Buying Trust: Asbestos Manufacturers Push for Litigation Reform

By Courtney Mabeus

http://www.capitaleye.org/inside.asp?ID=167

After several failed attempts, Congress is once again considering asbestos litigation reform that would put an end to years of expensive asbestos lawsuits. But deep divisions among powerful industry groups that doomed the legislation in the past are threatening the bill again this time around.

Asbestos is a cancer-causing fiber that was once used widely in brake linings, insulation, electrical casings and a number of other building materials. Some 730,000 asbestos lawsuits are now pending in U.S. courts, and as many as 75,000 new cases are filed each year. More than 8,000 companies have defended themselves from asbestos claims, resulting in more than 73 asbestos-related bankruptcies in the past 20 years, according to a RAND Corporation study released this month.

Companies that manufactured or used asbestos--and their insurers--for years have been seeking relief from asbestos lawsuits. Congress tried to address the issue in 2003 and again in 2004, but lawmakers failed to pass a bill. Republicans, fresh from their victory in passing class-action reform, are hoping for success on asbestos this year.

A proposal by Sens. Arlen Specter (R-Pa.) and Patrick Leahy (D-Vt.) would halt asbestos lawsuits and require businesses and insurers to pour $140 billion into a trust fund for victims of asbestos-related illnesses. Victims who meet certain medical criteria would be paid set awards based on the severity of their condition. But disagreements have surfaced among insurers, asbestos manufacturers and trial lawyers over the amount of money the trust fund would require and the medical criteria that would be used to determine eligibility.

The contentiousness of the debate was reflected Wednesday in the Senate Judiciary Committee, which Specter chairs. Committee members, who offered 80 amendments to the bill at a session last month, tacked on an additional 40 amendments this week. The committee is expected to vote on the bill before it breaks for Memorial Day.

If it reaches the Senate floor, the bill is certain to be the subject of an expensive lobbying battle. The Asbestos Study Group, whose membership includes several major companies that did not manufacture asbestos but used it in their products, is a longtime supporter of the compensation fund included in the asbestos bill. The group has spent $17.5 million lobbying the federal government since 2003. Its membership includes Dow Chemical, Ford, General Electric, General Motors, Honeywell and Pfizer and Viacom.

General Electric, General Motors and Pfizer are among the top donors to federal campaigns. General Electric has spent $35.4 million lobbying the federal government since 2003. Its employees and PAC contributed $2.1 million, 55 percent to Republicans, during the 2004 election cycle.

General Motors has spent $16.4 million on lobbying since 2003. Its employees and PAC contributed $996,000 during the last election cycle, 64 percent to Republicans.

Pfizer, which has spent $9.4 million on federal lobbying since 2003, contributed $1.8 million in individual and PAC contributions during the last cycle, 67 percent to Republicans.

The Asbestos Alliance, a coalition of asbestos manufacturers that is led by the National Association of Manufacturers, has been a consistent supporter of asbestos litigation reform. The group does not talk publicly about its lobbying, said Mike Heimowitz of the Alliance. But Roll Call reports that the group has been working with Senate Judiciary Committee staff to urge the support of Republican members.

NAM is considered one of the most influential business groups in Washington. It spent $9.4 million lobbying the federal government between January 2003 and mid-year 2004, the date of its last filing.

Business interests also are among the most vocal opponents of the bill. The Coalition for Asbestos Reform, which represents 35 companies and trade groups that are unhappy with the asbestos bill, argues that the proposal's funding scheme is uncertain, unfair and unaffordable for many mid-size and small businesses, according to spokesperson Tom O'Brien.

The Coalition has spent a modest $140,000 lobbying the federal government since it was formed last year. Its members, however, include corporate powerhouses Exxon Mobil and DuPont, as well as insurance giants AIG, Chubb, Nationwide and Liberty Mutual.

Exxon Mobil and AIG are among the top donors in federal politics. Exxon Mobil's employees and PAC contributed $926,000 during the last election cycle, 89 percent to Republicans. The company has spent more than $15 million on lobbying since 2003.

AIG's employees and PAC contributed $1.1 million, 55 percent to Democrats, during the 2004 cycle. The firm has spent $15 million on lobbying since 2003.

FreedomWorks, a conservative grassroots organization that resulted from the merger of Citizens for a Sound Economy and Empower America, opposes the bill for ignoring necessary changes in the legal system. The group launched a seven-state radio campaign in April in which former House Majority Leader Dick Armey, the organization's chairman, calls the bill "outrageous."

"Rather than start a new administrative program, we'd rather fix the legal system," said spokesman Chris Kinnan. "This [bill] isn't tort reform. This is taking all of these [asbestos] cases out of the legal system."

FreedomWorks does not have a budget specifically for its asbestos fight but has about $2 million to spend in support of tort reform, Kinnan said.

Opponents of the bill also include labor unions and trial lawyers. On the same day the Judiciary Committee met to consider Specter's bill, the Washington Post ran a two-page advertisement from the Asbestos Workers Union arguing that the bill would not adequately compensate asbestos victims. AWU's employees and political action committee contributed $46,000 to federal candidates and parties during the 2004 election cycle, 89 percent to Democrats. The AWU PAC contributed $500 to Specter, who took over the Judiciary chairmanship in January.

AWU is a member of the AFL-CIO, which also claims that the bill is inadequate. The umbrella group of more than 66 unions has spent $4.4 million lobbying the federal government since 2003.

It is among the biggest donors to federal campaigns, having contributed $1.5 million in individual and PAC donations during the 2004 election cycle, 93 percent to Democrats.

One group with a huge financial stake in the outcome of the asbestos debate is the Association of Trial Lawyers of America. ATLA opposes the bill, calling it unfair to victims and a reward to businesses that knowingly used asbestos. ATLA also opposes the bill because it would cap lawyer's fees at between 5 and 10 percent.

ATLA spokesman Carlton Carl said the proposed trust fund is "clearly inadequately funded.

"There's no transparency as to who would contribute to the fund, how much they would contribute to the fund," Carl said. "Who is for this? Only the biggest corporations in America."

ATLA hopes to use its considerable political clout to defeat the bill. The group's PAC and employees donated $2.6 million to federal candidates and parties in the 2004 election cycle, 92 percent to Democrats. ATLA has spent $10 million on federal lobbying since 2003.

The organization has tried to take advantage of the split in the corporate community by working with businesses and groups that also oppose the bill. Carl said ATLA's allies include groups that it does not normally work with, though he would not disclose their names.

"Certainly it's not been a close relationship," Carl said.

*** POSTED MAY 13, 2005 ***