February 6, 2006

REID: ASBESTOS LEGISLATION DOES NOT PROVIDE ENOUGH FOR VICTIMS

Washington, DC—Senate Democratic Leader Harry Reid delivered the following floor remarks today opposing the asbestos compensation legislation currently under debate in the Senate. The legislation, while the result of hard work by both Republicans and Democrats, does not do enough to adequately provide for asbestos victims. The amount of money set aside to pay off claims is insufficient, the means of its funding are ill defined, and which companies will pay to fund the program is unclear.

Statement of Senate Democratic Leader Harry Reid opposing the Motion to Proceed to the asbestos bill (S. 852), as prepared for delivery.

Mr. President, I rise to oppose the motion to proceed to S. 852, the so-called “Fairness in Asbestos Injury Resolution Act”, or “FAIR Act.”

For reasons I will explain today, I think this bill is anything but fair. It is unfair to victims of asbestos exposure. It is unfair to small businesses asked to bear more than their fair share of asbestos liability, while a few large companies get a windfall. And it is unfair to American taxpayers who will be saddled with a huge government bailout of a trust fund that is virtually guaranteed to fail.

I do not lightly oppose a motion to proceed. I recognize the general prerogative of the Majority Leader to set the Senate’s agenda. But in this case, opposition to the motion to proceed is absolutely justified. This bill is not ready for floor consideration by a long stretch. There are just too many unanswered questions raised by the current bill – too many questions about the solvency and adequacy of the trust fund and too many questions about the impact of this bill on the rights of countless Americans with asbestos-related illness.

These questions reach a level of difficulty and complexity that should disqualify the bill from floor consideration. The Senate could debate this bill for the next two months and we still wouldn’t be able to fix the basic structural flaws in the trust fund. The only reasonable approach is to recommit S. 852 back to the Judiciary Committee and ask our colleagues there to find a better approach.

I know how much time and energy Chairman Specter and Ranking Member Leahy have spent on this issue already, but the bill they have reported to the full Senate is unacceptable to too many stakeholders and too many Senators.

The bill should also be referred to the Senate Budget Committee before the full Senate debates it. Chairman Gregg and Ranking Member Conrad have written to me and to Senator Frist asking for time to review the massive fiscal impact of this program. That is why we have a Budget Committee. If the numbers don’t add up, that Committee needs to tell us so.

I have always favored improvements in the way asbestos victims are compensated. Some of those reforms have taken place at the state level since we considered this bill in the last Congress. Our best hope for achieving whatever federal reforms may be appropriate rests with further deliberation at the committee level, not in this venue. I urge my colleagues to join me in voting no on the motion to proceed.

There are so many problems with this bill, but I want to start by focusing on the people this is all supposed to be about – the victims of asbestos disease.

Asbestos is one of the most lethal substances ever to be used in the workplace and unleashed in communities across the country. More than 27.5 million workers were exposed to asbestos while on the job. Countless others were exposed in their neighborhoods, in school yards and at home. Hundreds of thousands of men and women have died or become severely ill due to asbestos exposure. The diseases caused by asbestos are painful, debilitating and often incurable.

Every state in America has been touched by this terrible scourge. I have heard from too many Nevadans with loved ones who lost battles with asbestos-induced illness. Margy Urnberg from Carson City lost her father, Ronald, to an asbestos-related disease. Will Glienke’s father, a Navy veteran with over 25 years of government service, died of mesothelioma. Kellie Appleton-Hultz, from Las Vegas, lost her husband to asbestos poisoning and is still coping with the medical and hospital bills created by that illness. Sadly, we can only expect more stories such as these because of the long latency periods associated with asbestos-related illness.

Tomorrow I will introduce a Senate resolution designating April 1, 2006, as Asbestos Disease Awareness Day. The purpose of this resolution is to raise awareness that asbestos exposure is still prevalent, that asbestos-related diseases continue to kill many Americans each year, and that more needs to be done to protect Americans from this lethal substance.

A truly fair asbestos reform bill should meet the unmet needs of asbestos victims. But this bill does not. Every major asbestos victims group opposes this bill. In an open letter to the Senate dated February 1, 2006, the Committee to Protect Mesothelioma Victims, the Asbestos Disease Awareness Organization, the Asbestos Victims Organization, the White Lung Association and the White Lung Asbestos Information Center write that they oppose this legislation. Specifically, they wrote:

"We do not want this proposed government policy forced upon us. We believe the program will fail to treat victims fairly, while benefiting the very companies that caused the problem."

An asbestos bill that faces such widespread opposition from the victims of asbestos disease is obviously the wrong approach to this national problem.

The problem seems to be that the so-called FAIR Act places the needs of a few large companies with asbestos liability above the needs of those suffering from asbestos-related illness. This is the fundamental flaw of the legislation itself.

It is no wonder that asbestos victims oppose a bill that deprives them of their legal rights in the traditional civil justice system and offers them instead a trust fund that is inadequate and will likely become insolvent. Numerous experts have concluded that the cost of the program will exceed the amount allotted for the trust fund. $140 billion may sound like a lot of money, but it is still inadequate to compensate the number of victims who will likely file claims.

The Congressional Budge Office has estimated that the program could generate as much as $150 billion in claims, leaving the trust fund $10 billion short. But even that figure understates the problem, because the bill does not adequately take into account the trust fund’s borrowing costs, further depleting the compensation available to victims. CBO estimates that approximately $8 billion would be borrowed during the first decade, an amount that will saddle the fund with huge debt service costs over the life of the program.

Other experts believe the bill is on even less solid fiscal footing. For instance, the Bates White economic consulting firm has concluded that the program will cost at least $300 billion and possibly more than $600 billion. And the General Accounting Office recently issued a report that at least four other federal trust fund compensation systems that were much smaller in scope than the proposed asbestos trust fund have encountered serious funding shortfalls.

Even if $140 billion were an adequate amount, there is no guarantee that the fund will raise that amount of revenue. The actual amount of revenue available to victims depends on the number of companies that actually contribute. Yet there is still no definitive information available to Senators on the number or identity of the participating companies.

Supporters of the bill have asserted that there will be between 8,000 and 10,000 such companies, but CBO could identify only 1,700 participants. As a result, less than $140 billion may be made available to the fund. If revenues from the private sector are insufficient to fully fund the program, the only options for maintaining solvency of the fund will be to reduce compensation to injured victims or supplement the privately raised funds with tax dollars.

There is a good argument that the federal government should contribute to the fund, since a large number of U.S. servicemen were exposed to asbestos in navy shipyards and elsewhere in the military. I, for one, would support efforts to compensate military veterans directly in this manner.

But this bill does not tap federal tax dollars in an honest, straightforward way. Instead, it establishes a private trust fund that will almost certainly become insolvent. As a practical matter, the federal government would be left holding the bag when things go wrong. A federal bailout of a program of this magnitude would have enormous adverse consequences for the federal budget.

These structural problems with the trust fund relate to one of the bill’s most fundamental flaws: its lack of transparency. From the outset, members of the Judiciary Committee and others have asked for full disclosure of the names of companies that will be required to pay into the fund. According to press reports, the major lobbying firms that helped draft the bill possess documents listing the contributing companies and how much each would be required to pay. But this information remains unavailable to Senators and to the general public.

The Senate is entitled to such relevant information before floor debate begins. There is no reason to waste the time of the full Senate debating a bill with so many loose ends, so many unanswered questions. These budgetary concerns are reason enough to defeat the motion to proceed.

Even if the trust fund were adequately funded, the system for compensating victims is seriously flawed in other ways. I will list only a few at this time.

First, the start-up provisions provide that as soon as the bill is enacted, the ability of asbestos victims to obtain compensation in the court system is cut off. It also requires that bankruptcy trusts established to pay victims’ claims be shut down, even before the trust fund is operational. The bill attempts to provide a mechanism through which terminally ill claimants will obtain payments in this interim period, but all other claimants, no matter how serious their illness or disability, could be left without a remedy for an indefinite period of time.

Second, the bill is unfair to victims with pending or settled court cases. Rather than permit asbestos claims to continue in court while the fund is being established, the bill imposes an immediate two-year stay on nearly all asbestos cases. Exigent cases are no exception to a stay – they will be automatically stayed for nine months from the date of enactment. The bill’s language is so broad that a trial about to begin would be stopped and an appellate ruling about to be handed down would be barred.

Third, the sunset process under the legislation leaves too much uncertainty for victims. If the fund fails to operate as promised, instead of allowing victims to return to court, S. 852 allows the Administrator of the fund to recommend any number of measures to salvage the program. This means that victims may receive even less compensation or become subject to more stringent medical criteria to have their claim successfully approved.

Fourth, the bill requires some victims to prove that asbestos was a “substantial contributing factor” to their disease, a higher burden than victims must meet in court where it is sufficient to show that asbestos exposure was a contributing factor, no matter how substantial a factor. The whole concept of a no-fault trust fund is that it is non-adversarial, but this higher burden of proof creates the potential for endless litigation and a high number of rejected claims.

Finally, I have serious concerns with the manner in which the FAIR Act treats lung-cancer and silica-diseases victims. Under this bill an entire category of lung-cancer victims who were exposed to asbestos for 15 years or more cannot bring a claim. This bill would deny these victims their right to pursue damages for that exposure in court, and deny them benefits under the fund as well. This is an unacceptable affront to the rights of an entire class of asbestos victims.

As for those suffering from silica disease, the FAIR Act limits recovery by individuals who have both asbestos disease and silica-related disease. The only recourse for victims of both diseases will be to seek compensation for their asbestos disease from the asbestos fund. But victims of silica-related disease, including those who also have asbestos disease, should have the right to seek redress in the courts for their silica injury.

This is a particular problem in my home state, where many miners have contracted both silicosis and asbestosis. In this and in so many other ways, the bill does not meet the needs of my constituents or of the American people in general.

I predict that the bill’s sponsors will attempt to answer my concerns and those of other Senators by telling us that there will be a “managers’ amendment” to cure all the problems in the bill. But there are so many problems in the bill that this managers’ amendment will effectively be a substitute bill.

I am reminded of the old English expression: don’t buy a pig in a poke. The sponsors of the bill should make the text of that managers’ amendment available before we vote on the motion to proceed. The Senate should not vote to proceed to one asbestos bill and then find itself debating a different asbestos bill.

Similarly, the Chairman may say: let’s just move the legislative process along. We’ll “fix” the problems in conference with the House. But some of us have been around here too long and seen too many times what happens when flawed bills end up in a conference committee. That gambit should be rejected – if the Senate decides to debate this bill, we should confront these tough questions now and get them right before the bill leaves the Senate.

Unfortunately, I am convinced we are not ready to face those tough questions at this time. The committee-reported bill is too deeply flawed, and we do not have sufficient information to address these flaws through amendment.

We owe asbestos victims and their families a better bill and a better process. The only proper course at this time is to defeat the motion to proceed.

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