A US Senate bill to create an industry-financed $140 billion asbestos compensation fund faced new obstacles Wednesday after some Democrats said the fund would run out of money and need a federal bailout to pay injury claims.

The fund is intended to end years of litigation over asbestos injuries that has pushed into bankruptcy some 70 US companies, including WR Grace and Co and USG Corp Companies and their insurers would pay for the fund in exchange for an end to asbestos lawsuits. Asbestos fibers were widely used for their insulating and fire-retardant capabilities until scientists found they were linked to lung-scarring diseases and cancer.

The contentious bill sponsored by Pennsylvania Republican Sen. Arlen Specter and Vermont Democratic Sen. Patrick Leahy won a key victory Tuesday when the Senate voted to debate it. But Sen. Kent Conrad, the ranking Democrat on the Senate Budget Committee, said Wednesday that an analysis by his staff showed the compensation fund would have at least a $150 billion shortfall in funding. Among other things, cancer claims against the fund have been underestimated, he said.

Although the trust would be privately funded, Conrad said that he did not believe it would simply shut down if it ran out of money, as the legislation dictates. "I think the most likely outcome is that the federal government would be turned to for even more payments," Conrad, of North Dakota, told reporters.

Another Democrat, Sen. Richard Durbin of Illinois, demanded a list of companies and their contributions to the fund. Shares of companies facing asbestos liabilities closed mixed Wednesday. Chemical maker W.R. Grace closed down 5.65 percent to $11.02 a share while engineering and energy services company McDermott International Inc. was up 2.91 percent to $48.13, both on the New York Stock Exchange.

The White House issued a statement on Wednesday saying it generally supported the Senate bill but said it had serious concerns about some parts. It did not specify which portions it was worried about but said it looked forward to working with Congress to strengthen the legislation.

Critics said support for the bill was thin among Republicans and Democrats alike. Debate on the bill is expected to last into next week. Conrad said he expected several lawmakers to raise a parliamentary objection against the bill on the grounds that it posed a threat to taxpayers and violated budget rules.

Last week, Budget Committee Chairman Judd Gregg, a New Hampshire Republican, said he might raise a budget point of order, a procedural hurdle requiring 60 votes to overcome. Specter said he had addressed most of Gregg s concerns and that there was no danger to taxpayers from the legislation. "There is no impact on the budget," he told reporters.

Sen. John Cornyn, a Texas Republican, said he would offer amendments that would try to tighten the medical criteria for filing claims and might try to remove the special consideration the bill gives to people living in Libby, Montana. Residents of Libby, where W.R. Grace operated a vermiculite mine that was contaminated with asbestos, would get $400,000 each if they meet special medical criteria. The bill has "a very thin base of support," Cornyn told reporters outside the Senate chamber.

In the House of Representatives, a different approach is under consideration. A House bill would allow asbestos lawsuits to go forward only if claimants meet certain medical criteria.
(Planet Ark, 09/02/06)