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114th Congress    }                                    {        Report
                        HOUSE OF REPRESENTATIVES
 1st Session      }                                    {       114-352

======================================================================



 
       FURTHERING ASBESTOS CLAIM TRANSPARENCY (FACT) ACT OF 2015

                                _______
                                

 November 30, 2015.--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. 526]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on the Judiciary, to whom was referred the 
bill (H.R. 526) 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.........................................................    17
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..................................    26
Disclosure of Directed Rule Makings..............................    27
Performance Goals and Objectives.................................    27
Advisory on Earmarks.............................................    27
Section-by-Section Analysis......................................    27
Changes in Existing Law Made by the Bill, as Reported............    27
Dissenting Views.................................................    40

                          Purpose and Summary

    H.R. 526, the ``Furthering Asbestos Claim Transparency 
(FACT) Act of 2015,'' or the ``FACT Act,'' amends the 
Bankruptcy Code to require transparency from bankruptcy trusts 
formed to pay asbestos claims. Specifically, 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\
---------------------------------------------------------------------------
    \1\Furthering Asbestos Claim Transparency (FACT) Act of 2013, H.R. 
982, 113th Cong. Sec. 2 (2013).
    \2\Id.
---------------------------------------------------------------------------

                  Background and Need for Legislation

            I. 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\
---------------------------------------------------------------------------
    \3\S. Rep. No. 110-189, at 1 (citing Asbestos, National Institute 
for Occupational Safety and Health, www.cdc.gov/niosh/topics/asbestos 
(last visited June 18, 2015)); 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 June 18, 2015) (Wylie).
    \4\Wylie, supra note 3, at 4.
    \5\Asbestos, Heritage Research Center, http://
www.heritageresearch.com/ourlibrary/histories/asbestos.html (last 
visited June 18, 2015).
    \6\Wylie, supra note 3, at 4.
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    Despite the usefulness of asbestos in industrial and 
residential products, it was discerned 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 cancer 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\
---------------------------------------------------------------------------
    \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 June 
18, 2015).
    \8\Id.
    \9\Asbestos Health Effects, Agency for Toxic Substances & Disease 
Registry, http://www.
atsdr.cdc.gov/asbestos/asbestos/health_effects/(last visited June 18, 
2015).
    \10\Id.
    \11\See 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) (Courts Subcomm. Hearing) (testimony of 
Charles S. Siegel).
    \12\Agency for Toxic Substances & Disease Registry, supra note 9.
    \13\Id.
    \14\Id.
    \15\Id.
---------------------------------------------------------------------------

                        II. 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 
courts, and now, increasingly, to bankruptcy courts and the 
resulting bankruptcy asbestos trusts.\19\
---------------------------------------------------------------------------
    \16\Stephen J. Carroll et al., Asbestos Litigation, Rand Institute 
for Civil Justice, 2005, at xvii (Carroll).
    \17\Lloyd 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 (Dixon).
    \18\Carroll, et al., supra note 16, at xx.
    \19\Id.
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    \20\Borel v. Fibreboard Paper Prods. Corp., 493 F.2d 1076 (5th Cir. 
1973).
    \21\Id. at 1109.
---------------------------------------------------------------------------
    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 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\
---------------------------------------------------------------------------
    \22\Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 597 (1997).
    \23\Carroll et al., supra note 16, at xxiv.
    \24\Id.
    \25\The 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.) (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.
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \28\Carroll et al., supra note 16, at xxiv.
    \29\David 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) (Landin).
    \30\Edley Testimony, supra note 25.
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \31\Landin, 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).
    \33\Dixon et al., supra note 17, at 2.
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    \34\See Amchem Products; 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).
---------------------------------------------------------------------------

                   III. 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 Johns Manville Corporation, the 
dominant American producer of asbestos products. The Manville 
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\
---------------------------------------------------------------------------
    \35\Patrick M. Hanlon & Anne Smetak, Asbestos Changes, 62 N.Y.U. 
Ann. Surv. Am. L. 525, 526-7 (2007) (Hanlon & Smetak); 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.
---------------------------------------------------------------------------
    Following the Manville 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. 
Sec. 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 post-
confirmation 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.
---------------------------------------------------------------------------
    \38\Bankruptcy Reform Act of 1994, Sec. 111, 103d Cong. (1994) 
(enacted) (codified at 11 U.S.C. Sec. 524).
    \39\11 U.S.C. Sec. 524(g)(2)(B).
---------------------------------------------------------------------------
    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 
account of millions of claims a year; between 2007 and 2008, 
selected asbestos trusts satisfied over four million 
claims.\41\
---------------------------------------------------------------------------
    \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. (2014) (RRCAL Subcomm. Hearing) (testimony of Lester Brickman), 
at 2.
    \41\Id.
---------------------------------------------------------------------------

        IV. 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 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.
---------------------------------------------------------------------------
    \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).
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \43\Owens Corning v. Credit Suisse First Boston, 322 B.R. 719, 723 
(D. Del. 2005).
    \44\Lester Brickman, The Use of Litigation Screenings in Mass 
Torts: A Formula for Fraud?, 61 SMU L. Rev. 1221, 1233 (2008).
    \45\Griffin B. Bell, Asbestos & The Sleeping Constitution, 31 Pepp. 
L. Rev. 1, 5 (2003).
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \46\Pamela Sherrid, Looking for Some Million Dollar Lungs, Best of 
Asbestos, U.S. News & World Rep., Dec. 17, 2001, at 36.

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\
---------------------------------------------------------------------------
    \47\See Lester Brickman, On the Theory Class's Theories of Asbestos 
Litigation: The Disconnect Between Scholarship and Reality, 31 Pepp. L. 
Rev. 33, 69 (2003) (Brickman).
    \48\Andrew Schneider, Asbestos Lawsuits Anger Critics, St. Louis 
Post-Dispatch, Feb. 11, 2003, at A1.
    \49\Lester 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).
---------------------------------------------------------------------------
    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 occupational-medicine and pulmonary-disease 
physicians to craft legal standards for asbestos-related 
impairment. The Commission found: ``[s]ome X-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\
---------------------------------------------------------------------------
    \50\Mark A. Behrens & Phil Goldberg, The Asbestos Litigation 
Crisis: The Tide Appears to be Turning, 12 Conn. Ins. L.J. 477, 480 
(2006).
    \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/NIOSH-015/020103-Exhibit12.pdf.
    \52\Id.
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \53\Joseph N. Gitlin et al., Comparison of `B' Readers' 
Interpretations of Chest Radiographs for Asbestos Related Changes, 11 
Acad. Radiology 843, 852 (2004).
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \54\David E. Bernstein, Keeping Junk Science Out of Asbestos 
Litigation, 31 Pepp. L. Rev. 11, 13 (2003) (quoting Lawrence Martin, 
M.D.).
    \55\Owens Corning, 322 B.R. at 723.
    \56\Lester Brickman & Harvey D. Shapiro, Asbestos Kills--And More 
than Just People: Jobs, Ethics, and Elementary Justice, Nat'l. Rev., 
Jan. 31, 2005.
    \57\Brickman, supra note 47 at 33.
---------------------------------------------------------------------------
    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 asbestos 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\
---------------------------------------------------------------------------
    \58\In re Silica Prods. Liab. Litig., 398 F.Supp.2d 563 (S.D. Tex. 
2005).
    \59\Id. at 635.
    \60\The 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. . . .'').
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \62\See, e.g., Ohio Rev. Code Ann. Sec. 2307.91 et. seq. (enacted 
2004), Tex. Civ. Prac. & Rem. Sec. 90.001 et. seq. (last amended 2007).
    \63\Constitution Subcomm. Hearing, supra note 42 (testimony of 
Professor Lester Brickman).
    \64\See Hanlon & Smetak at 593; 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) (Brickman Ethical 
Issues).
    \65\Kenneth M. Goldstein, Panel Discussion at U.S. Chamber 
Institute for Legal Reform's 12th Annual Legal Reform Summit (Oct. 26, 
2011) available at http://videos.uschamber.com/detail/videos/legal-
reform-summits/video/1268850944001/access-to-justice-or-the-bottom-
line-the-growing-commercialization-of-the-practice-of-
law?device=mobile&page;=2.
    \66\Id.
    \67\See New Media Strategies, The Plaintiffs' Bar Goes Digital 3 
(January 2012) avail-
able at http://www.instituteforlegalreform.com/uploads/sites/1/
The_Plaintiffs_Bar_Goes_Digital_
2012_0.pdf (last visited June 18, 2015).
    \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'').
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    \69\The David Law Firm--Lung Cancer, http://www.calldavid.com/lung-
cancer.html (last visited June 18, 2015).
---------------------------------------------------------------------------

         V. 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\
---------------------------------------------------------------------------
    \70\11 U.S.C. Sec. 542(g)(2)(B)(ii)(V) (2011).

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.
---------------------------------------------------------------------------
    \71\Carroll et al., supra note 16, at 24.
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \72\See 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 (Searcey & Barry).
    \73\11 U.S.C. Sec. 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 
Sec. 524(g) in addition to the standard plan confirmation 
requirements.'').
    \75\11 U.S.C. Sec. 1129(b)(1) (2011) (allowing confirmation of a 
plan over the objection of a class of creditors).
---------------------------------------------------------------------------
    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 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\
---------------------------------------------------------------------------
    \76\In re Congoleum Corp., 426 F.3d 675, 679 (3d Cir. 2005).
    \77\Brickman Ethical Issues at 868-69 (discussing asbestos bar's de 
facto control of bankruptcy process).
    \78\Brown, supra note 73, at 121.
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \79\11 U.S.C. Sec. 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. . . .'').
    \80\See Brown, supra note 73, 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.
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \82\11 U.S.C. Sec. 524(g)(4)(B)(i) (2011).
    \83\Mark 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.'') (Plevin).
    \84\See Brown, supra note 51, at 158-59 (discussing parties' 
incentive to propose weak representative).
    \85\Brickman Ethical Issues at n. 144 (noting that Halliburton's 
pre-petition futures representative was nearly $5 million and retained 
by the resulting trust).
    \86\See Richard A. Nagareda, Mass Torts in a World of Settlement 
177 (2007).
    \87\Plevin, supra note 83 at 292-93.
    \88\See Dixon et al., supra note 17 (FCR's for largest trusts set 
forth in Appendix A).
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \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).
    \90\Dixon et al., supra note 17, at 14.
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \91\Dixon 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.
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \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. . . .'').
    \96\Manville Trust Single Use Data License Agreement, http://
www.claimsres.com/documents/MT/DataAgreement.pdf (last visited June 18, 
2015).
---------------------------------------------------------------------------
    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 allege 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\
---------------------------------------------------------------------------
    \97\Carroll et al., supra note 16, at 23; Dixon et al., supra note 
17, at 45.
    \98\See, e.g., Courts Subcomm. Hearing, supra note 11, at 224-36 
(letter signed by six FCRs).
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \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).
    \102\See 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-officer-gets-prison-
time-911-fraud/; Dept. of Justice, Deepwater Horizon (BP) Oil Spill 
Fraud, http://www.justice.gov/criminal/oilspill/(last visited June 18, 
2015) (collecting cases involving fraud on the Gulf Coast Claims 
Facility).
    \103\Courts Subcomm. Hearing, supra note 11, at 25 (testimony of S. 
Todd Brown).
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    Kananian is not an isolated incident; the Committee 
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\
---------------------------------------------------------------------------
    \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).
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \109\Courts Subcomm. Hearing, supra note 11, at 16 (written 
statement of Leigh Ann Schell).
---------------------------------------------------------------------------
    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:
---------------------------------------------------------------------------
    \110\Montgomery, supra note 108, at 7-8.

        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\
---------------------------------------------------------------------------
    \111\Montgomery, supra note 108, at 25.

In addition to the fraud uncovered through the state court 
system, the Wall Street Journal conducted an investigation that 
detailed numerous anomalies between individuals' 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\
---------------------------------------------------------------------------
    \112\Searcey & Barry, supra note 72.
    \113\Searcey & Barry, supra note 72.
---------------------------------------------------------------------------
    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 In re Garlock Sealing 
Techs. LLC, Case No. 10-BK-31607 (Bankr. Ct. W.D.N.C. 2014), 
plaintiffs' counsel requested $1.3 billion in asbestos claims 
damages.\115\ In a series of rulings, the presiding judge 
dramatically reduced the requested damages award 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 WSJ, in 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 asserted exposure to 284 different products.\117\
---------------------------------------------------------------------------
    \114\In re Garlock Sealing Techs. LLC, Case No. 10-BK-31607 (Bankr. 
Ct. W.D.N.C. 2014).
    \115\Editorial, The Double-Dipping Legal Scam, Wall St. J., Dec. 
25, 2014.
    \116\Id.
    \117\Id.
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \118\RRCAL Subcomm. Hearing, supra note 40 (testimony of Lester 
Brickman), at 29.
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \119\Id., at 30.
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    \120\Id.
---------------------------------------------------------------------------
    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 
of the Administative Office of the Courts 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 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:
---------------------------------------------------------------------------
    \121\Letter 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).

        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 Sec. 524(g) that 
        imposes additional requirements on trusts created under 
        that provision.\122\
---------------------------------------------------------------------------
    \122\Memorandum from Subcommittee on Business Issues to Advisory 
Committee on Bankruptcy Rules (Mar. 10, 2011) (on file with Committee).

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\
---------------------------------------------------------------------------
    \123\Memorandum from Subcommittee on Business Issues to Advisory 
Committee on Bankruptcy Rules (Sept. 19, 2011) (on file with 
Committee).
---------------------------------------------------------------------------

            VI. THE FURTHERING ASBESTOS CLAIMS TRANSPARENCY 
                           (FACT) ACT OF 2015

    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.
---------------------------------------------------------------------------
    \124\See generally Constitution Subcomm. Hearing, supra note 42.
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \125\See generally Courts Subcomm. Hearing, supra note 11.
    \126\See 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.'')
---------------------------------------------------------------------------
    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, 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. H.R. 982 was 
not considered by the Senate during the 113th Congress.
---------------------------------------------------------------------------
    \129\See 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).
    \130\See id. (testimonies of Hon. Peggy L. Ableman, Prof. S. Todd 
Brown, and Marc Scarcella).
    \131\Id.; see also H.R. 982.
---------------------------------------------------------------------------
    Given the continued necessity for transparency and the 
significant legislative record, on January 26, 2015, Rep. 
Farenthold, together with Rep. Tom Marino (R-PA), introduced 
H.R. 526, the Furthering Asbestos Claim Transparency (FACT) Act 
of 2015, which is 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 continues to lack 
transparency and that additional reports of fraudulent activity 
require Congressional action on the FACT Act.\133\ The fourth 
witness, Mr. Inselbuch, argued that the FACT Act is unnecessary 
and would create administrative burdens on the trusts, 
notwithstanding the Committee's record to the contrary on both 
accounts.\134\
---------------------------------------------------------------------------
    \132\See generally RRCAL Subcomm. Hearing.
    \133\See id. (testimonies of Nicholas Vari, Marc Scarcella, and 
Prof. Lester Brickman).
    \134\See id. (testimonies of Elihu Inselbuch, Nicholas Vari, Marc 
Scarcella, and Prof. Lester Brickman).
---------------------------------------------------------------------------
    H.R. 526 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, and the 
basis for any payments made to claimants.\135\ To be clear, the 
quarterly reporting requirements do not require the disclosure 
of the amounts of settlement funds paid to claimants. 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\
---------------------------------------------------------------------------
    \135\H.R. 982 Sec. 2.
    \136\Id.
    \137\U.S. Const. art. I, Sec. 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 123 (testimony of 
Prof. S. Todd Brown).
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \138\H.R. 982 Sec. 2.
    \139\11 U.S.C. Sec. 107(c) (2011); 18 U.S.C. Sec. 1028(d) (2011); 
Fed. R. Bankr. P. 9037.
    \140\H.R. 982 Sec. 2.
---------------------------------------------------------------------------
    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 enhanced reporting requirements for asbestos bankruptcy 
trusts required by the FACT Act may result in improvements and 
cost savings in the Medicare program. Specifically, the 
information provided under the FACT Act may improve the 
reporting of reimbursement payments under Medicare. Section 111 
of the Medicare, Medicaid, and SCHIP Extension Act of 2007\141\ 
added mandatory reporting requirements for Medicare patients 
who receive settlements, judgments, awards, or other payment 
from liability insurance. The increased reporting requirements 
under the FACT Act may result in the availability of 
information to the government regarding Medicare beneficiaries 
who receive payments from asbestos bankruptcy trusts.
---------------------------------------------------------------------------
    \141\P.L. No. 110-173.
---------------------------------------------------------------------------
    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.

                                Hearings

    The Committee's Subcommittee on Regulatory Reform, 
Commercial and Antitrust Law held a legislative hearing on H.R. 
526 on February 3, 2015. Testimony was received from Marc 
Scarcella, M.A., Manager, Bates White Economic Consulting; 
Nicholas P. Vari, Esq., Partner, K&L; Gates LLP; Lester 
Brickman, Professor of Law, Benjamin N. Cardozo School of Law; 
and, Elihu Inselbuch, Esq., Member, Caplin & Drysdale.

                        Committee Consideration

    On May 14, 2015, the Committee met in open session and 
ordered the bill H.R. 526 favorably reported, without 
amendment, by a rollcall vote of 19 ayes to 9 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 recorded votes were taken during the Committee's 
consideration of H.R. 526.
    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 5 to 14.

                             ROLLCALL NO. 1
------------------------------------------------------------------------
                                                  Ayes    Nays   Present
------------------------------------------------------------------------
Mr. Goodlatte (VA), Chairman...................              X
Mr. Sensenbrenner, Jr. (WI)....................
Mr. Smith (TX).................................
Mr. Chabot (OH)................................              X
Mr. Issa (CA)..................................
Mr. Forbes (VA)................................              X
Mr. King (IA)..................................
Mr. Franks (AZ)................................              X
Mr. Gohmert (TX)...............................              X
Mr. Jordan (OH)................................
Mr. Poe (TX)...................................
Mr. Chaffetz (UT)..............................
Mr. Marino (PA)................................              X
Mr. Gowdy (SC).................................
Mr. Labrador (ID)..............................
Mr. Farenthold (TX)............................              X
Mr. Collins (GA)...............................              X
Mr. DeSantis (FL)..............................              X
Ms. Walters (CA)...............................              X
Mr. Buck (CO)..................................              X
Mr. Ratcliffe (TX).............................              X
Mr. Trott (MI).................................              X
Mr. Bishop (MI)................................              X
 
Mr. Conyers, Jr. (MI), Ranking Member..........      X
Mr. Nadler (NY)................................      X
Ms. Lofgren (CA)...............................
Ms. Jackson Lee (TX)...........................
Mr. Cohen (TN).................................
Mr. Johnson (GA)...............................      X
Mr. Pierluisi (PR).............................
Ms. Chu (CA)...................................
Mr. Deutch (FL)................................
Mr. Gutierrez (IL).............................
Ms. Bass (CA)..................................
Mr. Richmond (LA)..............................
Ms. DelBene (WA)...............................      X
Mr. Jeffries (NY)..............................
Mr. Cicilline (RI).............................
Mr. Peters (CA)................................      X
                                                ------------------------
    Total......................................      5      14
------------------------------------------------------------------------


    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 6 to 
16.

                             ROLLCALL NO. 2
------------------------------------------------------------------------
                                                  Ayes    Nays   Present
------------------------------------------------------------------------
Mr. Goodlatte (VA), Chairman...................              X
Mr. Sensenbrenner, Jr. (WI)....................
Mr. Smith (TX).................................              X
Mr. Chabot (OH)................................              X
Mr. Issa (CA)..................................
Mr. Forbes (VA)................................              X
Mr. King (IA)..................................
Mr. Franks (AZ)................................              X
Mr. Gohmert (TX)...............................              X
Mr. Jordan (OH)................................
Mr. Poe (TX)...................................
Mr. Chaffetz (UT)..............................
Mr. Marino (PA)................................              X
Mr. Gowdy (SC).................................
Mr. Labrador (ID)..............................              X
Mr. Farenthold (TX)............................              X
Mr. Collins (GA)...............................              X
Mr. DeSantis (FL)..............................              X
Ms. Walters (CA)...............................              X
Mr. Buck (CO)..................................              X
Mr. Ratcliffe (TX).............................              X
Mr. Trott (MI).................................              X
Mr. Bishop (MI)................................              X
 
Mr. Conyers, Jr. (MI), Ranking Member..........      X
Mr. Nadler (NY)................................      X
Ms. Lofgren (CA)...............................
Ms. Jackson Lee (TX)...........................
Mr. Cohen (TN).................................      X
Mr. Johnson (GA)...............................      X
Mr. Pierluisi (PR).............................
Ms. Chu (CA)...................................
Mr. Deutch (FL)................................
Mr. Gutierrez (IL).............................
Ms. Bass (CA)..................................
Mr. Richmond (LA)..............................
Ms. DelBene (WA)...............................      X
Mr. Jeffries (NY)..............................
Mr. Cicilline (RI).............................
Mr. Peters (CA)................................      X
                                                ------------------------
    Total......................................      6      16
------------------------------------------------------------------------


    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 7 to 17.

                             ROLLCALL NO. 3
------------------------------------------------------------------------
                                                  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. Forbes (VA)................................
Mr. King (IA)..................................
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)..............................              X
Mr. Farenthold (TX)............................              X
Mr. Collins (GA)...............................              X
Mr. DeSantis (FL)..............................
Ms. Walters (CA)...............................              X
Mr. Buck (CO)..................................
Mr. Ratcliffe (TX).............................              X
Mr. Trott (MI).................................              X
Mr. Bishop (MI)................................              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. Pierluisi (PR).............................
Ms. Chu (CA)...................................
Mr. Deutch (FL)................................
Mr. Gutierrez (IL).............................
Ms. Bass (CA)..................................
Mr. Richmond (LA)..............................
Ms. DelBene (WA)...............................      X
Mr. Jeffries (NY)..............................      X
Mr. Cicilline (RI).............................
Mr. Peters (CA)................................
                                                ------------------------
    Total......................................      7      17
------------------------------------------------------------------------


    4. Amendment #4, offered by Mr. Johnson, to exclude 
personally identifiable information from the bill's public 
reporting and document production requirements. The amendment 
was defeated by a rollcall vote of 9 to 20.

                             ROLLCALL NO. 4
------------------------------------------------------------------------
                                                  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. Forbes (VA)................................              X
Mr. King (IA)..................................
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)..............................              X
Mr. Farenthold (TX)............................              X
Mr. Collins (GA)...............................              X
Mr. DeSantis (FL)..............................              X
Ms. Walters (CA)...............................              X
Mr. Buck (CO)..................................              X
Mr. Ratcliffe (TX).............................              X
Mr. Trott (MI).................................              X
Mr. Bishop (MI)................................              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. Pierluisi (PR).............................
Ms. Chu (CA)...................................
Mr. Deutch (FL)................................      X
Mr. Gutierrez (IL).............................
Ms. Bass (CA)..................................
Mr. Richmond (LA)..............................
Ms. DelBene (WA)...............................      X
Mr. Jeffries (NY)..............................      X
Mr. Cicilline (RI).............................
Mr. Peters (CA)................................      X
                                                ------------------------
    Total......................................      9      20
------------------------------------------------------------------------


    5. Amendment #5, offered by Mr. Jeffries, 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 8 to 18.

                             ROLLCALL NO. 5
------------------------------------------------------------------------
                                                  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. Forbes (VA)................................              X
Mr. King (IA)..................................
Mr. Franks (AZ)................................              X
Mr. Gohmert (TX)...............................
Mr. Jordan (OH)................................              X
Mr. Poe (TX)...................................              X
Mr. Chaffetz (UT)..............................
Mr. Marino (PA)................................              X
Mr. Gowdy (SC).................................              X
Mr. Labrador (ID)..............................              X
Mr. Farenthold (TX)............................              X
Mr. Collins (GA)...............................              X
Mr. DeSantis (FL)..............................
Ms. Walters (CA)...............................              X
Mr. Buck (CO)..................................              X
Mr. Ratcliffe (TX).............................              X
Mr. Trott (MI).................................              X
Mr. Bishop (MI)................................              X
 
Mr. Conyers, Jr. (MI), Ranking Member..........      X
Mr. Nadler (NY)................................      X
Ms. Lofgren (CA)...............................
Ms. Jackson Lee (TX)...........................
Mr. Cohen (TN).................................      X
Mr. Johnson (GA)...............................      X
Mr. Pierluisi (PR).............................
Ms. Chu (CA)...................................
Mr. Deutch (FL)................................      X
Mr. Gutierrez (IL).............................
Ms. Bass (CA)..................................
Mr. Richmond (LA)..............................
Ms. DelBene (WA)...............................      X
Mr. Jeffries (NY)..............................      X
Mr. Cicilline (RI).............................
Mr. Peters (CA)................................      X
                                                ------------------------
    Total......................................      8      18
------------------------------------------------------------------------


    6. Amendment #6, offered by Mr. Peters, 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 9 to 18.

                             ROLLCALL NO. 6
------------------------------------------------------------------------
                                                  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. Forbes (VA)................................              X
Mr. King (IA)..................................
Mr. Franks (AZ)................................              X
Mr. Gohmert (TX)...............................
Mr. Jordan (OH)................................              X
Mr. Poe (TX)...................................              X
Mr. Chaffetz (UT)..............................
Mr. Marino (PA)................................              X
Mr. Gowdy (SC).................................              X
Mr. Labrador (ID)..............................              X
Mr. Farenthold (TX)............................              X
Mr. Collins (GA)...............................              X
Mr. DeSantis (FL)..............................
Ms. Walters (CA)...............................              X
Mr. Buck (CO)..................................              X
Mr. Ratcliffe (TX).............................              X
Mr. Trott (MI).................................              X
Mr. Bishop (MI)................................              X
 
Mr. Conyers, Jr. (MI), Ranking Member..........      X
Mr. Nadler (NY)................................      X
Ms. Lofgren (CA)...............................
Ms. Jackson Lee (TX)...........................
Mr. Cohen (TN).................................      X
Mr. Johnson (GA)...............................      X
Mr. Pierluisi (PR).............................
Ms. Chu (CA)...................................      X
Mr. Deutch (FL)................................      X
Mr. Gutierrez (IL).............................
Ms. Bass (CA)..................................
Mr. Richmond (LA)..............................
Ms. DelBene (WA)...............................      X
Mr. Jeffries (NY)..............................      X
Mr. Cicilline (RI).............................
Mr. Peters (CA)................................      X
                                                ------------------------
    Total......................................      9      18
------------------------------------------------------------------------


    7. Motion to report H.R. 526 favorably to the House of 
Representatives. The motion was agreed to by a rollcall vote of 
19 to 9.

                             ROLLCALL NO. 7
------------------------------------------------------------------------
                                                  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. Forbes (VA)................................      X
Mr. King (IA)..................................
Mr. Franks (AZ)................................      X
Mr. Gohmert (TX)...............................
Mr. Jordan (OH)................................      X
Mr. Poe (TX)...................................      X
Mr. Chaffetz (UT)..............................
Mr. Marino (PA)................................      X
Mr. Gowdy (SC).................................      X
Mr. Labrador (ID)..............................      X
Mr. Farenthold (TX)............................      X
Mr. Collins (GA)...............................      X
Mr. DeSantis (FL)..............................      X
Ms. Walters (CA)...............................      X
Mr. Buck (CO)..................................      X
Mr. Ratcliffe (TX).............................      X
Mr. Trott (MI).................................      X
Mr. Bishop (MI)................................      X
 
Mr. Conyers, Jr. (MI), Ranking Member..........              X
Mr. Nadler (NY)................................              X
Ms. Lofgren (CA)...............................
Ms. Jackson Lee (TX)...........................
Mr. Cohen (TN).................................              X
Mr. Johnson (GA)...............................              X
Mr. Pierluisi (PR).............................
Ms. Chu (CA)...................................              X
Mr. Deutch (FL)................................              X
Mr. Gutierrez (IL).............................
Ms. Bass (CA)..................................
Mr. Richmond (LA)..............................
Ms. DelBene (WA)...............................              X
Mr. Jeffries (NY)..............................              X
Mr. Cicilline (RI).............................
Mr. Peters (CA)................................              X
                                                ------------------------
    Total......................................     19       9
------------------------------------------------------------------------

                      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. 526, the following estimate and 
comparison prepared 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, May 27, 2015.
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. 526, the 
``Furthering Asbestos Claims Transparency (FACT) Act of 2015.''
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Marin 
Burnett, who can be reached at 226-2860.
            Sincerely,
                                                Keith Hall,
                                                  Director.

Enclosure

cc:
        Honorable John Conyers, Jr.
        Ranking Member




 H.R. 526--Furthering Asbestos Claims Transparency (FACT) Act of 2015.

      As ordered reported by the House Committee on the Judiciary 
                            on May 14, 2015.




    H.R. 526 would require trusts set up through a Chapter 11 
bankruptcy reorganization caused by asbestos liabilities to 
submit quarterly reports to the bankruptcy court concerning the 
damage claims and payments made by the trust. Based on 
information provided by the Administrative Office of the U.S. 
Courts (AOUSC), CBO estimates that implementing H.R. 526 would 
have no significant effect on the Federal budget because the 
AOUSC would incur only minor costs to make that information 
publicly available. Enacting H.R. 526 would not affect direct 
spending or revenues; therefore, pay-as-you-go procedures do 
not apply.
    H.R. 526 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. 526 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. 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 incremental cost to comply with the 
reporting requirements in the bill would fall below the annual 
threshold established in UMRA for private-sector mandates ($154 
million in 2015, adjusted annually for inflation).
    The CBO staff contacts for this estimate are Marin Burnett 
(for Federal costs) and Paige Piper/Bach (for the private-
sector effects). The estimate was approved by H. Samuel 
Papenfuss, Deputy Assistant Director for Budget Analysis.

                    Duplication of Federal Programs

    No provision of H.R. 526 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. 526 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. 
526 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. 526 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 2015,'' or the ``FACT Act of 2015.''
    Section 2. Amendments. Adds to section 524(g) of the 
Bankruptcy Code a requirement that asbestos liability trusts 
publish quarterly public reports identifying the claimants, the 
demands made by claimants and the basis for such demands, and 
the basis for any payments from the trust to claimants. Further 
provides that trusts must comply with third-party discovery 
demands subject to third-parties' 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.

         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

           *       *       *       *       *       *       *


Sec. 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 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 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 property-
                damage 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 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 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;
                    (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 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 consist of the disclosure statement described in 
paragraph (3), completed 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
                            (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 the amount of $___ is due on ___ but 
                the future payment 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 attend 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:
            "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 $___, and my actual current monthly 
        expenses including monthly payments on post-bankruptcy 
        debt and other reaffirmation agreements total $___, 
        leaving $___ 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: ___.
            ``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.''.
    (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.

           *       *       *       *       *       *       *


                            Dissenting Views

                              INTRODUCTION

    H.R. 526, the ``Furthering Asbestos Claim Transparency 
(FACT) Act of 2015,'' would require a trust--established under 
bankruptcy law to pay the claims of asbestos victims--to 
publicly disclose sensitive, personal information of these 
victims, including their names and exposure histories. As a 
result, asbestos victims' private information will be 
irretrievably released into the public domain and available via 
the Internet. We oppose this offensive bill because: (1) its 
reporting and disclosure requirements are a blatant assault on 
asbestos victims' privacy interests; (2) it is fundamentally 
inequitable in that it 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. Not surprisingly, H.R. 526 is opposed by 
asbestos victims and their families,\1\ the Military Order of 
the Purple Heart,\2\ the AFL-CIO,\3\ the American Federation of 
State, County and Municipal Employees,\4\ Asbestos Disease 
Awareness Organization,\5\ the Environmental Working Group,\6\ 
Public Citizen,\7\ the Alliance for Justice,\8\ various 
consumer organizations,\9\ and legal representatives for future 
asbestos personal injury claimants with respect to asbestos 
bankruptcy trusts.\10\
---------------------------------------------------------------------------
    \1\See, 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'').
    \2\Letter from J. Patrick Little, National Commander, Military 
Order of the Purple Heart, to Representative John Boehner (R-OH), 
Speaker of the U.S. House of Representatives, et al. (Feb. 4, 2015) (on 
file with H. Comm. on the Judiciary Democratic staff) (stating that 
H.R. 526 ``was written to benefit asbestos corporations and their 
insurers, not their victims'' and that ``[d]elaying justice for any 
veteran suffering from the fatal effects of these diseases is offensive 
to our brave men and women in uniform'').
    \3\Letter from William Samuel, Director, Government Affairs 
Department, American Federation of Labor and Congress of Industrial 
Organizations, to U.S. House of Representative Members (Feb. 3, 2015) 
(on file with H. Comm. on the Judiciary Democratic staff).
    \4\Letter from Scott Frey, Director, Federal Government Affairs, 
American Federation of State, County and Municipal Employees, to U.S. 
House of Representative Members (Feb. 3, 2015) (on file with H. Comm. 
on the Judiciary Democratic staff).
    \5\Letter from Linda Reinstein, President & Co-Founder, Asbestos 
Disease Awareness Organization, to Representative Bob Goodlatte (R-VA), 
Chair, & Representative John Conyers, Jr. (D-MI), Ranking Member, H. 
Comm. on the Judiciary (May 13, 2015) (on file with H. Comm. on the 
Judiciary Democratic staff).
    \6\Press Release, Environmental Working Group, EWG Action Fund: 
FACT Act Favors Asbestos Industry Over Justice, Public Health (Jan. 28, 
2015) (on file with H. Comm. on the Judiciary Democratic staff).
    \7\Press Release, Public Citizen, FACT ACT Adds Insult to Injury 
for Asbestos Victims (Jan. 27, 2015) (on file with H. Comm. on the 
Judiciary Democratic staff).
    \8\Press Release, Alliance for Justice, AFJ: FACT Act Delays 
Justice for Asbestos Victims (Jan. 28, 2015), available at http://
www.afj.org/press-room/press-releases/afj-fact-act-delays-justice-for-
asbestos-victims.
    \9\These organizations include Consumer Act, Consumer Watchdog, the 
National Association of Consumer Advocates, and the National Consumers 
League. Letter from Alliance for Justice et al. to Representative Bob 
Goodlatte, Chair, H. Comm. on the Judiciary, et al. (May 12, 2015).
    \10\See, 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. (Jan. 30, 2015) (on file with H. Comm. 
on the Judiciary Democratic staff).
---------------------------------------------------------------------------

                       DESCRIPTION AND BACKGROUND

                              DESCRIPTION

    Section 524(g) of title 11 of the United States Code 
authorizes a company struggling with overwhelming asbestos tort 
claims to establish and fund, as part of its plan of 
reorganization in bankruptcy, a trust to pay such claims, under 
certain circumstances.\11\ In exchange for funding this trust, 
the company is released from liability for such claims once the 
bankruptcy court confirms the plan of reorganization. Upon 
confirmation, the trust must make the required payments, but is 
not subject to the bankruptcy court's supervision.
---------------------------------------------------------------------------
    \11\11 U.S.C. Sec. 524(g) (2015).
---------------------------------------------------------------------------
    H.R. 526 amends section 524(g) in two significant respects. 
First, it requires the trust to file with the bankruptcy court 
a quarterly 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, but not any confidential medical 
record or the claimant's full Social Security number. Second, 
the measure requires the trust, upon written request and 
subject to payment for any reasonable costs incurred in 
responding to such request at the option of the trust, to 
provide in a timely manner any information related to payments 
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.''\12\
---------------------------------------------------------------------------
    \12\11 U.S.C. Sec. 107(c) (2015).
---------------------------------------------------------------------------

                               BACKGROUND

A. 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 resistence.\13\ The modern industrial use of 
asbestos dates back to around 1860. Between 1934 to 1964, the 
world's annual use of raw asbestos increased from about 500,000 
tons to 2.5 million tons.\14\ Asbestos was often used 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.''\15\ The Department of Labor estimates 
that approximately 21 million Americans have been significantly 
exposed to asbestos.\16\
---------------------------------------------------------------------------
    \13\Asbestos Litigation Crisis in Federal and State Courts: 
Hearings Before the Subcomm. 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].
    \14\Id.
    \15\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].
    \16\Asbestos Litigation Hearings at 2.
---------------------------------------------------------------------------
    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).\17\ Lung cancer and other diseases have also been 
associated with the inhalation of asbestos fibers. \18\
---------------------------------------------------------------------------
    \17\GAO Report at 1-2.
    \18\Id.
---------------------------------------------------------------------------
    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.\19\ 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.''\20\ The 
Environmental Protection Agency (EPA) in 1988 published a study 
of asbestos in public schools and found that its presence was 
``extremely hazardous.''\21\
---------------------------------------------------------------------------
    \19\Report of the Judicial Conference of the U.S. Courts Ad Hoc 
Committee on Asbestos Litigation, at 2 (Mar. 1991).
    \20\Letter of transmittal dated July 21, 1983, Chronic Hazards 
Advisory Panel on Asbestos, Report to the U.S. Consumer Product Safety 
Commission (July 1983).
    \21\U.S. Environmental Protection Agency, EPA Study of Asbestos-
Containing Materials in Public Buildings: A Report to Congress, at 5 
(Feb. 1988).
---------------------------------------------------------------------------
    In 1989, the EPA issued a regulation pursuant to the Toxic 
Substances Control Act\22\ (TSCA) banning most asbestos-
containing products. This regulation, however, was remanded by 
the Fifth Circuit Court of Appeals\23\ 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 covered in the 1989 
final rule was overturned.''\24\ Currently, the use of asbestos 
is banned in the manufacture of certain products,\25\ but it 
continues to be used in many other products, such as disk brake 
pads, vinyl floor tiles, and clothing.\26\
---------------------------------------------------------------------------
    \22\Pub. L. No. 94-469, 90 Stat. 2003 (1976) (codified in 15 U.S.C. 
Sec. Sec. 2601 et seq. (2015)). 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. Sec. 2605 (2015).
    \23\Corrosion Proof Fittings v. Environmental Protection Agency, 
947 F.2d 1201 (5th Cir. 1991).
    \24\U.S. Environmental Protection Agency, U.S. Federal Bans on 
Asbestos--Regulatory History of Asbestos Bans, available at http://
www2.epa.gov/asbestos/us-federal-bans-asbestos (last visited May 7, 
2015).
    \25\See, e.g., 16 C.F.R. Parts 1304-05 (2015) (banning the use of 
asbestos in certain spackling compounds).
    \26\Other 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, available at http://
www2.epa.gov/asbestos/us-federal-bans-asbestos (last visited May 7, 
2015).
---------------------------------------------------------------------------
    The first appellate opinion upholding a product liability 
judgment against a manufacturer of asbestos-containing products 
was rendered in 1973 by the Fifth Circuit.\27\ 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.''\28\ 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.\29\ 
``Asbestos litigation,'' according to the GAO, ``has been the 
longest-running mass tort litigation in U.S. history.''\30\
---------------------------------------------------------------------------
    \27\Borel v. Fibreboard Paper Products Corp., 493 F.2d 1076 (5th 
Cir. 1973).
    \28\GAO Report at 8.
    \29\Lloyd 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).
    \30\GAO Report at 1. Approximately 100 companies have filed for 
bankruptcy relief at least in part due to asbestos-related liability. 
Id. at 2.
---------------------------------------------------------------------------
B. 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. 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,\31\ 
section 524(g) authorizes a court in a chapter 11 case, after 
making certain findings,\32\ 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\33\ that is to be paid in 
full or in part by a trust established under a confirmed plan 
of reorganization.\34\ The trust is typically funded with newly 
issued securities of the recapitalized debtor and by the 
debtor's obligation to make future payments.\35\ Upon 
confirmation, the trust assumes all of the debtor's liabilities 
for personal injury, wrongful death, or property damages 
allegedly caused by the presence or exposure to asbestos or 
asbestos-containing products.\36\ 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.''\37\
---------------------------------------------------------------------------
    \31\Kane v. Johns-Manville Corp., 843 F.2d 636 (2nd2nd Cir. 1988).
    \32\11 U.S.C. Sec. 524(g)(2)(B)(ii) (2015).
    \33\The provision defines ``demand'' as 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. Sec. 524(g)(5) (2015).
---------------------------------------------------------------------------
    \34\11 U.S.C. Sec. 524(g)(1)(B) (2015).
    \35\11 U.S.C. Sec. 524(g)(2)(B)(i) (2015).
    \36\11 U.S.C. Sec. 524(g)(2)(B) (2015).
    \37\GAO Report at 13.
---------------------------------------------------------------------------
    Once operational, the trust implements ``a nonadversarial 
administrative process--independent of the court system--to 
review claimants' occupational and medical histories before 
awarding compensation.''\38\ The trusts are privately managed 
and typically consist of a trustee, a trust advisory committee, 
and a future claims representative.\39\ The GAO explains:
---------------------------------------------------------------------------
    \38\Id. at 3.
    \39\Id. at 15.

        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.\40\
---------------------------------------------------------------------------
    \40\Id.

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.\41\ According to the GAO, payments range from 
1.1 percent to 100 percent for certain diseases, such as 
mesothelioma or asbestosis and the median payment percentage 
among the various trusts was 25 percent.\42\ 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.\43\ 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.\44\
---------------------------------------------------------------------------
    \41\Id. at 17.
    \42\Id. at 21.
    \43\Id. at 16.
    \44\Id. at 15.
---------------------------------------------------------------------------
    To establish entitlement to compensation from a bankruptcy 
asbestos trust, 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, the GAO reports.\45\ 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.''\46\
---------------------------------------------------------------------------
    \45\Id. at 18.
    \46\Id.
---------------------------------------------------------------------------
    In 2004, reports of fraudulent claims made against asbestos 
trusts and solvent companies emerged.\47\ The Committee's 
Subcommittee on Regulatory Reform, Commercial and Antitrust Law 
(RRCAL Subcommittee) examined this issue as well as others 
presented with respect to the treatment of mass torts in 
bankruptcy cases as part of an oversight hearing conducted that 
same year.\48\ More recently, a bankruptcy court found a 
pattern by asbestos claims of ``demonstrable 
misrepresentation'' of exposure evidence in the chapter 11 
bankruptcy case of Garlock Sealing Technologies, an asbestos 
manufacturer,.\49\
---------------------------------------------------------------------------
    \47\See, e.g., Editorial, St. Francis of Asbestos, Wall St. J., 
June 14, 2004, at A14 (suggesting that the House and Senate 
``bankruptcy subcommittees . . . [conduct] a full and public 
investigation of the rigged asbestos mess''); The Latest Asbestos 
Scam--The Lawyers Are Now Rigging the Bankruptcy Process, Wall St. J., 
June 1, 2004, at A16 (observing that the ``latest asbestos scandal is 
threatening the integrity of the judicial system itself'').
    \48\The Administration of Large Business Bankruptcy 
Reorganizations: Has Competition for Big Cases Corrupted the Bankruptcy 
System?: Hearing Before the Subcomm. on Commercial and Admin. Law of 
the H. Comm. on the Judiciary, 108th Cong. (2004).
    \49\In re Garlock Sealing Technologies, LLC, 504 Bankr. 71, 85-86 
(Bankr. W.D.N.C. 2014).
---------------------------------------------------------------------------
    Nevertheless, GAO, as part of its 2011 review of bankruptcy 
asbestos trusts, found neither any evidence of endemic fraud 
with respect to asbestos claims nor any proof of overt fraud 
over the course of its examination.\50\ The GAO reported that 
98 percent of the 52 trusts that it reviewed required a claims 
audit program to be conducted. Based on interviews held with 
representatives from 11 trusts, GAO observed that all the 
trusts ``incorporate quality assurance measures into their 
intake, evaluation, and payment processes.''\51\ GAO also noted 
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\ In addition, it 
found that none of the trusts ``indicated that these audits had 
identified cases of fraud.''\53\
---------------------------------------------------------------------------
    \50\Telephone interview with William Jenkins, Director, Homeland 
Security and Justice Issues, et al., U.S. Government Accountability 
Office (May 7, 2012); GAO Report at 23.
    \51\GAO Report at 23.
    \52\Id.
    \53\Id.
---------------------------------------------------------------------------
    With respect to reporting, the GAO states that these trusts 
``operate without judicial or Federal Government oversight, but 
generally provide annual financial reports to the U.S. 
bankruptcy court of jurisdiction in accordance with provisions 
set forth in each trust's trust agreements.''\54\ These reports 
typically set forth the total number of claims paid and the 
aggregate value of these claims.\55\ While some reports are 
publicly available, some are filed under seal with the 
bankruptcy court ``for reasons deemed appropriate by the 
court.''\56\ These include protecting the interests of the 
reorganized company and its competitiveness.\57\ Of the 47 
annual trust reports reviewed by GAO, only one reported the 
amount paid to each individual and listed these individuals' 
names.\58\ On the other hand, 65 percent of the trusts reviewed 
by GAO (33 out of 52 trusts) specifically provide that 
``claimant information submitted to the trust for purposes of 
obtaining compensation is confidential and should be treated as 
a settlement negotiation.''\59\
---------------------------------------------------------------------------
    \54\Id.
    \55\Id. at 16, 24.
    \56\Id. at 17.
    \57\Id. at 4, note 7.
    \58\Id. at 24-25.
    \59\Id. at 26.
---------------------------------------------------------------------------
    There is a sharp divide between those who support 
additional disclosure, namely the defense bar, and those who 
oppose it, namely the plaintiffs' bar and trusts. The principal 
arguments against disclosure of individual claimant 
information, as summarized by the GAO, are that ``parties in 
the tort system are not required to disclose settlement 
negotiation or agreement information outside of the subpoena 
process'' and that ``trusts are analogous to any other settling 
party and related negotiations and payments are 
privileged.''\60\ They further argue that ``all of the 
potentially relevant information in the trusts' possession is 
available to the defense through pretrial discovery.''\61\
---------------------------------------------------------------------------
    \60\Id. at 29.
    \61\Id.
---------------------------------------------------------------------------

                         CONCERNS WITH H.R. 526

    I. H.R. 526 IS NOT NECESSARY GIVEN THE ABSENCE OF ANY EMPIRICAL 
                       EVIDENCE OF SYSTEMIC FRAUD

    In order to justify the onerous new requirements the bill 
would impose on the asbestos trusts and the victims they serve, 
proponents of H.R. 526 allege that there is pervasive fraud and 
abuse in the asbestos trust compensation system.\62\ In truth, 
however, there have been only isolated reports of fraudulent 
claims over the years, as previously noted.\63\ Although the 
Wall Street Journal published an article in 2013 purporting to 
document ``numerous apparent anomalies'' regarding various 
asbestos claim,\64\ a close reading of the article shows that 
these instances typically resulted from human error or that 
protocols for rooting out fraud were working as intended.\65\ 
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:
---------------------------------------------------------------------------
    \62\See, e.g., Unofficial Tr. of Markup of H.R. 526, the 
``Furthering Asbestos Claim Transparency (FACT) Act of 2015,'' by the 
H. Comm. on the Judiciary, 114th Cong. (2015), at 92-94 [hereinafter 
``Tr. at ___''].
    \63\See text accompanying notes 47-49.
    \64\See, e.g., Dionne Searcey & Rob Barry, As Asbestos Claims Rise, 
So Do Worries About Fraud, Wall St. J., Mar. 11, 2013, at A1.
    \65\Id.

        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.\66\
---------------------------------------------------------------------------
    \66\Joan Claybrook, Fraud Made the Asbestos Illness Situation Much 
Worse, Letter to the Editor, Wall St. J., (May 19, 2013, at A16).

    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.\67\ Instead 
the GAO has detailed an already robust set of procedures that a 
claimant must follow to establish entitlement to compensation. 
The claimant completes a claim form supported with 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.\68\ 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.''\69\ In addition, 98 percent 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.''\70\ 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.''\71\ It is noteworthy that even with this 
heightened scrutiny, none of the trusts ``indicated that these 
audits had identified cases of fraud.''\72\
---------------------------------------------------------------------------
    \67\Telephone interview with William Jenkins, Director, Homeland 
Security and Justice Issues, et al., U.S. Government Accountability 
Office (May 7, 2012); GAO Report, supra note 14, at 23.
    \68\GAO Report at 18.
    \69\Id.
    \70\Id. at 23.
    \71\Id.
    \72\Id.
---------------------------------------------------------------------------
    To draw attention to the fact that the current asbestos 
trust claims processing generally has adequate fraud detection 
systems in place, RRCAL Subcommittee Ranking Member Steve Cohen 
(D-TN) offered an amendment that would have excluded trusts 
that have a claims audit program from the bill. This thoughtful 
amendment, however, was defeated by voice vote.\73\
---------------------------------------------------------------------------
    \73\Tr. at 148.
---------------------------------------------------------------------------
    With the knowledge that there is no empirical evidence of 
fraud in the system, we are led to conclude that this measure 
is nothing more than an attempt to improperly allow asbestos 
defendants to circumvent state and Federal discovery 
procedures. As the Minority witness explained during a hearing 
on a substantially identical bill held before the RRCAL 
Subcommittee in 2013, ``Solvent 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.''\74\ Any 
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, like 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 subvert state law discovery processes.
---------------------------------------------------------------------------
    \74\Furthering 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. 64 (2013) (prepared statement of Elihu Inselbuch).
---------------------------------------------------------------------------
    In response to this particular flaw in the bill, 
Representative Hakeem Jeffries (D-NY) offered an amendment that 
would have required the trust to provide information relating 
to payments made by the trust and demands for such payment to 
any party to an action concerning asbestos liability exposure 
only if such party cannot otherwise obtain such information 
under applicable non-bankruptcy law. The amendment further 
provided that the information must relate to a trust claimant 
who is also a party to such action against the requesting 
party. Representative Jeffries' amendment, however, failed by a 
vote of 8 to 18.\75\
---------------------------------------------------------------------------
    \75\Tr. at 193.
---------------------------------------------------------------------------

       II. H.R. 526 WOULD HARM ASBESTOS VICTIMS IN MULTIPLE WAYS

A. LThe Bill's Reporting and Disclosure Requirements Constitute an 
        Assault on Asbestos Victims' Privacy Interests
    H.R. 526's mandatory reporting and disclosure requirements 
would violate asbestos victims' privacy when they seek payment 
for injuries from an asbestos bankruptcy trust. Specifically, 
the bill requires their personal information, such as their 
names and exposure histories, 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.
    It is readily apparent that these reports would provide a 
treasure trove of data that could be accessed by insurance 
companies, prospective employers, lenders, and data collectors 
who could then use such information for purposes having 
absolutely nothing to do with compensation for asbestos 
exposure and that could be used to the detriment of asbestos 
victims. In effect, this bill would allow unsuspecting asbestos 
victims to be further victimized, all in the name of helping 
those who harmed these victims in the first place. As the widow 
of our former Judiciary Committee colleague, Representative 
Bruce Vento (D-MN), 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.''\76\
---------------------------------------------------------------------------
    \76\Letter 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).
---------------------------------------------------------------------------
    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.''\77\ 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.''\78\
---------------------------------------------------------------------------
    \77\GAO Report at 30.
    \78\Id.
---------------------------------------------------------------------------
    These arguments, however, lack any merit. As the GAO 
observed, ``parties in the tort system are not required to 
disclose settlement negotiation or agreement information 
outside of the subpoena process'' and that ``trusts are 
analogous to any other settling party and related negotiations 
and payments are privileged.''\79\ Equally important, the GAO 
noted that ``all of the potentially relevant information in the 
trusts' possession is available to the defense through pretrial 
discovery.''\80\ Trust representatives are also very concerned 
about the ``privacy rights of hundreds of thousands of 
individuals who did nothing except successfully seek 
compensation from a trust.''\81\
---------------------------------------------------------------------------
    \79\Id. at 29.
    \80\Id.
    \81\Memorandum 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).
---------------------------------------------------------------------------
    In an attempt to protect asbestos victims from this 
unwarranted invasion of privacy, Ranking Member John Conyers, 
Jr. (D-MI) offered an amendment specifying that the quarterly 
reports required to be filed under the bill contain only 
aggregate information. In support of his amendment, 
Representative Conyers argued that the bill would, in effect, 
subject unsuspecting asbestos victims to possible future abuse. 
The amendment also struck the bill's burdensome discovery 
requirement. This amendment would have ensured victims' privacy 
by not making individualized claimant information public. It 
also would have ensured that trusts could focus their resources 
on their primary mission of assuring fair compensation for 
asbestos victims, rather than participating in the discovery 
process for outside lawsuits. Notwithstanding these benefits, 
this amendment failed by a party line vote of 5 to 14.\82\
---------------------------------------------------------------------------
    \82\Tr. at 126.
---------------------------------------------------------------------------
    In another attempt to mitigate the bill's privacy flaws, 
Representative Henry C. ``Hank'' Johnson, Jr. (D-GA) offered an 
amendment that would have ensured that personally identifiable 
information about an asbestos victim claimant is protected from 
disclosure. It included within the amendment's definition of 
personally identifiable information, information pertaining to 
the claimant's health and finances. As Representative Johnson 
argued, the unfettered release of personally identifiable 
information facilitates identity theft. According to the 
Federal Trade Commission (FTC), identity theft is one of the 
top complaints received by the agency. Last year, for example, 
the FTC received nearly 160,000 of these complaints, which was 
100,000 more than it received in 2013.\83\ Although, as 
previously noted, identity theft is a serious concern of 
asbestos victims,\84\ this amendment failed by a vote of 9 to 
20.\85\
---------------------------------------------------------------------------
    \83\Federal Trade Commission: Identity Theft Once Again the Top 
Consumer Complaint, CNN Wire Service (Mar. 1, 2015), available at 
http://fox6now.com/2015/03/01/federal-trade-
commission-identity-theft-once-again-the-top-consumer-complaint.
    \84\See text accompanying note 76.
    \85\Tr. at 180-81.
---------------------------------------------------------------------------
B. Asbestos Victims Vigorously Oppose this Legislation
    The proponents of this legislation assert that it is 
intended to assist asbestos victims. For example, Committee 
Chairman Bob Goodlatte stated at the outset of the markup of 
H.R. 526 that the bill ``will help asbestos victims.''\86\ Yet, 
we are unaware of a single asbestos victim who supports H.R. 
526. In fact, we received letters from asbestos victims in 
vigorous opposition to this bill.\87\ Tellingly, the Majority 
failed to call an asbestos victim to testify at the hearing on 
this legislation held in this Congress or in the last two 
Congress when similar measures were considered.\88\ And, ``[t]o 
add insult to injury,'' the relatives of asbestos victims who 
were sitting silently in the audience at the hearing held on 
H.R. 526 were asked by Representative Darrell Issa (R-CA) to 
stand and then to shake their heads ``yes or no'' in response 
to his question, which then sought to use to support his 
arguments in support of the legislation.\89\
---------------------------------------------------------------------------
    \86\Id. at 92.
    \87\See, 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.
    \88\See, 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).
    \89\Letter 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).
---------------------------------------------------------------------------
    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.''\90\
---------------------------------------------------------------------------
    \90\Id.
---------------------------------------------------------------------------
C. LH.R. 526 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 eight percent of the population, they 
comprise 30 percent of all mesothelioma deaths.\91\ 
Military.com, the largest military and veteran membership 
organization in the United States, explains:
---------------------------------------------------------------------------
    \91\Military.com, Asbestos and the Military, History, Exposure & 
Assistance, available 
at http://www.military.com/benefits/veteran-benefits/asbestos-and-the-
military-history-exposure-
assistance.html (last visited Oct. 27, 2015).

          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.\92\
---------------------------------------------------------------------------
    \92\Id.

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.''.\93\
---------------------------------------------------------------------------
    \93\John Hedly-Whyte & Deborah R. Milamed, Asbestos and Ship-
Building: Fatal Consequences, 77(3) Ulster Medical J. 191 (Sept. 2008), 
available at http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2604477.

---------------------------------------------------------------------------
      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.

James Fite, U.S. Shipyards: A History of Massive Asbestos Exposure and 
Disease, World Asbestos Report (2004), available at http://
worldasbestosreport.org/conferences/gac/gac2004/ws_H_
2_e.php.
    In response to the special concerns presented by 
servicemembers and asbestos exposure, Representative Scott 
Peters (D-CA) offered an amendment that would have exempted 
claimants who have or who are currently serving in the Armed 
Forces of the United States, or who are currently or were 
previously civilian Department of Defense workers, and their 
families from the bill's disclosure requirements. The 
amendment, however, failed by a vote of 9 to 18.\94\
---------------------------------------------------------------------------
    \94\Tr. at 206.
---------------------------------------------------------------------------

    III. H.R. 526 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. 526 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 galling 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 highlight the problem of H.R. 526's inequitable 
disclosure obligations, Representative Jerrold Nadler (D-NY) 
offered an amendment requiring a party that requests 
information from a bankruptcy asbestos trust to meet certain 
criteria. Under the amendment, such a party would have been 
required to agree to disclose information relevant to such 
action that pertains to the protection of public health or 
safety to any other person or to any Federal or state agency 
with authority to enforce laws regulating an activity relating 
to such information upon request of such party or agency. The 
goal of this amendment was to ensure that the transparency that 
H.R. 526's proponents demand from the victims of the asbestos 
industry would also apply to the corporations that inflicted so 
much damage and so much suffering over the years. The amendment 
would have addressed the longstanding efforts by these 
corporations to conceal the facts from the public, from their 
victims, and from government agencies charged with enforcing 
our health and safety laws. Notwithstanding the equitable value 
of this amendment, it failed by a vote of 6 to 16.\95\
---------------------------------------------------------------------------
    \95\Id. at 142.
---------------------------------------------------------------------------
    Similarly, Representative Sheila Jackson Lee (D-TX) offered 
an amendment that would have provided balance to the bill's 
disclosure requirements. This amendment would have required an 
asbestos defendant seeking information from the trust about a 
plaintiff to first make available to the plaintiff and trust 
information about the median settlement amount paid by that 
defendant for claims settled or paid within 5 years of the date 
of the request, by disease category, for the State in which the 
plaintiff's action was filed. This amendment, however, failed 
by a vote of 7 to 17.\96\
---------------------------------------------------------------------------
    \96\Id. at 163.
---------------------------------------------------------------------------

     IV. H.R. 526 WILL DIVERT CRITICAL FUNDS AND FURTHER DECREASE 
   COMPENSATION TO ASBESTOS VICTIMS BY FORCING BANKRUPTCY TRUSTS TO 
                       PREPARE BURDENSOME REPORTS

    H.R. 526 would effectively shift the cost of discovery away 
from solvent asbestos defendants to the bankruptcy trusts, 
ultimately diminishing the available pool of money to 
compensate the victims of bankrupt asbestos defendants. By 
imposing reporting and information demand requirements on 
trusts, H.R. 526 could significantly increase the 
administrative costs of trusts in meeting these requirements 
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 state that the trusts are 
often required to keep such information confidential and they 
are concerned about the substantial costs involved in 
responding to requests for such information.\97\ 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.\98\ 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.''\99\
---------------------------------------------------------------------------
    \97\GAO Report at 30.
    \98\Id. at 27.
    \99\Memorandum 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).
---------------------------------------------------------------------------
    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.
    H.R. 526'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.\100\ Yet, after the passage of more than 20 
years since the first trust was established, the proponents of 
H.R. 526 now insist that these trusts issue reports and provide 
documentation.
---------------------------------------------------------------------------
    \100\GAO Report at 16.
---------------------------------------------------------------------------

                               CONCLUSION

    The only beneficiaries of H.R. 526 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 endemic 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 threatens to prevent or delay adequate compensation for 
asbestos victims.
    Further, H.R. 526'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 urge our colleagues to stand on the side of 
justice for asbestos victims and to oppose H.R. 526.

                                   Mr. Conyers, Jr.
                                   Mr. Nadler.
                                   Ms. Lofgren.
                                   Ms. Jackson Lee.
                                   Mr. Cohen.
                                   Mr. Johnson, Jr.
                                   Ms. Chu.
                                   Mr. Deutch.
                                   Mr. Gutierrez.
                                   Ms. Bass.
                                   Mr. Richmond.
                                   Ms. DelBene.
                                   Mr. Jeffries.
                                   Mr. Cicilline.
                                   Mr. Peters.

                                 [all]