Statement By Grover Glenn Norquist, President Americans for Tax Reform

March 4, 2003

Chairman Hatch and other members of this committee, thank you for the opportunity to address you regarding Asbestos Litigation.

My name is Grover Norquist and I am president Americans For Tax Reform (ATR), a non-partisan, not-for-profit coalition of taxpayers and taxpayer groups who oppose all federal and state tax increases. I submit my comments to you today with serious concerns regarding asbestos litigation and four guidelines for reform that will significantly help ill individuals, American workers, and shareholders.

To begin, it is vitally important to understand the historical context of asbestos litigation. Most of the original asbestos litigation cases involved individuals who had developed serious and often fatal diseases because the companies they worked for concealed evidence connecting asbestos exposure to major health problems. However, starting in 1982, state supreme courts (New Jersey in 1982 and Louisiana in 1986) ruled that companies were liable for asbestos related injuries, regardless of whether or not the company understood the dangers of asbestos.

As a result of these new court decisions, the number of asbestos lawsuits skyrocketed against companies using asbestos to produce a final good, such as insulation, and companies that merely exposed workers to products containing asbestos, such as automobile brakes and clutches. These new developments greatly expanded the definition of "victim," and subsequently, the rate at which these lawsuits have been filed has nearly doubled every year since 1999. In fact, almost 94 percent of these cases involved individuals who have not developed any type of cancer or asbestos-related disability.

The substantial number of new claims by people who are not sick has become the crux of the problem, which ultimately, has placed a severe, deadweight loss on the nation's economy and standard of living. For example, since 1982, due to our nation's broken asbestos litigation system, over 60 U.S. businesses have been forced into bankruptcy by asbestos related lawsuits. At the present rate, U.S. companies will be forced to pay more than $200 billion in asbestos settlements.

This dries up capital investment funding needed for new technologies. New technologies increase the productivity of workers, which increases wages of workers and lowers the prices of goods for consumers. Moreover, stockholders benefit from increased profits. Yet, the asbestos litigation has drained efficient, productive companies liquidity, which has severely impacted the nation's economy and workers.

Without question, legislative reform is needed, as pointed out by the United States Supreme Court, to ensure that juries award money to those who are legitimate victims and keep it out of the hands of the opportunistic. Accordingly, Americans for Tax Reform supports reforms and proposed legislation that will:

Ø Work to establish objective medical criteria to determine asbestos-related impairment. These medical criteria would set the minimum requirements for an "injury" in asbestos lawsuits. The sick - including all cancer victims - could pursue their claims immediately. Those who are not sick would be able to bring their claims when and if they become sick.

Ø Statutes of limitations - Liberalize them to remove the incentive for premature filings. This would help to prevent non-sick claimants from rushing to file suits.

Ø Do away with the consolidation of asbestos related claims and instead require individual trials that will focus on the facts of each specific case.

Ø Require lawsuits to be filed in the states where the plaintiff resides or where exposure occurred.

Enacting these common sense reforms can have significant benefits to the United States economy and increase the standard of living for all Americans. Ultimately, Congress has an opportunity to help American workers, individual shareholders, and genuinely ill individuals by creating the legislative remedy the US Supreme Court has deemed necessary for fixing today's system.

On behalf of Americans for Tax Reform, I urge your committee to enact these common sense reforms.