69–006 

115TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 1st Session 115–18 

FURTHERING ASBESTOS CLAIM TRANSPARENCY (FACT) 

ACT OF 2017 

FEBRUARY 24, 2017.—Committed to the Committee of the Whole House on the State 

of the Union and ordered to be printed 

Mr. GOODLATTE, from the Committee on the Judiciary, 

submitted the following 

R E P O R T 

together with 

DISSENTING VIEWS 

[To accompany H.R. 906] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on the Judiciary, to whom was referred the bill 

(H.R. 906) to amend title 11 of the United States Code to require 

the public disclosure by trusts established under section 524(g) of 

such title, of quarterly reports that contain detailed information regarding the receipt and disposition of claims for injuries based on 

exposure to asbestos, and for other purposes, having considered the 

same, reports favorably thereon without amendment and recommends that the bill do pass. 

CONTENTS 

Page 

Purpose and Summary ............................................................................................ 2 

Background and Need for the Legislation ............................................................. 2 

Hearings ................................................................................................................... 18 

Committee Consideration ........................................................................................ 18 

Committee Votes ...................................................................................................... 18 

Committee Oversight Findings ............................................................................... 25 

New Budget Authority and Tax Expenditures ...................................................... 25 

Congressional Budget Office Cost Estimate .......................................................... 25 

Duplication of Federal Programs ............................................................................ 27 

Disclosure of Directed Rule Makings ..................................................................... 27 

Performance Goals and Objectives ......................................................................... 27 

Advisory on Earmarks ............................................................................................. 27 


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1Furthering Asbestos Claim Transparency (FACT) Act of 2017, H.R. 906, 115th Cong. § 2 

(2017). 2 Id. 

3S. REP. NO. 110–189, at 1 (citing Asbestos, NATIONAL INSTITUTE FOR OCCUPATIONAL SAFETY

AND HEALTH, www.cdc.gov/niosh/topics/asbestos (last visited May 23, 2013)); see also Wylie, A 

Report on the Asbestos Litigation Industry, MANHATTAN INSTITUTE’S CENTER FOR LEGAL POLICY, 2008, at 4, available at http://www.triallawyersinc.com/pdfs/TLI-ASBESTOS.pdf (last visited 

May 31, 2013). 4Wylie, supra note 3, at 4. 5 Asbestos, HERITAGE RESEARCH CENTER, http://www.heritageresearch.com/ourlibrary/histories/ 

asbestos.html (last visited May 23, 2013). 6Wylie, supra note 3, at 4. 7 Asbestos Fibers and Other Elongate Mineral Particles: State of the Science and Roadmap for 

Research, NATIONAL INSTITUTE FOR OCCUPATIONAL SAFETY AND HEALTH, Apr. 2011, at 1, available at http://www.cdc.gov/niosh/docs/2011-159/pdfs/2011-159.pdf (last visited May 23, 2013). 8 Id. 

Section-by-Section Analysis .................................................................................... 27 

Changes in Existing Law Made by the Bill, as Reported ..................................... 28 

Dissenting Views ..................................................................................................... 41 

Purpose and Summary 

H.R. 906, the ‘‘Furthering Asbestos Claim Transparency (FACT) 

Act of 2017’’ or the ‘‘FACT Act’’ adds a paragraph to subsection (g) 

of section 524 of title 11 of the United States Code to require a 

trust established pursuant to that subsection to file, each quarter, 

a public report with the bankruptcy court listing the name and exposure history of those who have filed a claim with such trust and 

any payments made to claimants and the basis for such payments.1

It further requires each such trust to provide, upon written request, information related to payment from, and demands for payment from, such trust to any party in an action involving liability 

for asbestos exposure.2

Background and Need for Legislation 

A. THE HISTORY OF ASBESTOS AND ASBESTOS-RELATED

HEALTH CONDITIONS

Asbestos is a commercial name given to six minerals—amosite, 

crocidolite, tremolite, actinolite, anthophyllite, and chrysotile—that 

were widely used in the United States in industrial products 

throughout much of the 20th Century.3 Humans have used asbestos for centuries.4 The word ‘‘asbestos’’ comes from the Greek word 

for ‘‘indestructible,’’ and the ancient world used asbestos for everything from fabrics to lamp wicks.5 In the 1860’s, it was first commercially used in the United States as insulation. Because asbestos 

is strong, durable, and has excellent fire-retardant capability, it 

was widely used in industrial and other work and residential settings through the early 1970’s. It was regarded as a miracle fiber, 

versatile enough to weave into textiles, integrate into insulation, 

line the brakes of automobiles, and construct flame-retardant hulls 

for naval and merchant ships. Asbestos consumption in the United 

States peaked in 1973 and then dropped dramatically over the next 

three decades.6

Despite the usefulness of asbestos in industrial and residential 

products, it was uncovered that asbestos fibers cause serious diseases when inhaled.7 Inhalation of asbestos fibers has been linked 

to a number of diseases, including mesothelioma, lung cancer, asbestosis, and pleural abnormalities.8 Mesothelioma is a deadly canVerDate Sep 11 2014 01:40 Feb 25, 2017 Jkt 069006 PO 00000 Frm 00002 Fmt 6659 Sfmt 6601 E:\HR\OC\HR018.XXX HR018

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9 Asbestos Health Effects, AGENCY FOR TOXIC SUBSTANCES & DISEASE REGISTRY, http:// 

www.atsdr.cdc.gov/asbestos/asbestos/health_effects/(last visited May 28, 2013). 10 Id. 11See generally H.R. 4369, the ‘‘Furthering Asbestos Claim Transparency (FACT) Act of 2012’’: 

Hearing Before the Subcomm. on Courts, Commercial and Administrative Law of the H. Comm. 

on the Judiciary, 112th Cong. (2011) [hereinafter Courts Subcomm. Hearing] (testimony of 

Charles S. Siegel). 12 AGENCY FOR TOXIC SUBSTANCES & DISEASE REGISTRY, supra note 9. 13 Id. 14 Id. 15 Id. 16Stephen J. Carroll et al., Asbestos Litigation, RAND INSTITUTE FOR CIVIL JUSTICE, 2005, at 

xvii. 17Lloyd Dixon et al., Asbestos Bankruptcy Trusts: An Overview of Trust Structure and Activity 

with Detailed Reports on the Largest Trusts, RAND INSTITUTE FOR CIVIL JUSTICE, 2010, at xi. 18 Carroll et al., supra note 16, at xx. 19 Id. 20 Borel v. Fibreboard Paper Prods. Corp., 493 F.2d 1076 (5th Cir. 1973). 21 Id. at 1109. 

cer of the lining of the chest or abdomen.9 Exposure to asbestos is 

the cause for most cases of mesothelioma.10 Lung cancer is the 

other frequently claimed malignant disease that can be caused by 

asbestos, although some other forms of cancer may be related to asbestos exposure.11 Asbestosis, a chronic lung disease resulting from 

inhalation of asbestos fibers, can be debilitating and even fatal.12

Exposure to asbestos has been claimed to cause pleural abnormalities.13 Pleural plaques, pleural thickening, and pleural effusion are 

abnormalities of the pleura, the membrane that lines the inside of 

the chest wall and covers the outside of the lung.14 These abnormalities can affect breathing and may be an early warning sign for 

mesothelioma.15

B. ASBESTOS LITIGATION

Asbestos litigation is the longest-running mass tort litigation in 

the United States.16 Personal injury litigation related to asbestos 

exposure ‘‘has continued for over 40 years in the United States 

with hundreds of thousands of claims filed and billions of dollars 

in compensation paid.’’ 17 Throughout this period, asbestos litigation has evolved presenting different challenges to the parties and 

courts involved.18 The focus of the litigation shifted from Federal 

to state court, and now, increasingly, to bankruptcy courts and the 

resulting bankruptcy asbestos trusts.19

Asbestos litigation arose as a result of individuals’ long-term and 

widespread exposure to asbestos, and as a result of many asbestos 

product manufacturers’ failure to protect workers against exposure 

and failure to warn their workers to take adequate precautions 

against exposure. The U.S. Court of Appeals for the Fifth Circuit 

upheld the first successful asbestos liability suit in 1973.20 A worker sued the manufacturers of asbestos-containing products on a 

theory of product liability (a strict liability tort); the defendants’ affirmative defense that their products contained ample warning 

about the dangers of using the product proved insufficient.21 Prior 

to the Fifth Circuit’s decision, employees exposed to asbestos had 

recourse only to workers’ compensation claims to recover for their 

asbestos-related injuries. 

After the Fifth Circuit’s decision, the volume of asbestos litigation exploded—so much so that, in 1990, the Chief Justice of the 

United States Supreme Court appointed the Ad Hoc Committee on 

Asbestos Litigation to address what the Court later referred to as 


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22 Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 597 (1997). 23 Carroll et al., supra note 16, at xxiv. 24 Id. 25The Fairness in Asbestos Compensation Act of 1999: Hearing on H.R. 1283 Before the H. 

Comm. on the Judiciary, 106th Cong. 67 (1999) (statement of Christopher Edley, Jr.) [hereinafter Edley Testimony]. 26 Carroll et al., supra note 16, at xxiv. 27 Editorial, The Asbestos Blob, Cont., WALL ST. J., Apr. 6, 2004, at A16. 28 Carroll et al., supra note 16, at xxiv. 29David C. Landin et al., Lessons Learned from the Front Lines: A Trial Court Checklist for 

Promoting Order and Sound Policy in Asbestos Litigation, 16 J.L. & POL’Y 589, 595–96 (2008) 

(internal citations omitted). 30 Edley Testimony, supra note 25. 31Landin, supra note 29, at 597. 32 Carroll et al., supra note 16, at xxv (noting that the 8,400 figure likely was conservative 

given the reporting methodology). 33Dixon et al., supra note 17, at 2. 34See Amchem Products v. Windsor, 521 U.S. 591 (1997); see Ortiz v. Fibreboard Corp., 527 

U.S. 815 (1999); see e.g., Asbestos Compensation Fairness Act, H.R. 1957, 109th Cong. (2005); 

Fairness in Asbestos Injury Resolution (FAIR) Act, S. 852, 109th Cong. (2005). 

the ‘‘asbestos-litigation crisis.’’ 22 The volume of claims filed against 

asbestos defendants has not abated over time.23 On the contrary, 

annual claims filed against defendants have risen steadily, with 

sharp increases in recent years.24 During the 1990’s, the number 

of asbestos cases pending nationwide doubled from 100,000 to more 

than 200,000.25 By 2002, approximately 730,000 claims had been 

filed,26 with more than 100,000 claims filed in 2003 alone—‘‘the 

most in a single year.’’ 27

The recent growth in the number of asbestos claims is largely attributable to the significant increase of claimants with nonmalignant injuries, including those with little or no current functional 

impairment.28 By the early 2000’s, ‘‘the overwhelming majority of 

claims—up to 90 percent—were filed on behalf of plaintiffs who 

were ‘completely asymptomatic.’ These claimants may have had 

some marker of exposure, such as changes in the pleural membrane of their lungs, but ‘are not now and never will be afflicted 

by disease.’ ’’ 29 Conversely, when asbestos litigation first arose in 

the 1960’s, most claimants were ‘‘workers suffering from grave and 

crippling maladies.’’ 30

The number of asbestos litigation defendants has grown in commensurate fashion with the burgeoning asbestos claims. In 1983, 

there were approximately 300 asbestos litigation defendants.31 By 

2004, the number of asbestos litigation defendants increased to 

over 8,400, with over 90 percent of American industries subject to 

asbestos lawsuits.32 These defendants included miners and manufacturers of asbestos or asbestos-containing products, purchasers of 

asbestos products, insurers, and businesses that used asbestos or 

asbestos-containing products in the course of their industry.33

Under the backdrop of amassing asbestos claims and an expanding defendant constituency, courts and affected parties have initiated several attempts to achieve a comprehensive resolution to asbestos litigation. Notwithstanding these efforts, no resolution has 

been reached. The Supreme Court rejected two comprehensive class 

action settlements and draft Federal legislative reforms were never 

enacted.34 Accordingly, asbestos claimants and defendants likely 

will continue to operate within the existing state and Federal asbestos framework for the foreseeable future. 


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35 Hanlon & Smetak, Asbestos Changes, 62 N.Y.U. Ann. Surv. Am. L. 525, 526–7 (2007); see also Dixon et al., supra note 17, at xii. 36 Id. (citing Carroll et al., supra note 16, at 121 (data through 2002) and Joseph E. Stiglitz 

et al., The Impact of Asbestos Liabilities on Workers in Bankrupt Firms, SEBAGO ASSOCIATES, 2002, at 27–29, 42). 37 Hanlon & Smetak, supra note 35, at 541. 38 Bankruptcy Reform Act of 1994, § 111, 103d Cong. (1994) (enacted) (codified at 11 U.S.C. 

§ 524). 39 11 U.S.C. § 524(g)(2)(B). 40 H.R. 526, the ‘‘Furthering Asbestos Claim Transparency (FACT) Act of 2015’’: Hearing Before 

the Subcomm. on Regulatory Reform, Commercial and Antitrust Law of the H. Comm. on the 

Judiciary, 114th Cong. (2015) (RRCAL Subcomm. Hearing) (testimony of Lester Brickman), at 2. 41 Id. 

C. ASBESTOS CLAIMS IN BANKRUPTCY

Asbestos litigation has driven nearly 100 companies into bankruptcy, with more than half of such companies filing since the beginning of the year 2000.35 The cost of these bankruptcies is largely immeasurable but has been estimated to cost the American economy approximately 60,000 jobs and between $1.4 and $3.0 billion.36

One of the most prominent bankruptcies was that of John 

Mansville Corporation, the dominant American producer of asbestos products. The Mansville bankruptcy redefined many aspects of 

the asbestos litigation system, including the inception of a trust 

system to compensate asbestos claimants in exchange for a broad 

injunction against future asbestos liability.37

Following the Mansville model and in response to a rising tide 

of asbestos defendants seeking relief from liability through chapter 

11 bankruptcies, Congress amended the Bankruptcy Code in 1994 

to include a provision, 11 U.S.C. § 524(g), to allow for the resolution 

of asbestos liability claims against a debtor through a trust-based 

system.38 Under that section, a debtor is permitted to create, in its 

chapter 11 plan, a trust that is to be the exclusive source of postconfirmation compensation for the debtor’s asbestos liability. If the 

trust meets certain prescribed requirements, the debtor, after its 

successful reorganization, is granted a channeling injunction that 

prohibits any asbestos plaintiff from suing the reorganized debtor 

for asbestos liability.39 The balance intended by section 524(g) is 

simple—the asbestos claimants receive a trust funded in an 

amount and administered in a manner that is satisfactory to the 

presiding bankruptcy court and a majority of the debtor’s known 

asbestos claimants in exchange for the debtor’s ability to gain certainty regarding its asbestos liability exposure and a shield against 

future claims in order to allow the debtor to continue its business 

operations. 

The institution of an asbestos trust has become a virtual inevitability in recent chapter 11 cases involving asbestos defendants. 

There are 60 asbestos trusts with current and anticipated assets 

totaling between $30 billion and $37 billion.40 The asbestos trusts 

review and pay damages on millions of claims a year; between 2007 

and 2008, selected asbestos trusts satisfied over four million 

claims.41

D. FRAUD IN ASBESTOS LITIGATION THROUGH MASS SCREENINGS

A commentator likened the scale of fraud in asbestos litigation 

to that of the scandals of ‘‘Credit Mobilier, Teapot Dome, the Savings and Loan debacles, WorldCom, Enron and the vast Ponzi 


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42 How Fraud and Abuse in the Asbestos Compensation System Affect Victims, Jobs, the Economy, and the Legal System: Hearing Before the Subcomm. on the Constitution of the H. Comm. 

on the Judiciary, 112th Cong. 8 (2011) [hereinafter Constitution Subcomm. Hearing] (testimony 

of Professor Lester Brickman). 43Owens Corning v. Credit Suisse First Boston, 322 B.R. 719, 723 (D. Del. 2005). 44Lester Brickman, The Use of Litigation Screenings in Mass Torts: A Formula for Fraud?, 61 SMU L. REV. 1221, 1233 (2008). 45Griffin B. Bell, Asbestos & The Sleeping Constitution, 31 PEPP. L. REV. 1, 5 (2003). 46Pamela Sherrid, Looking for Some Million Dollar Lungs, Best of Asbestos, U.S. NEWS &

WORLD REP., Dec. 17, 2001, at 36. 47See Lester Brickman, On the Theory Class’s Theories of Asbestos Litigation: The Disconnect 

Between Scholarship and Reality, 31 PEPP. L. REV. 33, 69 (2003). 48 Andrew Schneider, Asbestos Lawsuits Anger Critics, ST. LOUIS POST-DISPATCH, Feb. 11, 

2003, at A1. 49Lester Brickman, Lawyers’ Ethics and Fiduciary Obligation in the Brave New World of Aggregative Litigation, 26 WM. & MARY ENVTL. L. & POL’Y REV. 243, 273 (2001). 50Mark A. Behrens & Phil Goldberg, The Asbestos Litigation Crisis: The Tide Appears to be 

Turning, 12 CONN. INS. L.J. 477, 480 (2006). 

schemes that have recently unfolded.’’ 42 Fraud in asbestos litigation largely stems from plaintiffs’ lawyers utilizing mass screening 

measures to recruit hundreds of thousands of claimants. 

Asbestos lawyers were found to have hired screening companies 

to recruit potential claimants who, although not currently suffering 

from asbestos-related injuries, exhibited symptoms of exposure. 

‘‘Labor unions, attorneys, and other persons with suspect motives 

caused large numbers of people to undergo X-ray examinations (at 

no cost), thus triggering thousands of claims by persons who had 

never experienced adverse symptoms.’’ 43 These screening companies used mobile X-ray vans to seek out potential clients in the 

parking lots of hotels and restaurants. The sole object of these 

screenings was to generate evidence—X-rays, pulmonary function 

tests, and medical reports—to support claims of asbestos-related injuries.44 As former United States Attorney General Griffin Bell has 

observed, ‘‘[t]here often is no medical purpose for these screenings 

and claimants receive no medical follow-up.’’ 45

These mass screenings were wildly successful and generated 

massive numbers of claims for plaintiffs’ attorneys. The claimant 

recruiting process was described by U.S. News & World Report: 

To unearth new clients for lawyers, screening firms advertise in towns with many aging industrial workers or park 

X-ray vans near union halls. To get a free X-ray, workers 

must often sign forms giving law firms 40 percent of any 

recovery. One solicitation reads: ‘‘Find out if YOU have 

MILLION DOLLAR LUNGS!’’ 46

It is estimated that more than one million workers have undergone 

attorney-sponsored screenings.47 As one worker explained, ‘‘it’s better than the lottery. If they find anything, I get a few thousand dollars I didn’t have. If they don’t find anything, I’ve just lost an afternoon.’’ 48 According to legal scholars, ‘‘without these claims, the ‘asbestos litigation crisis’ would never have arisen.’’ 49

An American Bar Association Commission on Asbestos Litigation 

confirmed that claims filed by the non-sick generally arose from 

for-profit screening companies whose sole purpose was to identify 

large numbers of people with minimal X-ray changes consistent 

with asbestos exposure.50 The Commission, with the help of the 

American Medical Association, consulted prominent occupationalmedicine and pulmonary-disease physicians to craft legal standards 

for asbestos-related impairment. The Commission found: ‘‘[s]ome XVerDate Sep 11 2014 22:43 Feb 24, 2017 Jkt 069006 PO 00000 Frm 00006 Fmt 6659 Sfmt 6601 E:\HR\OC\HR018.XXX HR018

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51 HON. NATHAN R. JONES, ABA COMM’N ON ASBESTOS LITIGATION, ABA REPORT TO THE

HOUSE OF DELEGATES 8 (2003) available at http://www.cdc.gov/niosh/docket/archive/pdfs/NIOSH015/020103-Exhibit12.pdf. 52 Id. 53 Joseph N. Gitlin et al., Comparison of ‘B’ Readers’ Interpretations of Chest Radiographs for 

Asbestos Related Changes, 11 ACAD. RADIOLOGY 843, 852 (2004). 54David E. Bernstein, Keeping Junk Science Out of Asbestos Litigation, 31 PEPP. L. REV. 11, 

13 (2003) (quoting Lawrence Martin, M.D.). 55Owens Corning, 322 B.R. at 723. 56Lester Brickman & Harvey D. Shapiro, Asbestos Kills—And More than Just People: Jobs, 

Ethics, and Elementary Justice, NAT’L. REV., Jan. 31, 2005. 57Lester Brickman, On the Theory Class’s Theories of Asbestos Litigation: The Disconnect Between Scholarship and Reality, 31 PEPP. L. REV. at 33. 

ray readers spend only minutes to make these findings, but are 

paid hundreds of thousands of dollars—in some cases, millions—in 

the aggregate by the litigation screening companies due to the volume of films read.’’ 51 The Commission also reported that litigation 

screening companies were finding X-ray evidence that was consistent with asbestos exposure at a ‘‘startlingly high’’ rate, often exceeding 50% and sometimes reaching 90%.52

Researchers at Johns Hopkins University compared the X-ray interpretations of professionals who are certified by the National Institute for Occupational Safety and Health to interpret pulmonary 

X-rays, referred to as ‘‘B Readers,’’ employed by plaintiffs’ counsel 

with the subsequent interpretations of six independent B Readers 

who had no knowledge of the X-rays’ origins. The study found that, 

while B Readers hired by plaintiffs claimed asbestos-related lung 

abnormalities in almost 96% of the X-rays, the independent B 

Readers found abnormalities in less than 5% of the same X-rays— 

a difference the researchers said was ‘‘too great to be attributed to 

inter-observer variability.’’ 53

One physician, Dr. Lawrence Martin, has explained the reason 

why plaintiffs’ B Readers seem to see asbestos-related lung abnormalities on chest X-rays in numbers not seen by neutral experts. 

Dr. Martin has said, ‘‘the chest X-rays are not read blindly, but always with knowledge of some asbestos exposure and that the lawyer wants to file litigation on the worker’s behalf.’’ 54 In 2005, Senior U.S. District Court Judge John Fullam said that many B Readers hired by plaintiffs’ lawyers were ‘‘so biased that their readings 

were simply unreliable.’’ 55 As Dr. James Crapo, a leading medical 

expert on asbestos-related diseases, has observed, claimants are 

being compensated ‘‘for illnesses that, according to the clear weight 

of medical evidence, either are not caused by asbestos or do not result in a significant impairment—i.e., are not generally regarded by 

the medical profession as an illness.’’ 56 Professor Lester Brickman, 

an expert on asbestos litigation, concluded that ‘‘[a]sbestos litigation has become a malignant enterprise which mostly consists of a 

massive client-recruitment effort that accounts for as much as 90 

percent of all claims currently being generated, supported by baseless medical evidence which is not generated by good-faith medical 

practice, but rather is primarily a function of the compensation 

paid, and by claimant testimony scripted by lawyers to identify exposure to certain defendants’ products.’’ 57

Screening programs declined in prominence following a landmark 

ruling by U.S. District Court Judge Janis Jack, who issued a 300- 

plus page order detailing methods used to generate fraudulent asVerDate Sep 11 2014 22:43 Feb 24, 2017 Jkt 069006 PO 00000 Frm 00007 Fmt 6659 Sfmt 6601 E:\HR\OC\HR018.XXX HR018

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58 In re Silica Prods. Liab. Litig., 398 F.Supp.2d 563 (S.D. Tex. 2005). 59 Id. at 635. 60The Silicosis Story: Hearings Before the Subcomm. on Oversight and Investigations of the 

Comm. on Energy and Commerce, 109th Cong. (2006). 61 Adam Liptak, Defendants See a Case of Diagnosing for Dollars, N.Y. TIMES, Oct. 1, 2007, 

available at http://www.nytimes.com/2007/10/01/us/01bar.html (last accessed May 31, 2013) (‘‘A 

grand jury was convened in Manhattan more than 2 years ago to look into potential fraud in 

silicosis cases. . . .’’). 62See, e.g., Ohio Rev. Code Ann. § 2307.91 et. seq. (enacted 2004), Tex. Civ. Prac. & Rem. 

§ 90.001 et. seq. (last amended 2007). 63 Constitution Subcomm. Hearing, supra note 42 (testimony of Professor Lester Brickman). 64See Patrick M. Hanlon & Anne Smetak, Asbestos Changes, 62 N.Y.U. ANN. SURV. AM. LAW

525, 593 (2007); Lester Brickman, On the Applicability of the Silica MDL Proceeding to Asbestos 

Litigation, 12 CONN. INS. L.J. 10 (2006); Lester Brickman, Ethical Issues in Asbestos Litigation, 

33 HOFSTRA L. REV. 833, 833–34 (2005). 65Kenneth M. Goldstein, Panel Discussion at U.S. Chamber Institute for Legal Reform’s 12th 

Annual Legal Reform Summit (Oct. 26, 2011) (associated slides available at http:// 

www.instituteforlegalreform.com/sites/default/files/Lawyers_Mass_Tort_Solicitation_Advertising_ Oct2011.pdf) (last visited May 31, 2013). 66 Id. 67See NEW MEDIA STRATEGIES, THE PLAINTIFFS’ BAR GOES DIGITAL 3 (January 2012) available at http://www.instituteforlegalreform.com/doc/the-plaintiffs-bar-goes-digital-0 (last visited May 

23, 2013). 68 Id. at 7 (‘‘Trial attorneys spend as much as $80 per click on mesothelioma-related search 

terms, far exceeding industry averages for search terms . . . ranked as most expensive by 

Google AdWords’’). 69The David Law Firm—Lung Cancer, http://www.calldavid.com/lung-cancer.html (last visited 

May 31, 2013). 

bestos and silica claims in 2005.58 In the wake of Judge Jack’s 

opinion, which noted that many asbestos and silica cases are ‘‘driven neither by health nor justice’’ and are instead ‘‘manufactured for 

money,’’ 59 Congress convened hearings on fraud and abuse in asbestos litigation.60 A Federal grand jury was empanelled in the 

Southern District of New York.61

Many believed the decline of mass screenings and enactment of 

medical criteria statutes in major asbestos venue states marked 

the beginning of a new, fairer asbestos compensation system.62 The 

Committee, however, has received testimony suggesting that 

screening programs may be, or soon will be, used to generate asbestos trust claims.63 The asbestos bar is using new techniques to recruit potential trust claimants. While screenings were often advertised in break rooms, in local papers, and on local broadcast stations,64 the modern asbestos plaintiffs’ bar spends billions of dollars on mass media advertisements designed to recruit potential asbestos tort plaintiffs and trust claimants.65 Experts estimate that 

asbestos plaintiffs’ firms spent over $950 million on television advertising in 2011.66 Trial lawyers’ advertising campaigns extend 

beyond television, and experts estimate that the asbestos bar 

spends tens of millions each year on sophisticated online advertising campaigns.67 ‘‘Mesothelioma’’ has become the single most expensive keyword on Google’s auction-style AdWords platform.68

There are signs that the suspect practices deployed in traditional 

asbestos state court tort litigation have been utilized against asbestos trusts. At least one firm advises lung cancer victims that billions of dollars have been set aside in ‘‘U.S. Compensation Trust 

Funds . . . to financially assist individuals with lung cancer’’ while 

making no mention of asbestos.69 Further, with the advent of enhanced information technology tools, plaintiffs’ firms have the ability to focus their claimant recruiting efforts on a broader audience. 

The indications of fraud coupled with an environment conducive for 

fraud, as provided in more detail below, is cause for alarm. 


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70 11 U.S.C. § 542(g)(2)(B)(ii)(V) (2011). 71 Carroll et al., supra note 16, at 24. 72See generally S. Todd Brown, Section 524(g) Without Compromise: Voting Rights and the 

Asbestos Bankruptcy Paradox, 2008 COLUM. BUS. L. REV. 841 (2008); see also Dixon et al., supra 

note 17, at 43 (listing asbestos firms most frequently represented on TAC’s; Weitz and 

Luxenberg P.C. sits on TAC’s of 11 trusts that control, combined, approximately 74% of all asbestos trust assets); see also Searcey & Barry, As Asbestos Claims Rise, So Do Worries About 

Fraud, WALL ST. J., Mar. 11, 2013. 73 11 U.S.C. § 524(g)(2)(B)(ii)(IV)(bb) (2011). 74 In re Combustion Engineering, Inc., 391 F.3d 190, 234 (3d Cir. 2004) (‘‘[A] debtor must satisfy the prerequisites set forth in § 524(g) in addition to the standard plan confirmation requirements.’’). 75 11 U.S.C. § 1129(b)(1) (2011) (allowing confirmation of a plan over the objection of a class 

of creditors). 

E. THE OPAQUE ASBESTOS TRUST SYSTEM AND RELATED FRAUD

While the prerequisites for establishing a bankruptcy asbestos 

trust typically compel certain disclosures, these disclosures are significantly lacking. To obtain the principal benefit of the asbestos 

trust—the channeling injunction—a debtor must demonstrate to 

the court, among other things, that at the time of confirmation: 

the trust will operate through mechanisms such as structured, periodic, or supplemental payments, pro rata distributions, matrices, or periodic review of estimates of the 

numbers and value of present claims and future demands, 

or other comparable mechanisms, that provide reasonable 

assurance that the trust will value, and be in a financial 

position to pay, present claims and future demands that 

involve similar claims in substantially the same manner.70

In many cases, this requirement has caused the debtor to include 

a provision in its chapter 11 plan requiring it to file periodic disclosures with the court of the financial health of the asbestos liability 

trust.71 Missing from these disclosures, however, is any statutory 

requirement that the trust identify claimants who seek compensation from the trust, the nature of their alleged injury, and the 

amount the trust paid them. 

The trusts’ limited disclosures are a result of the structure of section 524(g), which grants considerable control over asbestos bankruptcies and resulting asbestos trusts to plaintiffs’ attorneys.72 In 

particular, section 524(g) allows a channeling injunction to issue 

only if three-quarters of current asbestos claimants support a proposed chapter 11 plan.73 This requirement is distinct from the 

usual requirements for plan confirmation, which must also be satisfied.74 The requirement to gain the consent of a specified class is 

a departure from traditional bankruptcy procedures, which allow a 

chapter 11 plan to be confirmed over the objection of an impaired 

class so long as the plan is fair, non-discriminatory, and supported 

by another impaired class.75

In other words, the asbestos claimants class has a statutory 

blocking right to a proposed chapter 11 plan, which results in representatives of that class having considerable influence over the 

chapter 11 plan and the formation of any resulting asbestos trust. 

Generally speaking, representation of asbestos claimants is concentrated within a select group of law firms. As courts have noted, 

‘‘[a] unique feature of asbestos . . . litigation is the fact that a 

small group of law firms represents hundreds of thousands of 


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76 In re Congoleum Corp., 426 F.3d 675, 679 (3d Cir. 2005). 77Lester Brickman, Ethical Issues in Asbestos Litigation, 33 HOFSTRA L. REV. at 868–69 (discussing asbestos bar’s de facto control of bankruptcy process). 78 Brown, supra note 74, at 121. 79 11 U.S.C. § 1126(c) (2011) (‘‘A class of claims has accepted a plan if such plan has been accepted by creditors . . . that hold at least two-thirds in amount and more than one-half in number of the allowed claims of such class held by creditors. . . .’’). 80See Brown, supra note 74, at 150 (‘‘[A]n attorney can obtain a considerable negotiating position and sizeable fees by simply dumping their asbestos claim ‘‘inventory’’ on a debtor [with] 

little to no prospect of sanctions for filing even grossly fraudulent or, at best, wholly unsubstantiated claims.’’). 81 Id. 82 11 U.S.C. § 524(g)(4)(B)(i) (2011). 83Mark D. Plevin, The Future Claims Representative in Prepackaged Asbestos Bankruptcies: 

Conflicts of Interest, Strange Alliances, and Unfamiliar Duties for Burdened Bankruptcy Courts, 

62 N.Y.U. ANN. SURV. AM. L. 271, 301 (2006) (‘‘In almost every . . . case to date . . . the debtor 

[has been granted] a presumptive right to select . . . an FCR acceptable to the current claimants.’’). 84See Brown, supra note 52, at 158–59 (discussing parties’ incentive to propose weak representative). 85Lester Brickman, Ethical Issues in Asbestos Litigation, 33 HOFSTRA L. REV. at n. 144 (noting that Halliburton’s pre-petition futures representative was nearly $5 million and retained by 

the resulting trust). 86See Richard A. Nagareda, Mass Torts in a World of Settlement 177 (2007). 87Mark D. Plevin, The Future Claims Representative in Prepackaged Asbestos Bankruptcies: 

Conflicts of Interest, Strange Alliances, and Unfamiliar Duties for Burdened Bankruptcy Courts, 

62 N.Y.U. ANN. SURV. AM. L. at 292–93. 88See Dixon et al., supra note 17 (FCR’s for largest trusts set forth in Appendix A). 

plaintiffs.’’ 76 Consequently, single firms or small groups of firms 

may effectively block confirmation of a chapter 11 plan.77 As Professor S. Todd Brown has observed, ‘‘[asbestos firms] hold an unassailable veto power [that] leaves debtors and other parties in interest with a classic Hobson’s choice—reorganization on the [f]irms’ 

terms or no reorganization at all.’’ 78

Another unique feature of section 524(g) is that it looks only to 

the number of current asbestos claimants who support a proposed 

chapter 11 plan. In contrast, a traditional bankruptcy requires a 

majority in number and two-thirds in amount of a particular class 

in order to confirm a chapter 11 plan.79 Plaintiffs’ firms exploit section 524(g)’s express preference for claimant quantity over claim 

quality by asserting their large numbers of claims in bankruptcy 

regardless of their likely value or merit, which typically will be 

evaluated following the voting period on a debtor’s chapter 11 

plan.80 Plaintiffs’ firms that historically have filed few tort cases 

against a debtor company sometimes file claims on behalf of their 

entire client list once bankruptcy has been declared.81

Section 524(g) also requires the appointment of a legal representative on behalf of individuals who may file claims with a proposed 

asbestos trust in the future, referred to as a ‘‘future claims representative’’ or an ‘‘FCR.’’ 82 Courts generally appoint an individual 

suggested by the current claimants and the debtor company.83 Congress envisioned the appointment of an FCR as a due process protection for future claimants; however, the debtor company and the 

attorneys representing current claimants stand to benefit from the 

appointment of a weak or pliant representative.84 Moreover, FCR 

work can be extremely lucrative,85 and academic commentators 

have expressed concern that FCR’s are ‘‘punch-pulling’’ 86 in an effort to be seen as ‘‘reliable negotiating partners who [will] not ‘rock 

the boat’ ’’ 87 and increase the likelihood of future FCR appointments. Indeed, many representatives serve several trusts concurrently.88


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89 Carroll et al., supra note 16, at 22 (noting that TAC must consent to, among other things, 

modifications to a trust’s distribution plan or audit procedures). 90Dixon et al., supra note 17, at 14. 91Dixon et al., supra note 17, at 32. 92 Constitution Subcomm. Hearing, supra note 42, at 94–95, 100–101 (written testimony of 

James Stengel). 93 Carroll et al., supra note 16, at 28. 94 Courts Subcomm. Hearing, supra note 11, at 14. 95 Courts Subcomm. Hearing, supra note 11, at 207 (‘‘The Manville Personal Injury trust offer[ed] a data extract of claim level information . . . to anyone willing to pay a $10,000 licensing fee. Prior to 2002 the data could be purchased outright. . . .’’). 96Manville Trust Single Use Data License Agreement, http://www.claimsres.com/documents/ 

MT/DataAgreement.pdf (last visited May 31, 2013). 

Although asbestos trusts are nominally managed by court-approved trustees, virtually all trusts’ founding agreements require 

the trustee to seek approval of a post-confirmation FCR and a committee composed of current claimants’ representatives, most often 

characterized as a trust advisory committee or ‘‘TAC,’’ before 

amending the trust’s distribution plan or audit procedures.89 The 

asbestos bars’ pre-confirmation influence extends to operating 

trusts, as many TAC seats are held by plaintiffs’ attorneys who 

represented large numbers of claimants in bankruptcy proceedings.90

The trust documents governing the operation of the asbestos 

trusts often include restrictions on sharing trust data, facilitating 

a lack of transparency in the trust system. A majority of the trusts’ 

distribution plans affirmatively require claims to be treated as confidential settlement negotiations.91 As a result, tort litigants must 

engage in lengthy and expensive discovery disputes in order to gain 

access to basic information—including exposure information—routinely disclosed by defendant companies before they created trusts 

and exited the tort system.92 In many instances, trusts’ procedures 

require a valid state-court-issued subpoena in order to provide information to state litigants.93 Even in cases where a valid subpoena is served upon an asbestos trust, an asbestos trust may attempt to defeat the subpoena or require an additional subpoena 

from the presiding bankruptcy court judge.94

There was a time when asbestos trusts were willing to share 

claims information more freely. Prior to Judge Jack’s exposure of 

fraud in mass screened silica and asbestos cases, the Manville 

Trust sold its data to actuarial firms, law firms, and defendant 

companies.95 The trust also licensed its data to occupational health 

researchers and provided custom datasets to academics upon request. But in the wake of Judge Jack’s opinion, the Manville Trust 

limited access to its data. Its current data license prohibits use of 

the trust’s data to process or contest trust and tort claims, prevents 

data recipients from revealing information regarding an individual 

claimant, and is otherwise structured to ensure that any analysis 

of the data is strictly empirical, unusable in litigation, and may not 

serve as a basis for other trusts to reject inconsistent or improper 

claims.96

Because the trusts’ current confidentiality provisions and practices make data sharing difficult, individual trusts and the trust 

system as a whole are susceptible to fraud and abuse. The GAO 

and the non-partisan RAND Corporation, in their respective reports on the trusts, both concluded that asbestos bankruptcy trusts 

are unlikely to identify and decline payment of improper claims, including claims that are supported by ‘‘altered work histories’’ or alVerDate Sep 11 2014 22:43 Feb 24, 2017 Jkt 069006 PO 00000 Frm 00011 Fmt 6659 Sfmt 6601 E:\HR\OC\HR018.XXX HR018

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97 Carroll et al., supra note 16, at 23; Dixon et al., supra note 17, at 45. 98See, e.g., Courts Subcomm. Hearing, supra note 11, at 224–36 (letter signed by six FCRs). 99 Carroll et al., supra note 16, at 16. 100 Carroll et al., supra note 16, at 23. 101 Courts Subcomm. Hearing, supra note 11, at 25 (testimony of S. Todd Brown). 102See e.g., Nedra Pickler, Ex-naval officer gets prison time for 9–11 fraud, ASSOCIATED PRESS

(Dec. 12, 2011), available at http://www.washingtontimes.com/news/2011/dec/12/ex-naval-officergets-prison-time-911-fraud/; DEPT. OF JUSTICE, DEEPWATER HORIZON (BP) OIL SPILL FRAUD, http://www.justice.gov/criminal/oilspill/(last visited May 31, 2013) (collecting cases involving 

fraud on the Gulf Coast Claims Facility). 103 Courts Subcomm. Hearing, supra note 11, at 25 (testimony of S. Todd Brown). 104 Kananian v. Lorillard Tobacco Co., No. CV 442750 (Ohio Ct. Com. Pl. Cuyahoga County 

2007). 105 Id. at 5, 9. 106 Id. at 6. 

lege inconsistent exposure patterns.97 The trusts, the plaintiffs’ 

bar, and the post-confirmation FCRs nonetheless contend that the 

trust system is free from fraud and that more robust anti-fraud 

measures would be costly and reduce the funds available to fulfill 

the trusts’ core mission—claimant compensation.98

Although the eleven trusts interviewed by GAO in the course of 

its investigation reported that their audits have never identified an 

instance of fraud, the trusts paid over $4 billion in 2010 alone and, 

combined, have paid 3.3 million alleged asbestos victims nearly 

$17.5 billion since the Manville Trust was established.99 The GAO 

Report stated that the internal audits of the asbestos trusts were 

designed to ensure compliance with internal trust procedures and 

not generally designed to detect duplicate or inconsistent claims 

among different asbestos trusts and the state courts.100 Further, 

the complete absence of fraud reported by the eleven trusts interviewed in the GAO Report runs contrary to historical experiences 

with compensation and relief programs. Fraud and abuse have 

been uncovered in virtually every compensation and relief program 

undertaken in modern America, whether privately funded or government-sponsored.101 Fraudulent claims against the 9/11 Victim’s 

Compensation Fund and BP’s gulf oil fund, for example, were detected and prosecuted.102 As Professor Brown has observed, asbestos trusts are not ‘‘magically different’’ from other compensation 

trusts; that asbestos trusts’ audits have uncovered no fraud whatsoever suggests that their internal controls are lacking.103

While the trust system operates with near-complete secrecy, the 

quality of medical evidence and the consistency of the allegations 

made by alleged asbestos victims are sometimes tested in the state 

court tort system. Although the trusts’ confidentiality provisions 

and the generally combative nature of asbestos litigation have combined to limit the disclosure of trust information, defendants have 

successfully identified a number of cases of inconsistent and potentially fraudulent claiming. 

In the best known example of fraud uncovered through the state 

court tort system, Kananian v. Lorillard Tobacco, a tort plaintiff 

claimed that he developed mesothelioma solely from smoking asbestos-filtered cigarettes and that he only passed through a naval 

ship yard while being deployed elsewhere by the Navy.104 He simultaneously filed claims against multiple asbestos trusts alleging 

exposure to marine products while working as a ‘‘shipyard laborer.’’ 105 Despite the inconsistency of his tort and trust claims, 

which the court described as a ‘‘fiction,’’ Kananian received substantial payments from asbestos trusts.106


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107 Constitution Subcomm. Hearing, supra note 42, at 94–95, 103–105 (written testimony of 

James Stengel). 108 Courts Subcomm. Hearing, supra note 11, at 9 (testimony of Leigh Ann Schell); e.g., Montgomery v. Foster Wheeler, Case No. 09C–11–215 ASB, Pretrial Hearing Trans. (Del. Super. Ct. 

Nov. 7, 2011). 109 Courts Subcomm. Hearing, supra note 11, at 16 (written statement of Leigh Ann Schell). 110Montgomery, supra note 110, at 7–8. 111Montgomery, supra note 110, at 25. 112Searcey & Barry, supra note 74. 113Searcey & Barry, supra note 74. 114 In re Garlock Sealing Techs. LLC, Case No. 10–BK–31607 (Bankr. W.D.N.C. 2014). 

Kananian is not an isolated incident; the Committee has received 

testimony detailing several additional examples of fraud, abuse, 

and inconsistent claiming in other jurisdictions, including Maryland cases in which inconsistent exposure information was presented in the tort system and trust systems in an attempt to circumvent state-law caps on damages.107 Further examples of inconsistent claiming have been identified in Delaware, Louisiana, New 

York, Oklahoma, and Virginia.108

Counsel in a Louisiana case, Mary A. Robeson et al v. Amatek, 

Inc. et al, filed sixteen trust claims that denied the plaintiff’s father 

smoked and included detailed asbestos exposure information. When 

the plaintiff was deposed, however, he claimed his father was a 

smoker and that he had no knowledge of the exposures alleged in 

the claims. He also testified that counsel had never spoken to his 

father about his exposures to asbestos.109

In Montgomery v. Foster Wheeler, a Delaware case, the plaintiff’s 

attorney disclosed a number of trust claims shortly before trial 

even though he had repeatedly represented to the defendant and 

the court that his client had no such claims. The court described 

the plaintiff’s disclosure failure as ‘‘really seriously egregiously bad 

behavior’’ and lamented that ‘‘it happens a lot.’’ 110 The court further observed that: 

The core of this case had been fraudulent. . . . [T]his 

whole litigation is based on who was responsible. Nobody 

can say which fibers did what. But the most important 

thing is that a plaintiff disclose what they think caused 

their disease. And if they don’t disclose honestly when 

they’re asking [for] money from another company and they 

don’t even let the defendant know about that, that’s so dishonest. It is just so dishonest.111

In addition to the fraud uncovered through the state court system, the Wall Street Journal conducted an investigation that detailed numerous anomalies between individual’s state court filings 

and asbestos trust claim filings.112 The Wall Street Journal found 

that individuals had claimed exposure to asbestos through industrial jobs that they held while under the age of twelve, disparate 

medical diagnoses asserted among different asbestos trusts and 

state court cases, and claims asserted by individuals that simply 

did not exist.113

Recently, a number of discrepancies between bankruptcy and 

state court claims were uncovered in a bankruptcy case in North 

Carolina.114 In the bankruptcy case of Garlock Sealing Technologies, LLC, plaintiffs’ counsel requested $1.3 billion in asbestos 


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115 Editorial, The Double-Dipping Legal Scam, WALL ST. J., Dec. 25, 2014. 116 Id. 117 Id. 118 RRCAL Subcomm. Hearing, supra note 40 (testimony of Lester Brickman), at 29. 119 Id., at 30. 120 Id. 

claims damages.115 In a series of rulings, the presiding judge dramatically reduced the requested damages claim from $1.3 billion to 

$125 million and noted a number of alarming discrepancies between the claims filed against Garlock in state court and claims 

filed by the same plaintiffs against other bankruptcy asbestos 

trusts. As reported by the Wall Street Journal, in the fifteen cases 

filed in state court against Garlock, the plaintiffs disclosed that 

they were exposed to a total of 32 products.116 However, as uncovered in subsequent Garlock court documents, these same plaintiffs 

asserted claims in other forums that alleged exposure to 284 different products.117

Some particularly egregious examples of fraud from the Garlock 

case include a California case in which the plaintiff settled with 

Garlock for $9 million in state court litigation. The plaintiff affirmatively denied exposure to any other asbestos products. Nevertheless, the court later discovered that this plaintiff had filed fourteen 

bankruptcy asbestos trust claims, and included in those claims 

were statements made under penalty of perjury that directly contrasted with statements made to the jury in the state court case.118

In another Garlock example, a plaintiff’s lawyers responded to 

written interrogatories that the plaintiff had ‘‘no personal knowledge’’ of exposure to any other asbestos products. Yet 6 weeks earlier, those exact same lawyers filed a statement in connection with 

an asbestos bankruptcy trust claim that the plaintiff ‘‘frequently, 

regularly, and proximately’’ was exposed to other asbestos products. In that case, the plaintiff filed claims against twenty other asbestos products and made statements that contradicted state court 

pleadings in fourteen of the asbestos bankruptcy trust claims.119

Other Garlock examples include a plaintiff denying any exposure 

to other asbestos products in a state court case and then filing asbestos bankruptcy trust claims within 24 hours of settling the case, 

and a plaintiff denying exposure to a particular asbestos product 

in state court only for it to be uncovered later in discovery that his 

lawyers had filed an asbestos bankruptcy trust claim against that 

very product the day before his denial statement.120 These instances of fraud have been uncovered in spite of the current lack 

of transparency, and are a clear indication of the potential for significant, currently undetected fraud. 

The lack of meaningfully transparent trust disclosures, combined 

with published research, court decisions and investigations suggesting and highlighting fraud within the asbestos trust system 

provided the framework for bankruptcy bar and Congressional inquiry into potential mechanics to reduce and prevent fraudulent activity within the state court and asbestos trust systems. In March 

2011, the Subcommittee on Business Issues of the Advisory Committee on Bankruptcy Rules considered a proposal to add a new 

Federal Rule of Bankruptcy Procedure to require 524(g) trusts to 

disclose the particulars of each demand for payment received by a 


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121Letter from Lisa A. Rickard, President, U.S. Chamber Institute for Legal Reform, to Peter 

G. McCabe, Secretary, Committee on Rules of Practice and Procedure, Judicial Conference of 

the United States (Nov. 22, 2010) (on file with Committee). 122Memorandum from Subcommittee on Business Issues to Advisory Committee on Bankruptcy Rules (Mar. 10, 2011) (on file with Committee). 123Memorandum from Subcommittee on Business Issues to Advisory Committee on Bankruptcy Rules (Sept. 19, 2011) (on file with Committee). 124See generally Constitution Subcomm. Hearing, supra note 42. 125See generally Courts Subcomm. Hearing, supra note 11. 126See id. (testimonies of Leigh Ann Schell, Prof. S. Todd Brown, and Marc Scarcella). 127 Id. at 81. 128 Id. (‘‘As somebody who worked at a trust, the largest asbestos trust, the Manville Personal 

Injury Trust, back in 2001 as their quantitative data analyst and statistician, I can tell you that 

I understand Mr. Siegel’s concern, and I think it is a legitimate concern, but I can assure everybody that it is not a problem.’’) 

trust during the preceding quarter.121 That subcommittee, in a 

memo to the Advisory Committee, examined the merits and demerits of the proposal, but ultimately concluded that if: 

it is determined that the trusts should be providing more 

information than they currently are, the Subcommittee’s 

preliminary thought was that this may be a matter more 

appropriately addressed by a legislative solution—such as 

an amendment of § 524(g) that imposes additional requirements on trusts created under that provision.122

A second memo from the Subcommittee, dated September 19, 2011, 

collects comments the Subcommittee solicited from various bankruptcy and nonbankruptcy legal groups. The chair of the ABA Business Bankruptcy Committee established a task force to review the 

proposal, which ultimately supported the proposal, subject to a 

small number of qualifications. Others who submitted comments, 

including the FCRs, opposed the proposal.123

F. THE FURTHERING ASBESTOS CLAIM TRANSPARENCY (FACT) ACT

OF 2017

During the 112th Congress, the Subcommittee on the Constitution of the House Judiciary Committee held a hearing entitled 

‘‘How Fraud and Abuse in the Asbestos Compensation System Affects Victims, Jobs, the Economy, and the Legal System.’’ 124 In 

light of the testimony received at that hearing, the study of the Advisory Committee on Bankruptcy Rules, and the experience of debtors who have used the Bankruptcy Code to manage their future asbestos liability and their attorneys, Rep. Quayle (R-AZ), together 

with Reps. Matheson (D-UT) and Ross (R-FL), introduced H.R. 

4369, the Furthering Asbestos Claim Transparency (FACT) Act of 

2012, on April 17, 2012. 

The Subcommittee on Courts, Commercial and Administrative 

Law of the House Judiciary Committee held a hearing on H.R. 

4369 on May 10, 2012.125 Three of the four witnesses testified that 

transparency was sorely needed in the 524(g) asbestos trust compensation system.126 The fourth witness, Mr. Siegel, conceded that 

no provision of the FACT Act would impede a claimant’s filing of 

a claim with or receipt of compensation from a trust.127 Mr. Siegel 

did argue that the FACT Act would impose ‘‘onerous’’ new administrative burdens on the trusts—a hypothesis that was contradicted 

by Mr. Scarcella’s testimony founded in his experience working at 

a claims processing department at one of the largest trusts.128


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129See generally H.R. 982, the ‘‘Furthering Asbestos Claim Transparency (FACT) Act of 2013’’: 

Hearing Before the Subcomm. on Regulatory Reform, Commercial and Antitrust Law of the H. 

Comm. on the Judiciary, 113th Cong. (2013) (Reg. Subcomm. Hearing). 130See id. (testimonies of Hon. Peggy L. Ableman, Prof. S. Todd Brown, and Marc Scarcella). 131 Id.; see also H.R. 982. 132See generally RRCAL Subcomm. Hearing. 133See id. (testimonies of Nicholas Vari, Marc Scarcella, and Prof. Lester Brickman). 134See id. (testimonies of Elihu Inselbuch, Nicholas Vari, Marc Scarcella, and Prof. Lester 

Brickman). 

On June 8, 2012, the Committee met in open session and ordered 

the bill H.R. 4369 to be reported favorably to the House with a 

manager’s amendment. The amendment adopted during the Committee’s consideration of H.R. 4369 incorporated comments received 

during its legislative consideration and clarified that section 107 of 

the Bankruptcy Code applies to the new requirements of the asbestos trusts and that asbestos trusts could require payment for costs 

related to third-party discovery requests. H.R. 4369 was not considered by the Full House of Representatives during the 112th Congress. 

During the 113th Congress, on March 6, 2013, Rep. Farenthold 

(R-TX), together with Rep. Matheson, introduced H.R. 982, the Furthering Asbestos Claim Transparency (FACT) Act of 2013, which 

was identical to H.R. 4369 as reported out of the Committee during 

the 112th Congress. The Subcommittee on Regulatory Reform, 

Commercial and Antitrust Law held a hearing on H.R. 982 on 

March 13, 2013.129 Three of the four witnesses testified that the 

current asbestos trust system lacked transparency and was conducive to fraudulent activity.130 The fourth witness, Mr. Inselbuch, 

again argued that the FACT Act would abrogate state discovery 

laws and would create administrative burdens on the trusts notwithstanding a record to the contrary on both accounts.131 On May 

21, 2013, the Committee met in open session and ordered the bill 

H.R. 982 to be reported favorably to the House without amendment. On November 13, 2013, the House considered H.R. 982 and 

passed the bill. The provisions of H.R. 526 were included in separate legislation, H.R. 1927, which passed the House of Representatives on January 8, 2016, by a vote of 211–188, with one Member 

voting present. H.R. 1927 was not considered by the Senate during 

the 114th Congress. 

During the 114th Congress, on January 26, 2015, Rep. 

Farenthold, together with Rep. Marino (R-PA), introduced H.R. 

526, the Furthering Asbestos Claim Transparency (FACT) Act of 

2015, which was identical to H.R. 982 as passed by the House during the 113th Congress. The Subcommittee on Regulatory Reform, 

Commercial and Antitrust Law held a hearing on H.R. 526 on February 4, 2015.132 Three of the four witnesses testified that the current asbestos trust system lacked transparency and was conducive 

to fraudulent activity.133 The fourth witness, Mr. Inselbuch, argued 

that the FACT Act would abrogate state discovery laws and would 

create administrative burdens on the trusts notwithstanding a 

record to the contrary on both accounts.134 On November 30, 2015, 

the Committee met in open session and ordered the bill H.R. 526 

to be reported favorably to the House without amendment. H.R. 

526 was not considered by the Full House of Representatives during the 114th Congress. 

Given the necessity for transparency and the significant legislative record, Rep. Farenthold, together with Rep. Goodlatte (R-VA) 


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135 H.R. 982 § 2. 136 Id. 137 U.S. CONST. art. I, § 8, cl. 4; see Court Subcomm. Hearing, supra note 11, at 85–89 (memorandum regarding Congress’ power to enact legal reform legislation prepared by former Solicitor 

General Paul D. Clement); see also Reg. Subcomm. Hearing, supra note 124 (testimony of Prof. 

S. Todd Brown). 138 H.R. 982 § 2. 139 11 U.S.C. § 107(c) (2011); 18 U.S.C. § 1028(d) (2011); Fed. R. Bankr. P. 9037. 140 H.R. 982 § 2. 

and Rep. Marino, introduced H.R. 906, the Furthering Asbestos 

Claim Transparency (FACT) Act of 2017, on February 7, 2017, 

which is identical to H.R. 526 as reported out of the Committee 

during the 114th Congress. H.R. 906 amends section 524(g) of the 

Bankruptcy Code to require asbestos trusts to file quarterly reports 

with the presiding bankruptcy court that detail claimants’ names, 

demands made by the claimants to the asbestos trust, any amounts 

paid to claimants, and the basis for such payments.135 The FACT 

Act also requires asbestos trusts to provide information requested 

by parties to traditional asbestos tort litigation, subject to payment 

from the requesting party for costs associated with such a request.136 As the bill amends a provision of the Bankruptcy Code, 

the reporting and information sharing requirements contained 

therein fall squarely within Congress’ bankruptcy power.137

The FACT Act includes several privacy protections. The bill provides that sensitive identifying information, such as complete Social Security numbers and confidential medical records, should not 

be published in the quarterly reports.138 Additionally, the FACT 

Act subjects both the quarterly reporting requirements and the 

written discovery requests to section 107 of the Bankruptcy Code. 

Section 107 of the Bankruptcy Code and related Rule 9037 of the 

Federal Rules of Bankruptcy Procedure grant the presiding bankruptcy judge broad discretion to exclude confidential or sensitive information from the quarterly reports or in response to a written 

discovery request. Specifically, section 107(c) of the Bankruptcy 

Code provides a bankruptcy court with discretion to exclude from 

disclosure broad categories of information contained in any document filed in a chapter 11 case that would ‘‘create undue risk of 

identity theft or other unlawful injury. . . .’’ 139 Further, responses 

to written discovery requests are subject to any applicable protective orders.140

The FACT Act does not disturb or supersede any applicable state 

discovery laws or rules. On the contrary, any information received 

pursuant to a written request would remain subject to the discovery laws and rules applicable in the relevant state court proceeding. 

The FACT Act is a measured amendment to the Bankruptcy 

Code provision governing asbestos trusts that will promote greater 

transparency among the asbestos trusts and the state court system. 

This information will reduce the potential for fraud and help to 

unveil any existing fraudulent activity. A reduction in fraud will 

help to ensure that the asbestos trusts achieve their designed 

goal—administering and preserving their funds to provide substantially similar recompense to future claimants that have been truly 

aggrieved by exposure to asbestos. 


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Hearings 

H.R. 906 is identical to both a 2015 and 2013 bill on which the 

Committee held two separate hearings. The Committee also held 

additional hearings on the subject matter in 2011 and 2012, respectively. 

Committee Consideration 

On February 15, 2017, the Committee met in open session and 

ordered the bill H.R. 906 favorably reported, without amendment, 

by a rollcall vote of 17 ayes to 14 nays, a quorum being present. 

Committee Votes 

In compliance with clause 3(b) of rule XIII of the Rules of the 

House of Representatives, the Committee advises that the following 

rollcall votes occurred during the Committee’s consideration of H.R. 

906. 

1. Amendment #1, offered by Mr. Conyers, to replace the bill’s 

substantive provisions with a requirement that asbestos trusts report only aggregated information on demands received and payments made from the asbestos trusts. The amendment was defeated by a rollcall vote of 11 to 20. 

ROLLCALL NO. 1 

Ayes Nays Present 

Mr. Goodlatte (VA), Chairman ................................. X 

Mr. Sensenbrenner, Jr. (WI) .....................................

Mr. Smith (TX) .......................................................... X 

Mr. Chabot (OH) ........................................................ X 

Mr. Issa (CA) .............................................................. X 

Mr. King (IA) ............................................................. X 

Mr. Franks (AZ) ......................................................... X 

Mr. Gohmert (TX) ...................................................... X 

Mr. Jordan (OH) ........................................................ X 

Mr. Poe (TX) ............................................................... X 

Mr. Chaffetz (UT) ......................................................

Mr. Marino (PA) ........................................................ X 

Mr. Gowdy (SC) ......................................................... X 

Mr. Labrador (ID) ......................................................

Mr. Farenthold (TX) .................................................. X 

Mr. Collins (GA) ........................................................ X 

Mr. DeSantis (FL) .....................................................

Mr. Buck (CO) ............................................................ X 

Mr. Ratcliffe (TX) ....................................................... X 

Mr. Bishop (MI) ......................................................... X 

Ms. Roby (AL) ............................................................ X 

Mr. Gaetz (FL) ........................................................... X 

Mr. Johnson (LA) ....................................................... X 

Mr. Biggs (AZ) ........................................................... X 

Mr. Conyers, Jr. (MI), Ranking Member ................. X 

Mr. Nadler (NY) ......................................................... X 

Ms. Lofgren (CA) .......................................................


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ROLLCALL NO. 1—Continued 

Ayes Nays Present 

Ms. Jackson Lee (TX) ................................................ X 

Mr. Cohen (TN) .......................................................... X 

Mr. Johnson (GA) ......................................................

Mr. Deutch (FL) .........................................................

Mr. Gutierrez (IL) ......................................................

Ms. Bass (CA) ............................................................ X 

Mr. Richmond (LA) ....................................................

Mr. Jeffries (NY) ........................................................

Mr. Cicilline (RI) ........................................................ X 

Mr. Swalwell (CA) ..................................................... X 

Mr. Lieu (CA) ............................................................. X 

Mr. Raskin (MD) ........................................................ X 

Ms. Jayapal (WA) ...................................................... X 

Mr. Schneider (IL) ..................................................... X 

Total ............................................................. 11 20 

2. Amendment #2, offered by Mr. Nadler, to limit third-party 

discovery to those parties who disclose information pertaining to 

the public safety or health to a law enforcement agency. The 

amendment was defeated by a rollcall vote of 12 to 21. 

ROLLCALL NO. 2 

Ayes Nays Present 

Mr. Goodlatte (VA), Chairman ................................. X 

Mr. Sensenbrenner, Jr. (WI) ..................................... X 

Mr. Smith (TX) .......................................................... X 

Mr. Chabot (OH) ........................................................ X 

Mr. Issa (CA) .............................................................. X 

Mr. King (IA) ............................................................. X 

Mr. Franks (AZ) ......................................................... X 

Mr. Gohmert (TX) ...................................................... X 

Mr. Jordan (OH) ........................................................ X 

Mr. Poe (TX) ............................................................... X 

Mr. Chaffetz (UT) ...................................................... X 

Mr. Marino (PA) ........................................................ X 

Mr. Gowdy (SC) ......................................................... X 

Mr. Labrador (ID) ...................................................... X 

Mr. Farenthold (TX) .................................................. X 

Mr. Collins (GA) ........................................................

Mr. DeSantis (FL) .....................................................

Mr. Buck (CO) ............................................................ X 

Mr. Ratcliffe (TX) .......................................................

Mr. Bishop (MI) ......................................................... X 

Ms. Roby (AL) ............................................................ X 

Mr. Gaetz (FL) ........................................................... X 

Mr. Johnson (LA) ....................................................... X 

Mr. Biggs (AZ) ........................................................... X 

Mr. Conyers, Jr. (MI), Ranking Member ................. X 


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ROLLCALL NO. 2—Continued 

Ayes Nays Present 

Mr. Nadler (NY) ......................................................... X 

Ms. Lofgren (CA) .......................................................

Ms. Jackson Lee (TX) ................................................ X 

Mr. Cohen (TN) .......................................................... X 

Mr. Johnson (GA) ......................................................

Mr. Deutch (FL) ......................................................... X 

Mr. Gutierrez (IL) ......................................................

Ms. Bass (CA) ............................................................ X 

Mr. Richmond (LA) ....................................................

Mr. Jeffries (NY) ........................................................

Mr. Cicilline (RI) ........................................................ X 

Mr. Swalwell (CA) ..................................................... X 

Mr. Lieu (CA) ............................................................. X 

Mr. Raskin (MD) ........................................................ X 

Ms. Jayapal (WA) ...................................................... X 

Mr. Schneider (IL) ..................................................... X 

Total ............................................................. 12 21 

3. Amendment #3, offered by Ms. Jackson Lee, to require the filing of certain information regarding settlement amounts paid by a 

third-party before such third-party can seek discovery from an asbestos trust. The amendment was defeated by a rollcall vote of 12 

to 20. 

ROLLCALL NO. 3 

Ayes Nays Present 

Mr. Goodlatte (VA), Chairman ................................. X 

Mr. Sensenbrenner, Jr. (WI) ..................................... X 

Mr. Smith (TX) ..........................................................

Mr. Chabot (OH) ........................................................

Mr. Issa (CA) .............................................................. X 

Mr. King (IA) ............................................................. X 

Mr. Franks (AZ) ......................................................... X 

Mr. Gohmert (TX) ...................................................... X 

Mr. Jordan (OH) ........................................................ X 

Mr. Poe (TX) ...............................................................

Mr. Chaffetz (UT) ...................................................... X 

Mr. Marino (PA) ........................................................ X 

Mr. Gowdy (SC) ......................................................... X 

Mr. Labrador (ID) ...................................................... X 

Mr. Farenthold (TX) .................................................. X 

Mr. Collins (GA) ........................................................

Mr. DeSantis (FL) ..................................................... X 

Mr. Buck (CO) ............................................................ X 

Mr. Ratcliffe (TX) ....................................................... X 

Mr. Bishop (MI) ......................................................... X 

Ms. Roby (AL) ............................................................ X 

Mr. Gaetz (FL) ........................................................... X 

Mr. Johnson (LA) ....................................................... X 


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ROLLCALL NO. 3—Continued 

Ayes Nays Present 

Mr. Biggs (AZ) ........................................................... X 

Mr. Conyers, Jr. (MI), Ranking Member ................. X 

Mr. Nadler (NY) ......................................................... X 

Ms. Lofgren (CA) .......................................................

Ms. Jackson Lee (TX) ................................................ X 

Mr. Cohen (TN) .......................................................... X 

Mr. Johnson (GA) ...................................................... X 

Mr. Deutch (FL) ......................................................... X 

Mr. Gutierrez (IL) ......................................................

Ms. Bass (CA) ............................................................

Mr. Richmond (LA) ....................................................

Mr. Jeffries (NY) ........................................................ X 

Mr. Cicilline (RI) ........................................................ X 

Mr. Swalwell (CA) ..................................................... X 

Mr. Lieu (CA) ............................................................. X 

Mr. Raskin (MD) ........................................................ X 

Ms. Jayapal (WA) ......................................................

Mr. Schneider (IL) ..................................................... X 

Total ............................................................. 12 20 

4. Amendment #4, offered by Mr. Johnson, to exclude personally 

identifiable information relating to the claimant from the bill’s public reporting and document production requirement. The amendment was defeated by a rollcall vote of 12 to 20. 

ROLLCALL NO. 4 

Ayes Nays Present 

Mr. Goodlatte (VA), Chairman ................................. X 

Mr. Sensenbrenner, Jr. (WI) ..................................... X 

Mr. Smith (TX) ..........................................................

Mr. Chabot (OH) ........................................................

Mr. Issa (CA) .............................................................. X 

Mr. King (IA) ............................................................. X 

Mr. Franks (AZ) ......................................................... X 

Mr. Gohmert (TX) ...................................................... X 

Mr. Jordan (OH) ........................................................ X 

Mr. Poe (TX) ...............................................................

Mr. Chaffetz (UT) ...................................................... X 

Mr. Marino (PA) ........................................................ X 

Mr. Gowdy (SC) ......................................................... X 

Mr. Labrador (ID) ...................................................... X 

Mr. Farenthold (TX) .................................................. X 

Mr. Collins (GA) ........................................................

Mr. DeSantis (FL) ..................................................... X 

Mr. Buck (CO) ............................................................ X 

Mr. Ratcliffe (TX) ....................................................... X 

Mr. Bishop (MI) ......................................................... X 

Ms. Roby (AL) ............................................................ X 


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ROLLCALL NO. 4—Continued 

Ayes Nays Present 

Mr. Gaetz (FL) ........................................................... X 

Mr. Johnson (LA) ....................................................... X 

Mr. Biggs (AZ) ........................................................... X 

Mr. Conyers, Jr. (MI), Ranking Member ................. X 

Mr. Nadler (NY) ......................................................... X 

Ms. Lofgren (CA) .......................................................

Ms. Jackson Lee (TX) ................................................ X 

Mr. Cohen (TN) .......................................................... X 

Mr. Johnson (GA) ...................................................... X 

Mr. Deutch (FL) ......................................................... X 

Mr. Gutierrez (IL) ......................................................

Ms. Bass (CA) ............................................................

Mr. Richmond (LA) ....................................................

Mr. Jeffries (NY) ........................................................ X 

Mr. Cicilline (RI) ........................................................ X 

Mr. Swalwell (CA) ..................................................... X 

Mr. Lieu (CA) ............................................................. X 

Mr. Raskin (MD) ........................................................ X 

Ms. Jayapal (WA) ......................................................

Mr. Schneider (IL) ..................................................... X 

Total ............................................................. 12 20 

5. Amendment #5, offered by Mr. Jefferies, to replace the quarterly reporting requirements with a requirement that a trust provide discovery, upon written request, to a party to an action concerning liability for asbestos exposure if the requesting party cannot obtain such information under non-bankruptcy law. The 

amendment was defeated by a rollcall vote of 13 to 19. 

ROLLCALL NO. 5 

Ayes Nays Present 

Mr. Goodlatte (VA), Chairman ................................. X 

Mr. Sensenbrenner, Jr. (WI) ..................................... X 

Mr. Smith (TX) ..........................................................

Mr. Chabot (OH) ........................................................

Mr. Issa (CA) ..............................................................

Mr. King (IA) ............................................................. X 

Mr. Franks (AZ) ......................................................... X 

Mr. Gohmert (TX) ...................................................... X 

Mr. Jordan (OH) ........................................................ X 

Mr. Poe (TX) ...............................................................

Mr. Chaffetz (UT) ...................................................... X 

Mr. Marino (PA) ........................................................ X 

Mr. Gowdy (SC) ......................................................... X 

Mr. Labrador (ID) ...................................................... X 

Mr. Farenthold (TX) .................................................. X 

Mr. Collins (GA) ........................................................

Mr. DeSantis (FL) ..................................................... X 


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ROLLCALL NO. 5—Continued 

Ayes Nays Present 

Mr. Buck (CO) ............................................................ X 

Mr. Ratcliffe (TX) ....................................................... X 

Mr. Bishop (MI) ......................................................... X 

Ms. Roby (AL) ............................................................ X 

Mr. Gaetz (FL) ........................................................... X 

Mr. Johnson (LA) ....................................................... X 

Mr. Biggs (AZ) ........................................................... X 

Mr. Conyers, Jr. (MI), Ranking Member ................. X 

Mr. Nadler (NY) ......................................................... X 

Ms. Lofgren (CA) .......................................................

Ms. Jackson Lee (TX) ................................................ X 

Mr. Cohen (TN) .......................................................... X 

Mr. Johnson (GA) ...................................................... X 

Mr. Deutch (FL) ......................................................... X 

Mr. Gutierrez (IL) ......................................................

Ms. Bass (CA) ............................................................

Mr. Richmond (LA) ....................................................

Mr. Jeffries (NY) ........................................................ X 

Mr. Cicilline (RI) ........................................................ X 

Mr. Swalwell (CA) ..................................................... X 

Mr. Lieu (CA) ............................................................. X 

Mr. Raskin (MD) ........................................................ X 

Ms. Jayapal (WA) ...................................................... X 

Mr. Schneider (IL) ..................................................... X 

Total ............................................................. 13 19 

6. Amendment #6, offered by Mr. Cicilline, to exclude members 

of the Armed Forces and their families and civilian employees of 

the Department of Defense and their families from the requirements of the FACT Act. The amendment was defeated by a rollcall 

vote of 11 to 18. 

ROLLCALL NO. 6 

Ayes Nays Present 

Mr. Goodlatte (VA), Chairman ................................. X 

Mr. Sensenbrenner, Jr. (WI) ..................................... X 

Mr. Smith (TX) ..........................................................

Mr. Chabot (OH) ........................................................

Mr. Issa (CA) .............................................................. X 

Mr. King (IA) ............................................................. X 

Mr. Franks (AZ) ......................................................... X 

Mr. Gohmert (TX) ...................................................... X 

Mr. Jordan (OH) ........................................................

Mr. Poe (TX) ...............................................................

Mr. Chaffetz (UT) ...................................................... X 

Mr. Marino (PA) ........................................................ X 

Mr. Gowdy (SC) ......................................................... X 

Mr. Labrador (ID) ...................................................... X 


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ROLLCALL NO. 6—Continued 

Ayes Nays Present 

Mr. Farenthold (TX) .................................................. X 

Mr. Collins (GA) ........................................................

Mr. DeSantis (FL) ..................................................... X 

Mr. Buck (CO) ............................................................ X 

Mr. Ratcliffe (TX) ....................................................... X 

Mr. Bishop (MI) ......................................................... X 

Ms. Roby (AL) ............................................................ X 

Mr. Gaetz (FL) ........................................................... X 

Mr. Johnson (LA) .......................................................

Mr. Biggs (AZ) ........................................................... X 

Mr. Conyers, Jr. (MI), Ranking Member ................. X 

Mr. Nadler (NY) ......................................................... X 

Ms. Lofgren (CA) .......................................................

Ms. Jackson Lee (TX) ................................................ X 

Mr. Cohen (TN) .......................................................... X 

Mr. Johnson (GA) ...................................................... X 

Mr. Deutch (FL) .........................................................

Mr. Gutierrez (IL) ......................................................

Ms. Bass (CA) ............................................................

Mr. Richmond (LA) ....................................................

Mr. Jeffries (NY) ........................................................

Mr. Cicilline (RI) ........................................................ X 

Mr. Swalwell (CA) ..................................................... X 

Mr. Lieu (CA) ............................................................. X 

Mr. Raskin (MD) ........................................................ X 

Ms. Jayapal (WA) ...................................................... X 

Mr. Schneider (IL) ..................................................... X 

Total ............................................................. 11 18 

7. Motion to report H.R. 906 favorably to the House of Representatives. The motion was agreed to by a rollcall vote of 19 to 

11. 

ROLLCALL NO. 7 

Ayes Nays Present 

Mr. Goodlatte (VA), Chairman ................................. X 

Mr. Sensenbrenner, Jr. (WI) ..................................... X 

Mr. Smith (TX) ..........................................................

Mr. Chabot (OH) ........................................................

Mr. Issa (CA) .............................................................. X 

Mr. King (IA) ............................................................. X 

Mr. Franks (AZ) ......................................................... X 

Mr. Gohmert (TX) ...................................................... X 

Mr. Jordan (OH) ........................................................

Mr. Poe (TX) ...............................................................

Mr. Chaffetz (UT) ...................................................... X 

Mr. Marino (PA) ........................................................ X 

Mr. Gowdy (SC) ......................................................... X 


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ROLLCALL NO. 7—Continued 

Ayes Nays Present 

Mr. Labrador (ID) ...................................................... X 

Mr. Farenthold (TX) .................................................. X 

Mr. Collins (GA) ........................................................

Mr. DeSantis (FL) ..................................................... X 

Mr. Buck (CO) ............................................................ X 

Mr. Ratcliffe (TX) ....................................................... X 

Mr. Bishop (MI) ......................................................... X 

Ms. Roby (AL) ............................................................ X 

Mr. Gaetz (FL) ........................................................... X 

Mr. Johnson (LA) ....................................................... X 

Mr. Biggs (AZ) ........................................................... X 

Mr. Conyers, Jr. (MI), Ranking Member ................. X 

Mr. Nadler (NY) ......................................................... X 

Ms. Lofgren (CA) .......................................................

Ms. Jackson Lee (TX) ................................................ X 

Mr. Cohen (TN) .......................................................... X 

Mr. Johnson (GA) ...................................................... X 

Mr. Deutch (FL) .........................................................

Mr. Gutierrez (IL) ......................................................

Ms. Bass (CA) ............................................................

Mr. Richmond (LA) ....................................................

Mr. Jeffries (NY) ........................................................

Mr. Cicilline (RI) ........................................................ X 

Mr. Swalwell (CA) ..................................................... X 

Mr. Lieu (CA) ............................................................. X 

Mr. Raskin (MD) ........................................................ X 

Ms. Jayapal (WA) ...................................................... X 

Mr. Schneider (IL) ..................................................... X 

Total ............................................................. 19 11 

Committee Oversight Findings 

In compliance with clause 3(c)(1) of rule XIII of the Rules of the 

House of Representatives, the Committee advises that the findings 

and recommendations of the Committee, based on oversight activities under clause 2(b)(1) of rule X of the Rules of the House of Representatives, are incorporated in the descriptive portions of this report. 

New Budget Authority and Tax Expenditures 

Clause 3(c)(2) of rule XIII of the Rules of the House of Representatives is inapplicable because this legislation does not provide new 

budgetary authority or increased tax expenditures. 

Congressional Budget Office Cost Estimate 

In compliance with clause 3(c)(3) of rule XIII of the Rules of the 

House of Representatives, the Committee sets forth, with respect to 

the bill, H.R. 906, the following estimate and comparison prepared 


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26 

by the Director of the Congressional Budget Office under section 

402 of the Congressional Budget Act of 1974: 

U.S. CONGRESS, 

CONGRESSIONAL BUDGET OFFICE, 

Washington, DC, February 17, 2017. 

Hon. BOB GOODLATTE, CHAIRMAN, 

Committee on the Judiciary, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 906, the ‘‘Furthering Asbestos Claims Transparency (FACT) Act of 2017.’’ 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Robert Reese, who can 

be reached at 226–2860. 

Sincerely, 

KEITH HALL, 

DIRECTOR. 

Enclosure 

cc: Honorable John Conyers, Jr. 

Ranking Member 

H.R. 906—Furthering Asbestos Claims Transparency (FACT) 

Act of 2017. 

As ordered reported by the House Committee on the Judiciary 

on February 15, 2017. 

H.R. 906 would require trusts set up through a Chapter 11 bankruptcy reorganization caused by asbestos liabilities to submit quarterly reports to the relevant bankruptcy court concerning the damage claims and payments made by the trust. Bankruptcy courts 

would then be required to make the information from such reports 

publicly available. 

Based on an analysis of information provided by the Administrative Office of the U.S. Courts about the costs associated with making the required information publicly available, CBO estimates that 

implementing the bill would have no significant effect on the Federal budget. Enacting H.R. 906 would not affect direct spending or 

revenues; therefore, pay-as-you-go procedures do not apply. 

CBO estimates that enacting H.R. 906 would not increase net direct spending or on-budget deficits in any of the four consecutive 

10-year periods beginning in 2028. 

H.R. 906 contains no intergovernmental mandates as defined in 

the Unfunded Mandates Reform Act (UMRA) and would impose no 

costs on state, local, or tribal governments. 

H.R. 906 would impose a private-sector mandate as defined in 

UMRA by requiring asbestos trusts to submit quarterly reports. According to studies by the Government Accountability Office (GAO) 

and the RAND Corporation, only a small number of asbestos trusts 

currently exist (about 60). Further, the GAO study indicates that 

the information to be submitted under the bill is already tracked 

by many of the asbestos trusts. Therefore, CBO expects that the inVerDate Sep 11 2014 22:43 Feb 24, 2017 Jkt 069006 PO 00000 Frm 00026 Fmt 6659 Sfmt 6601 E:\HR\OC\HR018.XXX HR018

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cremental cost to comply with the reporting requirements in the 

bill would fall below the annual threshold established in UMRA for 

private-sector mandates ($156 million in 2017, adjusted annually 

for inflation). 

The CBO staff contacts for this estimate are Robert Reese (for 

Federal costs) and Paige Piper/Bach (for private-sector mandates). 

The estimate was approved by H. Samuel Papenfuss, Deputy Assistant Director for Budget Analysis. 

Duplication of Federal Programs 

No provision of H.R. 906 establishes or reauthorizes a program 

of the Federal Government known to be duplicative of another Federal program, a program that was included in any report from the 

Government Accountability Office to Congress pursuant to section 

21 of Public Law 111–139, or a program related to a program identified in the most recent Catalog of Federal Domestic Assistance. 

Disclosure of Directed Rule Makings 

The Committee estimates that H.R. 906 specifically directs to be 

completed no specific rule makings within the meaning of 5 

§ U.S.C. 551. 

Performance Goals and Objectives 

The Committee states that pursuant to clause 3(c)(4) of rule XIII 

of the Rules of the House of Representatives, H.R. 906 amends title 

11, United States Code, to require the publication and disclosure 

of certain data by trusts created in a chapter 11 plan pursuant to 

section 524 of that title. 

Advisory on Earmarks 

In accordance with clause 9 of rule XXI of the Rules of the House 

of Representatives, H.R. 906 does not contain any congressional 

earmarks, limited tax benefits, or limited tariff benefits as defined 

in clause 9(e), 9(f), or 9(g) of Rule XXI. 

Section-by-Section Analysis 

The following discussion describes the bill as reported by the 

Committee. 

Section 1. Short Title. Provides that the bill may be referred to 

as the ‘‘Furthering Asbestos Claim Transparency Act of 2017,’’ or 

‘‘FACT Act of 2017.’’ 

Section 2. Amendments. Adds to section 524(g) of the Bankruptcy 

Code a requirement that asbestos liability trusts publish quarterly 

public reports identifying claimants, amounts paid, and the basis 

for paying claims on the court’s public docket. Further provides 

that trusts must comply with third-party discovery demands subject to third-party payment of reasonable discovery costs. 

Section 3. Effective Date; Application of Amendments. Sets the effective date of the Act as date of enactment. Provides that the 

amendments made by the Act apply retroactively and prospectively. 


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Changes in Existing Law Made by the Bill, as Reported 

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (new matter is printed in italics 

and existing law in which no change is proposed is shown in 

roman): 

TITLE 11, UNITED STATES CODE 

* * * * * * * 

CHAPTER 5—CREDITORS, THE DEBTOR, AND THE 

ESTATE 

* * * * * * * 

SUBCHAPTER II—DEBTOR’S DUTIES AND BENEFITS 

* * * * * * * 

§ 524. Effect of discharge 

(a) A discharge in a case under this title— 

(1) voids any judgment at any time obtained, to the extent 

that such judgment is a determination of the personal liability 

of the debtor with respect to any debt discharged under section 

727, 944, 1141, 1228, or 1328 of this title, whether or not discharge of such debt is waived; 

(2) operates as an injunction against the commencement or 

continuation of an action, the employment of process, or an act, 

to collect, recover or offset any such debt as a personal liability 

of the debtor, whether or not discharge of such debt is waived; 

and 

(3) operates as an injunction against the commencement or 

continuation of an action, the employment of process, or an act, 

to collect or recover from, or offset against, property of the 

debtor of the kind specified in section 541(a)(2) of this title that 

is acquired after the commencement of the case, on account of 

any allowable community claim, except a community claim 

that is excepted from discharge under section 523, 1228(a)(1), 

or 1328(a)(1), or that would be so excepted, determined in accordance with the provisions of sections 523(c) and 523(d) of 

this title, in a case concerning the debtor’s spouse commenced 

on the date of the filing of the petition in the case concerning 

the debtor, whether or not discharge of the debt based on such 

community claim is waived. 

(b) Subsection (a)(3) of this section does not apply if— 

(1)(A) the debtor’s spouse is a debtor in a case under this 

title, or a bankrupt or a debtor in a case under the Bankruptcy 

Act, commenced within six years of the date of the filing of the 

petition in the case concerning the debtor; and 

(B) the court does not grant the debtor’s spouse a discharge in such case concerning the debtor’s spouse; or 

(2)(A) the court would not grant the debtor’s spouse a discharge in a case under chapter 7 of this title concerning such 


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spouse commenced on the date of the filing of the petition in 

the case concerning the debtor; and 

(B) a determination that the court would not so grant such 

discharge is made by the bankruptcy court within the time and 

in the manner provided for a determination under section 727 

of this title of whether a debtor is granted a discharge. 

(c) An agreement between a holder of a claim and the debtor, 

the consideration for which, in whole or in part, is based on a debt 

that is dischargeable in a case under this title is enforceable only 

to any extent enforceable under applicable nonbankruptcy law, 

whether or not discharge of such debt is waived, only if— 

(1) such agreement was made before the granting of the 

discharge under section 727, 1141, 1228, or 1328 of this title; 

(2) the debtor received the disclosures described in subsection (k) at or before the time at which the debtor signed the 

agreement; 

(3) such agreement has been filed with the court and, if 

applicable, accompanied by a declaration or an affidavit of the 

attorney that represented the debtor during the course of negotiating an agreement under this subsection, which states 

that— 

(A) such agreement represents a fully informed and 

voluntary agreement by the debtor; 

(B) such agreement does not impose an undue hardship on the debtor or a dependent of the debtor; and 

(C) the attorney fully advised the debtor of the legal 

effect and consequences of— 

(i) an agreement of the kind specified in this subsection; and 

(ii) any default under such an agreement; 

(4) the debtor has not rescinded such agreement at any 

time prior to discharge or within sixty days after such agreement is filed with the court, whichever occurs later, by giving 

notice of rescission to the holder of such claim; 

(5) the provisions of subsection (d) of this section have 

been complied with; and 

(6)(A) in a case concerning an individual who was not represented by an attorney during the course of negotiating an 

agreement under this subsection, the court approves such 

agreement as— 

(i) not imposing an undue hardship on the debtor or 

a dependent of the debtor; and 

(ii) in the best interest of the debtor. 

(B) Subparagraph (A) shall not apply to the extent that 

such debt is a consumer debt secured by real property. 

(d) In a case concerning an individual, when the court has determined whether to grant or not to grant a discharge under section 727, 1141, 1228, or 1328 of this title, the court may hold a 

hearing at which the debtor shall appear in person. At any such 

hearing, the court shall inform the debtor that a discharge has 

been granted or the reason why a discharge has not been granted. 

If a discharge has been granted and if the debtor desires to make 

an agreement of the kind specified in subsection (c) of this section 

and was not represented by an attorney during the course of negotiating such agreement, then the court shall hold a hearing at 


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which the debtor shall appear in person and at such hearing the 

court shall— 

(1) inform the debtor— 

(A) that such an agreement is not required under this 

title, under nonbankruptcy law, or under any agreement 

not made in accordance with the provisions of subsection 

(c) of this section; and 

(B) of the legal effect and consequences of— 

(i) an agreement of the kind specified in subsection (c) of this section; and 

(ii) a default under such an agreement; and 

(2) determine whether the agreement that the debtor desires to make complies with the requirements of subsection 

(c)(6) of this section, if the consideration for such agreement is 

based in whole or in part on a consumer debt that is not secured by real property of the debtor. 

(e) Except as provided in subsection (a)(3) of this section, discharge of a debt of the debtor does not affect the liability of any 

other entity on, or the property of any other entity for, such debt. 

(f) Nothing contained in subsection (c) or (d) of this section prevents a debtor from voluntarily repaying any debt. 

(g)(1)(A) After notice and hearing, a court that enters an order 

confirming a plan of reorganization under chapter 11 may issue, in 

connection with such order, an injunction in accordance with this 

subsection to supplement the injunctive effect of a discharge under 

this section. 

(B) An injunction may be issued under subparagraph (A) to enjoin entities from taking legal action for the purpose of directly or 

indirectly collecting, recovering, or receiving payment or recovery 

with respect to any claim or demand that, under a plan of reorganization, is to be paid in whole or in part by a trust described in 

paragraph (2)(B)(i), except such legal actions as are expressly allowed by the injunction, the confirmation order, or the plan of reorganization. 

(2)(A) Subject to subsection (h), if the requirements of subparagraph (B) are met at the time an injunction described in paragraph 

(1) is entered, then after entry of such injunction, any proceeding 

that involves the validity, application, construction, or modification 

of such injunction, or of this subsection with respect to such injunction, may be commenced only in the district court in which such 

injunction was entered, and such court shall have exclusive jurisdiction over any such proceeding without regard to the amount in 

controversy. 

(B) The requirements of this subparagraph are that— 

(i) the injunction is to be implemented in connection with 

a trust that, pursuant to the plan of reorganization— 

(I) is to assume the liabilities of a debtor which at the 

time of entry of the order for relief has been named as a 

defendant in personal injury, wrongful death, or propertydamage actions seeking recovery for damages allegedly 

caused by the presence of, or exposure to, asbestos or asbestos-containing products; 

(II) is to be funded in whole or in part by the securities of 1 or more debtors involved in such plan and by the 


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31 

obligation of such debtor or debtors to make future payments, including dividends; 

(III) is to own, or by the exercise of rights granted 

under such plan would be entitled to own if specified contingencies occur, a majority of the voting shares of— 

(aa) each such debtor; 

(bb) the parent corporation of each such debtor; or 

(cc) a subsidiary of each such debtor that is also 

a debtor; and 

(IV) is to use its assets or income to pay claims and 

demands; and 

(ii) subject to subsection (h), the court determines that— 

(I) the debtor is likely to be subject to substantial future demands for payment arising out of the same or similar conduct or events that gave rise to the claims that are 

addressed by the injunction; 

(II) the actual amounts, numbers, and timing of such 

future demands cannot be determined; 

(III) pursuit of such demands outside the procedures 

prescribed by such plan is likely to threaten the plan’s 

purpose to deal equitably with claims and future demands; 

(IV) as part of the process of seeking confirmation of 

such plan— 

(aa) the terms of the injunction proposed to be 

issued under paragraph (1)(A), including any provisions barring actions against third parties pursuant to 

paragraph (4)(A), are set out in such plan and in any 

disclosure statement supporting the plan; and 

(bb) a separate class or classes of the claimants 

whose claims are to be addressed by a trust described 

in clause (i) is established and votes, by at least 75 

percent of those voting, in favor of the plan; and 

(V) subject to subsection (h), pursuant to court orders 

or otherwise, the trust will operate through mechanisms 

such as structured, periodic, or supplemental payments, 

pro rata distributions, matrices, or periodic review of estimates of the numbers and values of present claims and future demands, or other comparable mechanisms, that provide reasonable assurance that the trust will value, and be 

in a financial position to pay, present claims and future 

demands that involve similar claims in substantially the 

same manner. 

(3)(A) If the requirements of paragraph (2)(B) are met and the 

order confirming the plan of reorganization was issued or affirmed 

by the district court that has jurisdiction over the reorganization 

case, then after the time for appeal of the order that issues or affirms the plan— 

(i) the injunction shall be valid and enforceable and may 

not be revoked or modified by any court except through appeal 

in accordance with paragraph (6); 

(ii) no entity that pursuant to such plan or thereafter becomes a direct or indirect transferee of, or successor to any assets of, a debtor or trust that is the subject of the injunction 

shall be liable with respect to any claim or demand made 


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32 

against such entity by reason of its becoming such a transferee 

or successor; and 

(iii) no entity that pursuant to such plan or thereafter 

makes a loan to such a debtor or trust or to such a successor 

or transferee shall, by reason of making the loan, be liable 

with respect to any claim or demand made against such entity, 

nor shall any pledge of assets made in connection with such a 

loan be upset or impaired for that reason; 

(B) Subparagraph (A) shall not be construed to— 

(i) imply that an entity described in subparagraph (A)(ii) 

or (iii) would, if this paragraph were not applicable, necessarily 

be liable to any entity by reason of any of the acts described 

in subparagraph (A); 

(ii) relieve any such entity of the duty to comply with, or 

of liability under, any Federal or State law regarding the making of a fraudulent conveyance in a transaction described in 

subparagraph (A)(ii) or (iii); or 

(iii) relieve a debtor of the debtor’s obligation to comply 

with the terms of the plan of reorganization, or affect the 

power of the court to exercise its authority under sections 1141 

and 1142 to compel the debtor to do so. 

(4)(A)(i) Subject to subparagraph (B), an injunction described 

in paragraph (1) shall be valid and enforceable against all entities 

that it addresses. 

(ii) Notwithstanding the provisions of section 524(e), such an 

injunction may bar any action directed against a third party who 

is identifiable from the terms of such injunction (by name or as 

part of an identifiable group) and is alleged to be directly or indirectly liable for the conduct of, claims against, or demands on the 

debtor to the extent such alleged liability of such third party arises 

by reason of— 

(I) the third party’s ownership of a financial interest in the 

debtor, a past or present affiliate of the debtor, or a predecessor in interest of the debtor; 

(II) the third party’s involvement in the management of 

the debtor or a predecessor in interest of the debtor, or service 

as an officer, director or employee of the debtor or a related 

party; 

(III) the third party’s provision of insurance to the debtor 

or a related party; or 

(IV) the third party’s involvement in a transaction changing the corporate structure, or in a loan or other financial 

transaction affecting the financial condition, of the debtor or a 

related party, including but not limited to— 

(aa) involvement in providing financing (debt or equity), or advice to an entity involved in such a transaction; 

or 

(bb) acquiring or selling a financial interest in an entity as part of such a transaction. 

(iii) As used in this subparagraph, the term ‘‘related party’’ 

means— 

(I) a past or present affiliate of the debtor; 

(II) a predecessor in interest of the debtor; or 

(III) any entity that owned a financial interest in— 

(aa) the debtor; 


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33 

(bb) a past or present affiliate of the debtor; or 

(cc) a predecessor in interest of the debtor. 

(B) Subject to subsection (h), if, under a plan of reorganization, 

a kind of demand described in such plan is to be paid in whole or 

in part by a trust described in paragraph (2)(B)(i) in connection 

with which an injunction described in paragraph (1) is to be implemented, then such injunction shall be valid and enforceable with 

respect to a demand of such kind made, after such plan is confirmed, against the debtor or debtors involved, or against a third 

party described in subparagraph (A)(ii), if— 

(i) as part of the proceedings leading to issuance of such 

injunction, the court appoints a legal representative for the 

purpose of protecting the rights of persons that might subsequently assert demands of such kind, and 

(ii) the court determines, before entering the order confirming such plan, that identifying such debtor or debtors, or 

such third party (by name or as part of an identifiable group), 

in such injunction with respect to such demands for purposes 

of this subparagraph is fair and equitable with respect to the 

persons that might subsequently assert such demands, in light 

of the benefits provided, or to be provided, to such trust on behalf of such debtor or debtors or such third party. 

(5) In this subsection, the term ‘‘demand’’ means a demand for 

payment, present or future, that— 

(A) was not a claim during the proceedings leading to the 

confirmation of a plan of reorganization; 

(B) arises out of the same or similar conduct or events that 

gave rise to the claims addressed by the injunction issued 

under paragraph (1); and 

(C) pursuant to the plan, is to be paid by a trust described 

in paragraph (2)(B)(i). 

(6) Paragraph (3)(A)(i) does not bar an action taken by or at 

the direction of an appellate court on appeal of an injunction issued 

under paragraph (1) or of the order of confirmation that relates to 

the injunction. 

(7) This subsection does not affect the operation of section 1144 

or the power of the district court to refer a proceeding under section 157 of title 28 or any reference of a proceeding made prior to 

the date of the enactment of this subsection. 

(8) A trust described in paragraph (2) shall, subject to section 

107— 

(A) file with the bankruptcy court, not later than 60 days 

after the end of every quarter, a report that shall be made available on the court’s public docket and with respect to such quarter— 

(i) describes each demand the trust received from, including the name and exposure history of, a claimant and 

the basis for any payment from the trust made to such 

claimant; and 

(ii) does not include any confidential medical record or 

the claimant’s full social security number; and 

(B) upon written request, and subject to payment (demanded at the option of the trust) for any reasonable cost incurred by the trust to comply with such request, provide in a 

timely manner any information related to payment from, and 


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34 

demands for payment from, such trust, subject to appropriate 

protective orders, to any party to any action in law or equity if 

the subject of such action concerns liability for asbestos exposure. 

(h) APPLICATION TO EXISTING INJUNCTIONS.—For purposes of 

subsection (g)— 

(1) subject to paragraph (2), if an injunction of the kind described in subsection (g)(1)(B) was issued before the date of the 

enactment of this Act, as part of a plan of reorganization confirmed by an order entered before such date, then the injunction shall be considered to meet the requirements of subsection 

(g)(2)(B) for purposes of subsection (g)(2)(A), and to satisfy subsection (g)(4)(A)(ii), if— 

(A) the court determined at the time the plan was confirmed that the plan was fair and equitable in accordance 

with the requirements of section 1129(b); 

(B) as part of the proceedings leading to issuance of 

such injunction and confirmation of such plan, the court 

had appointed a legal representative for the purpose of 

protecting the rights of persons that might subsequently 

assert demands described in subsection (g)(4)(B) with respect to such plan; and 

(C) such legal representative did not object to confirmation of such plan or issuance of such injunction; and 

(2) for purposes of paragraph (1), if a trust described in 

subsection (g)(2)(B)(i) is subject to a court order on the date of 

the enactment of this Act staying such trust from settling or 

paying further claims— 

(A) the requirements of subsection (g)(2)(B)(ii)(V) shall 

not apply with respect to such trust until such stay is lifted or dissolved; and 

(B) if such trust meets such requirements on the date 

such stay is lifted or dissolved, such trust shall be considered to have met such requirements continuously from the 

date of the enactment of this Act. 

(i) The willful failure of a creditor to credit payments received 

under a plan confirmed under this title, unless the order confirming the plan is revoked, the plan is in default, or the creditor 

has not received payments required to be made under the plan in 

the manner required by the plan (including crediting the amounts 

required under the plan), shall constitute a violation of an injunction under subsection (a)(2) if the act of the creditor to collect and 

failure to credit payments in the manner required by the plan 

caused material injury to the debtor. 

(j) Subsection (a)(2) does not operate as an injunction against 

an act by a creditor that is the holder of a secured claim, if— 

(1) such creditor retains a security interest in real property 

that is the principal residence of the debtor; 

(2) such act is in the ordinary course of business between 

the creditor and the debtor; and 

(3) such act is limited to seeking or obtaining periodic payments associated with a valid security interest in lieu of pursuit of in rem relief to enforce the lien. 

(k)(1) The disclosures required under subsection (c)(2) shall 

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pleted as required in that paragraph, together with the agreement 

specified in subsection (c), statement, declaration, motion and order 

described, respectively, in paragraphs (4) through (8), and shall be 

the only disclosures required in connection with entering into such 

agreement. 

(2) Disclosures made under paragraph (1) shall be made clearly 

and conspicuously and in writing. The terms ‘‘Amount Reaffirmed’’ 

and ‘‘Annual Percentage Rate’’ shall be disclosed more conspicuously than other terms, data or information provided in connection 

with this disclosure, except that the phrases ‘‘Before agreeing to reaffirm a debt, review these important disclosures’’ and ‘‘Summary 

of Reaffirmation Agreement’’ may be equally conspicuous. Disclosures may be made in a different order and may use terminology 

different from that set forth in paragraphs (2) through (8), except 

that the terms ‘‘Amount Reaffirmed’’ and ‘‘Annual Percentage Rate’’ 

must be used where indicated. 

(3) The disclosure statement required under this paragraph 

shall consist of the following: 

(A) The statement: ‘‘Part A: Before agreeing to reaffirm a 

debt, review these important disclosures:’’; 

(B) Under the heading ‘‘Summary of Reaffirmation Agreement’’, the statement: ‘‘This Summary is made pursuant to the 

requirements of the Bankruptcy Code’’; 

(C) The ‘‘Amount Reaffirmed’’, using that term, which shall 

be— 

(i) the total amount of debt that the debtor agrees to 

reaffirm by entering into an agreement of the kind specified in subsection (c), and 

(ii) the total of any fees and costs accrued as of the 

date of the disclosure statement, related to such total 

amount. 

(D) In conjunction with the disclosure of the ‘‘Amount Reaffirmed’’, the statements— 

(i) ‘‘The amount of debt you have agreed to reaffirm’’; 

and 

(ii) ‘‘Your credit agreement may obligate you to pay 

additional amounts which may come due after the date of 

this disclosure. Consult your credit agreement.’’. 

(E) The ‘‘Annual Percentage Rate’’, using that term, which 

shall be disclosed as— 

(i) if, at the time the petition is filed, the debt is an 

extension of credit under an open end credit plan, as the 

terms ‘‘credit’’ and ‘‘open end credit plan’’ are defined in 

section 103 of the Truth in Lending Act, then— 

(I) the annual percentage rate determined under 

paragraphs (5) and (6) of section 127(b) of the Truth 

in Lending Act, as applicable, as disclosed to the debtor in the most recent periodic statement prior to entering into an agreement of the kind specified in subsection (c) or, if no such periodic statement has been 

given to the debtor during the prior 6 months, the annual percentage rate as it would have been so disclosed at the time the disclosure statement is given to 

the debtor, or to the extent this annual percentage 

rate is not readily available or not applicable, then 


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36 

(II) the simple interest rate applicable to the 

amount reaffirmed as of the date the disclosure statement is given to the debtor, or if different simple interest rates apply to different balances, the simple interest rate applicable to each such balance, identifying 

the amount of each such balance included in the 

amount reaffirmed, or 

(III) if the entity making the disclosure elects, to 

disclose the annual percentage rate under subclause 

(I) and the simple interest rate under subclause (II); 

or 

(ii) if, at the time the petition is filed, the debt is an 

extension of credit other than under an open end credit 

plan, as the terms ‘‘credit’’ and ‘‘open end credit plan’’ are 

defined in section 103 of the Truth in Lending Act, then— 

(I) the annual percentage rate under section 

128(a)(4) of the Truth in Lending Act, as disclosed to 

the debtor in the most recent disclosure statement 

given to the debtor prior to the entering into an agreement of the kind specified in subsection (c) with respect to the debt, or, if no such disclosure statement 

was given to the debtor, the annual percentage rate as 

it would have been so disclosed at the time the disclosure statement is given to the debtor, or to the extent 

this annual percentage rate is not readily available or 

not applicable, then 

(II) the simple interest rate applicable to the 

amount reaffirmed as of the date the disclosure statement is given to the debtor, or if different simple interest rates apply to different balances, the simple interest rate applicable to each such balance, identifying 

the amount of such balance included in the amount reaffirmed, or 

(III) if the entity making the disclosure elects, to 

disclose the annual percentage rate under (I) and the 

simple interest rate under (II). 

(F) If the underlying debt transaction was disclosed as a 

variable rate transaction on the most recent disclosure given 

under the Truth in Lending Act, by stating ‘‘The interest rate 

on your loan may be a variable interest rate which changes 

from time to time, so that the annual percentage rate disclosed 

here may be higher or lower.’’. 

(G) If the debt is secured by a security interest which has 

not been waived in whole or in part or determined to be void 

by a final order of the court at the time of the disclosure, by 

disclosing that a security interest or lien in goods or property 

is asserted over some or all of the debts the debtor is reaffirming and listing the items and their original purchase price that 

are subject to the asserted security interest, or if not a purchase-money security interest then listing by items or types 

and the original amount of the loan. 

(H) At the election of the creditor, a statement of the repayment schedule using 1 or a combination of the following— 

(i) by making the statement: ‘‘Your first payment in 

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ment amount may be different. Consult your reaffirmation 

agreement or credit agreement, as applicable.’’, and stating 

the amount of the first payment and the due date of that 

payment in the places provided; 

(ii) by making the statement: ‘‘Your payment schedule 

will be:’’, and describing the repayment schedule with the 

number, amount, and due dates or period of payments 

scheduled to repay the debts reaffirmed to the extent then 

known by the disclosing party; or 

(iii) by describing the debtor’s repayment obligations 

with reasonable specificity to the extent then known by the 

disclosing party. 

(I) The following statement: ‘‘Note: When this disclosure 

refers to what a creditor‘may’do, it does not use the 

word‘may’to give the creditor specific permission. The word 

‘may’is used to tell you what might occur if the law permits the 

creditor to take the action. If you have questions about your reaffirming a debt or what the law requires, consult with the attorney who helped you negotiate this agreement reaffirming a 

debt. If you don’t have an attorney helping you, the judge will 

explain the effect of your reaffirming a debt when the hearing 

on the reaffirmation agreement is held.’’. 

(J)(i) The following additional statements: 

′′Reaffirming a debt is a serious financial decision. The law 

requires you to take certain steps to make sure the decision is 

in your best interest. If these steps are not completed, the reaffirmation agreement is not effective, even though you have 

signed it. ′′1. Read the disclosures in this Part A carefully. Consider 

the decision to reaffirm carefully. Then, if you want to reaffirm, sign the reaffirmation agreement in Part B (or you may 

use a separate agreement you and your creditor agree on). ′′2. Complete and sign Part D and be sure you can afford 

to make the payments you are agreeing to make and have received a copy of the disclosure statement and a completed and 

signed reaffirmation agreement. 

′′3. If you were represented by an attorney during the negotiation of your reaffirmation agreement, the attorney must 

have signed the certification in Part C. 

′′4. If you were not represented by an attorney during the 

negotiation of your reaffirmation agreement, you must have 

completed and signed Part E. 

′′5. The original of this disclosure must be filed with the 

court by you or your creditor. If a separate reaffirmation agreement (other than the one in Part B) has been signed, it must 

be attached. 

′′6. If you were represented by an attorney during the negotiation of your reaffirmation agreement, your reaffirmation 

agreement becomes effective upon filing with the court unless 

the reaffirmation is presumed to be an undue hardship as explained in Part D. 

′′7. If you were not represented by an attorney during the 

negotiation of your reaffirmation agreement, it will not be effective unless the court approves it. The court will notify you 

of the hearing on your reaffirmation agreement. You must atVerDate Sep 11 2014 22:43 Feb 24, 2017 Jkt 069006 PO 00000 Frm 00037 Fmt 6659 Sfmt 6601 E:\HR\OC\HR018.XXX HR018

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tend this hearing in bankruptcy court where the judge will review your reaffirmation agreement. The bankruptcy court must 

approve your reaffirmation agreement as consistent with your 

best interests, except that no court approval is required if your 

reaffirmation agreement is for a consumer debt secured by a 

mortgage, deed of trust, security deed, or other lien on your 

real property, like your home. 

′′Your right to rescind (cancel) your reaffirmation agreement. You may rescind (cancel) your reaffirmation agreement 

at any time before the bankruptcy court enters a discharge 

order, or before the expiration of the 60-day period that begins 

on the date your reaffirmation agreement is filed with the 

court, whichever occurs later. To rescind (cancel) your reaffirmation agreement, you must notify the creditor that your reaffirmation agreement is rescinded (or canceled). 

′′What are your obligations if you reaffirm the debt? A reaffirmed debt remains your personal legal obligation. It is not 

discharged in your bankruptcy case. That means that if you default on your reaffirmed debt after your bankruptcy case is 

over, your creditor may be able to take your property or your 

wages. Otherwise, your obligations will be determined by the 

reaffirmation agreement which may have changed the terms of 

the original agreement. For example, if you are reaffirming an 

open end credit agreement, the creditor may be permitted by 

that agreement or applicable law to change the terms of that 

agreement in the future under certain conditions. 

′′Are you required to enter into a reaffirmation agreement 

by any law? No, you are not required to reaffirm a debt by any 

law. Only agree to reaffirm a debt if it is in your best interest. 

Be sure you can afford the payments you agree to make. 

‘‘What if your creditor has a security interest or lien? Your 

bankruptcy discharge does not eliminate any lien on your property. A‘lien’is often referred to as a security interest, deed of 

trust, mortgage or security deed. Even if you do not reaffirm 

and your personal liability on the debt is discharged, because 

of the lien your creditor may still have the right to take the 

property securing the lien if you do not pay the debt or default 

on it. If the lien is on an item of personal property that is exempt under your State’s law or that the trustee has abandoned, you may be able to redeem the item rather than reaffirm the debt. To redeem, you must make a single payment to 

the creditor equal to the amount of the allowed secured claim, 

as agreed by the parties or determined by the court.’’. 

(ii) In the case of a reaffirmation under subsection (m)(2), 

numbered paragraph 6 in the disclosures required by clause (i) 

of this subparagraph shall read as follows: 

‘‘6. If you were represented by an attorney during the negotiation of your reaffirmation agreement, your reaffirmation 

agreement becomes effective upon filing with the court.’’. 

(4) The form of such agreement required under this paragraph 

shall consist of the following: 

′′Part B: Reaffirmation Agreement. I (we) agree to reaffirm 

the debts arising under the credit agreement described below. 

′′Brief description of credit agreement: 


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39 

′′Description of any changes to the credit agreement made 

as part of this reaffirmation agreement: ′′Signature: Date: 

′′Borrower: 

′′Co-borrower, if also reaffirming these debts: 

′′Accepted by creditor: 

‘‘Date of creditor acceptance:’’. 

(5) The declaration shall consist of the following: 

(A) The following certification: 

′′Part C: Certification by Debtor’s Attorney (If Any). 

′′I hereby certify that (1) this agreement represents a fully 

informed and voluntary agreement by the debtor; (2) this 

agreement does not impose an undue hardship on the debtor 

or any dependent of the debtor; and (3) I have fully advised the 

debtor of the legal effect and consequences of this agreement 

and any default under this agreement. 

‘‘Signature of Debtor’s Attorney: Date:’’. 

(B) If a presumption of undue hardship has been established with respect to such agreement, such certification shall 

state that, in the opinion of the attorney, the debtor is able to 

make the payment. 

(C) In the case of a reaffirmation agreement under subsection (m)(2), subparagraph (B) is not applicable. 

(6)(A) The statement in support of such agreement, which the 

debtor shall sign and date prior to filing with the court, shall consist of the following: ′′Part D: Debtor’s Statement in Support of Reaffirmation 

Agreement. ′′1. I believe this reaffirmation agreement will not impose 

an undue hardship on my dependents or me. I can afford to 

make the payments on the reaffirmed debt because my monthly income (take home pay plus any other income received) is 

$lll, and my actual current monthly expenses including 

monthly payments on post-bankruptcy debt and other reaffirmation agreements total $lll, leaving $lll to make the 

required payments on this reaffirmed debt. I understand that 

if my income less my monthly expenses does not leave enough 

to make the payments, this reaffirmation agreement is presumed to be an undue hardship on me and must be reviewed 

by the court. However, this presumption may be overcome if I 

explain to the satisfaction of the court how I can afford to 

make the payments here: lll. 

‘‘2. I received a copy of the Reaffirmation Disclosure Statement in Part A and a completed and signed reaffirmation 

agreement.’’. 

(B) Where the debtor is represented by an attorney and is reaffirming a debt owed to a creditor defined in section 19(b)(1)(A)(iv) 

of the Federal Reserve Act, the statement of support of the reaffirmation agreement, which the debtor shall sign and date prior to filing with the court, shall consist of the following: 

‘‘I believe this reaffirmation agreement is in my financial 

interest. I can afford to make the payments on the reaffirmed 

debt. I received a copy of the Reaffirmation Disclosure Statement in Part A and a completed and signed reaffirmation 

agreement.’’. 


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(7) The motion that may be used if approval of such agreement 

by the court is required in order for it to be effective, shall be 

signed and dated by the movant and shall consist of the following: 

′′Part E: Motion for Court Approval (To be completed only 

if the debtor is not represented by an attorney.). I (we), the 

debtor(s), affirm the following to be true and correct: 

′′I am not represented by an attorney in connection with 

this reaffirmation agreement. 

′′I believe this reaffirmation agreement is in my best interest based on the income and expenses I have disclosed in my 

Statement in Support of this reaffirmation agreement, and because (provide any additional relevant reasons the court should 

consider): 

‘‘Therefore, I ask the court for an order approving this reaffirmation agreement.’’. 

(8) The court order, which may be used to approve such agreement, shall consist of the following: 

‘‘Court Order: The court grants the debtor’s motion and approves the reaffirmation agreement described above.’’. 

(l) Notwithstanding any other provision of this title the following shall apply: 

(1) A creditor may accept payments from a debtor before 

and after the filing of an agreement of the kind specified in 

subsection (c) with the court. 

(2) A creditor may accept payments from a debtor under 

such agreement that the creditor believes in good faith to be 

effective. 

(3) The requirements of subsections (c)(2) and (k) shall be 

satisfied if disclosures required under those subsections are 

given in good faith. 

(m)(1) Until 60 days after an agreement of the kind specified 

in subsection (c) is filed with the court (or such additional period 

as the court, after notice and a hearing and for cause, orders before 

the expiration of such period), it shall be presumed that such 

agreement is an undue hardship on the debtor if the debtor’s 

monthly income less the debtor’s monthly expenses as shown on 

the debtor’s completed and signed statement in support of such 

agreement required under subsection (k)(6)(A) is less than the 

scheduled payments on the reaffirmed debt. This presumption shall 

be reviewed by the court. The presumption may be rebutted in 

writing by the debtor if the statement includes an explanation that 

identifies additional sources of funds to make the payments as 

agreed upon under the terms of such agreement. If the presumption is not rebutted to the satisfaction of the court, the court may 

disapprove such agreement. No agreement shall be disapproved 

without notice and a hearing to the debtor and creditor, and such 

hearing shall be concluded before the entry of the debtor’s discharge. 

(2) This subsection does not apply to reaffirmation agreements 

where the creditor is a credit union, as defined in section 

19(b)(1)(A)(iv) of the Federal Reserve Act. 

* * * * * * * 


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(41) 

1See, e.g., Letter from Sue Vento et al. to Representatives Bob Goodlatte (R-VA), Chair, & 

John Conyers, Jr., Ranking Member, H. Comm. on the Judiciary (Feb. 14, 2017) (signed by 138 

asbestos victims and family members of asbestos victims) (on file with H. Comm. on the Judiciary Democratic staff); Op. Ed., Susan Vento, Asbestos Victims Call on Congress to Stop FastTracking Legislation That Would Violate Victim’s Privacy, ROLL CALL, May 14, 2015, at 11 (describing the bill as ‘‘offensive’’). 2Letter from Aleks Morosky, Nat’l Legislative Dir., Military Order of the Purple Heart et al. 

to Representative Paul Ryan (R-WI) et al. (Feb. 14, 2017) (‘‘Forcing our veterans to publicize 

their work histories, medical conditions, majority of their social security numbers, and information about their children and families is an offensive invasion of privacy to the men and women 

who have honorably served, and it does nothing to assure their adequate compensation or to 

prevent future asbestos exposures and deaths.’’) (on file with H. Comm. on the Judiciary Democratic staff). 3Letter from Essential Information et al. to Representatives Bob Goodlatte (R-VA), Chair, & 

John Conyers, Jr., Ranking Member, H. Comm. on the Judiciary (Feb. 14, 2017) (expressing concern that H.R. 906 will ‘‘subject consumers to likely fraud and abuse stemming from release of 

their personal information’’) (on file with H. Comm. on the Judiciary Democratic staff). 

Dissenting Views 

H.R. 906, the ‘‘Furthering Asbestos Claim Transparency (FACT) 

Act of 2017,’’ would benefit the very entities that knowingly produced a toxic substance that killed or seriously injured unsuspecting American consumers and workers. Specifically, the bill would 

require a trust—established under bankruptcy law to pay the 

claims of individuals injured as a result of their exposure to asbestos—to: (1) file a quarterly, publicly-available report with the bankruptcy court that includes certain personal information concerning 

these claimants; and (2) provide information relating to any payment demands or payments made to such claimants upon written 

request of any party to any action concerning liability for asbestos 

exposure. As a result, asbestos victims’ private information will be 

irretrievably released into the public domain and available via the 

Internet. 

The principal concerns presented by the bill are the following: (1) 

its reporting and disclosure requirements are a blatant assault on 

asbestos victims’ privacy interests; (2) it is fundamentally inequitable in that the measure mandates disclosure by the trusts, but 

does not impose comparable disclosure demands on defendant companies, even though they exposed millions of unsuspecting Americans to their toxic products; (3) it addresses a non-existent problem 

as there is no evidence of systemic fraud; (4) it is an end-run by 

defendant companies around the discovery process available under 

non-bankruptcy law; and (5) it will divert critical funds and further 

decrease compensation to asbestos victims by forcing bankruptcy 

trusts to prepare burdensome reports. In recognition of these concerns, this legislation is opposed by numerous asbestos victims and 

their families;1 various veterans service organizations, including 

the Military Order of the Purple Heart, AMVETS, and the Vietnam 

Veterans of America;2 privacy and civil liberties organizations;3

various consumer and environmental organizations, including 


SSpencer on DSK4SPTVN1PROD with REPORTS
42 

4Letter from the Alliance for Justice et al. to Representatives Bob Goodlatte (R-VA), Chair, 

& John Conyers, Jr., Ranking Member, H. Comm. on the Judiciary (Feb. 14, 2017) (observing 

that the ‘‘bill is extremely misguided’’) (on file with H. Comm. on the Judiciary Democratic 

staff). 5Letter from Asbestos Disease Awareness Organization et al. to Representatives Bob Goodlatte (R-VA), Chair, & John Conyers, Jr., Ranking Member, H. Comm. on the Judiciary (Feb. 

14, 2017) (calling on Congress ‘‘to stand with our nation’s workforce and other victims of asbestos diseases’’) (on file with H. Comm. on the Judiciary Democratic staff). 6 Alliance for Justice, Protect Asbestos Victims—Oppose H.R. 906, the so-called ‘‘FACT Act’’ 

(undated) (on file with H. Comm. on the Judiciary Democratic staff). 7See, e.g., Letter from Douglas A. Campbell, counsel for various asbestos settlement trusts, 

to Representative Bob Goodlatte, Chair, H. Comm. on the Judiciary, et al. (Feb. 14, 2017) (on 

file with H. Comm. on the Judiciary Democratic staff). 8 Executive Office of the President, Statement of Administration Policy—H.R. 1927, the Fairness in Class Action Litigation and Furthering Asbestos Claim Transparency Act of 2015 (Jan. 

6, 2016) (noting that the bill’s disclosure requirement ‘‘would threaten their privacy, make them 

more vulnerable to identity thieves and other predators, and potentially disadvantage them in 

many ways unrelated to asbestos exposure, including in their efforts to obtain employment, 

credit, and insurance’’). 9 11 U.S.C. § 107(c)(1) (2017). 

Earthjustice, Public Citizen, and US PIRG; 4 labor organizations 

and occupational health and safety organizations; 5 the Alliance for 

Justice; 6 and a legal representative for future asbestos personal injury claimants with respect to asbestos bankruptcy trusts.7 In addition, the Obama Administration issued a veto threat regarding legislation that included a measure that was substantially identical to 

H.R. 906 considered in the last Congress.8

DESCRIPTION AND BACKGROUND

DESCRIPTION

H.R. 906 amends Bankruptcy Code section 524(g) to add a provision consisting of two components. First, it requires a trust, subject 

to Bankruptcy Code section 107, to file with the bankruptcy court 

not later than 60 days after the end of every quarter a report that 

must be made available on the court’s public docket. The report 

must describe each demand the trust received from a claimant, including the claimant’s name and exposure history as well as the 

basis for any payment from the trust made to such claimant. The 

report must not include any confidential medical record or the 

claimant’s full Social Security number. Second, the provision requires the trust, upon written request and, at the trust’s option, 

subject to payment for any reasonable costs incurred in responding 

to such request, to provide in a timely manner any information related to payment from and demands for payment from the trust, 

subject to appropriate protective orders, to any party to any action 

in law or equity if the subject of such action concerns liability for 

asbestos exposure. The bill’s reporting and information disclosure 

requirements are subject to Bankruptcy Code section 107, which 

authorizes the bankruptcy court, for cause, to restrict public access 

to any document filed in a bankruptcy case if the court finds that 

the disclosure of such information would create an ‘‘undue risk of 

identity theft or other unlawful injury.’’ 9

BACKGROUND

I. THE LETHAL EFFECTS OF ASBESTOS

Asbestos is a fibrous material, extracted from the earth that has 

been used for centuries because of its tensile strength and heat reVerDate Sep 11 2014 22:43 Feb 24, 2017 Jkt 069006 PO 00000 Frm 00042 Fmt 6601 Sfmt 6601 E:\HR\OC\HR018.XXX HR018

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10 Asbestos Litigation Crisis in Federal and State Courts: Hearings Before the Subcommittee 

on Intellectual Property and Judicial Administration of the House Comm. on the Judiciary, 102d 

Congress 1 (1975) (Opening Statement of Chairman Hughes) [hereinafter Asbestos Litigation 

Hearings]. 11 Id. 12 U.S. Government Accountability Office, Report on Asbestos Injury Compensation: The Role 

and Administration of Asbestos Trusts, GAO–11–819, at 6 (Sept. 2011) [hereinafter GAO Report]. 13 Asbestos Litigation Hearings at 2. 14 Id. 15 Id. 16 Report of the Judicial Conference of the U.S. Courts Ad Hoc Committee on Asbestos Litigation, at 2 (Mar. 1991). 17Letter of transmittal dated July 21, 1983, Chronic Hazards Advisory Panel on Asbestos, Report to the U.S. Consumer Product Safety Commission (July 1983). 18 U.S. Environmental Protection Agency, EPA Study of Asbestos-Containing Materials in Public Buildings: A Report to Congress, at 5 (Feb. 1988). 19Pub. L. No. 94–469, 90 Stat. 2003 (1976) (codified in 15 U.S.C. §§ 2601 et seq. (2017)). Section 6 of the Act authorizes the agency to prohibit the manufacture of certain products ‘‘[i]f the 

Administrator finds that there is a reasonable basis to conclude that the manufacture, processing, distribution in commerce, use, or disposal of a chemical substance or mixture, or that 

any combination of such activities, presents or will present an unreasonable risk of injury to 

health or the environment[.]’’ 15 U.S.C. § 2605 (2017). 20 Corrosion Proof Fittings v. Environmental Protection Agency, 947 F.2d 1201 (5th Cir. 1991). 

sistance.10 The modern industrial use of asbestos dates back to 

around 1860. Between 1934 and 1964, the world’s annual use of 

raw asbestos increased from about 500,000 tons to 2.5 million 

tons.11 Asbestos was often utilized as an insulator and as a fire retardant by the construction and ship-building industries. Examples 

of asbestos-containing products include attic and wall insulation, 

‘‘roofing shingles, ceiling and vinyl floor tiles, paper and cement 

products, and friction products such as automobile clutch, brake 

and transmission parts.’’ 12 The Department of Labor estimates 

that approximately 21 million Americans have been significantly 

exposed to asbestos.13

Asbestos fibers, when released into the atmosphere and inhaled 

by humans, may cause various diseases, including asbestosis—a 

clogging and scarring of the lungs that can produce a reduced 

breathing capacity—and mesothelioma—a cancer of the lining of 

the chest and abdomen that is typically fatal.14 Lung cancer and 

other diseases have also been associated with the inhalation of asbestos fibers.15

Although a link between asbestos and lung cancer was first reported in 1935, millions of Americans were exposed to asbestos 

over the ensuing years and their injuries began to manifest in the 

1960’s.16 For example, the Occupational Safety and Health Administration stated in 1986 that it was ‘‘aware of no instance in which 

exposure to a toxic substance more clearly demonstrated detrimental health effects on humans than has asbestos exposure. The 

diseases caused by asbestos exposure are life-threatening or disabling.’’ 17 The Environmental Protection Agency (‘‘EPA’’) in 1988 

published a study of asbestos in public schools and found that its 

presence was ‘‘extremely hazardous.’’ 18

In 1989, the EPA issued a regulation pursuant to the Toxic Substances Control Act 19 banning most asbestos-containing products. 

This regulation, however, was remanded by the Fifth Circuit Court 

of Appeals 20 and, ‘‘[a]s a result, most of the original ban on the 

manufacture, importation, processing, or distribution in commerce 

for the majority of the asbestos-containing products originally covVerDate Sep 11 2014 22:43 Feb 24, 2017 Jkt 069006 PO 00000 Frm 00043 Fmt 6601 Sfmt 6601 E:\HR\OC\HR018.XXX HR018

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21 U.S. ENVIRONMENTAL PROTECTION AGENCY, U.S. FEDERAL BANS ON ASBESTOS—REGU- LATORY HISTORY OF ASBESTOS BANS, http://www2.epa.gov/asbestos/us-federal-bans-asbestos (last 

visited Feb. 17, 2017). 22See, e.g., 16 C.F.R. Parts 1304–05 (2017) (banning the use of asbestos in certain spackling 

compounds). 23Other products that are permitted to be manufactured with asbestos include: cement corrugated sheets, cement flat sheet, pipeline wrap, roofing felt, cement shingle, millboard, cement 

pipe, automatic transmission components, clutch facings, friction materials, drum brake linings, 

brake blocks, and gaskets. U.S. Environmental Protection Agency, U.S. Federal Bans on Asbestos, http://www2.epa.gov/asbestos/us-federal-bans-asbestos (last visited Feb. 17, 2017). 24 Borel v. Fibreboard Paper Products Corp., 493 F.2d 1076 (5th Cir. 1973). 25GAO Report at 8. 26Lloyd Dixon et al., Report: Asbestos Bankruptcy Trusts—An Overview of Trust Structure 

and Activity with Detailed Reports on the Largest Trusts, Rand Institute for Civil Justice, at 

xi (2010). 27GAO Report at 1. Approximately 100 companies have filed for bankruptcy relief at least in 

part due to asbestos-related liability. Id. at 2. 28Pub. L. No. 103–394, § 111(a), 108 Stat. 4108 (1994). 29Kane v. Johns-Manville Corp., 843 F.2d 636 (2nd Cir. 1988). 30The provision defines ‘‘demand’’ as a means a demand for payment, present or future, 

that—(A) was not a claim during the proceedings leading to the confirmation of a plan of reorganization; (B) arises out of the same or similar conduct or events that gave rise to the claims 

addressed by the injunction issued under paragraph (1); and (C) pursuant to the plan, is to be 

paid by a trust described in paragraph (2)(B)(I). 11 U.S.C. § 524(g)(5) (2017). 31 11 U.S.C. § 524(g)(1)(B) (2017). 32 11 U.S.C. § 524(g)(2)(B)(i) (2017). 

ered in the 1989 final rule was overturned.’’ 21 Currently, the use 

of asbestos is banned in the manufacture of certain products,22 but 

it continues to be used in many other products, such as disk brake 

pads, vinyl floor tiles, and clothing.23

The first appellate opinion upholding a product liability judgment against a manufacturer of asbestos-containing products was 

rendered in 1973 by the Fifth Circuit.24 As reported by the Government Accountability Office (GAO), ‘‘In the course of the first successful personal injury lawsuits against asbestos manufacturers, 

plaintiffs’ attorneys introduced evidence that these manufacturers 

had known but concealed information about the dangers of asbestos 

exposure or that such dangers were reasonably foreseeable.’’ 25 In 

the more than four decades since, litigation over personal injuries 

resulting from exposure to asbestos has resulted in ‘‘hundreds of 

thousands of claims filed and billions of dollars in compensation 

paid,’’ according to the Rand Institute for Civil Justice.26 ‘‘Asbestos 

litigation,’’ according to the GAO, ‘‘has been the longest-running 

mass tort litigation in U.S. history.’’ 27

II. OVERVIEW OF BANKRUPTCY ASBESTOS TRUSTS

In 1994, Congress amended the Bankruptcy Code to authorize 

the imposition of a channeling injunction in chapter 11 cases involving asbestos claims.28 Codified as section 524(g), this provision 

allows a debtor, under certain circumstances, to shift its asbestos 

liabilities to a trust fund. Modeled on the injunction issued in the 

Johns-Manville bankruptcy case,29 section 524(g) authorizes a 

court in a chapter 11 case, after making certain findings, to issue 

an injunction preventing any entity from ‘‘taking legal action for 

the purpose of directly or indirectly collecting, recovering, or receiving payment’’ for any claim or demand 30 that is to be paid in full 

or in part by a trust established under a confirmed plan of reorganization.31 The trust is typically funded with newly issued securities of the recapitalized debtor and by the debtor’s obligation to 

make future payments.32 Upon confirmation, the trust assumes all 

of the debtor’s liabilities for personal injury, wrongful death, or 


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33 11 U.S.C. § 524(g)(2)(B) (2017). 34GAO Report at 13. 35 Id. at 3. 36 Id. at 15. 37 Id. 38 Id. at 17. 39 Id. at 21. 40 Id. at 16. 41 Id. at 18. 42 Id. 43 Id. at 15. 

property damages allegedly caused by the presence or exposure to 

asbestos or asbestos-containing products.33 As the GAO observes, 

‘‘neither the courts nor the U.S. Trustees have any specific statutory or other requirements to oversee a trust’s administration.’’ 34

Once operational, the trust implements ‘‘a nonadversarial administrative process—independent of the court system—to review 

claimants’ occupational and medical histories before awarding compensation.’’ 35 The trusts are privately managed and typically consist of a trustee, a trust advisory committee, and a future claims 

representative.36 The GAO explains: 

Trustees manage the daily operations of the trusts, including managing the trusts’ investments, hiring and supervising support staff and advisors, filing taxes, and submitting annual reports to the bankruptcy court, as required 

by the trusts’ [trust agreement]. The trustees are to manage the trust for the sole benefit of the present and future 

claimant beneficiaries.37

Each trust establishes its own process by which claims are assessed and paid. Claims that meet the requisite criteria are paid 

a percentage of the scheduled value based on the nature of the asserted injury. The payment ratio varies among the trusts based on 

the availability of assets and anticipated present and future 

claims.38 According to the GAO, payments range from 1.1% to 

100% for certain diseases, such as mesothelioma or asbestosis and 

the median payment percentage among the various trusts was 

25%.39 The GAO reports that since the establishment of the first 

trust in 1988, ‘‘asbestos trusts have paid about 3.3 million claims 

valued at about $17.5 billion,’’ as of 2010.40

To establish entitlement to compensation, the claimant completes 

a claim form supported by documented evidence of exposure to asbestos products. Such evidence may consist of the claimant’s work 

history, employer records, Social Security records, and deposition 

testimony taken during any litigation.41 The claimant must also 

submit medical records ‘‘sufficient to support a diagnosis for the 

specific disease being claimed or, if applicable, a copy of a death 

certificate.’’ 42 In addition to seeking compensation from an asbestos bankruptcy trust, asbestos claimants may seek compensation 

from liable companies that are not in bankruptcy through the tort 

system.43

CONCERNS WITH H.R. 906

The principal beneficiaries of H.R. 906 would be the very entities 

that knowingly produced a toxic substance that killed or seriously 

injured unsuspecting American consumers and workers. The legisVerDate Sep 11 2014 22:43 Feb 24, 2017 Jkt 069006 PO 00000 Frm 00045 Fmt 6601 Sfmt 6601 E:\HR\OC\HR018.XXX HR018

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44See, e.g., Memorandum from Representative Bob Goodlatte, Chairman, to Members of the 

H. Comm. on the Judiciary, at 5 (Feb. 14, 2017) (‘‘Fraudulent activity has occurred persistently 

throughout the long history of asbestos litigation. . . . [T]he Committee received testimony indicating that trusts formed in bankruptcy for the purpose of funding payments to asbestos victims 

were reducing their public disclosures. . . . Accordingly, funds dedicated in a bankruptcy case 

for the relief of asbestos victims likely were being used to satisfy fraudulent claims.’’) (on file 

with the H. Comm. on the Judiciary Democratic staff). 45See, e.g., Dionne Searcey & Rob Barry, As Asbestos Claims Rise, So Do Worries About 

Fraud, WALL ST. J., Mar. 11, 2013, at A1. 46 Id. 47 Joan Claybrook, Fraud Made the Asbestos Illness Situation Much Worse, Letter to the Editor, WALL ST. J., (May 19, 2013, at A16). 48Telephone interview with William Jenkins, Director, Homeland Security and Justice Issues, 

et al., U.S. Government Accountability Office (May 7, 2012); GAO Report, at 23. 

lation does nothing to protect victims or to improve the claims process and is based on the false assertion that there is endemic fraud 

in the asbestos trust system that must be addressed. The legislation is an end-run by defendants around the current discovery process. Further, H.R. 906’s reporting and disclosure requirements are 

an assault on asbestos victims’ privacy interests and are fundamentally inequitable because solvent defendant companies are not similarly required to disclose their confidential settlement agreements. 

Finally, the measure’s burdensome new reporting requirements 

will divert critical funds and further decrease compensation to asbestos victims. 

I. H.R. 906 IS UNNECESSARY GIVEN THE ABSENCE OF ANY EMPIRICAL

EVIDENCE OF SYSTEMIC FRAUD

To justify the bill’s onerous new requirements that would be 

borne by asbestos trusts and asbestos victims, proponents of H.R. 

906 allege that there is pervasive fraud and abuse in the asbestos 

trust compensation system,44 even though there have been only isolated reports of fraudulent claims over the years. For example, although the Wall Street Journal in 2013 purported to document ‘‘numerous apparent anomalies’’ regarding various asbestos claims,45 a 

close reading of its report shows that these instances typically resulted from human error or that protocols for rooting out fraud 

worked as intended.46 As noted in her response to this article, Joan 

Claybrook, president of Public Citizen from 1982 to 2009 and head 

of the National Highway Traffic Safety Administration From 1977 

to 1981, observed: 

There is no evidence to support assertions of significant 

fraud in claims by asbestos victims. Human error in data 

entry is not fraud. Out of millions of claims filed at the 

company asbestos trusts, the Journal’s extensive investigation identified an error and anomaly rate of only 0.35%, 

much of that due to mistakes by the trusts, not the victims.47

It is also important to note that the GAO is not aware of any 

subsequent reports of endemic fraud since 2004 with respect to asbestos claims and it did not uncover any evidence of overt fraud 

during its examination of asbestos trusts.48 Instead, the GAO detailed a robust set of procedures that a claimant must follow to establish entitlement to compensation by which the claimant has to 

complete a claim form supported with documented evidence of exposure to asbestos products. Such evidence may consist of the 


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49GAO Report at 18. 50 Id. 51 Id. at 23. 52 Id. 53 Id. 54Furthering Asbestos Claim Transparency (FACT) Act of 2013: Hearing on H.R. 982 Before 

the Subcomm. on Regulatory Reform, Commercial and Antitrust Law of the H. Comm. on the 

Judiciary, 113 Cong. (2013) (prepared statement of Elihu Inselbuch). 

claimant’s work history, employer records, Social Security records, 

and deposition testimony taken during any litigation.49 The claimant must also submit medical records ‘‘sufficient to support a diagnosis for the specific disease being claimed or, if applicable, a copy 

of a death certificate.’’ 50 In addition, 98% of the 52 trusts that the 

GAO reviewed required a claims audit program to be conducted. 

Based on interviews held with representatives from 11 trusts, GAO 

found that all the trusts ‘‘incorporate quality assurance measures 

into their intake, evaluation, and payment processes.’’ 51 GAO also 

found that ‘‘each trust is committed to ensuring that no fraudulent 

claims are paid by the trust, which aligns with their goals of preserving assets for future claimants.’’ 52 It is noteworthy that even 

with this heightened scrutiny, none of the trusts ‘‘indicated that 

these audits had identified cases of fraud.’’ 53

As the Minority witness explained during a hearing on a substantially identical bill held before the House Subcommittee on 

Regulatory Reform, Commercial and Antitrust Law in 2013, 

‘‘[s]olvent asbestos defendants remaining in the tort system are 

currently able to learn all information relevant to a claim against 

them, including information about a victim’s trust claims, under 

state discovery rules.’’ 54 All information that would be relevant to 

claims against asbestos defendants—including information related 

to a victim’s trust claims—can be obtained using normal discovery 

tools available under state law, such as interrogatories, document 

requests, and depositions. Nonetheless, the bill’s proponents offer 

no explanation as to why the bill’s potentially costly and burdensome information request provision is necessary or why Federal 

law should override state law discovery processes. 

II. H.R. 906 WOULD HARM ASBESTOS VICTIMS IN MULTIPLE WAYS

A. The Bill’s Reporting and Disclosure Requirements Would Invade 

Asbestos Victims’ Privacy Interests 

H.R. 906’s mandatory reporting and disclosure requirements 

would violate an asbestos victim’s privacy if he or she seeks payment for injuries from an asbestos bankruptcy trust. Specifically, 

the bill requires the victim’s personal information, including their 

name and exposure history, to be made part of the bankruptcy 

court’s public case docket, which is easily accessible through the 

Internet with the payment of a nominal fee. As a result, information concerning claimants’ sensitive personal information would be 

irretrievably released into the public domain. 

Such disclosures could be a treasure trove of data easily accessible by insurance companies, prospective employers, lenders, and 

data collectors who then can use such information for purposes 

having absolutely nothing to do with compensation for asbestos exposure and to the detriment of asbestos victims. In effect, this bill 

would allow unsuspecting asbestos victims to be further victimized, 


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55Letter from Susan Vento, widow of Rep. Bruce Vento (D-MN), et al., to Members of the 

House of Representatives (Feb. 4, 2015), at 2 (on file with Comm. on the Judiciary Democratic 

staff). 56GAO Report at 30. 57 Id. 58 Id. at 29. 59 Id. 60Memorandum from Legal Representatives for Future Asbestos Personal Injury Claimants 

with Respect to Certain Asbestos Settlement Trusts to Prof. Troy McKenzie, Advisory 

Comm.ittee on Bankruptcy Rules of the Judicial Conference of the United States, at 2 (Aug. 10, 

2011) (on file with the H. Comm. on the Judiciary Democratic staff). 61 Christine DiGangi, Identity Theft Complaints Leap by 47%, USA TODAY, Jan. 30, 2016, at 

http://www.usatoday.com/story/money/personalfinance/2016/01/30/identity-theft-complaints-leap47/79410150. 62 Unofficial Tr. of Markup of H.R. 906, the ‘‘Furthering Asbestos Claim Transparency (FACT) 

Act of 2017,’’ by the H. Comm. on the Judiciary, 115th Cong. at 28 (Feb. 15, 2017) [hereinafter 

Markup Tr.]. 

all in the name of helping those who harmed these victims in the 

first place. As the widow of former Representative Bruce Vento (DMN), who died of mesothelioma in 2000, warned, ‘‘The information 

on this public registry could be used to deny employment, credit, 

and health, life, and disability insurance. We are also concerned 

that victims would be more vulnerable to identity thieves, con men, 

and other types of predators.’’ 55

Proponents of more disclosure argue that it may reduce the ‘‘asbestos-related litigation burden on the remaining solvent defendants by demonstrating that the trusts have increased claimants’ 

overall compensation beyond the amount justified in relation to the 

harm caused.’’ 56 They also assert that the current system’s lack of 

transparency ‘‘could enable plaintiffs to file contradictory claims to 

different trusts while also pursuing recovery through the tort system.’’ 57

Nevertheless, as the GAO has observed, ‘‘parties in the tort system are not required to disclose settlement negotiation or agreement information outside of the subpoena process’’ and ‘‘trusts are 

analogous to any other settling party and related negotiations and 

payments are privileged.’’ 58 Equally important, the GAO noted 

that ‘‘all of the potentially relevant information in the trusts’ possession is available to the defense through pretrial discovery.’’ 59 In 

addition, asbestos bankruptcy trust representatives are concerned 

about the ‘‘privacy rights of hundreds of thousands of individuals 

who did nothing except successfully seek compensation from a 

trust.’’ 60 According to the Federal Trade Commission (FTC), identity theft is one of the top complaints received by the agency. In 

2015, for example, the FTC received more than 490,220 identity 

theft complaints a 47% increase over the number of these complaints it received in 2014.61

To highlight these concerns with the legislation, Ranking Member John Conyers, Jr. (D-MI) offered an amendment that would 

have replaced the substantive text of the bill with a requirement 

that the bankruptcy asbestos trust report quarterly an aggregate 

list of demands received and payments made. Unfortunately, this 

amendment failed by a party-line vote of 11 to 20.62 Representative 

Henry C. ‘‘Hank’’ Johnson, Jr. (D-GA) similarly expressed concern 

about the bill’s potentially adverse impact on the privacy interests 

of asbestos victims and offered an amendment that would have required disclosures mandated under the bill to exclude all personVerDate Sep 11 2014 22:43 Feb 24, 2017 Jkt 069006 PO 00000 Frm 00048 Fmt 6601 Sfmt 6601 E:\HR\OC\HR018.XXX HR018

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63 Id. at 90. 64See, e.g., Press Release, Bob Goodlatte, Chair, H. Comm. on the Judiciary, Goodlatte and 

Farenthold Praise House Judiciary Approval of FACT Act (Feb. 15, 2017). 65See, e.g., Op. Ed., Susan Vento, Asbestos Victims Call on Congress to Stop Fast-Tracking 

Legislation That Would Violate Victim’s Privacy, ROLL CALL, May 14, 2015, at 11 (describing 

the bill as ‘‘offensive’’); Letter from Susan Vento widow of Rep. Bruce Vento (D-MN), et al. to 

U.S. House of Representative Members (May 13, 2015) (on file with H. Comm. on the Judiciary 

Democratic staff) (warning that H.R. 526 ‘‘will make it harder for victims to seek justice and 

easier for asbestos companies to delay cases and pay less to victims’’); Michael Valach, son of 

deceased victim of mesothelioma, to Representative Tom Marino (R-PA), Chair, Subcomm. on 

Regulatory Reform, Commercial and Antitrust Law of the H. Comm. on the Judiciary (May 13, 

2015) (on file with H. Comm. on the Judiciary Democratic staff) (expressing concern that the 

legislation will ‘‘place personal information about asbestos victims and their families . . . on a 

public database accessible to the entire world’’). Vento Letter. 66See, e.g., Furthering Asbestos Claims Transparency (FACT) Act of 2015: Hearing on H.R. 

526 Before the Subcomm. on Regulatory Reform, Commercial and Antitrust Law, 114th Cong. 

(2015); Furthering Asbestos Claims Transparency (FACT) Act of 2013: Hearing on H.R. 928 Before the Subcomm. on Regulatory Reform, Commercial and Antitrust Law, 113th Cong. (2013); 

Furthering Asbestos Claims Transparency (FACT) Act of 2012: Hearing on H.R. 4369 Before the 

Subcomm. on Courts, Commercial and Admin. L. of the H. Comm. on the Judiciary, 112th Cong. 

(2012); How Fraud and Abuse in the Asbestos Compensation System Affect Victims, Jobs, the 

Economy, and the Legal System: Hearing Before the Subcomm. on the Constitution of the H. 

Comm. on the Judiciary, 112th Cong. (2011). 67Furthering Asbestos Claim Transparency (FACT) Act: Hearing on H.R. 526 Before the 

Subcomm. on Regulatory Reform, Commercial and Antitrust and Law of the H. Comm. on the 

Judiciary, 114th Cong. 111 (2015). 68Letter from Susan Vento widow of Rep. Bruce Vento (D-MN), et al. to U.S. House of Representative Members (May 13, 2015), at 1 (on file with H. Comm. on the Judiciary Democratic 

staff). 69 Id. 

ally identifiable information relating to the claimant. This amendment also failed by a party-line vote of 12 to 20.63

B. Asbestos Victims Vigorously Oppose this Legislation 

The proponents of this legislation assert that it is intended to assist asbestos victims. For example, Representative Blake 

Farenthold (R-TX), the bill’s sponsor, claims that H.R. 906 ‘‘will 

protect current and future victims of asbestos exposure.’’ 64 Yet, not 

a single asbestos victim has expressed support for this legislation 

over the many years it has been considered by Congress. In fact, 

asbestos victims have vigorously opposed such legislative initiatives.65 It should also be noted that the Majority has never asked 

an asbestos victim to testify at any of the hearings held on this legislation held in prior Congresses.66 And, ‘‘[t]o add insult to injury,’’ 

the relatives of asbestos victims who were sitting silently in the audience at the hearing held on the predecessor to H.R. 906 in the 

last Congress were asked by Representative Darrell Issa (R-CA) to 

stand and then to shake their heads ‘‘yes or no’’ in response to his 

question (‘‘Do you all either have current cases or have you settled?’’),67 which he then sought to use to support his arguments in 

support of the legislation.68 The victims observed, ‘‘Not one of us 

was given an opportunity to voice our opinions of the legislation, 

and yet, a member of the committee was permitted to use our presence in the hearing room to further his own position that is in direct contravention of our views.’’ 69

C. H.R. 906 Will Be Particularly Harmful to Veterans 

Although vast swaths of unsuspecting Americans have been exposed to asbestos, there are certain populations who had greater 

levels of exposure as the result of their work. For example, members of the Armed Forces of the United States have been disproportionately affected by asbestos. Even though veterans make up only 


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70Military.com, Asbestos and the Military, History, Exposure & Assistance, http://www. 

military.com/benefits/veteran-benefits/asbestos-and-the-military-history-exposure-assistance.html 

(last visited Feb. 17, 2017). 71 Id. 72 John Hedly-Whyte & Deborah R. Milamed, Asbestos and Ship-Building: Fatal Consequences, 77(3) ULSTER MEDICAL J. 191 (Sept. 2008), http://www.ncbi.nlm.nih.gov/pmc/articles/ 

PMC2604477/. 73 James Fite, U.S. Shipyards: A History of Massive Asbestos Exposure and Disease, World 

Asbestos Report (2004), http://worldasbestosreport.org/conferences/gac/gac2004/ws_H_2_e.php. 74 Ninety-Eighth Nat’l Convention of the American Legion, Resolution No. 368, Increase the 

Transparency of Asbestos Claims (Aug. 30, 31, Sept. 1, 2016). 75 Id. 76 Id. 

8% of the population, they comprise 30% of all mesothelioma 

deaths.70 Military.com, the largest military and veteran membership organization in the United States, explains: 

Virtually every ship commissioned by the United States 

Navy between 1930 and about 1970 contained several tons 

of asbestos insulation in the engine room, along the miles 

of pipe aboard ship and in the walls and doors that required fireproofing. The sailors that manned these ships 

and the men who repaired them in Navy shipyards were 

prime candidates for asbestos exposure, a fact borne out by 

the disease statistics.71

In addition, civilian Department of Defense workers, such as shipbuilders and dockworkers, were extensively exposed to asbestos. 

For example, it has been reported that ‘‘[s]hipbuilding in World 

War II is a significant aetiology of the malignancies caused by asbestos.’’ 72 According to the White Lung Association: 

During World War II a new Liberty Ship hit the water in 

Baltimore every 37 hours and a few hundred miles South, 

in Hampton Roads Virginia, three ships hit the water each 

day. Trucks and ships delivered thousands of pounds of asbestos and asbestos products to the shipyards. . . . Workers in all trades breathed the asbestos used by insulators, 

boiler mechanics, carpenters, machinists, painters and 

joiners.73

The American Legion last year passed a resolution noting that 

veterans ‘‘comprise up to 30 percent of deaths from asbestos-caused 

lung cancer’’ and that the ‘‘flame-retardant material was widely 

used in Navy ships and buildings until 1980.’’ 74 In addition the 

resolution observed that ‘‘[c]ompanies that produced it . . . sometimes hid its dangers.’’ 75 Although the resolution expressed support for ‘‘legislation requiring public disclosure by trusts regarding 

the receipt and disposition of claims for injuries based on exposure 

to asbestos,’’ it also noted such disclosure should ‘‘protect[ ] veterans’ private medical and work history, as well as Social Security 

numbers,’’ which H.R. 906 does not adequately do.76

To address this shortcoming of the bill, Representative David N. 

Cicilline, Ranking Member of the Subcommittee on Regulatory Reform, Commercial and Antitrust, offered an amendment that would 

have added a requirement to the bill specifying that the bankruptcy asbestos trust not disclose any information with respect to 

a claimant who is a member of the Armed Forces, a veteran, a ciVerDate Sep 11 2014 22:43 Feb 24, 2017 Jkt 069006 PO 00000 Frm 00050 Fmt 6601 Sfmt 6601 E:\HR\OC\HR018.XXX HR018

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77Markup Tr. at 114. 78 Id. at 40. 79 Id. at 80. 

vilian employee of the Defense Department, or a family member of 

any of these. His amendment, however, failed by a party-line vote 

of 11 to 18.77

III. H.R. 906 IS FUNDAMENTALLY INEQUITABLE BECAUSE IT REQUIRES

DISCLOSURE BY THE TRUSTS, BUT DOES NOT REQUIRE SOLVENT DEFENDANT COMPANIES TO DISCLOSE THEIR CONFIDENTIAL SETTLEMENT AGREEMENTS

H.R. 906 is fundamentally inequitable because it will impose additional burdens on asbestos bankruptcy trusts while easing the 

process by which solvent defendant companies can obtain discovery. This is particularly problematic given the history of asbestos manufacturers in affirmatively concealing the dangers of their 

product from the public. 

Many defendant companies insist on confidentiality agreements 

before entering into settlement agreements specifically in order to 

prevent evidence of their wrongdoing from becoming public. More 

importantly, because of the secrecy of these settlements, other people who have been injured have no way of gaining important information about their exposure, their illnesses, or the settled liability 

of the companies that made them sick. Information about the concealment of wrongdoing never becomes public, and the people who 

have suffered have no way of knowing about that wrongdoing or its 

extent. Governmental agencies that are charged with protecting 

public health—whether in the workplace or in the home—are deprived of the information they need to enforce the laws Congress 

has enacted. 

To illustrate the inequitable impact of H.R. 906, Representative 

Jerrold Nadler (D-NY) offered an amendment that would have required any party requesting information from a bankruptcy asbestos trust to make available certain information pertaining to the 

protection of public health and safety. This amendment, however, 

failed by a party-line vote of 12 to 21.78 In addition, Representative 

Sheila Jackson Lee offered an amendment that would have limited 

disclosures mandated under the bill to a party that is a defendant 

in a pending court action in a pending court action directly related 

to the plaintiff’s claim in that action and requires the defendant to 

first disclose to such plaintiff and such trust payments made by the 

defendant within the preceding 5 years. This amendment too failed 

by a party-line vote of 12 to 20.79

IV. H.R. 906 WILL DIVERT CRITICAL FUNDS AND FURTHER DECREASE

COMPENSATION TO ASBESTOS VICTIMS BY FORCING BANKRUPTCY

TRUSTS TO PREPARE BURDENSOME REPORTS

H.R. 906 would effectively shift the cost of discovery away from 

solvent asbestos defendants to the bankruptcy trusts, ultimately diminishing the amount of funds available to compensate the victims 

of bankrupt asbestos defendants. By imposing reporting and information demand requirements on trusts, the bill could significantly 

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80GAO Report at 30. 81GAO Report at 27. 82Memorandum from Legal Representatives for Future Asbestos Personal Injury Claimants 

with Respect to Certain Asbestos Settlement Trusts to Prof. Troy McKenzie, Advisory Committee on Bankruptcy Rules of the Judicial Conference of the United States, at 2 (Aug. 10, 

2011). 83Markup Tr. at 101. 84GAO Report at 16. 

quirements and force them to divert their limited resources from 

paying the claims of asbestos victims to satisfying the information 

requests of those who caused injuries to millions of Americans. For 

example, trust representatives explain that they are often required 

to keep such information confidential and they are concerned about 

the substantial costs involved in responding to requests for such information.80 In fact, one trust reported to the GAO that it incurred $1 million in attorneys’ fees to respond to a request to disclose 

every document on every claimant.81 Several legal representatives 

for future asbestos personal injury claimants also fear that ‘‘unnecessary and unreasonable reporting and discovery obligations would 

divert resources from the trusts’ limited funds, which were specifically created to pay the claims of individuals stricken with asbestos-related diseases, for the benefit of third party defendants in 

non-bankruptcy, asbestos-tort litigation.’’ 82

The bill includes only a modest compensation provision with respect to its information demand requirements, which allows a trust 

to seek payment for ‘‘any reasonable cost’’ that it incurred in responding to such demands. The ‘‘reasonableness’’ of reimbursement 

requests, of course, can be subject to dispute and litigation. Ultimately, the trusts will incur costs to implement the bill’s requirements, leaving less money to compensate asbestos victims. This is 

particularly problematic in light of the fact that defendants can already obtain the information they want using existing discovery 

tools. To underscore this shortcoming of the bill, Representative 

Hakeem Jeffries (D-NY) offered an amendment that would have replaced the substantive text of the bill with a requirement that a 

bankruptcy asbestos trust provide payment and demand information to any party to any action concerning liability for asbestos exposure if such party cannot otherwise obtain such information 

under applicable non-bankruptcy law. His amendment, however, 

failed by a party-line vote of 13 to 19.83

H.R. 906’s retroactive application only adds to this unnecessary 

burden. The vast bulk of asbestos trusts that would be affected by 

this legislation have long been in existence, one of which dates 

back to 1988. According to the GAO, these trusts have already paid 

3.3 million claims valued at about $17.5 billion.84 Yet, after the 

passage of more than 20 years since the first trust was established, 

H.R. 906 would now require these trusts to issue reports and provide documentation. 

CONCLUSION

The only beneficiaries of H.R. 906 will be the very entities that 

knowingly produced a toxic substance that killed or seriously injured millions of unsuspecting American consumers and workers. 

The legislation does nothing to protect victims or to improve the 

claims process and is based on the false assertion that there is enVerDate Sep 11 2014 22:43 Feb 24, 2017 Jkt 069006 PO 00000 Frm 00052 Fmt 6601 Sfmt 6601 E:\HR\OC\HR018.XXX HR018

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demic fraud in the asbestos trust system that must be addressed. 

In truth, this legislation is simply an end-run by defendants 

around the discovery process that already exists. Further, H.R. 

906’s reporting and disclosure requirements are an assault on asbestos victims’ privacy interests and are fundamentally inequitable 

because solvent defendant companies are not similarly required to 

disclose their confidential settlement agreements. Finally, these 

burdensome new reporting requirements will divert critical funds 

and further decrease compensation to asbestos victims. 

Accordingly, we respectfully dissent and urge our colleagues to 

stand on the side of justice for asbestos victims and to oppose H.R. 

906. 

MR. CONYERS, JR. 

MR. NADLER. 

MS. LOFGREN. 

MS. JACKSON LEE. 

MR. COHEN. 

MR. JOHNSON, JR. 

MR. DEUTCH. 

MR. GUTIERREZ. 

MS. BASS. 

MR. RICHMOND. 

MR. JEFFRIES. 

MR. CICILLINE. 

MR. SWALWELL

MR. LIEU

MR. RASKIN

MS. JAYAPAL

Æ 


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