AFL-CIO opposed to Daschle’s new asbestos compromise

By Klaus Marre
After months of wrangling, the Senate appears closer to an agreement on how much money should be poured into a trust fund that would be used to settle asbestos compensation cases.

Senate Minority Leader Tom Daschle (D-S.D.) yesterday informed Senate Majority Leader Bill Frist (R-Tenn.) that he would accept a trust fund size of $140 billion, a figure Frist has pushed.

But organized labor, one of the Democrats’ core constituencies, will not support legislation that includes a trust fund of $140 billion.

AFL-CIO Director of Health and Safety Peg Seminario said organized labor would “strongly oppose” a $140 billion trust fund, pointing out that legislation on the issue that was passed out of the Judiciary Committee last year had earmarked $153 billion for the fund.

Though Daschle said in his letter to Frist that he hopes legislation can be passed this year, Seminario said it is “very unlikely it will happen” because too many issues remain unresolved. The AFL-CIO official said organized labor remains “interested in reaching agreement on a good bill.”

Frist spokeswoman Amy Call said at press time that the GOP leader was still reviewing Daschle’s proposal.

The creation of the trust fund has been a highly contentious issue and involves some of the most powerful interest groups in Washington — organized labor, manufacturers, insurers and trial lawyers.

The Asbestos Alliance, a coalition of businesses, endorsed Sen. Orrin Hatch’s (R-Utah) bill on asbestos reform. At the time, Michael Baroody of the National Association of Manufacturers said, “After more than 25 years of trying, we cannot let this historic opportunity pass without enactment of fair and meaningful asbestos reform.”

But momentum for that bill was thwarted by the AFL-CIO, which said that bill’s lack of funding was a “nonstarter.”

Sen. Patrick Leahy, ranking member of the Judiciary Committee, also lashed out at the Hatch measure, calling it “partisan legislation.”

In an April 8 speech, Frist stressed that Congress needs to act on asbestos reform, pointing out that the lack of a solution has caused victims to go uncompensated and led 70 companies to go bankrupt and to the loss of 60,000 jobs.

Daschle Agrees to $140 Billion Asbestos Relief Fund (Update1)
Sept. 15 (Bloomberg) -- U.S. Senate Minority Leader Tom Daschle accepted a Republican proposal limiting a trust fund for asbestos victims to $140 billion to break a deadlock that has stalled the legislation in Congress.

The Democrats previously insisted the fund be $145 billion. The plan, financed by companies such as Armstrong Holdings Inc. that make products with asbestos and their insurers, would end lawsuits that have bankrupted more than 70 U.S. companies.

Daschle, 56, of South Dakota and Senate Majority Leader Bill Frist, 52, a Tennessee Republican, have been exchanging proposals to reach a compromise for months. In a letter to Frist, Daschle said he is ``hopeful that resolution can be achieved'' before Congress completes its session Oct. 8.

Frist is also optimistic, said spokeswoman Amy Call. ``We are hopeful that this process can move forward and we can reach an agreement,'' she said. Frist hasn't seen the proposal, she said.

USG Corp. rose $1.58, or 8.7 percent, to $19.73 in composite New York Stock Exchange trading at 1:33 p.m. Owens Corning shares rose almost 13 cents, or 24 percent, to 62 cents at 1:32 p.m. New York time in over-the-counter trading.

A spokeswoman for insurers expressed doubts the compromise would work.

"The prospects are not good'' for passage by Congress this year because ``many very important structural elements of the fund are still open and nowhere near closure,'' said Julie Rochman, a spokeswoman for the American Insurance Association.

Pending Lawsuits

Under Daschle's new proposal, some pending lawsuits wouldn't be covered by the fund and could still be pursued in court. For example, he would exempt any cases involving mesothelioma, a fatal illness caused by the cancer-causing fiber, that already have a trial date; all cases in which trial has begun; cases with a trial date within 60 days of the fund's creation, and proposed settlements awaiting court approval.

Last month, Frist said manufacturers and insurers would never agree to the Democrats' original demand of exempting all current cases from the fund.

Bill Samuel, legislative director of the AFL-CIO, estimated that more than 300,000 claims are pending.

The Daschle proposal would block any future claims.

To contact the reporter on this story:
Jeff Bliss at jbliss@bloomberg.net