§ 149.005.Adjustment

An inflation adjustment, and the mechanics are precise.

Subsection (a): the fair market value of total gross assets increases annually at a rate equal to the sum of: the prime rate as listed in the first edition of the Wall Street Journal published for each calendar year since the merger; and one percent.

Naming a specific publication and edition removes any argument about which rate applies in a given year — which matters when the calculation runs across six decades.

Subsection (b) is the significant limit: the rate is not compounded. Over sixty years, simple interest produces a far smaller figure than compound interest would, and the difference is the difference between a cap that grows with the economy and one that lags well behind it.

An asset base valued in 1960 dollars, adjusted at simple interest, is worth considerably less in real terms than it was.

Subsection (c) sets the end point. The adjustment continues until the adjusted value is exceeded by the cumulative amounts of successor asbestos liabilities paid or committed to be paid after the merger.

So once payments overtake the adjusted cap, the cap stops growing and the corporation has no further responsibility.

"Or committed to be paid" includes settlements not yet funded, so a corporation cannot extend its ceiling by delaying payment on agreed claims.

Subsection (d) excludes insurance from the adjustment. Liability coverage included in total gross assets is not increased — the policy limits are what they are, and inflating them would credit the successor with money no insurer will pay.