S.Amdt. 2790

SA 2790. Mr. CORNYN submitted an amendment intended to be proposed to amendment SA 2746 proposed by Mr. Frist (for Mr. Specter (for himself and Mr. Leahy)) to the bill S. 852, to create a fair and efficient system to resolve claims of victims for bodily injury caused by asbestos exposure, and for other purposes; which was ordered to lie on the table; as follows:

On page 171, strike all after line 5 until “(5) Bankruptcy Relief” and insert the following and renumber accordingly:

(c) Limitation.--

(1) In general.--Under expedited procedures established by the Administrator, any defendant participant may apply for a limitation on its annual payment obligation to the Fund by showing that it qualifies under subparagraph (3), and the Administrator shall promptly grant such application if the standards in subparagraph (3) are satisfied.

(2) Stay of payment.--A defendant participant who applies for a limitation on its annual payment obligation to the Fund under subparagraph (1) shall have the payment required under subsection (i)(l)(A)(iv) stayed until the Administrator has made a determination with respect to the application of such defendant participant.

(3) Application for limitation.--A defendant participant may apply under subparagraph (A) for a limit on its annual payment obligation to the Fund if:

(A) it is included in Tiers II, Ill, IV, V, or VI under section 202; and

(B) its prior asbestos expenditures are less than $200 million and its revenues as defined in this section are less than $10 Billion.

(4) Limitation.--Such qualifying defendant participant may apply for the limit set forth in either clause (A), (B) or (C), provided that it may apply only under one such clause and may not change its application once the application has been approved by the Administrator. A defendant participant qualifying under this subparagraph may apply for a limit on its annual payment obligation to the Fund to an amount equal to--

(A) 125 percent of the arithmetical average for fiscal years 1998 through 2002 of such defendant participant's annual prior asbestos expenditures; or

(B) 150 percent of the arithmetical average for fiscal years 1998 through 2002 of such defendant participant's annual prior asbestos expenditures, excluding (I) the amount of any payments by insurance carriers for the benefit of such defendant participant or on behalf of such defendant participant, and (II) any reimbursements of the amounts actually paid by such defendant participant with respect to prior asbestos expenditures for fiscal years 1998 through 2002, regardless of when such reimbursements were actually paid; or

(C) 1.67024 percent of the revenues for the most recent fiscal year ending on or prior to December 31, 2002, of the affiliated group to which such defendant participant belongs.

(5) Judicial review.--A defendant participant who is aggrieved by the denial by the Administrator of its application under this paragraph is entitled to judicial review under section 303, and during the pendency of such review, section 223(a) shall not apply to that defendant participant. Without regard to section 305(a), the reviewing court may, in its discretion, provide such interlocutory relief to the defendant participant as may be just.

(6) Applicability of the guarantee surcharge.--A defendant participant whose application for a limitation on its annual payment obligation to the Fund under subparagraph (A) is approved by the Administrator, shall not be exempt from the guaranteed payment surcharge established under subsection (1) unless otherwise provided in this Act.

(7) Minimum payment.--Notwithstanding the limitations provided in this subsection, a defendant participant that is granted a limitation by the Administrator shall pay no less than 5 percent of the amount the participant is scheduled to pay under section 202.

(d) Adjustments.--

(1) In general.--Under expedited procedures established by the Administrator, a defendant participant may seek adjustment of the amount of its payment obligation based on severe financial hardship or demonstrated inequity. The Administrator may determine whether to grant an adjustment, in accordance with this subsection. A defendant participant has a right to obtain a rehearing of the Administrator's determination under this subsection under the procedures prescribed in subsection (i)(10). The Administrator may adjust a defendant participant's payment obligations under this subsection, either by forgiving the relevant portion of the otherwise applicable payment obligation or by providing relevant rebates from the defendant hardship and inequity adjustment account created under subsection (j) after payment of the otherwise applicable payment obligation, at the discretion of the Administrator.

(2) Financial hardship adjustments.--

(A) General.--Any defendant participant in any tier may apply for an adjustment under this paragraph at any time during the period in which a payment obligation to the Fund remains outstanding and may qualify for such an adjustment by demonstrating to the satisfaction of the Administrator that the amount of its payment obligation would materially and adversely affect the defendant participant's ability to continue its business and to pay or satisfy its debts generally as and when they come due. Such an adjustment shall be in an amount that in the judgment of the Administrator is reasonably necessary to prevent such material and adverse effect on the defendant participant's ability to continue its business and to pay or satisfy its debts generally as and when they come due.

(B) Factors to consider.-In determining whether to make an adjustment under subparagraph (A) and the amount thereof, the Administrator shall consider--

(1) the financial situation of the defendant participant and its affiliated group as shown in historical audited financial statements, including income statement, balance sheet, and statement of cash flow, for the three fiscal years ending immediately prior to the application and projected financial statements for the three fiscal years following the application;

(2) an analysis of capital spending and fixed charge coverage on a historical basis for the three fiscal years immediately preceding a defendant participant's application and for the three fiscal years following the application;

(3) any payments or transfers of property made, or obligations incurred, within the preceding 6 years by the defendant participant to or for the benefit of any insider as defined under section 101(31) of title 11 of the United States Code or any affiliate as defined under section 101(2) of title 11 of the United States Code;

(4) any prior extraordinary transactions within the preceding 6 years involving the defendant participant, including without limitation payments of extraordinary salaries, bonuses, or dividends;

(5) the defendant participant's ability to satisfy its payment obligations to the Fund by borrowing or financing with equity capital, or through issuance of securities of the defendant participant or its affiliated group to the Fund;

(6) the defendant participant's ability to delay discretionary capital spending; and

(7) any other factor that the Administrator considers relevant.

(C) Term.--A financial hardship adjustment under this paragraph shall have a term of 5 years unless the Administrator determines at the time the adjustment is made that a shorter or longer period is appropriate in the light of the financial condition of the defendant participant and its affiliated group and other relevant factors, provided that a financial hardship adjustment under this paragraph shall terminate automatically in the event that the defendant participant holding the adjustment files a petition under title 11, United States Code.

(D) Renewal.--A defendant participant may renew a hardship adjustment upon expiration by demonstrating that it remains justified. Such renewed hardship adjustments shall have a term of 5 years unless the Administrator determines at the time of the renewed adjustment that a shorter or longer period is appropriate in the light of the financial condition of the defendant participant and its affiliated group and other relevant factors, provided that a renewed financial hardship adjustment under this paragraph shall terminate automatically in the event that the defendant participant holding the adjustment files a petition under title 11, United States Code.

(E) Procedure.--

(1) The Administrator shall prescribe the information to be submitted in applications for adjustments under this paragraph.

(2) All audited financial information required under this paragraph shall be as reported by the defendant participant in its annual report filed with the Securities and Exchange Commission in accordance with the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.). Any defendant participant that does not file reports with the Securities and Exchange Commission or which does not have audited financial statements shall submit financial statements prepared pursuant to generally accepted accounting principles. The chairman, chief executive officer, and chief financial officer of the defendant participant shall certify under penalty of law the completeness and accuracy of the financial statements provided under this sub-paragraph.

(3) The chairman, chief executive officer, and chief financial officer of the defendant participant shall certify that any projected information and analyses submitted to the Administrator were made in good faith and are reasonable and attainable.”

(3) Inequity adjustments.--

(A) In general--A defendant participant--

(i) may qualify for an adjustment based on inequity by demonstrating that the amount of its payment obligation under the statutory allocation is exception 25 ally inequitable--

(I) when measured against the amount of the likely cost to the defendant participant net of insurance of its future liability in the tort system in the absence of the Fund;

(II) when measured against the likely cost of past and potential future claims in the absence of this Act;

(III) when compared to the median payment rate for all defendant participants in the same tier; or

(IV) when measured against the percentage of the prior asbestos expenditures of the defendant that were incurred with respect to claims that neither resulted in an adverse judgment against the defendant, nor were the subject of a settlement that required a payment to a plaintiff by or on behalf of that defendant;

(ii) shall qualify for a two-tier main tier and a two-tier subtier adjustment reducing the defendant participant's payment obligation based on inequity by demonstrating that not less than 95 percent of such person's prior asbestos expenditures arose from claims related to the manufacture and sale of railroad locomotives and related products, so long as such person's manufacture and sale of railroad locomotives and related products is temporally and causally remote, and for purposes of this clause, a person's manufacture and sale of railroad locomotives and related products shall be deemed to be temporally and causally remote if the asbestos claims historically and generally filed against such person relate to the manufacture and sale of railroad locomotives and related products by an entity dissolved more than 25 years before the date of enactment of this Act;

(iii) shall be granted a two-tier adjustment reducing the defendant participant's payment obligation based on inequity by demonstrating that not less than 95 percent of such participant's prior asbestos expenditures arose from asbestos claims based on successor liability arising from a merger to which the participant or its predecessor was a party that occurred at least 30 years before the date of enactment of this Act, and that such prior asbestos expenditures exceed the inflation-adjusted value of the assets of the company from which such liability was derived in such merger, and upon such demonstration the Administrator shall grant such adjustment for the life of the Fund and amounts paid by such defendant participant prior to such adjustment in excess of its adjusted payment obligation under this clause shall be credited against next succeeding required payment obligations; and

(iv) may, subject to the discretion of the Administrator, be exempt from any payment obligation if such defendant participant establishes with the Administrator that--

(I) such participant has satisfied all past claims; and

(II) there is no reasonable likelihood in the absence of this Act of any future claims with costs for which the defendant participant might be responsible.

(B) Payment rate.--For purposes of subparagraph (A), the payment rate of a defendant participant is the payment amount of the defendant participant as a percentage of such defendant participant's gross revenues for the year ending December 31, 2002.

(C) Term.--Subject to the annual availability of funds in the defendant hardship and inequity adjustment account established under subsection (j), an inequity adjustment under this subsection shall have a term of 3 years.

(D) Renewal.--A defendant participant may renew an inequity adjustment every 16 years by demonstrating that the adjustment remains justified.

(E) Reinstatement.--

(i) In general.--Following the termination of an inequity adjustment under subparagraph (A), and during the funding period prescribed under subsection (a), the Administrator shall annually determine whether there has been a material change in conditions which would support a finding that the amount of the defendant participant's payment under the statutory allocation was not inequitable. Based on this determination, the Administrator may, consistent with the policies and legislative intent underlying this Act, reinstate any or all of the payment obligations of the defendant participant as if the inequity adjustment had not been granted for that 10 year period.

(ii) Terms and conditions.--In the event of a reinstatement under clause (i), the Administrator may require the defendant participant to pay any part or all of amounts not paid due to the inequity adjustment on such terms and conditions as established by the Administrator.

(4) Limitation on adjustments.--The aggregate total of financial hardship adjustments under paragraph (2) and inequity adjustments under paragraph (3) in effect in any given year shall not be limited.