How Special Interests Make Law: GAF Corporation Tries to Buy Liability Protection From Asbestos Claims

Summary

For the past nine months, the House Judiciary Committee has been locked in a protracted battle over asbestos liability legislation. This fight is a classic example of how special interests in Washington use political contributions, high-powered lobbying and public relations firms, and prestigious academics to work their will in Congress — and trample on the rights of workers and consumers in the process.

The GAF corporation and its super-wealthy owner, Samuel Heyman, as well as many other asbestos companies, stand to gain enormously if the asbestos legislation becomes law. In effect, Congress would require many workers and their families to forego compensation for injuries caused by asbestos, effectively subsidizing a private corporation and its owner who has an estimated worth of $800 million. This is truly a unique form of corporate welfare.

Introduced in 1998 and again in 1999 with the innocuous sounding title "Fairness in Asbestos Compensation Act," the legislation (H.R. 1283 and S. 758, and their numerous variations) would severely limit the ability of tens of thousands of injured asbestos workers to receive fair compensation from asbestos companies. The bills would protect the very companies that exposed their workers and customers to asbestos knowing that significant numbers of them would suffer severe injury or death.

Specifically, the bills would eliminate the ability of entire classes of asbestos victims to receive any compensation by:

— Adopting overly restrictive medical criteria for the types of lung cancer for which plaintiffs currently can receive compensation, which would deprive many non-mesothelioma lung cancer victims of any remedy.

— Prohibiting compensation awards to most workers with asbestos-caused pleural plaques (thickening of the wall of the lung) despite their proven physical injury, which would leave these workers and their families out in the cold.

For the past two years, the central players in the fight to pass the asbestos legislation have been Samuel Heyman and the GAF Corporation, of which Heyman is chairman. Both have a strong stake in the legislation. Heyman owns 97% of the stock in GAF, which ranks 187^th on the Forbes Top 500 Private Companies list. GAF has paid out $1.2 billion in claims and expenses to resolve asbestos cases, and it estimates hundreds of thousands of more cases will be filed against the company in future years. As of December 1998, GAF reported 113,800 asbestos personal injury claims pending against the company.

This report examines how beginning in 1997, after both the federal Third Circuit court in May of 1996 [Georgine v. Amchem Products] and the U.S. Supreme Court in June of 1997 [Amchem Products v. Windsor] rejected GAF's proposal to structure a settlement of present and future asbestos claims, Heyman has personally orchestrated a sophisticated and expensive effort to get Congress to pass legislation that effectively would subsidize his firm -- and him personally. This high-profile, multifaceted campaign exhibits the worst aspects of how special interests make law in our nation's Capitol.

Other asbestos manufacturers have also played a role in the passage of this legislation -- through lobbying and campaign contributions. But compared to the conductor role played by Heyman and GAF, those companies appear to have been relegated to the back of the strings section.

Major highlights of this report include the following:

• The GAF Corporation and its PAC and Samuel Heyman and his family members have contributed a total of $360,220 since 1995 to federal candidates and political parties in both hard and soft money. (Hard money includes contributions from individuals and PACs that are limited by federal law; soft money is the unlimited contributions made by individuals, corporations and unions to parties that are outside the hard money limits.) About 57% of the total was contributed by Heyman family members. See Table 1.
  
• The GAF and Heyman family campaign contributions have increased five-fold from 1995 to 1999 -- from $21,750 in 1995 to $117,500 in 1998 and $119,220 in 1999. Soft money rose from 0% of the total in 1995 to 53% in 1999. This rapid rise in contributions is strongly correlated with the June 1997 U.S. Supreme Court decision rejecting a proposed settlement structure for asbestos cases that would have benefitted the companies. GAF (and its allies) increasingly turned their attention to Congress where the first asbestos liability limitation bill was introduced in the House on May 20, 1998. See Table 1.
  
• The vast majority of these GAF/Heyman contributions — 73% — went to candidates who have a hand in determining the fate of this legislation (either because they were early cosponsors and/or were on House or Senate Judiciary Committees with jurisdiction over the bills) or to political parties whose leaders influence whether legislation is put on the legislative calendar or not. See Table 2 and the Appendix.
  
• Based on the timing of these campaign contributions and pro-GAF legislative action by both Republicans and Democrats there is a strong circumstantial case of a relationship between a candidate's and party's receipt of GAF/Heyman financial support and congressional support of the company's asbestos legislation. For instance:

— 13 House co-sponsors received $1,000 from the GAF PAC within two days to four months of co-sponsoring the bill; all but one member co-sponsored the bill first, with the contribution following later. See Table 2.

— 50% of Heyman family hard money contributions made since 1995 were concentrated on a few key Democratic senators who are the bill's leading co-sponsors and in positions of influence to determine the outcome of this legislation: Sens. Dodd (D-CT) - $10,000, Lieberman (D-CT) - $5,000, Schumer (D-N.Y.) - $70,000, and Torricelli (D-N.J.) - $12,000. See the Appendix.

— The GAF Corporation contributed $40,000 to the Democratic Senatorial Campaign Committee (DSCC) on April 19, 1999 — the first soft money donation the company ever made. The DSCC is headed by Sen. Robert Torricelli (D-N.J.), who became an original cosponsor of the asbestos legislation on October 10, 1998 and again on March 25, 1999. Sen. Torricelli, whose constituent is GAF which is based in his home state of New Jersey, is the ranking Democrat on the Senate Judiciary Subcommittee with jurisdiction over the legislation. See Table 1.

— Of the $86,000 in hard money contributed by the Heyman family alone in 1998, $70,000 benefitted Senate Judiciary Committee member Charles Schumer (D-N.Y.), who became an original cosponsor of the asbestos bill when it was introduced in the Senate on March 25, 1999. All but $10,000 of the $70,000 was contributed to Victory in New York in October 1998, a joint fund-raising committee comprised of the Schumer '98 Committee and the Democratic Senatorial Campaign Committee. See the Appendix.

— Senate Judiciary Committee Chairman Orrin Hatch (R-UT) received $5,000 from the GAF PAC on March 1, 1999, and a month later became an original bill co-sponsor; the chairman of the Judiciary subcommittee with jurisdiction over the bill, Sen. John Ashcroft (R-MO), received $3,000 on March 1, 1999, (after having received $2,500 on October 22, 1998) and a month later introduced the legislation as chief sponsor.

• GAF's lobbying expenditures have accelerated at an unprecedented pace since early 1997, when the U.S. Supreme Court rejected the company's legal strategy to limit its asbestos liability exposure in the Amchem case:

— GAF lobbying expenditures ballooned from $1.52 million in 1998 to $4.89 million in 1999. GAF's three-year lobbying expenditures total was $7.11 million. See Table 3. If one was to add in GAF's financial support for the Coalition on Asbestos Resolution (see below) the figure would be considerably higher.

— In the first six months of 1997, GAF reported having spent a paltry $40,000 lobbying Congress. By the last six months of 1999 that figure had gone through the roof to an astonishing $3.2 million -- a 7900% increase.

• GAF has employed very sophisticated lobbying activities to achieve its agenda in Congress. Among other things, GAF:

— Has controlled and financed the corporate "front group" Coalition for Asbestos Resolution, an organization that has worked primarily to pass the asbestos legislation. Separate from CAR's core budget, the organization has spent at least $680,000 since 1997 to hire high-powered lobbyists to promote the bills. See Table 3. (Its 1999 lobby disclosure reports are not yet available so the sum is likely to be much higher.) CAR has also sponsored extensive paid media advertising, including slick TV and print ads.

— Hired Christopher Edley Jr., through CAR, a Harvard law school professor and former Clinton White House official, and the so-called Boston Area Group on Asbestos Litigation (BAGAL), to draft versions of the asbestos bill that were then circulated for review by the staff of the House Judiciary Committee and formed the basis of committee legislative action throughout the second half of 1999 and into 2000.

— Paid a Boston law firm (Mintz, Levin) $340,000 in 1999 to lobby on the legislation and persuade various medical associations to endorse the medical criteria in the bill, which would greatly limit corporate liability. The firm was successful in getting the American College of Chest Physicians (ACCP) to endorse the bill's medical criteria. In the process the ACCP bypassed its Occupational and Educational Health Section, the logical place for such a position to be peer-reviewed and debated and which is headed by an expert on the medical effects of asbestos. Instead, ACCP leaders went directly to its Board of Regents. At least three Mintz, Levin lobbyists (Raymond D. Cotton, J. Edward Fox and Tracey Moorhead) are registered lobbyists for both the ACCP and GAF.

• GAF and the Coalition for Asbestos Resolution have not been alone in the campaign to enact liability protections. Six other asbestos companies spent $7.43 million since 1997 lobbying Congress on the bills (and in some cases other unrelated legislation). In total, the asbestos industry (including GAF and CAR) that reported lobbying on the bills are estimated to have spent $15.2 million lobbying Congress since 1997, when their strategy of seeking legislative liability protection from asbestos lawsuits was first hatched. See Table 3.
  
• Four of these six companies spent $817,336 since 1997 in campaign contributions to influence federal candidates and political parties. These same companies, plus GAF and the Heyman family, spent a total of $1.13 million since 1997 on campaign contributions to federal candidates and political parties. See Table 4.

I. Samuel Heyman and the Heyman Family

To win passage of the asbestos legislation, Heyman and GAF have run a full-service operation utilizing generous but targeted campaign contributions to elected officials and political parties; a full-court lobbying effort that funded a corporate "front group" called the Coalition for Asbestos Resolution, hired some of the most well-connected lobbyists on Washington's K Street, and employed a prestigious academic who has testified before Congress and played a leading role in drafting the asbestos legislation now under consideration; and a major public relations campaign with TV and print advertising and a traveling billboard that roams the streets of Washington for hours each day reminding power brokers how many asbestos cases have been filed since January 1, 2000.

Heyman's high level of attention to this legislation reflects his personal stake in the successful outcome of this fight. Heyman owns 97% of the stock in the GAF Corporation, which ranks 187^th on the Forbes Top 500 Private Companies list. His worth was estimated at $800 million in 1998. GAF has paid out $1.2 billion in claims and expenses to resolve asbestos cases and it estimates hundreds of thousands of more cases will be filed against the company in future years. As of December 1998, GAF reported 113,800 asbestos personal injury claims pending against the company.

According to Public Citizen interviews with members of Congress and their staff working on the asbestos bills, Heyman has conducted an extraordinary personal lobbying campaign meeting with many key members of the House and Senate Judiciary Committees, including with some of them repeatedly.

Along with his personal lobbying, Samuel Heyman and his family members have lavished substantial campaign contributions on many of the key players in the asbestos debate since 1995 as shown in Tables 1 and 2 and the Appendix.

Table 1. GAF/Heyman Family Hard and Soft Money Contributions (1995-1999)

Sources: Public Disclosure Inc.(http://www.tray.com), Center for Responsive Politics (http://www.opensecrets.org), and Common Cause (http://www.commoncause.org).
*Includes a $15,000 contribution from Samuel Heyman to the Republican National Committee on April 30, 1999.
**Includes a $40,000 contribution from the GAF Corporation to the Democratic Senatorial Campaign Committee on April 19, 1999.

There are several aspects about these contributions that are worth noting:

• The Heyman family and GAF campaign contributions increased five-fold from 1995 to 1999 — from $21,750 in1995 to $119,220 in 1999. Soft money to parties rose from 0% of the total in 1995 to 53% in 1999.
  
• Those increases generally correspond to a changed — and less favorable — legal landscape for GAF and other asbestos companies since the federal Third Circuit overturned [in Georgine v. Amchem Products, Inc.] in May of 1996 a proposed settlement of present and future asbestos claims against a group of asbestos companies including GAF. This decision was later upheld by the Supreme Court in June of 1997 [Amchem Products v. Windsor]. Having lost the effort to limit their liability through the courts, asbestos company defendants including GAF then tried to obtain similar liability protection through the federal legislation now before Congress.
  
• 50% of Heyman family contributions made since 1995 were concentrated on a few key Democratic senators who are the bill's leading co-sponsors and in positions of influence to determine the outcome of this legislation: Sens. Dodd (D-CT) - $10,000, Lieberman (D-CT) - $5,000, Schumer (D-N.Y.) - $70,000, and Torricelli (D-N.J.) - $12,000. See the Appendix.
  
• Of the $86,000 contributed by the Heyman family in 1998, $70,000 was to assist then House Judiciary Committee member Charles Schumer (D-N.Y.) in his bid to defeat incumbent Sen. Alfonse D'Amato (R-N.Y.). Schumer later became an original cosponsor of the asbestos bill (S. 758) when it was introduced in the Senate on March 25, 1999.
  
• $60,000 of the $70,000 directed to Schumer in 1998 was contributed by the Heymans to Victory in New York, a joint fund-raising committee comprised of the Schumer '98 Committee and the Democratic Senatorial Campaign Committee. A total of eight large contributions went to Victory in New York from Heyman family members on the same days for identical amounts: four contributions of $12,500 were made from Westport, Conn., on October 29, 1998 (five days before the 1998 election), and four more contributions for $2,500 were made by the same four family members on October 31, 1998 (three days before the election).
  
• Samuel Heyman contributed $15,000 in soft money to the Republican National Committee on April 30, 1999. This was the first-ever contribution from a Heyman family member or GAF to a Republican party committee.

II. GAF PAC and Corporate Contributions

While the Heyman family focused on assisting U.S. senators, primarily Democrats, in recent years, GAF undertook a complementary strategy: providing seed money to a bipartisan set of members in both the House and Senate, many of whom are in a position to determine the outcome of the asbestos legislation fight. Table 2 compares the dates and amounts of donations from the GAF Corporation PAC to members of Congress and dates of cosponsorship of the GAF-supported legislation.

Table 2. GAF Corporation PAC Contributions to Federal Candidates (1997-2000)

Source: Public Disclosure, Inc. (http://www.tray.com).

There are several points worth noting about the GAF PAC and general corporate contributions:

• Through its PAC, GAF gave a total of $70,250 in hard money to members of Congress since 1997 ($111,750 since 1995). These contributions have been strategically directed to key members of both parties. For instance:

— 13 House co-sponsors of the GAF-favored legislation received $1,000 from the GAF PAC within two days to four months of co-sponsoring the bill; all but one member cosponsored the bill first, with the contribution following later.

— Senate Judiciary Committee Chairman Orrin Hatch (R-UT) received $5,000 from the GAF PAC on March 1, 1999, and a month later became an original bill co-sponsor; the chairman of the Judiciary subcommittee with jurisdiction over the bill, Sen. John Ashcroft (R-MO), received $3,000 on March 1, 1999, (after having received $2,500 on October 22, 1998) and a month later introduced the legislation as chief sponsor.

— House Majority Whip Tom Delay (R-TX), who has considerable influence over what bills come to the floor of the House, co-sponsored the bill on March 25, 1999 and one month later received a GAF PAC contribution of $3,000. Five months earlier he had received $5,000 from the GAF PAC.

— $27,250 in GAF hard money went to cosponsors of the asbestos legislation in the House (74% of all the hard money contributions to House members).

— $19,000 in hard money contributions went to cosponsors of the asbestos legislation in the Senate (58% of all the hard money contributions to senators).

— $24,500 in hard money contributions went to Senate Judiciary Committee members (75% of all hard money contributions to senators).

• The GAF Corporation itself contributed $40,000 to the Democratic Senatorial Campaign Committee (DSCC) on April 19, 1999 — the first soft money donation the company ever made. The DSCC is headed by Sen. Robert Torricelli (D-N.J.), who became an original cosponsor of the asbestos legislation on October 10, 1998 and again on March 25, 1999. Sen. Torricelli, whose constituent is GAF which is based in his home state of New Jersey, is the ranking Democrat on the Senate Judiciary Subcommittee with jurisdiction over the legislation.

III. GAF's Massive Lobbying Operation

A. The Money & Top Lobbyists

GAF's lobbying expenditures have gone through the roof since June of 1997, when the U.S. Supreme Court rejected the company's legal strategy to limit its asbestos liability exposure, as illustrated by Table 3. The amount of money being spent by GAF to lobby for the asbestos legislation — at least $7.11 million since 1997 — is massive for a company of this size.