Document Gmk5aZNrX2eQ8Bn3xVRdOaKnr

LEGAL & LEGISLATIVE BULLETIN S9AAi*M3TM*AL ::a 'n g s a s s o c a*'* *H * I * on-* ; ; No. '.7 TOPICS: Ceraoer 25, \ 973 A. Lead in Poinr -- -ederal, Stets 1 Masjoehuser*s ana Wisconsin) and New York City 0. Mercury in Poinr ~ Naw Jersey regulations C. Air Pollution Control regulations -- Connecticut, Louisiana and Now Janay D. Poison Pravanrion Packoging Aet -- "Speeial-ooekaging" reauiremonts e. Consumar Product Safety Commission -- Product hazard list and Spray adhesives ban P. PHSA regulations G. Federal legislation -- "Consumer Product Warranties" bill H. IRS regulations "Pull absorption" inventory costing a/m Executive Synopsis This Bulletin reports recent developments an lead in point -- Federal bill approved by House and Senate, as reported out of Conference; Consumer Product Safety Commission (CPSC) approves exemption of artists' paints and related materials from Federal lead regulation (Copy appended.) Massachusetts ragulations on 2-gallon eonrainen may be amended; Wisconsin lead bill reported by Assembly committee; omenomenr to New York City ordinance proposed. Also reports NPCA actions to obtain relief from New Jersey pesticide regulations which would bon morcury usos in that state; to obtain amanamanis to vary restrictive air pollution control regulations In Connecticut, Louisiana and New Jersey; and ra acaulre by survey information on "tpacioT-pecKoginfl11 requirements of the inausrry under existing and proposed PPPA regulation. Includes eommanls on now Product Hazards Lilt, status of spray adhesives ban, raced!fication of FHSA regulations by CPj, and Sonars passage of Consumer Product Warranties bill. And, in addition, promulgates Information on IRS regulations which mode "hill absorption" inventory costing mondotoey. CONTACT AT NPCA. Office of Logoi end Government Relatione Division. *?< . 0007-SWP--036809 N22846 A. Laoa in Pgjnr -- Rcen> atvtioerr-i !. ftagral a. House and Senai* coorov* compromise sad siiI ''L&l" Sullt'in No. '4 r*oorred House eossag* af 'h* reaarol 'od ail! S. cC7 z-c set to',m a oomoarijon of eifferi-g provisions in t-e Hows* ana Senor* versions. On Sooro-ao- '9*-, --e cs',**'a*s nor and resolved rh* aiffarenees between ih# oills. T'n* final, agr**8--jpon ebmorsmise'' .an o ssn*c *t `no following previsions: '1) Research. Conferees accepted the Houia version which raouiros *h* Consumer ^.-acue: sofary Commission >a conduct rmarch on multipi* loyan af ariao aainr Him, conroining rha voriout load eomoounds commonly used, in oroar 'o aicarvi'n rha iafa laval af laea in residential painr products. No larar than Dec. 31, 1974, a raporr of rh* results af rhii research must ba mada ro the Congress. <2) Laad Standard. Conferees odoored a compromise position an this coint. Tha final -anguage proviso* for a 0.3% sronaord orior ro Doc.31,1974; ofrar Dac. 31, 1974, rha irondord bocomai 0.06%, except rhor. If rho Contumar Produet Sofory Cemmimon, baiad on rho raiaareh studies, determines rhor anorhar laval (nor ro excsed 0.5%) it safe, rhon rhor orhor laval bocomoi affaerivo ofror Doc. 31, 1974. (3) PraamBrian. Confaraai oceaprod rho Howto language which ttaras rhor ir it rhn inranr of Congrats re luparsado any Slaro or local Iowa which provide for o reauiremenr, prohibirion, or trondard rolarlng ro rho load eonran r in painr which diffart from rha provitiont of this Ael. Any tuch Slot* or local law purporting ro attablith such diffaranr requirement, prohibirion or standard is declared null and void. Tha Confaraat alto included a provision to prohibit rho application of "lead bated paint" ro any ray, furniture, or cooking, drinking or eating uloniil. (This it in addition to the exiiring pronibirion against use of lead bated ooint in roiidontial structural constructed or rehabilitated with Feoaral ssiittanco.) This final variion was incorporated in o Conference Report which now hot boon adeotod by the full Sonata and House of Roprooontativoo and sent to the White Howe. The President it expected ro rake action in the very near future. b. CPSC approves exemption of ortitti* points and rotated moteriols On Soptaeiber 28>h the Coraueier Product Safety Commission approved the exemption of ortitti' points and related materials from classification at a banned hetardeue subttonee under the lead regulation of Mareh 11, 1973. Thii action -- published in the Federal Register an October 4, 1973 (3ft F.R.27514) provide* far the exemption to became effective on December 3, 1973, "except at ro any provision* that may bo stayed by tho filing of praper objections." (Copy appondad.) r<v"be^e -* 3 aw. . * --. `J " ". S. i_-. ? 0007-SVKP-036810 0007-SWP-000118125 -3- This ialt*f Statement ' emonosized Because i* i>sdics'es *not a perloe of "me *or tJr~er C5if,"j and objection) eon o exeeeted wnen rn* agency ?i"ciiees rne eguiarisn caven.-g --e cri.-icc ***-= =- 'ea nested by NPCA one year ago. 'See "L&L" Bulletin No. 7). Noac'ion yet -as seen -exert oy C9SC ai successor agency to FDA) on the NPCA requesr, tnui the imol ententerion cate ;sr --e oroajer ce-egar ei covered By `net proposed regulation remain* suseended, ana -- men proaucn can canrinue -a =e -arxe-ec. even rhougn the leaa content may exceed 0.5 percent. A* explained in an earlier Bulletin, the cartgo'y far artists' paint* one reie-ea --c-e- c's cs -or inciuoed in the NPCA reauest because tuen proauer* were nor eonsiderea oy the inauirty >o c 'semt* ana similar surface-coating materials" and thus nor suojecr to the initial ban, Neverr-tiess, sf-e<Dublishing fan December 5, 1972) the proposed regulation covering the exemorions reauesreo sv n ^CA, FDA published Ion January l, 1973) a proposed regulation to cover tnis additional oraauer ca'egory. See "L4L" Bulletin No. 8). 2. State o. Massachusetts lead regulation may be amended As reported in "LAL" Bulletin No. Id, NPCA formally requested certain amendments ro me "Regulations for Lead Poisoning Prevention Program -- The Commonwealth of Masnehuierrs" wnich were appended to "L4L" Bulletin No. 10, NPCA hat net received formal notification and we are unable to confirm that the regulations have in fact, been amended. However, information has been received unofficially that the Director of Massachusetts Lead Poisoning Control Program has roporrod to tho Massachusetts Deoarrmenr of Public Health that the Governor's Advisory Committee to the Lead Poisoning Prevention Program voted unanimously to amend paragraph 4.4 of the regulations, at published an April 6, 1973, by omirring the nine woras a: the end of the sentence *nor said in containers of lost then 2 gallant," At such time os this ctmenomenr may be published, it would have the effect of eliminating altogether the restriction on salts of the exempted products in containers of lost than 2 gallora. Meanwhilq membeit are reminded that tho Massachusetts regulations became fully effective on October 1, 1973. These regulations contain previsions for special labeling; but -- there still remains an unresolved legal guestion as to whether these labeling provisions are null and void due to Federal pre emption of labeling under the Federal Haaardoue 5ubsnees Act. It it our own legal opinion that such provisions are nullified by Federal preemption, even though no Federal label has yet boon finalised far those produets For whieh an exemption from rhe Federal (0.5 percent) lead level has been requested. While Massachusetts officials have nor expressed agreement with this position, they have indicated that they would respect Federal preemption of labeling once the Federal regulation prescribinge lead label far exempted products is finalized. ; :< .- We have not pursued this matter in court mainly because we believe rhe burden rails with the state of Massachusetts to demonstrate that their labeling is nor preempted end we believe the matter can be successfully resolved without court action once requisite labeling is prescribed by a final. Federal regulation. 'Z'lri <W! 0007-SWP-036811 0007-SWP-00011812e o. Wisconsin After noving been aormont for many montbs, tV'jconsin Asieroiy 3111 Nie. *iC inrrocuees sebruory 1573) was reoorrea favoreely sy ne eognizonr Auemoly esmmitre* earner t-'j roif, This bill would require "h# Srara Deporrmenr of Haalrh ro odeor regu.orlonj wir-ln a morr-j establishing >Ha .eoe-eontent levels in Minr. While me Federal oraemotion orovisian srou.s conrroi '"is asoeer, rna Dili aoes csnroin several other objeerionoole provisions, as fol'swt: 1. Would require a lobal on oil poinr prooucrt exceeding ""a 'too conranr s'0"co's, ro stars ''WARNING Comains ooisoneus ingreolenrs." Larva'S "ot ass -an 18 paint rypa.) 2. Would prohibir usa of poinr exceeding rha laod eonranr sronaord on inrarier surfacas of "any home, sparrmant building, aducarional or child-coring ' restitution, hospital, clinic, start, profassionoi offlea or puolic goineri-g si oca." 3. Would roquira businassas to display a sign warning purchasars ajoinst tha usa of preduen hozoreous baeousa of laod eonranr. This measure is baing followed elosaly and, wirh rha invaluable ouisrenca of members in Wisconsin, appropriate action will be taken in an effort ro correct the above oojectionaole requirements. .i- - V, . 3. New York City proposes amendment to lead ordinonce Amendments have been proposed to the existing New York City ordinance (presently 1%) wirh the stored purpose of bringing the ordinance into conformity with the FDA regulation. As written, the proposed amendments would prohibit the possession or sale of any paint containing more than 0,5% lead which is intended or peekaged in a fotm suitable for use in or around the household. While uniformity with the Federal regulation Is desirable, this proposal makes no provision for the seven product categories which have boon exempted from the original FOA order pending additional review and the promulgation of a further order. (Sea "L&L" bulletin No, 7.), Accordingly, if oaopted in in present form, these amendments would have the effect of prohibiting tha sale (and even possession) in New York City of the many industrial and special-purpose coatings coveted in rha seven product categories. Fortunately, the New York taint and Coatings Association was alert to this situation and their notification of NPCA has permitted us to file abjections to the amendments along with objections filed by the local association. Wo heva erguodLamong other things, that adaption of those amendments would be prematura until final action at the Federal level. An infernal moating with appropriate City officials has boon requested In ardor to resolve the matter in advance of any formal eonsidotation of tha amandmants -*-vf.-,tf ,r. v:ZT.- v*V * 0007--SWP--036812 0007-SWP-000118127 3. Mrcyrv in Bo;nt -- Now j^iv -eo.! icr'o-s NPCA nos filed comments with "he Now ueoarr-en* of jnv'.ron-e-'c: R-j'ecfOn 3" --or ro*s j Pfaoossd pesticide control reguiotions wnien would, among o'i*r >nirgi, ciassiv -*rs,,n :omoouno except those ujea os drugs os oefined in N.j S A. 24-2I-2'" os o 3'onio'**o =*ifici3. Re;er- P-opased Cnooror "2 Pesticide Conrrol Regulations, Section 2.1, Lisreo Numoe' 135. , Tn* NPCA C3mr-*Tj -- presen'td at c Duolie "taring in New Brunswicx, New ,e'sev an Gc'ooer 16, 1973 -- suooorreo represenrotivies of 'he N#w varx and Phiiodeionlo CA s, --e ~e.ar -ercjryi jjDolis't ond otntf incus'ry witnesses ot'enfling mis ntenng NPCA and me reus?', ore seei ng *3 -<ave me Drooosid regulations amended so as to Dermir the continued use of onen/itrere.r:aii! n ooin't ona coatings pending me resolution of rne issue oy me rtaeral agency tSPA). Note. The aominisrrorive proceedings on mis issue hove seen 'urther deloved see ''..ii," Bulletin No. 14) with me granting oy the Adminisrta*ive Low Judge of an ooairiansl 30 days until Novemoer 30, 973) for industry witnesses ro answer rhe oe*trioi or let of :?A wnien was filed on Oetooor 1st. C. A> Pollution Control Regulations 1. Connecticut and Louisiana The states of Cormecrieur ond Louisiana hove odooted air pollution control regulations which include very resti iefive solvent amission controls based on earlier EPA direction (EPA Guidelines ro tho States, August id, 1971; 36 F.R. 15496;. These controls simply do not prevido tho solvent use flexi bility needed to monufactu'c paints and coatings; and, EPA now recognizes these as unfair ond) unworkable. Tho Louisiana regulations already are in affect; but, the Connecticut regulation!! do nor become fully effective until January I, 1973. It should bo notad, however, that -- after January 1, 1974 -- all architectural coatings sold o> offered for sole in Connecticut in containers larger 'non one auarr must contain photoenamically umeocivo solvents m accordance with the acceptable Rule 66 approach In view of the foregoing, NPCA currently is soaking a mooring on rhoio matters with eporoeriara officials, ro discus* fair and raasoneblo alternatives. IA moating is scheduled with Connecticut officials far Qcrooar 29, >973; as yar no moating has bean confirmed with Louisiana officials. J 2. Now Jersey Regarding the New Jo'iay situation, EPA originally published a proposed transportation central a!an for ports of that state which was essentially a Rule-66 approach for organic solvent control. Wo nave teamed, however, that these provisions have bean modified, perhaps substantially, during the rule-making procase, NPCA currently is taking the necessary legal stops to preserve our right to testify, offer comments, and to have a fair hearing an the regulation currently being considered. As these matters develop and further information is available, it will bo lepertad. >s *2 iVif ' lJ-Sr':-ed* . -i>7 * - * r'l r.: 0007-SWP-036813 0007-SWP-000118128 -60. Poison Prevention Packaging Act -- Survey of "special-oocitsgiglaaui-e'les a* >cust>v On October 17th a Memorandum, with "Child Resistant Packaging Survey" srraened, -as 'orwarOed to all NPCA memoers. This is an effort -- oy 'no Associatin'! Packaging Camnittee -- *o abtain information on the industry's oresent and anticiooted requirements for child-resisranr oc;caging for those products now sjaject to "speeiol-oackaging" requirements unaer -'-e raison Prevention s9c95>; Act of expected to ce covered by standards already proposed and currently Being coniice-ea *ar ;:-ai DublTearion by the Consumer Product Safety Commission. Mermen ore urged to complete the aforementioned "Child Resisranr Packaging Survey ona return re NPCA Headquarters as soon as oracrical. This will provide guidance to assist Association s Packaging Committee in determining additional step* that may ba necessary ta orovide for r-e :ncui-ry t needs in this critical area in the near future. `See "L&L." Bulletins 14 and 15. . E. Consumer Product Safety Commission t. Produet hazard list issued The Consumer Product Safety Commission has released a comprehensive list of consumer product categories which, because of the threat of Injury ta the American public, ate likely ta be the subject of early action far development as product safely standards. (5ee "L4L" Bulletin No. 14.). The list (Consumer Product Hazard Index) is based on reports of injuries, associated with consumer products, reported by 119 hospitals nationwide participating in the National Electronic Injury Surveillance System (NEISS). Points and solvents are lumped together in this report, and ranked 23 out of a total of 369 product ratings. NPCA is attempting to obtain more details on this matter, particularly sinee "lead poisoning" cases apparently have been included in the total "Injuries* far the "paints and solvents" category. Aerosols are ranked 59 under the product description -- "Pressurized Container, Aerosol Cans." Again, the "injuries" have been lumped together, thus these related to aerosol "paints" cannot be distinguished from ether aerosol products. Commission Chairmen Simpson has stated that, while the agency will focus greater attention end resources on products appearing high on the list, it would be a mistake far manufacturers to conclude that products "near the bottom of the listing" would not also be the subject of studies leading to Hie develop ment ef product j rondoids. He challenged industry ta initiate actions ta develop end adept voluntary safety standards. 2. Spray adhaelvas ban continues The bait an certain spray adhesives (reported in "liL" Bulletin No. IB) remains effective while the agency (CPSC) continues to conduct a vary thorough Investigation of the matter. Information available to data indicates that na "caiaal connection between exposure .... end ehremesens carnage leading to genetic birth defects" yet has been confirmed. 0007-SWP-036814 0007-SWP-00011812 F. FHSA Regulation: recodified bv CPSC The Consumer Procucr Safety Commission nos revises ana recaaified tn regulcfioni in'Dleme":."g r1-* rederat hozaroeus Subsronces Aer. This aerion is Similar >o that reperred in "L&L" Bulletin No. ' 6 wirn respecr ro the sronoard) under the Poison Prevennon Packaging Acr.t The rHSA 'eguiatians -- formerly eanrained in Title 21 of the Federal Regulations, P:rr 'Si -- -av have been issues cs Part 1500 of Title 16, Cnaoter II, Code of Federal Regular'ons. -ecDCif.'::- o- was published in the Federal Regisrer on September 27, 1973 133 F.R. 27012-38); ona, since -a < requirements were aaded, the regulations oecome effective uoon date of oublicarisn. G. Federal Bill on Warranty Standards Fosses Senate Last month, the Senate paued S. 366, a bill designed to provide disclosure standards far written consumer produet warranties, ro define Federal eon rent standards for such warranties, and to increase me powers of the Federal Trade Commission (FTC) in this area. As stated in the resort by me Senate Commerce Committee, the purpose of the bill is to "improve the position of the consumer in the marketplace by making the Federal agency responsible for his economic well being (the FTC) mare effective and by delineating with specificity the duties which suppliers of consumer products assume when offering warranties or service contracts In writing an consumer products." The warranty provisions apply to all "consumer products" which ora defined os any tangible personal property normally used for personal, family, or household purposes and whieh costs the purchaser more thon five dollars. Soma of the specific provisions ora as follows: a. In ardor to moke more and clearer information available ro tha consumer, FTC is given authority to issue rales prescribing the manner and farm in which information about any written warranty it displayed. The rules may require the following to be clearly disclosed in the warranty: name and addran of warrantor, product or parrs covered, sraramant of what wananior will da in the event of defect and at whose expense, exesprions end exclusions, procedure to fallow whan making elaim under the warranty, eta., etc. b. Establishes uniform Fsdoral standards fist written warranties which are: to repair or roplaco any malfunctioning or defective product; within a reasonable time; and without charge. a. If a wmrasily meets the above standards and does not limit liability of the warrantor, it shall be designated as "fall (statement of duration)" warranty. 0007-SWP-036815 0007-SWP-0001 -3 - d. If 'he werronly meet* rhe roderel fonoars* bur Coe* 'limit llee!!>v =s D*'-n-a oy State law, than it mutt alio incluaa a statement, men at "liaoilirv for eaniaautnriol aamages, limited; ramady limitad ta fr repair or rplaeamenr wirnin a raaianaole ime, without ehorge." e. Warranties not meeting the Feaeral irandsrds mutt be designates in men manner os to clearly indicate the limited tesoe of coverage afforded. f. There is also a provision which prohibit* an express disclaimer of imolied warranties :f any written warranty is made. S. 356 had been referred to tho House interstate one Foreign Commerce Csmmirr-e for con sideration. That committee is alio considering several similar measures introoucea earlier in the House, the principal one being H.R, 20 (Mots, 0.-California}. Enactment of a lew in rhis area is anticipated, perhaps before the end of the year. Further significant developments will be reported as occurring. H. IRS Regulations -- "Full obsorprion" inventory costing Tho Internal Revenue Service published -- in the Federal Register an September 19, 1973 (31 F.R. 26184 - 26189) -- certain amendments of its regulations which will require the use of a "full absorption* method of Inventory costing for all taxpayers engaged in manufacturing or production oporations. It was stotod by the Commissioner of |R5 (net "suck rule* should simplify the tax; reporting for many Easinesses and eliminate the uncertainty and controversy of past practices.'1 Specific amend ments apply to sections 1.61-3; 1,446-1; 1,471-2; 1.471-3 end 1.471-11. While "full absorption" hat been qualified to some extent by the classification of expanses into throo categories, the new method does lake into cast e number of items that are not taken into account under either the "dircet east" or the "prime cost" method, nolthor of which can now bo mod. These three categories ere described briefly balm*: 1. Category 1 -- Those costs must bo included in inventety costs, caver utilities \such as heat, light and power), rant, indirect lobar and production suaerviiary wages, indirect materials and supplies, wncapitalized teals and eauipment, ami casts of quality control and inspection. 2. Category 2 -- These cast*, which are net to be included in inventory cost, covet marketing, advertising, soiling, and otKer distribution expenses, interest, research and other experimental expanses, lasses listed under section 165 af the Coda, percentage depletion In excuse of cost depletion, depredation end amortisation taken far federal Income lax purposes in races of tho amount taken in financial reports, Sncem trace attributable to income from the sale of inventory, pension contributions roprosonting poet services cast, and ganoid and administrative expense* and officers1 salaries incident in the manufacturer's activities as a whole. u9fe.-pj: m i* -V * .* V -V 0007-SWP-036816 0007-SWP-000118131 -0- Caugory 3 - These cast* may er may nor be included in inventory eosr eeaec!-g upon now they art treared in tne Financial reoorrsi, covtr 'axes otner --an .nesme axtl, depreciation shown in Financial reports and cost ceplerion, emoiovtt serer'i-s, costs attributable Fa strikes, rework labor, scrap and spoilage, factory sdminiirror,on expenses, affictn1 salaries end imuranct. Category 3 costs art includable or excludable from the computation of !"v*~'ariable casrt in accordance with the raxooyen' financial reporting rreatmtnr for such costs, but only if suen eat.--er is not inconsistent with generally acceptable accounting principles. w Liberal transition rules were established in the final regulations to encourage c*oov*rj ro c-arje tneir method of inventory costing. These who choose to switch to the "full absorption1' method voiunrer! , may make o special election by filing Form 3115 during the first 100 days of any taxaofe year beginning after September IB, 1973 end before September 19, 1975. Substantial benefits will ccerue -o moss taxpayers who make'rhe special election during the allowed transition period. As evident, this is e complex subject end, while o significant development, NPCA has nor attempred ro provide fvrthtr detail in this Bulletin because all manufacturers need to review carefully their presenr Inventory and accounting practices ond indicated changes with their own accountants and/or lex attorneys. jViohn M. Montgomery, General Counsel JMMtrw Attachment r^-asyBitg-.rr.:amms .wiiiajjiiiwiBiJLifviyw ~. ...V .*.* .v? v-/* S ;-v.. * - % 0007-SWP-036817