11:34 AM EST

Blake Randolph Farenthold, R-TX 27th

Mr. FARENTHOLD. Madam Chair, the FACT Act requires increased transparency to combat fraud committed against the asbestos trusts. This amendment strikes the requirement that the asbestos trusts publish the very data that would be necessary to detect the fraud between the trusts and State court tort proceedings.

In its place, the amendment calls for quarterly reports under the bill to publish only aggregate lists of demands received and aggregate lists of payments made by the trusts. Simple aggregation of information is not enough to allow defendants and State court parties and sister asbestos trusts to make meaningful inquiry into whether or not they are being defrauded.

The amendment also removes the requirement that the asbestos trusts respond to information requests from parties subject to asbestos-related suits and imposes the cost of such requests on the inquiring parties. The cost-shifting element of this provision is significant. In fact, a GAO report found that one asbestos trust had to pay over $1 million to respond to a discovery request. Rather than have asbestos trust money used to comply with discovery requests, they should be preserved for the payment

to the victims of asbestos-related illnesses.

This amendment not only guts the transparency requirements and elements of the bill, it also removes meaningful cost-saving measures. In fact, the bill is carefully crafted to protect folks' privacy. Here is what happens: The legislation ensures that claimants' confidential medical records and full Social Security numbers will not be made public.

Trust reports are also subject to the Bankruptcy Code's existing privacy protections. Section 107 of the code, for example, allows courts to protect any information that would present an undue risk of identity theft or injure a claimant if disclosed. Rule 9037 of the Federal Rules of Bankruptcy Procedure, Privacy Protection for Filings Made with the Court, would also apply to these public reports. The rule would allow the courts to require redactions of personal and private information. Finally,

rule 9037 will allow the courts to limit or prohibit electronic access to the trust reports.

Courts throughout the country already use these rules to protect the personal information of individuals who file claims during asbestos bankruptcies. For

example, the court, in overseeing a Garlock bankruptcy, redacted trust claims information that was introduced into a hearing record and later released to the public. Other courts have required anyone reviewing bankruptcy claims to agree to strict protective ordinances.

Witnesses at the House Committee on the Judiciary on the FACT Act have explained that the bill does not threaten asbestos victims' privacy and that asbestos claimants routinely disclose more information than the trust would be required to report in the course of tort litigation and bankruptcy proceedings. [Page: H201]

For these and other reasons, I urge my colleagues to oppose the Nadler amendment.

Madam Chair, I reserve the balance of my time.

11:37 AM EST

Jerrold Nadler, D-NY 10th

Mr. NADLER. Madam Chair, we should realize that the Bankruptcy Code sections cited by the distinguished gentleman from Texas are permissive, not mandatory. Bankruptcy Code section 107(c), for example, permits, but does not require, the bankruptcy court to issue an order prohibiting the disclosure of certain information pertaining to an individual's for cause if the court finds that disclosure of such information would create undue risk of identity theft or other unlawful injury to the individual

or the individual's property.

In other words, the victim here, who has been victimized by the people who produced the asbestos, would now have to go into court and request the protective order. The burden would be on the victim.

Why are we putting the burden on the victim instead of on the tortfeasor? The bill would do that. The Bankruptcy Code's section 107 so-called privacy protection is not automatic. As a result, the asbestos victim would have to retain counsel and go to court to prove cause to obtain relief. Again, you are shifting the burden further to the victim from the tortfeasor. That is not a very good idea, and there is no great necessity for it.

If the court finds or if a trust believes that it is being defrauded, it can request the court to get this information. It can ask for discovery. Yes, discovery is expensive, but you want to shift the expense to the victim. That is highly unfair.

This bill shifts tremendous burden to the victim. If he doesn't pick up that burden and go in for protective orders, it puts personal information that can be used to further victimize him open to anyone who wants to get it on the Internet.

My amendment would say no, to publish aggregate data that will help prevent fraud--I am not sure that there is much fraud--but publish aggregate data that would help prevent fraud; and if you have a reason, then you can go and ask the court for more, instead of the other way around.

The question is: Should the burden be on the tortfeasor or on the victim? I side with the victim.

I urge the adoption of this amendment.

Madam Chair, I yield back the balance of my time.