December, 2005
The insurance industry has been an advocate for asbestos litigation reform legislation. Nevertheless, there has been a split within the insurance industry with respect to support for the FAIR ACT. Certain insurers oppose the Act's Trust Fund approach and/or provisions which rely upon three major funding sources: insurance company contributions, Defendant company contributions, and existing Asbestos Bankruptcy Trust Fund contributions. In the December, 2005 issue of Best's Review, a leading and respected journal of the insurance industry, Eleanor Barrett summarizes asbestos litigation reform from an insurer perspective.
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December 19, 2005
Following publication of projections of the financial impact of the FAIR ACT by the Congressional Budget Office (CBO), and a competing projection by the economic consulting firm, Bates White, LLC, Senate Chairman Judiciary Committee Chairman Senator Arlen Specter directed the CBO to review and analyze the Bates White projections, which concluded that the financial obligations under the FAIR ACT could far exceed those projected by the CBO. The CBO prepared an analysis titled ANALYSIS OF POTENTIAL CLAIMS UNDER S. 852, THE FAIRNESS IN ASBESTOS INJURY RESOLUTION ACT OF 2005, dated December 19, 2005, and presented it to Senator Specter in a letter dated December 19, 2005. In its analysis, the CBO concluded that the Bates White analysis contained no new or different information which would cause the CBO to change its August 25, 2005 projections. It noted that the CBO and Bates White analyses could not be directly compared because their respective estimates addressed different questions. The CBO estimated the value of valid claims that would be presented to the Asbestos Injury Claims Resolution Fund, while Bates White estimated the value of claims which could be presented to the Fund.
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December 8, 2005
The National Taxpayers Union (NTU), and National Taxpayers Union Foundation are Washington, DC based organizations who describe their mission as providing education for taxpayers, the media, and elected officials on a non-partisan basis on the merits of limited government and low taxes. On December 8, 2005 it issued its NTU Policy Paper 118 by Jeff Dirkson, titled Gordian Knot: How the Senate's Asbestos "Reform" Bill Entangles Taxpayers. The Paper provides an overview and analysis of the potential impact upon the federal budget of the FAIR ACT from the perspective of the NTU. NTU reviewed the CBO and Bates White estimates of the potential claims under the ACT, its potential funding, and the testimony of witnesses before the Senate Judiciary Committee on those issues, and concluded as follows:

1)	The Asbestos Claims Injury Resolution Fund proposed under the Fair Act may be insufficient to compensate claimants who may be expected to present claims under the Fund, resulting in unanticipated obligations, including borrowing and debt service.
2)	Based upon past experience with the Black Lung Fund established by Congress to administer claims for coal miners' disease, and the savings and loan industry crisis and bailout, NTU believes that the federal government may be called upon to bail out the Fund.
3)	NTU proposes an alternative legislative solution, a so-called medical criteria approach such as the bill introduced in the House of Representatives; H.R. 1957, which would establish statutory medical and claim criteria for asbestos claims to proceed within the tort system in the courts.

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November 23, 2005
The Coalition for Asbestos Reform (CAR) is a group composed of smaller and mid-sized companies who are Defendants in asbestos litigation, but who object to the Trust Fund approach proposed under the FAIR ACT. These objections are based on a variety of grounds, but focus on the fact that as the CAR members view the ACT, its funding mechanism unfairly target them to the benefit of larger Defendant companies. In a series of correspondence between CAR and Senator Arlen Specter, Chairman of the senate Judiciary Committee, and his staff, CAR presented its position that its member companies would be unable to comply with the FAIR ACT reporting requirements (which asks that Defendant companies report their historical expenditures for asbestos claims and litigation through December 31, 2002) because such information is often incomplete and in the hands of insurance companies from which it often cannot be retrieved or reconstructed. Under the FAIR ACT, such historical experience information forms the basis for the Defendant companies' funding obligation to the Asbestos Injury Claims Resolution Fund. In a letter to Senator Specter dated November 23, 2005, CAR Chairman Thomas R. O'Brien outlined his members' concerns.
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November 17, 2005
The Senate Judiciary Committee took the unusual step of holding a further hearing on the FAIR ACT even though the Judiciary Committee had already reported the bill out to the full Senate. In connection with that hearing the Congressional Budget Office (CBO) presented testimony through its Director, Douglas Holtz-Eakin, concerning its projections for the economic viability of the Act, together with a comparison of the CBO projections with those by the economic consulting firm of Bates White, LLC. In its Statement, entitled Estimates of the Potential Cost of Claims Under the Fairness in Asbestos Injury Resolution Act, the CBO focused on four points, as follows:

1)	CBO estimates projected that the FAIR ACT Asbestos Injury Claims Resolution Fund (Fund) would be presented with valid claims totaling between $120 billion and $150 billion over its 50 year life, in addition to financing costs, and administrative expenses. The Act would terminate payment of new claims in the Fund's resources proved inadequate.
2)	CBO's estimate is based upon the analyses of a number of experts relying upon epidemiological data, disease incidence projection, and the historical experience of Asbestos Bankruptcy Trusts.

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November 16, 2005
At the request of Senate Judiciary Committee Chairman Arlen Specter, the Congressional Budget Office (CBO) provided further information to update its report and analysis of the economic impact of the proposed FAIR ACT presented on August 25, 2005. In a letter to Senator Specter dated November 16, 2005, the CBO advised that the CBO over the 50 year life of the projected Asbestos Injury Claims Resolution Fund, it estimated that nearly 100,000 claims for malignant conditions would be filed and almost 1.5 million claims for nonmalignant pulmonary disease would be filed, 20 percent of which would be pending at the inception of the Fund. The CBO projected claims by disease over the Funds life, including 41,422 mesotheliomas, 19,764 lung cancers with asbestosis, 21,074 lung cancers with pleural disease, 17,512 other cancers, 33,307 claims of asbestosis, 149,214 claims of mixed asbestosis/pleural disease, 31,850 claims of pleural disease with pulmonary impairment, and 1,270,034 cases of pleural disease without pulmonary impairment. The CBO further advised that while there was significant uncertainty surrounding the number, timing, and types of claims submitted to the Fund, the Fund Administrator would not provide compensation unless amounts in the Fund were sufficient to make such payments.
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September, 2005

The economic consulting firm of Bates White, LLC has prepared an analysis of the economic viability of the Asbestos Injury Claims Resolution Fund (Fund) proposed under the FAIR ACT. In its September, 2005 Report, titled Analysis of S. 852 Fairness In Asbestos Injury Resolution (FAIR) Act, Bates White concluded that the proposed Fund was not financially viable. Based upon what the Report described as conservative assumptions, the FAIR ACT would create entitlements valued at $300 billion. The statutory funding level of the Fund is $140 billion, leaving a $160 billion shortfall. As a result of the shortfall, the Fund would sunset within three years of its inception with a debt of more than $45 billion. Bates White identified five additional factors it described as risk factors for the Fund, as follows:

1)	Bates White estimates that more than 3.5 million individuals who satisfy the occupational exposure criteria of the FAIR ACT will develop lung and other cancers between 2001 and 2055. Such claims could be more viable under the FAIR ACT criteria than in the tort system, resulting in increased claims.
2)	Bates White estimates the 2000 population who meet the occupational exposure criteria at 27 million to 34 million. Using the higher figure of 34 million would result in increased claims.
3)	Family members of eligible workers may be eligible for compensation, resulting in increased claims.
4)	The Fund may compensate dormant tort claimants who have previously settled with most, but not all asbestos Defendants. If such claims were presented, they would occur in the Fund's early years, increasing expenditures.
5)	Likely entitlements the FAIR ACT would create for individuals impaired by naturally occurring asbestos or from the mining area around Libby, Montana could further increase the shortfall of the Fund.

In aggregate, Bates White estimates the additional risk factors identified above would increase entitlements under the Fund to $695 billion.
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August 25, 2005
Pursuant to its charge to assess the impact of potential legislation upon the federal budget, the Congressional Budget Office (CBO) completed its analysis of the potential impact of the FAIR ACT upon the federal budget on August 25, 2005. Entitled CONGRESSIONAL BUDGET OFFICE COST ESTIMATE: S.852, Fairness in Asbestos Injury Resolution Act of 2005, the Report outlined the potential impact upon the federal budget of the revenue, spending, and borrowing provisions of the FAIR ACT. It concluded as follows:

1)	Over the 50 year life of the Asbestos Injury Claims Resolution Fund (Fund), the maximum actual revenues to be collected would be up to $140 billion, but could be significantly less.
2)	The value of valid claims likely to be submitted over the 50 year life of the Fund could be between $120 billion, and $150 billion, not including debt service costs and administrative costs.
3)	Over the initial 10 year period of the Fund, CBO estimates the Fund will collect about $63 billion from asbestos Defendants, insurance companies, and existing Asbestos Trusts.
4)	Over the initial 10 year period of the Fund, CBO estimates the Fund will make expenditures of $70 billion to eligible claimants, start-up costs, investment transactions, and administrative expenses.
5)	CBO expects sums paid into the Fund to be treated as federal revenues, and expenditures treated as new federal direct spending.
6)	Net receipts and expenditures of the Fund will increase projected federal budget deficits over the 2006-2015 period by about $6.5 billion (excluding debt service costs).
7)	CBO estimates the Fund Administrator will exercise its borrowing authority in the amount of $8 billion during the initial 10 year period of the Fund.
8)	CBO estimates that the FAIR ACT would cause an increase in direct federal spending greater than $5 billion in at least one 10 year period from 2016 to 2055.
9)	CBO estimates the Fund would face more than half of all anticipated claims expenses in its first 10 years, while it would receive roughly constant collections from insurers and Defendant firms over its first 30 years.
10)	A more precise forecast of the Fund’s performance over its 50 year life is not possible because there is little basis for predicting the claims volume, approved claims, or the pace of such claims approvals.

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June 30, 2005
On June 30, 2005, the Senate Judiciary Committee issued its Report to the full Senate on the Fairness in Asbestos Injury Resolution Act of 2005 (“FAIR ACT”). This Report, consisting of a Majority Report together with Additional, and Minority Views, from the Senators on the Judiciary Committee who voted the FAIR ACT out of Committee on May 26, 2005.
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June 30, 2005
While most attention with respect to Congressional action on asbestos litigation reform has focused on the FAIR ACT in the Senate, the Fairness in Asbestos Injury Resolution Act of 2005 (“FAIR ACT”) was introduced in the House of Representatives on March 17, 2005.
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June 30, 2005
A bill has been introduced in the United States House of Representatives to provide for the exclusive handling of asbestos-related claims, and silica-related claims, within the federal Court system, under a “medical criteria” approach.
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May 26, 2005
On May 26, 2005, the Senate Judiciary Committee passed the Fairness In Asbestos Injury Resolution Act of 2005 (“FAIR ACT”), S. F. 852, by a vote of 13 to 5. The FAIR ACT bill then moved to the Senate floor for consideration by the full Senate.
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April 18, 2005
Former Solicitor General Theodore B. Olson presented a letter to Senate Judiciary Committee Member Senator John Cornyn discussing potential constitutional infirmities with the FAIR ACT from the point of view of existing Asbestos Trusts established under Section 524(g) of the Bankruptcy Act. Under the FAIR ACT, the assets of such existing Asbestos Trusts are a significant funding source, estimated to exceed $7.6 billion. Certain Asbestos Trusts contend that contribution of their assets to the proposed Asbestos Injury Claims Resolution Fund constitutes an unconstitutional taking of private property without just compensation, tampers with final judicial judgments in violation of the separation of powers, and violates equal protection by treating the bankruptcy assets of the Assets Trusts differently than other prior asbestos-related judgments.
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