeping Constitution, 31 Pepp. 
L. Rev. 1, 5 (2003).
---------------------------------------------------------------------------
    These mass screenings were wildly successful and generated 
massive numbers of claims for plaintiffs' attorneys. The 
claimant recruiting process was described by U.S. News & World 
Report:
    To unearth new clients for lawyers, screening firms 
advertise in towns with many aging industrial workers or park 
X-ray vans near union halls. To get a free X-ray, workers must 
often sign forms giving law firms 40 percent of any recovery. 
One solicitation reads: ``Find out if YOU have MILLION DOLLAR 
LUNGS!''\47\
---------------------------------------------------------------------------
    \47\Pamela Sherrid, Looking for Some Million Dollar Lungs, Best of 
Asbestos, U.S. News & World Rep., Dec. 17, 2001, at 36.
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    It is estimated that more than one million workers have 
undergone attorney-sponsored screenings.\48\ As one worker 
explained, ``it's better than the lottery. If they find 
anything, I get a few thousand dollars I didn't have. If they 
don't find anything, I've just lost an afternoon.''\49\ 
According to legal scholars, ``without these claims, the 
`asbestos litigation crisis' would never have arisen.''\50\
---------------------------------------------------------------------------
    \48\See Lester Brickman, On the Theory Class's Theories of Asbestos 
Litigation: The Disconnect Between Scholarship and Reality, 31 Pepp. L. 
Rev. 33, 69 (2003).
    \49\Andrew Schneider, Asbestos Lawsuits Anger Critics, St. Louis 
Post-Dispatch, Feb. 11, 2003, at A1.
    \50\Lester Brickman, Lawyers' Ethics and Fiduciary Obligation in 
the Brave New World of Aggregative Litigation, 26 Wm. & Mary Envtl. L. 
& Pol'y Rev. 243, 273 (2001).
---------------------------------------------------------------------------
    An American Bar Association Commission on Asbestos 
Litigation confirmed that claims filed by the non-sick 
generally arose from for-profit screening companies whose sole 
purpose was to identify large numbers of people with minimal X-
ray changes consistent with asbestos exposure.\51\ The 
Commission, with the help of the American Medical Association, 
consulted prominent occupational-medicine and pulmonary-disease 
physicians to craft legal standards for asbestos-related 
impairment. The Commission found: ``[s]ome X-ray readers spend 
only minutes to make these findings, but are paid hundreds of 
thousands of dollars--in some cases, millions--in the aggregate 
by the litigation screening companies due to the volume of 
films read.''\52\ The Commission also reported that litigation 
screening companies were finding X-ray evidence that was 
consistent with asbestos exposure at a ``startlingly high'' 
rate, often exceeding 50% and sometimes reaching 90%.\53\
---------------------------------------------------------------------------
    \51\Mark A. Behrens & Phil Goldberg, The Asbestos Litigation 
Crisis: The Tide Appears to be Turning, 12 Conn. Ins. L.J. 477, 480 
(2006).
    \52\Hon. Nathan R. Jones, ABA Comm'n on Asbestos Litigation, ABA 
Report to the House of Delegates 8 (2003) available at http://
www.cdc.gov/niosh/docket/archive/pdfs/NIOSH-015/020103-Exhibit12.pdf.
    \53\Id.
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    Researchers at Johns Hopkins University compared the X-ray 
interpretations of professionals who are certified by the 
National Institute for Occupational Safety and Health to 
interpret pulmonary X-rays, referred to as ``B Readers,'' 
employed by plaintiffs' counsel with the subsequent 
interpretations of six independent B Readers who had no 
knowledge of the X-rays' origins. The study found that, while B 
Readers hired by plaintiffs claimed asbestos-related lung 
abnormalities in almost 96% of the X-rays, the independent B 
Readers found abnormalities in less than 5% of the same X-
rays--a difference the researchers said was ``too great to be 
attributed to inter-observer variability.''\54\
---------------------------------------------------------------------------
    \54\Joseph N. Gitlin et al., Comparison of `B' Readers' 
Interpretations of Chest Radiographs for Asbestos Related Changes, 11 
Acad. Radiology 843, 852 (2004).
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    One physician, Dr. Lawrence Martin, has explained the 
reason why plaintiffs' B Readers seem to see asbestos-related 
lung abnormalities on chest X-rays in numbers not seen by 
neutral experts. Dr. Martin has said, ``the chest X-rays are 
not read blindly, but always with knowledge of some asbestos 
exposure and that the lawyer wants to file litigation on the 
worker's behalf.''\55\ In 2005, Senior U.S. District Court 
Judge John Fullam said that many B Readers hired by plaintiffs' 
lawyers were ``so biased that their readings were simply 
unreliable.''\56\ As Dr. James Crapo, a leading medical expert 
on asbestos-related diseases, has observed, claimants are being 
compensated ``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.''\57\ 
Professor Lester Brickman, an expert on asbestos litigation, 
concluded that ``[a]sbestos litigation has become a malignant 
enterprise which mostly consists of a massive client-
recruitment effort that accounts for as much as 90 percent of 
all claims currently being generated, supported by baseless 
medical evidence which is not generated by good-faith medical 
practice, but rather is primarily a function of the 
compensation paid, and by claimant testimony scripted by 
lawyers to identify exposure to certain defendants' 
products.''\58\
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    \55\David E. Bernstein, Keeping Junk Science Out of Asbestos 
Litigation, 31 Pepp. L. Rev. 11, 13 (2003) (quoting Lawrence Martin, 
M.D.).
    \56\Owens Corning, 322 B.R. at 723.
    \57\Lester Brickman & Harvey D. Shapiro, Asbestos Kills--And More 
than Just People: Jobs, Ethics, and Elementary Justice, Nat'l. Rev., 
Jan. 31, 2005.
    \58\Lester Brickman, On the Theory Class's Theories of Asbestos 
Litigation: The Disconnect Between Scholarship and Reality, 31 Pepp. L. 
Rev. at 33.
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    Screening programs declined in prominence following a 
landmark ruling by U.S. District Court Judge Janis Jack, who 
issued a 300-plus page order detailing methods used to generate 
fraudulent asbestos and silica claims in 2005.\59\ In the wake 
of Judge Jack's opinion, which noted that many asbestos and 
silica cases are ``driven neither by health nor justice'' and 
are instead ``manufactured for money,''\60\ Congress convened 
hearings on fraud and abuse in asbestos litigation.\61\ A 
Federal grand jury was empanelled in the Southern District of 
New York.\62\
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    \59\In re Silica Prods. Liab. Litig., 398 F.Supp.2d 563 (S.D. Tex. 
2005).
    \60\Id. at 635.
    \61\The Silicosis Story: Hearings Before the Subcomm. on Oversight 
and Investigations of the Comm. on Energy and Commerce, 109th Cong. 
(2006).
    \62\Adam Liptak, Defendants See a Case of Diagnosing for Dollars, 
N.Y. Times, Oct. 1, 2007, available at http://www.nytimes.com/2007/10/
01/us/01bar.html (last accessed May 31, 2013) (``A grand jury was 
convened in Manhattan more than 2 years ago to look into potential 
fraud in silicosis cases. . . .'').
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    Many believed the decline in mass screenings and enactment 
of medical criteria statutes in major asbestos venue states 
marked the beginning of a new, fairer asbestos compensation 
system.\63\ The Committee, however, has received testimony 
suggesting that screening programs may be, or soon will be, 
used to generate asbestos trust claims.\64\ The asbestos bar is 
using new techniques to recruit potential trust claimants. 
While screenings were often advertised in break rooms, in local 
papers, and on local broadcast stations,\65\ the modern 
asbestos plaintiffs' bar spends billions of dollars on mass 
media advertisements designed to recruit potential asbestos 
tort plaintiffs and trust claimants.\66\ Experts estimate that 
asbestos plaintiffs' firms spent over $950 million on 
television advertising in 2011.\67\ Trial lawyers' advertising 
campaigns extend beyond television, and experts estimate that 
the asbestos bar spends tens of millions each year on 
sophisticated online advertising campaigns.\68\ 
``Mesothelioma'' has become the single most expensive keyword 
on Google's auction-style AdWords platform.\69\
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    \63\See, e.g., Ohio Rev. Code Ann. Sec. 2307.91 et. seq. (enacted 
2004), Tex. Civ. Prac. & Rem. Sec. 90.001 et. seq. (last amended 2007).
    \64\Constitution Subcomm. Hearing, supra note 43 (testimony of 
Professor Lester Brickman).
    \65\See Patrick M. Hanlon & Anne Smetak, Asbestos Changes, 62 
N.Y.U. Ann. Surv. Am. Law 525, 593 (2007); Lester Brickman, On the 
Applicability of the Silica MDL Proceeding to Asbestos Litigation, 12 
Conn. Ins. L.J. 10 (2006); Lester Brickman, Ethical Issues in Asbestos 
Litigation, 33 Hofstra L. Rev. 833, 833-34 (2005).
    \66\Kenneth M. Goldstein, Panel Discussion at U.S. Chamber 
Institute for Legal Reform's 12th Annual Legal Reform Summit (Oct. 26, 
2011) (associated slides available at http://
www.instituteforlegalreform.com/sites/default/files/
Lawyers_Mass_Tort_Solicitation_Advertising_Oct2011.pdf) (last visited 
May 31, 2013).
    \67\Id.
    \68\See New Media Strategies, The Plaintiffs' Bar Goes Digital 3 
(January 2012) available at http://www.instituteforlegalreform.com/doc/
the-plaintiffs-bar-goes-digital-0 (last visited May 23, 2013).
    \69\Id. at 7 (``Trial attorneys spend as much as $80 per click on 
mesothelioma-related search terms, far exceeding industry averages for 
search terms . . . ranked as most expensive by Google AdWords'').
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    There are signs that the suspect practices deployed in 
traditional asbestos state court tort litigation have been 
utilized against asbestos trusts. At least one firm advises 
lung cancer victims that billions of dollars have been set 
aside in ``U.S. Compensation Trust Funds . . . to financially 
assist individuals with lung cancer'' while making no mention 
of asbestos.\70\ Further, with the advent of enhanced 
information technology tools, plaintiffs' firms have the 
ability to focus their claimant recruiting efforts on a broader 
audience. The indications of fraud coupled with an environment 
conducive for fraud, as provided in more detail below, is cause 
for alarm.
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    \70\The David Law Firm--Lung Cancer, http://www.calldavid.com/lung-
cancer.html (last visited May 31, 2013).
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         E. THE OPAQUE ASBESTOS TRUST SYSTEM AND RELATED FRAUD

    While the prerequisites for establishing a bankruptcy 
asbestos trust typically compel certain disclosures, these 
disclosures are significantly lacking. To obtain the principal 
benefit of the asbestos trust--the channeling injunction--a 
debtor must demonstrate to the court, among other things, that 
at the time of confirmation:
    the trust will operate through mechanisms such as 
structured, periodic, or supplemental payments, pro rata 
distributions, matrices, or periodic review of estimates of the 
numbers and value of present claims and future demands, or 
other comparable mechanisms, that provide reasonable assurance 
that the trust will value, and be in a financial position to 
pay, present claims and future demands that involve similar 
claims in substantially the same manner.\71\
---------------------------------------------------------------------------
    \71\11 U.S.C. Sec. 542(g)(2)(B)(ii)(V) (2011).
---------------------------------------------------------------------------
    In many cases, this requirement has caused the debtor to 
include a provision in its chapter 11 plan requiring it to file 
periodic disclosures with the court of the financial health of 
the asbestos liability trust.\72\ Missing from these 
disclosures, however, is any statutory requirement that the 
trust identify claimants who seek compensation from the trust, 
the nature of their alleged injury, and the amount the trust 
paid them.
---------------------------------------------------------------------------
    \72\Carroll et al., supra note 16, at 24.
---------------------------------------------------------------------------
    The trusts' limited disclosures are a result of the 
structure of section 524(g), which grants considerable control 
over asbestos bankruptcies and resulting asbestos trusts to 
plaintiffs' attorneys.\73\ In particular, section 524(g) allows 
a channeling injunction to issue only if three-quarters of 
current asbestos claimants support a proposed chapter 11 
plan.\74\ This requirement is distinct from the usual 
requirements for plan confirmation, which must also be 
satisfied.\75\ The requirement to gain the consent of a 
specified class is a departure from traditional bankruptcy 
procedures, which allow a chapter 11 plan to be confirmed over 
the objection of an impaired class so long as the plan is fair, 
non-discriminatory, and supported by another impaired 
class.\76\
---------------------------------------------------------------------------
    \73\See generally S. Todd Brown, Section 524(g) Without Compromise: 
Voting Rights and the Asbestos Bankruptcy Paradox, 2008 Colum. Bus. L. 
Rev. 841 (2008); see also Dixon et al., supra note 17, at 43 (listing 
asbestos firms most frequently represented on TAC's; Weitz and 
Luxenberg P.C. sits on TAC's of 11 trusts that control, combined, 
approximately 74% of all asbestos trust assets); see also Searcey & 
Barry, As Asbestos Claims Rise, So Do Worries About Fraud, Wall St. J., 
Mar. 11, 2013.
    \74\11 U.S.C. Sec. 524(g)(2)(B)(ii)(IV)(bb) (2011).
    \75\In re Combustion Engineering, Inc., 391 F.3d 190, 234 (3d Cir. 
2004) (``[A] debtor must satisfy the prerequisites set forth in 
Sec. 524(g) in addition to the standard plan confirmation 
requirements.'').
    \76\11 U.S.C. Sec. 1129(b)(1) (2011) (allowing confirmation of a 
plan over the objection of a class of creditors).
---------------------------------------------------------------------------
    In other words, the asbestos claimants class has a 
statutory blocking right to a proposed chapter 11 plan, which 
results in representatives of that class having considerable 
influence over the chapter 11 plan and the formation of any 
resulting asbestos trust. Generally speaking, representation of 
asbestos claimants is concentrated within a select group of law 
firms. As courts have noted, ``[a] unique feature of asbestos . 
. . litigation is the fact that a small group of law firms 
represents hundreds of thousands of plaintiffs.''\77\ 
Consequently, single firms or small groups of firms may 
effectively block confirmation of a chapter 11 plan.\78\ As 
Professor S. Todd Brown has observed, ``[asbestos firms] hold 
an unassailable veto power [that] leaves debtors and other 
parties in interest with a classic Hobson's choice--
reorganization on the [f]irms' terms or no reorganization at 
all.''\79\
---------------------------------------------------------------------------
    \77\In re Congoleum Corp., 426 F.3d 675, 679 (3d Cir. 2005).
    \78\Lester Brickman, Ethical Issues in Asbestos Litigation, 33 
Hofstra L. Rev. at 868-69 (discussing asbestos bar's de facto control 
of bankruptcy process).
    \79\Brown, supra note 74, at 121.
---------------------------------------------------------------------------
    Another unique feature of section 524(g) is that it looks 
only to the number of current asbestos claimants who support a 
proposed chapter 11 plan. In contrast, a traditional bankruptcy 
requires a majority in number and two-thirds in amount of a 
particular class in order to confirm a chapter 11 plan.\80\ 
Plaintiffs' firms exploit the express preference for claimant 
quantity over claim quality in section 524(g) by asserting 
their large numbers of claims in bankruptcy regardless of their 
likely value or merit, which typically will be evaluated 
following the voting period on a debtor's chapter 11 plan.\81\ 
Plaintiffs' firms that historically have filed few tort cases 
against a debtor company sometimes file claims on behalf of 
their entire client list once bankruptcy has been declared.\82\
---------------------------------------------------------------------------
    \80\11 U.S.C. Sec. 1126(c) (2011)(``A class of claims has accepted 
a plan if such plan has been accepted by creditors . . . that hold at 
least two-thirds in amount and more than one-half in number of the 
allowed claims of such class held by creditors. . . .'').
    \81\See Brown, supra note 74, at 150 (``[A]n attorney can obtain a 
considerable negotiating position and sizeable fees by simply dumping 
their asbestos claim ``inventory'' on a debtor [with] little to no 
prospect of sanctions for filing even grossly fraudulent or, at best, 
wholly unsubstantiated claims.'').
    \82\Id.
---------------------------------------------------------------------------
    Section 524(g) also requires the appointment of a legal 
representative on behalf of individuals who may file claims 
with a proposed asbestos trust in the future, referred to as a 
``future claims representative'' or an ``FCR.''\83\ Courts 
generally appoint an individual suggested by the current 
claimants and the debtor company.\84\ Congress envisioned the 
appointment of an FCR as a due process protection for future 
claimants; however, the debtor company and the attorneys 
representing current claimants stand to benefit from the 
appointment of a weak or pliant representative.\85\ Moreover, 
FCR work can be extremely lucrative,\86\ and academic 
commentators have expressed concern that FCR's are ``punch-
pulling''\87\ in an effort to be seen as ``reliable negotiating 
partners who [will] not `rock the boat'''\88\ and increase the 
likelihood of future FCR appointments. Indeed, many 
representatives serve several trusts concurrently.\89\
---------------------------------------------------------------------------
    \83\11 U.S.C. Sec. 524(g)(4)(B)(i) (2011).
    \84\Mark D. Plevin, The Future Claims Representative in Prepackaged 
Asbestos Bankruptcies: Conflicts of Interest, Strange Alliances, and 
Unfamiliar Duties for Burdened Bankruptcy Courts, 62 N.Y.U. Ann. Surv. 
Am. L. 271, 301 (2006) (``In almost every . . . case to date . . . the 
debtor [has been granted] a presumptive right to select . . . an FCR 
acceptable to the current claimants.'').
    \85\See Brown, supra note 52, at 158-59 (discussing parties' 
incentive to propose weak representative).
    \86\Lester Brickman, Ethical Issues in Asbestos Litigation, 33 
Hofstra L. Rev. at n. 144 (noting that Halliburton's pre-petition 
futures representative was nearly $5 million and retained by the 
resulting trust).
    \87\See Richard A. Nagareda, Mass Torts in a World of Settlement 
177 (2007).
    \88\Mark D. Plevin, The Future Claims Representative in Prepackaged 
Asbestos Bankruptcies: Conflicts of Interest, Strange Alliances, and 
Unfamiliar Duties for Burdened Bankruptcy Courts, 62 N.Y.U. Ann. Surv. 
Am. L. at 292-93.
    \89\See Dixon et al., supra note 17 (FCR's for largest trusts set 
forth in Appendix A).
---------------------------------------------------------------------------
    Although asbestos trusts are nominally managed by court-
approved trustees, virtually all trusts' founding agreements 
require the trustee to seek approval of a post-confirmation FCR 
and a committee composed of current claimants' representatives, 
most often characterized as a trust advisory committee or 
``TAC,'' before amending the trust's distribution plan or audit 
procedures.\90\ The asbestos bars' pre-confirmation influence 
extends to operating trusts, as many TAC seats are held by 
plaintiffs' attorneys who represented large numbers of 
claimants in bankruptcy proceedings.\91\
---------------------------------------------------------------------------
    \90\Carroll et al., supra note 16, at 22 (noting that TAC must 
consent to, among other things, modifications to a trust's distribution 
plan or audit procedures).
    \91\Dixon et al., supra note 17, at 14.
---------------------------------------------------------------------------
    The trust documents governing the operation of the asbestos 
trusts often include restrictions on sharing trust data, 
facilitating a lack of transparency in the trust system. A 
majority of the trusts' distribution plans affirmatively 
require claims to be treated as confidential settlement 
negotiations.\92\ As a result, tort litigants must engage in 
lengthy and expensive discovery disputes in order to gain 
access to basic information--including exposure information--
routinely disclosed by defendant companies before they created 
trusts and exited the tort system.\93\ In many instances, 
trusts' procedures require a valid state-court-issued subpoena 
in order to provide information to state litigants.\94\ Even in 
cases where a valid subpoena is served upon an asbestos trust, 
an asbestos trust may attempt to defeat the subpoena or require 
an additional subpoena from the presiding bankruptcy court 
judge.\95\
---------------------------------------------------------------------------
    \92\Dixon et al., supra note 17, at 32.
    \93\Constitution Subcomm. Hearing, supra note 43, at 94-95, 100-101 
(written testimony of James Stengel).
    \94\Carroll et al., supra note 16, at 28.
    \95\Courts Subcomm. Hearing, supra note 11, at 14.
---------------------------------------------------------------------------
    There was a time when asbestos trusts were willing to share 
claims information more freely. Prior to Judge Jack's exposure 
of fraud in mass screened silica and asbestos cases, the 
Manville Trust sold its data to actuarial firms, law firms, and 
defendant companies.\96\ The trust also licensed its data to 
occupational health researchers and provided custom datasets to 
academics upon request. But in the wake of Judge Jack's 
opinion, the Manville Trust limited access to its data. Its 
current data license prohibits use of the trust's data to 
process or contest trust and tort claims, prevents data 
recipients from revealing information regarding an individual 
claimant, and is otherwise structured to ensure that any 
analysis of the data is strictly empirical, unusable in 
litigation, and may not serve as a basis for other trusts to 
reject inconsistent or improper claims.\97\
---------------------------------------------------------------------------
    \96\Courts Subcomm. Hearing, supra note 11, at 207 (``The Manville 
Personal Injury trust offer[ed] a data extract of claim level 
information . . . to anyone willing to pay a $10,000 licensing fee. 
Prior to 2002 the data could be purchased outright. . . .'').
    \97\Manville Trust Single Use Data License Agreement, http://
www.claimsres.com/documents/MT/DataAgreement.pdf (last visited May 31, 
2013).
---------------------------------------------------------------------------
    Because the trusts' current confidentiality provisions and 
practices make data sharing difficult, individual trusts and 
the trust system as a whole are susceptible to fraud and abuse. 
The GAO and the non-partisan RAND Corporation, in their 
respective reports on the trusts, both concluded that asbestos 
bankruptcy trusts are unlikely to identify and decline payment 
of improper claims, including claims that are supported by 
``altered work histories'' or allege inconsistent exposure 
patterns.\98\ The trusts, the plaintiffs' bar, and the post-
confirmation FCRs nonetheless contend that the trust system is 
free from fraud and that more robust anti-fraud measures would 
be costly and reduce the funds available to fulfill the trusts' 
core mission--claimant compensation.\99\
---------------------------------------------------------------------------
    \98\Carroll et al., supra note 16, at 23; Dixon et al., supra note 
17, at 45.
    \99\See, e.g., Courts Subcomm. Hearing, supra note 11, at 224-36 
(letter signed by six FCRs).
---------------------------------------------------------------------------
    Although the eleven trusts interviewed by GAO in the course 
of its investigation reported that their audits have never 
identified an instance of fraud, the trusts paid over $4 
billion in 2010 alone and, combined, have paid 3.3 million 
alleged asbestos victims nearly $17.5 billion since the 
Manville Trust was established.\100\ The GAO Report stated that 
the internal audits of the asbestos trusts were designed to 
ensure compliance with internal trust procedures and not 
generally designed to detect duplicate or inconsistent claims 
among different asbestos trusts and the state courts.\101\ 
Further, the complete absence of fraud reported by the eleven 
trusts interviewed in the GAO Report runs contrary to 
historical experiences with compensation and relief programs. 
Fraud and abuse have been uncovered in virtually every 
compensation and relief program undertaken in modern America, 
whether privately funded or government-sponsored.\102\ 
Fraudulent claims against the 9/11 Victim's Compensation Fund 
and BP's gulf oil fund, for example, were detected and 
prosecuted.\103\ As Professor Brown has observed, asbestos 
trusts are not ``magically different'' from other compensation 
trusts; that asbestos trusts' audits have uncovered no fraud 
whatsoever suggests that their internal controls are 
lacking.\104\
---------------------------------------------------------------------------
    \100\Carroll et al., supra note 16, at 16.
    \101\Carroll et al., supra note 16, at 23.
    \102\Courts Subcomm. Hearing, supra note 11, at 25 (testimony of S. 
Todd Brown).
    \103\See e.g., Nedra Pickler, Ex-naval officer gets prison time for 
9-11 fraud, Associated Press (Dec. 12, 2011), available at http://
www.washingtontimes.com/news/2011/dec/12/ex-naval-officer-gets-prison-
time-911-fraud/; Dept. of Justice, Deepwater Horizon (BP) Oil Spill 
Fraud, http://www.justice.gov/criminal/oilspill/(last visited May 31, 
2013) (collecting cases involving fraud on the Gulf Coast Claims 
Facility).
    \104\Courts Subcomm. Hearing, supra note 11, at 25 (testimony of S. 
Todd Brown).
---------------------------------------------------------------------------
    While the trust system operates with near-complete secrecy, 
the quality of medical evidence and the consistency of the 
allegations made by alleged asbestos victims are sometimes 
tested in the state court tort system. Although the trusts' 
confidentiality provisions and the generally combative nature 
of asbestos litigation have combined to limit the disclosure of 
trust information, defendants have successfully identified a 
number of cases of inconsistent and potentially fraudulent 
claiming.
    In the best known example of fraud uncovered through the 
state court tort system, Kananian v. Lorillard Tobacco, a tort 
plaintiff claimed that he developed mesothelioma solely from 
smoking asbestos-filtered cigarettes and that he only passed 
through a naval ship yard while being deployed elsewhere by the 
Navy.\105\ He simultaneously filed claims against multiple 
asbestos trusts alleging exposure to marine products while 
working as a ``shipyard laborer.''\106\ Despite the 
inconsistency of his tort and trust claims, which the court 
described as a ``fiction,'' Kananian received substantial 
payments from asbestos trusts.\107\
---------------------------------------------------------------------------
    \105\Kananian v. Lorillard Tobacco Co., No. CV 442750 (Ohio Ct. 
Com. Pl. Cuyahoga County 2007).
    \106\Id. at 5, 9.
    \107\Id. at 6.
---------------------------------------------------------------------------
    Kananian is not an isolated incident; the Committee 
received testimony detailing several additional examples of 
fraud, abuse, and inconsistent claiming in other jurisdictions, 
including Maryland cases in which inconsistent exposure 
information was presented in the tort system and trust systems 
in an attempt to circumvent state-law caps on damages.\108\ 
Further examples of inconsistent claiming have been identified 
in Delaware, Louisiana, New York, Oklahoma, and Virginia.\109\
---------------------------------------------------------------------------
    \108\Constitution Subcomm. Hearing, supra note 43, at 94-95, 103-
105 (written testimony of James Stengel).
    \109\Courts Subcomm. Hearing, supra note 11, at 9 (testimony of 
Leigh Ann Schell); e.g., Montgomery v. Foster Wheeler, Case No. 09C-11-
215 ASB, Pretrial Hearing Trans. (Del. Super. Ct. Nov. 7, 2011).
---------------------------------------------------------------------------
    Counsel in a Louisiana case, Mary A. Robeson et al v. 
Amatek, Inc. et al, filed sixteen trust claims that denied the 
plaintiff's father smoked and included detailed asbestos 
exposure information. When the plaintiff was deposed, however, 
he claimed his father was a smoker and that he had no knowledge 
of the exposures alleged in the claims. He also testified that 
counsel had never spoken to his father about his exposures to 
asbestos.\110\
---------------------------------------------------------------------------
    \110\Courts Subcomm. Hearing, supra note 11, at 16 (written 
statement of Leigh Ann Schell).
---------------------------------------------------------------------------
    In Montgomery v. Foster Wheeler, a Delaware case, the 
plaintiff's attorney disclosed a number of trust claims shortly 
before trial even though he had repeatedly represented to the 
defendant and the court that his client had no such claims. The 
court described the plaintiff's disclosure failure as ``really 
seriously egregiously bad behavior'' and lamented that ``it 
happens a lot.''\111\ The court further observed that:
---------------------------------------------------------------------------
    \111\Montgomery, supra note 110, at 7-8.

        The core of this case had been fraudulent. . . . [T]his 
        whole litigation is based on who was responsible. 
        Nobody can say which fibers did what. But the most 
        important thing is that a plaintiff disclose what they 
        think caused their disease. And if they don't disclose 
        honestly when they're asking [for] money from another 
        company and they don't even let the defendant know 
        about that, that's so dishonest. It is just so 
        dishonest.\112\
---------------------------------------------------------------------------
    \112\Montgomery, supra note 110, at 25.

    In addition to the fraud uncovered through the state court 
system, the Wall Street Journal conducted an investigation that 
detailed numerous anomalies between individuals' state court 
filings and asbestos trust claim filings.\113\ The Wall Street 
Journal found that individuals had claimed exposure to asbestos 
through industrial jobs that they held while under the age of 
twelve, disparate medical diagnoses asserted among different 
asbestos trusts and state court cases, and claims asserted by 
individuals that simply did not exist.\114\
---------------------------------------------------------------------------
    \113\Searcey & Barry, supra note 74.
    \114\Searcey & Barry, supra note 74.
---------------------------------------------------------------------------
    The lack of meaningfully transparent trust disclosures, 
combined with published research, court decisions and 
investigations suggesting and highlighting fraud within the 
asbestos trust system provided the framework for bankruptcy bar 
and Congressional inquiry into potential mechanics to reduce 
and prevent fraudulent activity within the state court and 
asbestos trust systems. In March 2011, the Subcommittee on 
Business Issues of the Advisory Committee on Bankruptcy Rules 
considered a proposal to add a new Federal Rule of Bankruptcy 
Procedure to require 524(g) trusts to disclose the particulars 
of each demand for payment received by a trust during the 
preceding quarter.\115\ The Subcommittee, in a memo to the 
Advisory Committee, examined the merits and demerits of the 
proposal, but ultimately concluded that if:
---------------------------------------------------------------------------
    \115\Letter from Lisa A. Rickard, President, U.S. Chamber Institute 
for Legal Reform, to Peter G. McCabe, Secretary, Committee on Rules of 
Practice and Procedure, Judicial Conference of the United States (Nov. 
22, 2010) (on file with Committee).

        . . . it is determined that the trusts should be 
        providing more information than they currently are, the 
        Subcommittee's preliminary thought was that this may be 
        a matter more appropriately addressed by a legislative 
        solution--such as an amendment of Sec. 524(g) that 
        imposes additional requirements on trusts created under 
        that provision.\116\
---------------------------------------------------------------------------
    \116\Memorandum from Subcommittee on Business Issues to Advisory 
Committee on Bankruptcy Rules (Mar. 10, 2011) (on file with Committee).

    A second memo from the Subcommittee, dated September 19, 
2011, collects comments the Subcommittee solicited from various 
bankruptcy and nonbankruptcy legal groups. The chair of the ABA 
Business Bankruptcy Committee established a task force to 
review the proposal, which ultimately supported the proposal, 
subject to a small number of qualifications. Others who 
submitted comments, including the FCRs, opposed the 
proposal.\117\
---------------------------------------------------------------------------
    \117\Memorandum from Subcommittee on Business Issues to Advisory 
Committee on Bankruptcy Rules (Sept. 19, 2011) (on file with 
Committee).
---------------------------------------------------------------------------

            F. THE FURTHERING ASBESTOS CLAIMS TRANSPARENCY 
                           (FACT) ACT OF 2013

    During the 112th Congress, the Subcommittee on the 
Constitution of the House Judiciary Committee held a hearing 
entitled ``How Fraud and Abuse in the Asbestos Compensation 
System Affects Victims, Jobs, the Economy, and the Legal 
System.''\118\ In light of the testimony received at that 
hearing, the study of the Advisory Committee on Bankruptcy 
Rules, and the experience of debtors who have used the 
Bankruptcy Code to manage their future asbestos liability and 
their attorneys, Rep. Quayle (R-AZ), together with Reps. 
Matheson (D-UT) and Ross (R-FL), introduced H.R. 4369, the 
Furthering Asbestos Claim Transparency (FACT) Act of 2012, on 
April 17, 2012.
---------------------------------------------------------------------------
    \118\See generally Constitution Subcomm. Hearing, supra note 43.
---------------------------------------------------------------------------
    The Subcommittee on Courts, Commercial and Administrative 
Law of the House Judiciary Committee held a hearing on H.R. 
4369 on May 10, 2012.\119\ Three of the four witnesses 
testified that transparency was sorely needed in the 524(g) 
asbestos trust compensation system.\120\ The fourth witness, 
Mr. Siegel, conceded that no provision of the FACT Act would 
impede a claimant's filing of a claim with or receipt of 
compensation from a trust.\121\ Mr. Siegel did argue that the 
FACT Act would impose ``onerous'' new administrative burdens on 
the trusts--a hypothesis that was contradicted by Mr. 
Scarcella's testimony founded in his experience working at a 
claims processing department at one of the largest trusts.\122\
---------------------------------------------------------------------------
    \119\See generally Courts Subcomm. Hearing, supra note 11.
    \120\See id. (testimonies of Leigh Ann Schell, Prof. S. Todd Brown, 
and Marc Scarcella).
    \121\Id. at 81.
    \122\Id. (``As somebody who worked at a trust, the largest asbestos 
trust, the Manville Personal Injury Trust, back in 2001 as their 
quantitative data analyst and statistician, I can tell you that I 
understand Mr. Siegel's concern, and I think it is a legitimate 
concern, but I can assure everybody that it is not a problem.'')
---------------------------------------------------------------------------
    On June 8, 2012, the Committee met in open session and 
ordered the bill H.R. 4369 to be reported favorably to the 
House with a manager's amendment. The amendment adopted during 
the Committee's consideration of H.R. 4369 incorporated 
comments received during its legislative consideration and 
clarified that section 107 of the Bankruptcy Code applies to 
the new requirements of the asbestos trusts and that asbestos 
trusts could require payment for costs related to third-party 
discovery requests. H.R. 4369 was not considered by the Full 
House of Representatives during the 112th Congress.
    Given the necessity for transparency and the significant 
legislative record, Rep. Farenthold (R-TX), together with Rep. 
Matheson (D-UT), introduced H.R. 982, the Furthering Asbestos 
Claim Transparency (FACT) Act of 2013, on March 6, 2013, which 
is identical to H.R. 4369 as reported out of the Committee 
during the 112th Congress. The Subcommittee on Regulatory 
Reform, Commercial and Antitrust Law held a hearing on H.R. 982 
on March 13, 2013.\123\ Three of the four witnesses testified 
that the current asbestos trust system lacked transparency and 
was conducive to fraudulent activity.\124\ The fourth witness, 
Mr. Inselbuch, argued that the FACT Act would abrogate state 
discovery laws and would create administrative burdens on the 
trusts notwithstanding a record to the contrary on both 
accounts.\125\
---------------------------------------------------------------------------
    \123\See generally H.R. 982, the ``Furthering Asbestos Claim 
Transparency (FACT) Act of 2013'': Hearing Before the Subcomm. on 
Regulatory Reform, Commercial and Antitrust Law of the H. Comm. on the 
Judiciary, 113th Cong. (2013) [hereinafter the Reg. Subcomm. Hearing].
    \124\See id. (testimonies of Hon. Peggy L. Ableman, Prof. S. Todd 
Brown, and Marc Scarcella).
    \125\Id.; see also H.R. 982.
---------------------------------------------------------------------------
    The bill amends section 524(g) of the Bankruptcy Code to 
require asbestos trusts to file quarterly reports with the 
presiding bankruptcy court that detail claimants' names, 
demands made by the claimants to the asbestos trust, any 
amounts paid to claimants, and the basis for such 
payments.\126\ The FACT Act also requires asbestos trusts to 
provide information requested by parties to traditional 
asbestos tort litigation, subject to payment from the 
requesting party for costs associated with such a request.\127\ 
As the bill amends a provision of the Bankruptcy Code, the 
reporting and information sharing requirements contained 
therein fall squarely within Congress' bankruptcy power.\128\
---------------------------------------------------------------------------
    \126\H.R. 982 Sec. 2.
    \127\Id.
    \128\U.S. Const. art. I, Sec. 8, cl. 4; see Court Subcomm. Hearing, 
supra note 11, at 85-89 (memorandum regarding Congress' power to enact 
legal reform legislation prepared by former Solicitor General Paul D. 
Clement); see also Reg. Subcomm. Hearing, supra note 124 (testimony of 
Prof. S. Todd Brown).
---------------------------------------------------------------------------
    The FACT Act includes several privacy protections. The bill 
provides that sensitive identifying information, such as 
complete Social Security numbers and confidential medical 
records, should not be published in the quarterly reports.\129\ 
Additionally, the FACT Act subjects both the quarterly 
reporting requirements and the written discovery requests to 
section 107 of the Bankruptcy Code. Section 107 of the 
Bankruptcy Code and related Rule 9037 of the Federal Rules of 
Bankruptcy Procedure grant the presiding bankruptcy judge broad 
discretion to exclude confidential or sensitive information 
from the quarterly reports or in response to a written 
discovery request. Specifically, section 107(c) of the 
Bankruptcy Code provides a bankruptcy court with discretion to 
exclude from disclosure broad categories of information 
contained in any document filed in a chapter 11 case that would 
``create undue risk of identity theft or other unlawful injury. 
. . .''\130\ Further, responses to written discovery requests 
are subject to any applicable protective orders.\131\
---------------------------------------------------------------------------
    \129\H.R. 982 Sec. 2.
    \130\11 U.S.C. Sec. 107(c) (2011); 18 U.S.C. Sec. 1028(d) (2011); 
Fed. R. Bankr. P. 9037.
    \131\H.R. 982 Sec. 2.
---------------------------------------------------------------------------
    The FACT Act does not disturb or supersede any applicable 
state discovery laws or rules. On the contrary, any information 
received pursuant to a written request would remain subject to 
the discovery laws and rules applicable in the relevant state 
court proceeding.
    The FACT Act is a measured amendment to the Bankruptcy Code 
provision governing asbestos trusts that will promote greater 
transparency among the asbestos trusts and the state court 
system. This information will reduce the potential for fraud 
and help to unveil any existing fraudulent activity. A 
reduction in fraud will help to ensure that the asbestos trusts 
achieve their designed goal--administering and preserving their 
funds to provide substantially similar recompense to future 
claimants that have been truly aggrieved by exposure to 
asbestos.

                                Hearings

    The Committee's Subcommittee on Regulatory Reform, 
Commercial and Antitrust Law held a hearing on H.R. 982 on 
March 13, 2013. Testimony was received from Hon. Peggy L. 
Ableman, former Delaware Superior Court Judge and special 
counsel at McCarter & English, LLP; S. Todd Brown, Professor of 
Law, SUNY Buffalo Law School; Elihu Inselbuch, Member, Caplin & 
Drysdale, Chartered; and Marc Scarcella of Bates White 
Consulting, with additional material submitted by Bill 
Cawlfield, Asbestos & Mesothelioma Patient, Denver, CO; 
Courtney Davis, Daughter of Asbestos & Mesothelioma Victim, 
Raleigh, NC; Bob Guinn, Asbestos & Mesothelioma Patient, Ririe, 
ID; Julie Gundlach, Asbestos & Mesothelioma Patient, St. Louis, 
MO; Shelly Kozicki, Widow of Asbestos & Mesothelioma Victim, 
Detroit, MI; Mary Jane Williams, Asbestos & Mesothelioma 
Patient, Springfield, OH; Loring Williams, Spouse of Asbestos & 
Mesothelioma Patient, Springfield, OH; Forrest Wulf, Asbestos & 
Mesothelioma Patient, Alton, IL; Dan Young, Spouse of Asbestos 
& Mesothelioma Patient, St. Louis, MO; Susan Vento, Widow of 
Bruce Vento, Mesothelioma Victim and Former U.S. House 
Representative, St. Paul, MN; Nan Aron, Alliance for Justice; 
Joanne Doroshow, Center for Justice & Democracy; Thomas 
Cluderay, Environmental Working Group; Robert Kelley, Protect 
Missouri Workers; Robert Weissman, Public Citizen; Ed 
Mierzwinski, U.S. Public Interest Research Group; Michael J. 
Crames, FCR for the Owens Corning/Fibreboard Asbestos Personal 
Injury Trust; Lawrence Fitzpatrick, FCR for the ACandS Asbestos 
Settlement Trust and the Durabla Manufacturing Company and 
Durabla Canada Ltd. Asbestos Trust; Prof. Eric D. Green, FCR 
for the Babcock & Wilcox Company Asbestos PI Trust, the DII 
Industries, LLC Asbestos PI Trust, the Federal-Mogul Asbestos 
Personal Injury Trust, and the Fuller-Austin Asbestos 
Settlement Trust; Martin J. Murphy, FCR for the Kaiser Alum. & 
Chem. Corp. Asbestos Personal Injury Trust; James L. Patton, 
Jr., FCR for the Celotex Asbestos Settlement Trust and the 
Leslie Controls, Inc. Asbestos Personal Injury Trust; The 
Honorable Dean M. Trafelet (Ret.), FCR for the Armstrong World 
Industries Asbestos Trust, the Plibrico Asbestos Trust, the MLC 
Asbestos PI Trust, and the United States Gypsum Asbestos 
Personal Injury Settlement Trust; Doug Campbell, Campbell & 
Levine, LLC; Genevieve Casey Bosilevac, Mesothelioma Victim; 
Judy Van Ness, Widow of Dickie Van Ness, Mesothelioma Victim; 
and the Asbestos Disease Awareness Organization.

                        Committee Consideration

    On May 21, 2013, the Committee met in open session and 
ordered the bill H.R. 982 favorably reported, without 
amendment, by a rollcall vote of 17 ayes to 14 noes, a quorum 
being present.

                            Committee Votes

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, the Committee advises that the 
following recorded votes were taken during the Committee's 
consideration of H.R. 982.
    1. The amendment offered by Mr. Conyers replaces the bill's 
substantive provisions with a requirement that asbestos trusts 
report only aggregated information on demands received and 
payments made from the asbestos trusts. This amendment was 
defeated by a rollcall vote of 15-16.

                             ROLLCALL NO. 1
------------------------------------------------------------------------
                                                  Ayes    Nays   Present
------------------------------------------------------------------------
Mr. Goodlatte (VA), Chairman...................              X
Mr. Sensenbrenner, Jr. (WI)....................              X
Mr. Coble (NC).................................              X
Mr. Smith (TX).................................              X
Mr. Chabot (OH)................................              X
Mr. Bachus (AL)................................              X
Mr. Issa (CA)..................................
Mr. Forbes (VA)................................              X
Mr. King (IA)..................................              X
Mr. Franks (AZ)................................              X
Mr. Gohmert (TX)...............................              X
Mr. Jordan (OH)................................
Mr. Poe (TX)...................................
Mr. Chaffetz (UT)..............................              X
Mr. Marino (PA)................................              X
Mr. Gowdy (SC).................................              X
Mr. Amodei (NV)................................
Mr. Labrador (ID)..............................
Ms. Farenthold (TX)............................              X
Mr. Holding (NC)...............................              X
Mr. Collins (GA)...............................              X
Mr. DeSantis (FL)..............................
[Vacant].......................................

Mr. Conyers, Jr. (MI), Ranking Member..........      X
Mr. Nadler (NY)................................      X
Mr. Scott (VA).................................      X
Mr. Watt (NC)..................................      X
Ms. Lofgren (CA)...............................      X
Ms. Jackson Lee (TX)...........................
Mr. Cohen (TN).................................      X
Mr. Johnson (GA)...............................      X
Mr. Pierluisi (PR).............................      X
Ms. Chu (CA)...................................      X
Mr. Deutch (FL)................................      X
Mr. Gutierrez (IL).............................
Ms. Bass (CA)..................................      X
Mr. Richmond (LA)..............................      X
Ms. DelBene (WA)...............................      X
Mr. Garcia (FL)................................      X
Mr. Jeffries (NY)..............................      X
                                                ------------------------
    Total......................................     15      16
------------------------------------------------------------------------

    2. The amendment offered by Mr. Cohen excepts from 
quarterly reporting trusts that already have an internal audit 
mechanism in place. This amendment was defeated by a rollcall 
vote of 13-19.

                             ROLLCALL NO. 2
------------------------------------------------------------------------
                                                  Ayes    Nays   Present
------------------------------------------------------------------------
Mr. Goodlatte (VA), Chairman...................              X
Mr. Sensenbrenner, Jr. (WI)....................              X
Mr. Coble (NC).................................              X
Mr. Smith (TX).................................              X
Mr. Chabot (OH)................................              X
Mr. Bachus (AL)................................              X
Mr. Issa (CA)..................................              X
Mr. Forbes (VA)................................              X
Mr. King (IA)..................................              X
Mr. Franks (AZ)................................              X
Mr. Gohmert (TX)...............................              X
Mr. Jordan (OH)................................
Mr. Poe (TX)...................................
Mr. Chaffetz (UT)..............................              X
Mr. Marino (PA)................................              X
Mr. Gowdy (SC).................................              X
Mr. Amodei (NV)................................
Mr. Labrador (ID)..............................              X
Ms. Farenthold (TX)............................              X
Mr. Holding (NC)...............................              X
Mr. Collins (GA)...............................              X
Mr. DeSantis (FL)..............................              X
[Vacant].......................................

Mr. Conyers, Jr. (MI), Ranking Member..........      X
Mr. Nadler (NY)................................      X
Mr. Scott (VA).................................      X
Mr. Watt (NC)..................................      X
Ms. Lofgren (CA)...............................
Ms. Jackson Lee (TX)...........................
Mr. Cohen (TN).................................      X
Mr. Johnson (GA)...............................      X
Mr. Pierluisi (PR).............................      X
Ms. Chu (CA)...................................      X
Mr. Deutch (FL)................................
Mr. Gutierrez (IL).............................
Ms. Bass (CA)..................................      X
Mr. Richmond (LA)..............................      X
Ms. DelBene (WA)...............................      X
Mr. Garcia (FL)................................      X
Mr. Jeffries (NY)..............................      X
                                                ------------------------
    Total......................................     13      19
------------------------------------------------------------------------

    3. The amendment offered by Mr. Nadler limits third party 
discovery to those parties who disclose information pertaining 
to the public safety or health to a law enforcement agency. 
This amendment was defeated by a rollcall vote of 14-18.

                             ROLLCALL NO. 3
------------------------------------------------------------------------
                                                  Ayes    Nays   Present
------------------------------------------------------------------------
Mr. Goodlatte (VA), Chairman...................              X
Mr. Sensenbrenner, Jr. (WI)....................              X
Mr. Coble (NC).................................              X
Mr. Smith (TX).................................
Mr. Chabot (OH)................................              X
Mr. Bachus (AL)................................              X
Mr. Issa (CA)..................................              X
Mr. Forbes (VA)................................              X
Mr. King (IA)..................................              X
Mr. Franks (AZ)................................              X
Mr. Gohmert (TX)...............................              X
Mr. Jordan (OH)................................
Mr. Poe (TX)...................................
Mr. Chaffetz (UT)..............................              X
Mr. Marino (PA)................................              X
Mr. Gowdy (SC).................................              X
Mr. Amodei (NV)................................
Mr. Labrador (ID)..............................              X
Ms. Farenthold (TX)............................              X
Mr. Holding (NC)...............................              X
Mr. Collins (GA)...............................              X
Mr. DeSantis (FL)..............................              X
[Vacant].......................................

Mr. Conyers, Jr. (MI), Ranking Member..........      X
Mr. Nadler (NY)................................      X
Mr. Scott (VA).................................      X
Mr. Watt (NC)..................................      X
Ms. Lofgren (CA)...............................
Ms. Jackson Lee (TX)...........................
Mr. Cohen (TN).................................      X
Mr. Johnson (GA)...............................      X
Mr. Pierluisi (PR).............................      X
Ms. Chu (CA)...................................      X
Mr. Deutch (FL)................................      X
Mr. Gutierrez (IL).............................
Ms. Bass (CA)..................................      X
Mr. Richmond (LA)..............................      X
Ms. DelBene (WA)...............................      X
Mr. Garcia (FL)................................      X
Mr. Jeffries (NY)..............................      X
                                                ------------------------
    Total......................................     14      18
------------------------------------------------------------------------

    4. The amendment offered by Mr. Scott treats certain 
medical information in the quarterly reports as protected 
health information under the Health Insurance Portability and 
Accountability Act. This amendment was defeated by a rollcall 
vote of 14-18.

                             ROLLCALL NO. 4
------------------------------------------------------------------------
                                                  Ayes    Nays   Present
------------------------------------------------------------------------
Mr. Goodlatte (VA), Chairman...................              X
Mr. Sensenbrenner, Jr. (WI)....................
Mr. Coble (NC).................................              X
Mr. Smith (TX).................................
Mr. Chabot (OH)................................              X
Mr. Bachus (AL)................................              X
Mr. Issa (CA)..................................              X
Mr. Forbes (VA)................................              X
Mr. King (IA)..................................              X
Mr. Franks (AZ)................................              X
Mr. Gohmert (TX)...............................
Mr. Jordan (OH)................................              X
Mr. Poe (TX)...................................
Mr. Chaffetz (UT)..............................              X
Mr. Marino (PA)................................              X
Mr. Gowdy (SC).................................              X
Mr. Amodei (NV)................................              X
Mr. Labrador (ID)..............................              X
Ms. Farenthold (TX)............................              X
Mr. Holding (NC)...............................              X
Mr. Collins (GA)...............................              X
Mr. DeSantis (FL)..............................              X
[Vacant].......................................

Mr. Conyers, Jr. (MI), Ranking Member..........      X
Mr. Nadler (NY)................................      X
Mr. Scott (VA).................................      X
Mr. Watt (NC)..................................      X
Ms. Lofgren (CA)...............................
Ms. Jackson Lee (TX)...........................
Mr. Cohen (TN).................................      X
Mr. Johnson (GA)...............................      X
Mr. Pierluisi (PR).............................
Ms. Chu (CA)...................................      X
Mr. Deutch (FL)................................      X
Mr. Gutierrez (IL).............................      X
Ms. Bass (CA)..................................      X
Mr. Richmond (LA)..............................      X
Ms. DelBene (WA)...............................      X
Mr. Garcia (FL)................................      X
Mr. Jeffries (NY)..............................      X
                                                ------------------------
    Total......................................     14      18
------------------------------------------------------------------------

    5. The amendment offered by Mr. Scott exempts claimants who 
are veterans or servicemembers. This amendment was defeated by 
a rollcall vote of 14-15.

                             ROLLCALL NO. 5
------------------------------------------------------------------------
                                                  Ayes    Nays   Present
------------------------------------------------------------------------
Mr. Goodlatte (VA), Chairman...................              X
Mr. Sensenbrenner, Jr. (WI)....................
Mr. Coble (NC).................................              X
Mr. Smith (TX).................................
Mr. Chabot (OH)................................
Mr. Bachus (AL)................................              X
Mr. Issa (CA)..................................              X
Mr. Forbes (VA)................................              X
Mr. King (IA)..................................              X
Mr. Franks (AZ)................................              X
Mr. Gohmert (TX)...............................              X
Mr. Jordan (OH)................................
Mr. Poe (TX)...................................
Mr. Chaffetz (UT)..............................
Mr. Marino (PA)................................              X
Mr. Gowdy (SC).................................              X
Mr. Amodei (NV)................................
Mr. Labrador (ID)..............................              X
Ms. Farenthold (TX)............................              X
Mr. Holding (NC)...............................              X
Mr. Collins (GA)...............................              X
Mr. DeSantis (FL)..............................              X
[Vacant].......................................

Mr. Conyers, Jr. (MI), Ranking Member..........      X
Mr. Nadler (NY)................................
Mr. Scott (VA).................................      X
Mr. Watt (NC)..................................      X
Ms. Lofgren (CA)...............................
Ms. Jackson Lee (TX)...........................      X
Mr. Cohen (TN).................................
Mr. Johnson (GA)...............................      X
Mr. Pierluisi (PR).............................      X
Ms. Chu (CA)...................................      X
Mr. Deutch (FL)................................      X
Mr. Gutierrez (IL).............................      X
Ms. Bass (CA)..................................      X
Mr. Richmond (LA)..............................      X
Ms. DelBene (WA)...............................      X
Mr. Garcia (FL)................................      X
Mr. Jeffries (NY)..............................      X
                                                ------------------------
    Total......................................     14      15
------------------------------------------------------------------------

    6. The amendments offered en bloc by Mr. Johnson limits the 
terms upon which a trust may disclose information and to 
exclude personally identifiable information from the bill's 
public reporting and document production requirements. These 
amendments were defeated by a rollcall vote of 13-18.

                             ROLLCALL NO. 6
------------------------------------------------------------------------
                                                  Ayes    Nays   Present
------------------------------------------------------------------------
Mr. Goodlatte (VA), Chairman...................              X
Mr. Sensenbrenner, Jr. (WI)....................
Mr. Coble (NC).................................              X
Mr. Smith (TX).................................              X
Mr. Chabot (OH)................................
Mr. Bachus (AL)................................              X
Mr. Issa (CA)..................................              X
Mr. Forbes (VA)................................              X
Mr. King (IA)..................................              X
Mr. Franks (AZ)................................              X
Mr. Gohmert (TX)...............................              X
Mr. Jordan (OH)................................              X
Mr. Poe (TX)...................................
Mr. Chaffetz (UT)..............................
Mr. Marino (PA)................................              X
Mr. Gowdy (SC).................................              X
Mr. Amodei (NV)................................              X
Mr. Labrador (ID)..............................              X
Ms. Farenthold (TX)............................              X
Mr. Holding (NC)...............................              X
Mr. Collins (GA)...............................              X
Mr. DeSantis (FL)..............................              X
[Vacant].......................................

Mr. Conyers, Jr. (MI), Ranking Member..........      X
Mr. Nadler (NY)................................
Mr. Scott (VA).................................      X
Mr. Watt (NC)..................................      X
Ms. Lofgren (CA)...............................
Ms. Jackson Lee (TX)...........................      X
Mr. Cohen (TN).................................
Mr. Johnson (GA)...............................      X
Mr. Pierluisi (PR).............................      X
Ms. Chu (CA)...................................      X
Mr. Deutch (FL)................................      X
Mr. Gutierrez (IL).............................
Ms. Bass (CA)..................................      X
Mr. Richmond (LA)..............................      X
Ms. DelBene (WA)...............................      X
Mr. Garcia (FL)................................      X
Mr. Jeffries (NY)..............................      X
                                                ------------------------
    Total......................................     13      18
------------------------------------------------------------------------

    7. The amendments offered en bloc by Ms. Jackson Lee 
require the filing of certain certifications concerning claims 
against a third party before it may seek discovery from an 
asbestos trust and require the filing of certain certifications 
concerning asbestos-containing products before a third party 
may seek discovery from an asbestos trust. These amendments 
were defeated by a rollcall vote of 95-15.

                             ROLLCALL NO. 7
------------------------------------------------------------------------
                                                  Ayes    Nays   Present
------------------------------------------------------------------------
Mr. Goodlatte (VA), Chairman...................              X
Mr. Sensenbrenner, Jr. (WI)....................
Mr. Coble (NC).................................              X
Mr. Smith (TX).................................
Mr. Chabot (OH)................................              X
Mr. Bachus (AL)................................              X
Mr. Issa (CA)..................................
Mr. Forbes (VA)................................              X
Mr. King (IA)..................................              X
Mr. Franks (AZ)................................
Mr. Gohmert (TX)...............................              X
Mr. Jordan (OH)................................
Mr. Poe (TX)...................................              X
Mr. Chaffetz (UT)..............................
Mr. Marino (PA)................................              X
Mr. Gowdy (SC).................................              X
Mr. Amodei (NV)................................              X
Mr. Labrador (ID)..............................
Ms. Farenthold (TX)............................              X
Mr. Holding (NC)...............................              X
Mr. Collins (GA)...............................              X
Mr. DeSantis (FL)..............................              X
[Vacant].......................................

Mr. Conyers, Jr. (MI), Ranking Member..........      X
Mr. Nadler (NY)................................
Mr. Scott (VA).................................      X
Mr. Watt (NC)..................................      X
Ms. Lofgren (CA)...............................
Ms. Jackson Lee (TX)...........................      X
Mr. Cohen (TN).................................
Mr. Johnson (GA)...............................
Mr. Pierluisi (PR).............................
Ms. Chu (CA)...................................
Mr. Deutch (FL)................................      X
Mr. Gutierrez (IL).............................
Ms. Bass (CA)..................................      X
Mr. Richmond (LA)..............................
Ms. DelBene (WA)...............................      X
Mr. Garcia (FL)................................      X
Mr. Jeffries (NY)..............................      X
                                                ------------------------
    Total......................................      9      15
------------------------------------------------------------------------

    8. The amendment offered by Mr. Garcia prohibits defendants 
who were held liable for asbestos exposure from seeking 
information through the bill. This amendment was defeated by a 
rollcall vote of 11-18.

                             ROLLCALL NO. 8
------------------------------------------------------------------------
                                                  Ayes    Nays   Present
------------------------------------------------------------------------
Mr. Goodlatte (VA), Chairman...................              X
Mr. Sensenbrenner, Jr. (WI)....................
Mr. Coble (NC).................................              X
Mr. Smith (TX).................................
Mr. Chabot (OH)................................              X
Mr. Bachus (AL)................................              X
Mr. Issa (CA)..................................
Mr. Forbes (VA)................................              X
Mr. King (IA)..................................              X
Mr. Franks (AZ)................................              X
Mr. Gohmert (TX)...............................              X
Mr. Jordan (OH)................................              X
Mr. Poe (TX)...................................              X
Mr. Chaffetz (UT)..............................
Mr. Marino (PA)................................              X
Mr. Gowdy (SC).................................              X
Mr. Amodei (NV)................................              X
Mr. Labrador (ID)..............................              X
Ms. Farenthold (TX)............................              X
Mr. Holding (NC)...............................              X
Mr. Collins (GA)...............................              X
Mr. DeSantis (FL)..............................              X
[Vacant].......................................

Mr. Conyers, Jr. (MI), Ranking Member..........      X
Mr. Nadler (NY)................................      X
Mr. Scott (VA).................................      X
Mr. Watt (NC)..................................      X
Ms. Lofgren (CA)...............................
Ms. Jackson Lee (TX)...........................      X
Mr. Cohen (TN).................................
Mr. Johnson (GA)...............................
Mr. Pierluisi (PR).............................      X
Ms. Chu (CA)...................................
Mr. Deutch (FL)................................      X
Mr. Gutierrez (IL).............................
Ms. Bass (CA)..................................      X
Mr. Richmond (LA)..............................
Ms. DelBene (WA)...............................      X
Mr. Garcia (FL)................................      X
Mr. Jeffries (NY)..............................      X
                                                ------------------------
    Total......................................     11      18
------------------------------------------------------------------------

    9. The amendment offered by Mr. Jeffries replaces the 
quarterly reporting requirements with a requirement that a 
trust provide discovery, upon written request, to a party to an 
action concerning liability for asbestos exposure if the 
requesting party cannot obtain such information under non-
bankruptcy law. This amendment was defeated by a rollcall vote 
of 13-18.

                             ROLLCALL NO. 9
------------------------------------------------------------------------
                                                  Ayes    Nays   Present
------------------------------------------------------------------------
Mr. Goodlatte (VA), Chairman...................              X
Mr. Sensenbrenner, Jr. (WI)....................
Mr. Coble (NC).................................              X
Mr. Smith (TX).................................
Mr. Chabot (OH)................................              X
Mr. Bachus (AL)................................              X
Mr. Issa (CA)..................................
Mr. Forbes (VA)................................              X
Mr. King (IA)..................................              X
Mr. Franks (AZ)................................              X
Mr. Gohmert (TX)...............................              X
Mr. Jordan (OH)................................              X
Mr. Poe (TX)...................................              X
Mr. Chaffetz (UT)..............................
Mr. Marino (PA)................................              X
Mr. Gowdy (SC).................................              X
Mr. Amodei (NV)................................              X
Mr. Labrador (ID)..............................              X
Ms. Farenthold (TX)............................              X
Mr. Holding (NC)...............................              X
Mr. Collins (GA)...............................              X
Mr. DeSantis (FL)..............................              X
[Vacant].......................................

Mr. Conyers, Jr. (MI), Ranking Member..........      X
Mr. Nadler (NY)................................      X
Mr. Scott (VA).................................      X
Mr. Watt (NC)..................................      X
Ms. Lofgren (CA)...............................
Ms. Jackson Lee (TX)...........................      X
Mr. Cohen (TN).................................      X
Mr. Johnson (GA)...............................
Mr. Pierluisi (PR).............................      X
Ms. Chu (CA)...................................      X
Mr. Deutch (FL)................................      X
Mr. Gutierrez (IL).............................
Ms. Bass (CA)..................................      X
Mr. Richmond (LA)..............................
Ms. DelBene (WA)...............................      X
Mr. Garcia (FL)................................      X
Mr. Jeffries (NY)..............................      X
                                                ------------------------
    Total......................................     13      18
------------------------------------------------------------------------

    10. The bill was reported favorably without amendment by a 
rollcall vote of 17-14.

                             ROLLCALL NO. 10
------------------------------------------------------------------------
                                                Ayes    Nays   T2Present
------------------------------------------------------------------------
Mr. Goodlatte (VA), Chairman.................      X
Mr. Sensenbrenner, Jr. (WI)..................
Mr. Coble (NC)...............................      X
Mr. Smith (TX)...............................
Mr. Chabot (OH)..............................      X
Mr. Bachus (AL)..............................      X
Mr. Issa (CA)................................
Mr. Forbes (VA)..............................      X
Mr. King (IA)................................      X
Mr. Franks (AZ)..............................      X
Mr. Gohmert (TX).............................      X
Mr. Jordan (OH)..............................      X
Mr. Poe (TX).................................              X
Mr. Chaffetz (UT)............................
Mr. Marino (PA)..............................      X
Mr. Gowdy (SC)...............................      X
Mr. Amodei (NV)..............................      X
Mr. Labrador (ID)............................      X
Ms. Farenthold (TX)..........................      X
Mr. Holding (NC).............................      X
Mr. Collins (GA).............................      X
Mr. DeSantis (FL)............................      X
[Vacant].....................................

Mr. Conyers, Jr. (MI), Ranking Member........              X
Mr. Nadler (NY)..............................              X
Mr. Scott (VA)...............................              X
Mr. Watt (NC)................................              X
Ms. Lofgren (CA).............................
Ms. Jackson Lee (TX).........................              X
Mr. Cohen (TN)...............................              X
Mr. Johnson (GA).............................
Mr. Pierluisi (PR)...........................              X
Ms. Chu (CA).................................              X
Mr. Deutch (FL)..............................              X
Mr. Gutierrez (IL)...........................
Ms. Bass (CA)................................              X
Mr. Richmond (LA)............................
Ms. DelBene (WA).............................              X
Mr. Garcia (FL)..............................              X
Mr. Jeffries (NY)............................              X
                                              --------------------------
    Total....................................     17      14
------------------------------------------------------------------------

                      Committee Oversight Findings

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

               New Budget Authority and Tax Expenditures

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

               Congressional Budget Office Cost Estimate

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, the Committee sets forth, with 
respect to the bill, H.R. 982, the following estimate and 
comparison prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act of 
1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, June 7, 2013.
Hon. Bob Goodlatte, Chairman,
Committee on the Judiciary,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 982, the 
``Furthering Asbestos Claim Transparency (FACT) Act of 2013.''
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Martin von 
Gnechten, who can be reached at 226-2860.
            Sincerely,
                                      Douglas W. Elmendorf,
                                                  Director.

Enclosure

cc:
        Honorable John Conyers, Jr.
        Ranking Member




           H.R. 982--Furthering Asbestos Claim Transparency 
                          (FACT) Act of 2013.

      As ordered reported by the House Committee on the Judiciary 
                            on May 21, 2013.




    H.R. 982 would require trusts set up through a Chapter 11 
bankruptcy reorganization caused by asbestos liabilities to 
submit quarterly reports to the bankruptcy court concerning the 
damage claims and payments made by the trust. Based on 
information provided by the Administrative Office of the U.S. 
Courts (AOUSC), CBO estimates that implementing H.R. 982 would 
have no significant impact on the Federal budget because the 
AOUSC would incur only minor costs to make that information 
publicly available. Enacting H.R. 982 would not affect direct 
spending or revenues; therefore, pay-as-you-go procedures do 
not apply.
    H.R. 982 contains no intergovernmental mandates as defined 
in the Unfunded Mandates Reform Act (UMRA) and would impose no 
costs on state, local, or tribal governments.
    H.R. 982 would impose a private-sector mandate as defined 
in UMRA by requiring asbestos trusts to submit quarterly 
reports. According to studies by the Government Accountability 
Office (GAO) and the RAND Corporation, only a small number of 
asbestos trusts currently exist. Further, the GAO study 
indicates that the information to be submitted under the bill 
is already tracked by many of the asbestos trusts. Therefore, 
CBO expects that the incremental cost to comply with the 
reporting requirements in the bill would fall below the annual 
threshold established in UMRA for private-sector mandates ($150 
million in 2013, adjusted annually for inflation).
    The CBO staff contacts for this estimate are Martin von 
Gnechten (for Federal costs) and Paige Piper/Bach (for the 
impact on the private sector). The estimate was approved by 
Theresa Gullo, Deputy Assistant Director for Budget Analysis.

                    Duplication of Federal Programs

    No provision of H.R. 982 establishes or reauthorizes a 
program of the Federal Government known to be duplicative of 
another Federal program, a program that was included in any 
report from the Government Accountability Office to Congress 
pursuant to section 21 of Public Law 111-139, or a program 
related to a program identified in the most recent Catalog of 
Federal Domestic Assistance.

                  Disclosure of Directed Rule Makings

    The Committee estimates that H.R. 982 specifically directs 
to be completed no specific rule makings within the meaning of 
5 U.S.C. 551.

                    Performance Goals and Objectives

    The Committee states that pursuant to clause 3(c)(4) of 
rule XIII of the Rules of the House of Representatives, H.R. 
982 amends title 11, United States Code, to require the 
publication and disclosure of certain data by trusts created in 
a chapter 11 plan pursuant to section 524 of that title.

                          Advisory on Earmarks

    In accordance with clause 9 of rule XXI of the Rules of the 
House of Representatives, H.R. 982 does not contain any 
congressional earmarks, limited tax benefits, or limited tariff 
benefits as defined in clause 9(e), 9(f), or 9(g) of Rule XXI.

                      Section-by-Section Analysis

    The following discussion describes the bill as reported by 
the Committee.
    Section 1. Short Title. Provides that the bill may be 
referred to as the ``Furthering Asbestos Claim Transparency Act 
of 2013,'' or ``FACT Act of 2013.''
    Section 2. Amendments. Adds to section 524(g) of the 
Bankruptcy Code a requirement that asbestos liability trusts 
publish quarterly public reports identifying claimants, amounts 
paid, and basis for paying claims on the court's public docket. 
Further provides that trusts must comply with third-party 
discovery demands subject to third-party's payment of 
reasonable discovery costs.
    Section 3. Effective Date; Application of Amendments. Sets 
the effective date of the Act as date of enactment. Provides 
that the amendments made by the act apply retroactively and 
prospectively.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (new matter is 
printed in italics and existing law in which no change is 
proposed is shown in roman):

                      TITLE 11, UNITED STATES CODE



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

           *       *       *       *       *       *       *


SUBCHAPTER II--DEBTOR'S DUTIES AND BENEFITS

           *       *       *       *       *       *       *


Sec. 524. Effect of discharge

    (a) * * *

           *       *       *       *       *       *       *

    (g)(1) * * *

           *       *       *       *       *       *       *

    (8) A trust described in paragraph (2) shall, subject to 
section 107--
            (A) file with the bankruptcy court, not later than 
        60 days after the end of every quarter, a report that 
        shall be made available on the court's public docket 
        and with respect to such quarter--
                    (i) describes each demand the trust 
                received from, including the name and exposure 
                history of, a claimant and the basis for any 
                payment from the trust made to such claimant; 
                and
                    (ii) does not include any confidential 
                medical record or the claimant's full social 
                security number; and
            (B) upon written request, and subject to payment 
        (demanded at the option of the trust) for any 
        reasonable cost incurred by the trust to comply with 
        such request, provide in a timely manner any 
        information related to payment from, and demands for 
        payment from, such trust, subject to appropriate 
        protective orders, to any party to any action in law or 
        equity if the subject of such action concerns liability 
        for asbestos exposure.

           *       *       *       *       *       *       *


                            Dissenting Views

                              INTRODUCTION

    H.R. 982, the ``Furthering Asbestos Claim Transparency 
(FACT) Act of 2013,'' is a thoroughly flawed bill that 
blatantly strengthens protections for the very entities that 
exposed millions of unsuspecting Americans to the toxic effects 
of asbestos. The bill accomplishes this end by giving asbestos 
defendants ``new rights and advantages to be used against 
asbestos victims in state court'' and it would ``add new 
burdens'' to asbestos bankruptcy trusts that would severely 
cripple ``their ability to operate and pay claims.''\1\ 
Although the proponents of this legislation assert that it is 
intended to protect asbestos victims, not a single asbestos 
victim has expressed support for H.R. 982. For example, we 
heard from the widow of our former colleague Representative 
Bruce Vento (D-MN) who passed away from mesothelioma. She 
emphatically stated that H.R. 982 ``does not do a single 
thing'' to help asbestos victims and their families.\2\
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    \1\Furthering Asbestos Claims Transparency Act: Hearing on H.R. 
4369 Before the Subcomm. on Courts, Commercial and Admin. L. of the H. 
Comm. on the Judiciary, 112th Cong. 61-62 (2012) (testimony of Charles 
S. Siegel, Waters & Kraus LLP).
    \2\Letter from Susan Vento, widow of Rep. Bruce Vento (D-MN), et 
al. to Chairman Bob Goodlatte (R-VA) of the H. Comm. on the Judiciary 
(May 20, 2013) (on file with H. Comm. on the Judiciary Democratic 
staff) [hereinafter Vento Letter].
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    H.R. 982 disrupts a reasonably well-functioning asbestos 
victim compensation process. Entities facing overwhelming mass 
tort liability for causing asbestos injuries may shed these 
liabilities and financially regain their stability in exchange 
for funding trusts established under chapter 11 of the 
Bankruptcy Code to pay the claims of their victims, under 
certain circumstances.\3\ H.R. 982, however, interferes with 
this longstanding process in two ways. The FACT Act would 
require these trusts to: (1) file a publicly available 
quarterly report with the bankruptcy court that would include 
personally identifying information about such claimants, 
including their names, exposure history, and basis for any 
payment made to them; and (2) provide any information related 
to payment from and demands for payment from such trust to any 
party to any action in law or equity concerning liability for 
asbestos exposure.
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    \3\11 U.S.C. Sec. 524(g)(2)(B)(i)(I) (2013).
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    The bill's sponsors contend that these changes to the 
asbestos claims process are necessary to curb fraud in the 
system, but there is scant evidence that such a problem even 
exists. In fact, the multiple hearings held by this Committee 
have failed to identify any academic or other objective study 
demonstrating endemic fraud in the asbestos trust claims 
process. With the knowledge that there is no empirical evidence 
of fraud in the system, we are led to conclude that this 
measure is nothing more than an end run by asbestos defendants 
around the discovery process available under nonbankruptcy law.
    The truth is that this legislation is a solution in search 
of a problem that will benefit the asbestos defendants and will 
re-victimize asbestos victims and their families by invading 
their privacy and slowing the claims payment process. Moreover, 
this legislation is fundamentally inequitable as it mandates 
disclosure by the trusts, but does not require solvent 
defendant companies to disclose information about the injurious 
effects of the products they manufactured or hazardous working 
conditions they imposed on their employees. Finally, the bill 
will divert critical funds and further decrease compensation to 
asbestos victims by forcing bankruptcy trusts to prepare 
burdensome reports.
    Not surprisingly, this measure is opposed by various 
asbestos victims,\4\ asbestos trusts,\5\ and legal 
representatives for future asbestos personal injury 
claimants.\6\ In addition, various organizations representing 
workers and consumers have registered their strong opposition, 
including the AFL-CIO,\7\ Public Citizen, U.S. Public Interest 
Research Group, the Environmental Working Group, the Alliance 
for Justice, and Protect Missouri Workers.\8\
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    \4\See, e.g., Vento Letter.
    \5\See, e.g., Supplemental letter from Douglas A. Campbell, counsel 
for various asbestos settlement trusts, to Chairman Bob Goodlatte (R-
VA) of the H. Comm. on the Judiciary et al. (Mar. 20, 2013) (on behalf 
of four asbestos settlement trusts) (on file with H. Comm. on the 
Judiciary Democratic staff); letter from Douglas A. Campbell, counsel 
for various asbestos settlement trusts, to Chairman Bob Goodlatte (R-
VA) of the H. Comm. on the Judiciary et al. (Mar. 11, 2013) (on behalf 
of four asbestos settlement trusts) (on file with H. Comm. on the 
Judiciary Democratic staff).
    \6\See, e.g., Letter from Michael J. Crames, future claimants' 
representative for Owens Corning/Fibreboard Asbestos Personal Injury 
Trust et al., to Chairman Bob Goodlatte (R-VA) of the H. Comm. on the 
Judiciary et al. (Mar. 11, 2013) (signed by six future claims 
representatives) (on file with H. Comm. on the Judiciary Democratic 
staff).
    \7\See, e.g., Letter from William Samuels, Director, Government 
Affairs Dep't, AFL-CIO, to Members of the House of Representatives 
(June 25, 2013) (expressing the view that ``the bill is simply an 
effort by asbestos manufacturers who still are subject to asbestos 
lawsuits to avoid liability for diseases caused by their products'') 
(on file with H. Comm. on the Judiciary Democratic staff).
    \8\See, e.g., Letter from Nan Aron, Alliance for Justice,, et al., 
to Chairman Spencer Bachus (R-AL) and Ranking Member Steve Cohen (D-TN) 
of the Subcomm. on Regulatory Reform, Commercial and Antitrust Law of 
the H. Comm. on the Judiciary (Mar. 12, 2013) (on file with H. Comm. on 
the Judiciary Democratic staff).
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    For these reasons and those described below, we 
respectfully dissent and urge our colleagues to reject this 
seriously flawed bill.

                       DESCRIPTION AND BACKGROUND

                              DESCRIPTION

    H.R. 982 amends section 524(g) of the Bankruptcy Code in 
two significant respects. First, it requires a trust to file 
with the bankruptcy court not later than 60 days after the end 
of every quarter a report that must be made available on the 
court's public docket. The report must describe each demand the 
trust received from a claimant, including the claimant's name 
and exposure history as well as the basis for any payment from 
the trust made to such claimant. The report may not include any 
confidential medical record or the claimant's full Social 
Security number. Second, the measure requires the trust, upon 
written request and subject to payment for any reasonable costs 
incurred in responding to such request at the option of the 
trust, to provide in a timely manner any information related to 
payments and demands for payment from the trust, subject to 
appropriate protective orders, to any party to any action in 
law or equity if the subject of such action concerns liability 
for asbestos exposure. The bill's reporting and information 
disclosure requirements are subject to Bankruptcy Code section 
107, which authorizes the bankruptcy court, for cause, to 
restrict public access to any document filed in a bankruptcy 
case if the court finds that the disclosure of the information 
contained in such document would create an ``undue risk of 
identity theft or other unlawful injury.''\9\
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    \9\11 U.S.C. Sec. 107(c)(1) (2013).
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                               BACKGROUND

A. The Lethal Effects of Asbestos
    Asbestos is a fibrous material, extracted from the earth, 
that has been used for centuries because of its tensile 
strength and its heat resistence.\10\ The modern industrial use 
of asbestos began around 1860, and the world's annual use of 
raw asbestos increased from some 500,000 tons to 2.5 million 
tons between the years 1934 and 1964.\11\ Asbestos has been 
widely used as an insulator and as a fire retardant by the 
construction and ship-building industries. Examples of 
asbestos-containing products include attic and wall insulation, 
roofing shingles, ceiling and vinyl floor tiles, paper and 
cement products, and `friction products such as automobile 
clutch, brake and transmission parts.''\12\
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    \10\Asbestos Litigation Crisis in Federal and State Courts: 
Hearings Before the Subcomm. on Intellectual Property and Judicial 
Admin. of the H. Comm. on the Judiciary, 102d Cong. 1 (1975) (opening 
statement of Chairman William J. Hughes) [hereinafter Asbestos 
Litigation Hearings].
    \11\Id.
    \12\U.S. Government Accountability Office, Report on Asbestos 
Injury Compensation: The Role and Administration of Asbestos Trusts, 
GAO-11-819, at at 6 (Sept. 2011) [hereinafter GAO Report].
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    Asbestos fibers, when released into the atmosphere and 
inhaled by humans, may cause various diseases, including 
asbestosis (a clogging and scarring of the lungs that can 
produce a reduced breathing capacity) and mesothelioma (a 
cancer of the lining of the chest and abdomen that is typically 
fatal).\13\ Lung cancer and other diseases have also been 
associated with the inhalation of asbestos fibers.\14\
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    \13\Id.
    \14\Id.
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    Although a link between asbestos and lung cancer was first 
reported in 1935, an estimated 21 million Americans were 
exposed to asbestos over the ensuing years,\15\ some of whom 
began to manifest injuries during the 1960's.\16\ During the 
1970's, asbestos became the subject of significant regulation 
and was banned or declared hazardous by numerous federal 
agencies. For example, the Occupational Safety and Health 
Administration in 1986 stated that it was ``aware of no 
instance in which exposure to a toxic substance more clearly 
demonstrated detrimental health effects on humans than has 
asbestos exposure. The diseases caused by asbestos exposure are 
life-threatening or disabling.''\17\ The Environmental 
Protection Agency (EPA) in 1988 published a study of asbestos 
in public schools and found that its presence was ``extremely 
hazardous.''\18\ In 1989, the EPA promulgated a regulation 
banning the manufacture, processing, importation, and 
distribution of materials or products containing asbestos.\19\ 
The rule, however, was later overturned.\20\
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    \15\The Department of Labor provided this estimate. Asbestos 
Litigation Hearings at 2.
    \16\Report of the Judicial Conference of the U.S. Courts Ad Hoc 
Committee on Asbestos Litigation, at 2 (Mar. 1991).
    \17\Letter of transmittal dated July 21, 1983, Chronic Hazards 
Advisory Panel on Asbestos, Report to the U.S. Consumer Product Safety 
Commission (July 1983).
    \18\U.S. Environmental Protection Agency, EPA Study of Asbestos-
Containing Materials in Public Buildings: A Report to Congress, at 5 
(Feb. 1988).
    \19\See EPA Asbestos Ban and Phasedown Regulations, 40 C.F.R. 
763.160 et seq. (1989).
    \20\Corrosion Proof Fittings v. Environmental Protection Agency, 
947 F.2d 1201 (5th Cir. 1991).
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    In 1973, the Fifth Circuit rendered the first appellate 
opinion upholding a product liability judgment against a 
manufacturer of asbestos-containing products.\21\ As the 
Government Accountability Office (GAO) reported, ``In the 
course of the first successful personal injury lawsuits against 
asbestos manufacturers, plaintiffs' attorneys introduced 
evidence that these manufacturers had known but concealed 
information about the dangers of asbestos exposure or that such 
dangers were reasonably foreseeable.''\22\ In the nearly four 
decades since, litigation over personal injuries resulting from 
exposure to asbestos has resulted in ``hundreds of thousands of 
claims filed and billions of dollars in compensation paid,'' 
according to the Rand Institute for Civil Justice.\23\ 
``Asbestos litigation,'' according to the GAO, ``has been the 
longest-running mass tort litigation in U.S. history.''\24\
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    \21\Borel v. Fibreboard Paper Products Corp., 493 F.2d 1076 (5th 
Cir. 1973).
    \22\GAO Report at 8.
    \23\Lloyd Dixon et al., Rand Institute for Civil Justice, Report: 
Asbestos Bankruptcy Trusts--An Overview of Trust Structure and Activity 
with Detailed Reports on the Largest Trusts, at xi (2010).
    \24\GAO Report at 1.
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B. Overview of Asbestos Bankruptcy Trusts
    In 1994, Congress amended the Bankruptcy Code to authorize 
the imposition of a channeling injunction in chapter 11 cases 
involving asbestos claims. Codified as section 524(g), this 
provision allows a debtor, under certain circumstances, to 
shift its asbestos liabilities to a trust fund. Modeled on the 
injunction issued in the Johns-Manville bankruptcy case,\25\ 
section 524(g) authorizes a court in a chapter 11 case, after 
making certain findings,\26\ to issue an injunction preventing 
any entity from ``taking legal action for the purpose of 
directly or indirectly collecting, recovering, or receiving 
payment'' for any claim or demand\27\ that is to be paid in 
full or in part by a trust established under a confirmed plan 
of reorganization.\28\ Funding for the trust is derived by the 
debtor's securities and by the obligation of the debtor to make 
future payments, including dividends.\29\ Upon confirmation, 
the trust assumes all of the debtor's liabilities for personal 
injury, wrongful death, or property damages allegedly caused by 
the presence or exposure to asbestos or asbestos-containing 
products.\30\ As the GAO observes, ``neither the courts nor the 
U.S. Trustees have any specific statutory or other requirements 
to oversee a trust's administration.''\31\
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    \25\Kane v. Johns-Manville Corp., 843 F.2d 636 (2nd Cir. 1988).
    \26\11 U.S.C. Sec. 524(g)(2)(B)(ii) (2013).
    \27\The provision defines ``demand'' as a demand for payment, 
present or future, that--

      (A) was not a claim during the proceedings leading to the 
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      confirmation of a plan of reorganization;

      (B) arises out of the same or similar conduct or events 
      that gave rise to the claims addressed by the injunction 
      issued under paragraph (1); and

      (C) pursuant to the plan, is to be paid by a trust 
      described in paragraph (2)(B)(I).

11 U.S.C. Sec. 524(g)(5) (2013).
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    \28\11 U.S.C. Sec. 524(g)(1)(B) (2013).
    \29\11 U.S.C. Sec. 524(g)(2)(B)(i) (2013).
    \30\11 U.S.C. Sec. 524(g)(2)(B) (2013).
    \31\GAO Report at 13.
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    Once operational, the trust implements ``a nonadversarial 
administrative process--independent of the court system--to 
review claimants' occupational and medical histories before 
awarding compensation.''\32\ The trusts are privately managed 
and typically consist of a trustee, a trust advisory committee, 
and a future claims representative.\33\ The GAO explains:
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    \32\Id. at 3.
    \33\Id. at 15.

        Trustees manage the daily operations of the trusts, 
        including managing the trusts' investments, hiring and 
        supervising support staff and advisors, filing taxes, 
        and submitting annual reports to the bankruptcy court, 
        as required by the trusts' [trust agreement]. The 
        trustees are to manage the trust for the sole benefit 
        of the present and future claimant beneficiaries.\34\
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    \34\Id.

Currently, there are 60 asbestos bankruptcy trusts in operation 
with a combined total of $36.8 billion in assets as of 
2011.\35\
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    \35\Id. at 3.
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    Each trust establishes its own process by which claims are 
assessed and paid. Claims that meet the requisite criteria are 
paid a percentage of the scheduled value based on the nature of 
the asserted injury. The payment ratio varies among the trusts 
based on the availability of assets and anticipated present and 
future claims.\36\ According to the GAO, the range of payment 
ranges from 1.1 percent to 100 percent for certain diseases, 
such as mesothelioma or asbestosis.\37\ The GAO found that the 
median payment percentage among the various trusts was 25 
percent.\38\ The GAO reports that ``[s]ince the establishment 
of the first trust in 1988 through 2010, available data 
indicate that asbestos trusts have paid about 3.3 million 
claims valued at about $17.5 billion.''\39\ In addition to 
seeking compensation from an asbestos bankruptcy trust, 
asbestos claimants may also seek compensation from liable 
companies that are not in bankruptcy through the tort 
system.\40\
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    \36\Id. at 17.
    \37\Id. at 21.
    \38\Id.
    \39\Id. at 16.
    \40\Id. at 15.
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                         CONCERNS WITH H.R. 982

         I. H.R. 982 IS NOT NECESSARY GIVEN THE ABSENCE OF ANY 
                  EMPIRICAL EVIDENCE OF SYSTEMIC FRAUD

    In order to justify the onerous new requirements the bill 
would impose on the asbestos trusts and the victims they serve, 
proponents of H.R. 982 allege that ``there is growing evidence 
of fraud and abuse in the asbestos trust compensation 
system.''\41\ In truth, however, there have been only isolated 
reports of fraudulent claims over the years and many of those 
instances were attributed to human error. For example, reports 
surfaced in 2004 regarding a series of incidences of abusive 
claim practices\42\ and the Subcommittee on Regulatory Reform, 
Commercial and Antitrust Law (Subcommittee) conducted an 
oversight hearing into that issue as well as others presented 
with respect to the treatment of mass torts in bankruptcy 
cases.\43\ In addition, the Wall Street Journal recently 
published an article purporting to document ``numerous apparent 
anomalies'' regarding various asbestos claims.\44\ A close 
reading of this article, however, reveals that these instances 
were isolated or could be explained.\45\ As noted in her 
response to this article, Joan Claybrook, president of Public 
Citizen from 1982 to 2009 and head of the National Highway 
Traffic Safety Administration from 1977 to 1981, noted:
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    \41\See, e.g., Unofficial Tr. of Markup of H.R. 982, the 
``Furthering Asbestos Claim Transparency (FACT) Act of 2013,'' by the 
H. Comm. on the Judiciary, at 5 (May 21, 2013) (remarks of Chairman Bob 
Goodlatte, H. Comm. on the Judiciary) [hereinafter Full Committee 
Markup Tr.].
    \42\See, e.g., Editorial, St. Francis of Asbestos, Wall St. J., 
June 14, 2004, at A14 (recommending that the House and Senate 
``bankruptcy subcommittees . . . [conduct] a full and public 
investigation of the rigged asbestos mess''); The Latest Asbestos 
Scam--The Lawyers Are Now Rigging the Bankruptcy Process, Wall St. J., 
June 1, 2004, at A16 (observing that the `latest asbestos scandal is 
threatening the integrity of the judicial system itself').
    \43\The Administration of Large Business Bankruptcy 
Reorganizations: Has Competition for Big Cases Corrupted the Bankruptcy 
System?: Hearing Before the Subcomm. on Commercial and Admin. Law of 
the H. Comm. on the Judiciary, 108th Cong. (2004).
    \44\See, e.g., Dionne Searcey & Rob Barry, As Asbestos Claims Rise, 
So Do Worries About Fraud, Wall St. J., Mar. 11, 2013, at A1.
    \45\Id.

        There is no evidence to support assertions of 
        significant fraud in claims by asbestos victims. Human 
        error in data entry is not fraud. Out of millions of 
        claims filed at the company asbestos trusts, the 
        Journal's extensive investigation identified an error 
        and anomaly rate of only 0.35%, much of that due to 
        mistakes by the trusts, not the victims.\46\
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    \46\Joan Claybrook, Fraud Made the Asbestos Illness Situation Much 
Worse, Letter to the Editor, Wall St. J., May 19, 2013, at A16.

    Likewise, the GAO is not aware of any subsequent reports of 
endemic fraud since 2004 with respect to asbestos claims and it 
did not uncover any evidence of overt fraud during its 
examination of asbestos trusts last year.\47\ Instead, the GAO 
has detailed an already robust set of procedures that a 
claimant must follow to establish entitlement to compensation. 
The claimant completes a claim form supported with documented 
evidence of exposure to asbestos products. Such evidence may 
consist of the claimant's work history, employer records, 
Social Security records, and deposition testimony taken during 
any litigation.\48\ The claimant must also submit medical 
records ``sufficient to support a diagnosis for the specific 
disease being claimed or, if applicable, a copy of a death 
certificate.''\49\ In addition, 98 percent of the 52 trusts 
that the GAO reviewed required a claims audit program to be 
conducted. Based on interviews held with representatives from 
11 trusts, GAO found that all the trusts ``incorporate quality 
assurance measures into their intake, evaluation, and payment 
processes.''\50\ GAO also found that ``each trust is committed 
to ensuring that no fraudulent claims are paid by the trust, 
which aligns with their goals of preserving assets for future 
claimants.''\51\ It is noteworthy that even with this 
heightened scrutiny, none of the trusts ``indicated that these 
audits had identified cases of fraud.''\52\
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    \47\Telephone interview with William Jenkins, Director, Homeland 
Security and Justice Issues, et al., U.S. Government Accountability 
Office (May 7, 2012); GAO Report at 23.
    \48\GAO Report at 18.
    \49\Id.
    \50\Id. at 23.
    \51\Id.
    \52\Id.
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    To draw attention to the fact that the current asbestos 
trust claims process generally has adequate fraud detection 
systems in place, Subcommittee Ranking Member Steve Cohen (D-
TN) offered an amendment that would have excluded trusts that 
have a claims audit program from the bill. This thoughtful 
amendment, however, was defeated by a vote of 13 to 19.
    With the knowledge that there is no empirical evidence of 
fraud in the system, we are led to conclude that this measure 
is nothing more than an attempt to improperly allow asbestos 
defendants to circumvent state and federal discovery 
procedures. As the Minority witness explained during the 
hearing on H.R. 982, ``Solvent asbestos defendants remaining in 
the tort system are currently able to learn all information 
relevant to a claim against them, including information about a 
victim's trust claims, under state discovery rules.''\53\ All 
information that would be relevant to claims against asbestos 
defendants--including information related to a victim's trust 
claims--can be obtained using normal discovery tools available 
under state law, like interrogatories, document requests, and 
depositions. Nonetheless, the bill's proponents offer no 
explanation as to why the bill's potentially costly and 
burdensome information request provision is necessary or why 
federal law should subvert state law discovery processes.
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    \53\Furthering Asbestos Claim Transparency (FACT) Act of 2013: 
Hearing on H.R. 982 Before the Subcomm. on Regulatory Reform, 
Commercial and Antitrust Law of the H. Comm. on the Judiciary, 113 
Cong. (2013) (prepared statement of Elihu Inselbuch).
---------------------------------------------------------------------------
    In response to this particular flaw in the bill, 
Representative Hakeem Jeffries (D-NY) offered an amendment that 
would have required the trust to provide information relating 
to payments made by the trust and demands for such payment to 
any party to an action concerning asbestos liability exposure 
only if such party cannot otherwise obtain such information 
under applicable non-bankruptcy law. The amendment further 
provided that the information must relate to a trust claimant 
who is also a party to such action against the requesting 
party. Representative Jeffries' amendment, however, failed by a 
vote of 13 to 18.
    Representative Joe Garcia (D-FL) also offered an amendment 
that would have prohibited a party that has been found liable 
in court for asbestos-related harm to a plaintiff from seeking 
information about that plaintiff through the bill's disclosure 
process. Essentially, this amendment would have prohibited an 
asbestos defendant who has already been found liable in court 
for causing harm to a plaintiff from using this bill to seek 
information that was already available to it in discovery. This 
amendment would have added a little more balance to what is a 
very unbalanced bill. Defendants that have already had their 
day in court and lost should not be allowed to then use this 
bill as a way to simply harass asbestos plaintiffs they have 
already harmed. Notwithstanding the clearly equitable bona 
fides of this amendment, it failed by a vote of 11 to 18.

       II. H.R. 982 WOULD HARM ASBESTOS VICTIMS IN MULTIPLE WAYS

A. LThe Bill's Reporting and Disclosure Requirements Constitute an 
        Assault on Asbestos Victims' Privacy Interests
    H.R. 982's mandatory reporting and disclosure requirements 
would threaten asbestos victims' privacy when they seek payment 
for injuries from an asbestos bankruptcy trust. Specifically, 
the bill requires such information to be made part of the 
bankruptcy court's case docket, which is easily accessible 
through the Internet with the payment of a nominal fee. As a 
result, information concerning claimants' sensitive personal 
information--including their names and exposure histories--
would be irretrievably released into the public domain.
    It is readily apparent that these reports would provide a 
treasure trove of data that could be accessed by insurance 
companies, prospective employers, lenders, and data collectors 
who could then use such information for purposes having 
absolutely nothing to do with compensation for asbestos 
exposure and that could be used to the detriment of asbestos 
victims. In effect, this bill would allow unsuspecting asbestos 
victims to be further victimized, all in the name of helping 
those who harmed these victims in the first place. As the widow 
of our former colleague, Representative Bruce Vento (D-MN), who 
died of mesothelioma in 2000, warned, ``The information on this 
public registry could be used to deny employment, credit, and 
health, life, and disability insurance. We are also concerned 
that victims would be more vulnerable to identity thieves, con 
men, and other types of predators.''\54\
---------------------------------------------------------------------------
    \54\Vento Letter.
---------------------------------------------------------------------------
    It is notable that trusts already generally provide annual 
financial reports to the bankruptcy court, but the information 
disclosed typically consists of the total number of claims paid 
and the aggregate value of these claims, thus protecting 
claimants' privacy.\55\ Some reports are publically available, 
while others are filed under seal with the bankruptcy court 
``for reasons deemed appropriate by the court.''\56\ Such 
reasons include protecting the interests of the reorganized 
company and its competitiveness.\57\ In fact, of the 47 trust 
annual reports that the GAO reviewed, only one reported the 
amount paid to each individual and listed these individuals' 
names.\58\ Nevertheless, 65 percent of the trusts reviewed by 
GAO (33 out of 52 trusts) specifically provide that ``claimant 
information submitted to the trust for purposes of obtaining 
compensation is confidential and should be treated as a 
settlement negotiation.''\59\
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    \55\GAO Report at 1, 24.
    \56\Id. at 17.
    \57\Id. at 4, note 7.
    \58\Id. at 24-25.
    \59\Id. at 26.
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    Proponents of more disclosure argue that it may reduce the 
``asbestos-related litigation burden on the remaining solvent 
defendants by demonstrating that the trusts have increased 
claimants' overall compensation beyond the amount justified in 
relation to the harm caused.''\60\ They also assert that the 
current system's lack of transparency ``could enable plaintiffs 
to file contradictory claims to different trusts while also 
pursuing recovery through the tort system.''\61\
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    \60\Id. at 30.
    \61\Id.
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    These arguments lack any merit. As the GAO observed, 
``parties in the tort system are not required to disclose 
settlement negotiation or agreement information outside of the 
subpoena process'' and that ``trusts are analogous to any other 
settling party and related negotiations and payments are 
privileged.''\62\ Equally important, the GAO noted that ``all 
of the potentially relevant information in the trusts' 
possession is available to the defense through pretrial 
discovery.''\63\ Trust representatives are also very concerned 
about the ``privacy rights of hundreds of thousands of 
individuals who did nothing except successfully seek 
compensation from a trust.''\64\
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    \62\Id. at 29.
    \63\Id.
    \64\Memorandum from Legal Representatives for Future Asbestos 
Personal Injury Claimants with Respect to Certain Asbestos Settlement 
Trusts to Prof. Troy McKenzie, Advisory Comm. on Bankruptcy Rules of 
the Judicial Conference of the United States, 2 (Aug. 10, 2011) (on 
file with the H. Comm. on the Judiciary Democratic staff).
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    In attempt to protect asbestos victims from this 
unwarranted invasion of privacy, Ranking Member John Conyers, 
Jr. (D-MI) offered an amendment specifying that the quarterly 
reports required to be filed under the bill contain only 
aggregate information. In support of his amendment, 
Representative Conyers argued that the bill would, in effect, 
subject unsuspecting asbestos victims to possible future abuse. 
The amendment also struck the bill's burdensome discovery 
requirement. This amendment would have ensured victims' privacy 
by not making individualized claimant information public. It 
also would have ensured that trusts could focus their resources 
on their primary mission of assuring fair compensation for 
asbestos victims, rather than participating in the discovery 
process for outside lawsuits. Notwithstanding these benefits, 
this amendment failed by a party-line vote of 15 to 16.
    Representative Bobby Scott (D-VA) offered an amendment that 
would have required the trust to: (1) not identify the names of 
asbestos victims in the quarterly report; and (2) treat any 
information contained in the report pursuant to the privacy 
protections set forth in the Health Insurance Portability and 
Accountability Act (HIPAA).\65\ This amendment would have 
simply ensured that trusts comply with the HIPAA Privacy Rule. 
This Rule, according to the U.S. Department of Health and Human 
Services, was promulgated to establish:
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    \65\Pub. L. No. 104-191, 110 Stat. 1936 (1996).

        national standards to protect individuals' medical 
        records and other personal health information and 
        applies to health plans, health care clearinghouses, 
        and those health care providers that conduct certain 
        health care transactions electronically. The Rule 
        requires appropriate safeguards to protect the privacy 
        of personal health information, and sets limits and 
        conditions on the uses and disclosures that may be made 
        of such information without patient authorization. The 
        Rule also gives patients rights over their health 
        information, including rights to examine and obtain a 
        copy of their health records, and to request 
        corrections.\66\
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    \66\U.S. Dep't of Health & Human Services, Health Information 
Privacy--The Privacy Rule, available at http://www.hhs.gov/ocr/privacy/
hipaa/administrative/privacyrule/index.html (last visited May 23, 
2013).

Although asbestos victims who seek compensation for their 
injuries should be accorded at least the same privacy 
protections that are given to every other patient, this 
amendment failed by a vote of 13 to 19.
    In another attempt to address the bill's privacy flaws, 
Representative Hank Johnson (D-GA) offered two further 
amendments that were considered en bloc. One amendment would 
have required the quarterly reports required by the bill to be 
protected from public disclosure. Access to such reports, 
pursuant to the amendment, would have been restricted to a 
party that is a defendant in an action concerning asbestos 
exposure, with the access limited to the information in the 
report that was relevant to the plaintiff in such action, and 
only when such information is relevant to such action. In sum, 
this amendment would have ensured that the privacy interests of 
asbestos victims are respected by restricting access to the 
information contained in the reports to only those parties that 
have a ``need to know.''
    Representative Johnson's other amendment would have ensured 
that personally identifiable information about an asbestos 
victim claimant is protected from disclosure. It included 
within the amendment's definition of ``personally identifiable 
information'' any information pertaining to the claimant's 
health and finances. The unfettered release of personally 
identifiable information facilitates identity theft. According 
to the Federal Trade Commission (FTC), identity theft is one of 
the top complaints received by the agency. In fact, 18 percent 
of complaints that the FTC received in 2012 were related to 
identity theft.\67\ As previously noted, identity theft is a 
serious concern of asbestos victims.\68\ These amendments, 
however, failed by a vote of 13 to 18.
---------------------------------------------------------------------------
    \67\Press Release, Federal Trade Commission, FTC Releases Top 10 
Complaint Categories for 2012--Identity Theft Tops List for 13th 
Consecutive Year in Report of National Consumer Complaints (Feb. 26, 
2013), available at http://ftc.gov/opa/2013/02/sentineltop.shtm (last 
visited May 23, 2013).
    \68\See text accompanying note 54.
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B. LAsbestos Victims Vigorously Oppose this Legislation
    The proponents of this legislation assert that it is 
intended to assist asbestos victims. For example, the 
Subcommitte Chairman described the purpose of the bill as 
follows:

        We are here for one purpose and one purpose only, and 
        that is to protect those victims of asbestos exposure. 
        That is our only motivation. We are not here to protect 
        companies, we are not here to protect the defense bar, 
        plaintiffs' bar. We are here for the victims, and we 
        are here to protect their rights and to ensure that 
        justice is served. We are not here to protect those who 
        are not victims.\69\
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    \69\Unofficial Tr. of Hearing on H.R. 982, the ``Furthering 
Asbestos Claim Transparency (FACT) Act of 2013,'' by the Subcomm. on 
Regulatory Reform, Commercial and Antitrust Law of the H. Comm. on the 
Judiciary, 113th Cong. 2 (Mar. 13, 2013) (statement of Chairman Spencer 
Bachus, Subcomm. on Regulatory Reform, Commercial and Antitrust Law).

    Nevertheless, we are unaware of a single asbestos victim 
who supports H.R. 982. In fact, we received letters from 
asbestos victims in vigorous opposition to this bill.\70\ It is 
notable, for instance, that the Majority failed to call an 
asbestos victim to testify at any of the hearings on this 
legislation in either this Congress\71\ or in the last Congress 
when a similar measure was considered.\72\
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    \70\See, e.g., Vento Letter.
    \71\See, e.g., Unofficial Tr. of Hearing on H.R. 982, the 
``Furthering Asbestos Claim Transparency (FACT) Act of 2013,'' by the 
Subcomm. on Regulatory Reform, Commercial and Antitrust Law of the H. 
Comm. on the Judiciary, 113th Cong. 2 (Mar. 13, 2013).
    \72\See, e.g., Furthering Asbestos Claims Transparency Act: Hearing 
on H.R. 4369 Before the Subcomm. on Courts, Commercial and Admin. L. of 
the H. Comm. on the Judiciary, 112th Cong. (2012); How Fraud and Abuse 
in the Asbestos Compensation System Affect Victims, Jobs, the Economy, 
and the Legal System: Hearing Before the Subcomm. on the Constitution 
of the H. Comm. on the Judiciary, 112th Cong. (2011).
---------------------------------------------------------------------------
    To his credit, the Subcommittee Chairman suspended the 
markup of the bill by the Subcommittee on March 20, 2013 to 
give certain asbestos victims ``the right to have their 
testimony recorded'' and to allow ``members to ask them 
questions.''\73\ The process ultimately offered to the victims, 
consisting of an informal information session that would have 
been closed to the public and neither transcribed nor recorded, 
was rejected by the victims because they rightly deemed this 
process to be woefully deficient.\74\ As these victims 
observed:
---------------------------------------------------------------------------
    \73\Unofficial Tr. of Markup of H.R. 982, the ``Furthering Asbestos 
Claim Transparency (FACT) Act of 2013,'' by the Subcomm. on Regulatory 
Reform, Commercial and Antitrust Law of the H. Comm. on the Judiciary, 
113th Cong. 21, 23 (Mar. 20, 2013) [hereinafter Subcommittee Markup 
Tr.].
    \74\Letter from Susan Vento et al., to Chairman Spencer Bachus (R-
AL) of the Subcomm. on Regulatory Reform, Commercial and Antitrust Law 
of the H. Comm. on the Judiciary (Apr. 5, 2013) (on file with H. Comm. 
on the Judiciary Democratic staff).

          Instead of a public hearing as originally promised, 
        we were invited to participate in an informal and 
        private ``information session'' that would be closed 
        off to the public and everyone else, except 
        subcommittee members and their staff. We were told that 
        this would be a closed door ``conversation'' that would 
        not be recorded or become part of the official record 
        of the legislation. This was insulting, and 
        disturbingly ironic for a bill with the word 
        ``transparency'' in its title.
          We may not be Washington insiders, but we know the 
        difference between being official witnesses and being 
        treated as invisible people who need to be hidden 
        behind closed doors and then forgotten. We rejected 
        this offer because we felt it was not a serious effort 
        to ensure that our views and those of other asbestos 
        victims--who would be most affected by this one-sided 
        legislation--were heard and considered before the bill 
        moves forward.\75\
---------------------------------------------------------------------------
    \75\Id.
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C. LH.R. 982 Will Be Particularly Harmful to Veterans
    Although millions of unsuspecting Americans have been 
exposed to asbestos, there are certain populations who had 
greater levels of exposure as the result of their work. For 
example, members of the Armed Forces of the United States have 
been disproportionately affected by asbestos. Even though 
veterans make up only eight percent of the population, they 
comprise 30 percent of all mesothelioma deaths.\76\ 
Military.com, the largest military and veteran membership 
organization in the United States, explains:
---------------------------------------------------------------------------
    \76\Military.com, Asbestos and the Military, History, Exposure & 
Assistance, available at http://www.military.com/benefits/veteran-
benefits/asbestos-and-the-military-history-exposure-assistance.html 
(last visited May 23, 2013).

        Virtually every ship commissioned by the United States 
        Navy between 1930 and about 1970 contained several tons 
        of asbestos insulation in the engine room, along the 
        miles of pipe aboard ship and in the walls and doors 
        that required fireproofing. The sailors that manned 
        these ships and the men who repaired them in Navy 
        shipyards were prime candidates for asbestos exposure, 
        a fact borne out by the disease statistics.\77\
---------------------------------------------------------------------------
    \77\Id.

    In response to the special concerns presented by 
servicemembers and asbestos exposure, Representative Scott 
offered an amendment that would have exempted claimants who 
have or who are currently serving in the Armed Forces of the 
United States from the bill's disclosure requirements.\78\ The 
amendment, however, failed by a vote of 14 to 15.
---------------------------------------------------------------------------
    \78\It should be noted that shipbuilders and dockworkers over the 
years have been extensively exposed to asbestos. For example, it has 
been reported that ``[s]hipbuilding in World War II is a significant 
aetiology of the malignancies caused by asbestos.'' John Hedly-Whyte & 
Deborah R. Milamed, Asbestos and Ship-Building: Fatal Consequences, 
77(3) Ulster Medical J. 191 (Sept. 2008), available at http://
www.ncbi.nlm.nih.gov/pmc/articles/PMC2604477/.

---------------------------------------------------------------------------
      According to the White Lung Association:

      During World War II a new Liberty Ship hit the water in 
      Baltimore every 37 hours and a few hundred miles South, in 
      Hampton Roads Virginia, three ships hit the water each day. 
      Trucks and ships delivered thousands of pounds of asbestos 
      and asbestos products to the shipyards. . . . Workers in 
      all trades breathed the asbestos used by insulators, boiler 
      mechanics, carpenters, machinists, painters and joiners.

James Fite, U.S. Shipyards: A History of Massive Asbestos Exposure and 
Disease, World Asbestos Report (2004), available at http://
worldasbestosreport.org/conferences/gac/gac2004/ws_
H_2_e.php.
D. LH.R. 982 Heightens the Risk of More Discrimination Against Victims
    H.R. 982 will make asbestos victims more vulnerable to 
employment discrimination by making their disease status a 
matter of public record. Both Ranking Member Conyers and 
Representative Johnson raised serious concerns that current and 
potential employers could use the information required to be 
disclosed about asbestos victim claimants to engage in 
employment discrimination. In response, Representative 
Farenthold argued that the ``American [sic] Disabilities Act 
would protect folks with the jobs.''\79\ He continued:
---------------------------------------------------------------------------
    \79\Full Committee Markup Tr. at 137.

        They talk about employers using this information. There 
        is [sic] volumes of existing law. The Americans with 
        Disabilities Act, for instance, would prohibit 
        discrimination based on the information disclosed in 
        here.\80\
---------------------------------------------------------------------------
    \80\Id. at 31.

    While we would hope that Representative Farenthold's 
analysis is correct, it is not clear that this would prove to 
be the case under the Americans with Disabilities Act 
(ADA).\81\ To begin with, these victims would face potential 
problems with proof. How, for example, would an applicant or 
employee ever be able to prove that an employer had accessed 
and relied on the information in the database?
---------------------------------------------------------------------------
    \81\The Americans with Disabilities Act of 1990, Pub. L. No. 101-
336, 104 Stat. 327 (1990), was subsequently amended by the ADA 
Amendments Act of 2008, Pub. L. No. 110-325, 122 Stat. 3553 (2008) 
(codified at 42 U.S.C. Sec. Sec. 12101 et seq. (2013)).
---------------------------------------------------------------------------
    Even if this problem of proof could be overcome, the 
applicant or employee would then have to prove that he or she 
was an individual with a ``disability,'' as defined in the ADA, 
to obtain its protection from discrimination. The information 
in the database concerns exposure to asbestos, while the ADA 
protects individuals who have, had, or are regarded as having 
physical or mental impairments. It is not clear how, or 
whether, mere exposure to asbestos would qualify as an 
impairment or being regarded as having an impairment, thereby 
creating the risk that individuals could face discrimination 
based on their prospective or current employer's knowledge of 
their exposure to asbestos outside the ADA's protection.
    While we believe that a court could, and should, find that 
reliance on exposure to asbestos in making an adverse 
employment decision is unlawful under the ADA, we have very 
real concerns that this would not be the case based on our 
experience under this law. For example, following the enactment 
of the ADA in 1990, employers and the courts seized on the 
Act's definition of disability as a means of denying protection 
to individuals with disabilities that Congress unquestionably 
intended to protect, such as workers with diabetes, multiple 
sclerosis, HIV, and similar limiting impairments. To remedy 
this misinterpretation of the law, Congress, in 2008, had to 
amend the ADA to ensure sufficient coverage.\82\
---------------------------------------------------------------------------
    \82\ADA Amendments Act of 2008, Pub. L. No. 110-325, 122 Stat. 3553 
(2008).
---------------------------------------------------------------------------
    In addition, our experience with a closely analogous 
problem--discrimination by employers and others based on 
genetic information, i.e., a marker for a disease or impairment 
that has not yet developed--provides additional cause to 
question whether the ADA would be interpreted to prohibit 
discrimination based on information about exposure to asbestos. 
With regard to genetic information, Congress was sufficiently 
concerned that the ADA might not reach discrimination on this 
basis and therefore passed the Genetic Information 
Nondiscrimination Act of 2008.\83\ Congress understood that, 
while it was possible that the courts might interpret the ADA 
to prohibit discrimination based on genetic information, there 
also was a significant risk that they could fail to do so.
---------------------------------------------------------------------------
    \83\Pub. L. No. 110-233, 122 Stat. 881 (2008).
---------------------------------------------------------------------------
    Thus, while we again would hope that the ADA would protect 
individuals from discrimination based on information revealing 
exposure to asbestos, protection under current law is too 
uncertain to risk.

    III. H.R. 982 IS FUNDAMENTALLY INEQUITABLE BECAUSE IT REQUIRES 
   DISCLOSURE BY THE TRUSTS, BUT DOES NOT REQUIRE SOLVENT DEFENDANT 
     COMPANIES TO DISCLOSE THEIR CONFIDENTIAL SETTLEMENT AGREEMENTS

    H.R. 982 is fundamentally inequitable because it imposes 
additional burdens on asbestos bankruptcy trusts while easing 
the process by which solvent defendant companies can obtain 
discovery. This is particularly galling given the history of 
asbestos manufacturers in affirmatively concealing the dangers 
of their products from the public.
    Many defendant companies insist on confidentiality 
agreements before entering into settlement agreements 
specifically in order to prevent evidence of their wrongdoing 
from becoming public. More importantly, because of the secrecy 
of these settlements, other people who have been injured have 
no way of gaining important information about their exposure, 
their illnesses, or the settled liability of the companies that 
made them sick. Information about the concealment of wrongdoing 
never becomes public, and the people who have suffered have no 
way of knowing about that wrongdoing or its extent. 
Governmental agencies that are charged with protecting public 
health--whether in the workplace or in the home--are deprived 
of the information they need to enforce the laws Congress has 
passed.
    To highlight the problem of H.R. 982's inequitable 
disclosure obligations, Representative Jerrold Nadler (D-NY) 
offered an amendment requiring a party that requests 
information from a bankruptcy asbestos trust to meet certain 
criteria. Under the amendment, such a party would have been 
required to agree to disclose information relevant to such 
action that pertains to the protection of public health or 
safety to any other person or to any federal or state agency 
with authority to enforce laws regulating an activity relating 
to such information upon request of such party or agency. The 
goal of this amendment was to ensure that the transparency that 
H.R. 982's proponents demand from the victims of the asbestos 
industry would also apply to the corporations that inflicted so 
much damage and so much suffering over the years. The amendment 
would have addressed the longstanding efforts by these 
corporations to conceal the facts from the public, from their 
victims, and from government agencies charged with enforcing 
our health and safety laws. Notwithstanding the equitable value 
of this amendment, it failed by a vote of 14 to 18.
    Similarly, Representative Sheila Jackson Lee (D-TX) offered 
two amendments en bloc that would have provided balance to the 
bill's disclosure requirements. One of these amendments would 
have required a trust to provide certain information to a 
defendant providing such defendant first disclosed the median 
settlement amount that it paid for claims settled or paid 
within 5 years of the date of the request, by disease category, 
for the state in which the plaintiff's action was filed. Her 
other amendment would have similarly allowed the trust to 
supply information in response to a request from a defendant 
providing the defendant first made available to the plaintiff 
and the trust certain information regarding the defendant's 
asbestos-containing products and work sites under the 
defendant's control, unless such information is a trade secret. 
These amendments, however, failed by a vote of 9 to 15.

     IV. H.R. 982 WILL DIVERT CRITICAL FUNDS AND FURTHER DECREASE 
   COMPENSATION TO ASBESTOS VICTIMS BY FORCING BANKRUPTCY TRUSTS TO 
                       PREPARE BURDENSOME REPORTS

    H.R. 982 would effectively shift the cost of discovery away 
from solvent asbestos defendants to the bankruptcy trusts, 
ultimately diminishing the available pool of money to 
compensate the victims of bankrupt asbestos defendants. By 
imposing reporting and information demand requirements on 
trusts, H.R. 982 could significantly increase the 
administrative costs of trusts in meeting these requirements 
and force them to divert their limited resources from paying 
the claims of asbestos victims to satisfying the information 
requests of those who caused injuries to millions of Americans. 
The GAO, for example, noted that one trust reported that it 
incurred $1 million in attorneys' fees to respond to a request 
to disclose every document on every claimant.\84\ Several legal 
representatives for future asbestos personal injury claimants 
fear that ``unnecessary and unreasonable reporting and 
discovery obligations would divert resources from the trusts' 
limited funds, which were specifically created to pay the 
claims of individuals stricken with asbestos-related diseases, 
for the benefit of third party defendants in non-bankruptcy, 
asbestos-tort litigation.''\85\
---------------------------------------------------------------------------
    \84\GAO Report at 27.
    \85\Legal Representatives Memorandum at 2.
---------------------------------------------------------------------------
    The bill includes only a modest compensation provision with 
respect to its information demand requirements, which allows a 
trust to seek payment for ``any reasonable cost'' that it 
incurred in responding to such demands. The ``reasonableness'' 
of reimbursement requests, of course, can be subject to dispute 
and litigation. Ultimately, the trusts will incur costs to 
implement the bill's requirements, leaving less money to 
compensate asbestos victims. This is particularly problematic 
in light of the fact that defendants can already obtain the 
information they want using existing discovery tools.
    H.R. 982's retroactive application only adds to this 
unnecessary burden. The vast bulk of asbestos trusts that would 
be affected by this legislation have long been in existence, 
one of which dates back to 1988. According to the GAO, these 
trusts have already paid 3.3 million claims valued at about 
$17.5 billion.\86\ Yet, after the passage of more than 20 years 
since the first trust was established, the proponents of H.R. 
982 now insist that these trusts issue reports and provide 
documentation.
---------------------------------------------------------------------------
    \86\GAO Report at 16.
---------------------------------------------------------------------------

                               CONCLUSION

    The only beneficiaries of H.R. 982 will be the very 
entities that knowingly produced a toxic substance that killed 
or seriously injured unsuspecting American consumers and 
workers. The legislation does nothing to protect victims or to 
improve the claims process and is based on the false assertion 
that there is endemic fraud in the asbestos trust system that 
must be addressed. In truth, this legislation is simply an end 
run by defendants around the discovery process that threatens 
to prevent or delay adequate compensation for asbestos victims.
    Further, H.R. 982's reporting and disclosure requirements 
are an assault against asbestos victims' privacy interests and 
are fundamentally inequitable because solvent defendant 
companies are not similarly required to disclose their 
confidential settlement agreements. Finally, these burdensome 
new reporting requirements will divert critical funds and 
further decrease compensation to asbestos victims.
    Accordingly, we urge our colleagues to stand on the side of 
justice for asbestos victims and to oppose H.R. 982.

                                   John Conyers, Jr.
                                   Jerrold Nadler.
                                   Robert C. ``Bobby'' Scott.
                                   Melvin L. Watt.
                                   Zoe Lofgren.
                                   Sheila Jackson Lee.
                                   Steve Cohen.
                                   Henry C. ``Hank'' Johnson, Jr.
                                   Pedro R. Pierluisi.
                                   Judy Chu.
                                   Ted Deutch.
                                   Luis V. Gutierrez.
                                   Karen Bass.
                                   Cedric Richmond.
                                   Suzan DelBene
                                   Joe Garcia.
                                   Hakeem Jeffries.

                                  
