Document GKv7197xqmz64wJBzKx2ZGbXm

the society of the plastics industry. INC. 230 PARK AVENUE NEW YORK, NEW YORK 10017 - 212/373-9400 MINUTES BOARD OF DIRECTORS MEETING THE SOCIETY OF THE PLASTICS INDUSTRY, INC. Innisbrook Tarpon Springs, Florida February 1^, 1975 SPI-22410 the society of the plastics industry. INC. 230 PARK AVENUE NEW YORK. NEW YORK 10017 212/373-9*00 STI BOARD OF DIRECTORS MEETING MINUTES Innisbrook Tarpon Springs. Florida February 1975 DIRECTORS PRESENT: Fritz Backscheider Walter Becker Robert Chickey Frank Cogdell F. Reed Estabrook Jack Flynn Iver Freeman Robert Gerdes Jack Glatt Charles Grant Harry Katz Robert Kittredge Josef Klingler Leonard Lane Vernon Larson (Thursday only) Jean Malone LaVern Nledfeldt Miles Powell John Relb Clyde Rushing Rex Scott Stanford Shaw Fred Sutro William Willert Harold Wright Recto Maided Products Mobay Chemical Co* Kusaa, Inc. E* I. du Pont de Nemours & Co*, Inc. Brook Molding Corp* Dow Chemical USA Package fochinery Co* Plastic foldings Corp. Keolyn Plastics, Inc. Hercules Incorporated Variform Plastics Fabri-Kal Corporation Janler Plastic fold Corp. Icore International Uhion Carbide Corporation B. F* Goodrich Chemical Co. Technical Plastics Corp. Cheaplast, Inc. Conair, Inc* Feco, Inc* Phillips Petroleum Co. Shaw Plastics Corp* USS Chemicals Egan fochinery Co* Shenandoah Plastics Corp. DIRECTORS ABSENT: A. W. Andrews Donald Bryan DeWitt Cheney James J* Coleman Robert Cook fonsanto Conpany fobay Chemical Co. Allied Chemical Corp* ICI Uhlted States Plastic Industries, Inc. SPI-22411 DIRECTORS ABSENT continued C. Malcolm Cooper Robert Daily Dan J. Edwards Robert S. Elliott Jerome Foroo Robert Hoffer John A. Larkin Robert S. Morrison Charles O'Connell Seymour Rosenhouse Gerald A. Schultz Samuel H. Smith Robert Stillingcr Eugene H. Wiard GUESTS PRESENT: James Alberts John Bachner Charles Bentley John Blair Kenneth Broo toroid Brown David Clavadetscher E. R. Evason George Fowles Gary Fulmer Lester Gigax Martin Haley Joseph Hines William Jackson Charles Jones James Joy William Kennel James Kiss George Kovach Robert Lange A. Levenhagen Richard Moore Clarence Neher Clifford Palkie Harry Paulus William Simeral Donald Snow Theodore Stoughton Matthew Swetonic Howard Wilkoff Owens-Illinois, Inc. General Electric Corp. Dennis Chemical Co. Pronto Plastics Inc. Plastics, Inc. Hoffer Plastics Corp. W. R. Grace & Co. Molded Fiber Glass Companies Gulf Oil Chemicals Co. Vydel Corporation Noury Chemical Corp. Von Dorn Conpany Crown Molding Co. Ren Plastics Dart Industries Chicago Molded Products Corp. Colt's Plastics Co., Inc. E. I. du Pont de Nemours & Co. Boonton Molding Co. E. I. du Pont de Nemours & Co. Premix, Inc. SPI-Canada Retired Crane Plastics, Inc. Rubbermaid, Inc. tortin Ryan Haley Associates Dart Industries Phillips Petroleum Co. Structurlite Plastics Plastics Manufacturing Co. Amoco Chemicals Corp. Hill and Knowlton Kero Corporation Con&ir, Inc. Rockwell International W. R. Grace Ethyl Corporation M & T Chemicals PPG Industries E. I. du Pont de Nemours & Co., Inc. Springfield Moulders Ri chardson-Merrell Hill and Knowlton New England Tape Co. SPI-22412 -3 - STAFF PRESENT Lloyd Darden Charles Eisele Ralph L. Harding, Jr Jerome H. Heckman Laura E. Jones John Lawrence Thomas J* McGrath E. S. Nuspliger Robert Sherman Robert R. Tiernan Western Regional Manager Director of Finances and Administration President SPI General Counsel Secretary to the Board of Directors Technical Director General Manager Director of Public Affairs Midwest Regional Manager SFI General Counsel Chairman Scott called the meeting to order at 8:30 a.m. and asked for self-introductions. Mr. Scott asked for approval of the Minutes of the last Board Meeting, which were mailed previously to all Directors. Riere being no additions or corrections, Mr. Estabrook moved that the minutes be approved, Mr. Malone seconded the motion, and the Board approved them. EXECUTIVE COMMITTEE REPORT Mr. Scott reported the the Executive Committee had spent a great deal of its time discussing, reviewing and changing the Compensation Survey and Salary Administration Plan as presented by Dean Hildebrandt of Boo2, Allen and Hamilton. The Cosmittee thought the plan very workable and similar to those plans used in some of the larger chemical companies. This will give Messra McGrath and Harding & salary administration plan containing Job classification, job grades, and a performance evaluation plan with complete job descriptions. The Executive Connittee approved the plan and authorized the Salary Coomlttee to put it into effect beginning March 1. Mr. Scott also noted that the Survey done by Boos, Allen and Hamilton showed that there were several significant inequitiea In SPI's staff regarding staff salaries and staff grades, as compared to 14 similar associations. Mr. Scott announced that the Executive Connittee had instructed Messrs. Harding and McGrath to revise the timetable and plans for the Annual Meeting - stortenting It to 1^ to 2 days of meetings. The Executive Coomlttee discussed the new mini directory and agreed that it should be published annually and the major directory should be published only on KPE years. Mr. Scott informed the Board that the Executive Cosmittee plans for the new SPI office. been briefed on the Mr. McGrath reported that the space now under consideration is located at 40th Street and Lexington Avenue. When the move la made, SPI will obtain 1,300 additional square feet of space for an annual increase in rent of slightly less than $3,000. SPI-22413 -4- Mr. Scott added that the Executive Committee has been assured that SPI can operate within the budget that has already been set aside by the Board to handle the new rove. This move will be made by June 15. Mr. Scott actioned that the following resolution be approved: Whereas, SPI stationery has been provided to some SPI operating unit chairman for the purpose of conmunicating the unit's activities and. Whereas, it is the desire of SPI to communicate its position through the SPI staff Be it Resolved, that no statement representing an SPI position or policy shall be made on SPI letterhead unless such statenent has been prepared, reviewed and mailed from an SPI office or that of its counsel. Mr. Niedfeldt seconded the motion and the Board approved it. NOMTHATUIG CCMCTTEE REPORT Mr. Harding reported on behalf of Nominating Comnittee Chairman, Bob Hoffer, who was not present at Innisbrook, and Clarence Neher, who chaired the Thursday Meeting. The Nominating Committee renominated the four officers to serve another one-year term: Rex Scott, Chairman; Stan Shaw, Vice Chairman; Bill Willert, Secretary and Red Niedfeldt, Treasurer. In addition, there were six nominees chosen to fill the vacancies for Directors at Large for 3-year terms. Four of the nominees: Messrs. Jean Malone, Charles Grant, Leonard Lane and Robert Gerdes have agreed to serve if elected, le other two nominees have not been contacted as yet. ManraRStgp DEVELOPMENT COMMITTEE REPORT Mr. Willert informed the Board that the total count of Class I members to date is 1,213. This figure includes 39 new members less 20 resignations since the last Board Meeting. The total Class H membership is 153 with 13 new members and 2 resignations. At present there are 106 Class HI members, including 3 new members and 3 resignations. The total membership of the Society, Class I, H and U Is 1,472. Mr. Willert motioned that all membership changes be approved, including those changes listed in the addendum to the Report Notebook. Mr. Kittredge seconded the motion and the Board approved it. Mr. Willert reported that the Membership Development Committee is not only concerned about SPI growth through new members, but the retention of present members, especially in our present economic climate. To promote this effort. Bob Sherman has been busy preparing the following supporting literature for new programs: 1. A new brochure called "Take Stock in Your Industry1* has been available since last November. It is an assessment of what SPI is doing for the plastics industry and is available at all SPI offices. SPI-22414 -5- 2 . A new pamphlet entitled "Director of SPI Services to Members" will be available in March. 3. Merabersliip in SPI is also being promoted through articles in company mailings* U. An advertisement for SPI membership was run in the magazines "Plastics Magerials and Equipment" and "Plastics World." These advertisements reached approximately 20,000 people. Two hundred replies have been received from the former magazine and 11^ from the latter. The replies have been divided by region and are being assigned to the SPI staff for follow up. Mr. Willert stated that for several years the Membership Development Committee had been discussing the possibility of encouraging foreign manufacturers of equipment and materials to participate in SPI. At the present time they can belong only as associate seabers, paying Class II dues. It is proposed that the bylaws be changed to allow foreign coopanies to be Class I members providing they pay Class I dues on all equipment and materials sold to the U.S. plastics industry. Mr. Willert presented the following bylaw amendment, which has the approval of the Planning, Membership Development and Executive Committees: PRESENT BYLAWS ARTICLE H. MEMBERSHIP Section 1. Classes of Membership. The membership classifications of the Society shall be as follows: a. CLASS 1. COMPANY MEMBERSHIP: Any corporation, partnership, or sole proprietorship shall be eligible for Class 1 membership in the Society, provided it: (l) Processes plastics saterials in the United States for sale as plastics products or for use as manufacturing conponents; or (ii) Manufactures plastics materials, adjuvants, or processing equipment (including tools and molds) in the Uhited States for the Plastics industry b. CLASS 2. ASSOCIATE COMPANY MEMBERSHIP: Any corporation, partnership, or sole proprietorship which is not eligible for Class 1 membership in the Society shall ba entitled to participate as an Associate Member provided it: (i) Purchases plastics products for use as manufacturing conponents or for resale; (ii) Serves the plastics industry as a distributor or sales agent for plastics products, materials, adjuvants, or processing equipment (including tools and molds); (iii) Would otherwise be eligible for Class 1 Membership but has no manufacturing facilities in the Uhited States. SPI-22415 PROPOSED AMSKPMEWT ARTICLE II. MEMBERSHIP Section 1. CIASSES OF MEMBERSHIP a. CLASS 1. COMPANY MEMBERSHIP: Any corporation, partnership, or sole proprietorship shall be eligible for Class 1 membership in the Society, provided It: (i) Processed plastics materials for sale in the United States as plastics products or for use as manufacturing conponents; or (ii) Manufactures plastics materials, adjuvants, or processing equipment (including tools and molds) for the Uhited States plastics industry in the Uhited States b. CLASS 2. ASSOCIATE COMPANY MEMBERSHIP: Any corporation, partnership or sole proprietorship which is not eligible for Class 1 Membership in the Society shall be entitled to participate as an Associate Member, provided it: (i) Purchases plastics products for use as manufacturing cosponents or for resale; (ii) Serves the plastics Industry as a distributor or sales agent for plastics products, materials, adjuvants, or processing equipment (including tools and molds). Mr. Heckman advised that this bylaw amendment would have to be submitted and voted upon by the full membership of SPI. Mr. Reib seconded the motion, and the Board approved it. Mr. Willert then stated ttat the Membership Development Committee was proposing a second Bylaw amendment designed to streamline and reduce the time required to process an application and elect the applicant to membership. It shifts the responsibility for approval from the Board of Directors to the Membership Development Committee. The Board will still ratify the recommendations of the Membership Development Committee. However, it is estimated that this Bylaw change will reduce the present processing time of applications from as much as 120 days to a of 30 days. Nr. Willert motioned that the following change in the present Bylaws be approved: PRESENT BYLAWS ARTICLE II. MEMBERSHIP - Section 3 Section 3* Application for membership shall be filed with the Society's Secretary on a written application form provided by the Society. Any application so filed shall be reviewed promptly by the Society's Membership Development Cosmdttee which SPl-22416 -7- Article II. Membership - Section 3 (cont.) shall furnish its findings as to eligibility of such application to the Board of Directors. The application shall thereafter be considered by the Board of Directors at its next regular meeting and shall be approved by the Board unless the applicant does not meet the qualifications applicable to the class of membership sought. PROPOSED CHANGE Df BHAWS ARTICLE II* MEMBERSHIP - Section 3 Section 3* Application for membership shall be filed vith the Society's Secretary on a written application fora provided by the Society. Any applications so filed shall be reviewed pronptly by the Society's Membership Development Committee and shall be deemed approved unless the Membership Development Committee finds that the applicant does not meet the qualifications applicable to the class of membership sought. Upon the of a finding by the Membership Development Committee that an applicant is duly eligible for membership, the applicant shall be notified immediately and its membership shall become effective as of the date of notification Mr. Becker seconded the motion and the Board approved it. Mr. Freeman motioned that the report of the Membership Development Committee be approved, Mr. Backscheider seconded the motion and the Board approved it. PROCESSORS COMMUTEE REPORT Mr. Katz stated that the report of the Processors Committee would be included in the Planning Corned.ttee report. Mr. Ifiedfeldt moved to approve the report of the Processors Cosnittee, Mr. Becker seconded the motion fluid the Boflu'd approved it. PIAfflTOTG COMCTTEE REPORT Mr. Shaw reported that the Planning Committee met in Chicago in January and again on Thursday at Innlsbrook. The Committee spent quite some time discussing the role of the I^ocessors Committee. The Planning Committee recognizes the value, merit and purpose of continuing the frocessors Committee and recommends that this Committee become a permanent Board Committee with the following functions: 1. To provide input when requested to assure that the best interests of processor members are being served. 2. To coordinate and consolidate, if possible, the views of operating units with regard to the continuance of SPI services for processors and to recommend steps to make these services more useful. 3. To assure that the processor members receive communications about SPI activities conducted in their behalf. SPI-22417 Mr. Shaw said that the Planning Committee discussed the frequency of Board Meetings. The Committee recommends that two Board of Directors Meetings be held per year in addition to an Annual Meeting, which should be held each year in Washington, D.C. During the Annual Mveting, there would also be a third Board Meeting. The scheduling of the meetings would be left to the SPI staff. In addition, the Board Committees should meet as frequently as they deem necessary at whatever location the staff and the individual committees choose. Mr. Shaw stated that because of economic conditions, there has been a question raised as to whether the Board should meet at the end of July in Banff, Alberta, Canada. A secret ballot was taken of the Board members present, and they voted lU to 8 to hold the July Board Meeting in Banff. The Planning Committee Is still working on a definition of the plastics industry and the scope of SFI. One of the principal goals of the Society is to increase member ship. The Committee also feels that SPI should maintain the present level of activity on existing and approved programs, but that the Society should be prepared with a contingency plan if a cut-back is required. Mr. Harding stated that in addition to the two Bylaw amendments already approved by the Board, there were two editorial changes that were needed to reflect the present operating practices of the Society. Mr. Tieraan read the following Bylaw amendments: Whereas, the Board of Directors of The Society of the Plastics Industry, Inc. has determined that the Society's Bylaws should be amended to reflect the operating practices of the Society as they now exist and to effect a number of editorial changes In conpliance with applicable law; Bow Therefore Be it Resolved, that, in accordance with the provisions of Article XIV of the Society's fylavs, the Class 1 members should be balloted on the following amendments to the fylavs: 1. Article X, entitled "IHTEHNAIIOHAL AFFILIATES" shall be deleted in its entirety, the terms " one Director from each International Affiliate" and "International Affiliate Directors" shall be deleted wherever they appear In the Bylaws, and ARTICLE XI through XIV shall be changed to ARTICLES XI through XIV shall be changed to ARTICLES X through XIH, respectively. 2. ARTICLE VUI, Section 1, c, (3) shall be amended to change "Controller" to "Director of Finance." Mr. Backschaider motioned that the Bylaw amendments be approved, Mr. Powell seconded the motion and the Board approved It, SPI-22418 -9- Mr. lane motioned that the Planning Committee report be accepted, Mr. Klttredge seconded that motion and the Board approved it. FINANCE COMMITTEE REPOST Mr. Niedfeldt reported that the Society was in very good financial condition at the present time. In the previous two years there was an excess of income over expenses of approximately $311j000. Currently, the budget shows an excess of income over expenses of $329,000. The Finance Committee spent a great deal of time looking at the proposed 1975-1976 budget. At the present time it is anticipated that the budget will be balanced and that there will be no dues increase. Mr. Niedfeldt explained that he was motioning that the following resolutions be adopted in order to bring the SPI Pension Plan into conformance with recently enacted Federal legislation: 1. Resolved, that the Society of the FLastics Industry Pension Plan is hereby amended effective January 1, 1975 as follows: The position of Plan Administrator Is created. The Plan Administrator shall be the Plan fiduciary required by the Employees Retirement Income Security Act of 197** and shall have the responsibility of maintaining the books and records of the Plan, administering the Plan on behalf of the Coupany, obtaining any necessary information, applications and consents from the Coopany, the Trustees, and any participants, former participants and beneficiaries of participants, and filing any reports, returns, registrations required by law or the Flan, and making any required disclosures to Plan participants, former participants, and beneficiaries of participants. The Flan Administrator may delegate his responsibilities to appropriate eoployees of the Cospany and may eoploy any advisors as may be necessary in the conduct of his duties* Be it further Resolved that Donald Snow is hereby appointed Plan Administrator of SPI'a Pension Flan to serve in that position at the pleasure of the Board. Mr. Gerdes seconded the motion and the Board approved it. Mr. Harding added that Chuck Eisele will be the Flan's Assistant Administrator. Me, Niedfeldt motioned a second Pension Plan resolution: 2 Be it resolved that the number of Pension Trustees be increased from three to five and that the term of office be five years, with the senior member serving as Chairman for one year and that a new member be appointed each year with the succession of the Chairman. SPI-22419  - 10 - Mr* Backscheider seconded the notion and the Board approved it* Mr. Niedfeldt motioned that a third Pension Plan resolution be adopted: 3* Resolved, that the President of the Corporation shall obtain fidelity bonds for the benefit of the Plan on the Plan Administrator and each of the Trustees under the Plan and any other individuals who handle funds of the Plan In the amount of $50,000 for each of 6 Individuals the five Trustees and the Assistant Administrator. Mr. Backscheider seconded the motion and the Board approved it* Mr. Scott motioned that the following five men be named as Pension Trustees: Messrs. Donald Snow, Plan Administrator, Stan Shaw, Clare Bacon, Miles Powell and Bob Hoffer. Mr. Estabrook seconded the motion and the Board approved It. Mr. Sutro motioned to approve the Treasurers report, Mr. Katz seconded the motion and the Board approved it. PUBLIC AFFSTBS maqiTEE REPORT Mr. Sutro introduced Mr. Richard Moore to the Board. Mr. Moore will share the leadership of the PAC Legislative and Public Relations Committee along with Don Bryan. Mr. Sutro informed the Board that tfertln Ryan Haley had submitted a summary report on the problems facing SPI and describing the mission of PAC which was excellent. The report states that based on the volume of political and legal activity, If measured by the number of issues, state and Federal legislative bills, state and Federal agency regulations, legal actions and lobbying programs, the industry has had an increase of well over 400& in its Public Affairs activities in the past four years. The Issues faced by the industry were solid waste followed by combustibility, then product safety, then energy and more recently tcocicity. Each older issue stayed on and grew while layers of newer issues were added. FAC as it is now constituted, has been in existence just over one year. To evaluate its performance and to evaluate its objectives for one year and for five years, as well as to prepare the 1975 - 1976 budget, Jack Jlynn has been asked and has accepted the responsibilities of Director of Planning. Mr. Flynn's proposals include the following four principal points: 1. Establishment of short and long-term objectives. 2. Issue management of the major problems facing the Industry. 3. Changing the function of the full Public Affairs Comittee to act as a policy recommending Board and group rather then a problem solving or a sounding board group. 4. Evaluate our organization. - is it structured to get the job done? SPI-22420 - 11 - Mr. Sutro stated that Shell Chemical had asked for SPI's support on resolutions regarding natural gas deregulations and early development of the Eastern continental shelf. Shell Chemical feels that adoption of these resolutions and strong political follow up by SPI's members could sake a substantial contribution to securing expanded supplies of petrochemicals, resins and molding materials. Mr. Sutro stated that the PAC accepts this request and that at the Washington Board Meeting a policy statement would be presented with a recommendation of what SPI's role should be in support of the policy statement. SPI will not promote an active program in this area on its own but would work in conjunction with and in support of active programs sponsored by the American Petroleum Institute and the many others who are affected by policies on these matters. Mr. Sutro Informed the Board that relations with MHA have improved. ICA now has three committees in operation to study the toxicity of styrene monomer, vinylidene chloride and acrylonitrile. MSA has also been requested to establish a Benzene Committee, but it now appears that the American Petroleum Institute has such a committee underway, and MSA does not need to duplicate their work. Mr. Heckman reported on the legal activities of SPI: 1. The NJE tax case continues to be a major problem. While negotiations are still underway with the IRS, the IRS is trying to mate this a major test case and there probably will be a full-scale trial. 2. Regarding the Federal Trade Commission Combustibility proceeding, it is felt that the FTC will take into account the comments that were filed on behalf of SPI and that they will issue a new proposal before moving forward in any final way. Mr. Tiernan reported on the products liability law suits that are now pending agaiost SPI. He reported that the Arizona suite involving one hi Ilian dollars has been dismissed. The Staten Island suit related to the tank explosion causing the deaths of 1+1 people is now in pre-trial discovery and SPI is a defendant. SPI is also a defendant in the Sunshine Mining Case, where 92 miners died in a fire. This case is also in pre-trial discovery, (for a more detailed report, please see the attachement to the minutes.) 3. Mr. Heckman reported on the VCJ^FVC situation. The Court of Appeals issued a unanimous decision, with the opinion written by former Supreme Court Justice Clark, supporting the Department of Labor. The VCM/PVC Producers Committee will be meeting on February 18 to decide whether to appeal the decision to the Supreme Court. In its opinion, the Court did say that OSHA might consider a change or a different standard for fabricators. In regard to the SPA, discussions are now underway to retain Ifr. William Runkelshause as associate counsel. U. Mr. Heckman reported that on the subject of plastic bottles for carbonated beverage and beer use, the FDA Is now approving ABS acrylonitrile and nitrile co-polymers. Many regulations are now being issued on this subject. ^ SPI-22421 - 12 Mr. Kennel reported, that the PAC Technical Committee was presenting three reports on the work the Cocnittee was doing in the areas of raw materials, manufacture, safe use and disposal of plastic materials. Currently there are active programs in three of these areas. Mr. Jackson, Chairman of the Safety and Loss Prevention Committee reported on the programs underway with Factory Mutual and FIA on the storage of plastics in ware houses. A 6Omm film was shown on two fire tests being done at Factory Mitual. Mr. Blair, Chairman of the Coordinating Committee on Consumer Safety reported to the Directors on the work being done by this Committee in the areas of combusti bility, product safety and smoke toxicity. The report included an excellent slide presentation. Mr. Alberts, Chairman of the Plastics Waste Management Committee reported on the activities of his Committee. It is felt that with the advent of the energy crisis, resource recovery - the separation and possible reuse of plastics by generic separation - has become a very desirable objective. A slide presentation also acconpanied Mr. Albert's report. Mr. Kennel briefly reviewed the Technical Committee budget. The Combustibility program was budgeted at $150,000 in 1974 - 1975. The Technical Committee is proposing that this budget be increased to $187,000. The Solid Waste budget in 1974 - 1975 was $8l,000 and the Committee proposed to increase this budget in 1973 . 1976 to $121,000. The total technical budget in 1974 - 1975 was $294,000 and it is proposed to increase it in 1975 - 1976 to $366,000, Mr. Kennel stated that although energy has become a major problem, the Committee had not yet decided on what research approach should be taken. A proposal will be made to the PAC Steering Committee within the next few months. Mr. Cogdell motioned that the FAC report be accepted, Mr. Katz seconded the motion and the Board approved it. SPE REPORT Mr. Stoughton reported that SPE was operating in the black for the fourth year in a row. SPE has just consisted its election of officers. Harold Holtz was elected President and George Pickering is the President Elect. In addition, SPE seminars have been scheduled in Cleveland, Ohio for October 5*7, 1976 and they will not conflict with the NPE. MIDWEST SECTION Mr. Glatt reported that plans were veil underway for the Annual Midwest Conference to be held at Nordic Hills in Illinois in early June. SPI-22422 - 13 t WESTERN SECTION Mr. Lane stated that the Western Section Annual Conference would be held on April 23 - 2$ at the Ifyatt Regency in San Francisco. FPI Mr. Cogdell's report included a special slide presentation on the activities of the Plastics Pipe Institute. The Institute is celebrating its 25th anniversary this year at its Annual Meeting in San Diego on April 21 - 2kt 1975. INDUSTRIAL CONTAINER INSTITUTE Mr. McGrath reported that the Industrial Container Institute requested that the following resolution be submitted to the Board for approvals Whereas* the Industrial Container Institute of SPI wishes to concentrate Its activities to the recommendations of specifications for plastic drums and, Whereas, the members of the Industrial Container Institute have voted to change their name to the Plastic Drum Institute of SPI Be It Resolved that the name of the Industrial Container Institute be changed to the Plastic Drum Institute. Mr. Sutro motioned that the name change be approved, Mr* Niedfeldt seconded the motion and the Board approved it. RIGID PLASTIC CONTAINER DIVISION Mr. Kittredge motioned that the following resolution be approved by the Board of Directors: Whereas, Article HI, Section 2 of the SPI Bylaws require Board of Directors approval for specific project funds in excess of $2,000 sod, Whereas, The Rigid Plastic Container Division wishes to undertake a separately funded market research project for the purpose of identifying potential markets and, Whereas, the estimated project cost is in excess of $2,000 and. Whereas, l6 of the 19.member companies have approved the project Be It Resolved that the Rigid Plastic Container Division be granted Board approval to undertake the separately funded market research project. Mr. Gerdes seconded the motion and the Board approved it. MDLDERS MANAGEMENT DIVISION Mr. Gerdes proposed the following statement as a resolution and motioned that it be approved: SPI-22423 - 14 - The Holders Management Division does not feel that the energy problem has been solved, and they are very concerned about the future costs and supplies of molding compounds. In cooperation with the PAC, the Division would like to see a policy on energy formulated that has 100$ agreement. This policy, once formulated, should be followed by a positive program to affect legislative bodies. The Holders Management Division along with the Processors Committee offer their full cooperation. Mr. Katz seconded the motion and the Board approved it. PROFILE EXTRUDERS DIVISION Mr. Katz reported that the Annual Meeting of his Division, held recently, was the most successful in attendance that the group has ever had. REINFORCED PLASTICS/CQMPOSITES INSTITUTE Mr. Levenhagen reported that the recent Reinforced Plastics/Composites Conference in Washington was very successful with 1,300 people registered and 113 papers all excellently prepared. VCM AND PVC PRODUCERS COMMITTEE Mr. Harding reported that Mr. Vittone had stepped down as Chairman of this group and was replaced by Joe Fath of Tenneco. INTERNATIONAL COM-OTTEB Mr. Harding reported that SPI was participating in the current tariff negotiations through the Chemical Industry Trade Advisor. SPI is supplying a panel of plastics resin experts. In addition, plans are well along for the joint stand at Dusseldorf K-75 which SPI and the German American Chamber of Commerce are sponsoring. Mr. Harding added that if any of the Board members were interested in attending K-75j to please let him know and he will try to help them with hotel accomodations. NATIONAL PLASTICS EXPOSHICB Mr. Eisele explained that according to the SPI Bylaws, the Board of Directors must approve all changes in rates for the National Plastics Exposition. The NPE Conmittee has approved the following rate changes and are submitting than for Board approval: 1. The square footage rate in 1973 was $4.75 a square foot. It is proposed to increase this to $6.00 per square foot - a 26$ increase. 2. The non-member rate per square foot in 1973 was $5*70. It is proposed to increase this to $7-50 ~ a 31$ increase. 3* The spread between member and non-member rates in the 1973 show was 20$. It is proposed to increase this to 25$. SPl-22424 - 15 - 4. The premium for front and. center aisles will remain square foot. same at 50 per 5. The Processor Hall rate in 1973 was a flat fee of $900 for a 10' by 10' booth. It is proposed to raise this rate to $1,100 and to charge nonmembers $1,300. 6. The registration fee in 1973 was $5.00. It is proposed to raise this to $10. The pre-registration fee in 1973 was $5 and it is proposed to raise this to $7.50. However in 1976 the pre-registration fee will entitle the registrant to free busing throughout Chicago, and it will include the Conference fee, which was $50 in 1973* 7. The inhibitor fee will remain at $2.00, but there will be a limit of 2 exhibitor badges per every 100 square feet of sold space. Nr. Freeman motioned that the rate changes be approved, Mr. Flynn seconded the motion and the Board approved it. Mr. Willert's negative vote was noted by the Chairman. STAFF FIAJT5 Mr. McGrath informed the Board that there were several new es^loyees at SPI. Mr. John Malloy has joined the staff and has taken over all the packaging groups; Mrs. Julllette Cahn is also on board and will assume the responsibility for Joe McDermott's groups and also two of A1 Evan's groups. Mr. Richard Frock has been hired as the Eastern Regional Manager, and meet recently, Mr. Calvin Green was hired as the Public Relations Manager. Mr. Harding stated that he was very happy with the way Tom NSGrath was functioning in his job, especially with the heavy workload he has undertaken. FUTURE MEETING DATES Ms. Jones reported on the dates and locations of future Board Meetings. The next Board Meeting will be held at the Mayflower Hotel in Washington, D.C. on April 28 30. The Board will be meeting at the Banff Springs Hotel, Banff, Canada, July 30 August 1, 1975; Williamsburg Inn, Williamsburg, Virginia, October 22 - 24 and In February of 1976 back at Innisbrook, Tarpon Springs, Florida on February 11 - 14. Mr. Harding stated that in view of the recommendations that the Planning Committee made for three Board Meetings a year, a decision will be made regarding the possibility of changing this meeting schedule around. A vote was taken to determine whether the Directors would rather go to Banff or Williamsburg. By a vote of 9 to 8 the Board preferred Banff. SPI-22425 - 16 - Mr. Shaw noted that the Planning Committee recommendation did not set an actual time period for making this change. The situation was referred hack to the Planning Committee for further study. There being no further business to transact, the meeting adjourned at 11:55 a.a. Respectfully submitted, lAura E. Jones Secretary to the Board of Directors LEJjsms SPI-22426 ATTACHMEHT I memorandum February 5, 1975 Re: Arizona, et al. v. Cook Paint and Varnish Company, et al. The United States District Court for the District of Arizona on November 18, 1974.filed a Final Judgment in the above-captioned case, a copy of which is attached, dismissing all counts against all defendants. This suit, in which SPI was named as a co-conspirator rather than a defendant, was pleaded as a class action, alleging antitrust, strict liability, negligence, and fraudulent repre sentation causes of action. The first three counts were dismissed based on a failure to state a claim upon which relief could be granted while the fraud count was withdrawn by the plaintiffs without preju dice. The Court also assessed costs against the plaintiffs. In holding for the defendants, the Court issued no opinion but stated that one would be filed in due course. Meanwhile, the plaintiffs have appealed the decision to the U.S. Circuit Court of Appeals for the Ninth Circuit, where the case is now pending. SPI associate counsel in the "Sunshine Mine Cases" and the "Staten Island Tank Cases" have been notified of the Arizona Court's Final Judgment. SPI-22427 MEMORANDUM February 6, 1975 Re: Analysis and Evaluation of SPI's Potential Liability in the Sunshine Mine Cases SPI, which has been served as a defendant in House, et al. v. Mine Safety Appliances Company, et al. and the related series of suits known as the Sunshine Mine cases, is subject to serious potential liability froei the aspects of damages and legal fees in defending these cases. While, in our opinion, the Society has legitimate defenses to present in these cases, it may, for the reasons set forth below, be required to engage in the extensive trial proceedings. In addition to the analysis contained herein, this memo con cludes with recommendations for subsequent SPI actions. Parties The plaintiffs consist of approximately 150 heirs of the decedents who are filing suits in various groupings, and are represented by a number of attorneys. Apparently the lead attorneys have funded the case to date by a $50,000 contribution from the United Mine Workers union, $50,000 from heirs themselves, and the remainder from plaintiffs' attorneys' own funds. Jack Ormes, the lead attorney, supposedly is personally wealthy. The defendants other than SPI include plastics resin suppliers, standards-making and testing organizations, and the U.S. Bureau of Mines. Sunshine Mine, which was the decedents' employer, was not named as defendant due to an immunization granted by Idaho law. Under the Idaho workman's compensation statute, an employer is protected from injury suits by employees and suits for contribution by other defendants Cause of Action Plaintiffs have alleged counts of negligence and breach of contract against SPI, claiming both compensatory SPI-22428 2 and punitive damages. While very little was known regarding the causative aspects of the fire and explosion in the mine when the plaintiffs filed suit originally, more substantive evidence is being adduced upon discovery. To date, the significant facts are: (1) a fire and explosion occurred in the Sunshine Mine (a silver mine) on May 2, 1972 killing 91 miners? (2) the cause of the fire is unclear; (3) the cause of death of the miners is unclear but may have been asphyxiation; (4) combustible material in the mine included a great deal of shoring timber and a relatively small amount of urethane foam insulation; (5) the Sunshine Mine records are not complete but apparently the foam system present in the mine was supplied by Polytron, Inc.; (6) Polytron was a subsidiary of Pacific Vegetable Oil, Inc. (PVO) at the time of the sale and was dissolved after a sale of Polytron's assets to Olin Corp. prior to the fire; and (7) the suppliers of the components of the urethane foam used in the mine are thought to be Mobay, and Dow Chemical but, based on the formulation of the foam, any one of a number of the defendant resin manufacturers could have supplied the components. Discovery Plaintiffs have been conducting discovery of the Sunshine Mine, U.S. Bureau of Mines, Olin Corp.. (for Polytron) and, very recently, SPI. Numerous defendants' attorneys have been present at these discovery proceedings as was the case during the discovery at SPI. Attendance at SPI discovery proceedings was very beneficial since it pro vided an opportunity to review the evidence elicited and to obtain information based on the "chatter" of both plaintiffs' and other defendants* attorneys. Discovery of SPI consisted of the inspection and copying of the minutes and other documents of SPI's Cellular Plastics Division and its committees and task forces for the period between January 1, 1955 and May 2, 1972. Initially SPI associate counsel in Boise, in negotiations with plain tiffs* counsel opposed, at my request, plaintiffs' request of inspection of documents distributed after the May 2, 1972 date on the grounds of irrelevancy and Inadmissibility of evidence. Since plaintiffs' attorneys apparently have knowledge that other SPI documents exist post-May 2, 1972 related to flammability matters, plaintiffs will probably move that the Court order inspection of these later docu ments. If plaintiffs' motion is successful, it is expected SPI-22429 "I -3- that plaintiffs' counsel will return to SPI to inspect further books and records. I have drafted interrogatories to be served by SPI on plaintiffs as part of a plan for SPI to file a motion for summary judgment. These interrogatories, which are still in the possession of SPI associate counsel, should be served as soon as possible. Court Proceedings The Court has been supervising these cases to this point with the view of conducting and completing discovery. Feriodic pre-trial conferences have been held involving all the parties, including SPI associate counsel, where the discovery schedule has been established and reviewed. Motions to dismiss, which have been filed by various parties including SPI, have with two exceptions been held in abeyance by the Court, pending further discovery proceed ings. Motions for summary judgment, filed by Joy Manufac turing Co. and Westinghouse Corp., were granted on the grounds that these defendants' products were either not in the mine or could not have been causative factors in the mine fire. However, these two defendants had settled with the plaintiffs, allegedly for $10,000 each, and summary judgment was used as a device for dismissal since, according to the usual settle ment procedures, all of the plaintiffs must agree to the settlement, an act deemed to be logistically onerous con sidering the large numbers of plaintiffs involved. The next pre-trial conference is scheduled to be held in Boise, Idaho on February 18, 1975 to determine the schedule for the next stage of discovery proceedings and to argue or request continuances for any pending notions. At that time, SPI should request that its motion to dismiss be scheduled for argument at a subsequent hearing. Cne of the main motions to be argued on February 18 is one for summary judgment filed by PPG. According to the PPG attorney, PPG will argue that it sold no products used in the mine, engaged in no conduct that could raise neg ligence or breach of contract claims and, thus, as a matter of lav; should be dismissed from the case. This argument is analogous to one SPI could use and the Court's ruling here should be indicative of the disposition of a summary judg ment motion that could be filed by SPI. This observation was reinforced during an informal conversation I had with SPI-22430 4 plai.nti.ffB' counsel, where he admitted that they would have difficulty proving a case against the Society based on the negligence and breach of warranty theories. Group Negligence - The "Blasting Caps" Case However, an intervening factor will probably com plicate this entire matter especially regarding SPI. Plaintiffs' attorney has filed a motion to amend the complaints to plead the group negligence theory articulated in the "blasting caps" case. Hall v. Du Pont, 345 F. Supp. 353 (E.D.N.Y. 1972), a copy of whicK is attached hereto. The group negligence or institutional tort theory as stated in the "blasting caps" case generally holds that where a group of manufacturers and their trade association (1) have data showing a high degree of risk of injury created by products sold by the members, (2) continue to promote and sell such products in the face of this knowledge, and (3) neglect to take reasonable steps to provide adequate notice to purchasers regarding these risks, the industry members along with their trade association can be held liable for tortious conduct. The Court in Hall emphasized that the group negligence theory was particularly appropriate because the injured parties were unable to determine the identity of the manufacturers selling the injury-causing products and the group of manufacturers was sufficiently concentrated, thus making it more likely then not that as between all of the manufacturers, one of them sold the hazardous product. (Based on the facts that we know to date, the significant elements that factually distinguish the "blasting caps" case from the Sunshine Mine case are that (1) the urethane foam manufacturers and suppliers are identifiable, (2) the urethane foam industry is not concentrated but is diverse and is comprised of different levels of distribution, and (3) SPX did disclose the potentially hazardous nature of its members' products if misused.) The Court's decision in Hall dismissed defendants' motion to dismiss for failure to state a claim upon which relief can be granted and the cases are in the process of being tried before juries. If plaintiffs in fact raise the group negligence issue through their pleadings, SFI which probably could have been dismissed from the case based on the tort and contract pleadings could not be viewed as an integral part of the case, since plaintiffs will probably allege that the industry group activity resulting in a breach of a duty to disclose product hazards was conducted by the manufacturer SPI-22431 -- t *1 5- defendants through the instrumentality of SPI. This is probably the main reason the plaintiffs' attorney, in an informal conversation I had with him, stated that plaintiffs would not drop SPI from the suit. Recommendations It is recommended that SPI take the following steps regarding its defense in this case: 1. Attend discovery sessions on a selective basis. The next discovery proceeding is scheduled for February 10, 1975 at the Bureau of Mines in Washington, D.C. and ve recommend attendance. Attendance at other proceedings logistically will be more difficult; however the schedule for the next round of discovery proceedings, which will probably be established at the February 18 pre-trial con ference, should be reviewed to determine if SPI interests would be served by attendance at any subsequent discovery sessions. 2. Direct Boise associate counsel to notify the Court of SPI's desire to argue its motion to dismiss at a subsequent pre-trial hearing. Hopefully, this motion could be argued along with an SPI motion for sunnary judgment, discussed below. Also a delay in the date for argument would give SPI an opportunity to review the Court's ruling on the PPG summary judgment motion. 3. Instruct Boise associate counsel to serve interrogatories upon plaintiffs as soon as possible and request the Court rule that plaintiffs must answer inter rogatories in a timely manner. Plaintiffs have been given liberal amount of time to answer interrogatories filed by other defendants but SPI's interrogatories should be served and the request for prompt answers should be made as soon as possible. 4. File motion for summary judgment upon receipt of answers to interrogatories arguing that SPI engaged in no actionable activity from the negligence and breach of contract viewpoints. 5. If plaintiffs amend complaints to plead group negligence theory against SPI, prepare a motion to dismiss for failure to state a claim upon which relief can be granted. In this event, there might be a possibility of drafting a brief by a group of defendants similarly situated. SPI-22432 Prognosis Based on discussions with other defendants' attorneys, SPI's jurisdictional argument could fail since the Idaho Supreme Court has held that a defendant's activities that result in a tort occuring in Idaho grants sufficient juris diction over defendant. However, pending further research, SPI's activities could be distinguished from that held to be tortious in the precedent-setting case. The motion for summary judgment should succeed if the Court dees accept the institutional tort theory of the "blasting caps" case. It is unclear whether or not the Court will accept the theory in that case; however, there are enough similarities between that one and the present cases that the Court could rule that the current cases should be tried on their merits. If cases go to trial, SPI has meritorious defenses on all coats? however, considerable costs may be incurred in the defense. SPI-22433 CONTENTS 1. Report on Current Statue of NFE Tax Case 2. Status of the Federal Trade Coonission Combustibility Proceedings and Related Civil Suits 3. Report on Regulatory Status of Vinyl Chloride and Polyvinyl Chloride 4. Report on the Status of Activity with Respect to Plastic Bottles for Carbonated Beverage and Beer Use 5. Report on the Proposed housewares Exemption" Rulemaking and Related Activity 6. Federal Activities Regarding Plastics and the Materials Shortage Situation 7. Status of Solid Waste Legislative Matters 8. Traffic Comittee Report to the Board of Directors PAGES 1-3 4-12 13 - 16 17 - 19 20-23 24 - 25 26-30 31-33 SPI-22434 ra/'e 1 "REPORT ON CURRENT STATUS OF NPE TAX CASE" In general, the Internal Revenue Service has asserted that the income derived by the Society from the Twelfth National Plastics Exposition held in November, 1968, ("1968 NPE") is subject to unrelated business income tax. Messrs. Cohen and Uretz, special tax counsel to the Society, on behalf of the Society, filed a Petition in the Tax Court on February 15, 1974, contesting the IRS determination. The Petition sets forth assignments of error which the Society contends were committed by the Commissioner of Internal Revenue in his determination of the deficiency. The Society maintains that its gross income from the 1968 NPE did not constitute unrelated business taxable income. This conten tion represents the primary position taken by the Society during the administrative proceedings in connection with this matter. The Society also contends that the determination of deficiency by the Commissioner was invalid and void. In particular, the Society contends that (1) the determination of deficiency violated the Society's right to due process of law because the Commissioner failed to follow his own estab lished rules and procedures; (2) in the determination of deficiency, the Commissioner acted arbitrarily and capri ciously and abused his discretion in applying a change in his rules and procedures retroactively with respect to the Society; and (3) in determining that the amounts received by the Society from the 1968 NPE constituted unrelated business taxable in come, the Commissioner discriminated unlawfully between the Society and other similarly situated organizations. These theories of discrimination and violation of due process of law as applied to the tax law represent new and developing areas of the law. */ Prepared for inclusion in Advance Report by Jerome H. Heckman, SPI general counsel, for the SPI Board of Directors meeting to be held at Innisbrook, Tarpon Springs, Florida, February 12-14, 1975. This Report was drafted with the assistance of specially retained tax counsel, Messrs. Cohen and Uretz of Washington, D.C. Any developments which occur subsequent to the preparation of this Advance Report, will be included in a current Report prepared for the Meeting. SPI-22435 Page 2 Page Two These allegations derive from the Internal Revenue Ser- . vice's officially announced position that it will not challenge, pending the completion of a study, the tax exempt treatment of certain income derived by exempt organizations from the rental of display space at a ''convention display type of trade show." The precise definition of a "convention display type of trade show," however, is not publicly available. The Society has taken the position that the 1968 NPE is such a trade show and, accordingly, the determination of deficiency results in dis crimination against the Society without a rational basis therefor. In the alternative to the assignments of errors discussed above, the Society contends in the Petition that if its gross income from the 1968 NPE was determined to be derived from an unrelated trade or business, certain expenses were erroneously not allowed as deductions by the Commissioner. These expenses, it is contended, should have been allowed by the Commissioner as deductions because they were directly connected with the carrying on of the 1968 NPE. j The Government filed its Answer to the Petition on April 18, 1974, generally denying all of the substantive allegations. The IRS attorney assigned to the case, after preliminary discussions with Messrs. Cohen and Uretz, agreed to send the case to the National Office of the Internal Revenue Service for technical advice. This procedure is followed for the purpose of assuring consistency in the national policy of the Internal Revenue Ser vice with regard to important issues. Recently, the National Office of the Internal Revenue Service reached a determination that it will pursue this case in the Tax Court, notwithstanding the study it is conducting of the proper treatment of income from a "convention display type of trade shows." Messrs. Cohen and Uretz have been in formed by the IRS attorney handling the case that the Service will take the position that selling activities were engaged in during the 1968 NPE and that such selling activities subject the Society to the unrelated business income tax on the income from the Exposition. This case is important to the Society. The amount of taxes involved is substantial. The Commissioner has determined a deficiency in income taxes for the fiscal year ended May 31, 1968, in the amounc of $192,762.00. Moreover, the issue raised SPl-22436 Page 3 Page Three by the Internal Revenue Service is a continuing one because the Society holds an Exposition approximately every two and one-half years. Nevertheless, because the Government's case appears to rest primarily upon the factual assertion of selling activi ties during the 1968 NPE, Messrs. Cohen and Uretz have advised that settlement discussions during the course of trial prepara tion are still warranted. The factual nature of the issue could provide a basis both for disposing of the controversy concerning previously conducted National Plastics Expositions and for removing the continuing nature of the issue by modi fying the conduct of future Expositions in a manner acceptable to the Society and to the Internal Revenue Service. After consultation with Jerome H. Heckman, general counsel to SPI, and with the approval of the Society, Messrs. Cohen and Uretz have begun preparation for trial. A trial of this matter will entail the normal conferences (for purposes of exploring settlement or stipulating facts), witness and document preparation for trial preparation, presentation of evidence at trial and post-trial briefing. In addition, in order to support the Society's claim that it is being unfairly discriminated against by the Government, the Society will utilize the new Tax Court discovery procedures. These dis covery procedures could be important to the outcome of this case and could involve a substantial controversy over collateral legal issues if cooperation is not forthcoming in this regard from the Internal Revenue Service. SPI-22437 Page 4 Status of the Federal Trade Commission Combustibility Proceedings and Related Civil Suits */ Since our last report, the Consent Agreement and Order with the Federal Trade Commission has become final; the compliance program required by that Order has been initiated? and industry Comments in response to the Com mission's proposed Trade Regulation Rule were filed on behalf of SPI. There have also been a number of develop ments regarding the civil products liability suits involving SPI. Consent Negotiations The FTC Consent Agreement and Order, provisionally accepted on July 29, 1974, was accepted as final by a unani mous vote of the Commission on November 4, 1974. Under FTC procedure, the Order became effective upon service to each Respondent, service being defined as the day of receipt of the Order by the Respondent. SPI received its final Order on December 3, 1974 and, thus, all aspects of the SPI com pliance program will be based on that date as a starting point. Compliance Program As regards the compliance program, the Society has established a mechanism to effect compliance not only on its own behalf but in coordination with each of the other Respondents. A copy of the SPI program along with supporting documents is attached to this report as Exhibit A. As the Board of Directors will recall, SPI's main function in implementing this program is to handle the Appendix B notification requirements on behalf of the indi vidual Respondents. So as to defray the costs of publication and mailing, the Society has executed compliance contracts with the Respondents whereby each Respondent has agreed to reimburse SPI for its pro rata share of the costs. While it is expected that all Respondents will be participating in the program, a few still have not "signed up". SPI also has the obligation to notify its own employees as to the contents of the Appendix B notice and the prohibi tions against the use of designated descriptive terminology Y? Prepared on January 20, 1975 by Jerome H. Heckman, SPI General Counsel, for advance inclusion in the Notebook prepared for the use of the SPI Board of Directors at its meeting to be held in Tarpon Springs, Florida, February 12-14, 1975* SPI-22438 -2- Page 5 in written or oral communications, as set forth in paragraph (A) of the Order. These internal notifications have already been disseminated by Mr. Harding. A further aspect of the compliance program relates to the organization and operation of the Products Research Committee (PRC). As counsel for SPI, we assisted in the preparation and execution of the Products Research Committee Trust Agreement, the enabling document of the Committee. We also filed an application with the Internal Revenue Service to obtain tax exempt status for the Committee which applica tion was granted in late December of 1974. Thus, the Products Research Committee officially began to function as a tax exempt organization effective January 1, 1975. SPI will also provide a mechanism to communicate the status of its own research activities to the Products Research Committee so as to assist the Respondents in obtaining credits against funds due under the Committee's $5 million research program. Efforts are now underway in this regard. As the final part of the compliance program, SPI is obligated to file periodic compliance reports with the Federal Trade Commission indicating implementation of the terms of the Order. The first report is due on February 3, 1975 and preparations are being made to file it in a timely fashion. Trade Regulation Rule The proceedings involving the Federal Trade Commis sion's proposed Trade Regulation Rule have now reached a hiatus. By way of brief background, the proposed Rule was published in the August 6, 1974 Federal Register. Basically, the proposal would prohibit industry from utilizing any test, standard, or certification, e.g. ASTM E-84 and D-1692, unless it predicts or evaluates the burning characteristics of cellular plastics products under actual fire conditions. Additionally, the proposed Rule would require specific hazard warning and safe use instructions to accompany all promotional materials and, where products are sold for installation by a non-professional applicator, such information must be affixed to the product itself. Originally, the deadline for Comments was set at October 11, 1974 with a public hearing scheduled for December 9, 1974. However, in response to a request filed on behalf SPI-22439 -3- Page 6 of SPI, the Commission extended the filing deadline for Com ments to December 10, 1974 and scheduled hearings to commence on January 13, 1975. So as to develop an industry response, SPI sponsored industry meetings on October 8 and November 21, 1974. At the first meeting. Steering, Legal, Technical, and Product Definition Committees were established to assist in develop ing an industry position. All of the Committees worked diligently and, as a result, an industry position was esta blished at the November 21 meeting. Briefly stated, that position objects strenuously to much of the Commission's proposal and, instead, recommends the following as an alternative: (1) a prohibition against the use of terms such as "non-burning", "self-extinguishing", etc., (2) a requirement for stating the limited utility of certain exist ing standards or ratings derived therefrom, (3) a provision calling for more realistic cautionary labeling and safe use instructions based on existing tests and standards, and (4) a product definition restricted to cellular plastics in building construction. SPI formalized its position and filed Comments by the December 10, 1974 deadline. Intervening legislative action has now caused further developments in this proceeding to be delayed. The first week in 1975 saw the President sign the Warranty/PTC Improve ment Act which, among other things, establishes new procedural requirements in FTC rulemaking cases. Accordingly, the Com mission has indefinitely postponed this proceeding until its Rules have been revised to comply with the new law. Related Civil Suits In House, et al. v. Mine Safety Appliances, et al. and the associated so-called Sunshine Mine cues, attorneys for all parties inspected various books and records of SPI in the SPI offices on January 14, 1975, as part of the dis covery aspects of these cases. Plaintiffs' attorneys were especially interested in direct publications by SPI, and any communication between SPI and the Bureau of Mines, or SPI and ASTM. The Society is still planning to seek dismissal of these suits by Motions for Dismissal for Lack of Juris diction and for Summary Judgment. The series of suits referred to as the Staten Island tank cases are in various stages of pendency awaiting actual SP1-22440 -4- Page 7 trial. In many of the cases, plaintiffs are still engaged in the effort of identifying the proper parties defendant to the suits while numerous of the defendants are crossclaiming among themselves. The Court has also made some attempts to determine the feasibility of settling the cases. The Court has also now indicated that it intends to try one of the cases, Eria v. Texas Eastern Transmission Corp., et. al., as a "lead case" to use as a model regarding the remaining actions. Since SPI is not a defendant in Eria, it will not be participating in the trial. Also, SPI has not participated in any settlement efforts since the Society will, at the appropriate time, seek a dismissal. However, upon advice of New York associate counsel, SPI has not yet taken any steps in this direction. The Arizona law suit which named SPI as a co-conspirator (as opposed to a defendant) has been concluded favorably with all counts of the suit being dismissed. In the Arizona case, plaintiffs based their case on various products liability theories and one count of an antitrust violation, claiming $1 billion in damages. The Court, pursuant to motions made by defendants, dismissed all of the counts except the anti trust charge last Fall. Then in a subsequent proceeding in late 1974, the antitrust action was also dismissed, thus concluding the case. SPI-22441 SPI COMPLIANCE PROGRAM CHECK LIST Page 8 Instructions Please fill in date when activity has been completed. [Parenthetical ( ) refers to Compliance Program sections.] 1. Compliance Contract (II) a. Distributed to all other Respondents b. Received from all other Respondents Duty assigned to 2. Descriptive Terminology and Flame Spread Warning (III.A.) Literature review Duty assigned to Keller and Heckman 3 Notice to Designated Customers of Other Respondents (III.B.) a. Provide mechanism for printing of Appendix B notices on SPI letterhead b. Dispatch Appendix B notices to other Respondents based on requests from Respondents c. Dispatch Respondents' order list to Keller and Heckman (1) within 45 days of effective date of the Order, by _________________ (datel (2) within 105 days of effective date of the Order, by (date) SPt-22442 -2- Page 9 (3) when the list has been finalized Duty assigned to ^_____ 4. Publication of Notice in Designated Journals (III.C.) (Duty complete when publication sent to Keller and Heckman) a. Architectural Digest b. Progressive Architecture Architecture Journals c. Architectural Record d. Building Products Guide e. Engineering News Record f. Professional Builder House & Home Building and Construction Journals h. NAHM Journal of Home building 1. Fire Command j- Fire Chief Magazine k. Fire Engineering ______ Fire Protection Journals 1. Home Furnishings Daily Furnishing Journals m. D E Journal n. ASHRAE Journal Heating, Plumbing, and Air Condition ing Journals o. Best's Review P* National Underwriter q. Family Handyman r. Interiors Insurance Journals Interior Decoration SPI-22443 - 3- Page 10 s. Modern Plastics t. Plastic World u. Plastics Design & Processing v. Plastics Technology w. Better Homes & Gardens x. House and Garden y. Time z. Popular Mechanics a-1. Farm Journal b-1. American Farmer Duty assigned to ______ Plastics Journals Consumer Journals Farm Journals Notice to Governmental Bodies and the Fire Insurance, and Building Code Communities (III.D.) a. Compile list within 90 days of the effective date of the Order, by (date) b. Supply notice to parties on the list within 105 days of the effective date of the Order, by (date) c. Mail copy of the list to Keller and Heckman immediately thereafter Duty assigned to Notice to ASTM Members (III.E.) a. Obtain a copy of ASTM mailing list within 30 days of the effective date of the Order, by__ (date) SPI-22444 - 4- Page U b. Mail each member of the list an Appendix B notice within 45 days of the effective date of the Order, by _ ______________ (date) c. Mail copy of mailing list to Keller and Heckman immediately thereafter 7. Information Service (III.F.) a. Review and compile a list of litera ture to utilize as responses to information requests. b. Mail copy of compilation of information requests to Xeller and Heckman monthly. 8. Research Program (III.G.) a. Executive Committee to submit nominee list to Products Research Committee b. Coordinating Committee on Consumer Safety to establish requisite records concerning SPI combustibility research program to date and to maintain such records regarding continuing and future projects c. Keller and Heckman so notified Duty assigned to ___ 9. Compliance by Employees (III.H.) a. Compile a list of SPI employees having administrative, managerial, promotional and technical responsibilities regarding Products covered by the Order b. Distribute a Compliance Memorandum to each such employee-recipient withing 15 days of the effective date of the Order, bv ---------------(date)--------------- SPI-22445 -5- Pae 12 c. Receive executed memos from each employee-recipient within 30 days of the effective date of the Order, by (date) d. Inform Keller and Heckman that all such employees have been notified Duty assigned to Ralph L. Harding, Jr. 10. Compliance Reports (III.I.) (To be filed with the Federal Trade Commission) a Within 60 days of the effective date of the Order, by (date) b. Within 120 days of the effective date of the Order, by (date) c. On the first anniversary of the effec tive date of the Order, by ___________________ (date) d. On the second anniversary of the effec tive date of the Order, by ___________________ (date) e On the third anniversary of the effec tive date of the Order, by ___________________ (date) f. On the fourth anniversary of the effec tive date of the Order, by ^. (date) g. On the fifth anniversary of the effec tive date of the Order, by ___________________ (date) Duty assigned to Keller and Heckman SPI-22446 Page 13 "Report on Regulatory Status of Vinyl Chloride and Polyvinyl Chloride"^/ For at least the past six months a very unusual pro portion of Keller and Heckman time has been devoted to dealing with the regulatory complexities concerning vinyl chloride monomer (VCM) and polyvinyl chloride (PVC). Originally a matter wherein the industry was seeking regulatory approval for packaging alcoholic beverages in PVC bottles, activities related to VCM and PVC now involve a full scale appeal at the second highest level of federal court and regulatory action by six federal agencies. Prior to 1973/ a major issue relating to PVC was whether it was a suitable package for alcoholic beverages. While this investigation was ongoing, vinyl chloride monomer was discovered to be migrating from PVC bottles into distilled spirits packaged under an experimental authorization granted by the Bureau of Alcohol/ Tobacco and Firearms of the Treasury Department (BATF) for testing purposes. As a consequence of the migration discovery in May, 1973 the Food and Drug Adminis tration (FDA) announced it would begin a complete reevaluation of PVC usage; at the same time, BATF terminated the interim authority to package alcoholic beverages in PVC. At that time, SPI members interested both in PVC liquor bottles and food packaging generally coordinated in order to cooperate with FDA to reassure and help it with its studies of the safety of a broad spectrum of applications for PVC. The turning point, which made an already complicated situation into one of the most involved that this industry has ever faced, occurred in January, 1974 when the deaths of 13 production workers from a liver cancer called angiosarcoma were linked to occupational exposure to vinyl chloride monomer in VCM and PVC plants. Almost simultaneously, reports on laboratory experiments revealed that test animals also con tracted angiosarcoma of the liver from breathing vinyl chlo ride monomer. As a result of these findings, the United States Department of Labor's Occupational Safety and Health Adminis tration (OSHA) conducted an investigation to determine how "*7 Prepared on January 20, 1975 by Jerome H. Heckman, SPI General Counsel, for advance inclusion in the Notebook pre pared for the use of the SPI Board of Directors at its meeting to be held in Tarpon Springs, Florida, February 1214, 1975. SPI-22447 -2 - Pa^e 14 seriously worker health was affected by occupational exposure to vinyl chloride and what other factors contributed to the contraction of this rare form of cancer. After its initial investigations and labor union petitions for action, OSHA published an Emergency Temporary Standard (ETS) on April 5, 1974. The ETS lowered the pre vious limitation on vinyl chloride exposure from a ceiling of 500 parts per million (ppm) in the air to a ceiling of 50 ppm. Then, having received additional animal data in dicating that angiosarcoma could be induced in some test animals at concentrations as low as 50 ppm, on May 10, 1974 OSHA proposed a Permanent Occupational Exposure Standard for Vinyl Chloride at a concentration level of "no detectable" with a sampling and analytical method capable of measuring concentrations of 1 ppm. After publication of the Proposed Permanent Standard, OSHA conducted extensive hearings during June and July to help it try to determine the effects of occupational exposure to vinyl chloride monomer and the propriety of its Proposed Permanent Standard to eliminate vinyl chloride from industrial worker breathing zones. At the hearings, SPI's witnesses testified for two full days and provided OSHA with a great deal of information concerning worker health, the industry's technological ability to control occupational exposure to vinyl chloride in the work place, and the known and suspected effects of occupational exposure to vinyl chloride at various concentrations over different periods of time. It remains our view that the industry evidence (that submitted by SPI and by the major companies in their separate testimony) demon strated that (1) it was technologically infeasible to control vinyl chloride exposure to the proposed "no detectable" level, (2) to date, disease found to be related to vinyl chloride exposure has resulted from long term, high exposure to vinyl chloride during the early years of the industry's existence, and (3) the -vast majority of workers in the industry today are not believed to be suffering adverse effects from in halation of vinyl chloride at current levels of exposure. Nevertheless, as you were informed at the Ponte Vedra meeting last October, OSHA promulgated a Standard limiting worker exposure to an 8 hour time weighted average of 1 ppm, allowing for short term excursions to 5 ppm, and requiring respiratory protection for excessive exposure, i.e., above the average of 1 ppm. SPI-22448 -3- Page 15 Based on the continued assertion that it is infeasible for the industry at large to achieve compliance with such low exposure levels, and the contention that adoption of the Standard as written exceeded the regulatory authority granted to OSHA in the Occupational Safety and Health Act and contra vened the legislative and judicial history of that law which requires that standards be "feasible", we were authorized by the Ad Hoc Vinyl Chloride Monomer and Polyvinyl Chloride Resin Producers Committee to file a Petition for Review of the Standard in the federal courts. Petitions for Review were filed by SPI and a number of VCM and PVC producers early in October; indeed within minutes after OSHA announced the Standard on October 1, 1974. Operating under an expedited briefing and argument schedule, sought so that the case could be heard before the January 1, 1975 effective date of the Standard, Briefs were filed in November and December and Oral Argument on the case was held in the United States Court of Appeals for the Second Circuit (New York City) on December 13, 1974. Following Oral Argu ment, the Court heard additional arguments on the Motions for a Stay that had been filed by SPI and the other Peti tioners. We were most pleased that the Court did grant a Stay immediately after the Oral Argument thereby preventing the Standard from going into effect until such time as the Court hands down its decision. In the interim, the Emergency Temporary Standard remains in effect. As far as the Court case goes, the case is submitted and we can only await the ultimate resolution. 1/ At the time of this writing, it is impossible to predict when the Court will render its decision but, if it does so within the next few weeks, we will brief you fully on it at the Innisbrook meeting. 1/ One procedural matter, however, remains outs tending. Two of the Motions for a Stay stated that, as to any portion of the Standard found lawful by the Court, the industry would require 90 days lead time to accomplish steps aimed at com pliance therewith. Subsequent to the Arguments made before the Court, Government counsel challenged this point and the Petitioners for the lead time, including SPI, have filed written replies. Since the Court has not acted expeditiously on this issue, we consider it likely that it will deal with the matter of lead time in its written opinion on the merits of the case. SPI-22449 -4- Page 16 While the OSHA activity and the Court case have been going on, the U.S. Environmental Protection Agency (EPA), the Consumer Product Safety Commission {CPSO and the Food and Drug Administration (FDA) have moved to prohibit the use of vinyl chloride monomer as a propellant for a wide range of aerosol products including drugs and cosmetics. Similarly, the United States Coast Guard is reported to be working on proposed regulations which, like the OSHA Standard, will be aimed at governing vinyl chloride monomer exposure in locations within its maritime jurisdiction. The Environmental Protection Agency, as has been reported previously, is conducting investigations into the development of a formal air emission standard for the VCM and PVC industries. Although much of the information coming out of the EPA indicates that its review of the entire matter is, in many ways, still in the embryonic stage, there is con siderable evidence that the Agency is committed to proposing a standard and filing an Environmental Impact: Statement during the first half of 1975. As a result of inquiries and contacts we are making at EPA, we hope to be able to provide more detail on exactly how that Agency intends to proceed in our next report. On the continuing Food and Drug Administration front, there is, strangely, little new to report. That Agency still intends to publish an Interim Food Additive Regulation for PVC food contact applications except that this coverage now may or may not extend as far as containers for drugs and cosmetics and potable water pipe. Although we expected this Regulation to be published some time ago, it has been held up by concerns at FDA Staff level about whether the regula tion of PVC should exceed traditional examinations for extraction by regulating residual monomer content, material thickness and the like. At this juncture, we are unable to predict with certainty how the Staff will ultimately proceed, or when the proposed Interim Regulation will be issued. In summary, what was once a problem involving poten tial ingestion of vinyl chloride which had migrated from finished PVC into the packaged spirits or food, has now become a more serious and complicated matter involving both the inhalation and ingestion of vinyl chloride by industrial workers and the general public as well. Despite the increased complications in this area, it is believed that, under the circumstances, the situation is as well under control as possible. SPI-22450 Pae 17 "Report on. the Status of Activity With Respect to Plastic Bottles for Carbonated Beverage and Beer Use* */ On December 6, 1973, pursuant to a Notice published in the Federal Register by the Food and Drug Administration (FDA), SPI's Ad Hoc Nitrile Resins Committee filed an Environ mental Impact Analysis Report (EIAR) on plastic bottles for carbonated beverage and beer use. Although it has been in dicated to us for some time that the FDA Draft Environmental Impact Statement (EIS) is complete, subject only to review by the Commissioner and the Administration at the United States Department of Health, Education and Welfare, the FDA Draft remains to be published for circulation and comment. Thes Draft EIS, which has now taken about as much time to complete as the Department of the Interior's Draft EIS for the Alaska oil pipeline, has embarrassed officials at FDA to the extent that they will no longer even *guesstimaten when it will be published. Since the environmental issues remain unresolved, the Ad Hoc Nitrile Resins Committee has been relatively in active. Regulatory problems relating to nitrile resins generally, such as ABS and SAN, as well as other acrylo nitrile copolymers are really being handled under the aegis of the Food, Drug and Cosmetic Packaging Materials Committee but it seemed appropriate to report on this area here to present a rounded view of the overall nitrile resins area. During its review of a Food Additive Petition filed on behalf of a particular nitrile resin intended for use with carbonated beverages, the Food and Drug Administration (a) became aware of potential migration of acrylonitrile and acrylonitrile derived compounds from other classes of AN co polymers and, (b) became concerned that the early toxicology studies demonstrating safety of low levels of acrylonitrile in the diet were not conclusive in light of today's stan dards for such tests. Accordingly, although FDA has now promulgated other Regulations for the nitrile bottle resins, it also published a Notice of Proposed Rulemaking on November 4, 1974 that enunciated its concerns. V Prepared on January 20, 1975 by Jerome H. Heckman, SPI General Counsel, for advance inclusion in the Notebook pre pared for the use of the SPI Board of Directors at its meeting to be held in Tarpon Springs, Florida, February 1214, 1975. SPI-22451 -2 - Page 18 Specifically/ FDA proposed to add two new sections to the Food Additive Regulations to cover all acrylonitrile copolymers intended for use in contact with foods. That Proposal would reaffirm the long-standing "prior sanction" for acrylonitrile-butadiene and acrylonitrile-butadienestyrene resins as long as excessive migration of acrylo nitrile from the packaging material into the food contents does not occur. The same migration limitation would also extend to all regulated AN copolymers. In addition, one portion of the proposal would require the conducting of toxicity studies and SPI, in Comments filed in its name after the same were drafted, circulated to the Food, Drug and Cosmetics Packaging Materials Committee (FDCPMC), and then given special attention by an FDCPMC Ad Hoc Committee of Nitrile Producers stated that such studies were understood to have been undertaken already by other parties who would be reporting the results to FDA. The SPI Food, Drug and Cosmetic Packaging Material Comments, further stated that the parameters on migrating monomer set forth in the Proposed Rulemaking were unneces sarily restrictive because, in developing migration test procedures and limits, FDA did not properly take into account the toxicological evidence of safety presently available to it nor the conditions of intended use for the resins. As a final general note on this matter, it should be pointed out that glass container interests took advantage of this latest FDA proposal to oppose any kind of FDA Regula tion which would allow acrylonitrile polymers to be used for food packaging purposes. In fact, the Glass Container Manufacturers Institute (GCMI) went so far as to remind FDA that a synonym for acrylonitrile is "vinyl cyanide," and that it should therefore be subject to the same stringent examination, testing and the like as vinyl chloride. It would be difficult to predict when this Proposed Rulemaking will be finalized because, in the first place, SPI has requested that the Rulemaking Record be kept open for an additional 60 days past the January 3, 1975 deadline. This was done in order to conduct a survey among the major producers of acrylonitrile copolymers regarding present and projected uses of AN copolymers, the types of food contacted, the food contact applications, and the types of copolymers used. Anticipating that FDA will allow time for the SPI SPI-22452 -3- Page 19 survey, formally or informally, the Rulemaking record will probably not be closed until early March, 1975. In the meantime, it should be noted that the Ad Hoc Nitrile Resins Committee remains intact and prepared to comment on FDA's Draft EIS if and when it is forthcoming. SPI-22453 Pa^e 20 "Report on the Proposed 'Housewares Exemption* Rulemaking" and Related Activity */ On April 12, 1974 the Food and Drug Administration (FDA) published a Notice proposing that it formally assert Food Additives Amendment pre-clearance jurisdiction over components of dinnerware, utensils and other housewares items that might contact food. As background, because of an explicit statement of Congressional intent, generally speaking such housewares items have not previously been subject to the 1958 Food Additives Amendment. The statement of Congressional intent in the history of that legislation was the direct result of efforts by SPI because of concern at the time that unless something were done such items as melamine dinnerware and picnic items could be made subject to the same onerous pre-clearance procedures as food packag ing materials. Despite the strong legislative history, in the spring of 1972, due to problems with nylon oven bags alleged to con tain uncleared food additive components, and heavy metals migrating from colorants employed in improperly glazed pot tery, FDA General Counsel, Peter Barton Hutt, instructed that a new proposed Regulation be prepared with a view towards phasing out what has come to be called the "housewares exemption." Once this were done FDA would be able to require Food Additive Petitions vis-a-vis components of cooking utensils, storage receptacles/containers, and a whole host of other items which, although they contact food, are not sold as commercial food packages. Host of the kinds of items in question are sold for use primarily in the home, although restaurant and dispensing machine applications have also been considered largely exempt heretofore. (For items that are initially sold as commercial food packages, even if there is a re-use application, the components have, since 1958, been concededly subject to the requirements of the Food Additives Amendment.] The FDA Notice of Proposed Rulemaking, designed to clarify the fact that the Agency intended to take full */ Prepared on January 20, 1975 by Jerome H. Heckman, SPI General Counsel, for advance inclusion in the Notebook pre pared for the use of the SPI Board of Directors at its meeting to be held in Tarpon Springs, Florida, February 1214, 1975. SPI-22454 -2 - Page 21 jurisdiction over all of these previously exempt items sought to make it appear that nothing drastic was being done by reaffirming that substances not reasonably expected to become components of food under the intended conditions of use, are not food additives and, ergo, are not subject to the Food Additives Amendment. Having informed all members of the SPI, Food, Drug and Cosmetics Packaging Materials Committee of the Proposed Rulemaking, a set of Comments was prepared, and submitted to FDA on June 10, 1974. In our Comments it was noted that the scheme to abolish the "housewares exemption," although designed to accomplish what might otherwise be a worthwhile objective, was (1) ill-conceived and far too broadly framed? (2) would clearly violate the basic Congressional intent that the Food Additives Amendment not apply to housewares; (3) would be unenforceable; and (4) would leave wholly unanswered once again the fundamental and very critically important issue of when, under the intended conditions of use, a substance may or may not reasonably be expected to become a component of foods. Although the Proposal was scheduled to be finalized in the fall with a procedure beginning by the first of 1975 for clearing housewares items with FDA, the Agency has not moved as yet and has apparently decided to proceed a little more deliberately in its contemplation of final action. In fact, a real question has arisen at FDA as to what the ultimate intent and scope of this rulemaking ought to be. Strong comments filed by many parties, including SPI, show a definite concern about nonsensical situations that could arise under the proposal, e.g., refrigerator gaskets, truck liners and meat plant storage trays would be placed in the same status as single-service food packages so their com ponents theoretically would need to be "cleared" in the same very burdensome way. At this juncture, the December 31, 1974 deadline has come and gone, the rulemaking is not finalized and the filing of housewares Food Additive Petitions is not re quired. In the meantime, some important progress has been made in educating the FDA Staff about the complexities in volved and the long-standing background controversy over the so-called "no migration" problem. SPI-22455 Pae 22 3- Specifically, from our viewpoint, FDA is looking for some way to distinguish between housewares and other food contact items and a way to definitively determine which should be controlled and when. In fact, as a result of a conference with FDA Counsel on this topic, we believe that a much better understanding exists now than before and our contacts at FDA more fully appreciate that the ultimate solution of the problem is not a simple matter. With this in mind, we believe it could be quite some time before the Proposal in question results in any type of final Regulation. In a very separate but accidentally related pro ceeding, SPI has been following and, indeed, is helping the Plaintiffs in a Declaratory Judgment suit in which FDA is defending its authority to seize a food packaging material. As background, a few years ago an FDA seizure of pottery containing lead was challenged on the basis that FDA did not have statutory authority to seize anything other than adulterated food, per se, not something that might ultimately contain food for a brief time. Unfor tunately, in the court case that followed the FDA seizure action was upheld because the facts in the case were so threatening that no one considered broader implications. It is believed that FDA has since employed what many con sider extra-statutory seizure power in a number of instances and has not been challenged again. In the case we are now following, a Complaint and Preliminary Injunction have been sought against FDA be cause it had announced that it would seize paper food packaging materials which, after September 4, 1973, exceed a tolerance level of 10 parts per million for polychlorinated biphenyls (PCB). The PCB issue is, in point of practicality, moot now (since the level of PCB contamination of paper is now believed inconsequential or non-existent) but the under lying very important point here is that this case represents a new challenge to FDA's self-expansion of its jurisdiction whereby it regulates food packaging materials irrespective of their effects on food. In other words, the suit contests FDA's continuing practice of treating food packaging mate rials as though they are food and, therefore, subject to seizure for adulteration. SPI-22456 -4 - Page 23 Prom the "housewares exemption" point of view, this case represents a serious attempt to limit FDA's seizure powers so it cannot seize things which obviously are not adulterated food. If this case is won--and we are now awaiting the decision--it could destroy the basis upon which FDA has been treating packaging materials as though they are food. With the current state of affairs, were a plastic champagne goblet, blender lid, coffee pot insert or a variety of other items found to contain a component which is an uncleared food additive, FDA would feel quite com fortable in seizing the product at the manufacturing plant or store on the basis that, since the houseware will come into contact with food and could adulterate it, the houseware must be considered food that is adulterated and sub ject to FDA seizure powers. However, were FDA not exceeding our reading of its statutory authority, it would only be able to seize a houseware when it is in actual contact with food because FDA's seizure authority literally extends only to food, not to "incidental food additives," i.e. not to packag ing materials or components of housewares in the absence of food. From a realistic point of view, the winning of this case would hamper FDA seizure of housewares because the housewares could not be treated as food to which the seizure power applies and could only be seized when they were in con tact with food; in most cases, this would mean seizures could be made only in homes and this is an unlikely prospect. SPI-22457 Federal Activities Reqardinq Plastics and the Materials Shortage Situation */ Page 24 It appears that the raw materials shortage is being resolved, in large measure, by the current economic crisis. According to a recent article in the Wall Street Journal, demand for plastics resins has decreased to a~point where, in some cases, there is an over-supply. Resolution of the materials shortage situation faced by the plastics industry, which was one of the objectives of the allocation program established by the Federal Energy Administration, is probably being affected as much by the economic downturn as by the allocation system itself. With petrochemicals given a priority position in the FEA allocation regulations, as has been noted in previous reports, it may be of interest to highlight some examples of implementation of these Rules. Under the allocation system, a plastics raw materials manufacturer not receiving his specified share of feedstock may petition FEA to be assigned a feedstock supplier. In one of its major rulings, FEA issued an order in the middle of last year requiring 27 petroleum companies to supply specified quantities of naphtha to petrochemical plants operated by three resin manufacturers. In so doing, FEA concluded that (1) the three resin manufacturers were un able to obtain sufficient feedstocks to meet their require ments; (2) the feedstock supplies otherwise available for sale in the United States were insufficient to meet current demand; and (3) granting such an allocation would contribute to a reduction of the shortage of petrochemical products in the United States. The effectiveness of the order was terminated when FEA determined that the shortage conditions prompting the issuance of the order no longer existed. In another case decided in July of 1974, FEA concluded that benzene and toluene are not subject to allocation under the motor gasoline category but, rather, are reserved for petrochemical uses. Also, in early December of last year, FEA formally ordered a producer of isobutane, a petrochemical feedstock, to meet the supply requirements of one of its base period customers in accordance with the provisions of the allocation Rules. V' Prepared on January 20, 1975 by Jerome H. Heckman, SPI General Counsel, for advance inclusion in the Notebook prepared for the use of the SPI Board of Directors at its meeting to be held in Tarpon Springs, Florida, February 12-14, 1975. SPI-22458 -2 - Page 25 Very little activity has occured in the legislative area since our last report. The only action worth noting concerns congressional bills introduced by Rep. Rhodes (R-Arit.), H.R. 16172, and Rep. Ullman (D-Ore.), H.R. 17431. These bills, proposed suspension of import duties on polyethylene, poly propylene, and PVC for a specific period of time. Both bills died with the expiration of the last congressional session and it does not appear that they will be reintroduced in the new Congress. SP1-22459 Pa^c 26 "Status of Solid Waste Legislative Matters" */ Having come through 1974 in large part unscathed by anti-plastics legislation, the industry must now look towards the 94th Congress, almost all of the States and Territories, and perhaps especially the Legislatures in all four of our special program states since they are now in regular general sessions with legislative carry-overs into 1976, Despite the lack of legislative disasters in 1974, the many seeds that were planted during last year and earlier could sprout and bear bitter fruit during 1975 and 1976. Indeed, we agree with those who have indicated to your leadership that there is likely to be greater anti-chemical and plastics industry legislative activity than ever before. Federal Legislation During 1974 the House of Representatives voted to extend the Solid Waste Act--Resource Recovery Act for two more years, that is, until June 30, 1976. On the Senate side, however, agreement on an extension was only given grudgingly. The Senate Public Works Committee sought to compromise the two year extension offered by the House by making the expiration date February 1, 1975. This move was aimed at spurring reconciliation between the Senate Public Works Committee (Randolph is Chairman but Muskie and Dominici are the environmental activists) and the Senate Commerce Com mittee (where Senators Moss and Hart are in the forefront) in the more-or-less ongoing jurisdictional battle over environmental matters generally, and the heretofore uncom promising Senators on each Committee as to what sort of solid waste legislation should be pressed. Under the Senate plan the Solid Waste-Resource Recovery Act was to be carried on a continuing resolution from month to month. Fortunately, the House and Senate conferees finally agreed on a six month extension and President Ford signed the extension bill on January 2, 1975. This means that, as of now, the Solid Waste-Resource Recovery Act will expire at the end of this fiscal year. V Prepared on January 20, 1975 by Jerome H. Heckman, SPI General Counsel, for advance inclusion in the Notebook pre pared for the use of the SPI Board of Directors at its meeting to be held in Tarpon Springs, Florida, February 12-14, 1975. SPI-22460 Page 27 -2 - In the meantime, of course, while the usual bushel basket full of solid waste measures, many of them of only passing consequence, will be or have been introduced in the House, the Senate will probably remain embroiled in working with the same type of legislative proposals discussed at length in many of our previous reports. The full Senate is expected to send the Hart-Magnuson Toxic Substances Control Act Bill back into conference where it died at the end of the last Congress? this Bill might be the most crucial of all as far as the plastics industry as well as the entire chemical industry is concerned. The major outstanding measures designed to replace the Solid Waste Disposal-Resource Recovery Act are before Senator Randolph's Public Works Committee. The least ob jectionable Bill is the proposed "Solid Waste Utilization Act of 1974." As yet, only a Committee print of this Bill is available and SPI has filed brief comments thereon giving it general support. This rather comprehensive measure will not be enough, however, to satisfy Senators Muskie, Dominici, et al. It would appear that early in this year a version of that measure, combined with features of the Nelson-Hart "Environmental Protection Act of 1974" and the Hart-Moss "Resource Conservation and Energy Recovery Act of 1974," both coming out of the Commerce Committee, will become the forerunner, but probably only after it is even further burdened with additional amendments. Of the amendments, one introduced as a result of the now famous Reserve Mining case is the most worrisome. It would place the burden of proof on industry to show that government action in an alleged environmental insult case is not justified. We would hope that this reversal of what some consider traditional legal principles will not be favored but, considering the make-up of the new Congress, a Bill with such an amendment might prove attractive in view of growing public disenchantment with industry. On the issue of the jurisdictional quarrel between Senate Public Works and the Commerce Committee, Senator Muskie is expected to be quite busy with attempts to find a cure for the American economy in the new Budget-oversight Committee and with re-election (or election?) campaign activity since his next election test is only a little more than a year and a half away. Senator Hart will be preoccupied SPI-22461 -3- Page 28 for a bit longer with the Toxic Substances Bill. Thus, competition for domination of environmental affairs may cool somewhat before ultimate resolution as to which Com mittee will prevail but Randolph's Public Works Committee has the running start as a result of last year's preemptive activity, mostly by Senator Muskie. Even so, as indicated above, the situation in the Senate Public Works Committee is at best confused so it is anybody's guess at this early point in the First Session as to what kind of a Bill will ultimately be developed and pushed. Right now there seems to be no middle ground com mon to the various approaches being taken. However, we share the feeling widely held in Washington that some sort of far-reaching solid waste proposal is very likely to go to the floor of the Senate in this Session. State Legislation Massachusetts Early in January, the Massachusetts State Legisla ture convened in General Session for a period of unlimited duration. In excess of 7,000 bills were prefiled and initial indications are that many affect the interests of SPI --the bulk of those are in the solid waste and general packaging areas. As of this writing, we have yet to receive the bills themselves but, on the basis of the activity in Massachusetts over the last couple of years, we predict that 1975 is going to be another busy year in Massachusetts with the great in flux of new, young Democrats resurrecting a whole host of measures (the number already filed having been estimated by Massachusetts counsel as in excess of 100) previously buried in Committee or otherwise sidetracked. Minnesota In Minnesota, the Legislature convened on January 7 in a session limited to 120 legislative days during the Biennium. By statute, both houses must adjourn this year by May 19. Our first report from Minnesota indicates that not only has an Oregon-type bill, previously sidetracked, been reintroduced but, as an alternative, his Administrative Assistant for Environmental Affairs is recommending that the Governor's Environmental Message recommend legislation to SPl-22462 Page 29 -4- the effect that all non-environmentally sound containers be outlawed; that is, that only returnable glass and all-steel cans without pop tops (apparently the latter are deemed "environmentally sound" because so many are made in Minnesota) be allowed. The prospective Governor's proposal, if accepted, would badly split the anti-container legislation industry groups. As sides are chosen on what should be recommended to the Governor, the glass people favor the Oregon-type bill whereas the can industry is obviously bending the other way. How this drama will unfold is difficult to predict at this early stage, but at this point in time our Special Legisla tive Counsel in Minnesota is attempting to dissuade the Governor's Assistant from making his recommendation because the Oregon bill can still be defeated and this is not the time for divisiveness with a potential assault on the Packaging Regulations in the wind. As to those Regulations, you may recall that in May, 1973, the Minnesota Pollution Control Agency was given the authority to regulate "new" packages based on environ mental desirability and energy usage. After a year and a half of hearings, the Packaging Regulations have been ap proved and are now in effect retroactive to May 26, 1973. As previously reported, these Regulations are, from a mechanical point of view, totally unworkable? only $75,000 and a two-man staff have been approved to enforce the Regu lations and, as yet, no forms or other compliance devices have been prepared by the Agency. Nevertheless, we are advised to expect action by the Agency in the very near future and some plastic package is very apt to be used as a stalking horse. Those hardest hit by the Packaging Regulations-those interested in aluminum cans, aerosols, and plastics-along with their customers and the Minnesota Association of Commerce and Industry are currently considering how best to challenge the Regulations in court. The details of the court challenge may take some time to work out and imple ment. We have instructed Minnesota Counsel to prepare a suit for Declaratory Judgment to be filed without undue delay--that is, to be filed before a new package gets "hit." More information on the Minnesota situation will probably be available so that we can supplement this report at the February meeting. SPI-22463 *age New York The State of New York is also in General Session this year, beginning on January 8, 1975. As yet, the re view of prefiled bills has revealed none of particular interest to the plastics industry as a whole, although a "clear meat tray" bill has been filed in the Assembly. Nevertheless, New York is traditionally a state that can be counted on for a variety of proposals of a type on which we must focus more than routine interest. Here again, we may have more to say by Board meeting time. Vermont Finally, the Vermont Legislature, convened in General Session on January 8 for a period of unlimited duration, and has already produced two bills of great con cern. The first would not only prohibit the sale of metal cans with "pop tops'* but would also ban the use of plastic rings and other non-biodegradable materials which hold the package together. The other bill would ban disposable milk containers above 1 pint in capacity if they are made from rigid plastic. At this juncture, only the Milk Bottle Bill is slated to be the subject of early hearings. Since Vermont is the home of the two-year old "litter levy*, that is, an Oregon-type mandatory deposit system which opponents were unable to dislodge last year, the State apparently will remain a cause for continuing special concern. SPI-22464 Pae 31 TRAFFIC COMMITTEE REPORT TO THE BOARD OF DIRECTORS */ In the waning days of 1974 the Interstate Commerce Commission rendered a favorable ruling in the rate proceed ing concerning alcoholic beverages packaged in plastic bottles. The rate level applicable to liquor in plastic bottles has been a subject of controversy between the motor carriers on the one hand and the plastic bottle industry and the liquor industry on the other for more than three years, since the advent of large scale test marketing of alcoholic beverages in PVC bottles. The weight advantage of plastic over glass bottles may be translated into the shipment of additional quantities of liquor at the same freight charge, thus producing significant freight savings for the shipper and revenue losses for the carriers. Upon BATF1s withdrawal of the experimental permit for packaging alcoholic beverages in PVC bottles, the motor carrier rate bureau publishing rates between the central and southern states sought to restrict the application of favorable commodity rates on alcoholic beverages to the use of glass packaging, citing as justification that the plastic bottle is "obsolete". Upon protest to the Interstate Com merce Commission by SPI and by the Distilled Spirits Council of the United States, the proposed tariff change was sus pended and designated for hearing. In its Report and Order, the Interstate Commerce Commission found that the carriers had not shown the dele tion of the plastic bottle as an authorized package for application of the commodity rates in issue to be just and reasonable in view of the development of nitrile type plastic packaging for alcoholic beverages and the existence of some inventory of liquor in PVC bottles (packaged prior to BATF's withdrawal of the packaging authorization) held by at least one distiller. The ICC's Report further recog nized that final action has not been taken to preclude future use of the PVC bottle. Whereas the effect of the proposed tariff change'would be to deny the application of favorable commodity rates to alcoholic beverages packaged *7 Prepared on January 20, 1975 by Jerome H. Heckman, SPI General Counsel, for advance inclusion in the Notebook pre pared for the use of the SPI Board of Directors at its meeting to be held in Tarpon Springs, Florida, February 1214, 1975. SPI-22465 Page 32 -2 - in plastic and thereby subject such traffic to the higher class rates, the ICC further held that such discriminatory treatment dependent upon mode of packaging could only be justified on the basis of traditional rate making considera tions . The motor carriers have filed for reconsideration of this decision, and the Traffic Committee will continue to pursue this proceeding, hopefully to a successful final conclusion. In consideration of the increasingly broad applica tion of hazardous materials regulations governing the trans portation of materials and products, and also in light of the expanding scope of SPI's activities, the Traffic Com mittee at its semi-annual meeting held January 16 and 17, 1975, formed a Hazardous Materials Subcommittee. It is the Committee's intent to play a more active role in the regulatory processes involving the transportation of haz ardous materials than has been dictated by prior require ments . For the past several years, the Traffic Committee has expended substantial time and resources in contesting carrier and regional rate bureau efforts to take exception to the nationwide classification basis of determining rates and charges. The Committee has successfully protested to the Interstate Commerce Commission on eight separate occasions over the last three years to maintain the classi fication rainimums applicable to truckload movements of light density plastic products and on numerous other occasions has made appearances before motor carrier rate committees to dissuade them from publishing higher than classification based rates. In an effort to curtail carrier practice which has become a nuisance to the industry, the Committee will peti tion the Interstate Commerce Commission to institute a rule making proceeding to establish tariff publishing regu lations governing this type of situation. 'Hie proposed regulation seeks to codify ICC decisions that charges higher than those determined on the classification level must be justified on the basis of extenuating circumstances. Such a regulation would hopefully deter publication by shifting to the carriers the burden of going forward with their proof prior to publication, thus alleviating SPI and its members of a substantial portion of the burden of repeatedly litigat ing the same issue at the Commission. SP1-22466 -3- Page 33 In other activities over the past six months f the Committee persuaded two motor carrier rate bureaus not to publish higher than classification-based truckload charges which would increase freight charges on light density products by as much as twenty percent and further dissuaded one of the bureaus from adjusting the rate levels applicable to plastic resins moving from the southwest into the middlewest. The Committee was further successful in obtaining withdrawal of a motor freight classification rule looking toward estab lishing a minimum weight on individual packages, a measure aimed at light density and light weight products. It is also now involved in new classification proceedings pertain ing to plastic pipe. SPI-22467 Page 1 MIDWEST SECTION Jack E. Glatt, Chairman Robert W. Sherman, Staff Plans are well underway for our two major conferences. Theme of the Midwest Section Conference is "How to Survive in 75". The Third Annual EPS Conference Program and Design Competition has already been planned. Our thermoset supervisors training course grew to a full three day program with national participation. A Presidents Night in Detroit has lead to the formation of a steering committee for a Michigan Chapter. The EPS Block Molders Commtttee has raised a total of $68,000.00 and has now completed 5 of its 6 initial planned fire tests. Further tests in the series are being studied. The Expanded Polystyrene Safety Bulletin has been revised and is to be distributed in answer to questions on combustibility. The recession has seriously impacted the business of midwest companies and new memberships are going to be few in number until the economy turns around. On top of this Illinois in particular is vigorously enforcing air polution laws and occu pational safety. All midwest chapters are strong and have had several successful meetings. Robert W. Sherman January 21, 1975 spl-22468 Page 2 NEW ENGLAND SECTION F. Reed Estabrook, Jr., SPI Board Representative Gage Olcott, Section President Bert S. Montell, Staff The 30th Annual New England Conference took place at Wentvorth-byThe-Sea, Portsmouth, New Hampshire on October 2, 3 and 4, 1974 attended by over 400 people. This was the largest Conference ever held with molders from 46 companies in attendance in addition to the other industry representatives. The theme of the Conference was "How To Operate At A Profit During A Static Economy." The annual Spring meeting of the Section will be held in West Springfield, Mass, on March 24 when speakers will discuss the economic outlook as well as the national fiscal trends and their effect on the New England states. There will also be a talk on "Tapping Your Plant's Hidden Capacity." The Section Board of Directors has decided to change the location for the 1975 Annual Conference. It will now be held at Dunfey's Hyannis Resort and Conference Center, Hyannis, Mass, on September 16-19 of this year. The Conference will return to Wentworth-by-The-Sea in Portsmouth, New Hampshire in the Fall of 1976. Meanwhile, the Section Board of Directors is endeavoring to expand its company membership. The Board has ruled that a non-member may attend a conference one time. At that point it is necessary for a company to join SPI or not be eligible to register for the conference. Bert S. Monte.1.1 January 23, 1975 SP1-22469 Page 3 WESTERN SECTION Robert $. Elliott, Choi niton Lloyd N. D.irdcn, r,taff Western Section Conference E. Paul Engstrom, 1975 Chairman Working meeting took place at conference site, Hyatt Regency San Francisco January 2k . 25, with emphasis on developing program to attract attendance in this off economic year. Directors reported progress and worked with hotel personnel on more detailed arrangements. Theme is 'Through the Golden Gate to the Golden Age of Plastics." Conference dates: April 23-25, 1975. Pacific Northwest Chapter Ripley Gage, president Group held their EXPO *7k meeting September 13, 197k in Spokane, featuring R<ilph L. Harding, Jr. as speaker on 'Vhat's Ahead for Plastics?" November meeting in Portland featured seminar on "Effective Management Communica tions." January meeting in Seattle featured 'V/hat is the Value of your Personnel Inventory." A charter flight is being organized for Plastics Exposition at Dusseldorf, Germany, October 7-1^, 1975. Northern California Chapter Paul Rossi, President September meeting encompassed a field trip on Bay Area Rapid Transit, followed by BART speaker and motion pictures. October was a day-evening management training session. November was PAC talk by Dick Moore, W.R. Grace & Co. December Christmas party. January was plastics medical program, with presentations by Hexcel and Cutter Labs. Southern California Chapter Richard A. Bradbury, President Good national speakers (PAC's Don Bryan in November, Plastics Technology's Mai Riley in October), had smaller than usual audiences, as did chapter social events in September and December. January SPI/SPE meeting on pro duct liability well attended. Participation at "Career Days" for high school students involves 50 members, January 31 - February 9, 1975. Typi cal annual attendance for this event is approximately 200,000. Expandable Polystyrene Group William Bie, Chairman The group has conducted two general meetings, both bringing high attendance. Permanent officers have been elected. Combustibility runs high as the main interest. New memberships obtained in this report period proportion ately the highest of all product-oriented groups. SPl-22470 Page 3-A Reinforced Plastics/Composites Institute Oavid Oubbell, Chairman This group's main interest is its upcoming April '76 major technical con ference which will focus on the economic advantages of corrosion-r^sistant structures. The group also held a successful general open-forum meeting and has scheduled another on the vital topic of the state of the economy. Trade Apprenticeship Committee Richard Sperr, Chairman Inactivity continues in this committee. There is enthusiasm remaining on the part of a few who always show interest in education, but in general the group seems disinterested. The state authority has been involved in the two meetings of this report period and wants us to make up our minds if we wish to continue. A verbal questionnaire will be held at the Holders1 annual conference in February to get an open public opinion from molders and moldmakers. Plastics for Tooling Group Charles Owen, Chairman Major interest is annual conference in Son Diego. They rejected a proposal to alternate with the national group for their conferences and are pushing ahead with their own yearly Western meeting. As before, the March 21-22 conference will focus on the basics and update of plastics tooling tech nology with concurrent demonstration workshops. SPE this year joins with SPI and San Diego State University as a third co-sponsor. Molders Management Division Richard McKibben, Chairman Just ahead is the annual conference at Ojai, California. Group is also hard at work on their local wage/labor survey and a revision of the "Injection Molding" handbook. A very successful Molders and Moldmakers Annual North ern California Conference was held in September. Moldmakers Division Paul R. Jones, chairman This group has been showing improved attendance at local Molders Management meetings, particularly at the combined mini-conference in Monterey. Major concern continues to be the dwindling supply of new toot and moldmakers coming on the scene. Membership During this report period there have been 13 Class 1 members and two Associate members who joined SPI. Class I members are: A.M. ANDREWS CO.; ARAPAHOE CHEMICALS; ARIZONA DIVERSIFIED PRODUCTS; FLEETWOOD ENTER PRISES; NEVELL & ASSOCIATES; IBM; MOLDED FIBERGLASS AND PLASTICS; KEYSORCENTURY COUP.; FOAMCO; R fi. R PRODUCTS; ZERO FOAM PROOUCTS; PUGET CORP.; LUNASTRAN CO./PULTRUDED PRODUCTS. Associate members are: HAWLEY EQUIPMENT and PLASTIMACH INTERNATIONAL. Lloyd N. Darden January 27, 1975 SPI-22471 Page 4 PLASTICS PIPS INSTITUTE J. F. Cogdell, Chairman Ray Durazo, Staff PPI's activities during 1974 have covered the full range of the problems and opportunities presently facing the plastics piping Industry. Following are some of the highlights of those activities. - PPI established 1975 as the Industry's official 25th Anniversary and an intensive public relations campaign has been developed. - During 1974, PPI was engaged on the front lines of a critical struggle to protect the industry against loss of market resulting from widespread attacks on plastics piping In fire situations. - A long-range research program was launched to gather data on the In-use performance of plastics sever piping. It is anticipated that the data which this program should yield will be an effective tool in broadening the market for plastics pipe In municipal sewer applications. - PPI has established a PVC/VCM Committee which is doing important technical work in the area of vinyl chloride monomer and its effect on potable water conveyed in PVC pipe. - Statistics on shipments of thermoplastics pipe, conduit and fittings are generated by an Ernst & Ernst program under the supervision of PPI Statistics and Market Analysis Task Group. - In addition to PPI's Annual and Semi-Annual meetings, the Institute's Market Division which is made up of 12 committees and task groups holds two meetings each year to discuss numerous projects. - PPI membership is now up to 100 companies which develop an annual does income of $550,000. PPI staff personnel number 10, Raymond Durazo January 22, 1975 SPI-22472 Page 5 THERMOPLASTIC EXTERIOR BUILDING PROOUCTS OIVISION Seymour Rosenhouse, Chairman Joseph S. McOermott, Staff The Division meetings continue to be well attended. The Technical Section continues its activities in obtaining weatherability and flammability data. At an upcoming meeting February 18, 197S there will be further discussion and voting on the product standard for vinyl siding. The marketing interests of the Division are furthered by the distri bution of its application manual, monitoring of building codes and keeping trade publications informed of the merits of these building products. In addition, audited periodic statistical surveys on industry marketing trends and product field performance are maintained. Seymour Rosenhouse January 22, 1975 SPI-22473