Washington, DC, February 15, 2006--The Senate on Tuesday voted to block legislation to create a $140 billion privately-financed fund to compensate asbestos victims, but sponsors vowed they would not let the bill die.
The Senate vote of 58-41 sustained an objection to the legislation from John Ensign, a Nevada Republican, on grounds that the fund could violate budget rules by forcing U.S. taxpayers to pick up some asbestos costs.
The legislation sought to remove asbestos injury claims from years of court litigation and pay them from a $140 billion fund financed by asbestos companies and their insurers. That approach is favored by W.R. Grace and Co., USG Corp., and some of the 70 other companies pushed into bankruptcy by tens of thousands of asbestos injury claims.
Asbestos, a fire-retardant fibrous mineral, was widely used in building insulation until the 1970s. Inhaling fibers of asbestos has been linked to cancer and other diseases.
But the legislation, which Illinois Sen. Dick Durbin derided as "an Armageddon of special interests," has deeply divided business and labor as well as senators in both parties.
A small group of Republicans, worried that taxpayers would ultimately have to pay some of the fund's costs, joined forces to sink the measure on Tuesday with most of the Senate's Democrats, who as close allies of trial lawyers have long opposed the legislation.
The sponsors, Pennsylvania Republican Arlen Specter and Vermont Democrat Patrick Leahy, needed 60 senators to win the procedural vote and had said their bill would die otherwise.
But immediately after the vote, Senate Majority Leader Bill Frist wavered on his earlier vow not to bring the bill up again this year if it failed on Tuesday. Specter and Leahy also seemed to change their minds.
Frist, a Tennessee Republican, said he had changed his vote to "no" at the last minute to give himself the option of moving to bring the legislation up at some other time. Before he changed his vote, the tally was 59-40.
Specter said the one absentee, Hawaii Democrat Sen. Daniel Inouye, would have voted with Specter and Leahy to support the asbestos bill, but had to go home because his wife was sick.
"We have just begun to fight," Specter declared in a statement. Leahy told reporters: "It's not dead."
Durbin, however, said the vote showed the Senate needed to work together to create better asbestos legislation, such as a bill to set stricter medical standards for filing claims.
"I hope now we can have an effort from members on both sides of the aisle, on a bipartisan basis," Durbin said on the Senate floor.
Texas Republican Sen. John Cornyn has said he wants to introduce a medical criteria bill, and similar legislation has already been introduced in the House.
The American Insurance Association, which had opposed the bill, said in a statement that it still hoped Congress could enact "meaningful reform."
USG shares rose as high as $91 on Tuesday before dipping into negative territory after Frist's remarks. They closed just 2 cents higher at $87.63 on the New York Stock Exchange, and retreated 63 cents to $87 in after-hours trading on Inet.
Grace fell 57 cents, or 5.42 percent, to close at $9.94, also on the NYSE. In after-hours trading, Grace shed another 19 cents to $9.75 following the vote.
Spokesmen for Grace and Foster Wheeler Ltd., another company closely following the asbestos legislation, could not immediately be reached for comment.
