Document MMrXOXbyMJL8nZ7R3YqvXG51x

39615-621 missing 8:30-8:35 a.m. 8:35-8:40 8:40-8:45 8:45-9:30 9:30-9:45 9:45-10:25 10:25-10:50 10:50-11:05 11:05-11:20 11:20-11:40 11:40-11:45 11:45 AGENDA CMA EXECUTIVE COMMITTEE MEETING 8:30 a.m., Wednesday, March 5, 1986 Grand Hyatt Hotel Music Box/Morocco Rooms New York City, Nev York __________________ TAB 1. Call to Order and Approval of Minutes of Meeting, January 27, 1986 -- Chairman Clark 1 2. Standing Committee Appointments --* Charles W. Van Vlack 2 3. Treasurers Report -- Gary C. Herman 3 4. Finance Committee Report -- Robert D. Kennedy Sep. Book 5. Special Committee on Insurance -- David Zoll a. Appointment of Chairman and Members b. Report on Activities 4 6. Superfund Reauthorlzatlon a. Overview of Association Activities -- William M. Stover b. Legislative Status -- Wells Denyes, Eastman Kodak Company 5 7. Tax Reform Legislation -- St. Clair J. Tweedie, American Cyanamld Company 6 8. Proposed Program For Increased Coordination of Industry Political Activity -- Ken Cole, Allied-Signal Corporation 7 9. Air Toxics Control Policy --* Status Report on Implementation -- Richard A. Symuleskl, Amoco Corporation and Vincent J. Marchesanl, ICI Americas Inc. 8 10. President's Report on Association Activities -- Program and Issue Highlights 9 11. New Business 12. Adjournment CMA 039622 MINUTES OF MEETING CMA EXECUTIVE COMMITTEE Grand Hyatt Hotel (Music Box/Morosco Rooms) New York, New York March 5, 1986 1. The meeting was called to order at 8:30 a.m. by Chairman Clark, There were present: W. H. Clark, Jr. - Chairman P.obert A. Roland - President Dexter F. Baker Alan Belzer F. Jack Fitzgerald Robert C. Forney John W. Johnstone, Jr. Robert D. Kennedy Keith R. McKennon Robert T-. Mitchell George J. Sella, Jr. Harold A. Sorgenti James R. Street Charles W, Van Vlack - Secretary Gary C, Herrman - Treasurer David F. Zoll - General Counsel Bv Invitation: Geraldine V. Cox *Ken Cole *Wells Denyes ^Robert B.*Hill Jon C. Holtzman E. Hamilton Hurst ^Vincent J. Marchesani Vernon R. Rice William M. Stover *Ric'nard A. Symuleski *St. Claire J. Tweedie Juliane H. Van Epmond James P. Watkins Eenjamin Woodhouse CMA Allied-Signal Inc. Eastman Kodak Company CMA CMA Nalco Chemical Company ICI Americas Inc. E. I. du Pont de Nemours & Company CMA Amoco Corporation American Cvanamid Company American Cyanamid Company American Cyanamid Company Dow Chemical U.S.A, *Part time 2. Minutes of Last Meeting The Minutes of the January 27, 1986, meeting were approved as distributed. (Note: Subsequently during the dis cussion on air toxics, a clarification was made with respect to the January consideration of the air toxic legislative principles. See Item 11). 3. Treasurer's Report Mr, Herrman reported that through January 31, 1986, of the current fiscal year, the Association had received actual revenues CMA 039623 2 of $14,029,700, and had Incurred actual expenses of $8,625,000. By year-end, he projected revenues of approximately $14,370,000 and expenses of approximately $14,700,000. He further reported that response had been good from member companies with respect to reporting their 1985 chemical sales and that all but 17 members had reported as of the previous week. Follow-up is continuing with respect to those members. Based on this substantial return, he reported that the previous revenue estimates utilized for preliminary budget projections had been confirmed. 4, Standing Committee Appointments Mr. Van Vlack presented the list (Exhibit A) of proposed appointments to fill vacancies on the Association's standing committees. These appointments were approved. 5. Nominating Committee Report Reporting on behalf of the Nominating Committee, Mr. Roland presented a nomination to fill the vacancy on the Board caused by the resignation of Hans H. Kopper of BASF Corporation-Fibers Division. The nomination of Edwin L. Stenzel, Executive Vice President of BASF Corporation and President of BASF-Chemicals Division, for a term ending May 31, 1986, was approved. 6. Finance Committee Report Mr. Kennedy presented the report of the Finance Committee which had met on February 11-12 to address the 1986/87 budget and fee schedule, and referenced the minutes of that meeting and the proposed final budget document which had been distributed to the Executive Committee in advance of the meeting. He highlighted the following events, conditions, input and assumptions that were part of the Finance Committee's considerations: - Review of the fact that the Association had to utilize its reserves in the 1984/85 and 1985/86 fiscal years in order to finance the au thorized budget expenditures. Review of the Executive Committee's guidance provided at the January meeting that an increase in dues, other than the establishment of a $5,000 minimum fee, would be inappropriate in light of current indus try economic conditions and the concerns of the membership about escalating costs. Therefore, a 1986/87 budget which balanced antic ipated revenues with anticipated expenditures should be proposed, - Review of the fact that the CAER and NCRIC programs had been added during the course of the current fiscal year and that an increased program in the air toxics area could be anticipated in 1986/87, perhaps to be offset to some degree by a decrease in Superfund related activity. An assumption of an approximately 3Z overall increase in the budget attributable to inflation. Projections for 1985 chemical sales were reported to be lower than originally anticipated, which combined with reduced investment revenue compared to prior years, created an additional shortfall of approxi mately $600,000. - Results of the Board survey on the possible sunset of six program/ issue areas. f t CMA 039624 f A - That the Membership Committee should explore the possibility of broadening the membership eligibility base. Mr. Kennedy stated that the proposed final budget, as summarized in Exhibits B-l and B-2, would result in a budget for fiscal year 1986/87 of $14,077,300, with no use of reserves being contemplated. The proposed fee schedule, as set forth in Exhibit B-3, would be unchanged from the 1985/86 fee schedule, with the exception of the establishment of a minimum fee of $5,000. Mr. Kennedy expressed the Finance Committee's opinion that although the proposed 1986/87 budget was a reasonable, if extremely tight, program to address the industry's high priority issues, that it was highly likely that either a dues increase or the use of reserves would be required to fund the Association's programs for the 1987/88 fiscal year. Discussion followed on the proposed budget and fee schedule and the resulting impact on the Association's programs. Mr. Kennedy reported on the concern expressed by Mr. McBrayer regarding the sunset of the Energy program and the resulting potential for the industry to be caught unprepared to address significant energy-related issues which could conceivably arise in the year ahead. Considerable discussion followed concerning possible options, including a specially funded program, for continuing industry monitoring of the energy area. Chairman Clark appointed a special ad hoc group of Executive Committee members (Messrs. Mitchell, Sorgenti, and McBrayer) to examine the options available for continued involvement by the Association in monitoring energy Issues and to report back to the Executive Committee with their recommendations.' There was also discussion of the need to continue efforts to enlist additional participation in the Association's programs by those member companies who are currently providing little or no personnel to the committee and task group activities. It was agreed to pursue this further at the Annual Meeting, stressing both the opportunity to participate and the need for assistance. Mr. Kennedy also described the Finance Committee's discussions con cerning the need to better leverage the Association's resources through more extensive utilization of the grassroots program and increased coordination of the common interests of related associations. He reported that these ideas had been advanced under the leadership of Mr. Davis and that they were more fully set forth in a white paper Mr. Davis had prepared which is attached as Exhibit B-A. He urged the support of the Executive Committee members in this effort. Finally, he indicated that the Finance Committee believed it would be useful for the standing committees to examine their respective issues as "prod ucts," and to review those "products" annually in a life-cycle planning process. A chart indicating the level of overall participation in CMA activ ities by members in each dues category was also referenced. The discussion concluded with reference to the adequacy of the 1986/87 funding for the CAER and NCRIC programs as well as the significant limitations on the resources allocated for outside legal services. It was the consensus that the overall budget was tight and that if unanticipated needs arose during the year, adjustments might be required, including the possible use of reserves as a last resort. CMA 039625 3 Mr. Kennedy then reported on the Finance Committee's meeting of February 11-12 during which the committee had received excellent presentations from the chairmen of the Environmental Management Committee and the Health and Safety Committee, as well as from the various CMA departmental vice presidents. These presentations highlighted and reinforced the scope of the issues being addressed and the degree to which rigorous prioritization of activities and projects had already been undertaken. As a result of these presentations and the written budget submissions, the Finance Committee was not inclined to make any further arbitrary across-the-board cuts in the priority programs of the Association. Therefore, the committee proceeded to consider the possible sunset or substan tial reduction in the six program areas which had been the subject of the 3oard survey. As a result of those discussions, the Finance Committee recommended the following further reductions and amendments to the proposed budget, in addition to those which had been identified at the January Executive Committee meeting: Complete the Bunset of the Energy Committee program. Complete the sunset of the Community and Public Information program, with the understanding that the Catalyst Awards program costing $29,500 would be maintained. Funding would be secured by an addi tional fee assessed to participants at the Annual meeting. - Reduce outside legal services. - At the option of the President, retain the International Affairs Group as a reduced and merged part of the International Trade Division of the Government Relations Department. Continuing costs of the reduced activity were estimated at $96,300. Financial support for this joint program to be solicited from SOCMA in an amount approximating half of the program cost ($50,000) with the remaining $46,300 to be realized from reductions in outside legal services. Reduce general administrative and service costs by an additional $50,000. Accept a one-time reduction in the actuarlally determined pension fund contribution for FY 86/87 of $120,000. In reviewing revenue and funding needs, the Committee recommended establishing a minimum fee of $5,000 for membership in the Association. No other changes in the fee schedule were recommended for FY 1986/87. The Commit tee suggested undertaking a review of the Association's investment guidelines, with the assistance of Committee members, with a view toward increasing income by possibly as much as $200,000 but recognizing this was a guideline goal. The Finance Committee also made the following related observations and recommendations as a result of their deliberations: That the Association should review the materials and services which it is presently providing free of charge to determine if additional revenue might be possible. Sales of public relations material and charging for the "800 number" telephone lines were mentioned as potential areas for review. It was agreed that Annual Meeting and Chemical Industry Conference fees be raised to $275 each. CMA 039626 6 b. Association Activities Hr. Stover reported on the various Association activities under way to support the advocacy effort directed at the conferees, including: preparation of the compilation of potentially responsible parties (PRPs) at National Priority List (NPL) sites; media relations and editorial board visits; a proposed press conference by Mr. Sella on March 12; low-key labor outreach effort; continued grassroots support; outreach to en vironmental groups on funding; continued close coordination with API and other coalitions; CEO assignments with Ways and Means Members; and CEO visits with key Administration officials. There was additional discussion of the outlook and options for resolving the funding issue as well as additional discussion of the differences between the House and Senate community right-to-know provisions (Edgar and Lautenberg). 9. Tax Reform Mr. Tweedie's report is attached as Exhibit F. He reviewed recent activities under way in the Senate Finance Committee, including the surfacing of a staff draft which may serve as the vehicle for Senate consid eration. He also reviewed CMA activities under way in recent weeks including: Washington representative/tax policy export team visits with the Senate Finance Committee; formal assignment of Washington representatives to tax coalitions and other interested associations; weekly task group meetings; a meeting scheduled for March 14 with a large group of impacted companies; and update of the IRET study. The Senate Finance Committee markup was tentatively scheduled for March 19, but he indicated that it was likely to slip several days. He reported that the CMA message being carried to the Finance Committee was: to maintain the same or equivalent tax incentives to those contained in existing law for capital formation; and to oppose any changes in international provisions which would cause the chemical Industry to operate in domestic or foreign markets at a competitive disadvantage. Mr. Tweedie indicated that his task group intended to reach every member of the Senate prior to markup by the Finance Committee. Messrs. Sella and Baker reported on the activities of the ad hoc Executive Committee group on tax reform which had been formed as a result of the January Executive Committee and Board meetings. Considerable discussion fol lowed on tax reform and the Association's activities to address the substantial Issues raised by the House-passed bill. Some of the items discussed Included the role of the ad hoc Executive Committee group, the need (if any) for addi tional data beyond what is already available, and the identification and eval uation of alternative positions on the capital formation Issues. Mr. Tweedie outlined the status of implementation of the tax work plan. The Executive Committee agreed to support the concepts contained in Senator Boschwltz's letter -- address the budget and deficit reduction before acting on tax reform. Further discussion of tax reform was deferred to the ad hoc group's meeting in the afternoon. 10. Increased Information Sharing on Political Activity Mr. Cole presented a revised program for the sharing of information on the industry's political activity. This program had been presented at the January meeting and CMA 039627 5 Chairman Clark expresses his gratitude to the Finance Committee and staff. On motion by Mr. Kennedy, the 1986/87 proposed final budget of $14,077,300, as summarized in Exhibits B-l and B-2, and the proposed fee schedule, as summarized in Exhibit B-3, were approved for final consideration by the Board at the April 1 meeting. 7. Special Committee on Insurance a. Officers and Members Mr. Zoll presented a list of nominees for the Special Committee on Insurance which was created at the January meeting. The officers and an initial list of members, as set forth in Exhibit C, were approved. Discussion followed on the need to seek additional members for this special committee to insure that the full spectrum of companies in the industry were adequately represented. Mr. Zoll indicated that additional nominees had been solicited and that he expected additional appointments to be brought forward for approval at the April meeting. b. Insurance-Related Activities and Product Liability/Tort Reform Discussion Messrs. Roland and Zoll described insurance-related activities under way, including the upcoming Insurance Forum and an exploratory meeting of smaller companies potentially interested in examining commercial insurance options through a CMA special program type of activity. Mr. Zoll presented an overview of key issues and activities relating to product liability and tort reform (Exhibit D). Following discussion, it was agreed that this subject would be examined in more detail at a future officers' meeting and that recommendations for appropriate additional Association policy and supporting activities would he brought back to the Executive Committee for its consideration. 8. Superfund Reauthorization a. Legislative Status Mr. Denyes' report is attached as Exhibit E. He reviewed recent developments relating to the appointment of House and Senate conferees and reported on the expected activities in the weeks ahead. Congress man Dingell was appointed chairman of the conference and chairman of the program matic issues while Congressman Rostenkowski was appointed chairman on the funding issues. The conferees began meeting in late February and are expected to continue to meet twice a week. Mr. Denyes briefly reviewed CMA's activities and the outlook with respect to the conference, both as to the programmatic and funding Issues. Dr. Forney reported on a recent meeting with Lee Thomas and expressed his con cern over the right-to-know provisions in the Senate bill. He also indicated that Mr. Thomas' priority was the issue of cleanup standards. Mr. Denyes reported that April 1 is the date when EPA will begin layoffs and termination of contracts if no agreement has been reached between the House and Senate. The issue of possible short-term extensions of Superfund was discussed, and there was consensus that CMA should continue to push hard for a five-year reauthori zation in order to avoid the possibility of one or more interim extensions which might result in the issue being carried over into the next session of Congress. **A11 CMA 039628 P 7 tabled pending the resolution of certain concerns raised by several Executive Committee members. Following discussion and an amendment, the proposed program as set forth in Exhibit G was approved. 11. Air Toxics Program Messrs. Marchesani and Symuleski presented an update of the plans and ongoing activities relating to the implementation of the air toxics policy and program approved at the January meeting. Their report is attached as Exhibit H. Mr. Symuleski reported on: the establishment of an EMC lead coordinating group, the appointment of 65 air toxics coordinators by member companies, and the scheduling of a series of regional' workshops to brief the membership and seek feedback on the policy. Mr. Marchesani reported on the two workshops held to date and outlined the needs for CMA assistance identified by those attending. Briefings for EPA, API and NAM were reported, as were plans for a public announcement of the policy on March 13 in New Orleans by Mr. Sella. Mr. Symuleski reviewed the work plan and the immediate priorities of the coordinating group. Following this discussion, it was clarified that the air toxics legislative principles had not been formally approved at the January meeting. It was requested that this be clarified in the January Executive Committee minutes and that the principles be brought back to the Executive Committee for review and approval prior to their being utilized. 12. President's Report Mr. Roland's report is attached as Exhibit I. In addition, Dr. Cox highlighted recent efforts to coordinate with AIChE, She also reported on the progress to date of member companies in achieving and reporting on the CAER milestones. The meeting was adjourned at 11:55 a.m. CMA 039629 EXHIBIT A COMMITTEE APPOINTMENTS 1. Communications Committee William H. Scarborough, Shell Chemical company - Term ending May 31, 1987 (replacing w. L. Lafield, same company) 2. Engineering Advisory Committee Emmitt J. Nelson, Shell Oil Company - Term ending May 31, 1988 (replacing William A..Gabig, same company) 3. Environmental Management Committee Robert F. Curran, CIBA-GEIGY Corporation - Term ending May 31, 1988 (replacing Rolf Bernegger, same company) 4. Health and Safety Committee David S. Smallwood, ARCO Chemical Company - Term ending May 31, 1988 (replacing Ensor Rodriguez, M.D., same company) 5. International Trade Committee Ralph D. Schumack, Dow corning Corporation - Term ending May 31, 1986 (replacing William J. Hargreaves, same company) CMA EC-3/5/86 CMA 039630 EXHIBIT B-l General Background CHEMICAL MANUFACTURERS ASSOCIATION COMMENTS ON SOWtAXY OF PROGRAMS AMO PROJECTED COSTS The iunwary on the opposite page attempts to reflect the cost (net of revenue) of eaeh of the significant program end support areas maintained by the Association. The traditional operating budget n aumanted in tab 42. As with any attempt to portray the activities of a service organisation in financial tens, the analysis does contain a senes of compromises and judgments consistently applied. The cost of CMA program activities in colunn 42 were largely defined in e fashion that refleets the base level cost of analysing, developing end advocating industry positions assusung 3% increase in the operating budget for Hr 1906/8? versus the current 1985/86 fiscal year. Column M reflects the result of ths review of the draft summary budget by the Finance Conraittee and the cost impact of program and administrative aervice reductions. Column *5 represents the proposed program budgit for tha 1906/8? fiscal year. Column *6 provides references to tht detail daseription in the budget document of eaeh program, tha letues being monitored or advocated, the relevant eowittee or task group, and the estimated eost. The rather clear message out of the September and October meeting* of tht board. Executive and Finance Cosnittee w** that the budget should be held flat and that tha new Cash and NCRIC activities should be funded by program substitution, reduction or deletion. Since the programs are linked with cosmttee activity and Board ana Executive Committee policy, a survey of Board members was conducted on Association program activity focusing on six programs and requesting comments on all program areas. Tha results of tha survey responses from the Directors indicated* Sun.tt F*t*in Neutral e Energy 6 Petrochemical Feedstocks 17 14 11 Plant Management 6 Design (Engineering Codes s Standards) 1C 14 12 Patents 6 Protection of Technology IS 13 12 International Regulatory lasues (Health, Safatv s Environment) 13 IS 14 International Trade/lntamationai Competitiveness 10 IS 14 CotiBunity and Public Information 13 14 15 A* the January Executive CoMiittee meeting and before the fall off m dues revenue wee known, general guidance was provided that the budget as preposed should provide an option that matched revenue with expenses and without further use of reserves. With the projected fall off in FY 1966/8? dues revenue of approximately S3SD,COD, the addition and continuation of CAER and WCRIC programs of approximately 6450,000, increases for air toxics activity in excess of S100,000, a deadest increase projected at 3% for inflstion and assuming a reduction in Superfund activities -- the preliminary draft summary budget as reviewed by the Pinanee committee estimated a deficit of approximately $1.2 million for FY 1986/8? as shown in column #3* Following its review and analysis of potential expense reductions end/or funding options, and within the parameter* of guidelines provided -- the Finance Cpitssitt.ee would recommend a proposed FY 1986/6? budget resulting in program costs as indicated in column 5. cost reduction measures are outlined belowi Program Modifications sunset of the Energy and Petrochemical Feedstocks program and related committee and task group* and tha expenses of outside purchased services eliminating two staff positions and saving $160,200. e Redoes to monitor status of the Plant Management and Design (Engineering Codes 6 Standards) program with staff support being reduced to sn estimated 20% of one exempt and 80% of one aupport staff saving $30,300. e The Finanea Comittee considered sunset of the International Regulatory program and International Affairs Group but accepted a reduced program merging the international functions into the government relations international trade division and eliminating two staff positions saving an estimated 888,?00. Support for the remaining $96,300 was provided by a further reduction in outside legal fees of $46,300 and by action to bill SOCMA for approximately one-half tha eost ($50,000) of this Joint project* A reduction in the International Trade/International Competitiveness program by eliminating previsions for outside purchased reguletory, legislative and economic support saving $25,000. e a reduction in the Targeted Issue and Member Communication program by reduction of 845,500 in grants awarded to state CZCs in support of their communication efforts and through reduction in publication expenses of 810,000. sunset of the Community and Public Information program eliminating one staff position and saving n estimated 8361,700 through elimination of future public relations film production and distribution, tha Lifestyle radio news series, the Farm Broadcasters, Chem-Agra and related program*. e A savings of 8226,300 it achieved through eliminating outside legal support otherwise provided to the sunset trees and by reductions in other issue areas. Administrative Modifications A reduction through elimination of one staff position and direct reductions in administrative and service costs totaling $79,200, plus a one-time reduction for FY 1986/8? of $120,000 in the aetuerially determined pension contribution* substantial indirect reductions have occurred through elimination of administrative service costs otherwise allocated to the above sunset and reduced programs. As discussed in tab 2, tha above reductions combined with modest revenue enhancements bring the proposed fY 1966/8? budget in line with projected revenue and without further use of reserves* 1 CMA 039631 CHEMICAL MAWUFACTCTER5 AASOCXATIOM PROPOSED BUDGET SUMMARY Or PROGRAMS AMD PROJECTED COSTS TY 85/06 Budgat and Projected Resulta, Preliminary FY 06/67 Budget And Base-Leva! Adjust DIRECT PROGRAM S COMMITTEE SUPPORT COST; Regulation of Chemicals (TSCA t AtI*tad) Public Compensation: Risk, Health a Related Issues Occupational & Public Safety Cosenunity Awareness t Emergency Response (CAER) HAsadouf waste Superfund Hazardous Wasta Management (RCRA) Groundwater (Including SDWA) Surface water Air Chemical Product Distribution Advocacy National Chemical Response & Information Center (NCRJO j CHEMTREC and CHEMNET Emergency Response Training Chemical Referral Center (CRC) Energy t Petrochemical Feedstocks Plant Management & Design (Engineering codes 6 standards) Pattnts & Protection of Technology Mwndad ry 95/96 tudgtt 5 324,400 511,800 269,700 270.000 163,300 256,300 263,800 203,800 230,300 181,900 Projected PY 85/86 Rculr.i 0 321,200 429,300 253,200 263,700 132,100 309,300 171,800 232,800 277,800 177.700 Pr*llain*ry PY 86/87 8ud9*t PTf 86/97 Mm 1*v1 ,n,rmi Adjusttents Proposed rY 86/87 Budget 5 319,000 479.400 250,000 333,800 136,300 326,300 151,900 151,900 364,400 218,000 $ $ 319,000 -- 479*400 -- 25C.00C *- 223.80C -- 136,30C *- 326.300 -- 151.900 -- 151,900 -- 384,40C 116.000 Pegs Ref. a 1C 11 i: 15 16 17 16 19 22 693,800 249,100 175,300 191,500 43,800 13,100 720,800 257,600 168,000 155,500 78,600 12,900 767,600 312,500 120,600 160,200 91,000 12,800 -- -- (150,200) (30,300) 767,600 312,500 120,600 -0- 6C.70C 12,800 23 24 25 26 29 49 International Regulatory issue* (Health, Safaty $ Environment) international Trade/Ineemational Competitiveness Taxation Federal Lobbying Activities Federal Grassroots Activities wadi* communications Targeted Issue & Member Conminication CCiwnur.ity and Public Information State Legislative and Regulatory Advocacy Association Legal Support Technical Administration TOTAL (Nt of Program Revenue) lt;aiiocates management and support ACTIVITIES; Executive Coordination and Support Meetings and Conventier.s Accounting and Finance Business Services Computer and Information services pnntinc and Distribution TOTAL TOTAL EXPENSES (Net of Program Revenue) REVENUE; Membership Dues, Investment and Miscellaneous Revenue Net Specifically Related to Individual Programs CONTRIBUTION TO (Vet of) RESERVES . AUTHOR22CC PERSONNEL 187,700 182*700 185,000 281,900 209,700 1,413,900 212.700 1,365,800 859,300 257,600 622.500 2,654,000 321,600 262,400 205,000 1,479,800 219,500 1,348,600 826,400 265,900 592,000 2,64",200 296,400 303,000 182,700 1,243,600 253,900 1,340,700 908,900 351,700 638,800 2,726.400 317,100 $12,473,800 212,180,400 $12,678,500 (139,700) 46,300 (25,000) -- -- -- -- (55,500) (361,700) -- (226.300) -- 278,000 182,700 1,243*600 253.900 1.340,700 853,4CC -C- 63e . see :,500*100 3ln, ICC $(997,7C0) $11,630,800 32 ' 33 34 1 35 1 36 39 40 4] 44 46 50 1 S 886,200 $ 881,400 S 921,200 S (38,100) s 883,:o: 200,800 198.400 200,100 (6,800) 183,300 364,500 343,700 356,000 (4,000) 354,000 173,500 175,500 286,200 (131,300) 154,90C 443,300 450.800 482,700 (17,200) 225,100 225,000 242,500 (1,800) 240,700 3 2,293,400 $ i^^boo $ 2,500,700 $(199,200) $ 2,301,500 314,759,200 $14,563*200 313,179,200 1(1.195,900) $13,982,300 s: 1 52 fl 54 I 55 I $14,417,900 $14,236,900 $13,639,800 $ 142,500 $ (351,300] $ (326,300) S (1.339,400) $13,982,300 165 165 165 (6) 159 CMA 039632 CHEMICAL KANUTACTUMRS ASSOCIATION Connu or operating faudg.t fay Natural bcp*n.* Classification EXHIBIT B-2 General background Column *4 on the opposite page refleets the starting point for budget preparation which was the current /ear operating budget increased by approximately 3%. Revenue and expense adjustments in eolumn #5 lead to a proposed rY 1986/8? operating budget in column t6 which is break-even et <14,0??.300. Revenue Memoarshig Dues -* because of the reduction in 1985 versus 1984 chemical sale* by 64 of the 140 members reporting to date, dues in rY 1986/8? arc projected to drop to $12,606,500. The finance Coomttee recommends establishing e <5,000 minimum fee for membership which could gentrete an additional <69,300 in revenue per column 95. The propoeed fee achedule and revenue projections are discussed in tab 83. Investment Revenue -- the Finance Coanittee is undertaking a review and updating of CMA's investment guidelines. It is believed that revenue increases of et least <?J.20G will be possible as projected in eolumn *5. Ml Other Revenue -- column *5 projects additional funding of <50,000 to recover approximately one-half the eoat of maintaining a reduced and merged international Regulatory program. Expenses Staff and Related Expenses -- the reductions identified in column *5 of <557,600 reflect generally the impact of program sunset end administrative, staff and service coat reductions described in tab <1. Other general changes from projected FY 1985/86 results include increases in the eott of obtaining insurance coverages estimated at 5100,000 additional plus increased coats for NCRIC telephone service and for additional space occupied to support the new chemical Referral Center and CA program. Authorised Personnel -- Staffing is reduetd by six from 165 and down to 159. The opposite page does not reflect the separately funded 17 staff and expenses of the Riomedieal end Environmental Special Programs Division which is discussed in tab 114 of the budget document. Outside Purchased services -- the reductions identified m column #5 of $5e9,300 reflect generally the impact of program sunset and reductions described in tab 91. specific reductions included) <30,000 for economic analysis and SB0,000 for outside legal support of the sunset Energy program* $25,000 for economic analysis end <50,000 for outside legal support of the merged and reduced international program*. $252,500 for material and support of the sunset Community and Public Information program and <55,500 from a reduction in grants to state CICs communication efforts and in printing. Further arbitrary cuts of $50,000 were made in outside legal expenses plus additional reductions of <46,300 to retain the otherwise unfunded portion of the International Regulatory program. Safarisry The proposed operating budget for FY 1986/8? in column 96 reflects expenses reduced to a lavel of *14,0??,300, Funding at this level it provided by dues of <12,675,800 and other revenue in the amount of <1,401,500. Reserves would remain unchanged at <5,266,400 representing 37\ of the operating budget. The proposed schedule of fees, which includes the establishing of a minimum fas of <5,000 for membership in the Association is discussed under tab 93. 3 CMA 039633 CHWXCAL MANUFACTURERS ASSOCIATION PROPOSED BUDGET * SUMMARY OP REVO*UI AND EXPENSES SY NATURAL EXPENSE CLASSIFICATION rr 84/85 Actual, rY 85/86 Budget end Projected Results Preliminary FY 66/67 Budget end Base Level Adjustments FY 94/65 Audited Results REVENUE: Mab*nhip Dues Investment Revenge Meetings (Net of Expanses) Revenue iron Special Program Area AU other *11,718.100 1.219,000 190,400 33,400 21,100 TOTAL REVENUE; 613,201,000 STArr i RELATED EXPENSES; Salary * Ralatad Expanaa S 5,044,500 Employee Benefits 1,055,700 Travel 6 Staff Training 460,900 Outs, Subscriptions, * Publication, 106,600 Cut,id* Computer S*mcti 222,500 Meetings Workshops 112,500 General Printing, Art Graphics 52,900 Direct Postage, Freight t o,liv,ry 199,500" Supplia* c Ganaral Offica 59,900 Taxes, Insurance Audit 574,100 CKE*("RC and CPC Ttiaphona 62,700 Rent i Occupancy 767,400 Ccmr.Qr. Costs 043,600 Least Special Program Support (395,200) TOTAL; 5 9,226,300 OUTSIDE PURCHASED SERVICES; Regulatory, Laalalatlv, i Economic Analysis Outside Legal Fees federal Legislative Consulting Federal Coalitioning Expenses Audiovisual Hatsnal Support Printed Publications i Material Media Tours Related Expense Public Relations Awards Program Regional Csmunleatlona 5upport Print advartlalng i Produetior. S 723,500 1,547,200 730,100 14,600 510,600 255,300 355,300 65,400 344,500 TOTAL; S 4*446,500 TOTAL EXPENSES t 513,672,800 Contribution to Uaa sf Reaarvea S (471,800) Reatrvaa - laginning ot Year 5 6,064,500 Raaarvaa - End of Yaar t 5,592,700 Amended TY 65/66 Budget Projected FY 65/84 Results 8rliaU.nary FY 86/87 Budgat rY 86/87 Wee Level Progris Adjustments Proposed rY 86/87 Budget 512,978,000 512,954,300 512,606,500 $ 1,222.900 1,000,000 1,000,000 69,300 112,675,800 73,200 1,073,200 164,500 75,000 6,000 255,700 30,000 129,200 211,800 50,000 16,500 --m 50,000 211.900 50,000 66,500 514,448,400 >14,369,200 513,884,800 J 192,500 514,077,300 $ 5,685,700 1,231,100 479,800 t 5,532,200 1,155,100 477,500 i 5,954,100 1,240,200 506,600 f (228,300) * 5,725,800 (149,800) 1,070,400 (29,400) 479,400 110,800 247,500 96,100 107,200 244,100 84,500 125,500 231,600 92,700 (7,700) (10,000) (5,000) 117,800 221,600 87,700 77,100 96,600 9,000 (10,400) 78,600 199,900 52.500 643,300 107,600 945.600 -966,400 211,800 57.200 699,100 107,900 924,500 987,900 212,500 62,600 636,000 130,700 1,013,600 1,033,400 (12,500) (100) (21.800) -- (12.800) (50,000) 200,000 62,700 616,400 130,7C0 1,000,000 983,400 (425,200) (410,600) (436,900) -- (436,900) >10,441,300 >10,377,000 11,095,290 s (557,800) *10.537,600 5 952,000 > 945,600 5 920,000 $ (55,000) 5 665,000 1,489,200 1,495,4)00 1,500,000 (228.300) 1,273.700 530,000 600,000 300,000 -- 300,000 25,000 25,000 25,000 *- 25,000 372,000 407,000 403,000 (110,000) 293,000 405,100 366,100 403,000 (25,000) 370,000 370,000 365,000 385,000 ** 385,000 72,600 71,900 72,500 (72,500) * 65,500 85,500 65,500 145,500) 20,000 57.000 57.000 55.000 (55.0.00) S 4,358,400 $ 4,418,500 5 4,129,000 > (589,300) $ 3,539,700 514,799,700 >14,695,500 515,224,200 5(1 ,146,900 514,077,300 * (251,300) > (329,300) $(1,329,400) * -0- > 5,592.700 5 5,266,400 S 5,266,400 5 5,266,400 AUTHORIZED PERSONNEL 153 165 165 165 4 (6) 159 CMA 039634 W CHEMICAL MANUFACTURERS ASSOCIATION PROPOSED PEE SCHEDULE AND RESERVE CONSIDERATIONS EXHIBIT B-3 Stntril Corsnenta With no changes in the fee schedule And based on a sample f 67\ reporting by companies with silts in excess of 30 million ptr year, CMA du> would be predicted At $12*606,500 with member payments estimated in th following categories* (reports rtetivtd ss of 2/4/96) NO. Of Aver*?. Ptm:ip.n-i Pirtietpation St 1*1 Category NO. Comp.niti 414 51.8 Maximum Fee 9 478 15.4 over $400 mil 31 169 4.1 $100 * 400 41 31 1.3 50 - 100 24 8 .4 25 - SO 19 4 .3 is - :s 12 2 .4 10 - 15 5 1 .1 7.5 10 7 1 .1 5.0 - 7.5 7 0 .0 2.5 - 5.0 3 3 .4 1.0 - 2.5 7 1 .1 Canadian 11 0 -0 under $1 mil 2 1,112 6.3 176 Current Fee Schedule FY 96/87 Amount Ettln.t.d FY 96/87 Proposed Fee Schedule FY 86/87 Amount Zltiotttd lU *ooo $ 396,000 $ 3*166,000 $ .0249% 6,123,455 .0249% ,0278% 2,349,900 .0278% .0305% . 486,600 .0305% .0334% 1 225*200 .0334% 9*320 99*940 8*320 6,930 34,650 6*930 5*550 38*950 5*550 4,710 32,970 5,000 3*325 9,975 5*000 1*940 13,580 5*000 1*940 U.340 5,000 970 1,940 5,000 i 3,168,000 6,123,560 2.349,900 486*900 225*200 99*840 34*650 38*950 35*000 15.000 35*000 ss.ooo 10,000 12*606,500 12,675,600 Reserves At tht tnd of th currant yAr srt projected it 5*266,400 which would represent 37% of *n operating budget of 14*077*300 is set forth in tib 42, CMA's policy on reserves is that they should be maintained in a range with e maximum of 50% and the operating budget. of 25% of At the January 27, 1996, meeting of the Executive Committee, staff was directed to indicate the number of committee and task group participants from the various categories of member companies. Columns *1 and *2 above indicate --:al and average participation levels per the Association's records as of December 1, 1995. Internal records indicate 1,112 memoir company employees participating in the aetivitiei of 171 dues-supported conmttees* task groups and work groupa. Summary and Recorerendations With guidance from Executive Committee members that the proposed FY 1966/87 budget should present options that reflect no general increase in the fee schedule and no further use of reserves, the Finance Committee would reccrsnend fee schedule for FY 1986/67 at set forth in column 47 above. The recommended fee schedule would remain unchanged except that a minimum fee of 5,000 would be established in recognition cf the fact that there is a minimum cost to the Association of serving any member. While a minimum cost ol service is difficult, if not impossible, to compute -- the feet that many smaller members are relying or use cf tne CHEMTREC and Chemical Referral Center telephone numbers to meet their OSKA-mandated emergency and nonemeraency reporting requirements was noted as an example of costa bom by the Association in supporting smaller members. The FY 1996/97 proposed fee schedule per colusm 47 is projected to generate dues revenue in the ansunt of 12,675,900 as reflected in tab #2* Nf 5 CMA 039635 Addendum to Finance Committee Report EXHIBIT B-4 Issue Advocacy The Chemical Manufacturers Association has developed considerable skill at preparing technically sound, persuasive advocacy positions (products) on legislative and regulatory issues of great importance to the chemical industry. In this process, CMA's well managed professional association staff, with guidance and leadership provided by member company committee participants, makes very effective use of technical "sweat equity" primarily from the larger members. The effective use of member resources to leverage dues supported activity is one of the keys to the success of this effort. The CM A has recently begun to develop a complementary skill using member company resources to leverage delivery of CMA's advocacy products as an adjunct to the Association's traditional Washington, DC focused advocacy effort. The best example of leveraging -- Superfund -- has shown us all that issue advocacy effectiveness can be multiplied substantially through CMA staff leadership utilizing member resources all across the nation. That effort called upon our emerging grassroots network, worked with other associations, and with the media, and coordinated wide-ranging contacts in the political arena. Although the results are not yet what we want, we consider that effort a substantial success. The number of crucial industry issues is increasing and threatens to overwhelm our technical product development team. This comes, unfortunately, at a time when budget cuts are needed because of the economic condition of our industry. To sustain, we must either find a way to fund more effort or we must reduce demands for technical advocacy product development. This is a policy matter for decision by the Executive Committee. CMA 039636 - 2- It is our sense, however, that the "advocacy product delivery" capability is not as well leveraged as it can and should be. We recommend to the Executive Committee that management be asked to reallocate some advocacy resources from traditional Washington, DC based efforts (including the hiring of advocacy consultants) to the Product Development Program. In other words, if we augment our advocacy effort by calling on more advocacy "sweat equity" from the members, and especially from among the smaller ones, we can multiply the effectiveness of our dues supported advocacy effort. By placing emphasis on networking with other associations, the federal grassroots activity, state chemical industry councils, and other means of advocacy leverage nationwide, we should be able to reduce the advocacy budget, allowing the proposed resource reallocation. Smaller members would also benefit by being involved more actively in the affairs of the association. CMA can't do it all, but CMA and its members are in a superior position to provide leadership in networking and effective coalition building. Most of the CMA Board members, and many members not represented on the Board, have representatives on boards and committees of other trade associations. We have the power to ensure that the needed advocacy networking takes place. CMA members have responded during the Superfund grassroots effort and we are confident that they can and will respond to the leadership of the CMA Executive Committee on other critical advocacy issues. Lobbying nationwide through a sophisticated grassroots program will be more effective in bringing forth reasonable and balanced public positions on the issues that , concern us all. CMA EC-3/5/86 R. W. Davis Chevron Chemical Company EXHIBIT C Special Committee on Insurance Chairman: Thomas Caldwell Director, Corporate Insurance American Cyanamid company Vice Chairman: Steve Scammel Director of Risk Management GAF Corporation Terms ending May 31, 1987 David Bullock Risk Manager Celanese Corporation Benny Bumpers Manager, Corporate Risk Vulcan Materials Company Thomas Caldwell Chairman Director, Corporate Insurance American Cyanamid Company Fred Deitz Director of Insurance and Risk Management Nalco Chemical Company Thomas Lewison Corporate Risk and Insurance Management Degussa Corporation Lathorp Nelson Staff Associate Rohm & Haas company Steve Scammell Vice Chairman, Director of Risk Management GAF Corporation David Urbani Manager - Corporate Risk Air Products & Chemicals Inc. John J. Delaney Assistant Treasurer Olin Corporation Mark Wilson Risk Manager First Chemical Corporation Wolfgang Kunze Vice President and Treasurer Sherex Chemical Company, Inc. Randy Woods Director, Risk Management FMC Corporation EC 3/5/86 CMA 039638 EXHIBIT D OVERVIEW OF MCA/CMA POSITIONS ON TORT REFORM/PRODUCT LIABILITY CMA originally focused its efforts on the state level. In 1978, a Special Committee was created which targeted key states for action. The goal was to monitor product liability bills in those states and assist in enactment of sound legislation. The Special Committee was also an active participant*in commenting on the Uniform Product Liability Act developed by the Department of Commerce, which was intended to serve as a model for adoption by the states. Unfortunately, the model Act was largely ignored by state legislatures. This led the business community to shift its focus on product liability to the federal level. CMA at that time began actively pursuing a fair federal product liability bill. STATEMENT OF PRINCIPLES RELATING TO TORT REFORM/PRODUCT LIABILITY - 197B The Special Committee's Report, which was adopted by the Board of Directors in 1978, contained the following principles. Reasonable compensation - support principle that persons who are injured or whose property is damaged by reason of defective products or the handling of products are entitled to reasonable compensation. 6 Comparative responsibility (apportioned liability) - all parties who have contributed to an injury resulting from a product should bear a responsibility for the resulting loss proportionate to their respective responsibility in contributing to the injury. 0 Duty to warn - the duty to warn of the hazards of products should be satisfied by compliance with government standards relating to the content of warnings and the obligation to communicate warnings. State of scientific knowledge (state-of-the-act) - responsibility should be measured in light of the state of scientific knowledge at the time the product was manufactured and sold. 0 Time limitations for bringing litigation (statue of repose) - litigation should not be initiated after a reasonable period of time calculated from the date of sale of the product. Limitations excluding the chemical industry should be opposed. " Changes in the judicial system - changes would be supported to improve the system, such as modification of the contingency fee system, arbitration by a panel of experts in place of a jury and use of court-appointed experts. CMA 039639 PRODUCT LIABILITY AND THE KASTEN BILLS - 1962-1985 CMA was actively involved in the development of a uniform federal product liability bill. CMA coordinated its efforts through The Product Liability Alliance. This bill was sponsored by Senator Robert Kasten (R-WI). - Benefits of the Kasten bill to the Chemical Industry e create a uniform product liability law 0 reduce high transaction costs/lower legal fees * establish greater predictability regarding the legal responsibility of product manufacturers 0 help prevent deterioration of basic common law principles - Specific provisions in the Kasten bill that would assist the Chemical Industry in product liability actions 0 product design and failure to warn cases would be governed by a fault based standard e product sellers would be held to a standard of conduct consistent with practical technological feasibility at the time of manufacturer 0 claimant must show by a preponderance of evidence that the unreasonably dangerous aspect of the product was the cause of the harm e claimants award would be reduced by the amount recovered from worker's compensation 0 each person would be responsible for the proportionate share of harm he caused (comparative fault) manufacturers compliance with government safety standards would be given extra weight 0 punitive damages would be separated from the compensation claim and the amount awarded would be determined by the court In April of 1985, the Kasten bill failed to receive Committee approval on an 8-8 tie vote. This vote effectively killed the Kasten bill. Senator John ' Danforth (R-Missouri), in July of 1985, launched a new effort to enact a federal product liability bill. THE DANFORTH BILL - 1985-1986 The Danforth bill, introduced as S.1999, is a combination of two basic ideas. A uniform federal product liability standard similar to the previous Kasten bill (fault'based and limited punitive damages) s A claims system which would allow a person to file an expedited administrative claim. Under this alternative, a claimant could file to recover his or her "net economic loss" in an expedited proceeding with a simplified burden of proof The uniform product liability standards are an improvement over current tort law. The alternative claims system, however, presents serious difficulties and cannot be supported. The most serious problems with this system involve issues of causation. I *- CMA 039640  the claims system allows the use of questionable statistics to show causation (a 30% trigger) 8 a National Toxic Health Effects Panel would make determinations of causation without review or accountability * the claims system allows a claimant to select a defendant on a basis other than causation and responsibility (Sindell - type provision) a* CMA EC-3/5/86 CMA 039641 SUPERFUND STATUS REPORT Legislative Review By Wells Denyes, Eastman Kodak Company EXHIBIT E On February 6 and 7 the House and Senate appointed conferees to resolve the differences between the two versions of the Superfund bills. Until then, no action had occurred on Superfund since December and the end of the first session of the 99th Congress. On January 29, EPA Administrator Lee Thomas told the "Senate Environment and Public Works Committee that EPA would be forced to begin dismantling its Superfund program and terminating its clean-up programs because it is running out of money. Mr. Thomas recommended a one year extension of the feedstock taxes, which would provide about S300 million, plus authority to borrow an additional $600 million. This proposal was not well received, especially by Democratic Members who believe this is another effort by the Administration to reduce the overall size of Superfund to about $5 billion. The fear of a substantial reduction in clean-up apparently prompted rapid action in appointing conferees and the beginning of the final process to reauthorize Superfund. New that conferees have been appointed, committee staffs are preparing for conference, which could begin as early as February IS, the day Congress returns from recess. In anticipation of conference, CMA has prepared a comprehensive analysis of the House and Senate bills. Contacts are being made with the appropriate staffs to discuss the programmatic portions of the bill. On funding, the House and Senate versions have substantial differences in both the size of the fund and the funding mechanism. No easy reconciliation of these differences is seen. Therefore, CMA continues, through its officers, senior company executives and Washington representatives, to support the Senate Superfund Excise Tax (SET) and to discuss the inequity of the House-passed bill. These contacts are being made with key Senators, House Members and Administration officials. CMA also continues to work closely with API and the mining and steel industries. GMA's editorial board contacts and Grassroots program are continuing, aimed specifically at key Members, particularly those who have been appointed to the conference. CMA EC-3/5/86 CMA 039642 EXHIBIT F Tax Reform Advocacy Background The Senate Committee on Finance began active consideration of HR 3838 and other tax reform proposals with public hearings in late January and early February. The Committee received the testimony of several invited economists most of whom generally agreed that HR 3838 as passed by the House would make several key segments of U.S. manufacturing less competitive or non-competitive in U.S. and foreign markets. In addition, the Finance Committee's hearings focused on major new problems created by the proposed alternative minimum tax in HR 3838. After the Finance Committee concluded its hearings, a series of staff briefing sessions were held to determine what problems Senators had with HR 3838. At the request of the Finance Committee, the Treasury Department finished a 26-page analysis of the revenue estimates of several alternative revenue sources. In this respect, the major new sources of revenue to finance tax reform were items of major significance to the chemical industry - - an oil import fee and additional energy taxes. Chairman Bob Packwood (R-OR) has directed the Committee's staff to prepare a draft vehicle that will be the basis of markup sessions beginning in March. Senator Packwood's schedule is to complete Finance Committee action on the bill by late May with the Senate completing floor action before the July 4th Congressional recess. Although the Finance Committee schedule is considered optimistic, the Committee could begin important decisions by early to mid-March. CMA has submitted a written statement on tax reform to the House Ways and Means Committee and will submit an updated statement to the Senate Committee on Finance by February 25. CMA has in place a comprehensive work plan with specific assignments for legislative contacts and detailed follow-through. A copy of this work plan will be available on March 5, 1986. A summary of CMA's statement on tax reform is attached. Basic CMA Policy on Tax Reform: Although CMA supports President Reagan's stated goals of economic growth, fairness and simplicity, the current tax reform proposals would penalize capital intensive enterprises and those that engage in substantial international trade. Thus, CMA opposes HR 3838 and other tax revision proposals that would substantially increase the industry's costs of capital and production. HR 3838 as passed by the House would have serious and adverse impact on the U.S. chemical industry. CMA has established as part of the Superfund debate in the Senate that precipitous increases in the cost of producing feedstocks (by Superfund taxes) would render key segments of the chemical industry non-competitive in U.S. and foreign markets. By repealing or revising tax provisions like the Investment CMA 039643 tax credit, ACRS, and the minimum tax on corporations, HR 3838 would greatly increase the chemical industry's cost of production and would have an equally harmful impact on its relative competitive position. CMA continues to stress the specific defects of HR 3838 that would increase the tax costs of capital intensive enterprises and those that would have substantial impact on international trade. Moreover, CMA contends that several of the revenue raising alternatives suggested to finance tax reform - notably energy taxes and an oil import fee - would have similar harmful consequences for the chemical industry. Recommendations: The Government Relations Committee's Taxation Task Group recommends the following program for Executive Committee consideration: 1. As outlined in Attachment A, continue strong opposition to the provision of HR 3838 and other vehicles for tax revision legislation which would have a significant adverse impact on the chemical industry, with particular emphasis on capital formation and international competitiveness issues. 2. Continue to identify and work with multi-industry coalitions with similar concerns, including reevaluating participation in coalitions which would require a direct commitment of CMA financial resources. 3. Form an ad hoc Executive Committee task group to organize and coordinate Congressional visits by senior chemical industry executives. 4. Continue visits by CMA's tax legislative teams (Washington representatives and tax professionals) with the offices of members of the Senate Committee on Finance. 5. Schedule follow-up visits to key Senators by senior chemical industry executives utilizing the resources identified by the Executive Committee ad hoc task group. 6. Continue to coordinate all routine activity, including refinement and implementation of the full work plan, though the Government Relations Committee's Taxation Task Group (which Includes members of the Tax Policy Committee). Action Required: Approval of recommendations EC - 3/5/86 CMA 039644 ATTACHMENT A CHEMICAL MANUFACTURERS ASSOCIATION SUMMARY STATEMENT ON TAX REFORM Neither the President's tax reform proposal, nor its modified form in H.R. 3838, promotes economic growth, fairness, or simplicity. Both finance revenue neutral reform at the expense of America's capital.intensive industries, of which the chemical industry is a prime example. Our industry spends $15 billion annually on plant, equipment and machinery and employs 1 million Americans directly. The repeal of the investment tax credit and slowing of deductions for capital cost recovery alone would cost capital intensive industries more than the $122-140 billion shift in tax burden from individuals and noncapital intensive industries to capital intensive industries under these proposals. These and related changes would significantly increase the cost of capital, thereby slowing capital investment, and increase the cost of manufactured goods, thereby damaging our ability to compete in domestic and international markets. CMA believes review of existing reform proposals should . be guided by the following principles: 1) Economic growth and international competitiveness depend upon preserving or reducing the current cost of capital; reform should not be financed on the backs of our capital inten sive industries. 2) Research and development incentives must be retained or expanded for long-term competitive reasons. The 25% incremental R&D credit should be made permanent, as should the moratorium on regulations allocating domestic R4D expenses to foreign income. 3) An alternative minimum tax on corporations should be rejected. Its concept is inconsistent with tax reform and its burdens fall most heavily on those least able to afford it due to low profitability or investments for expansion. For our industry it would often result in a permanent flat tax. 4) The foreign provisions of existing law do not require extensive revision of the type comtemplated. The revenue benefits of the proposed changes are far outweighed by the obvious complexity of the proposals and their abandonment of well-understood, administrable rules. 5) Existing inventory accounting rules, which are sufficiently flexible to accomodate historic practices in a wide variety of industries, should not be overridden by a "super full-absorption" rule that binds all industries. 6) Reform should have no retroactive effect. In particular, the benefits expected from existing or presently planned investments should not be disturbed, and LIFO inventories should not be revalued. CMA 039645 ATTACHMENT B 1985-1986 TAX LEGISLATION WORK PLAN PROGRAM ELEMENTS: February 24, 1986 . POLICY REVIEW AND ISSUE EVALUATION A. Review of Treasury I -Reform Plan (completed May 1985) B. Analysis of Treasury II Tax Reform Proposals 1. Analysis (completed July 31, 1985) 2. CMA Statement on Tax Reform for House Ways and Means (completed July 30, 1985) C. Review of H.R. 3838, House-passed Tax Revision Legislation 1. Analysis (completed January 19, 1986) 2. Revision of CMA Statement on tax reform to Reflect Provisions of H.R. 3838 (under way) D. Selection of Priority Issues by Tax Policy Committee (initially completed August 13, 1985; reassessment in light of H.R. 3838 completed January 19, 1986) I. CEO visits to ranking members of House committee on Ways and Means to be scheduled after completion of House-Senate Conference on Superfund Reauthorization. 2. CMA Statement on Tax Reform legislation to be submitted to Senate Finance Committee by February 25, 1985. [. OUTSIDE STUDIES A. Price-Waterhouse study on Effective Tax Rates in the Chemical Industry. 1. Completed (approved August 13, 1985) 2. Transmitted to: Joint Committee on Taxation House Committee on Ways and Means Senate Committee on Finance Treasury Department (Assistant Secretary Tax Policy) for CMA 039646 2- - 3. Article in Tax Notes (published August 19, 1985) 4. Continued use in Congressional Tax and Superfund advocacy 5. Meeting with Staff of Joint Committee on Taxation on 1984 effective tax rate study February 19, 1986. B. IRET Study on Impact on Chemical Industry of Proposed Changes in Tax Treatment of Capital-intensive Investments. 1 - Initially completed and approved December 1, 1985 2 - Tax Policy Committee requests update, February 4, 1986, approved February 18, 1986. III. ADVOCACY DOCUMENTS A. Basic CMA statement on tax reform delivered to House Ways and Means (July 30, 1985) B. Summary CMA position on tax reform (August 15, 1985) C. Preparation of Separate Advocacy Documents 1. General Statement completed July 30, 1985 2. Brief Statements completed August 23, 1985 3. Modifications of above to reflect House passage of H.R,, 3838 (to be completed by February 25, 1986) Specific Issues (in order of priority): 1. Capital Cost Recovery System - Investment Tax Credit 2. Foreign Tax Credit - Per Country Limitation 3. Minimum Tax (Administration and H.R. 3838 Alternatives) 4. Inventories and other Accounting Provisions 5. Source Rule For Sales 6. Allocation of Expenses (including interest) 7. Research and Development Expenses 8. Transfers of Intangibles and Intellectual Property 9. Section 936 Possessions Credit (Puerto Rico) IV. LEGISLATIVE CONTACTS -3- A. In General 1. Legislative Contact Teams - 3 member teams consisting of representatives from Tax Policy Committee, GRC Taxation Task Group, and CMA. (completed, September 13, 1985) 2. Initial Contacts - Contact Teams to focus on results of Price Waterhouse effective tax rates study, to deliver CMA advocacy papers, to respond to questions on specific issues, and to schedule return visits (completed October 1, 1985) 3. Task Group Meetings - Washington representatives of member companies and disignated representatives of Tax Policy Committee hold weekly briefings on tax legislation. In these meetings CMA coordinates the tax legislative activity of the Washington representatives through specific assignments, review of legislative intelligence and detailed follow-through. B. House Advocacy Assignments 1. Committee on Ways and Means a. CMA Statement on Tax Reform - Presented by Dexter F. Baker, President, Air Products and Chemicals, Inc. (July 30, 1985) b. Meetings with Professional Staff (continuing) c. Meetings with Committee Staff Leaders (continuing) d. Meetings with Individual Congressmen i. Specific Assignments for initial contacts (completed September 13, 1985) ii. CEO visits to ranking members of House Committee on Ways and Means to be scheduled after completion of HouseSenate Conference on Superfund Reauthorization, 2. Leadership a. Meetings with House Democratic Leadership (completed September 17, 1985) b. Meetings with House Republican Leadership (under way) C. Senate 1. Senate Finance Committee CMA 039648 -4- a. CMA Statement to be filed in Senate Finance Committee Hearings on H.R. 3838 b. Staff Leadership (continuing) c. Tax Professionals (continuing) d. Individual Senators - Specific assignments of CMA Teams o Washington representatives and tax professionals of member companies. 2. Senate leadership - Specific assignments (underway) V. Administration Contacts A. initial comments to Treasury by CMA Executive Delegation. Comments from member company CEO's on impact of Treasury II tax plan with respect to capital formation and foreign tax issues as requested in Executive letter from R.A. Roland. B. Courtesy comments to Treasury Assistant Secretary for Tax Policy 1. Price Waterhouse Study 2. IRET Study C. General reservation of opposition mail until after HouseSenate conference on Superfund reauthorization legislation, VI. Coordination of Activities with Allied Trade Associations A. identification of allied interest groups (completed September 9, , 1985) B. Specific Assignments of task group members to attend/monitor allied trade group meetings (completed, September 13, 1985) C. Transmittal of CMA Tax Policy position to allied trade associations 1. Original CMA statement (September, 1985) 2. Revised CMA^statement to reflect provisions of H.R. 3838 (to be completed by February 25, 1986) VII. Press : Response to inquiries. More direct activities to be considered after House-Senate Conference on Superfund Reauthorization is completed. CMA 039649 CONTACTS 5 St. Clair Tweedie Director, Government Relations American Cyanamid Company Chairman, Taxation Task Group (202) 789-1222 William M. Bellamy, Jr. Chief Tax Counsel Union Carbide Corporation Chairman, Tax Policy Committee (203) 794-6214 Robert B. Hill Legislative Representative for Taxation CMA Staff Executive (202) 887-1128 CMA 039650 EXHIBIT G INCREASED INFORMATION SHARING ON POLITICAL ACTIVITIES BY THE CHEMICAL INDUSTRY BACKGROUND At. the January CMA Board of Directors meeting, Ken Davis of Rohm and Haas and Ken Cole of Allied-Signal presented a proposed program to increase coordination of the industry's political activities. Based on the discussion at the January meeting and subsequent review by senior counsel of several companies, this program will be limited to the gathering and sharing of information on campaigns, candidates and key issues. Specifically, this sharing of information will Include: . the status of Congressional races; . candidates (both incumbents and non-incumbents) and their positions on chemical Industry issues; . sources of campaign contributions and; . identification of candidates of particular importance to the chemical industry. Thia information will be shared through non-partisan, non-fundraising activities. Additional activities will involve encouraging wider company participation in the political process. This would Include discussions of how to form and successfully administer a political action committee (PAC). Company PAC managers would be asked to share their expertise and experience in managing a PAC, Two clarifications were requested at the January Board of Directors meeting concerning CMA's proposed activities. First, whether there are any legal ramifications which would adversely affect member company PACs. This matter was reviewed and, to address any potential concerns, the program was modified to eliminate these items of concern. Second, how do similar associations deal with these activities and whether they have any problem CMA should be aware of? The American Petroleum Institute, American Iron and Steel Institute, American Paper Institute, American Textile Manufacturers Institute, American Electronic Association and Edison Electric Institute have been contacted regarding the nature of their coordination of political activities. Two of those associations had their own PACs (the American Textile Manufacturers Institute and the American Electronic Association). None of the other CMA 039651 associations contacted had any formal method of dealing with member company PACs. However, American Petroleum Institute indicated that they were considering improving their capabilities in these areas. The conclusion of the survey was that none of the associations contacted had any experience which would indicate any problems with CMA's proposed activities. A meeting of PAC managers from member companies is tentatively planned for March 21. This meeting will review the status of several Congressional elections. RECOMMENDATIONS Authorize the Government Relations Committee to: 1. promote sharing of information on campaigns, candidates and hey Issues; 2. encourage new and greater Involvement in the political process by member companies. IMPACT A) Money: No new funds are requested at this time. B) Staff: This program will require approzimately 10 - 20 percent of the time of one executive staff member and support staff member. C) Company Personnel: participation will be required from member company personnel in the CMA Task Group and related activities. ACTION REQUIRED Approval of the program and activities as outlined. EC - 3/5/66 CMA 039652 g EXHIBIT H AIR TOXICS CONTROL POLICY WORK PLAN BACKGROUND The CMA Board of Directors, at its January 28, 1986, meeting, approved the Air Toxics Control Policy. As the lead CMA committee in implementing the policy, the Environmental Management Committee (EMGr has established an Air Toxics Group to coordinate implementation activities among the various CMA standing committees. The Air Toxics Group is made up of member company representatives and staff from the EMC, Health and Safety Committee, Communications Committee, Government Relations Committee, and State Affairs Committee. IMPLEMENTATION ACTIVITIES The Air Toxics Group met on February 11, 1986, and addressed two policy implementation steps which require immediate action. First, plans were finalized for conducting regional workshops on the air toxics control policy for member companies and state chemical industry council representatives. (The initial round of workshops, cosponsored by state CICs, will begin February 26, 1986, in Columbus, Ohio. Tentatively plans call for concluding the initial workshops on April 11, 1986, In Hartford, Connecticut.) Second, the development of a work plan for implementing the approved air toxics control policy was started. Attachment A Is an outline of the subjects that will be addressed in the work plan. An initial work plan will be presented to the Executive Committee on March 5, 1986. The work plan will be a dynamic document, modified as new information and/or needs are identified. In this regard, we expect to identify additional training needs, to be incorporated into the work plan, as a result of: (1) feedback at the regional workshops; (2) feedback from the company air toxics coordinators (to be designated by March 15, 1986); and (3) recommendations from the CMA standing committees represented on the Air Toxics Group. ACTION REQUIRED None--for Information only. As the work plan and its implementation activities evolve, and CMA and the member companies' implementing activities increase, we will report periodically to the Executive Committee and the Board of Directors on progress as well as any problems or needs which may arise in implementing the policy. EC - 3/5/86 CMA 039653 Attachment A AIR TOXICS CONTROL POLICY WORK PLAN Short-Term Work Plan (February-April) A. Disseminate Policy to CMA Members and CIC Members o Executive Letter (COMPLETED) o Letter to Environmental and Health and Safety Contacts (COMPLETED) o Letter to State Chemical Industry Councils (COMPLETED) B. Establish Air Toxics Coordinating Group o Initial meeting February 11, 1986 (COMPLETED) o Coordinate Association Activities and Assign Implementation Responsibilities (COMPLETED) o Develop Work Plan (INITIAL VERSION COMPLETED) C. Initiate Member Company Activities o Assign Coordinators by March 15, 1986 o Attend Workshops and Identify Training Needs and Provide Initial Feedback on Company Implementation Actlvltles/Plans D. Conduct Education Workshops o Develop Brochures and Mail to CMA Members and CICs (COMPLETED) o Conduct Workshops in: o Columbus, OH (2/26) (COMPLETED) o Chicago, IL (3/25) o Cherry Hill, NJ (3/4) (COMPLETED) o Oakland, CA (3/26) o Houston, TX (3/11) o Atlanta, GA (4/1) o New Orleans, LA (3/13) oCharleston, WVA (4/8) o Hartford, CT (4/11) o Workshops to be Cosponsored by and Developed in Conjunction with the CIC E. Hold External Briefings o February and March o Related Associations, State and Local Officials, Federal Regulatory Agencies, and Key Congressional Members o American Petroleum Institute (COMPLETED) o Chamber of Commerce (3/10) o Council of Chemical Associations (3/19) o EPA-Office of Air Quality Planning and Standards Office, RTP, NC (COMPLETED) o Synthetic Organic Chemical Manufacturers Association (3/7) o State and Territorial Air Pollution-Program Administrators (3/6) o National Association of Manufacturers (2/26) CMA 039654 F. Flan Policy Announcement o March 13, 1986 - New Orleans o Follow-up Unlv. of North Carolina School of Public Health Annual Conference (March 20, 1986); 1986 Hazardous Spills Conference (May 6, 1986); and Air Pollution Control Association Annual Meeting (June 2A, 1986) 11, Long-Term Work Plan (April and Beyond) A. Provide Technical Assistance o Technical Workshops (1) Initial technical workshops - June (inventories, screening, assessments, and control prevention options) (2) Follow-up initial technical workshops - September (control and prevention options) o Testimony and/or White Paper Preparation - As Needed o Technical Aids (1) Accidental Releases o Health & Safety Committee (lead), Environmental Management Committee-Hazardous Air Pollutants Work Group, Air Dispersion Modeling Task Group, Environmental Monitoring Task Group, Air Regulations & Standards Task Group (support), Engineering Advisory Committee (support) o Work Products - June 1986 (2) Process Emissions o Environmental Management Committee (lead), Health 6 Safety Committee-Risk Assessment Task Group, Health Effects (support) o Work Products - June 1986 B. Conduct Reporting and Tracking o Informal Tracking using Coordinators (as needed) o Surveys (September 1986) and/or End-of-the-Year Report o Coordinator Meetings (Summer 1986) o Newsletter (May 1986 first edition) C. Promote Effective Communications o Educational Brochures o Grassroots NdVsletter o Media Communications (l.e., media tours, editorial boards) o Media Training o Communications Workshop(s) D. Conduct Federal Regulatory Advocacy o Rulemaking Proceedings on Listings, Proposed Standards/Regulations (ONGOING) o Administration Legislative Positions o Identify Percentage of Chemical Industry Air Toxics Emissions CMA 039655 E. Conduct Federal Legislative Advocacy o Grassroots Program o Solicit Increased participation by member companies (COMPLETED) o Identify key members of Congress in air toxics debate (COMPLETED) o Coordinate with Communications Department and Clean Air Act Task Group on message development (ONGOING) o Identification of constituent chemcial industry employees living in key Congressional districts (CLR's) (ONGOING) o Grassroots managers meetings on air toxics control policy and CMA grassroots message (4/22/86 & 5/6/86) o Coalition meetings with members of Congress (JuneDeeember 1986) o Information Gathering/Political Base-Touching with Hill Leadership o Education of Key House and Senate Members o Coalitioning o Political Support of Selected Members of Congress o Obtain Support for CMA Policy from Key House and Senate Members (ONGOING) o House leadership o Energy and Commerce Committee/Health and the Environment Subcommittee o Congressman with plants in district o Referral committees o Rules Committee o Senate leadership o Environment and Public Works Committee o Senators with plants in states o Referral committees F. Conduct State Legislative and Regulatory Advocacy o New or Amended Air Toxics Legislation o Listing of Substances and Proposed Regulation o Emission Inventory and Industry Summaries G. Conduct External Liaison and Outreach o Other Industry Groups o Public Interest and Environmentalist Groups (NCAC, OCAW) o Professional Societies o State and Local Government Associations o National Governors Association o National Conference of State Legislators o National Association of Counties o State and Territorial Air Pollution Program Administrators TABLE OF CONTENTS EXHIBIT I REPORT OF THE PRESIDENT Association Issues and Program Report Page I. ADVOCACY OVERVIEW A. Congress.................................................................................... B. Federal Regulatory Agencies............................................................................................. C. International.................................................................................................................................. D. States................................. E. Media..................................................................................................................................................... 1 2 2 3 4 II. ISSUES AND PROGRAM STATUS A. Hazardous Waste (Superfund)................................................................................................. 4 B. Hazardous Waste Management (RCRA)................................................................................... 6 C. Air............................... ........................................................................................................................ 8 D. Surface Water.................................................................................................................................. 10 E. Groundwater (Includes safe Drinking Water Act).................................................... 10 F. Regulation of Chemicals (TSCA and related).............................................................. 12 G. Public Compensation (Risk, Health and related issues).................................... 14 H. Occupational and Public Safety.......................................................................................... 15 I. Community Awareness and Emergency Response (CAER)............................................. 17 J. Chemical Product Distribution Advocacy....................................................................... 19 K. National Chemical Response and Information Center (NCRIC).......................... 22 L. Energy and Petrochemical and Feedstocks..................................................................... 24 M. Taxation.......................................................................................................................................... 26 N. Plant Management and Design (Engineering Codes and Standards)................. 27 O. International Trade/International Competitiveness............................................. 27 P. International Regulatory Issues (Health, Safety, and Environment).... 30 Q. Patents and Protection of Technology............................................................................ 31 R. State Legislative and Regulatory Advocacy................................................................ 31 S. Specific Chemical Research and Advocacy..................................................................... 34 III. DEPARTMENTAL PROGRAM NOTES A. Office of the President.......................................................................................................... 36 B. Government Relations Department........................................................................................ 37 C. Technical Department.................................................................................................................. 37 D. Communications................................................. 37 CMA EC-3/5/86 CMA 039657 REPORT OF THE PRESIDENT *** ASSOCIATION PROGRAM AND ISSUE REPORT I. ADVOCACY OVERVIEW A. Congress President Reagan has sent to the Congress his FY 1987 Budget which proposes to meet the Gramm-Rudman-Hollings deficit targets, which declines from S144 billion in fiscal year 1987 to a balanced budget in fiscal year 1991. Proposed spending cuts rise from $32 billion in 1987 to S101 billion in 1991, and revenue increases total $6 billion in 1987 and $4 billion in 1991. The President's budget proposal would reduce the total budget deficit from 5.4 percent of GNP in 1985 to 3.2 percent in 1987, 1.9 percent in 1988, and zero by 1991. The question remains as to whether monetary policy can be adjusted in a timely way to sustain economic growth during a period of increased fiscal restraint. The reductions are to be achieved by terminating and reducing programs, selling Federal assets, transferring programs to state and local governments, imposing or expanding user fees and cutting various program and management costs. The President's budget forecast is more optimistic on real growth over the entire period than the forecasts of private economists, but shows slightly higher inflation and interest rates in 1986. This possibly reflects the fact that the Administration forecast was prepared before the sharp drop in oil prices during January. If the economy performs in line with the private forecasts rather than Administration's the deficit could be $14 billion higher in 1987 and $40 billion higher by 1989 than projected in the President's budget. The 1986 Congressional session continues to remain unpredictable because of the challenges presented by the Gramm-Rudman-Hollings Balanced Budget and Emergency Deficit Control Act of 1985. The legislative agenda sent to the Congress by President Reagan on February 6 reiterated the initiatives in his State of the Union address and also included tax and antitrust law revision, product liability changes, trade legislation and complete deregulation of natural gas pricing. Congress still would like to address Superfund, Safe Drinking Water Act amendments, Clean Water Act amendments, reauthorization of the Hazardous Materials Transportation Act, Clean Air Act amendments and other important issues before their scheduled adjournment of October 3. CMA 039658 B. Federal Regulatory Agencies Food and Drug administration (FDA) s Environmental Protection Agency (EPA). Last month the Food and Drug Administration took a public stand on deminimis exposures and endorsed reliance on risk assessment as a tool for making regulatory decisions. FDA stated that the lifetime risk of cancer from drinking decaffeinated coffee was less than one in a million and, therefore, that the risk from exposure to methylene chloride, used to decaffeinate coffee, was deminimis. FDA had previously held that the Delaney clause disallowed any addition of any carcinogen in any amount to any food products. FDA's decision now has company, SPA, acting under the Resource Conservation and Recovery Act, has proposed that some known and suspected carcinogens can be disposed of in landfills and underground injection wells. EPA calculated that at the proposed concentrations, any leachates reaching drinking water supplies would have caused only one excess death from cancer per million people who might drink the water over a lifetime. Historically, the agencies have often not regulated a substance when the lifetime risk was less than one in a million, but such assessments were not used to justify inaction and until now it has never been used to justify setting or suggesting a standard. Analyses by CMA and AIHC have shown that past regulatory agency decisions to regulate or not regulate a particular substance have been radical when viewed from a perspective of lifetime risk, but agency staff, and many key scientists are now talking avidly about the risk of one in a million as a basis for risk comparisons. These decisions, by EPA and FDA, which are sure to be attacked by those who advocate a risk free society, offer hope of a trend toward good science. Occupational Safety s Health Administration (OSHA). The Agency is feeling increased public and congressional pressure to develop a standard for regulating chemical plant processes. Secretary Brock expects OSHA to publish a proposed regulation this summer. C, International The Congress and Administration are dismayed over the country's S148.5 billion trade deficit for 1985. However, no one has an answer to the problem except for a hope that a cheaper dollar will help exports and inhibit imports. Hundreds of trade bills have been introduced, some of which are directed toward solving the trade deficit problem. No one believes they will. The chemical and allied products trade balance dropped for the fifth year in a row to an estimated $7.6 billion. The most meaningful trade bill has yet to emerge. On January 23, ways and Means Trade Subcommittee Chairman Sam Gibbons announced that omnibus legislation, now in drafting stage, may be introduced in March. In mid-March, Mr. Gibbons will involve his trade subcommittee 2 CMA 039659 in a retreat to discuss the draft bill. He predicts that natural resource subsidies, telecommunications, trade adjustment, non-market economy country investigations, and modifications in the antidumping, countervailing duty laws and Section 301 of the Trade Act of 1974 are likely to be included. Mr. Gibbons did not make it clear as to whether an MTN bargaining authority would be included. Mr. Gibbons hopes the Ways and Means Committee will report the bill out in June, that the Senate will take it up,,in August and that it will get to the President's desk before the election. Many, including Congressmen, believe the Congress cannot meet this schedule and that there will be no trade bill this year. CMA now has a Board approved position on parts of the expected bill that are important to the chemical industry. However, it will continue to be neutral on the natural resources provision due to the differing positions of member companies. D. States In a year where 38 governors face re-election, most governors emphasized continued support to the issues of the day in their state of the state messages. In capital after capital, the governors' speeches echoed concern over such issues as educational reform, economic development, infrastructure repair and environmental improvements including hazardous waste disposal and water quality. Above all, the governors issued a plea--to Congress, legislatures and citizens--for sound fiscal management. Environmental proposals varied from structural reforms to new funding mechanisms. The nation's newest governor, Gerald Baliles of Virginia, plans to divide one cabinet office of economic development and environmental quality into two. Governor George Deukmejian of California is again asking for a new cabinet-level department of waste management that would consolidate some functions of two boards and one department. Arizona Governor Bruce Babbitt put his water quality bill back on the agenda after the legislature rejected it last year. Governor Cuomo is among many governors experimenting with new funding mechanisms for environmental cleanup. He has proposed a new SI.45 billion environmental bond issue, of which $1.2 billion would help clean up New York's hazardous waste. The growth of state groundwater programs and their impact on the chemical industry will accelerate as U.s. Representative George Miller (D-CA) introduces legislation requiring states to establish and maintain extensive programs including provisions for monitoring and standards, as well as other controls. The District of Columbia has proposed to study the risk relative to the transportation, use and storage of hazardous materials in the area. CMA supports the study and offered to submit the names of qualified industry representatives for the study commission. CMA 039660 The State Affairs Committee and the State Toxic Air Task Group are working with CMA technical groups to implement the new Air Toxics Policy involving state trade organizations and groups such as the National Conference of State Legislatures. The liability insurance/tort reform activities fall into three categories: 1) stopgap measures to assure some insurance coverage; 2) measures to "fix" parts of the liability concerns; and 3) longer term hearings and/or studies of the crisis and underlying tort system. E. Media Attention to acute and chronic health effects related to chemicals has been a growing subject for television. Typically a national television presentation--both news and fiction-guarantees a heightened public interest and perhaps concern. In late February CBS "60 Minutes" plans to present a story about long term health effects attributed to exposure to toxic chemicals through drinking water at Woburn, Massachusetts. Both the Massachusetts Department of Health and the Center for Disease Control in Atlanta have identified leukemia incidents in children. CBS moved very rapidly to try to air the segment prior to a February 25 P.B.S. NOVA program about the same subject. NOVA's program, "The Woburn File", will include several sections; o A visit to Perham, Minnesota, where epidemiologists have linked health effects to contaminated groundwater, o The Solresira site in Lowell, Massachusetts, o CDC in Atlanta. o The National Toxicology Program at Research Triangle, o Massachusetts General Hospital in Boston. ABC's "Acceptable Risk", a doeudrama about a chemical leak which turns into a catastrophe for a small town, is now scheduled to air Sunday, March 2. The story is about a plant manager, threatened by foreign competition and faced with a need for higher production, who takes an "acceptable risk" and elects not to do certain safety maintenance. At the same time the community has done no emergency planning. The two conditions produce the catastrophe. CMA is meeting ABC to encourage a public affairs program which will review the positive steps the industry has taken since Bhopal. II. ISSUES AND PROGRAM STATUS A. Hazardous Waste (Superfund) 1. Congressional Developments and Response 4 Senate Activity The Senate Environment and Public Works Committee received testimony on the status of the Superfund program, January 30, from EPA Administrator Lee Thomas. Thomas said that the Superfund program will begin shutting down April 1, if Congress does not pass a new funding bill. Thomas said he would begin cancelling cleanup contracts April 1; stop the EPA's laboratory analysis work in June; shut down the cleanup program in July; and begin laying off 1,S00 employees in September or October. ^ For the first time EPA has said if Congress can not reauthorize Superfund for the full five years then a one year extension would be appropriate to keep the clean-up program in operation. Thomas said the one year extension could be funded by using the current level of feedstock and petroleum taxes to raise 5300 million and anything above that from borrowing authority. The reauthorization of Superfund moved forward February 9, when the Senate appointed conferees from the Finance, Environment and Public Works, and Judiciary Committees. It appears Congress will now begin the Superfund conference after the Washington birthday recess ends February 18. They will be aiming to complete a long or short term extension of the Superfund program by April 1. The Superfund funding proposal has been deleted from the budget reconciliation legislation so that the budget proposal can move forward and Superfund can be considered in its own conference. House Activity. With increasing concern that the Superfund money will run out April 1, the House has appointed conferees from five committees. Representatives from Ways and Means, Energy and Commerce, Public Works and Transportation, Judiciary, and Merchant Marine and Fisheries will meet with the Senate conferees sometime after February 18. The House and Senate conferees will have a difficult time resolving the issues of taxing mechanisms and size of the fund. The program issues of clean-up schedules, clean-up standards, settlement policy, right to know and other issues will have to be worked out between the different House committee conferees before they are resolved with the Senate conferees. CmA Activity. The Government Relations Committee's Superfund Task Group has made chemical industry CEO assignments for key members of the White House, Executive Branch Department and key Senators. Also , the task group will identify House Members that need CEO level visits; and will make member company Washington Representatives assignments for each House and Senate conferee. Legislative language on chemical industry issues is being developed for the conferees and updated material is being developed in the effort to establish a broad based tax to finance Superfund. CMA is coordinating its efforts on funding with the petroleum, steel and mining industries. Liaison is on going with a broad 5 CMA 039662 spectrum of business interests on the program issues including rightto-know. 2. Grassroots Activities Since 1983 the Grassroots Program has concentrated on the Superfund Reauthorization debate. Additional contacts or letters will be initiated for the Superfund conference as requested by the Government Relations Committee's Superfund Task Group. Grassroots contacts are being maintained through the Grassroots Newsletter. 3. Regulatory Developments and Response National Contingency Plan Revisions Judicial Challenge. The Environmental Management Committee has authorized CMA to file a judicial challenge to EPA's revisions to the National Contingency Plan. The issues of concern are: (1) application of relevant and appropriate clean up standards; (2) cleanup must attain or exceed applicable standards; (3) cost-effectiveness has been relegated to lesser consideration; and (4) inappropriate discretion in the selection of remedial alternatives. The outcome of the Superfund reauthorization process and the final cleanup standards provision will impact how vigorously an appeal is pursued. 4. Communications The latest in a series of update letters has been sent to all editorial board contacts on the status of pending House and Senate reauthorization proposals. Media in selected Congressional districts/states represented by likely House-Senate conferees have been identified. Targeted communications will be undertaken in selected districts/states when conferess are indentified. Eight radio newsfeeds were developed and distributed to the "Report" and "Lifestyle" networks on Superfund issues. The Superfund issues briefing booklet was updated. A new advocacy paper for use in the 1986 Superfund government relations/communications campaign will incorporate the EPA list of more than 8000 potentially responsible parties (PRP's) at Superfund sites. The PRP list will eventually be available for staff and member companies to use in Superfund related activities. "Cleaning Up", CMA's waste site cleanup film, has fourteen confirmed or planned airings. The film has been ordered by 34 cable stations, and is being previewed by 29 commercial stations. Print and tape sales to member companies number 111. B. Hazardous Waste Management (RCRA) 6 1. Congressional Developments and Response It appears that there may be upcoming legislative activity in the RCRA program over the next few months, as both the House and the Senate plan oversight hearings of EPA's proposed regulations of the 1984 laws. A key issue of legislative concern will be the effects of the loss of interim status on RCRA sites. Other areas .that may be the subject of future hearings are groundwater monitoring regulations, inventory requirements and insurance availability. The other major area of concern is the EPA land disposal ban regulations. The Senate Environment and Public Works Committee and the House Energy and Consnerce Committee both plan on holding oversight hearings on the land disposal bans. CMA will be submitting comments for the hearing record. 2. Regulatory Developments and Response Proposal to List Used Oil. The EMC's RCRA Regulations Task Group has developed two sets of comments submitted to EPA on RCRA's applicability to used oils. The first set of comments supports EPA's decision to list used oil as a hazardous waste but expresses technical concerns with the definitions and scope of the used oils subject to the RCRA regulatory regime. The second set of comments addresses technical concerns with the specific technical standards that will be applicable to used oils that are RCRA hazardous wastes. Proposed Revision of the Spent Solvent Listing. The EMC's RCRA Regulations Task Group has submitted comments to EPA on a proposed revision to the spent solvents listing. The comments support a proposed revision that will limit the number of facilities that otherwise might have to obtain a major permit modification to continue operating. EPA recognizes in the revision that most companies were already treating spent solvents as RCRA hazardous wastes. 3. Underground Injection and Control Project Position Papers. The EMC has endorsed four sets of position papers developed by the UIC Management Group. The position papers cover: (1) monitoring wells, (2) compatibility, (3) mechanical integrity testing, and (4) post closure care and financial assurance. The UIC Management Group plans to use these position papers in discussions with EPA and in an EPA sponsored regulatory negotiation of RCRA requirements that will be applicable to UIC facilities. 4. Litigation and Related Activities Definition of Solid Waste. CMA is challenging in the Court of Appeals EPA's January 5, 1985, rule defining solid waste to include materials resulting from a manufacturing process that are reclaimed and reused in a "closed-loop" manner in the same manufacturing process. This rule would subject to the panoply of RCRA regulations 7 CMA 039664 an estimated 3000 to 5000 tanks used by CMA members in their manufacturing operations. As part of the litigation, CMA has convinced EPA to propose an amendment to its rules that would exclude this "closed-loop" reclamation from EPA jurisdiction. EPA proposed such an amendment on December 16, 1985. CMA filed comments supporting the amendment on January 30, 1986, and urged members to also file supporting comments. Codification Rule/Corrective Action. CMA has intervened in a challenge to EPA's July 15, 1985 rule codifying the 1984 RCRA Amendments. The challenge involves, among other issues, the question of to what extent owners of waste facilities must repair the environment damaged by prior releases. CMA is monitoring the litigation and may participate in settlement negotiations with EPA aimed at clarifying the rule. EPA staff have expressed interest in discussing the procedures one must undergo to determine the scope of the corrective action that must be taken. Inorganic Leaching VHS Modal. On November 27, 1985, EPA issued a final rule adopting a model that predicts the leaching, migration and persistence of inorganic wastes in the land. EPA will use the model to determine which inorganic materials should be listed/delisted as hazardous wastes. The model, with some variations, will also be used to determine which inorganic wastes will be banned from land disposal. On February 12, 1986, the RCRA Regulations Task Group will recommend that the Environmental Management Committee support an appeal of the rule. CMA's major concerns are that the model relies on too many worst case assumptions and the model does not account for site-specific factors. C. Air 1. Congressional Developments and Response Congress has been considering the potential impact of GrammRudman-Hollings on EPA's existing budget including its Clean Air Act programs. Therefore, Senate and House committee staff are projecting that committee hearings on air toxics may be scheduled in the Spring when Grantm-Rudman-Hollings implications should be clearer. CMA's Clean Air Act Task Group has begun implementing a work plan for CMA's approved^Air Toxics Policy. Briefings are being held for CMA's Washington representatives, and with key Members of Congress and staff. 2. Grassroots Activities The Grassroots Program is increasing concentration on the toxic air emissions issue. Working in' conjunction with the Government Relations Coimittee's Clean Air Act Task Group, the Grassroots Program is in the process of identifying selected Congressional districts and states to organize meetings with Congressmen and Senators on this issue. 8 CMA member companies will be asked to identify plant personnel who can explain how the CMA toxic air policy affects their facilities. The Grassroots Program will help those plant personnel better understand their responsibilities to communicate with their Federal legislators. The Grassroots Program will participate in the regional meeting organized by the Environmental Management Committee and hosted by CIC's. These meetings will be designed in part to^explain the role of the Grassroots Program in communicating the CMA toxic air policy to Federal legislators. 3. Regulatory Developments and Response EPA Intent to List Administrative Process. The EMC is evaluating whether or not to authorize CMA intervention in a Federal district court case brought by NRDC challenging EPA's intent to list process. At a minimum CMA will assist other trade groups who have intervened or plan to intervene in the litigation (i.e., utilities group, API). If CMA intervenes we will primarily pursue jurisdictional issues and seek to preserve EPA's intent to list process. 4. Policy Development, Analytical and Program Activities Air Toxics Control Policy Workshops. CMA, in conjunction with eight state chemical industry councils, will be sponsoring workshops on the recent Board approved air toxics control policy. The workshops will start in late February and run through early April. The workshops will (1) discuss the policy, implementation plans, and status reports on company activities, and (2) identify company activities that are ongoing or planned, and workshops, training aids, or other support activities that may be needed. Emergency Models Evaluation. The EMC's Air Dispersion Modeling Task Group is in the final stages of an activity that is evaluating the strengths and weaknesses of various emergency models. The contractor's evaluation is being reviewed by the companies whose models were evaluated by CMA's contractors. All comments received will be appended to the final report. The final report will be available to member companies to assist them in designing the most appropriate accidental release response program. 5. Litigation and Related Activities Vinyl Chloride Litigation. Oral argument in the vinyl chloride litigation is scheduled for Wednesday, February 26, in the U.S. Court of Appeals for the District of Columbia Circuit. This case will be the first to decide the meaning of the "ample margin of safety" test in section 112 of the Clean Air Act. The Natural Resources Defense Council argues that EPA must set zero-risk, zero-emission standards for all carcinogens. CMA, which intervened in the litigation, argues that EPA has flexibility under the statute to consider cost and 9 feasibility in setting emission standards. A decision is expected this spring. 6. Communications To date, department activities have been limited to assisting Government Relations and Technical staff identify potential broad communications options (press, public, government, etc.), and to beginning work on developing messages and communciations needs. The department developed, through outside public relations counsel, a "white" paper on messages/positions of major environmental organizations active in air emissions issues. The department is developing a briefing book on air toxics control and related issues. The materials will be used by CMA spokespersons to discuss air emissions control activities and media tours. The briefing package will be ready in March. D. Surface Water 1. Congressional Developments and Response Political posturing has begun over the timing of Clean Water Act House and Senate conference this year. Senator Robert Stafford (R-VT), chairman of the Senate Environment and Public Works Committee, wrote his Republican counterpart in the House on January 28, suggesting that meetings on clean water could be held concurrent with Superfund conference. Stafford projected that a clean water conference could occur by April 1, if Superfund conference is completed by March 7. There's no word yet from the Democratic leadership regarding plans for Clean Water Act conference. 2. Regulatory Developments and Response Pesticides Effluent Guidelines. The EMC has authorized CMA litigation of the final pesticides effluent guidelines. CMA is coordinating its activities with NACA and CSMA who will play the primary roles in the litigation, CMA is especially concerned with some of the policy decisions and the adequacy of the data relied upon by EPA. The pesticides effluent guidelines, unless modified by EPA and/or remanded to EPA for revision, could set a precedent for the organic chemicals, plastics, and synthetic fibers effluent guidelines. E. Groundwater (Includes Safe Drinking Water Act) 1. Congressional Developments and Response Safe Drinking water. The House and Senate Conference Committee continues to try to work on reauthorizing the Safe Drinking Water Act. Conference did begin, with conferees resolving 18 differences between the House and Senate bills. But strong differences remain on 10 the issue of groundwater protection, and it will be difficult to reconcile the House and Senate positions in this area. The House and Senate bills would set deadlines for the Environmental Protection Agency to regulate drinking water contaminants, require monitoring for unregulated contaminants, and establish a demonstration program for planning to protect aquifiers that are the sole or principal source of a community's drinking water. Conferees were able to agree on other differences between the two bills. A key agreement reached by the conferees was to adopt language requiring the Environmental Protection Agency to set binding standards for a list of 85 contaminants within three years of enactment, based on the health effects and cost criteria specified in current law. Conferees also agreed to split the difference between the funding levels in the two bills, resulting in authorization of about $135 million for Safe Drinking Water Act programs in fiscal 1987. On the groundwater issue in Conference, the House (H.R. 1650) would create a new federal program of grants to states to develop plans and regulations as needed to protect groundwater within their boundaries. The Senate bill (S. 124) would authorize funds only to protect aquifers that serve as the only available supply of drinking water for a community. The Senate continues to prefer keeping the groundwater issue separate from the Safe Drinking Water Act. CMA has supported the Senate bill over the House version on three issues: standard setting, no comprehensive groundwater protection program, and the Senate critical aquifer demonstration program instead of the House sole source. Groundwater. In the fall of 1985, Senator David Durenberger (R-MN) held a series of hearings leading toward the introduction of his groundwater protection bill. Senator Durenberger plans on introducing his bill, with bipartisan support, sometime this spring. Senators George Mitchell (D-ME) and Max Baucus (D-MT) introduced their groundwater protection bill S. 1836, on November 7, 1985, primarily to begin the discussions in the groundwater debate. This bill would require states to have their own groundwater protection programs and to establish groundwater quality standards, with assistance from the Federal government. CMA is currently working on an analysis of the Mitchell/Baucus bill. The National Groundwater Policy Forum, led by Gov. Bruce Babbitt of Arizona, recently announced its legislative recommendations. These recommendations, together with Senator Mitchell's and Senator Durenberger*s bills, will probably serve as the initial focal point for the groundwater legislative debate this year. CMA is in the process of completing an analysis of the Forum's proposal. 11 CMA 039668 Activity in the House appears to be picking up in the groundwater area. A House version of the Mitchell/Baucus bill was introduced (H.R. 3808) and hearings will be held in the spring on various groundwater initiatives. Progress will most likely be slow in the House, however, due to jurisdictional problems. The Energy and Commerce, Public Works and Transportation and Interior Committees will all be playing a role in the groundwater debate in the House. 2. Grassroots Activities The Grassroots Program is working with the Government Relations Committee's Groundwater Task Group to determine the appropriate states and/or Congressional districts in which to organize groundwater campaigns. Message development and timetables are being coordinated to meet the Congressional schedule. 3. Regulatory Developments and Response Maximum Contaminant Levels. The EMC's Safe Drinking Water Act Group has developed comments submitted to EPA on the proposed maximum contaminant levels for specific volatile organic chemicals. The comments identify several technical, and analytical concerns with the proposed regulations. The final maximum contaminant levels will be applicable to all public drinking water systems including drinking water systems at member company facilities. The final levels may require significant and costly supplemental treatment to comply with the new standards. F. Regulation of Chemicals (TSCA and related) 1. Regulatory Developments and Response Comprehensive Reporting. The EPA is proceeding with its plans to propose a comprehensive reporting rule under the authority of the Toxic Substances Control Act (TSCA). The rule would establish procedures for imposing reporting requirements and a standard form for reporting. A significant aspect of this rule is that it will establish a TSCA reporting rule that asks questions which relate to all phases of a chemical's life cycle. Many of these questions can be asked under the authority of other statutes, and thus there is a potential that the rule will impose duplicative reporting requirements. CMA has strongly voiced this concern in meetings and comments and has presented recommendations to prevent duplication. We will continue to do so as the rulemaking process continues. For the reporting form that the rule will establish, EPA has announced an opportunity for companies to test the form during the comment period on the proposed rule. This program gives companies a unique chance to pre-test a form, prepare comments, and estimate the burden impact before significant reporting requirements are imposed. Because of the breadth and depth of this rulemaking, companies should participate in this pre-test. For further information, please call Garrity Baker at 202/887-1280. 12 Response to EPA's Approach to Carcinogenicity Testing. The Hazard Assessment Task Group joined with AIHC, SOCMA and the Diethylenetriamine Producers/Importers Alliance (DP1A) in suggesting to EPA that a symposium or workshop be held to discuss the "tiered mutagenicity/automatic trigger" approach to carcinogenicity testing. Briefly, this method requires only a single positive outcome among a battery of mutagenicity tests to trigger the traditional two-year cancer bioassay. The approach has already been included in several recently proposed test rules. CMA suggested that more rational alternatives exist, and proposed in writing to EPA that a forum be held to discuss the issue. New chemical Follow-up. On January 21, the conservation Foundation's Toxic Substances Dialogue Group met with EPA to discuss the Dialogue Group's proposal for a procedure to follow the commercial development of new chemicals. The proposed procedure would establish an interim inventory for chemicals of concern that have been through the premanufacture notice (PMN) review process. For chemicals on the interim inventory, a PMN would be filed by second manufacturers or the original submitter if changes are planned that may increase exposure to the chemical. At the meeting, EPA supported the proposal but did express reservations about legal and procedural matters not addressed in the Dialogue Group proposal. Despite these reservations, EPA agreed to help develop a procedural rule to implement the proposal. CMA will work with the Dialogue Group to prepare a draft procedural rule for EPA review. 2. Policy Development, Analytical and Program Activities Food and Drug Administration's Symposium in Interspecies Extrapolation. The Risk Assessment Task Group presented its paper, "Factorslnfluencing Interspecies Extrapolation of Carcinogenicity Data", to the Food and Drug Administration's January 6 symposium on interspecies extrapolation. The paper covered the various methods of extrapolating laboratory data to human experience, the pitfalls involved in each of them, and the validity of the results. FDA plans to use the symposium as a means of keeping its risk assessment methods current with the state of science. Harvard University Study on Dose Response Relationships. The Risk Assessment Task Group completed its final review of Harvard University's study, "The Dose Response Relationships for Carcinogens: A Review". The study, partially funded by CMA, reviewed the validity of dose response extrapolation methods as they have been applied to chemicals. The final report will soon be publicly available, and will be used to help establish a research agenda for agencies to improve their risk assessment methods. Evaluation of Exposure Assessment Methods. The Exposure Assessment Task Group has begun a project to evaluate the most commonly used methods to estimate exposure to chemicals. Such an evaluation will help to improve the accuracy of studies done as part of the regulatory process. These studies are now rudimentary and consist of little more than "worst case" assumptions. The Exposure 13 CMA 039670 Assessment Task Group's evaluation will also highlight critical data gaps and the assumptions used to fill them. The gaps in knowledge can then be targeted as high priority research areas. EPA Workshop on Assessing Occupational Exposure to New Chemicals. The Exposure Assessment Task Group will participate in an EPA workshop on assessing occupational exposure to new chemicals. The workshop held in Washington, DC on February 12-13, focused will focus on improving the accuracy of exposure assessments made as part of the premanufacture notification (PMN) process. 3. International Regulation European Community Preparations Directive The IAG distributed to CMA international contacts the January 7 International Affairs Group/Health and Safety Committee comments on the European Council's Directive Relating to the Classification, Packaging and Labeling of Dangerous Preparations. These comments relate to confidentiality, labeling and product liability concerns as well as the economic burdens of compliance on the chemical industry. It is our understanding that the U.S. Trade Representative plans to meet with the European Community representatives later in the spring (MarchApril) to discuss U.S. {OSHA, EPA, and private sector) views with the European Economic Community representatives. A good deal of care has been taken to coordinate our inputs with those of CEFIC so that the comments received by the Council both from the U.S. and from the European private sector will be in agreement. Australian Chemical Law. Developments on the Australian Registration Law continue to progress at a deliberate pace. Reporting for the Inventory is now scheduled to start February 17 and to end August 15, 1986. The cut-off for Confidential Section has been moved up to the end of 1984 from 1983. Japanese Chemical Control Law. IAG continues to press for "American-style" modifications to the current Japanese Chemical Control Law. While pressures within Japan, principally those from Academia and the Government, favor a more rigid "European" base-set test. The Japanese Ministry of Trade and Industry (MITI) will consider recommendations to amend the law during the March-April timeframe, and the Japanese Diet is expected to adopt these recommendations in early June. MITI had identified recommendations as the followings (1) adopt MPD within limits of feasibility of the Act to meet international harmonization for regulation of chemicals; (2) manage the safety of chemicals after manufacturing or importing; and (3) stress self-control by makers for the hazardous chemicals. <3. Public Compensation (Risk, Health and related Issues) 1.Product Liability Developments and Response Danforth Bill. The Senate Commerce, Science and Transportation Subcommitee on the Consumer will hold hearings on S. 1999, the product 14 provisions in the two bills. However, we are concerned that the emissions/discharge reporting requirements are poorly drafted and that the substances to which such reporting requirements apply are too vague and open-ended. Therefore, our technical department will be working to develop more specific and reasonable criteria for reporting, consistent with our emerging air toxics policy. CMA will be working within a coalition of allied industry groups, including one with a small business focus led by the Synthetic Organic Chemicals Association (SOCMA) and a broadened air toxics group, to achieve reasonable reporting provisions in the House and Senate Conference. Worker Right to Knowt Congressman Joseph Gaydos (D-PA) has put his Occupational Disease Notification Act, H.R. 1309, on temporary hold until the other Subcommittee which he chairs completes work on internal House committee budgets, expected by the end of March. Mr. Gaydos intends to hold one or two more days of hearings on H.R. 1309 sometime in April, and then make a determination as to further action on this bill. A relevant factor will be action taken in the Senate on companion legislation expected to be introduced in the next few weeks. CMA testified-last year on the Gaydos measure in general support of its objectives, but in strong opposition to its methods of achieving those objectives. A CMA technical task group is developing arguments in support of our positions to be used with the Gaydos subcommittee later this year. 2. Regulatory Developments and Response Pressure appears to be increasing on the Occupational Safety and Health Administration for the development of a standard to regulate chemical plant processes. Responding to congressional expressions of interest, DOL Secretary Brock has indicated his desire to see a proposed regulation in the Federal Register by August, 1986, and OSHA will make every effort to comply. At this time, the Safety Programs Task Group efforts are focused on identifying department positions and developing an appropriate plan to address what could be an odious, expensive, and ultimately ineffective standard. Of necessity, we will pursue a consensus with allied associations. Trade Secret Comments The Third Circuit instructed OSHA to amend the Hazard Communication Standard's trade secret definition. The court further instructed OSHA to reconsider who has access to trade secret information under the standard. On November 27, 1985, OSHA published a standard that addressed both these issues. CMA submitted comments generally supporting the widely used trade secret definition adopted by OSHA. However, CMA had concerns about the amendment that allows trade secret access to employes and their designated representatives. Trade secret access is now extended not only to a manufacturer's employees, but also to his customers' employees. Thus, CMA asked OSHA to make cl#ar that a downstream 16 CMA 039672 liability legislation. On February 12, 1986, CMA submitted written comments on S.1999, the product liability bill introduced by Senator John Danforth (R-MO.). The comments express support for the uniform product liability standards in Title III of the bill. However, the alternative claims mechanism in Title II presents serious difficulties and cannot be supported as drafted. The most serious problems with the Title II claims procedure involve determinations of causation. Good science is not required in these determinations and an inappropriate statistical presumption has been added. As a result, liability would be imposed on a manufacturer even though there is only a small likelihood of actual responsibility. Also distressing is that liability can be imposed on the basis of a causation determination by a Health Effects Panel that lacks due process and is beyond legal review. The Senate Commerce Committee has scheduled hearings on product liability for February 26 and 27. CMA will testify at these hearings. In addition, CMA is working closely with the Product Liability Alliance, a coalition of more than 250 businesses and trade associations seeking product liability reform. Comments developed by the Alliance reflect CMA's concerns with the Title II alternative claims mechanism. 2. Insurance Issues Developments and Response Liability Insurance The Senate Commerce, Science and Transportation Committee will hold hearings on the cost and availability of liability insurance. The Committee Chairman Senator John Danforth (R-MO) has called the hearings for February 19 and March 4. CMA is preparing a statement to submit for the record of these hearings. Rep. James Florio (D-NJ), the chairman of the Subcommittee on Commerce and Transportation and Tourism of the Energy & Commerce Committee, held a hearing February 4 on the growing insurance crisis. Florio may hold an additional hearing in February or March because he wants to document how difficult it is to get liability insurance and how much its cost have increased. H. Occupational and'.Public Safety 1. Congressional Developments And Response Community Right to Know (RTK). Last year, the House and Senate passed differing versions of community right to know as part of the Superfund reauthorization (H.R. 2005). These differences will be worked out in the conference between the House and Senate which Senator Robert Stafford (R-VT) hopes will be completed in March, (see separate section on Superfund in this report.) CMA does not have major problems with the community information and emergency response 15 employee may be required to certify that he is seeking trade secret information solely on his behalf; and, where he is seeking the information because of his employment relationship, the trade secret holder should be permitted to turn down the request, or at least insist that the downstream employee co-sign the confidentiality agreement. 3. Policy Development, Analytical and Program Response In response to the official release of EPA's "Hazardous Events Data Base and their announced intent to continue to update the document, the Safety Programs Task Group (SPTG) is following a two fold strategy; (1) pointing out serious deficiencies in the report and (2) convincing EPA to allow CMA to help redesign the Agency's methodology. The concern is that the report, which severely distorts the nature of chemical accidents and injuries, might become the basis for spreading "chemophobia" as well as for legislative or regulatory action. The SPTG has entered into discussions with the Assistant Administrator at EPA to help accomplish our objectives. 4. Communications Fifteen programs/newsfeeds were produced and distributed for "Report" and "Lifestyles" networks on a variety of health-related issues, including a new EPA risk communication program; effects of diet on health. The department video recorded the recent Risk Communication Conference, sponsored by the Conservation Foundation, EPA and the National Science Foundation, for use in future radio and television programs/newsfeeds on health-related issues. Private interviews also were conducted with selected conference participants, including former EPA Adminstrator William Ruckelshaus; Vernon Houk, Centers for Disease Control; Vincent Covello, National Science Foundation; Frank Press, National Academy of Science. The department participated in planning/preparations for the upcoming teleconference on the OSHA Hazard Communication Standard. The teleconference is sponsored by NUS (a private consulting firm) and the Public Broadcasting Service. I. Community Awareness and Emergency Response (CAER) 1. Regulatory Developments and Response On January 30, 1966, Dr. Geraldine V. Cox testified in Albany, New York at the Joint Hearings on Toxic Chemical Accidents. New York is considering legislation to prevent sudden uncontrollable toxic chemical releases. Dr. Cox. stated that CMA believes that if given the opportunity, the implementation of existing regulations and industry funded programs, coupled with pending Superfund legislation, will preclude the need for additional legislation that requires emergency response planning for commercial and industrial sites. In 17 CMA 039674 her testimony, Dr. Cox described the industry-funded NCRIC, CAER and CRC programs. Mr. George Willcox-Jones of Nepara Corporation testified with CMA and discussed how Nepara's CAER program was implemented. 2. Policy Development and Program Activity CMA is presenting the CAER and NCRIC programs at four regional Hazardous Materials Emergency Management Conferences. The conferences are sponsored by the Federal Emergency Management Agency, the Environmental Protection Agency, the Department of Transportation, the Department of Health and Human Resources -- Agency for Toxic Substances and Disease Registry, the United States Coast Guard, and the Occupational Safety and Health Administration. The agencies and industry are using this opportunity to bring together leaders of state chemical organizations, local industry, and federal, state and local emergency response officials to coordinate various emergency response planning initiatives. The first conference was held February 4-5 in San Francisco. The Chemical Industry Council of California, CMA and local industry participated. The Council of Chemical Associations has formed a CAER Task Group, chaired by CMA. This task group, comprised of staff from allied chemical associations, will work to help implement CAER in the allied chemical industries. This task group responds to the recognition expressed by respective association staff and member companies that CAER is working and is having a positive impact for the chemical manufacturing industry. CMA staff have participated in pilot FEMA workshops on contingency planning. These workshops, held at the Emergency Management Institute in Maryland, explain to local emergency response officials the CAER program, EPA's Emergency Preparedness Program and FEMA's emergency planning programs. The federal agencies plan to make CAER an integral part of their ongoing emergency planning training programs. The CAER Task Group is working with federal agencies to develop an agenda for a national teleconference on conducting emergency response simulations and drills. The teleconference, tentatively scheduled for September 1986, will be directed to community planning groups. 3. International Aspects Mexico -- Asociacion Naclonal de la Industrie Quimica(ANIp). As a direct response to an inquiry by one of CMA's member companies, the IAG plans to meet with ANIQ on March 5th to discuss implementation of the CAER Program in Mexico. This meeting will feature a briefing by Chris Cathcart, CMA's Associate Director, Health, Safety, and Chemical Regulations, who will describe the CAER Program and how it is being implemented in the United States. The initial reaction to this meeting from the Mexican side has been extremely favorable. Many 18 U.S.-owned Mexican subsidiaries as well as some domestically controlled Mexican chemical companies are expected to attend. 4. Outreach Activity CMA has also been working with state organizations to enhance the implementation of the CAES program. Specific meetings have been held with New Jersey, Florida, Missouri and Michigan. Discussions have focused on the development of specific programs which assist chemical companies and communities in implementing CAER. Some examples include emergency response drill training, first responder training workshops, the development of educational information and placing retired industry representatives on retainer to work with small companies and communities having a difficult time implementing the program. 5. Communications CMA is working with a CAER coordinating group in Jackson County, Mississippi, to develop a training videotape for plant managers implementing the CAER program. The tape will document how the Jackson County group worked together through the CAER process to develop a coordinated emergency response plan for the country. Four radio newsfeeds were produced and distributed for CMA's "Report" and "Lifestyle" networks on CAER-related issues. J. Chemical Product Distribution Advocacy 1. Congressional Developments and Response Conrail Acquisition. In two separate votes the Senate has favored the Administration in supporting the government's sale of Conrail to Norfolk Southern over the Morgan-Stanley public offering. CMA had gone on record opposing the sale of Conrail to another major Eastern railroad, because the Distribution Committee believes this will significantly reduce the competitive alternatives available to shippers in that region. Companies are urged to contact their representatives in the House to register their opposition to this Norfolk Southem/Conrail merger. Hazardous Material Transportation. The Office of Technology Assessment has released a working draft of its final recommendation to the Senate Committee on Science, Commerce and Transportation on revisions to the Hazardous Materials Transportation Act. The proposed OTA recommendations call for increased uniformity of hazardous materials transportation regulations, and additional assistance to state and local emergency response personnel for responding to accidents involving chemicals. Interestingly, the OTA draft recognizes industry's voluntary assistance to emergency responders, and identifies several methods for financing their additional training and equipment needs. CMA has gone on record before OTA in support of alternative methods for such training. CMA would support an industryfinanced federal emergency response fund only if specific requirements 19 CMA 039676 ware provided in the law* These requirements are; that an adequate assessment of the needs of emergency responders is conducted, taking into consideration existing industry and public assistance programs; that funding levels are appropriate and reasonable; and that state and local jurisdictions are prohibited by statute from enacting their own funding mechanisms for emergency response to chemical transportation accidents. (See related item under Communications.) Highway Safety Week. CMA was a co-sponsor of a bill designating the week of January 27 as National Highway Safety Week. This is further evidence of the chemical industry's commitment to enhance public safety on our nation's highways. water Resources Development Act of 1985. It appears unlikely that the Senate will favorably consider CMA's proposed cap on the ad valorem tax on cargo loaded or unloaded at U.S. ports for harbor operation and maintenance. CMA argued that the tax proposed in S.1567, Water Resources Development Act of 1985, does not relate to the degree of harbor use, and therefore unfairly burdens shipments of high value cargo. CMA does not intend to pursue amendments to this bill as they would divert resources and attention from other more important issues. Pollution Liability Insurance. CMA is monitoring activities of the House Committee on Public Works and Transportation and the House Committee on Government Operations relative to pollution liability insurance for the carrier industry. Carriers are experiencing problems in obtaining pollution liability coverage because the international reinsurance market has advised the U.S. that such insurance will be difficult, if not impossible, to obtain. (See related item under Regulatory Development and Response.) Staggers Rail Act Hearings. On February 6, 1986, the House Subcommittee on Commerce, Transportation and Tourism held hearings on the ICC's implementation of the Staggers Rail Act, on proposed amendments to the Staggers Act, and on the Administration's proposal to abolish the ICC. According to the Department of Transportation witness, the Administration's proposal would deregulate motor and barge transportation, and would transfer the rail regulatory functions of the ICC to DOT and the Department of Justice. By contrast, several bills have been introduced in both the House and Senate that would amend the Staggers Act to provide for increased scrutiny by the ICC of railroad practices involving captive shippers. CMA is evaluating the impact on its members of the various proposals and will develop an options paper for presentation to the Distribution Contacts. 2. Regulatory Developments and Response Railroad Per Diem, Demurrage and Storage Agreement. A decision has been issued by the ICC on the AAR's petition for approval of amendments concerning the collective establishment of car hire charges, mileage allowances, and demurrage and storage charges. CMA participated in the proceedings in support of the AAR's petition. The 20 CMA 039677 effect of the decision is to continue antitrust immunity for the collective establishment of per diem and mileage allowances, but to discontinue such immunity for demurrage and storage charges. The decision further notes that such antitrust immunity for the establishment of mileage allowances will be revisited upon completion of the present Ex Parte 328 negotiations. CMA is a prime participant in these negotiations. Tank Truck Specifications. The Highway Task Group has formed an Ad Hoc Work Group to develop CMA's comments on-the Department of Transportation's Advance Notice of Proposed Rulemaking calling for significant revisions to the specifications for tank trucks, Docket HM183. Draft comments have been prepared, and are being circulated for review. Comments are due May 22, 1986. Special Insurance Adjustment. The Providence and Worcester Railroad Company recently published a tariff supplement that would provide for a "special insurance adjustment" of S19 per car on nonhazardous freight and 5107 per car on hazardous freight. The supplement states that the "increase applies toward compensating carriers for sharply increased costs in maintaining insurance coverage." This proposed surcharge was brought to CMA's attention by a member company. Because of the adjustment's potential industry-wide impact, CMA is working with the member to forestall this adjustment or, at least, to have it recharacterized. Competitive Access. On October 31, 1985, the ICC adopted regulations in Ex Parte No. 445 (Sub-No. 1), Intermodal Rail Competition to govern the ICC's handling of various rail "competitive access" issues. The rules adopted were in large part the consensus rules proposed by the Association of American Railroads, the National Industrial Traffic League and CMA. The ICC's decision in Ex Parte No. 445 (Sub-No. 1) has been appealed in two separate judicial review actions, and CMA has intervened in those cases. CMA has also sought to intervene in Midtec Paper Corporation v. C&NW. That case, which was reopened by the ICC subject to court approval of the ICC's remand request, may involve the first application of the Ex Parte No. 445 (Sub-No. 1) standards. 3. Policy Development, Analytical and Program Activities Hazardous Materials Transportation Act -- CMA Policy Development. The Board of Directors approved a CMA policy on the reauthorization of the Hazardous Materials Transportation Act. Twelve specific areas were addressed, including: regulatory uniformity; emergency response assistance; product flow data development; and transportation employees' right-to-know. For complete details, contact Richard Doyle, CMA's Associate Director for Distribution. Measuring Tank Car Contents. The CMA Rail Equipment work Group is developing information on the methods used by the chemical industry to measure the quantity of material remaining in rail tank cars after they have been unloaded. Information developed will be communicated to the Department of Transportation in the Placarding of Empty Tank 21 CMA 039678 Cars proceeding and to the National Transportation Safety Board in response to its request for such information. Chemical Distribution Conference. The Distribution Committee will conduct an open conference on March 24-25, 1986, in San Francisco.. Topics will cover Data Information Exchange, Staggers Rail Act, state of the Tank Truck Industry, and relevant marine issues, among others. All member companies are urged to send represen tatives. For details contact Richard Doyle at (202) 887-1272. Emergency Response Survey. The Distribution Committee is preparing a survey of chemical industry initiatives related to emergency response training and equipment. The survey will demonstrate the extensive amount of chemical industry activity in this area. National Conference On Barge Fleeting. CMA is co-sponsoring a conference on barge fleeting, April 8-9, 1986, in Memphis, Tennessee. The goal of this conference is to broaden the awareness of the technical findings and techniques developed by the Federal Maritime Administration and the State of Louisiana on barge fleeting. K. National Chemical Response and Information Center (NCRIC) 1. CHEMTREC CHEMTREC commenced 1986 with a 12 percent increase in activity over January 1985. Although transportation emergencies remained static, non-transportation emergencies increased by a significant 76 percent. Medical emergency referrals continue to steadily increase since CHEMTREC was expanded to handle such referrals in September 1985, with a total of 96 medical emergency referrals reported to date. Referrals to the Chemical Referral Center (CRC) took off in its first full month of operation. A total of 288 callers were referred to CRC, or 9 percent of CHEMTREC's activity. The CHEMTREC Salvage Drum Cooperative Program has had a 57 percent increase in membership during the current enrollment period. Total membership now stands at 153. 2. CHEMNET The CHEMNET membership has grown by three since the last report. We have added two participant members and one subscriber. A new contractor has also been added to the list of CHEMNET contracts. These new members and contractors bring the totals to 135 participant teams and 52 contractor teams as members of the network. A CHEMNET workshop is scheduled in Washington, DC, for March 12, 1986. This workshop will stress CHEMNET activation, participant 22 capabilities and contractor capabilities. We urge all CHEMNET members attend as well as those firms who are interested in joining. A CHEMNET manual will be provided to workshop participants and to all CHEMNET members. 3. Chemical Referral Center The Chemical Referral Center (CRC) has responded to approximately 40 calls a day during its first month of operation. The requests for non-emergency health and safety information on chemicals have come from chemical users and the general public who are referred to the CRC by CHEMTREC, or who have.read about this service in such publications as CMA News, Chemical and Engineering News, or The Kiplinger Letter. The CRC staff has generally been able to refer callers to one or more of the 130 chemical manufacturers currently participating in the program. 4. Emergency Response Training First Responder Training Program. The videotape training program "First on the Scene" that was produced by CMA is being distributed widely. The program became available for distribution on December 1, 1985. In a two-month period, 200 requests to borrow the program have been handled by the Lending Library. Over 400 copies of the program have been sold at the cost of reproducing the program and 200 copies have been distributed free to: State Fire Instructors; State Law Enforcement Instructors; 10 FEMA regions and the National Fire Academy; Fire Training Schools; other associations; and federal agencies. Since there are no restrictions on reproducing the program, many member companies have duplicated the tape and distributed copies to emergency response personnel in their areas. Most organizations that borrow the program from the Lending Library also copy the tape. The program has been shown to representatives of the Department of Transportation, Office of Technology Assessment, Environmental Protection Agency, Federal Emergency Management Agency as well as other federal and state agencies, emergency response organizations and other trade associations. Comments on the quality of the program have been extremely complimentary. Requests for the program have also been received from several foreign countries including England, Canada, Australia and Brazil. Lending Library The Lending Library has been operational for five months. During this period 450, training programs have been loaned out to the emergency response personnel in the public sector. The organizations borrowing the training aids have indicated that over 24,000 people have viewed the programs. Approximately 30 requests are received each week and there is a waiting list to borrow some of the programs. The majority of requests are received from fire departments (70%), 23 CMA 039680 hazardous materials teams (20%), law enforcement departments (4%), State agencies (4%) and emergency medical services (2%). Three new programs have been added to the library and a new brochure listing these additions has been printed and is being distributed. Recommended Terms For Personal Protective Equipment. This bulletin, developed to encourage the use of consistent terminology when referring to personal protective equipment, is also receiving wide distribution. CMA has distributed 5,000 copies and other organizations including AAR, API and Union Pacific Railroad have printed copies and made them available to their members and emergency response personnel. Transport Canada is adding a French translation and then will distribute the bulletin in Canada. CHEMTREC Workshops. The first CHEMTREC Emergency Response Team Workshop scheduled for 1986 was held in Mobile, Alabama on February 2526, 1986. Two additional workshops are planned for this year; one at the end of May in Pueblo, Colorado; the other in Findlay, Ohio in September. 5. Communications NCRIC communications activities were initiated, including: o Media tours scheduled--Indianapolis, San Francisco and Los Angeles o Preparation and distribution of press release on Chemical Referral Center and broader NCRIC activities. o Media contact and story development activities with major "shelter publications". o Preparation of fact sheets on NCRIC and various program elements; CRC, CHEMTREC, lending library, CHEMNET, etc. News releases were prepared and distributed for "First on the Scene," a videotape training program for first responders. Assist in development of media training portion of workshop for transportation emergency response teams in Mobile, Alabama. Began development of public service announcements on CRC for possible use by television and radio stations. Likely distribution, if approved, through North American precis syndicate. L. Energy and Petrochemical and Feedstocks 1. Congressional Developments and Response Oil Import Fee The most important energy issue in 1986 is the increasing popularity in the Congress of imposing a federal oil import tax. With the falling price of world oil, many in Congress consider such a tax a logical way to add revenue to the continuing efforts to balance the 24 CMA 039681 budget. Two of the most serious possibilities of such a tax are posed by S. 1997 (Senator wallop - R-WY) and S. 1507 (Senator Boren - D-OK). S. 1997 would impose a tax on imported crude oil and refined petroleum products. cma continues to work with a broad coalition representing business, labor and consumer interests to advocate opposition to an oil import fee. The coalition is planning to write the President and contact members of Congress. CMA is also requesting an opportunity to testify on this subject during February 27 and 28 hearings, to be conducted by the Senate Subcommittee on Energy and Agricultural Taxation. The greatest support for an oil import fee appears to come from independent oil royalty owners, some economists and members of Congress who believe an import fee would support higher domestic oil prices, and have little impact on consumers while current world crude oil prices are falling. .An oil import fee would price energy and petrochemical feedstocks above world-competitive levels. 2. Policy Developments, Analytical and Program Activities FERC Order No. 436-A. On January 10, CMA filed motions to intervene in thirteen court challenges to the Federal Energy Regulatory Commission (FERC) rules on natural gas transportation and pipeline rate making. This action was taken to enable CMA to effectively monitor the court activities, and to respond on a selective basis to those issues that are of the greatest significance to members. Basically, CMA intends to defend the gains achieved by the new FERC rules. FERC Docket No, RM86-3. DOE proposed a rule for final action by the FERC that would make all old, price-controlled, gas eligible for a higher "just and reasonable price", and that would establish incentive prices for old gas. CMA indicated support for this action in comments that were submitted to the FERC on February 25. Congress is following this activity. Congressman Dingell has requested the Energy Information Administration to undertake a full study of the FERC Order 436-A and DOE's proposed rule RM86-3. He requested the study to focus on implications for consumer prices and domestic supply over the long and short-term, and he requested the analysis to be completed by March 31. Energy Conservation Reporting CMA formally notified DOE of intentions to continue as a sponsor for the Industrial Energy Efficiency Improvement Program. Members are asked to submit the 1985 survey data to CMA by April 15. There are no changes to the DOE reporting rules or data requirements. The CMA corporate reporting form has been modified slightly to facilitate machine tabulation by CMA. 25 CMA 039682 Contacts with DOE indicate that for future reporting years, the Energy Information Administration is planning to manage the program, and they are very likely to seek legislative amendments that would make the CE-189 program conform to their more detailed, EIA-846 plant survey. CMA will follow these developments closely. In a related development, the ERA recently completed a new pilot survey of 100 manufacturing establishments. They will shortly ask the OMB to approve a survey of 10,000 manufacturing establishments. CMA believes that the survey is structured so that about 60% of our members' facilities could receive this new questionnaire. 3. Litigation and Related Legal Activities Natural Gas Transportation Rules. CMA has intervened in litigation involving the Federal Energy Regulatory Commission's new rules on natural gas transportation. These rules were recently promulgated as Order No. 436.A. CMA's intervention is intended to protect the gains achieved in the Commission's order. M. Taxation 1. Congressional Developments and Response The Senate Committee on Finance began its review of H.R. 3838, the House-passed tax revision bill, with the testimony of invited economists. With minor dissent, these witnesses generally agreed that the shift of $140 billion of individual tax burdens to corporations could create serious competitive problems for U.S. manufactured products in both domestic and foreign markets. Moreover, that if the Senate were to amend the bill to meet the President's stated goals of a higher personal exemption and lower tax rates for individuals it would require additional tax revenues of $100 billion over a 5 year period. The five days of Finance Committee hearings produced two major suggestions on how the President's changes could be financed - by placing a three percent floor on the deduction of state and local taxes and imposing a fee on imported oil. When the committee completed its hearings in early February, neither of these proposals had found a consensus of approval within the Finance Committee. Senator Malcom Wallop (R-WY), chairman of the Senate Finance Subcommittee on Energy and Agricultural Taxation, announced that they will hold hearings in late February on two measures that would impose an import fee on imported oil - S. 1997 (Wallop) and S. 1507 (Boren). CMA has requested the opportunity to testify in these hearings. In addition to questions on the merits of a proposed oil import fee, there is a strong division of Senate opinion on whether the revenues from that proposal should be used to finance tax reform legislation or to reduce Federal budget deficits. Senate Finance Chairman Bob Packwood (R-OR) supports using an oil import fee to finance tax 26 reform, while Senate Majority Leader Bob Dole (R-roJ) and Senate Budget Committee Chairman Pete Dominici (R-NY) favor its use as a means to reduce budget deficits. The work of the Senate is further complicated because of the time pressures created by the budget-cutting requirements of the GrammRudman-Hollings legislation and by election year campaigning. As the Finance Committee concluded its hearings on H.R. 3838, it was suggested that the committee has only six weeks available to complete its decision on tax and budget matters before Juirt, Given the fundamental nature of the disputes on both tax and budget issues there is serious question that both efforts could be completed within this period. CMA is revising its written policy statement on tax reform to reflect the specific issues raised in H.R. 3838 for submission later this month to the Senate Committee on Finance. CMA has underway a comprehensive legislative work plan to achieve these policy goals in the Senate. CMA is actively coordinating its efforts with allied trade associations in opposition to tax reform legislation that would seriously affect the competitive position of U.S. manufacturers in domestic and world markets. N. Plant Management and Design (Engineering Codes and Standards) 1. Regulations, Standards, Codes and Technology Forum on Safety and Reliability Improvement. The Engineering Advisory Committee's (EAC) Inspection and Maintenance Task Group met January 22 to make further preparations for the CMA forum on safety and reliability improvement through application of advanced inspection and maintenance techniques. This forum will emphasize those techniques that directly influence safety of plant and community. Forum on Process Computers. The EAC Process Control Task Group will meet March 18 to wrap up arrangements for the Fifth Process Computer Users Forum to be held May 5-7, 1986. This forum will emphasize safety aspects of control systems design and operation. Electrical Equipment. The EAC Electrical Task Group will meet in conjunction with the NFPA Annual Meeting in Atlanta May 19-22. Purpose of this meeting is to prepare for floor action on the 1987 National Electrical Code at the General Session. Pressure Equipment. The EAC Pressure Equipment Task Group will meet March 11 to further develop issue papers on Toughness Evaluation of Pressure Vessels; Authorization for Repair of Safety and Safety Relief Valves; and State Legislation, Rules, and Regulations Involving Pressure Equipment. 0. International Trade/International Competitiveness 27 CMA 039684 1. Congressional Developments and Response omnibus Trade Bill. During the first session of the current Congress, the country's growing trade problem was identified by key members as a priority issue. Unfortunately, the committee which deals with trade issues also has jurisdiction over tax issues, and the need to address these latter issues prevented any action from occurring on trade legislation. Nevertheless, Congressional leaders, especially in the House of Representatives, are still of the opinion that forceful action is needed on trade problems. Accordingly, the House Ways & Means Committee is planning a retreat early in the Spring to work on trade legislation. Few hearings have been held on trade issues during this Congress and the ways and Means Committee has not yet proposed any omnibus legislation. At the retreat, the committee will examine various trade proposals which will no doubt include the Administration's ideas and other initiatives made by the Energy and Commerce Committee's proposed omnibus trade bill (H.R. 3777). A proposal from the ways and Means Committee can then be expected shortly after the retreat. Rep. Sam Gibbons (D-7-FD), chairman of the House Ways and Means Trade Subcommittee, has addressed the issue of authority for an MTN round, which is included in Senator Danforth's (R-MO) proposed omnibus trade bill (S. 1860), but believes that this issue should be dealt with separately. Based on Board approved positions, CMA is preparing suggested legislative language for certain provisions of trade legislation and will offer this language to appropriate Members of the Ways & Means Committee for their consideration. 2. International Negotiations/Agreements MTN. Next January, tariff rates on goods imported into the United States will undergo their eighth scheduled reduction since the passage of the Trade Agreements Act of 1979. That law implemented the reductions in tariffs which had been agreed to at the last round of Multilateral Trade Negotiations known as the Tokyo Round. During those negotiations the Administration had sought an overall cut in chemical tariffs of 55% but the chemical industry was able to hold the average cut to 35%. Because the actions agreed to during the Tokyo Round have all but concluded, the Reagan Administration, as well as most of the United States' major trading partners, are proposing a new MTN round. The CMA Board of Directors approved a position on this issue at its January, 1986 meeting. In spite of the desire of the Administration to begin an MTN, key Members of both Houses of Congress have repeatedly said over the last few years that any new tariff cuts were out of the question so long as the U.S. budget and trade deficits were so high. It now appears as if the Administration is wavering on seeking specific negotiating authority. That does not mean, however, that the United states would not be a party to preliminary international trade discussions should 28 CMA 039685 they get underway now. Major country trade ministers, including u.s. Trade Representative Yeutter, are to meet in September, signaling the kick off of the new round. CMA needs to be prepared at any time to provide the Office of the U.S. Trade Representative with input from the industry. Armed with the recently approved CMA position on MTN, the International Trade Committee (ITC) has created a Task Group to deal with this issue which will be chaired by Steve Littlejohn of Monsanto. This group will begin by examining how the tariff rates of our trading partners compare with these of the United States. This will allow the Task Group to more clearly focus on the problems associated with any additional cuts which may be part of the negotiations. In addition to the new MTN Task Group, CMA's International Trade Committee, in conjunction with the Government Relations Committee, is developing strategies for advocating the Board approved MTN position with the Administration, Congress and other industry groups. CMA is also participating in an inter-association chemical industry ad hoc group which is developing guidelines, procedures, and strategies for obtaining exceptions from U.S. tariff cuts for "import sensitive" chemicals and allied products. For these purposes, the group is following the CMA Board-approved position on MTN dealing with tariff negotiations. 3. Legal United Nations: World Commission on Environment and Development (WCED). On February 10, 1986, CMA commented on the WCED draft Report on Hazardous waste Management. WCED is an independent commission within the United Nations System, reporting directly to the General Assembly. Its purpose is to look ahead at critical environment and development problems and propose better ways for the world community to address them. The chairman of WCED is Mrs. Gro Harlem Brundtland, Leader of the Opposition, former Prime Minister and a former Environment Minister of Norway. Mr. william Ruckelshaus, former EPA Administrator is the United States representative on the Commission. The draft waste report of the Commission presents proposals for managing generation, transport and disposal of hazardous waste internationally, including an international treaty on this subject and an international Superfund. CMA, in comments prepared by in-house counsel, has opposed these latter two proposals and recommended that international consideration of waste management be limited at this time to issues involving the movement of hazardous wastes across national frontiers. 4. Communications The department held the annual economic briefing for Washington media. A news release on the Industry's performance and outlook was 29 CMA 039686 prepared and distributed. The department assisted in preparation of annual economic survey data for distribution to the media and others. Two newsfeeds were prepared and distributed for the "Report" network on the economic/trade data in the annual survey. p. International Regulatory Issues (Health, Safety, and Environment) 1. International Organizations UNCTC/ONSP Seminar on Industrial Process Safety and Hazards. A delegation of several IAG members attended a briefing m New York given by UNCTC's Peter Hansen, wherein Hansen discussed the activities of the previously held symposium (December 2-3, in Geneva). The report of Hansen's organization concluded that there are many areas where the international concern about industrial health and safety and the environment still exist, but suggested that UNCTC would focus its efforts in the future on completing a Code of Conduct for Multinational Foreign Investment and would leave the matters of concern about the environment, health, and worker safety to organizations such as United Nations Environment Programme and the International Labour Organization. Hansen offered an opportunity to the IAG and other outside organizations that elected not to attend the seminar to participate with the UNCTC in editing and reviewing the papers which the UNCTC staff plans to generate as a result of this conference. OECD Developments. The IAG continues to monitor the deliberations of the Organization for Economic Cooperation and Development (OECD) Chemicals Group and Environment Committee and has recently received a group of reports through the u.S. State Department dealing with the Environment Committee's agenda for 1987. The Environment Committee continues to express concern over pollution prevention and control, management of hazardous wastes, control of ma^or air pollutants, and a number of other chemicals-related programs, such as information exchanges and testing and assessment of chemicals. The use of animals in toxic chemical evaluations is a topic of concern. The OECD High-Level Meeting-Ill coming up in 198687 will include a discussion on the substitutions for animal testing in evaluation of chemical toxicity. 2. Legal Support EC Product Liability Directive. With the support of Counsel, IAG prepared a proposed position paper on the European Community's (EC) July, 1985, Product Liabilities Directive. This paper was referred to the CMA International Trade Committee and Board Counsels Group for their review. The Directive includes several concepts of concern to international business, including those of developmental risk, financial limitations on liability, strict liability, and the definition of a defect. 30 CMA 039687 Member countries of the EC have three years in which to implement this Directive. However, the direction of this implementation process is unclear, since governments have been given various options by the Directive on critical aspects such as financial ceilings and developmental risk. It is, therefore, to be expected that differing, inconsistent implementing laws will be adopted by the EC member countries. This will inevitably lead to forum shopping by future plaintiffs. CMA's comments will be coordinated with those of the International Chamber of Commerce and the European Council of Chemical Manufacturers' Federations. Q. Patents and Protection of Technology 1. Congress Patent Term Restoration. The U.S. patent laws are designed to provide a 17-year period during which the owner of a patent can exclude others from making, using, or selling his invention throughout the United States. The restoration of lost patent life due to required Government testing and regulation is necessary to give chemical innovators the same incentive for research and development and the same commensurate rewards for progress that are available in other areas of science and the useful arts. In early 1985, Senator Charles Mathias (R-MD) introduced S.1093 to restore to the patent life for agricultural chemicals, industrial chemicals regulated under the Toxic Substances Control Act (TSCA), and animal drugs, the time period lost for government mandated testing and review. This legislation is designed to provide benefits for agricultural chemicals and animal drugs comparable to those provided for brand name human drugs in Public Law 98-417, the Drug Price Competition and Patent Firm Restoration Act of 1964. On December 11, 1985, Representatives Frederick Boucher (D-VA) and Michael DeWine (R-OH) introduced H.R. 3897, the Agricultural Patent Reform Act, in the House of Representatives. H.R. 3897 is identical to patent legislation which passed the House at the end of the 98th Congress. Thus far, nine Members have co-sponsored the bill. H.R. 3897 has also been endorsed by 28 farm groups and by editorials in eight major newspapers. Chances of passage of patent term restoration (PTR) legislation in 1986 appear to hinge on the satisfactory resolution of remaining disputes involved in the agreement reached last fall between members of a coalition bid and by NACA an environmental/consumer groups on amendments to the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA). R. State Legislative and Regulatory Advocacy 31 CMA 039688 1. Superfund Among the states considering superfunds for 1986, New Jersey and New York are proposing legislation that could total over two billion dollars. In his state of the state address, Governor Cuomo targeted SI.2 billion for cleaning up New York's hazardous waste sites. The State Affairs Committee's (SAC) Hazardous Waste/Groundwater Task Group is studying the potential costs of state superfunds. A draft report is expected in March. The Pennsylvania House recently approved legislation that would establish a state Superfund to pay for cleaning up hazardous waste sites. The state's proposed cleanup program would be funded through levies on companies that produce hazardous waste. It would also receive money from the state and federal governments, along with funds collected from fines and violations. House Majority Leader Manderino sponsored and won approval of an amendment that removed a $10 million cap on the proposed fund. The amendment also would require that 25 percent of the funds be used to locate and inspect hazardous waste sites. 2. Public Compensation Most of the activity in insurance/liability/tort reform falls into three ma;jor categories: (1) Stopgap measures to maintain some insurance coverage include: no mid-term cancellations, longer periods of notification of intent to cancel, and the creation of pools and other self-insurance mechanisms. (2) Measures introduced to "fix" parts of liability concerns include an initiative in California placing a referendum on the June ballot relating to joint and several liability and a Tennessee bill to exempt actions arising from harm caused by PCBs from product liability limitations. A bill in New York will impose strict, joint and several liability on past users of inactive hazardous waste sites. (3) In the longer term, many states are holding hearings and/or setting up study comnissions to review the insurance crisis and the underlying tort system. There are a number of coalitions working on the tort reform issue. 3. Hazardous Waste Management and Regulation Liability provisions in existing state laws governing the clean up of inactive hazardous waste disposal sites would be revamped under a bill currently moving through the New York Assembly. Key aspects of the bill, which is opposed by the Business Council, would impose strict, joint and several liability on past users of inactive sites and would allow any citizen to claim standing 32 CMA 039689 in civil lawsuits to force cleanups. The Assembly bill is similar to one that passed the Assembly last year, but died in the Senate. 4. Right-To-Know In New York the Departments of Health, Environmental Conservation, the Attorney General's Office and the Senate and Assembly are conducting a series of three joint hearings on the adequacy of existing laws and regulations to prevent sudden uncontrolled toxic chemical releases at commercial"and industrial sites. CMA testified at the hearing in Albany on January 30th. The testimony focused on the actions industry has taken to prevent accidental releases such as risk assessments, safety equipment upgrades and reduced inventories. CMA's CAER and NCRIC programs were also discussed in detail. (See 1.1. - CAER) It is likely that some legislation will result from these hearings. The Michigan House has unanimously passed a package of three bills which propose a comprehensive right-to-know program for the state. H.B. 4111 adopts the OSHA Hazard Communication Standard and covers all employers; H.B. 5250 deals with emergency planning and allows fire chiefs to request MSDS's and other information? H.B. 5251 allows county residents to request MSDS's from the Department of Public Health. These bills are expected to pass the Senate and be signed into law by the Governor by March. The Illinois state EPA is conducting audits of chemical companies training procedures for plant operators. Legislation mandating the licensing of plant operators could result from this effort. The Right-To-Know Task Group is developing an issue discussion paper to be used by member companies and CICs in their 1986 advocacy efforts. Because the range of issues under the right-to-know umbrella in the states include emergency planning and process safety, the task group has developed close liaison with the Health and Safety Committee's CAER Task Group and the Process Safety Analysis Task Group. 5. Groundwater As reported in January, groundwater will be one of the top state environmental issues in 1986 in part because the EPA is delegating most of the groundwater program to the states. Demonstrating this shift to the states is the likelihood that U.S. Representative George Miller (D-CA) will introduce legislation that would require states to classify aquifiers, set ambient groundwater standards and control ma^or contamination sources. The bill is being based on the recommendations of Arizona Governor, Bruce Babbitt, the chairman of the National Groundwater Forum, which provided states with primary authority for devising their own groundwater protection programs. The SAC's Hazardous Waste/Groundwater Task Group, working with technical task group members, has developed groundwater issue papers on standards, monitoring, protection, and remediation. 33 CMA 039690 6. Hazardous Materials Transportion A study commission has been proposed in the District of Columbia to review the risk related to the transportation, use and storage of hazardous materials in the DC metropolitan area. The commission will have nine members including representatives from the chemical and petroleum industries. The study is scheduled to take eighteen months. CMA entered a statement in support of this study commission noting the concerns of federal preemption and time needed to complete such a study. CMA offered to suggest an appropriate chemical industry representative for the commission when it is formed. The State of Colorado continues to look at a legislative establishment of a hazardous materials transportation control mechanism. 7. Toxic Air The State Affairs Committee and Toxic Air Task Group are working closely with CMA's technical committees to implement the new Air Toxics Policy and the program for reducing toxic chemical emissions. State interest groups such as the National Conference of State Legislatures, the National Governors Association and the State and Territorial Air Pollution Program Administrators are being briefed on the policy. Regional seminars sponsored by state CICs are also being planned. The California Air Resources Board (CARB) is requesting comments on a proposal to categorize dozens of substances for potential regulation under the state's toxic air contaminants program. Member companies will be working with CARB to develop data on these substances. 8. Chronic Health The California employee health monitoring legislation has been put on hold, and it is unlikely that it will move in its present form. There is still a strong possibility that some type of mandatory monitoring program will be enacted. CMA's State Affairs Committee is working with the technical department's Health Programs Task Group and the California CIC to develop alternative proposals for consideration. The committee is also assisting the American Industrial Health Council in developing legislative monitoring and advocacy programs for chronic health issues. S. Specific Chemical Research and Advocacy 1. Research and Advocacy Highlights Octylphenol. The contract with ABC Laboratories for conduct of an early life stage study in the rainbow trout is being finalized. 34 CMA 039691 Methylenedianiline. The Panel's Industrial Hygiene Task Group developed a survey to collect information for the Panel's use during the upcoming OSHA Advisory Committee negotiations. The survey calls for a description of the engineering controls and personal protective devices necessary to achieve various different exposure levels. Dibenzofurans/Dibenzodioxins. The Panel is preparing comments on EPA's TSCA Section 4 and 8 Proposed Rules. The Panel filed its brief in the Environmental Defense Fund/ National Wildlife Federation suit challenging EPA's response to their Section 2l citizens petition. The Panel argued that the Court should deny partial summary judgement in favor of EDF and NWF and to grant partial summary judgement in favor of EPA. Fluorocarbons. Dr. S. Robert Orfeo (Allied), newly elected Chairman of the Fluorocarbon Program Panel (FPP), appeared on TV Cable Network News, February 11, to discuss the science of the CFC issue. Dr. Gordon Diprose (ICI) was re-elected Vice Chairman. Drs. Diprose, Mack McFarland (DuPont) and Aaron Owens (DuPont) represented the FPP at the February 24-28 meeting of the United Nations Environment Program's (UNEP) Coordinating Committee on the Ozone Layer (CCOL) in Nairobi, Kenya. CCOL reviewed the latest "Assessment" (WMO, 1986) of the science. The FPP is also co-sponsoring with NASA, NOAA, and WMO an international Early Detection Workshop, March 5-7, in Boulder, Colorado. The goal is to identify the stations and intrumentation required to monitor long term trends in the atmosphere, and to detect and diagnose causes of any measured changes. Dr. Igor Sobolev (Kaiser) has accepted an invitation from EPA to describe the FPP research program as part of the Agency's hosted workshop on "Demand and Control Technologies." This meeting is on March 6-7, in Washington, D.C. \ On January 10, 1986, EPA published a strategy and timetable for examining the issue of stratopheric ozone depletion (51 FR 1257). Hydroguinone. The Panel responded to EPA's Phase II Proposed Test Rule for Hydroquinone. Polychlorinated Biphenyls. Efforts continue to resolve the lawsuit challenging EPA's final rule regulating the manufacture, processing, distribution m commerce and use of PC3s. The Panel met with EPA and the other parties in the suit to discuss means of resolving the remaining oustanding issues. 35 CMA 039692 III. DEPARTMENTAL PROGRAM NOTES A. Office of the President 1. International Affairs As part of a continuing dialogue with the Japanese Chemical Industry Association, the IAG met with a group of delegates from JCIA, MITI, and the Japanese professors of Environmental Science from a variety of Japanese universities. The purpose of our meeting was to discuss the U.S. views about impending changes to the Japanese Chemical control Law. Specifically, the discussion centered around interpretation of an OECD Directive, and whether or not base-set testing was mandated by that directive. The Japanese interpretation is that, in order to comply with the OECD Directive, they must institute a base-set test for all new chemicals (which would add greatly to the expense of importing chemicals into that market). Following our discussions with the delegation, the IAG drafted a detailed discussion of the' merits of the U.S. system over that used by the Europeans and formally submitted that testimony to the Japanese MITI for consideration during the deliberation period, we have a meeting scheduled with the Japanese Chemical Industry Association sometime in the early summer of 1906 to discuss the changes which are finally implemented. The IAG plans to meet with CEFIC in the March-April time period to discuss further harmonization between U.S. and European chemical industries on labeling of hazardous materials. 2. Association and State Organization Outreach Programs State Chemical Industry Councils. Following upon the September 1985 report to the Board on the status and programs of the various CIC's, a presentation was made at the January Board meeting by the New Jersey CIC. The NJCIC made specific requests for assistance from the Directors and the overall recommendations which were presented were endorsed unanimously by the Board. Since reaction to this report has been extremely favorable, efforts will be made in the months ahead to work with other CIC's who believe a similar presentation would be beneficial. Council of Chemical Associations. The Council of Chemical Associations (CCA), an informal coalition of approximately 40 chemically related trade associations, is embarking on two new cooperative efforts with respect to CAER and Federal grassroots lobbying activities. Exploratory task groups have been formed by CCA to develop a plan for implementing these programs on a broad industry basis. CMA 039693 B. Government Relations Department Grassroots The Grassroots Program has requested that each company appoint a Grassroots Manager if they do not already have one. A letter dated January 24th was sent to each CMA Executive Contact by Mr. George Sella, CMA's Chairman of the Board and CEO for American Cyanamid, outlining the need for maximum company participation. The Grassroots Program is in the process of planning long-term toxic air emissions and groundwater campaigns. To that end several meetings are being organized to brief Grassroots Contacts about these issues. C. Technical Department, The Department's activities are now heavily targeted at implementing CMA's new programs in Air Toxics, NCRIC and CAER. Activities in reauthorizing the Hazardous Materials Transportation Act are also tightly allied with these projects. In response to EPA's increased implementation of TSCA, RCRA, the Clean Air Act, the Safe Drinking Water Act and the Clean Water Act, the Technical Department has increased its support for CMA petitions, waivers and litigation. The Department is also paying much more attention to the policies, models and databases used by agencies to make regulatory decisions. D. Communications The Catalyst Awards Program (for excellence in teaching chemistry) has received 158 entries for 1986 competition. The department arranged for the CFC Special Program Panel response to the recent NASA assessment of ozone depletion. Media training was conducted for the panel's chairman for appearance on Cable News Network. 37 CMA 039694