Negotiations on a bipartisan bill to set up an asbestos compensation fund appeared to have hit a roadblock on Tuesday night, after conservative Republicans objected to some provisions of a draft bill that had gained support from key Republicans and Democrats.

Arlen Specter, chairman of the Senate judiciary committee and the driving force behind the bill, made clear on Tuesday night that no deal was imminent, after a day in which asbestos stocks rose sharply on expectations of a legislative solution to the crisis.

Mr Specter said there would be a one-week delay in negotiations, but lobbyists close to the talks said the hiatus could dissipate the momentum behind a deal.

Mr Specter and Patrick Leahy, the ranking Democrat on the committee, had said earlier in the day that they were very close to agreement after a compromise draft bill was circulated to establish a $140bn asbestos compensation fund.

But speaking after a meeting with Senate Republicans several of whom have been openly critical of some provisions of the bill Mr Specter said they were seeking “refinements” to the bill. He said these did not involve core principles, but gave no details of the substance of their concerns.

The goal of the legislation is to set up a fund that would pay asbestos victims on a no-fault basis, and limit the exposure of companies and insurers to asbestos lawsuits. The fund would be managed by the federal government but privately financed by asbestos defendants and insurers. Negotiations on such a bill have been going on for over two years.

Hopes of a deal were raised earlier in the day when Mr Specter announced that Democratic members of his committee had made major concessions in an attempt to get bipartisan agreement. Democrats had agreed, he said, to bar smokers from claiming from the fund, since they may not have become ill strictly from asbestos.

“You have to be able to prove that the problem you have was caused by asbestos,” he said. This concession was aimed at Republicans who insisted the fund should only pay victims of asbestos.

Democrats are also reported to have compromised on the question of what should happen if the fund runs out of money. In that event, he said, plaintiffs could return to the court system to sue, but must bring their claims either in federal court, or in the state where they reside or where the injury took place. The draft bill is also understood to cap attorney's fees at 5 per cent, or 10 per cent for appeals.

Insurers, however, were dealt a defeat in the draft bill, when Mr Specter said trust fund awards would not be offset by money awarded to victims through other means, such as workers' compensation benefits.

None of the major groups affected by the asbestos crisis from businesses to insurers to trade unions were willing to comment on Tuesday on the proposed deal, saying they had not seen the new draft and cautioning that “the devil is in the details”.

They also cautioned that even if there is eventually enough bipartisan support to vote the bill out of committee, passage on the Senate floor could be a different matter.

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