"I consider asbestos to be very much alive. ... We lost under the most extraordinary circumstances," Specter, the chairman of the Senate Judiciary Committee and primary sponsor of the bill, told reporters.

But analysts argue that an uncommon alliance of liberals and fiscal conservatives are likely to continue to stand in the way of meaningful action on the hard-fought legislation for at least the remainder of the year -- a disappointment for manufacturers facing asbestos-related lawsuits and a modest plus for property and casualty insurers.

The Tuesday night vote was indeed dramatic. Supporters of the legislation needed to muster a 60-vote supermajority to overcome a budget-related objection by Sen. John Ensign, R-Nev.

As the roll call wound down, supporters had 59 votes, while opponents numbered 40. But Democratic Sen. Daniel Inouye of Hawaii, who Specter says had promised to vote to overrule the objection, wasn't on the floor, having returned home to attend to his ailing wife.

After it became clear that Inouye wouldn't show, Senate Majority Leader Bill Frist, R-Tenn., changed his vote to "no," a purely parliamentary move that allows him to call up the bill again at a later date.

Another vote

Specter, R-Pa., said that Frist indicated in a Wednesday morning meeting that he was willing to revisit the bill.

"We talked about bringing it up again and having another vote," Specter said. The senator noted, however, that with the Senate now debating an extension of the Patriot Act, the asbestos bill won't be revisited until lawmakers return from next week's Presidents Day recess, at the earliest.

Meanwhile, analysts argue that the bill, which faced opposition from a mix of liberals and fiscal conservatives, is too controversial and complicated to be accommodated in an election-year Senate session.

"We believe the extremely close vote highlights the strong opposition to the trust concept, and would make it difficult for [Frist] to find the political fortitude to spend additional time on this measure, given that other priorities lie ahead," wrote Crystal Skinner, an analyst with Susquehanna Financial Group.

The legislation, authored by Specter and Sen. Patrick Leahy, D-Vt., is designed to halt future asbestos litigation. Instead, firms facing potential asbestos liability would be required to make contributions to a $140 billion compensation fund that would then award payouts to sufferers of asbestos-related illnesses.

The fund would be administered by the Labor Department, but would be filled solely through compulsory corporate contributions.

Alternative approach being discussed

The Senate has spent three years battling over how to best respond to an explosion of asbestos-related litigation. Dozens of U.S. companies who used the once-popular fire-retardant fiber in a range of products and processes have been forced into bankruptcy by litigation. Asbestos has been determined to be a carcinogen.

Big manufacturers, along with influential business groups such as the National Association of Manufacturers, have backed the trust-fund concept.

The bill's demise would be a victory, however, for property and casualty insurers, who feared that the legislation would allow claimants to pursue a payout from the trust fund as well as from insurance companies.

Such a fear was well-founded, according to Donald Light, senior analyst with Celent, a financial research firm.

"The bill in the form that was defeated would have left the door open to double-dipping," he said. But the bigger question for insurers and their lobbyists, he added, is: "What comes next?"

Light added that he sees "only a small chance" that Specter's bill will return to the floor.

The 40 senators who voted to block the bill Tuesday night represented a combination of liberals, who feared that the fund would let some asbestos users off easy while denying victims of their legal rights, and fiscal conservatives, who worried that taxpayers would be forced to pony up if the trust fund was unable to cover future claims.

Meanwhile, Sen. John Cornyn, R-Texas, and Assistant Minority Leader Richard Durbin, D-Ill., have said that they're willing to work together to come up with an alternative approach that would keep asbestos cases in the courts, but would tighten the medical criteria for eligible patients.

Tightening the criteria would address complaints by defendants who argue that many asbestos cases are brought by plaintiffs with dubious medical claims.

Specter reiterated his opposition to a medical-criteria bill, arguing that it would do nothing to compensate victims whose former employers have gone bankrupt, or who became ill after being exposed to asbestos during military service.

But Susquehanna's Skinner said that efforts to craft a medical-criteria bill along the lines of similar state-level efforts is likely to deepen the divide over the proposed trust fund.

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