Daschle, Labor Nix Asbestos Fund Proposal

Fri Oct 17, 6:35 PM ET

By Susan Cornwell

WASHINGTON (Reuters) - Democrats and labor said on Friday that a proposed $114 billion fund for asbestos victims was too small and had no chance in the Senate, darkening prospects for an asbestos deal passing Congress this year.

"It won't be passed if this is the final offer," Senate Democratic Leader Tom Daschle said of the asbestos fund agreed to by insurers and asbestos companies and announced earlier this week by Senate Republican Leader Bill Frist.

The $114 billion fund proposal was "grossly inadequate" and "will clearly make it impossible to achieve a consensus resolution of any kind this year," said AFL-CIO President John Sweeney.

Republicans hoped the fund agreement would revive stalled legislation to end asbestos lawsuits and establish a fund to pay claims of people sickened by the mineral. Insurers and asbestos companies agreed to financing for the fund this week.

But getting the measure through the closely-divided Senate will be difficult without the support of Daschle or organized labor, an important Democratic constituency.

Daschle said he told Frist there had to be more negotiations, or there would be no hope for the measure.

Frist's office withheld comment, with aides saying they must study Daschle and Sweeney's remarks before responding.

Asbestos was widely used for fireproofing and insulation until the 1970s, when scientists concluded that inhaled fibers could be linked to cancer and other diseases. Hundreds of thousands of asbestos claims have driven scores of U.S. companies into bankruptcy and cost business $54 billion.

Daschle said an earlier bill by Utah Republican Sen. Orrin Hatch had come closer to estimates of what is needed to pay the claims of asbestos victims over the next quarter-century.

The Hatch bill's cost was estimated at $136 billion by the Congressional Budget Office (news - web sites). But Daschle noted that earlier estimates suggested it could provide up to $150 billion.

"This (Frist's proposal) falls far short of that. So if it's the final offer, then I think you've seen the final negotiation," Daschle told reporters.

Sweeney, in a written statement, said the overall size of the fund was too low, as were the proposed individual awards for asbestos victims. He also complained that the proposal did not allow victims to return to court if the fund runs dry.

"There is simply no possibility that those other critical issues could be resolved satisfactorily within the three weeks or so remaining in this congressional session," Sweeney said.

Organized labor would be willing to try again, but "I think we are done for this year," AFL-CIO general counsel Jonathan Hiatt said in a telephone interview.

Hiatt and other labor officials were involved in talks on the Hatch bill but were not in the meetings between insurers and asbestos companies that led to the latest proposal.

The RAND Institute for Civil Justice says asbestos could cost business up to $210 billion more in years ahead. But RAND says only 43 percent of the $54 billion paid so far went to victims. The rest went to costs such as lawyers' fees.

Insurers and asbestos companies argue that a compensation fund would slash these additional costs, and therefore does not need to be as large as estimates under the current system.

*** POSTED OCTOBER 20, 2003 ***