By Juliet Eilperin
Washington Post Staff Writer
Saturday, November 17, 2001; Page A08

On the afternoon of Oct. 30, a cadre of lobbyists gathered in the Capitol office of House Majority Whip Tom DeLay (R-Tex.) to scrutinize the fine print in the House airport security bill. Representing a New York real estate mogul, a Republican governor and a jet fuel manufacturer, they were unlikely allies who shared a common fear: lawsuits stemming from the terrorist attacks of Sept. 11.

DeLay's aides had good news: Judiciary Committee Republicans had drafted a sweeping provision that would shield all of them, from Boeing to the owner of the World Trade Center, from the threat of huge damage awards.

And when House and Senate negotiators struck an agreement on a compromise bill on Thursday, the liability provision survived. It wasn't the first time since Sept. 11 that lawmakers had shown a willingness to grant companies greater legal protection.

The airline bailout package that Congress passed in September insulated United and American airlines from damage awards stemming from the attacks. A pending insurance bill includes a provision that would limit both the venues and the damages for terrorism-related lawsuits against insurers. And after consulting with the pharmaceutical industry, senators recently considered, but then rejected, language for a bioterrorism bill that would have protected the industry from lawsuits if vaccines and drugs they produce at the government's request cause injuries or deaths.

Sally Greenberg, senior product safety counsel at Consumers Union, said she was devoting most of her time to battling such restrictions. "It really does seem to be coming from all directions," she said.

Proponents say that such exceptions are justified, given the circumstances the country is facing. "It's a critical economic issue," said Rep. John L. Mica (R-Fla.), adding that major American industries would collapse without these legal protections.

But critics contend that the measures not only would curtail Americans' right to hold companies responsible for wrongdoing, but also could lay the groundwork for further legal restrictions unrelated to terrorism.

Leo Boyle, president of the Association of Trial Lawyers of America, said the provisions were unjustified when Congress was providing financial support to the affected industries. "They're attempting to take away the rights of people and insulate private industry from any fear of accountability," Boyle said of the Republicans.

The debate over liability is part of a long-standing dispute between Democrats and Republicans over how much legal exposure companies should face. Democrats are allied with trial lawyers, who have showered the party with donations over the years; Republicans are just as firmly tied to the business community, which has consistently lobbied for restrictions on personal injury lawsuits.

At the moment, neither side appears inclined to give way.

"I'm not going to rewrite the tort law of each of the 50 states just so a few well-heeled and well-lobbied industries, quite frankly, [can take] advantage of this situation and get something they couldn't otherwise get," said Senate Judiciary Committee Chairman Patrick J. Leahy (D-Vt.).

Republicans, who for years have tried to curtail the grounds for lawsuits, said they recognized they could not achieve broad legal reform at the moment. But they want to take advantage of the changed political climate.

"Clearly, some of the members have an agenda to limit the trial bar," said House Financial Services Committee Chairman Michael G. Oxley (R-Ohio), adding that he counted himself among them. Oxley helped draft the pending insurance bill.

But these moves have inspired stiff resistance, complicating lawmakers' task of passing critical legislation this year.

In negotiations for the airline bailout package, House lawmakers reached common ground by limiting the airlines' terrorism-related liability while creating a government compensation fund for victims. The trial lawyers pushed the idea of a federal fund and offered to represent victims' families for free, believing it would set a precedent that injured parties deserved compensation for terrorist acts. The business community saw a different precedent in the provision that steered all claims to federal court, where they believe juries are less inclined to deliver massive judgments against companies.

Even so, GOP leaders became convinced that additional industry protections were necessary. A host of industries began contacting congressional leaders, warning that their companies could be exposed to crushing lawsuits.

The lobbying for liability protection in the aviation security bill is a case in point. Larry Silverstein, who owns the lease on the World Trade Center, met with House Judiciary Committee Chairman F. James Sensenbrenner Jr. (R-Wis.) in his office. Koch Industries, a maker of jet fuel and a major GOP donor, sent its emissaries to DeLay and other top Republicans. Boeing appealed to Rep. Jennifer Dunn (R-Wash.), who in turn made her pitch to Mica, who chairs the House Transportation and Infrastructure subcommittee on aviation.

Dunn, who put her staff on the project full-time, noted that Boeing was laying off 30,000 employees in the aftermath of the attack. "The airlines are protected. We think the airplane manufacturers should be, too," Dunn said.

The liability language appealed to another influential constituency: moderate New York Republicans, who were worried about the state Port Authority's legal exposure. Once the provision that would protect the authority was added, New York Gov. George E. Pataki and New York City Mayor Rudolph W. Giuliani urged lawmakers to support the bill. But the liability provision failed to win over any New York Democrats and prompted a flood of outraged comments from other Democrats on the House floor. Rep. John Conyers Jr. (D-Mich.) accused Republicans of being "willing to sacrifice the legal rights of the victims of the September 11th tragedy."

The provision was scaled back in negotiations between the two chambers but still covers several groups, including Silverstein and his partners, the city of New York, the New York Port Authority, Logan Airport in Boston and the makers of both airplanes and plane equipment.

The pending insurance legislation raises similar issues. Senators have crafted language that would restrict lawsuits over terrorist acts to federal court and would bar plaintiffs from collecting punitive damages; the House bill would prevent the government from bearing financial responsibility for punitive damages related to terrorism.

The recently introduced bioterrorism bill also raises the question of legal liability. With lawmakers calling on the pharmaceutical industry to produce vaccines and other medications to guard against future terrorist attacks, companies asked the federal government to take legal responsibility if these products cause injuries.

"If we vaccinate 250, 300 million people, there will be several hundred deaths," said Sen. Bill Frist (R-Tenn.), a heart surgeon who is helping to write the bipartisan legislation. "Who would have that liability? That's what it boils down to."

Lawmakers opted not to include the language because an executive order recently issued by the administration already provides legal protection for industries engaged in the nation's defense. The pharmaceutical industry is reviewing the executive order to determine if it provides sufficient protection, according to a spokesman for the Pharmaceutical Research and Manufacturers of America.

Senior Republicans cautioned that their Democratic colleagues would have to make compromises on questions such as legal liability if they want to respond quickly to the economic problems arising from September's attack. "We're all being a little more flexible," said House Majority Leader Richard K. Armey (R-Tex.). "This is a national emergency."