Washington ? The Justice Department has rejected a proposal from accounting firm Arthur Andersen for settlement of a criminal obstruction charge stemming from the shredding of Enron Corp. documents, an Andersen attorney said Friday.

“They rejected our proposal,” said the attorney, Rusty Hardin. “So I think all kinds of discussions with them are probably over for now. … So we just proceed to trial. … I think we’re probably through talking to the government about the case.”

Hardin declined to give any details of Andersen’s proposal or the government’s reasons for rejecting it.

Andersen, which is scheduled to go on trial May 6 in Houston on the obstruction-of-justice charge, had sent a letter to the Justice Department Wednesday laying out its position in response to the government’s request last week.

Justice Department spokesman Mark Corallo on Friday said only that the department issued a response to the accounting firm.

In a related development Thursday, the Senate Judiciary Committee approved an Enron-inspired bill that would create new criminal penalties for securities fraud. The action came a day after the House passed legislation that would tighten oversight of the accounting industry and toughen some corporate rules a measure assailed by consumer groups and some Democrats as too weak.

Andersen, one of the Big Five accounting firms, has been struggling for survival as it rapidly loses clients and affiliates following its indictment last month.

Former Federal Reserve Chairman Paul Volcker, who has been overseeing changes at Andersen, said Thursday that in recent weeks, his plan to turn the firm into one that does only auditing has lost support among Andersen partners.

“Loyalties have dissipated, people are looking out for their own welfare,” Volcker said. “I’m not sure that critical mass (of support) still exists. If all the other problems evaporated tomorrow, the other problems obviously are not going to evaporate tomorrow.”

The Securities and Exchange Commission is pursuing a civil investigation of Enron and Anderson.