Document M4X1gZqoGDJ4LwaGEXNR8oexy

AGENDA JOINT MEETING OF MCA EXECUTIVE AND FINANCE COMMITTEES Tuesday, March 13, 1979 -- 9:00 - 11:45 a. m. Washington, D. C. 9:00 a. m. 9:00-9:05 9:05-9:10 9:10-9:15 9:15-10:15 0:15-10:30 10:30-10:40 10:40-10:50 10:50-11:40 11:40-11:45 11:45 1. Call to Order -- Chairman Henske 2. Minutes of Last Meeting -- B. M. Barackman 3. Financial Report -- G, C. Herrman 4. Appointment of Committee Me mbers -- B. M. Barackman 5. Report of Finance Committee on Preliminary 1979/80 Budget -- J, E. Burrell / R. A. Roland / G. C. Herrman BREAK 6. Report on Economic Impact of TSCA Study -- W. C. Krumrei 7. Report of Inter-Industry Task Force on Rail Trans portation of Hazardous Materials -- W. G. Simeral 8. Association Activities a. Chronic Hazard Labeling -- R. A. Roland b. Research into Options for Waste Disposal -- C. A. Gosline d. Response to Media on Disposal Site Problem -- R. A. Roland d. Report of General Counsel -- E. B. Frost e. Report of Special Committee on Chemical Incidents -- W. M. Stover 9. New Business 10. Adjournment TAB 1 2 3 4 5 CMA 062284 MINUTES OF JOINT MEETING MCA EXECUTIVE AND FINANCE COMMITTEES MCA Conference Room Washington, D. C. March 13, 1979 1. The meeting was called to order at 9:00 a. m. by Mr. Donley. Chair man of the Board, who presided in Mr. Henske's absence. There were present: Edward Donley, Acting Chairman Executive Committee J. Earl Burrell, Chairman Finance Committee William J. Ferracone Richard J. Hughes W. C. Krumrei Paul F. Oreffice Robert A. Roland William G. Simeral Charles W. Smith Alexander B. Trowbridge Bruce M. Barackman, Secretary Edmund B. Frost, General Counsel Gary C. Herrman, Treasurer By Invitation: *E. W. Callahan, Allied Chemical Corporation ^Donald M. Clarke, MCA Geraldine V. Cox, MCA *J. T. Estes, Allied Chemical Corporation S. L. Goldstein, Olin Corporation ;;:C. A. Gosline, MCA *J. J. Kenney, Jr., Union Carbide Corporation V. H. Peterson, MCA E. R. Poliak (SOCMA), Olin Corporation *C. L. Sercu, The Dow Chemical Company John E. Slavick, MCA William M. Stover, MCA *part time 2. Minutes of the February 13, 1979, Meeting The minutes of the February 13 Executive Committee meeting, as distributed, were approved. 3- Financial Report Mr. Herrman stated that the most recent |tf^ncial report would be transmitted along with the minutes of the meeting, report will show that for nine months of this year, MCA has received CMA 062285 2- - revenue of $4, 431,400 and disbursed $3, 608, 800 resulting in an excess of revenue over expense of $822,600. On February 28, 1979, MCA had total assets of $7, 750, 800 of which $4, 624, 600 was restricted. It was pointed out that although the budget documents as distributed at the meeting indicated a projected deficit for the current year of $905, 300 -- the final cash basis deficit may be less, due to time lags in receiving, processing and paying expenses incurred under the various research and consulting agreements. This problem will be resolved in the forthcoming year when MCA shifts to an accrual basis for financial reporting. 4. Committee Appointments Dr. Julianne H. Prager, Minnesota Mining and Manufacturing Company, was appointed to the Patents and In formation Retrieval Committee to fill the unexpired term of Mr. John Erickson, who has withdrawn. 5. Report of Finance Committee on Preliminary 1979/80 Budget Mr. Roland referred to Book I, Preliminary Budget Request for the Fiscal Year Ending May 31, 1980, and Book II, Documentation of Internal Program and Priority Review -- both previously mailed to the Executive and Finance Committees. These constitute a financial management plan for the Asso ciation and form the basis for the final proposed budget to be presented to the Executive Committee and the Board at the April meetings. Mr. Herrman reviewed the preliminary budget request for fiscal year 1979/80 with particular reference to the revenue and expense summary by line item, Exhibit A; described projections through fiscal year 1983/84; and discussed alternates considered in the level of dues required to fund the budget which led up to the recommendation for an 85% dues increase to meet present commitments, restore depleted reserves to the 50% level over five years, and provide a measure of flexibility in future programming. Mr. Burrell discussed the Finance Committee review, with staff, of the budget proposal, with emphasis on the background for formulation of Book II, In performing the detail review of Book II, several areas for future improvement in MCA financial management were noted and dis cussed by the committee. Examples of these areas included the costing and funding of subscribed special projects, the costing and pricing of pub lications, the level of meeting registration fees, capitalization of assets, and the cost of present and future office space. It was left that these and other areas would be examined further by the MCA Finance Committee. A significant conclusion that came of this review in looking at Book II and Book I is that the primary request for funds is coming from standing committees of MCA. To the best of the Finance Committee's ability to judge, it appears that these Committees are responding to the charter that was laid CMA 062286 3 -3- down for them by the Executive Committee and Board. In fulfilling this charter, the committees are exercising their judgements as to the level of spending required by the nature of the problems in their respective areas. This in turn generates requests for MCA manpower and funds re quired to support the level of committee activity. The Finance Committee felt that Book II reasonably defines the scope of work of the various committees, but that the overall judgement as to the merits of the program should be left to the Executive Committee. The Finance Committee concluded that a $7. 5 million level of ex penditure is reasonable if the programs presented are approved; the pro jections through fiscal year 1983/84 are also reasonable, based on a $7. 5 million level of expenditure; and that this level of spending for fiscal year 1979/80 would require a dues increase of 85%. Mr. Donley urged Executive Committee members to study the documents presented and contact staff during this next month for answers to any questions that may arise. The proposed budget will be presented for approval at the April meeting; staff was asked to consider a stepped increase as an alternate dues schedule for presentation at that time. Mr. Burrell suggested two things for consideration during the budget review -- the appropriateness of the level of expenses generated by the standing committees' activities; and the desirability of offering member companies an opportunity, for the first year only, to elect to pay dues in two installments in order to ease possible company budget problems. It was also suggested that another source of revenue which may be considered in the future is to fund Chemtrec by assessment based on member company shipments rather than out of dues as is the present practice. 6. EPA/AIHC Meeting February 12, 1979 Mr. Krumrei, Chair man of the Ad Hoc Committee of the Steering Committee, AIHC, reported on the results of a meeting with Mr. Costle, Chairman, Regulatory Council and Administrator, EPA. Representatives of AIHC and EPA participated. Mr. Costle expressed concern about the cost of testing, particularly of low volume chemicals, its impact on the economy and its effect on innovation. He invited recommendations for testing which would lower costs and still provide a reasonable degree of safety. In the national cancer area he said they didn't want to stipulate zero risk and welcomed a dialogue with industry on points of difference. Mr. Jellinek referred to MCA's economic impact analysis study of TSCA, saying it is the only one they're aware of and that they would like to use it if MCA would improve its credibility by using outside auditors and by adding people from outside the chemical industry to the group planning CMA 062287 -4- and controlling the study. He also noted an increasing adversarial role on MCA's part and suggested meeting with MCA to develop ways to work better together in resolving issues. During Executive Committee discussion it was agreed that meetings between MCA and EPA would be desirable. Mr. Roland was requested to workup a program and propose timing and participants for such meetings. Mr. Roland reported on the TSCA economic impact study placed within NERA. He expressed concern with resistance being met from some company representatives in CRAC who have said they probably won't participate in the study. An attempt will be made at upcoming CRAC meet ings to obtain a renewed participation commitment. Market testing of final questionnaire is expected by May 15. Without adequate member company sampling, the report would lack credibility. To ensure participation in the survey, Mr. Roland recommended sending a letter to Executive Contacts communicating the Executive Committee's unqualified endorsement of support of the study. He also recommended, in order to secure EPA's participation as a partner, that a toxic substances economic impact study task group meet with Mr. Jellinek in connection with the study to work out an auditing function and outside participation in management of the project, subject to Executive Committee approval. Following discussion, both recom mendations were approved. 7. Report of Inter-Industry Task Force on Rail Transportation of Hazardous Materials Mr. Simeral reviewed briefly his letter to the Executive Committee dated March 6, 1979, Exhibit B. The recommendations at the bottom of page three and the top of page four were approved. 8. Association Activities MCA Wins P/R Award Mr. Roland announced that MCA has won the First Prize in the category of External/Internal Association Public Relations in the American Society of Association Executives 1979 Idea Fair. This was based on Peggy Walton's consumer in formation program which provides opportunities for audio and video taping of chemical industry experts at MCA-arranged facilities at conventions of American Women in Radio and Television and National Association of Farm Broadcasters; and offers special taped inter views to extension home economists. 0 Association Name Change The Executive Committee, and sub sequently the Board at its January meeting, approved the name "Chemical Manufacturers Association" (CMA) subject to a vote of the membership. Mr. Roland advised that to date 73% of the members CMA 062288 "5* have voted. 68% of the members have voted in favor of the name change. 10 members have voted against. In the absence o; a strong objection, the implementation of the name change ar_; logo will proceed at a deliberate pace. Announcement of results of the vote will be made at the Annual Meeting. o Chronic Hazard Labeling Mr. Roland's report is attached a; Exhibit C. The matter is expected to come before the Executive Committee and Board in detail at the April meeting. We have received from one member company strong opposition to the idea of chronic hazard labeling information. Their views have been considered. Any one having comments again was urged to submit them. o Solid Waste Disposal Distributed to those present was a draft of a study by a task group of the Environmental Management Commizcee (EMC) which will form the basis of a report following review by that committee. This was in response to a request of the Executive Com mittee to the EMC to look into waste disposal options. The remarks of Mr. Callahan, Chairman of the EMC, relating to that report are attached as Exhibit D. He concluded with a request for comment; on direction EMC plans to take. o Response to Media on Disposal Site Problem Mr. Roland stated that we have no P/R effort we can put together at this time because there is very little positive that we can say. First we must have a positive program to support. This will arise from such recommenda tions as contained in Mr. Callahan's report and Mr. Stover's report, to follow, on the Special Committee on Chemical Incidents (SCCI). After policy decisions are made, based on the work of the EMC and the SCCI we can go forward with a communications program. o Report of Special Committee on Chemical Incidents Mr. Stover's report is attached as Exhibit E. He reviewed the type of legislative proposal being readied, as well as the various congressional hearings underway or planned concerning problems relating to public exposure to hazardous materials. He requested the Executive Committee to re view this week the outline and documentation supporting it (Exhibit E) and advise Mr. Roland by phone or wire no later than the end of Friday, March 16, whether they support or don't support the conclusions o: the outline. MCA plans to contact the Senate Environment and Public Works Committee to secure a position at joint hearings on waste disposal scheduled for March 28-29. In preparation for these hearings, a meet ing of the SCCI will be held Monday, March 19, hence the short dead line to receive the views of the Executive Committee. If response to the EMC proposals can be made at the same zime, that would be welcome. CMA 062289 6~ o Report of General Counsel Mr. Frost's report is attached as Exhibit F. He updated item 8 of his report, saying that MCA's comments on work practice standards being developed by EPA to control general hydrocarbon emissions has been coordinated with AIHC whose counsel worked with us in preparing the comments which will probably go out today. In regard to item 10 of his report concerning TSCA Section 5 pre manufacturing notification rules, he noted that some small companies are not in agreement with the short form reporting proposal MCA is preparing to offer in place of the proposed EPA regulations. A difference of opinion exists concerning the point at which the volume of production of a chemical will trigger additional reporting. During discussion of this matter it was recognized that the MCA CRAC Com mittee is the appropriate forum in which to effect an accommodation of the differing views. At the same time the Executive Committee ex pressed its concern for a proper resolution of this matter. Bruce M. Barackman Secretary Edward Donley Acting Chairman Executive Committee CMA 062290 0 EXHIBIT A MANUFACTURING chemists association REVENUE AND EXPENSES SUMMARY RY LINE ITEM PRELIMINARY BUDGET FY 79/80 REVENUE: Amended FY 78/79 Budget Projected FY 78/79 Actual Rosulil Preliminary FY 79/80 Budget Membership Fees Investments - General Operations Investments - Subscribed Research Publication Sales Meetings (net of expense) Overhead Reimbursement - Subscribed Projects $3,615,000 250,000 250,000 100,000 130,000 180,000 TOTAL REVENUES $4,525,000 $3,615,000 326,400 348,600 103,500 132,000 200,000 $4,725,500 $3,945,300 305,000 250,500 153,700 129,000 250.000 $5., 033.500 PROJECTED FUJI v REQUIREMENTS FY 80/81 FY 81'82 FY 82/83 FY 33/84 Projected P ro iected t Prolected P~ -ected ! $4,813,200 $4,228,000 300,000 250,000 179,000 102,700 $4,530,100 300,000 j 250,000 1 229,300 ; 106,100 I 300,000 250,000 244,600 91,400 $5,119,000 520,000 1:0,000 :t5,ooo $7,300 250,000 $5,309,700 1 250,000 ! 250.000 j$5,665,500 $5,949,200 250,000 $6,181,300 CFNERAL EXPENSES: Salaries $2,131,300 Employee Benefits 425,700 Travel 6 Entertainment Dues,Subscriptions & Publications 113,200 32,500 Meetings & Workshops 23,100 Printing & Publication 272,100 Postage 112,500 Public Relations 76,000 Rent & Premises Expenses 144,600 Fumiture&Equipment purchases ^^kmOuter.Audit&Investment Services 24,900 13,500 ^leohone & Telegraph 84,400 Supplies & General Office Expense 89,500 Taxes & Insurance 478,600 Miscellaneous 5,000 Building Relocation(incremental costs) -o- TOTAL GENERAL EXPENSES $4,026,900 $2,206,100 419,400 124,000 34,000 23,100 257,700 131,500 66,000 159,000 40,800 13,500 96,100 107,100 328,900 2,400 -0- $4,009,600 $2,696,700 523,200 160,900 45,100 60,000 377,400 149,300 96,500 218,000 56,400 22,500 128,000 129,300 373,900 4,000 *0- $5,041,200 j $3,018,900 624,900 178,700 49,900 54,800 401,800 163,100 94,600 243,700 48,300 24,300 139,900 141,900 409,700 4,900 185,500 $5,784,900 $3,262,300 674,900 193,000 54,000 59,400 434,100 177,500 102,100 263,200 52,100 26,200 151,000 153,200 442,600 5,800 171,800 $6,223,200 S3,523,500 728,900 208,400 58,200 64,300 469,000 193,400 110,400 284,200 56,400 28,300 163,200 165,500 477,900 5,600 185.600 $6,722 ,800 $3,805,200 787,100 215,000 63,100 69,500 536,600 208,000 119,100 306,900 61,100 30,600 176,100 178,700 516,100 7,700 200.500 $7,261,300 RESEARCH 6 LEGAL EXPENSES: Legal Fees & Expenses Research & Consulting TOTAL LEGAL & RESEARCH $ 915,000 560,000 $1,475,000 $ 943,000 678,200 $1,621,200 $1,368,000 1.102,000 $2,470,000 $1,545,000 1,121,000 $2,666,000 $1,565,000 1.125.000 $2,690,000 $1,545,000 1.110.500 $2,655,500 $1,535,000 1.111,500 $2,616,500 total expenses $5,501,900 $5,630,800 $7,511,200 $8,450,900 $8,913,200 $9,378,300 $9,907,800 Excess of Expenses over Revenue $ (976,900) $ (905,300) $(2,477,700) $(3,141,200) $(3,247,700) $(3,429,100) $(3,626,500) p [^PERSONNEL complement 93 99 109 116' 116 116 116 CMA 062291 Exhibit 1 ' '*'lU 5 l$Q.' I.du Pont de Nemours 5, Company ***(] Wilmington, Delaware i9896 se:niOR VICE PRESIDENT March 6, 19 ~!) TO: MCA EXECUTIVE COMMITTEE MEMBERS John M. Henske, Chairman Duncan J. MacLennan William H. Bricker Paul F. Oreffice J. Earl Burrell Robert A. Roland Edward Donley Tom K. Smith", Jr. Richard J. Hughes Jack B. St. Clair William C. Krumrei Alexander B. Trowbridge FROM: MCA REPRESENTATIVES TO INTER-INDUSTRY TASK FORCE ON RAIL TRANSPORTATION OF HAZARDOUS MATERIALS I plan to recommend for action at our meeting on Marc:. 1 j those items listed at the bottom of page 3 and the top of page 4. The Task Force plans to terminate its work in June, IS79. A final report will be issued at that time. There are several matters that should receive continuing attention from the MCA. These matters are discussed briefly below and are followed by a recommended procedure to deal with them. (1) Training of Emergency Response Crews - The Task Force has developed an introductory training course for use with small emergency groups such as volunteer fire companies. It has been thoroughly tested and receives good marks from the people trained as indicated by a post-evaluation questionnaire. The DOT has also reviewed the program and agrees that it has merit. The dissemination of the program has been planned as a joint effort of shippers and the railroads. The direct cost of the program will be $200,000 over a two-year period. We anticipate that AAR will pay one-half. We will solicit shippers for the other $100,000. Program direction and coordination will be done jointly by a designated person from AAR and another from MCA. Shipper companies and railroads will be asked to provide people to help in distributing the program. No MCA budget funds should be required. (2) Accident Response System - AT&T has made preliminary recommendations for upgrading the communications system of which CHEMTREC is the central point. On the afternoon of March 13, their proposal will be presented in detail, together with cost estimates. CMA 062292 MCA Executive Committee Members 2 March 6, 1979 It now appears that in the first phase of upgrading, the principal additional expense to MCA will be to provide CHEMTREC with a hard copy capability so that accident information can be relayed to shippers and others via a hardcopy transmittal over telephone lines . CHEMTREC will probably implement this first step in the next several months. Subsequent steps will involve cooperation with railroads and the DOT and the addition of further hardware. Che planning and coordination of this work should be with MCA. (3) Safety System Analysis - The Task Force has made some progress in analyzing accident data to identify areas for improvement. Continued effort is needed. The DOT has an active program. It has been proposed that an ad hoc group follow up. The group would have representatives of AAR, MCA, and the Railway Progress Institute (Car Manufacturers Group). (4) Railcar Maintenance Procedures - One of the groups formed under the Task Force is an ad hoc group of shippers, railroad maintenance officers, and railcar manufacturers who have dealt with the problem of car maintenance. This group may choose to continue its meetings since much useful exchange of information has occurred. MCA should foster this activity so long as the results merit continuation. (5) Mutual Aid/Mutual Assistance - Many shippers are reluctant to provide expert assistance *at the scene of an accident, especially if none of the materials involved came from rhe shipper. Their principal concern is legal liability. Efforts 're in progress to develop an appropriate solution to this problem. The MCA should take the lead on this matter and maintain close contact with other industry associations, especially the Fertilizer Institute and NLPGA. Once this problem has been dealt with, a more comprehensive set of Mutual Assistance agreements should be sponsored by MCA. (6) Emergency Response Manuals - There are currently many different source books published by a variety of public and private groups. One very important publication is the so-called "Red 3ook" used by the railroads and published by AAR. We have arranged for MCA to be represented in the future when modifications of the "Red Book" are developed. Further, we are indicating to DOT our desire to participate in an advisory group to assist the DOT in developing a universal manual that would replace the multi plicity of material now in use. i CMA 062293 MCA Executive Committee Members 3 ch - r (7) Marking of Tank Cars - The MCA Distribution Committee has already agreed to follow up on this matter relating tc the of names of products on selected tank cars. Each of the above items deserves the continuing attention of MCA. In addition, CHEMTREC is universally acknowledged as a vital link in accident response and deserves the continued sponsor ship of MCA. It is not yet clear just how rapidly or at what ccst CHEMTREC should be upgraded in capability, but this matter will come into sharper focus in the next few weeks. In any event, it is our recommendation that the re sponsibility for future efforts in each of these matters, inducing the overall operation and planning for CHEMTREC, should properly be placed with the MCA Distribution Committee. While it should be left to that Committee to decide how best to organize to assume these reponsibilities, it seems clear that one permanent subgroup will be needed to deal with CHEMTREC and probably one or more task groups to deal with the other matters. We will conclude our efforts with publication of a report in June. It is our recommendation that the President of MCA take steps to have regular meetings with the President of AAR in the future. Items for the agenda of such meetings should be developed from the various activities of the MCA Distribution Committee which involve mutual interests with the railroads . These items would include most of those listed above until they are complete, updating on the CHEMTREC operation including any problems in implementation of planned improvements, and activities of the AAR Tank Car Committee on which an MCA representative serves. We propose for action by the Executive Committee the following: The Executive Committee of MCA accepts the recommendations of the Inter-Industry Task Force on Rail Transportation of Hazardous Materials as follows: (1) The Task Force is to be discontinued as of the publication of its final report expected about June, 1979. (2) The various unfinished program items of the Task Force are referred to the MCA Distribu tion Committee for follow-up and completion. CMA 062294 MCA Executive Committee Members 4 March 6, 1979 (3) The CHEMTEEC operation of the MCA is to be under the general jurisdiction of the Distribu tion Committee. That Committee is requested to assume responsibility for future planning and overview of the CHEMTREC operations of MCA. (4) The President of MCA is requested to establish and maintain frequent liaison with the President of AAR and to convene appropriate meetings of shipper and railroad executives in the future. Such meetings would be directed towards maintaining good communications with the railroad management group and reaching resolution of problems of mutual interest. WGS:kgk W. G. SIMERAL Cochairman Inter-Industry Task Force on Rail Transportation of Hazardous Materials CMA 062295 Exhibit C CHRONIC HAZARD LABELING As recommended by the Occupational Safety and Health Committee, tentative guidelines for the incorporation of chronic hazard infor mation on labels in safety data sheets, prepared by the Task Group on Chronic Hazard Labeling, were used in a trial procedure in drafts of three revised safety data sheets: SD-19 Dimethyl Sulfate, SD-43 Acetaldehyde and SD-44 Chromic Acid. Member company users, member company manufacturers and members of the Occupational Safety and Health Committee were ashed both to review the drafts and to give particular attention to the tentative guidelines and their applica tion in the construction of the labels. None of the 65 responses received to date recommend that chronic hazard information given in the text of a safety data sheet be ex cluded from a label. Eight companies responded with suggestions for changes in the guidelines or in the safety data sheet description of chronic effects. Changes recommended for the guidelines concerned either the use of more detailed definitions of the criteria for chron ic effects or changes in the phrases used in the guidelines or in the label statements. Comments on the safety data sheet material ranged Ifrom suggesting less literal reports of chronic effects taken from *he literature to urging that "critical level exemption" statements be developed to describe exposures below which chronic effects would be absent. All suggested changes and comments have been considered by the Task Group.on Chronic Hazard Labeling. Recommendations have been prepared for review by the Occupational Safety and Health Committee. At its meeting on March 15 this committee is expected to develop final recommendations to be presented to the Board of Directors at its meeting on April 10. Action required: None, for information only. - 3/13/79 CMA 062296 SOLID WASTE DISPOSAL jcxhibi: D Purpose: To provide an interim report on the technological alternative for hazardous waste disposal. Qve rview: (1) As we investigated technological alternatives we found other factors had to be considered before we could reach rational conclusions. Tor example: (a) If acceptable sites are not available to practice proven technology -the fact that safe technology exists is not a viable solution to the waste disposal problems. (2) We must maintain the viability of all the various technologies so we may choose the best and safest disposal method for individual circumstances. (3) We must proceed carefully to avoid duplicating the nuclear energy ex perience. The government has failed to resolve the nuclear waste problem after 30 years of effort and has paralyzed the industry. (4) The report you will receive today is a first rough draft which we are work ing to tidy-up. L TECHNOLOGY: (1) Technology exists to dispose of hazardous wastes in an environ mentally safe manner. Methods include: (a) Process related -- to reduce or alter hazardous character at source. (b) Dispersed -- landfarm, ocean, deep well, etc. (c) Containment -- fixation, encapsulation, vaulting, landfill. (d) Treatment -- incineration, biological, etc. (2) Applied research is desirable to maximize operating continuity, equipment life, monitoring storage and material handling. (3) Two technologies warrant additional industry support: (a) Incineration of waste at sea (b) Engineered storage (vaulting) CMA 062297 2- - Re commend a tio ns: (1) MCA should not fund basic research for hazardous waste disposal at this time. (2) MCA should explore a joint program with EPA to further the use of incineration at sea and vaulting. Action: (1) EMC will prepare a proposal for Executive Committee. II. POLITICAL-LEGISLATIVE CONSIDERATIONS (1) We believe actual or potential threats from (a) Oil spills (b) Hazardous chemical spills (Section 311) (c) Solid waste sites require different steps to avoid future problems and correct recently recognized problems and redress injury. Recomme nd a tio ns: (1) MCA support legislation that treat oil spills and hazardous chemical spills separately -- and to establish separate "super funds" (2) Urge EPA to implement 18 month study of Section 311 type hazardous substance spills as required by the 1978 amendments (3) Support RCRA amendments for: (a) EPA inventory of old sites (b) Funding for reclamation to be assessed on waste disposer (c) Provide federal assistance to States for new waste disposal sites (d) Redress of private/public injury Action: (1) EMC will meet with Thomas C, Jorling - EPA Deputy Administrator, Water - to urge industry knowledge be incorporated into the study. CMA 062298 II. SITING (1) Need new land disposal sites (2) Difficulty in obtaining new, or continuing to operate licensed exist ing, sites is based on. local pub'lic/political opposition (3) After 30 years **- government has not yet resolved nuclear waste disposal problem (4) State of Minnesota had to return several million dollars in grant funds to set up a regional disposal site when local residents stopped the program Recommendations: (1) MCA evaluate a joint industry/government program to site, build and operate a regional waste disposal facility to prove its safety and worth Quasi-publie or industry-government consortiums may be useful ideas Action: (1) EMC develop a specific proposal for Executive Committee considera tion (2) This proposal would serve as a vehicle for discussions with appropriate business leaders and government officials IV. RECLAMATION OF FAILING SITES (1) We have the technology to identify failing sites (2) We have the technology to mitigate the damage (3) Reclamation can be costly and extend over long periods of time Recorinmendations; (1) MCA consider formation of a consulting team that would be avail able to investigate failure sites and propose action programs for reclamation. Group could be similar in nature to Chemtrec. Action: (1) EMC develop a specific proposal for Executive Committee con sideration. Problems associated with liability and cost recovery would be addressed. CMA 062299 - 4V. PUBLIC RELATIONS PROGRAM (1) We believe a strong program to educate the general public on the need for safe waste disposal facilities is needed. CMA 062300 Second Interim Report Special Committee on Chemical Incidents Committee Activities The MCA Special Committee on Chemical Incidents continues to pursue development of recommendations for response to legislative proposals cor.* cerning problems created by public exposure to hazardous materials. The Special Committee recommends MCA adopt a policy which advocates creation of a funding mechanism to clean up abandoned waste disposal sites under specific conditions and with safeguards outlined in the following series of principles, and more fully detailed in the referenced attach ments . 1. Spills of hazardous substances and spills of oil are significantly different and merit different legislative treatment. In the past, legis lative proposals have linked oil and chemical spills, recommending iden tical sanctions and response mechanisms and blurring important physical, scientific, commercial and financial distinctions. MCA should oppose such linkage. (See Attachment 1) 2. Problems resulting from spills of hazardous substances are signifi cantly different from those which result from improper land disposal, and therefore merit different legislative treatment. "Superfund" bills which address both spills and disposal fail to properly recognize such critical distinctions as purity versus amalgamation, random location versus spe cific site, surface water contamination versus leaching, and drastically differing potentials for impact on the national economy. MCA should oppose such bills. (See Attachment 2) 3. The problem of spills of hazardous substances is adequately addressed by existing law (Section 311 of PL 95-217, as amended, and related sec tions) and new law to control spills is unnecessary. MCA had an active and constructive role in the evolution of this body of law, which now provides: a fund of $35 million to clean up and restore damage from spills; penalties for violations; recovery of fund monies from wrong doers; defenses which suggest certain societal responsibilities; in centives for safe handling, prompt reporting and immediate cleanup; governmental action when spiller is unknown or does not act; an emergency fund where public health is endangered. MCA should oppose unnecessary new law in this area. (See Attachment 3) CMA 062301 2 4. Public policy must carefully distinguish between its treatment of disposal practices and problems before enactment of RCRA, and those after enactment. Enactment of the Resource Conservation and Recovery Act, PL 94-580, in 1976, created for the first time a system of controls over waste disposal: EPA issues permits for sites and oversees their safety; a manifest system ensures cradle-to-grave control of hazardous wastes; identifies disposers and the character of wastes; mandates fi nancial responsibility on the part of operators. Throughout the years prior to enactment of RCRA, society as a whole engaged in a variety of land disposal practices -- sound and unsound -the results of which are only now being fully realized. Consideration in development of public policies and remedies must therefore be given to the scope of the problem, the many elements of public responsibility which exist, the evolution in scientific capability and disposal stateof-the-art, and difficulties in affixing liability in a just fashion. MCA should seek to maintain appropriate distinctions between ''pro spective" and "retrospective" disposal policies. 5. A funding mechanism should be created to eliminate harm from abandoned waste disposal sites which are hazardous. Carefully focused and appro priately limited new law is needed to address problems created by dis posal practices of the past. (See Attachment 4) The fund should: A. be derived in some significant degree from public monies, as well as from the private sector, so as to reflect the breadth of societal responsibility for creating the problem. (See Attachment 5) (NOTE: the SCCI is continuing to study specific funding concepts and mechanisms with the intention of developing a recommended approach which the chemical in dustry can advocate.) B. be limited in its application to eliminating harm caused by abandoned disposal sites and preventing additional harm. (NOTE: restor ation of sites to a pristine state, or repair of broad-scale ecological damage is not an appropriate usage of the fund. The SCCI continues its study of this area with the intention of making further recon^^ndations.) C. have an upper limit, an annual payout limit and a statutory life-span. D. pre-empt the application of conflicting or overlapping state laws. (See Attachment 6) CMA 062302 3 Should the Congress create a superfund with application beyond abandoned waste disposal sites, the following principles should be observed. 7. Limits and circumstances of liability must be carefully structured. New law should not operate to penalize disposers for incidents beyond their control, to make adequate insurance unavailable, or to otherwise impinge on their rights or options. (See Attachment 7) 8. New law must avoid the concept of strict liability. Such a departure would be unfair, unworkable, alter traditional Federal/state relationships and impede the evolutionary processes of our judicial system. (See Attachment 8) 9. Subrogation rights must not be included in a Federal compensation plan. Such intervention by government would proliferate claims, inter fere with tort law recovery, inflate the Federal bureaucracy, unwisely inject new considerations into settlements and is, in fact, unnecessary, (See Attachment 9) MCA EC - 3/13/79 CMA 062303 Attachment 1 IN TERMS OF "SUPERFUND" LEGISLATION, OIL SPILLS SHOULD BE TREATED INDEPENDENTLY FROM SPILLS OF HAZARDOUS MATERIALS The term oil refers to a uniform group of products whose physical quali ties are relatively constant. Oil when spilled will normally float on water, will be predictable in dispersion and will be physically contain able. Oil is removable under normal circumstances. On the other hand, whether a chemical will be a cause for concern when spilled depends on a variety of unique circumstances -- the exact chemical spilled, the amount spilled, the unique physical characteristics of the chemical, the hazards associated with such chemical, the nature of the receiving water. Removal or mitigation may be unnecessary or impossible. There are also great differences in transportation patterns. Over eight million barrels of oil are imported to this country on a daily basis. Volumes transported are very large and carriers are often foreign -- flag vessels who may not have sufficient insurance or assets to cover potential lia bilities resulting from a catastrophic accident. Foreign vessels may be difficult to hold liable because of diplomatic complications. These particular problems may dictate creation of a larger fund than Section 311 currently contains. As a general rule, chemicals are shipped in far smaller quantities than oil and most movement and potential for spills occurs on land where dis persion and removal are not significant problems. Even with water car riage the accidental spiller is identifiable and liable for costs of any necessary cleanup and mitigation. Although Section 311 of the Clean Water Act controlling hazardous spills has not been operational in the past, that program will go into effect this Spring and we believe 311 will provide adequate incentives for safe operation. If spills do occur, the spiller has sufficient financial incentives to react quickly and the legal responsibility to report the spill promptly. In the event the spiller does not initiate cleanup the U. S. Government or a state can respond and recover costs of cleanup from the spiller. The problem of intentional spills (i.e., midnight dumping, vandalism) is not a 311 spill but rather improper disposal and should be treated in the same fashion as abandoned sites or closed sites where liable parties are not identifiable. MCA EC - 3/13/79 CMA 062304 Attachment 2 In terms of "superfund" legislation, solid waste disposal incidents should be treated differently from chemical spills under Section 311 of the Clean Water Act _ Chemical spills normally involve "pure" substances as products in commerce. As such, they are closely regulated by DOT and at least one other Federal agency (e.g. EPA, FDA, CPSC, FTC) in terms of purity (quality), packaging, manner of transport and labeling. As pure substances, they normally will have "pure", definable effects when spilled into a receiving water In contrast, solid waste in many cases will be an amalgamation of a wide variety of waste products, The waste will not be pure by any means and will not have such easily defined environ mental effects as with the spilling of a pure chemical product. Solid waste is concentrated at individual sites where collected and generally found in large volumes. Spills occur au random sites in finite quantities, with relatively small volumes in volved in each instance. Consequently the potential for envi ronmental impact and the problems associated with containment or mitigation arising from a spill is considerably less than in the case of solid waste incidents. From an environmental standpoint, the concern in most cases with solid waste will be with respect to leaching potential and under ground water contamination. In contrast, chemical spills occur on surface waters. The mitigation techniques and remedies for each situation necessarily will be very different. Because of such differences, Congress chose at the outset to deal with solid waste and chemical spills in different statutes (RCRA and the FWPCA, respectively). There is no sound reason to treat these very different matters under one legislative scheme. In addition, the scope of spill superfund legislation related to "hazardous" substances identified and designated by EPA under Section 311 of the Clean Water Act (as amended) will necessarily impact on fewer industries than such legislation concerning solid waste disposal. The generators of solid waste comprise a broad spectrum of United States industry, requiring a broader funding base. MCA EC - 3/13/79 CMA 062305 Attachment 3 NEW LAW TO CONTROL SPILLS AND PROVIDE FUNDS FOR CLEANUP OF HAZARDOUS SUBSTANCES IS NOT NEEDED In the Second Session of the 95th Congress the Senate attempted to establish a superfund mechanism for response to spills of hazardous materials. At that time, regulations im plementing Section 311 of the Clean Water Act designed to im plement the spill cleanup program were enjoined by a Federal district court. The court subsequently ruled that EPA had failed in its attempt to identify harmful quantities of hazar dous substances in conformance with the Act. As a result, the procedures for assessing penalties and recovering costs of cleanup incurred by the U. S. Government were invalid. Only the spiller, on a voluntary basis, or the revolving fund under Section 311(k) could provide monies for mitigation and cleanup of spills. EPA had no recourse against liable parties for civil penalties or cleanup expenses undertaken by the govern ment. As such, the Senate Committee report (95-370) accompanying S. 1952, "The Clean Water Act of 1977" stated that most of the $35,000,000 appropriated for Section 311(k) in 1970 had been expended on both oil and hazardous substances spills. The 1977 amendments to the Clean Water Act reauthorized the appropriation to Section 311(k) such sums as may be neces sary to maintain the fund at a level of $35,000,000. In ad dition, legislative repair of Section 311 during the closing days of the 95th Congress will permit the 311 spill program to operate for the first time by the Spring of 1979. EPA will be able for the first time to collect penalties for violations and recover expenses for cleanup and restoration except when the spill results from: an Act of God, an act of war, negligence on the part of the U. S. Government or a third party, or where full recovery cannot be made because of limitation of liability or exhaustion of spiller's financial resources, which ever comes first. Each of these defenses suggests a societal responsibility and Federal revenues for cleanup have been authorized under Section 311(k). Section 311 provides incentives for safe handling of hazar dous substances and prompt reporting of spills. It encourages spillers to clean up immediately, and allows the Government to act when the spiller does not or is unknown. Currently the Section 311 list contains designations of 299 hazardous sub stances. However, the Administrator is directed in Section 311(b)(2)(A) to develop, promulgate and revise the list of elements and compounds which present an imminent and substan tial danger to public health or welfare. CMA 062306 Attachment 3 Page two Nothing in Section 311 of the Clean Water Act affects or modifies the right of a person to pursue any legal recourse for damages caused by spills of hazardous substances. BACKUP AUTHORITY IN THE CLEAN WATER ACT Should any substance including those listed under Section 311 present an imminent or substantial danger to public health or welfare caused by its release into the enviornment Section 504 of the Clean Water Act allows the Administrator to prevent, limit or mitigate the effects of that release. Section 504(b)(2) authorizes such sums as are necessary to maintain a fund for emergency assistance at $10,000,000. If the emergency is caused by a discharge subject to Section 311, monies expended under Section 504 are recoverable under Section 311(g). Cost of cleanup for emergencies caused by violations of Sections 301, 306, 307, 402 or 403 of the Clean Water Act are recoverable under Section 309, Federal Enforcement. MCA EC - 3/13/79 CMA 062307 Attachment 4 TREATMENT OF ABANDONED HAZARDOUS WASTES LANDFILLS BY CREATION OF A FUND FOR MITIGATION AND CLEANUP There are many abandoned landfills in the United States which may contain hazardous materials. This unsatisfactory situation has been created by common practices which society has employed throughout the nation's his tory. In general, these conditions have arisen from ignorance of poten tial damage and not as the result of criminal neglect. Our society has only recently come to realize some of the problems resulting from the commonly accepted disposal technology of previous years. It would be inappropriate, therefore, to develop a system that unduly penalizes or singles out elements of society to bear the burdens of correcting dis posal practices of the past. A broad-based tax supplemented by state and Federal revenues should be used to generate funds to aid in the cleanup of dangerous landfills when there is no clearly responsible party to do so. Coverage should include disposal sites where more than one contributor has been involved and it is impossible to determine actual contribution levels of each disposer. The fund should also cover illegal disposal or "midnight dumping" where the dumper escapes detection or if apprehended, has insufficient assets to pay for cleanup. A. Uses of the Fund: Non-RCRA permitted sites only 1. Mitigation and cleanup to stabilize the site to eliminate imminent hazard to public health and the environment Examples -- - leachate entry into waterways aquifers or populated areas - toxic fumes impacting populated areas 2. Analytical work to determine the extent and nature of the imminent hazard and to assure continued containment after stabilization Examples - on-site testing as necessary to determine the presence of hazardous materials - testing of waterbodies and aquifers to detect migration of suspect materials - annual gas monitoring survey from previously identified sites CMA 062308 Attachment 4 page Two B, potential Uses of the Fund Which Are Not Appropriate 1. Ecological and environmental restoration 2. Personal injury and third party damages 3. Research grants to study this or other problem areas 4. Post-RCRA permitted landfills. Under RCRA, site operators will conform to high technology standards and be required to maintain financial responsibility MCA EC - 3/13/79 CMA 062309 Attachment 5 PUBLIC FUNDING OF EFFORTS TO CLEAN UP ABANDONED WASTE DISPOSAL SITES IS NECESSARY, EQUITABLE AND SOUND PUBLIC POLICY Public funding, from both the Federal and State Governments, for the mitigation of damages to public health and the environ ment and cleanup of abandoned hazardous waste disposal sites, is appropriate for reasons of equity and sound public policy 1. Some current problems are the result of inadequate municipal or other publicly-owned hazardous waste disposal sites, some of which contain sludge and other wastes from publiclyowned waste water treatment plants or collection systems 2. It is clearly not equitable to place the full economic burden on today's companies, stockholders, and customers for the practices, failures or shortcomings of yesterday's industrial producers. The generators of today's hazardous wastes, many of whom are handling their waste in successful, acceptable ways, should not bear the whole cost of past practices. The present products, wastes and hazards all may be vastly different from those of abandoned sites. Furthermore, many of the prob lems of today were not known and were, in fact, unknowable in terms of the state of knowledge and art at the time of the original disposal. 3. The general prosperity and economic health of the nation and the state were beneficiaries of the economic activities that produced the hazardous wastes in the first instance, and public revenues should properly share part of the burdens imposed today. 4. In some instances, the wastes were generated as a result of government activities, government procurement con tracts and the like, including war production efforts associated with the nation's wars. A Federal responsibility is clear in such instances. 5. The contribution of Federal and State revenues will be of significant benefit in assuring fiscal and operational accountability and responsibility. In the absence of such a contribution, there would be a clear tendency to overspend -wasting resources -- since only someone else's money would be involved. For this reason alone the interest of sound public policy and fiscal control dictates significant contributions of public revenues. 6. A requirement for Federal and State financial partici pation will also be of significant benefit in establishing priorities with respect to cleanup and mitigation efforts While the task may not be as large as is indicated by some early estimates, the task will exceed the resources -- both financial and technical -- that may be available at any one time, and a requirement for Federal and State contributions will aid in establishing the program's priorities CMA 062310 Attachment 5 Page Two 7. Hazardous wastes are not solely the products of the chemical industry; rather, they are an integral ingredient of our industrial society. Problems associated with abandoned hazardous waste disposal sites reflect more than 100 years of industrial development in the nation. Hazardous wastes have been generated by a wide range of industries, business con cerns, government agencies and defense installation, municipalities and scientific facilities. The problem is societal in scope and the costs of coping with it should reflect its societal nature, just as the benefits of resolving the problems will inure to all elements of the country. Only through significant parti cipation by general revenue funds, at both the state and national level, can this general responsibility be adequately discharged. MCA EC-3/13/79 CMA 062311 Attachment 6 The Need For Federal Preemption of State Hazardous Waste Disposal Legislation Important legislation with respect to environmental cleanup and mitigation costs for pre-RCRA incidents must be aimed at pro viding an orderly mechanism for response. Only a comprehensive national program can accomplish this purpose. Superimposing a Federal superfund on top of a potential patchwork of state and Federal laws would complicate the hazardous waste problem rather than solve it. For these reasons and others set forth below, support for Federal legislation must be conditioned on pre emption of state laws and, as appropriate, coordination of relevant Federal laws and programs. Preemption of state programs is essential because: 1. Separate state funds could result in multiple charges or taxes on the same product; 2. Separate state funds would result in duplicative and wasteful administrative expenses; 3. The impact of #1 and #2 above would create unnecessary and unwarranted inflationary pressures creating waste ful government spending which taxpayers resent; 4. Procedures for uniform administration, financial responsibility requirements and fee collection would provide the necessary stability which permits and encourages business planning and investment, whereas separate state laws would vary and serve as a disin centive to industrial investment in new and expanded facilities and job creation; 5. Separate state funds and laws would not increase the level of protection but would serve to create inequities; 6. Damages from hazardous waste disposal do not recognize state boundaries; 7. Separate state laws individually crafted to meet local considerations would encourage forum shopping; 8. Expensive and time-consuming litigation because of conflicting, overlapping and inconsistent state laws is undesirable. Industry should be encouraged to utilize its resources to solve the problem of waste disposal in cooperation with Federal authorities; 9 , State interests would be fully protected by a uniform Federal program; CMA 062312 Attachment 6 Page Two 10, The test should not be whether state laws are strength ened or weakened by Federal preemption of such laws, but rather whether the environment is protected and interstate and foreign commerce is simultaneously encouraged to flourish under uniform guidelines re sulting in a healthy and vigorous national economy. MCA EC - 3/13/79 ES CMA 062313 Attachment 7 WASTE DISPOSAL SUPERFUND LIABILITY ISSUES I The disposer should be relieved from liability for in cidents which were beyond his controT Although all Federal legislation-to' date with regard to liability for oil pollu tion 1'supposedly establishes "strict" liability, each act provides defenses which relieve a spiller of some if not all liability. Accordingly, this is not a new or innovative concept. Further, the most recent legislation (Outer Con tinental Shelf Lands Act Amendments of 1978) provides for considerably more defense than those provided for in earlier acts 2/ (i.e., Clean Water Act - 1972 and Trans-Alaska Pipeline Act - 1973). The recent trend to permit traditional defenses to liability probably results from the realization that the liability will be uninsurable without them, thereby precluding any owner or operator incapable of self-insuring from engaging in the covered activities. There should be no liability to the extent the incident is caused by (1) an act of war, (2) an act of God, or (3) an act or omission of a third party. This language would provide for a comparative negligence standard and reflects the majority rule in this country (in most cases by statute). It avoids the harsh and inequitable results of a contributory negligence defense where one party is slightly negligent as compared to a catastrophe such as war or an earthquake or to the gross negligence of the other party. With regard to a particular claimant, the defense should apply both to the incident and the economic loss -- i.e,, if the claimant's negligence caused the incident or the environmental damage, a compara tive negligence standard would apply; if the claimant's gross negligence or willful misconduct caused the incident or the environmental damage, the discharger would have no liability. Therefore, if a particular claimant did not cause the incident but did contribute to his loss, he should be barred from recovery For example, an individual who ignores the warning signs at a hazardous waste disposal site and deliberately excavates or alters the dumpsite should not recover for resulting damages to his adjoining property 1/ Clean Water Act, Trans-Alaska Pipeline Authorization Act, Deepwater Port Act, Outer Continental Shelf Lands Act. 2/ There is no liability where an incident is caused solely by (1) Act of War, (2) unanticipated grave natural disaster or other phenomenon of an exceptional inevitable and irresistable character the effect of which could not have been prevented or avoided by the exercise of due care or foresight. Similarly, there is no liability as to a particular claimant where the incident or economic loss is caused by the claimant's gross negligence or willful misconduct. As to ordinary negligence, the comparative negligence principle should apply. CMA 062314 Attachment 7 Page Two II The disposer's liability should be limited to a specified amount As with all Federal liability legislation, an upper limit should be placed on the amount of damages to which a discharger must respond in the absence of his gross negli gence or willful misconduct. The limit should reflect degree of risk posed and insurable limits. Again, if the amount is uninsurable, thereby making self-insurance the only alterna tive for the excess liability, many businesses will be pre cluded from engaging in the covered activity. Ill The disposer should have primary responsibility for cleanup. Following the precedent set by Federal Water Pollution Cohtro1 Act in 1972 (Sec. 311), all Federal liability legislation imposes this responsibility. Since the discharger is liable for such costs, he should be able to exercise some controls over them. Of course, if the cleanup is not initiated promptly or is not conducted diligently according to standard cleanup procedures, a Federal coordinator should be able to contract for outside help after making appropriate findings about the inadequacy of cleanup by the discharger. IV The disposer should be entitled to recover his costs of cleanup where he is entitled to defense or his costs exceed his liability limit' The discharger should be treated no differently from any other claimant when he has a defense to liability or his liability limit is exceeded. Again, this follows a precedent set under Section 311 of the Clean Water Act 3/. V The claimant should present his claims directly to the Fund when the disposer denies liability or has paid damages up to his liability limit. The Federal Acts which provide for this party damage claim 4/ permit a claimant to present his claim directly to the Fund or to commence legal action against the discharger whenever the discharger denies liability for any reason. Such election on the part of the claimant is exclusive and irrevocable. 3/ Owner/operator pays removal costs measured by the U.S. Govern ment and then pursues by right of subrogation, recovery from third party. If an act of war or act of God, U. S. Government negligence defense or claim in excess of liability is involved, the owner/operator must clean up and then sue the Fund in the Court of Claims to recover its costs. 4/ Liability under the Clean Water Act runs to the U. S. Govern ment only. MCA EC - 3/13/79 CWIA062315 Attachment S THE FEDERAL GOVERNMENT SHOULD NOT ENACT A STRICT LIABILITY TORT LAW SYSTEM AS A PART OF A COMPENSATION PROGRAM A Strict Liability Standard Would Be Unfair And Unworkable: Tradi tional tort liability-requires a finding' of either negligence or a defective product. Both standards require a finding of a breach of social responsibility. Under both standards a company is liable only if the avoidance of the harm was reasonably within its control. A strict liability statute would omit this basic element of fairness found in the negligence and pro ducts liability area. To change the law now would create uncer tainty with respect to past conduct, making the purchase of in surance difficult if not impossible, and would result in liability being imposed for past conduct which was proper at the time. In a strict liability context the party held liable might be one who could not have avoided the harm. A Federal Tort Statute Would Impose Federal Regulation In An Area Traditionally Reserved To The~States Under Our Federal System: With-few exceptions (e.g. nuclear power plants, admiralty) tort law -the responsibility of a member of society to avoid harm to others -has been determined by the states. A Federal intrusion into this area of states rights would be a major modification of political responsibilities in our Federal system. This should not be under taken lightly and should be avoided when unnecessary. Tort Law Is Traditionally A Matter For The Judiciary, Not The Legislature: The evolution of tort law from intentional'torts, through the law of negligence, to the present system has been accomplished by the judiciary of the several states. This has allowed trial and error and an application of justice to the factual issues before the courts. Legislation would limit the ability of the courts to continue the evolutionary process as the need arose. Federal, as opposed to state, legislation would make all jurisdictions uniform preventing the trial and error system which permits one state to adopt the best features of a sister state system while rejecting others. NOTE -- This paper does not deal with the issue of negligence per se currently imposed under traditional tort law, where a party who breaches a statutory obligation which leads to another party's injury is held liable on the basis of causation without regard to a specific showing of negligence. In those circumstances, negligence is inferred by the statutory obligation or duty which has been breached. This is unlike strict liability, where neither actual nor inferred negligence is a factor in assessing liability, but merely a causative relationship to the injury alleged. MCA EC - 3/13/79 CMA 062316 Attachment 9 A FEDERAL COMPENSATION PROGRAM SHOULD NOT INCLUDE SUBROGATION RIGHTS Subrogation Could Lead To Multiple Claimants Asserting Different Legal Rights or To Mutiplicity of Lawsuits: The issue of sub rogation only applies in the area of private injuries and not for measures involving the cost of clean-up or mitigation of en vironmental contamination. Simply stated, subrogation involves one party (e.g, the Federal government) standing in the shoes of another party (e.g. private individual) and asserting such party's rights. In the case of environmental cleanup and mitiga tion costs, the government is itself the party in interest on behalf of all citizens generally. Unless a Federal program compensated for all private injuries including the more speculative types (e.g. loss of future pro fits and advantageous business opportunity, pain and suffering, loss of consortium, decreased earning capacity, damage to aesthetic or historic property value), two claimants with po tentially diverse interests and legal rights would result -namely, the government under subrogation rights and the injured party for claims not yet compensated. Additionally, if the sub- igation claim was based on strict liability and the private 'aim on traditional negligence concepts, the jury would be confused by the different legal standards to be applied. If the government were to consider compensation for all private injuries, it would become embroiled in a morass of issues and claims requiring enormous staff and huge fund from which to award claims. Separate trials to avoid potential conflict would aggravate already crowded court problems and needlessly subject the alleged wrongdoer to duplicative defense costs and the injured party to duplicative time spent in connection with trial prepara tion and prosecution. Subrogation By The Federal Government Would Interfere With The Victims7 Recovery Under Tort Law: A plaintiff in a tort action must make numerous strategic and tactical decisions before and during litigation. For example, the plaintiff must determine the court in which to bring his action, the parties to be sued, the timing of the commencement of suit, the selection of witnesses, settlement and trial tactics. A Federal compensation program should not interfere with or inhibit a victim's prosecution of his tort claim. Yet we must assume that the government agency and the victim will not always concur on the proper trial strategy. It follows that an independent right of subrogation st interfere with the victim's right to recover in a tort case. CMA 062317 Attachment 9 Page Two Subrogation Rights Will Increase The Federal Bureaucracy: In order to prosecute a subrogation claim the government agency involved would require a claims staff similar to an insurance company's including investigators, claims evaluators, trial lawyers, a panel of expert witnesses (chemical, medical, and engineering) To be effective the trial lawyers would need a knowledge of local court rules and nature of the jury panel. All of this would be an unnecessary duplication of the victim's attorney's litigation skills. Subrogation Invites Improper Political Or Policy Considerations: A victim will ordinarily pursue, settle, or withdraw a claim against a third party on the basis of economic considerations balancing the probability of success or failure in the suit. The government agency may be influenced by factors unrelated to tort liability such as political pressure from the press or citizens groups, a desire to punish the purported wrongdoer, or in some cases political or professional ambitions. A tort claim ought not to be pursued or resolved for any of these reasons. A tort claim should be limited to a consideration of the harm and the legal responsibility. Subrogation is Unnecessary: The compensation program can satisfy the government's need to be reimbursed for its compen sation when appropriate in another manner, not so disruptive as subrogation. The government agency could be given a lien on any recovery by the victim in a tort law action. If the victim recovered, the government would be reimbursed. The lien would not discourage suits by victims because the government program will probably not compensate for such non-monetary factors as pain and suffering. To further encourage suits by victims the lien recovery could be used to satisfy a pro-rata share of litigation expenses and the program could provide that the lien applied only to a percentage of the recovery (e.g. 80%), permitting the victim to recover something even if his settlement war less than the lien. MCA EC - 3/13/79 CMA 062318 Status Report on Litigation and Administrative Proceeding; 1. Resource Conservation and Recovery Act jRCRA' ?.ulerr_; -Xing On February 22, 1979, a draft of MCA's comments on EPA's prrposec regulations to implement Sections 3001, 3002, and 3004 of the Re-ourc Conservation and Recovery Act (RCRA) was mailed to all Solid V.'aste a rd Environmental Contacts. The draft comments should assist all mem be companies prepare appropriate comments for submittal to EPA :v March 16, 1979. On February 22 and 23, .1979, MCA made three statements at EPA's Washington, D.C. public hearings on the proposed RCRA implementing regulations. Dr. C. V. Cox, Vice President and Techtii Department Director, presented a statement on the proposed regrlatio:r s to implement Section 3001. R. Sobel of Allied Chemical Corporation a r.d MCA's RCRA Task Group Leader presented a statement on the cropose regulations to implement Section 3002. G. J. Hanks of Union Carbide Corporation presented a statement on the proposed regulations i: implment Section 3004. 2. Resource Conservation and Recovery Act Intervention. T he Citizens for a Better Environment have filed a petition with the United States Court of Appeals for the District of Columbia Circuit seeking re' -'iev, of Judge Gesell's January 3, 1979, order that approved EPA's propose schedule for developing regulations to implement RCRA. Outside court sel advises that this challenge appears frivilous. 3. Prevention of Significant Deterioration Regulations PSD Although the United States Court of Appeals for the District of C-iambi; Circuit heard oral arguments on October 10, 1978, op the first erase of the litigation (i. e. , effective date of the regulations), we are still awaiting a decision on this issue. On the second phase of the litigation (i. e. , substantive issues presented by the PSD regulations), MCA's outside counsel is preoaring a brief responding to the positions raised in the environmentalisi s brief. Outside counsel will also prepare a brief to be submitted :o the court by April 1, 1979, that will reply to positions raised by EPA fi. e. EPA response brief is due March 1, 1979). As of this date, orai argu ments are still scheduled for April 19 and 20, 1979. CMA 062319 4. Nonet)iainment/Emissions Offset Interpretative Ruling. On January 26 197q MCA outside counsel submitted a petition with the United States Court Qf Appeals for the District, of Columbia Circuit challenging EPA s rev'Sion of its Emissions Offset Policy. We have offered all member c ompantes an opportunity to be listed with MCA as party-petit-one^s. Conipan.es interested in being listed should contact us by no la'er than March 9 1979. It now appears that several other trade asso- tai'.ons w'll be voining the sub ent litigation but they will rely on MCA to he the lead party in the litigation. On February 15, 1979, MCA submitted written comments on the first three issues EPA opened for public comment. MCA will be submitting written comments on the remaining issues by March 19, 1979, The Agency has not committed to revise its Interpretative Ruling based on the public ; ommenr.s r. receives. Nevertheless, we believe submitting comments is a necessary part of our litigation strategy. 5. Pretreatment Regulations. MCA and EPA, after a series of negotiating sessions, have been able to tentatively resolve most of the concerns we have identified in EPA's general pretreatment. The maior areas that are still unresolved concern how the Agency will handle the question of 'bypasses'' and the question of variances for fundamentally different factors. The Agency and MCA have agreed to agree on developing a formula(s) to resolve this issue. All parties agree that the variance question may have to be litigated separate from the other general pretreatment issues. As a result, on February 23, 1979. outside counsel and EPA's counsel filed a petition with the United States Court of Appeals for the District of Columbia Circuit requesting that the briefing scheduled be deferred until September 1, 1979. In the pet:.t:_on the court was advised that all parties hoped all resolvable issue t-. ould be final: zed by March 30, 1979, and that EPA could propose the agreed-to revisions by July 1, 1979. If the final regulations are essentially the same as the agreed-to revisions the litigation would be limir j. to the variance question. At this time, we feel MCA will probably take a relatively low key role in this phase of the litigation to assure that the chemical industry's concerns are adequately represented. Primary litigants would be NRDC. the American Paper Institute, and EPA. It is our understanding that our member companies are not that dissatisfied with what EPA promulgated on the variance issue. CMA 062320 -3- 6. Photochemical Oxidants/Ozone Ambient Standard Revision. See separate status report. 7. National Pollutant Discharge Elimination System (NPDES) Revised Regulations. See separate status report. 8. EPA's National Emission Standards for Hazardous Air Pollutants (NESHAPS) Proposed Work Practice Standards. On February 9, 1979, a draft of MCA comments and an alternative work practice standard for NESHAPS pollutants was forwarded to Counsel for the American Industry Health Council (AIHC) soliciting comments on our most recent draft. As of this date, we have only heard that AIHC believes that submittal of our comments and alternative proposal should be further delayed pending EPA's imminent promulgation of its generic air carcinogen policy and an advance notice of proposed rulemaking (ANPR) on a work practice standard. In addition, AIHC expressed a concern that Section 112 of the Clean Air Act does not provide the Agency with the authority to issue regulations establishing a general work practice standard for hazardous air pollutants under Section 112. No substantive comments on the technical aspects of MCA's alternative approach have been received from AIHC. On February 23, 1979, we learned that EPA's Assistant Administrator for Air Matters had returned the general carcinogen policy document and the ANPR to the staff at Research Triangle Park for extensive reworking. It is estimated that this rethinking of the policy and the work practice standard will result in a two-to-three month delay in publication of said documents. It has been MCA's intent in submitting appropriate comments on EPA's draft work practice standard and an alternative MCA program ro make very clear that MCA is not conceding that the Agency has the legal authority to develop such a program under Section 112. Nevertheless, we are convinced that the Agency management is committed to developing such a program under Section 112 and for the State Implementation Plans under Section 110 of the Act. As a result, we believe that such MCA's alternative work practice standards should be submitted to EPA, with appropriate caveats, in order to assure that if EPA develops a work practice standard it is technically and economically feasible. CMA 062321 -4- 9. Benzene Decision. The Supreme Court has granted the petition of OSHA and the unions for a writ of certiorari to the Fifth Circuit for review of the benzene decision which imposed a risk/benefit analysis requirement on OSHA. Thus the stage is set for a precedent-setting Supreme Court review of the risk/benefit concept. The unions are further requesting a;, expedited hearing schedule which will permit a Supreme Court decision by the end of this term which ends in July 1979. MCA will be represented before the Supreme Court by John H. Pickering and Andrew T.. A. Macdonald of the Washington,D. C. law firm, Wilmer, Cutler & Pickering. 1 0. TSCA Section 5 Premanufacturing Notification Rules. The Section 5 Task Group of MCA's Chemical Regulations Advisory Committee (CRAC) continues to work with Peter Barton Hutt, Coving ton & Burling, to develop comprehensive comments on EPA's proposed Section 5 rules. In addition, there will be a news conference on March 6, and an MCA panel will testify at an EPA hearing in Washington on March 7. Outside counsel and the CRAC Committee continue to work on a short form proposal to offer in place of the proposed regulations. 11. Coal Conversion Regulations. See separate status report. Act. 1 2. Department of Commerce Draft Uniform Product Liability See separate status report. Attachments EC - 3/13/79 CMA 062322 EPA's Promulgation of Revised National Ambient Air Quality Standards for Photochemical Oxidants Ozone Under Section 109 of the Clean Air Act. On February 8, 1979, EPA revised the National Ambient Air Quality Standards for Photochemical Oxidants pursuant to Section 109 of the Clean Air Act, as amended. The Agency relaxed the primary and secondary standards from 0. 08 ppm to 0. 12 ppm and changed the chemical designation of the standard from photochemical oxidants to ozone. Although the Administrator has provided some relief in the revised standards, the existing scientific data clearly supports a further relaxation of the standard. In addition, a proper evaluation of the data indicates that further relaxing the ambient standard would still provide an adequate margin of safety to protect the public health. The Environmental Management Committee and its Air Pollution Effects Task Group have requested that MCA initiate a judicial challenge based on the failure of the Agency to adequately evaluate the existing scientific data and adopt a more lenient ambient ozone standard. This matter has been discussed with outside counsel (John H. Pickering and Andrew T.A. Macdonald of the Washington, D. C. law firm Wilmer, Cutler & Pickering) and they concur that there are valid issues ripe for appellate review. The General Counsel has reviewed the matter and concurs with the EMC and Task Group recommendation. Accordingly, MCA will be represented by Lloyd N. Cutler and Andrew T.A. Macdonald of Wilmer, Cutler & Pickering. The legal cost for this litigation will be covered by MCA's 1979- 1980 budget. Outside counsel advises that MCA's petition should be filed with the United States Court of Appeals for the District of Columbia Circuit no later than mid-March to assure that we are involved early enough in the litigation to assume an active role among the industry petitioners. In this regard, the American Petroleum Institute has already filed its petition with the court and will assume the lead party role among the industry petitioners. In addition, a number of environmental groups (e. g. , NRDC, EDF) may also file challenges. A number of member companies are expected to join MCA in this appellate litigation. Action Required: None, Supplied for information only. CMA 062323 Report Irem #7 National Pollutant Discharge Elimination System Revised Regulations On November 20, 1978, MCA submitted to EPA extensive comments on the Agency's proposed revisions to its National Pollu tant Discharge Elimination System (NPDES). A copy of MCA's comments was transmitted to all member companies. We were advised at the February 9, 1979, meeting of the Washington Environmental Coordi nating Committee that EPA plans to promulgate final revised regula tions sometime early in March, In addition, we have been provided the most recent draft of the final revised NPDES regulations. As anticipated, the revised regulations contain a number of provisions that are objectionable to industry on both legal and technical grounds. Although there is a remote possibility that several of the more objectionable provisions will be modified before the NPDES regulations are ultimately promul gated, we expect the Agency to promulgate its revised NPDES regu lations essentially as presented in the most recent draft version. As a result, the Environmental Management Committee and its NPDES Task Group have requested that MCA provide outside counsel to assist in the preparation of a contingency litigation strategy on the assumption that the final regulations will fail to adequately respond to the concerns raised in MCA's November 20, 1978, comments. The General Counsel has reviewed this matter and concurs with the EMC and Task Group recommendation. The issues presented by the forthcoming revised NPDES regulations are complex and of great significance to the chemical industry. Accordingly, Theodore L. Garrett of Covington & Burling will be outside counsel on this matter. Project financing has been included in the budget for 1979- 1980 for challenging the revised NPDES regulations. 0snmnrn * * i.niiiU.ULy iwrtILi.VU :::acieu CMA 062324 2- - Action required: None, supplied for information only. CMA 062325 Report Item =11 Coal Conversion Regulations John. M. Henske, president, Olin Corporation, testified on March 2, 1979, on behalf of MCA regaring the Department of Energy's proposed reg ulations for new and existing facilities under the Powerplant and Industrial Fuel Use Act of 1978. At the same time, MCA filed a more detailed written statement on the new facilities regulations. In addition, written comments on the existing facilities regulations will be submitted by the March 26 dead line . MCA remarks emphasized that in a number of key respects the regulations proposed by the Department of Energy exceed the authority granted by Congress under the Fuel Use Act. Following are some highlights: 1. New Facilities Economic Exemption - Congress adopted an economic exemp tion to the Act's prohibitions on the use of oil and natural gas. This exemp tion is to apply if the cost of burning coal or another alternate fuel would ''substantially exceed" the cost of using imported petroleum in the facility. The Department of Energy, however, has virtually eliminated this exemption, A facility would have to show that the use of coal would cost at least 50 percent more than the use of imported oil. This economically unrealistic standard is made even worse by the way the costs are to be computed ( 7 per cent discount rate estimated as the cost of capital and a presumed 40 year venture life). 2, What: is an MFBI? Congress intended by the Fuel Use Act to regulate only large facilities (Major Fuel-Burning Installations). The DOE's proposed regulations go far beyond this. They cover for purposes of aggregation all facilities located at the same site regardless of their size. Moreover, the ridiculous presumption is made that "at the same site"means all units within 10 miles of each other. 3, Aggregation of New and Existing Facilities New and existing facilities would be added together to determine whether the 250 million Btu aggregation threshhold has been reached. CMA 062326 4. Fuels Decision Report and Filing Fees A Fuels Decision Report must be filed when petitioning for an exemption. This report demands an immense amount of information, much of it only peripheral to the statutory criteria for an exemption. A filing fee of $25, 000 - $85, 000 must accompany an exemption petition. 5. Existing Facilities Congress authorized DOE to order an existing unit to ( onvert to coal or an alternate fuel only when it determined that the facility had the technical capability to do so, and that it is financially feasible. DOE says it is financially feasible to convert unless the cost of using another fuel is 50 percent higher than the cost of using imported petroleum. This effectively nullifies the statutory exemption. Meanwhile, the test of technical capability includes that a loss of 25 percent of a unit's rated capacity will not be considered substantial. Most companies would certainly view a onefourth loss in rated capacity as substantial. CMA 062327 Report Iter:' 412 Department of Commerce Draft Uniform Product Liability Act On January 12, 1979, the U. S. Department of Commerce published a draft Uniform Product Liability Act. The final version, scheduled for comple tion by June of this year, will serve as a model law for use by the States. MCA's Special Committee on Tort Law Reform submitted extensive comments on the Department of Commerce proposal. In general, the Committee felt that the Act offered certain improvements but, nevertheless, was deficient in numerous areas of importance to the chemical industry. The following are a few highlights: 1. Relevance of the State of the Art Under the draft statute, evidence that a product conformed with state of the art at the time of manufacture raises a rebuttable presumption that the product was not defective. MCA recommends that the state of the art de fense should establish a conclusive presumption that the product was not defective. 2. Relevance of Compliance with Legislative or Administrative Standards If the product seller has complied with a rigorous legislative or administrative safety standard, the proposed law creates a rebuttable pre sumption that the product was not defective. MCA urges that compliance establish a conclusive presumption. 3, Statute of Repose The statute contains a presumption that the useful safe life of a product is 10 years, but that presumption is rebuttable weighing such factors as the effect of wear and tear on the product, the effect of climate and other local conditions on the product and the policy of usersas to repair and mainte nance. MCA recommends that the 10 year presumption be made conclusive unless the manufacturer warrants to the contrary. 4. Pharmaceutical Exception The statute of repose contains a so-called "pharmaceutical excep tion" for products that cuase harms that manifest themselves or cause perceptible harm only through prolonged exposure. MCA recommends further study of the ssue with respect to the long-term effects of hazardous materials, and warns CMA 062328 that the proposed exception creates the problem of treating certain industries differently for purposes of determing liability when uniformity of treatment is more desirable. 5. Nonmanufacturing Product Sellers Under the draft statute the nonmanufacturing product seller generally would be free from liability where he does not have an opportunity to inspect the product for defects. MCA believes this section is overly pro tective of the nonmanufacturing seller and urges its deletion. CMA 062329