Document dYmBDLwoxV7mKdzwvD55X85qb

AGENDA MEETING OF THE MCA BOARD OF DIRECTORS 3:30 p.m., Tuesday, May II, 1976 The Madison, Washington, D. C. I. Opening Remarks and Introduction of Guests II. Minutes of Meeting of April 13, 1976 III. Business Items: (a) Budget and Financing for Fiscal Year 1976-77 (Proposal mailed to Directors 4/21/76) (b) Report of the Membership Committee: JOC Oil Aromatics, Inc. (c) Report of Nominating Committee (d) Proposed Rules of Organization and Procedure for Energy Conservation Committee (e) Revised Antitrust Guide for MCA Committee Members (f) Appointment of Committee Members (Attachment) (Attachment) (Attachment) IV. Report by Chemical Industry Trade Advisor V. Report of Special Committee on Toxic Substances Legislation VI. Report of Director of Government Relations VII. Reports of Committees: (a) Transportation and Distribution Committee George A. Coffenberg, Chairman (b) Food, Drug, and Cosmetic Chemicals Company Gary A. Sunshine, Chairman (c) Transportation Equipment Committee R. E. (Dick) Phillips, Chairman VIII. Report of the President | Next Regular Directors' Meeting - Wednesday, June 9, 1976, at 5:30 p. m., the West Virginia Room, The Greenbrier, White Sulphur Springs, West I Virginia, followed by cocktails at 6:00 p. m. in the Tyler Room and Dinner at 7:00 p. m. in the Fillmore and Van Buren Rooms. CMA 036950 L 5 5^ MINUTES of the two hundred forty-ninth meeting of the Board of Directors of the Manufacturing Chemists' Association, Inc. , held at The Madison, Washington, D. C. , May i 1, 1976, at 3:30 p.m. Directors: Alternates: Outside Counsel: Staff Counsel: Seci etarv - Treasurer: By Invitation: Harry D. McNeeley, Earle B. Barnes John S. Coey John T. Connor Edward J. Donley William J. Driver J. Morris Evans James C. E. Fuller Edward J. Goett Robert D. Goodall John R. Hall Chairman John W. Hanley Richard E. Heckert Ralph M. Knight John K. McKinley Adolph Monsaroff H. Barclay Morley Donald D. Pascal William S. Sneath Harvey J. Taufen Robert J. Whitesel) Allan R. Bennett (for Konrad M. Weis) Charles R. Carson (for John F. Welch, Jr. ) Orell T. Collins (for Robert T. Powers) Howard H. Irvin (for Thomas S. Farmer) N. B. Sommer (for James G. Affleck) E. A. Von Doersten (for John R. Hall) Daniel K. Mayers Bruce M. Barackman George E. Best William H. Butterbaugh, MCA Albert C. Clark, MCA George A. Coffenberg, Stauffer Chemical Company David H. Dawson, Chemical Industry Trade Adviso: M. M. Hoover, MCA V. H. Peterson, MCA R. E. Phillips, Ethyl Corporation John E. Slavick, MCA William M. Stover, MCA Gary A. Sunshine, ICI United States Inc. J. G. Tritsch, MCA R. A. Winslow, Exxon Chemical Company Chairman McNeeley opened the meeting by calling for self-introduction of those present in turn. CMA 036951 1 I. MINUTES OF APRIL 13, 19 76, MEETING Minutes of the April 13th Board meeting, as distributed, in cluding the financial statement for ten months ended March 31, 1976, were duly approved. II. REPORT OF THE SECRETARY-TREASURER Exhibit A HI. BUSINESS ITEMS (a) Mr. Evans, Finance Committee chairman, summarized the budget and financing proposal which was mailed to Directors on April 21 as favorably recommended by the Executive and Finance Committees. ON MOTION, duly made and seconded, it was VOTED: That a budget for fiscal year 1976-77 in the amount of $3, 235, 300, of which $2, 880, 000 is for operations and $355, 300 for projects, be approved and presented to the membership at the Annual Meeting, funding to be provided by mem bership fees based on a continuation of the exist ing fee scale plus income from investments, meetings, sale of publications, and overhead re imbursement from subscribed projects; That the authority delegated to the President be continued at the same level, namely, to trans fer among approved projects 10% ($35, 530) of the total funds budgeted for them and to redistribute a like amount under operations, also to approve budget amendments up to a total of 2% ($67, 400) of the fiscal year budget, with the understanding that individual amendments in excess of $10, 000 would be cleared with the chairman of the Executive Com mittee or Board and become subject to Executive Committee approval if so advised; and That a separate plastics activity budget for fiscal year 1976-77 in the amount of $72, 000 be approved, of which $60, 000 will come from assess ments on participating member plastics materials producers and the balance from plastics fund surplus. Of the total budget, $63, 330 is in reserve for alloca tions to projects under current study by the Plastics CMA 036952 15 58 Committee, subject to prior approval by the Board of Directors. (b) Report of Membership Committee As chairman, Mr. Hall reported the committee's having examined the qualifications of the applicant named below and recommending election. ON MOTION, duly made and seconded, it was VOTED: That JOC Oil Aromatics, Inc. , be elected to membership in the Association. (c) Report of Nominating Committee In the absence of the chairman (Mr. Neubauer), Mr. Hanley presented the report attached as Exhibit B, including the proposed Bylaws' amendments, which was accepted. (d) Energy Conservation Committee -- Rules of Organization and Procedure The proposed Rules, favorably recommended by the Execu tive Committee and distributed in advance with the tentative agenda, were duly approved. (e) Revised Antitrust Guide for MCA Committee Members The Guide, revised as recommended by the Legal Advisory Committee with the assistance of Outside Counsel -- Exhibit C -- was duly approved, with the ur.derstanding that it will be incorporated in future printings of the MCA Directory ar.d also made available for wide distribution as a separately p-'inted publication. (f) . Appointment of Committee Members -vere approved as listed in Exhibit D. Appointments IV. REPORT BY CHEMICAL INDUSTRY TRADE ADVISOR Dr. Dawson emphasized the slow pace of developments in governmental negotiations, indicating that little real progress is to be ex pected this year, with European countries tending to delay until toward the erd of the U. S. statutory authority under the Trade Act. He spoke of difficulty in learning the substance of proposals being advanced by the United States. He commented on the approach of both sides to tar iff-cutting formulas, European efforts toward elimination of DISC as well as countervail ing duties without proof of injury, problems in sectoral bargaining, and other factors involved in the negotiations. He credited Congress with trying to keep in touch, mentioning the hearings at which he testified. He mentioned revival of Industry Sector Advisory Committee activity with regard to chemical industry interests, and CMA 036963 1559 the possibility of obtaining data with which to make a useful analysis of import sensitivity. He encouraged any companies disadvantaged by the present status of the Generalized System of Preferences concerning trade with developing countries to take their case to the authorities. V. TOXIC SUBSTANCES CONTROL LEGISLATION As chairman of the Executive Committee, Mr. Hanley reported that earlier today the committee had been apprised of the current status of legislative developments by Mr. Heckert, head of the Special Committee on this matter,, and had reviewed comprehensively the various options available in the continuing effort to achieve sound legislation. Endorsement was given to trying to gain acceptance of further improving amendments to H. R. 10318, public support of the bill by MCA being involved. He reminded that a number of the industry's highest priority concerns expressed earlier have been eased in the House version now pending. He . Jged prompt response to any requests for supportive action received from Mr. Heckert. VI. REPORT OF DIRECTOR OF GOVERNMENT RELATIONS Mr. Stover's report is attached as Exhibit E. A tabulation of the status o: legislation of interest to MCA as of May 6 was distributed to tr - -e pre-ent. VH REPORTS OF COMMITTEES Reports presented by the following committee chairmen are attached as indicated: Mr. Gary A. Sunshine, Chairman Food, Drug, and Cosmetic Chemicals Committee Exhibit F Mr. George A. Coffenberg, Chairman Transportation and Distribution Committee Exhibit G Mr. R. E. Phillips, Chairman Transportation Equipment Committee Exhibit H VIII. REPORT OF THE PRESIDENT Mr. Driver's Staff Report is attached as Exhibit I. He com mented on the increased attention to health standards in the Occupational CMA 036954 I 1560 Health and Saftey Administration (OSHA) and the recently announced new t procedures for revising safety standards, providing opportunity for public comment and hearing. -`<-1 -v , * y George E. Best Secretary-Treasurer Certified correct; Harry D. McNeeley Chairman of the Board I tj CMA 036956 exhibit a REPORT OF THE SECRETARY-TREASURER May 11, 1976 Dollar amounts rounded from tabular details ($000) INCOME & EXPENSE June 1. 1975 - April 30, 1976 - 11 Months (92%^ Income - Membership Fees - Other $2,748 573 $3,321 Expense - Operations - Projects $2,161 209 $2,370 Percent of Budget 101.402% 163.714% 108.529% 87.989% 58.217% 84.192% ASSETS (As of April 30. 1976) Cash Investments Miscellaneous $ 47 5,605 3 $5,655 CMA 036956 % -----' - - . ' ----- 1 --- --- ----- ------------- -------- --- ----- MANUFACTURING CHEMISTS ASSOCIATION Si VI1Ml M 1 Ol H\ VNt.l U msi \ io\ April 30, 1976 ----- ---- ----- --------------------- BALANCE SHEET Assets Cash National Saving* & Truat - Conaercial Account National Savings & Trust - Payroll Account Imprest Funds Investments Bank Certificate* of Depoeit Bank Repurchase Agreements 11. S. Coverment Securltlea U. S. Coverment Agency Securities Corporate Securities Deposits U, Sa Government Printing Office American Airlines Account Receivable Travel Advancea $ 37,961 6,000 7.800 $ 66,761 $ 200,000 170,000 2,096,617 705,625 2.635.300 5,605,317 $ 500 625 925 2,016 $5,655,039 Liabilities D. C. Uaa Tax Liabilities fit Fund Balances $ 77 Reserve Q Deferred Compensation 61,966 " Fund Balances o 03 Restricted (Schedule I (e)) $3,650,921 ttat Unrestricted - From Previous Fiscal Years $1,170,474 01 - Current Fiscal Year 451.621 2.122.095 . 5.573,018 $5,655,039 I N C U M 1 t. 1 X P 1 N S 1 INCOME Membership Dues 6 Entrance Fees 52, 747,662 Income from Investments i07,5U5 Publication Sales * (l)Meetlng 6 Special Funds (Schedule 1 (d)) $ 64,125 89,634 Overhead Reimbursement/Subscribed Projects (Schedule I (d)) 112.313 176,436 Miscellaneous 71 Total Income $3,321,330 EXPENSE Management Technical - General Technical - Chemtrec Public Relations Government Relations Information Service Office Admlnstration Total Expense *(2> $ 573,280 661,430 162,393 416,466 260,240 56,362 197,5ltt $2,369,709 $ 4SI 6/1 FOOTNOTES: *{1) Net Income on Completed Projects *(2) Total General Program Expense 1 , Fiscal Year 1975-76 Budget Program Expense (above) Expenditures from Project Funds carried over from previous Fiscal Year (Schedule I (c)) $2,369,709 __ 37t644 52,407,55 1 CMA 036968 < a/ KtLi> i Kicrri^u kunu^ a mm. i i mi. Carry-Over of Budgered Funds CR-1 Economic Study Tech X-9 Economic Impact/Toxic Substances Total - Carry-Over Budgeted Fund* Non-Budgeted Funds & Meetings Meetings, Workshops & Symposia Tank Car Mileage Compensation TEC Audio/Visual Aids CPC Audio/Visual Aids Vinyl Chloride Research - Inhalation Vinyl Chloride Research - Epidemiological Vinyl Chloride Research - Dow Studies Vinylidene Chloride Monomer - Research Styrene Monomer - Research Acrylonitrile Monomer Research Trichloroethylene Research Ethylene Dichloride Research Chlorobenzenea Research Phosgene Safety Research Fluorocarbons Research Ally1 Chloride Research Epichlorohydrln Research Phthalate Esters Research Loss Data Bank Project Patents Monitor Chemical Industry Trade Advisor Total - Non-Budgeted Funds A Meetings Plastics Group Financial Package Total Balance June 1, 1975 $ 2,844 33,000 $ 37,844 $ 81,519 24,348 (2,138) (28) 114,282 56,458 178,603 504,547 255,494 64,725 68,476 677,847 9,766 4,434 243 2,278 $2,060,856 $ 85,924 $2,184,624 Receipts $* - $- Current Fiscal Year Expend itures Transfers To Income 5 2,844 35,000 $ 37,844 $- 5- $ 262,069 66,336 3,754 26 595 684 1,785 148,000 105,587 529,248 353,625 28,620 27,500 15,000 1,664,939 120,120 128,700 49,000 2,285 - 37,000 $3,544,877 $ 59,286 l $3,604,163 $ 174,171 24,966 745 46,465 33,765 154,091 397,995 164,600 80,572 756 1,278 15,972 34,718 932,965 26,201 2,043 31,339 $2,122,642 $ 940 $2,161,426 $ 64,125 - 3,073 2,466 2,676 6,253 1,657 5,063 5,343 7,164 980 9,589 64,933 1,225 1,225 666 - $ 176,438 $ 5 176,438 Balance April 30, 1976 $- $- $ 105,292 65,720 871 65,339 20,911 23,621 248,299 194,824 443,613 347,526 104,903 10,548 39,171 1,344,888 118,895 127,475 31,899 4,676 243 7,939 $3,306,653 $ 144,270 $3,450,923 SCHEDULE II - EXPENSE BUDGET PROGRAM Apri I JO, 19/6 . Actual E^loyte. ( tathotlMd OPERATING EXPENSE Salaries A Related Expense Retirement Plan & Group Ins* Hosp. Ins. A Health Plan Legal Fees A Expense ConsultantsAInvestment Serv. Audit Rent A Premises Expense *(4)Tsxe A Insurance Supplies A Gen. Office Exp. Furniture A Equipment Printing Telephone A Telegraph Postage Travel A Entertainment Meeting Expense Periodicals, Books, etc. Organisational Memberships Contingency Operating Expense Totals MANAGEMENT EXPENSE ii BUDGET 12 TECHNICAL GENERAL CHEMIREC EXPENSE BUDGET EXPbNSE BUDGET 22 7 21 7 PUBLIC RELATIONS EXPENSE 12 BUDGET 12 CWT RtLAiHWS EXPENSE 10 BUUCU 9 INFO SkKVICt EXPKNSI. 3 blUMMI 1 oma i xn NSI. 12 ADMIN uiiuu i 11 1l i xn NSh 78 MON 111 5 mioo* i 75 $261,152 $286,165 6.671 60,656 6,561 2,911 223,568 119.166 2,56) $416,114 $389,855 5,861 68,687 6,773 5,729 - 18,333 *- 2,500 16,166 10,692 5,297 5,063 2,292 16,271 10,862 6,617 2,292 . 27,197 20,666 22,168 2,011 _ 27,179 18,333 16,333 1,811 $108,621 3,063 l.Ul - $109,128 15,675 642 - -- - 6,900 43,150 1,891 1,286 . 7,058 40,425 J.UJ 1,833 $200,433 $201,711 4,460 25,437 4,870 2,887 -- -- . 17,641 11,180 11,862 69 . 17,233 10,679 6,708 229 $158,3J9 $160,716 2,897 22,550 3,525 2,381 22,879 22,917 -" . 11,619 9,104 9,695 1,326 _ 12,008 6,66 2 6,417 2,292 $ 43,058 51,83/ 666 17,875 1,110 1,008 -- -- _ 7.217 2,435 3 25 - _ 7,150 2,687 733 92 $I39,u/4 1,096 5,545 - >120,J57 6,829 2,656 -- 23,612 9,44? 6,981 368 22,J67 8,250 8, 708 275 >1.331,591 >1, 319,989 26,694 217,707 29,557 1 B, -'40 246,447 160,416 - 2,567 2, 500 109,5 30 106,454 60,379 10,161 2,29 2 11)9, 266 100,096 52,431 8,846 6,682 6,112 2,719 6,973 6,566 3,300 5,637 3,208 7,333 11,000 - 15,565 23,066 19,380 246 917 12,192 21,542 23,833 825 1,006 13,936 391 561 * 917 19,600 917 1,833 - 4,592 7,600 40,217 19,471 14 1,850 8,112 41,250 22,917 92 644 7,532 9,151 9,875 3,086 731 6, USU 5,958 13.750 5,042 1,198 182 406 _ l, 375 733 1,008 - 1,365 5, J4 9 115 719 - 1 , 3 75 4,767 1,467 163 - 12,089 57,272 75,841 57. 387 9,892 11,092 57,933 75.075 70,657 16,959 556 658 1,330 1,467 364 367 1,460 1.512 8,937 9,167 1,783 1,512 140 92 14,572 14,575 2,566 2,567 2,156 2,383 75 92 963 917 1,233 2,108 - 46 107 92 7,120 8,205 1,616 6,563 -- *- - -- -- - 1.436 4,583 $573,260 $567,705 $564,277 $611,661 $182,393 $201,806 $324,632 $345,534 $260,240 $280,773 $ 58/382 $ 86,256 $197,518 $177,420 $2,160,922 $2,251,131 PROJECTS Technical *(2) Air Quality *(1) Occupational Health/Epidemiology Study Trade Advisor *<21 Hater Resources Mul11-Coaait tee/Transportacion Malt 1-CcNvit tee/ Publications *{3) Economic lapact/Toxic Substances Legislation $ $ 18,425 - 573 25,000 45,833 26,300 22,275 1,608 4,950 55,686 70,583 10,559 9,900 5 $ 18,425 - 573 25,000 45,833 24,300 22/275 1,408 4,950 55,886 70,563 10,559 9,900 Public Relations Community Relations Consumer Information Environmental Quality Internal Publications Media Relatione College A HI School Teacher Awards Education Exhibits Education Publications $ 17,269 $ 19,525 17,915 28,416 22,761 40,975 2,756 23,833 4,265 6,983 12,226 13,108 3,906 3,667 10,516 18,333 17,269 17,915 22,761 2,756 4,285 12,226 1,906 10,516 19.525 28,416 40,975 23,633 8,96 1 1 3,108 3,66 7 16,1J3 Project Totals $$ $117,153 $172,539 $ $ $ 91,634 $156,840 $ $ 5 -$ - $ $ 206,787 $ J 29,1/9 cote I NED TOTAL $573,280 $567,70S $681,630 $786,180 $182,393 $201,804 $416,466 $502,374 $260,240 $280,773 $ 58,382 86,256 $197,518 $177,420 $2,369,709 $2,580,512 *(l> Budget Increase approved by President August Id, 1975, fur "Guidelines fur LpLdcreiulugy Study" $625 *(2) Traits ter of Project Funds approved by President September 16, 1975, from "Air Quality1* to "Haler Resources" *(3) Approved by President for Economic Imp act/Toxic Substances legislation* presentation by consult juii. - budget increase October 9, 1975, $1,900, transfers of funds from "Air Quality" Live ember 10, 1975 >7,000 and March 1, 1976 $1,900, for a total of $10,800 *(4) Budget Increase approved by Board of Directors, November 26, 1975, lor Chemirec insurance $21,600 >6,000 CMA 036969 Exhibit B Nominating Committee Report to the Board of Directors 1 May 11, 1976 Your nominating committee, on which Jack Hanley and Harry McNeeley served with me, is pleased to name the following slate for election as officers and Directors effective June 1st of this year: Officers for Fiscal Year 1976-77 -- Chairman of the Board Earle B. Barnes, Executive Vice President, The Dow Chemical Company Vice Chairman of the Board Edward J. Donley, President, Air Products and Chemicals, Inc. Chairman of the Executive Committee James G. Affleck, Chairman and President, American Cyanamid Company President William J. Driver Directors for term expiring May 31, 1979 -- William H. Bricker, President, Diamond Shamrock Corporation Fletcher L. Byrom, Chairman of the Board, Koppers Company, Inc. John T. Files, President, Merichem Company John M. Henske, President, Olin Corporation James W. Kent, President, Chevron Chemical Company W. C. Krumrei, Senior Director, Research & Development, The Procter 8i Gamble Company Robert L,. Mitchell, Executive Vice President, Celanese Corporation Thomas B. Nantz, Executive Vice President, The B. F. Goodrich Company George F. Polzer, Executive Vice President, Witco Chemical Corporation I CMA 036960 2- - Tom K. Smith, Jr., Group Vice President, Operations, Monsanto Company William SV'Sneath, President, Union Carbide Corporation Eugene J. Sullivan, President, Borden, Inc. Director for term expiring May 31, 1978 -Robert A. Winslow, Executive Vice President, Exxon Chemical Company Bob Winslow thus will fill out the regular term to which his late I colleague, Don Swan, was elected last year. In the course of our deliberations, we visualized an occasional cir cumstance when it might be advantageous --in respect to continuity of leader ship --to afford the Nominating Committee an additional option, namely, t6 consider for the office of the Chairman of the Board a Director who in the last year of his regular term is serving as Chairman of the Executive Com i mittee. Obviously, this would provide additional flexibility. Normally, such progression would be expected to come within the span of a Director's three-year term. At least, it is not in mind that such extension to a fourth year would become usual or routine. To bring this possibility about involves amending the Bylaws, which now provide only for a three-year term for Directors, except for filling vacancies, and permit no re-election after serving a three-year term until an interval of one year has elapsed. To accomplish the purpose in view, we proposed amending the By laws by adding the following sentence to Article V Section 2 on Director eligibility: CMA 036961 i -3- A Director serving as Chairman of the Executive Com mittee during the concluding year of said Director's term may be re-elected to a contiguous one-year term if also elected to serve concurrently as Chairman of the i Board, continuation of such directorship being contingent on holding the latter office. A companion change would then be needed in Section 3 so that the foregoing as well as the filling of vacancies would be a recognized excep tion to the three-year term rule. This involves merely deletion of specific reference to vacancies and insertion of reference to Section 2. The second sentence of Section 3 would read: Except as set forth under Section 2 and Section 4 of this Article, Directors shall be elected for a term of three years. 1 understand no action other than your acceptance of this report is needed to place these matters on the agenda for our Annual Meeting. Joseph A. Neubauer Chairman Nominating Committee J CMA 036962 Revision of Antitrust Guide for MCA Committee Members As a part of the Legal Advisory Committee's attention to the Association's antitrust compliance program, Outside Counsel in conjunction with the Legal Advisory Committee has revised MCA's Antitrust Guide for Committee Members as attached hereto. It incor porates staff and Legal Advisory Committee comments. When approved, it will be incorporated in future printings of the MCA Directory. It MCA EC - 4/13/76 BD-5/11/76 CMA 036963 Draft March 29, 1976 FOREWORD The purpose of this Guide is to give MCA committee members an introduction, in non-technical language, to some of the federal antitrust laws as applied to MCA activities. It replaces the Antitrust Guide published April 1, 1965 and revised February 15, 1968. It has long been the policy of MCA to comply with the letter and the spirit of the antitrust laws. The Antitrust Guide for MCA Committee Members is provided to alert you to possible antitrust violations. As an intro duction and guide, it is limited in scope and contains neither a complete statement of the antitrust laws nor a description of every possible situation in which antitrust problems may arise. It is no substitute for legal advice, and for any specific question concerning the applicability of the antitrust laws you should consult MCA counsel as well as counsel for your own company. PRESIDENT & CMA 036964 DRAFT - March 29 1976____ ANTITRUST GUIDE FOR MCA COMMITTEE MEMBERS This pamphlet is designed to be a layman's guide on how the antitrust laws apply to trade association acti vities, with particular reference to MCA committee work. It is written both for the guidance of those MCA committee members who have no particular knowledge of this compli cated subject, and to provide a useful reminder or "refresher course" for those who have had the benefit of antitrust advice from their own company counsel. The Manufacturing Chemists Association is a non profit industry association representing about 200 chemical producers. Like other industry associations, MCA is composed of-member companies (many of whom are competitors of one another) representatives of which serve on its Board of Directors and on its committees. Whenever competitors meet together problems can arise under the antitrust laws. If the meeting or other activity among competitors is conducted by or through a trade association, it is just as vulnerable to antitrust attack as if the same companies were meeting or acting together without the medium of an association. Trade associations generally seek, quite properly, to promote understanding and coopera tion among their members. But if this "cooperation" restrains competition, both the association and its members will be in trouble under the antitrust laws. CMA 036965 1 Antitrust enforcement is being emphasized as never before. The number of criminal and civil antitrust actions is steadily increasing, congress has greatly increased both criminal and civil antitrust penalties, has made important pro cedural changes, and has substantially increased the budgets for the Antitrust Division of the Department of Justice and the Federal Trade Commission, the two agencies charged with antitrust enforcement. The courts are expanding the scope of antitrust prohibitions which may especially affect trade association activities, and such associations are more fre quently becoming the objects of FTC and Antitrust Division investigations. In view of these developments, increased awareness of the application of the antitrust laws to association activities is essential. Like most reputable trade associations, MCA has objectives and programs that are well within the law. It also makes every effort to prevent possible antitrust abuses from arising. But a large responsibility also rests upon its member companies -- and particularly upon their individual representatives who serve on MCA's committees. This means that committee members should know enough about this subject to be able in their MCA work to avoid actions or discussions that might raise antitrust questions. The main purpose of this pamphlet is to help all committee members to recognize what is, or might become, an "antitrust question." I \ i CMA 036966 \I Some actions or discussions by members of a trade association are clearly illegal; many others are wholly legal and proper; and there is a sizeable "grey area" or danger zone in between. This grey area between legal and illegal association activity is often vague and uncertain, and MCA's policy has always been to keep far away from the doubtful zones. The Association's aim is not only to avoid actual violations of law --it wants to prevent even any appearance of violation which might invite suspicion or investigation on the part of the enforcement authorities. To protect itself and its members in this respect, MCA has adopted and observes several basic policies: 1. It has well-defined, constructive objectives and programs which are designed to promote the overall interests of the industry and the public. 2. Its organizational structure consists primarily of standing committees v'ith specific and limited functional purposes; any activities concerned with pricing or marketing chemical products are scrupulously avoided, and limitations are also imposed on the subject matter and duration of ad^ hoc committees dealing with specific chemical products or product segments. 3. It maintains various procedural safeguards -particularly those set forth in the Board's "General Princi ples Applicable to the Structure and Operations of Committees" which appears in the Association's annual Directory. 3 CNIA 036967 4. it retains counsel to help insure full observance of the above policies and procedures, and to provide guidance and protective advice as to all MCA's operations from an antitrust standpoint. 5. It has approved the issuance of this "Antitrust Guide" to help member company representatives on MCA committees avoid problems under the antitrust laws. -4- CMA 036968 THE FEDERAL ANTITRUST LAWS Beginning in 1890, Congress has enacted a series of statutes which are known collectively as the federal antitrust laws. These laws are designed to promote and preserve our competitive private enterprise system by encouraging free and open competition in open markets. The federal antitrust laws give the force of law to the philosophy underlying our econo mic system, namely, that a free market in which supply and demand operate to determine the conditions and terms of pro duction, distribution and sale, and where each seller and buyer deals independently, serves to achieve the most equitable allocation of high quality goods and services at the lowest possible prices. The central core of federal antitrust legislation is formed by the Sherman Act (1890) and the Clayton and Federal Trade Commission Acts (1914). Most states have also enacted antitrust laws similar to the federal statutes but no attempt is made to discuss them in this brief manual. Similarly, there is no discussion herein of other areas of federal antitrust law (such as the Robinson-Patman Act and many parts of the Clayton Act) which may bear directly on the activities of individual companies but are usually not involved in association activities. The primary focus here is on horizontal conduct, i.e., conduct involving relationships between competitors, rather than vertical relationships such as those between a company and its customers. 5 CMA 036969 Section 1 of the Sherman Act prohibits "contracts," "combinations" or "conspiracies" in restraint of trade or commerce. These are terms of collective action or conduct by two or more persons, and they include agreements and understandings of all kinds -- whether written or oral, formal or informal -- which unduly restrain competition. Because of the collective nature of most trade association activities, this section is the principal weapon used by the Department of Justice in antitrust suits against trade associations or their members. Such suits are usually based upon an alleged conspiracy or agreement among competi tors to restrain trade. (The Federal Trade Commission also can, and does, challenge trade association activity which is alleged to lessen competition under Section 5 of the Federal Trade Commission Act which prohibits "unfair methods of competition.") Although the language of the antitrust statutes is deliberately general in its coverage, prohibiting "[every] contract, combination ... or conspiracy in restraint of trade" and "unfair methods of competition," the courts have defined a number of specific activities as inherently unlawful, the so-called "per se" offenses (see "Prohibited Activities," infra) . The legality of other activities is determined by the "rule of reason," i.e., is the activity ancillary to the achievement of a legitimate business objective and is it no more restrictive of competition than necessary to achieve that objective. Although this I l 1 i ' f I 6 CMA 036970 I necessarily involves difficult questions of interpretation, even here useful guidelines for antitrust compliance have evolved from the courts' decisions. The importance of obtaining legal counsel in any area of uncertainty cannot be overemphasized, for the sanctions imposed for violations of the antitrust laws are severe. ANTITRUST ENFORCEMENT The Federal antitrust laws are enforced by the Department of Justice (Antitrust Division) and the Federal Trade Commission and frequently provide the basis for suits by private parties. All of the following penalties can be imposed for violations of antitrust laws: 1. Imprisonment. Violations which are criminal offenses, including most prohibited collusive activities, are felonies, and each individual participant is subject to a prison sentence of up to three years. Prison sentences are becoming increasingly common, particularly in price fixing cases. Convicted felons may also be denied citizen ship, the right to vote and other privileges and rights. 2. Fines. Fines of up to $1,000,000 for corporations and up to $100,000 for individuals may be imposed for each criminal offense. An individual may not be reimbursed by his corporation for fines paid by him and fines are not deductible for income tax purposes. 3. Injunctive Court and Federal Trade Commission Orders. Orders (injunctions) which prohibit future viola tions or activities can be imposed as a result of civil 7 CMA 036971 actions brought by the Department of Justice, the Federal Trade Commission, or private parties, with far-reaching consequences. Such injunctions may contain sweeping pro hibitions which go well beyond the scope of the violations charged and prohibit conduct which is not itself considered contrary to the antitrust laws. Such orders can seriously limit freedom of corporate or association action, require burdensome and time-consuming reporting obligations, cause day-to-day activities to be supervised by a court or agency, and even require dissolution of a trade association. Violation of an injunctive order issued by a court can result in contempt proceedings with attendant fines, while failure to comply with an injunction ("cease and desist order") issued by the Federal Trade Commission carries penalties of up to $10,000 for each day the non-compliance continues. 4. Treble Damages. A sanction which has been applied with increasing frequency as private antitrust suits have rapidly increased in recent years is the "treble damage" provision of the antitrust laws which allows persons or businesses injured by an antitrust violation to recover three times the amount of actual damages sustained. Such cases have resulted in hundreds of millions of dollars of damages being paid to private litigants. Thus, an antitrust violation could impair the financial resources of any corporation and significantly weaker, its competitive position. -3- *1 ICMA 036972 PROHIBITED ACTIVITIES As noted above, many antitrust violations -- and particularly those involving trade associations -- result from concerted or collusive activity, that is, from an "agreement" between or among competitors which results in a restraint of trade. An illegal agreement may be proved in a number of ways. It need not be written, and seldom is. Rather, the term agreement" in antitrust parlance may mean no more than knowing adherence to or participation in a common scheme. .Explicit promises, commitments, or assurances are not necessary to establish a violation, nor must the parties actually carry out the agreement, (This definition of "agreement" is assumed throughout.) Convictions for collusive activities can be based on a series of seemingly isolated facts which have been linked to present a chain of circumstantial evidence from which an agree ment or conspiracy -- a meeting of the minds -- can be inferred; for example, identical price increases by competitors follow ing shortly after a trade association meeting at which "business conditions" and the need of the industry for higher prices were discussed. For this reason it is important when participating in MCA committee work or other association activities, which involve contact with other members of the industry, to avoid doing or saying anything which might even give an appearance of agreement with others in areas which may involve a lessening of competition. A. Agreements Involving Prices. Pricing is the most sensitive subject under the antitrust laws. 9 "Price" CMA 036973 in this context includes all the elements of the terms of sale: sales prices, discounts, allowances, freight, credit terms, container deposits, and all other services or condi tions integrally related to a sale. Any agreement between com petitors which fixes, stabilizes, maintains, bolsters, de presses, or tampers in any way with price is unlawful "per se,11 that is, the activity is indefensible and illegal without further analysis of its reasonableness, good intentions, arguable benefits to the public, or extenuating circumstances. In short, there is no defense. "Price-fixing" encompasses not only agreements with competitors on a selling price. It may also include, for example, agreements to buy up surplus goods, to adhere to a formula for determining prices, to standardize discounts, to control raw material prices, and any other agreement which has the net result of affecting the price structure of a given product. Moreover, it is just as unlawful for competitors to agree on the prices at which they will offer to buy from their suppliers, as on those at which they sell. As pre viously noted an agreement can be shown in a number of ways. Thus, even the mere exchange of price lists between competitors on a regular basis may in some circumstances serve as evidence of an illegal price-fixing agreement. The essential rule is that each seller must determine on its own the prices at which it purchases and sells. To avoid inferences of agreement or collusion -- and there can be no exceptions -- MCA members must not engage "in any direct l ( f \ 10 i CMA 036974 I or indirect discussions with any competitors regarding prices, pricing policies, or any other marketing policy which may affect pricing. The following are a few examples of activities which have been found by the courts to constitute evidence of illegal price fixing: 1. Some supermarket executives were held to have vio lated the Sherman Act on the basis of evidence which included a trade association meeting where one participant made remarks to the general effect that it was time to stop passing lower wholesale meat prices on to consumers and keep some of it for themselves. After viewing this and other evidence in light of the actual pricing practices, the court upheld a jury verdict that the attendees at the trade association meeting had engaged in an illegal conspiracy to keep whole sale prices low and retail prices high. (The jury awarded plaintiffs a verdict for over 32 million dollars, plus the plaintiffs' attorneys' fees.) 2. In another case, the sales manager of the leading com pany in a market invited the sales managers of the other major companies in the market to a meeting at which he described a proposal for reclassifying distributors and changing discount schedules. No one present openly agreed to reclassify his distributors and change his discount schedules. Subsequent to the meeting, however, the leading company instituted the changes proposed at the meeting and the other companies, one by one, adopted the same distributer classifications and discount schedules. All of the companies and their sales managers were convicted of engaging in an unlawful conspiracy. The fact that all of the individual defendants were at the meeting, heard CMA 036975 the discussion, and subsequently reclassified their distri butors and changed their discount schedules, supported a jury finding that they had unlawfully conspired to fix prices. 3. Sales officials of corrugated cardboard box manu facturers in the Southeast followed a practice of occasionally calling each other to determine quotes given on specific and current sales to identified customers. The Supreme Court held the practice .illegal because it had the effect of stabilizing > prices (i.e., it tended to limit price reductions and the range of \ price changes). The decision was reached in spite of an express I finding that the calls did not result in an actual agreement on j prices. Rather, each defendant, on receiving a request for pricing information, usually furnished the data with the expec- | | tation that reciprocal information would be furnished to him. This simple exchange of information was held to establish an un lawful combination or conspiracy under the Sherman Act. B. Agreements to Control Production or Sales. Com petitors may not agree to limit or control production or sales. Any limitations on output by direct or indirect agreement are illegal per se and cannot be justified, even where the purpose is to preserve the industry or conserve natural resources. ! C. Division of Territories and Allocation of Customers. Any agreement between competitors to divide or allocate either sales territories or customers is unlawful per se. Exchanges of information with competitors relating to customers or territories can create the I f j - 12 ' cMA 036976 ft appearance of such collusion or agreement and must be strictly avoided. D. Refusals to Deal. Any agreement among competitors which results in a refusal to deal with suppliers or other competitors -- for example, a blacklist or boycott -- is illegal per se. For this reason exchanges of information (e.g., credit information) concerning particular customers which might lead to parallel deci sions not to deal should be avoided. - 13 - CMA 036977 ! APPLICATION OF ANTITRUST LAWS TO TRADE ASSOCIATION ACTIVITIES The valuable and proper activities of the MCA and its committees can be accomplished effectively if participating members are alert to the prohibited types of behavior described above and react quickly when danger signals appear. Obviously, MCA activities should be conducted in such a way as to avoid any possible inference of agreement among its members with respect to prices, controlling produc tion or sales, division of territories, or refusals to deal in any form whatsoever. Further guidelines are given here to highlight potential danger zones to be avoided. When a danger zone appears, counsel should be consulted for specific guidance. In reviewing the following guidelines there are a few general points you should bear in mind: 1. As indicated above, an otherwise lawful act may become unlawful if done for an improper purpose, or if it is part of a larger unlawful scheme. For example, a product standardization program might be justifiable considered by itself, but not if it is combined with other activities to facilitate the fixing of uniform prices. In other words, the courts may look at the cumulative effect of several activities -- not at each one separately. ( - 14 - l CMA 036978 A 2. Good motives are not an excuse for doing things that are otherwise unlawful, either because they fall within one of the "per se" categories discussed previously or because they are more restrictive of competition than necessary to accomplish their legitimate objectives. Thus, even though a product standardization program may be intended to increase competition by providing consumers with important information, it may nevertheless be found unlawful if conducted in a manner more restrictive than necessary to achieve its legitimate purposes. 3. An ostensibly lawful program or activity runs a greater risk of getting into vulnerable areas if conducted by a group of competitors making the same product. That is the main reason why MCA operates primarily through functional committees, and imposes limitations on the subject matter and duration of any ad hoc committees dealing with matters concerning a specific chemical product or product segment. 4. As a member of an MCA committee, you and your company can be held responsible for any improper acts that may occur which you know about (or should know about), and if you fail to protest or disassociate yourself from them. Participation in MCA Committee Meetings. All meetings of MCA committees must be conducted in strict compliance with the procedures set out in the "General Principles Applicable to the Structure and - 15 - CMA 036979 Operations of Committees."- These General Principles provide for agendas, attendance of staff representatives, and for the keeping of accurate and complete minutes -- all of which are designed to avoid antitrust risks. If you participate in an MCA task group meeting held without an MCA staff member being present (pursuant to the special circumstances set forth in subparagraph 5(g) of, the General Principles), be sure that the meeting complies with the requirements of that subparagraph 5(g), including an "accurate and complete written report . . . as to everything occurring at such meeting." Note: The attitude of enforcement personnel will be governed by what committee or task group members actually do, not by what is said in reports or minutes that may be incomplete or inaccurate. MCA committee members participating in activities involving advocacy before governmental entities should be familiar with and carefully observe the guidelines set out in the memorandum, 'General Principles and Guidelines for MCA Advocacy," dated May 14, 1975. In general, advocacy can seek to influence government policy in ways which benefit the chemical industry, but such advocacy should be conducted i i ( t */ As approved by the Eoard of Directors on March 12, 1963 and amended March 9, 1971. These General Principles may be found in the MCA Directory issued annually. - 16 CMA 036980 I 1 in lawful ways and directed solely at efforts to influence that policy. It should not be used as a sham or as a means to affect competition directly and independently of what would be the effect of the government policy which is sought to be influenced. While committee agendas will have been cleared in advance with MCA counsel, it is the obligation of all committee members to make sure that their own participation in committee meetings will not give rise to even an inference of antitrust wrongdoing. Thus, even when carrying out approved and legitimate activities members must be careful to avoid discussions or exchanges of information with their competitors on any subject relating to the 11 per se" restraints listed above since such discussions or information exchanges may give rise to inferences of agreement. As examples, you should avoid any discussion with competitors of the following: (a) Individual company prices, price changes, price differentials, mark-ups, discounts, allowances, credit terms, etc. (b) Individual company figures on costs, produc tion, capacity, inventories, sales, etc. (c) Industry pricing policies, price, levels, price changes, differentials, etc. (d) Changes in industry production, capacity, or inventories. t - 17 - CMA 036981 (e) Transportation rates or rate policies for individual shipments or particular products, including basing point systems, zone prices, freight equalization, etc. Note: This was an alleged factor in the 1962 FTC charges against MCA in the TSP (trisodium phosphate) case. MCA denied the charges, but joined the producers in signing a consent order prohibiting the practices charged. Standardization of TSP containers was another principal factor in the TSP case; these charges pertained to an activity in 1939-40 which has long since been abandoned. MCA denied that this activity was illegal, but joined the respondent TSP producers in signing a consent order prohibiting the various practices charged, in order to avoid costly and time-consuming litigation. (f) Bids on contracts for particular products; procedures for responding to bid invitations. (g) Plans of individual companies concerning the design, production, distribution or marketing of parti cular products, including proposed territories or customers. (h) Matters relating to individual suppliers or customers that might have the effect of excluding them from any market. (i) Any matter relating to TSP as a specific product. f < l ( 1 ( ( ( j j 1 \ ( Regardless of subject matter, you should not attend or tolerate any meeting with your competitors in connection with MCA business which has no agenda, or which is concerned with matters outside your committee's terms of reference, or which otherwise fails to conform with the procedures in the General Principles. [ 18 CMA 036982 \ \I J 1 1* ^1 1 l 1 1 I i i i i. i i i i u Informal Gatherings It is important to avoid discussions of the above subjects, not only at formal MCA or committee meetings, but also in connection with social or other gatherings on those occasions. If any improper discussion should start in your presence, you should protest; if the discussion continues, you should promptly excuse yourself from the group and communicate your protest to the appropriate MCA staff member. Even if you do not take part in any improper discussion, your presence without participation could still get you and your company into trouble. Any individuals who participate in such improper discussions, whether deliberately or innocently, are doing their companies, and MCA, a real disservice, and subjecting themselves to possible liability. In case of doubt as to whether a particular subject may properly be discussed with your competitors, you should consult your own company counsel. Documents Care must be taken to avoid wording any written documents including reports or notes from committee meetings in a way that might be interpreted as indicating, contrary to fact, the existence of an antitrust violation. Every memorandum, letter, or other document dealing with prices, competition, or the other danger areas specified in this pamphlet should be written with the assumption that it will one day be examined - 19 - CMA 036983 for antitrust implications. An antitrust case may be based on documents which are in reality innocent or innocuous but have been written in such a way as to create suspicion and require explanation. Such documents may include personal notes based on recollection/ or taken at committee or other meetings, which record personal impressions rather than the facts of what transpired. i CONCLUSION It is hoped that this pamphlet will help you to understand how the antitrust laws bear upon trade associa tion activities, and to carry out your MCA work in full compliance with these laws and with MCA policies. Again, please remember that this is a limited outline and is not intended to be a complete description of the application of the antitrust laws -- for answers to specific problems, you should consult MCA counsel and your own company counsel. ( BD-5/11/76 - 20 CMA 036984 APPOINTMENT OF COMMITTEE MEMBERS Exhibit D (a) Chemical Packaging Committee Joseph Sandford, Jr., E. I. du Pont de Nemours k Company -- As Chairman* Robert E. Mcllroy, J. T. Baker Chemical Company -- As Vice Chairman* Edward J. Radziewicz, Celanese Chemical Company, A Division of Celanese Corporation ^ (b) Energy Conservation Committee Larry L. Saphier, The Dow Chemical Company -- As Vice Chairman (c) Insurance Committee R. A. Balotti, E. I. du Pont de Nemours k Company --As Chairman* R. E. Klingman, UNIROYAL, Inc. --As Vice Chairman* (d) International Trade Committee Lewis Sellers, The Dow Chemical Company (e) Legal Advisory Committee Edwin J. Putzell, Jr., Monsanto Company --As Chairman* James J. Wyer, American Cyanamid Company -- As Vice Chairman* Peter H. Kaskell, Olin Corporation S. Maynard Turk, Hercules Incorporated (f) Plastics Committee W. E. Kennel, Amoco Chemicals Corporation --As Chairman* Harry E. Connors, Jr. , Diamond Shamrock Chemical Company -As Vice Chairman* Walter Bussart, Eastman Chemical Products, Inc.* Paul A. McKim, ARCO/Polymers, Inc.* C. Rex Scott, Phillips Chemical Company* William G. Simeral, E. I. du Pont de Nemours & Company* (g) Public Relations Committee Gerd H. Wilcke, Mobay Chemical Corporation (h) Technical Information Retrieval Committee James C. Arvantes, Union Carbide Corporation Edith A. Baker, Hercules Incorporated Margaret H. Graham, Exxon Research and Engineering Company Mary Jo Jones, Borg-Warner Chemicals, Borg-Warner Corporation Robert Velgos, Phillips Petroleum Company (Over) CMA 036985 <U/II/S-VDW aa uox^Btujijuoo pxi* AL3TA9J Xxt^nmxe ^oafqna (snqe^g 8xit;oa-iioxi) dxqsjaqxnaui a*xaossy ** '__________________________________________________ 9161 `I 3ax?39jj3 **sp,eojxi*`iI uvaxjaxxxy jpo uoi^BiDossy 'saAtsoxdxtl jo xwajxxg 'xiapjoH T Xog aawmiuioQ ^xiauidinbg uotqe*Jod8xre.ii (0 *xiTOiJi*qo 9TA sy -- uot;xsjodaoo xXxpg 'pxoxwy vitio aa^ixuuioQ uoi^nqtJ^gici pxr* xioi**9JodaxrBJX (x) CMA 036986 ! Exhibit E v REPORT BY THE DIRECTOR OF GOVERNMENT RELATIONS WILLIAM M. STOVER MAY 11, 1976 SENATE COMMITTEE WORKING ON TAX LEGISLATION The Senate Finance Committee began markup of tax reform/tax reduction legislation on April 27 and is expected to report some type of tax measure by mid-June. Although it is not clear just what the scope of the Committee's action will be, it is entirely * possible that their bill will simply extend tax reduction pro visions which expire on June 30, thus delaying action on a tax reform package until later in the year. Senator Russell Long, Chairman of the Finance Conxnittee, has indicated that such a course is a distinct possibility. During the past two weeks of markup sessions the Senate committee dealt primarily with tax shelters of little direct interest to the chemical industry. It is significant to note, however, that most decisions could be characterized as easing off on limitations or restrictions included in the House-passed tax reform bill (H.R. 10612).. Many observers are concluding therefore that when the Committee takes up capital formation and foreign income provisions, its actions will be generally more favorable to industry than that of the House. However, there is still danger ahead. Whenever a tax bill comes up for Senate floor action -- be it a simple extension of expiring tax reduction provisions or a comprehensive tax reform/ tax reduction package -- Senator Kennedy and several other reformminded Senators are expected to introduce a number of anti-business amendments. These are likely to include proposals to repeal de ferral of taxation of income of foreign subsidiaries, restrict the use of the foreign tax credit, eliminate DISC entirely, repeal the Asset Depreciation Range (ADR) System, and repeal the percen tage depletion allowance for hard minerals. 1 CMA 036987 2 The fate of these extreme amendments will depend on the ability of the business community to convince a majority of Senators of the damaging impact of the proposals on U. S. business and the general economy. This was emphasized yesterday by U. S. Senator Herman E. Talmadge of Georgia, second-ranking Democrat on the Senate Finance Committee. In addressing MCA's CHEMICAL FORUM he urged company officials to communicate their views on tax changes to all Senators, and especially to those on the Finance Committee. In order to stimulate savings and capital investment, Senator Talmadge indicated that he favored proposals recommended by the Administration and supported by MCA to make the 10% investment tax credit permanent, to reduce the corporate tax rate, eliminate double taxation of corporate profits and to modify the present method of taxing capital gains. He fully supports retention of the Foreign Tax Credit and DISC and firmly opposes any changes that would materially alter and burden the competitive position of our companies operating abroad. It is his opinion that many Members of the Finance Committee shared his views on these matters. Various business organizations are urging industry spokesmen to contact all Senators with whom they have constituent relations to make known their views on these issues. We certainly support this line of action, and believe that such contacts should be made before June 15. CLEAN AIR AMENDMENTS HIT SNAG IN SENATE The Public Works Committees of both the House and Senate have reported bills in what is the first attempt at comprehensive re vision of the Clean Air Act of 1970 (PL 91-604). An emotional struggle is under way over provisions contained in both bills intended to protect clean air against "significant deterioration". Both bills establish certain "mandatory" Class I areas where only small amounts of additional pollution would be allowed. The Committees say their non-deterioration proposals would give states more control over the classification process than do the EPA's present regulations. Industry views this approach as thinly disguised Federal land-use control. I CMA 036988 3 la the Senate, there are signs that support is growing for an amendment proposed by Senator Frank Moss (D -Utah). The Democratic leadership has recently postponed until early June the floor de bate on Senator Muskie's bill, S 3219. The Moss amendment would defer the new nondeterioration restrictions for one year. During that period, a National Commission on Air Quality, established in the Senate bill, studies the economic and energy impacts of the ^ proposal and considers whether the government has enough technical information to implement it- By late April, Senator Moss had gathered 12 co-sponsors -six Republicans and six Democrats. The hasty decision to postpone floor action is being interpreted as an indication that his pro posal now has the backing to be adopted, and that opponents need more time to solidify their opposition. MCA is therefore con tinuing to work to build support for the Moss amendment. We are urging that member companies communicate with Senators on this subject as soon as possible. The House Interstate and Foreign Commerce Committee is ex pected to file the report on its Air Quality Amendments bill within the next few days, There now appears to be some possibility that the House might await the outcome of Senate action before proceeding. THE SOLID WASTE UTILIZATION ACT -- WILL IT PASS7 The Senate Public Works Committee has scheduled markup on proposed solid waste utilization legislation for May 12 and 13. Last July, Committee Chairman Senator Jennings Randolph (D.-W.Va.) introduced S. 2150, resulting from extensive hearings held during 1975. Last Monday, May 10, the Committee staff issued a new working print of the bill, which will now become the basis for the markup. The House Interstate and Foreign Commerce Subconmittee on Transportation and Commerce issued a draft solid waste bill last December which was considerably more comprehensive than the orig inal Senate bill. We now understand that the Subcommittee has abandoned the first draft because of adverse reactions, and that another draft will emerge in mid-May which will be less contro versial and more likely to attract wide support. The Subcommittee expects to hold hearings following issuance of the new draft bill. CMA 036989 -4- Last summer we submitted our own marked-up version of S. 2150 to the Senate Public Works Committee. We did the same with the House Transportation and Commerce Subcommittee December draft. In related developments, a House Government Operations Sub committee has conducted oversight hearings on solid waste, and a House Science and Technology Subcommittee has held hearings on several research and development bills related to solid waste and resource recovery issues. Oversight recommendations and R&D legislative proposals will be given consideration and possible incorporation by the Subcommittee on Transportation and Commerce in its writing of the major House solid waste bill. Judging from the events discussed above, and the general con sensus on Capitol Hill, there appears to be a good possibility of new solid waste legislation this year. OSHA OVERSIGHT HEARINGS Hearings on worker exposure to toxic materials are scheduled in the House Government Operations Manpower Subcommittee this Tuesday and Wednesday, May 11 and 12, and continuing May 19. The Subcommittee plans to investigate the adequacy of OSHA health standards, whether the procurement systems of GSA and DOD include screening for toxic substances and subsequent worker noti fication, and whether dangerous chemicals in the workplace may be more widespread than generally recognized. Witnesses scheduled for Tuesday, May 11, include representa tives of the National Institute for Occupational Safety and Health, and OCAW (Oil, Chemical and Atomic Workers Union). On May 12 the Subcommittee will hear Dr. Morton Corn, Assistant Secretary of Labor for OSHA. Also appearing will be a spokesman for MCA, Mr. Emil E. Christofano, Chairman of the MCA Occupational Health Comnittee. Mr. Christofano is an Industrial Hygienist for Hercules Incorporated. CMA 036990 I Exhibit F REPORT TO THE BOARD OF DIRECTORS MANUFACTURING CHEMISTS ASSOCIATION GARY A. SUNSHINE, CHAIRMAN FOOD, DRUG, AND COSMETIC CHEMICALS COMMITTEE MAY II, 1976 It is a pleasure to have the opportunity to report to you on the activities of the FDCC Committee and to share with you thoughts that have grown out of my association with the work of the Committee during the past year. As you know, the objectives and the function of the FDCC Committee are as follows: "To advise the Board of Directors concerning chemicals used in foods, drugs, and cosmetics, and in accord with Association policies and procedures, develop positions on legislation and regulations affect ing such chemicals, formulate principles and encourage technical development pertinent to their use and cooperate with other organizations having parallel interests Considering the rapid rate of developments in the past few years, these responsibilities represent no small task. The activities of the Committee during the past year have been directed largely toward consolidating and implementing organizational improvements initiated during the preceding year. The organizational structure that has been established consists essentially of a legislative and regulatory subcommittee, a scientific subcommittee, and a commun ications subcommittee, which are designed to closely follow develop ments in their respective areas. The subcommittees, through their respective chairmen, and the steering subcommittee, function by developing and referring well-developed reports and proposals to the full Committee for review and action. This structural concept takes advantage of the available manpower by establishing a welldefined division of the work areas; eliminating repetitious meetings, and concentrating on developing concrete proposals for the basis of Committee action. Task force units with specific areas of assign ment within these broad lines of division have also been used to advantage. H i. CMA 036991 During the past year, for example, the Committee prepared and submitted extensive comments on the FDA proposed Administrative Practices and Procedures regulations, of particular importance to MCA was the FDA position stated in Section 2.23 (b) of these proposed regulations, that any representation made by a trade association "shall be on behalf of its members and shall constitute a represen tation on behalf of each member of the trade association, except those specifically excluded by name in any such submission." The obstacles to equitable administration of justice under the law that could be evoked by such a provision are so numerous as to preclude detailed reference in this report. Such objections have been fully documented in our submission to FDA. Other features of the proposed regulations to which we have submitted substantial comments have included a proposed limitation on the opportunity to present oral testimony and to cross-examine witnesses during hearings, and the establishment of criteria which the FDA asserted constituted a proper basis on which to deny a petition or right to a hearing. These provisions and others of varying degrees of importance and impact are not merely a codification of existing FDA procedures, but in many respects, represent a basic change in practices that restrict' the rights of individuals subject to the agency's jurisdiction to obtain consideration and review. Another legislative development of importance which is now under review by the legislative and regulatory subcommittee is the Kennedy Food Surveillance Bill S.641. Although originally heralded as applying primarily to food manufacturing and processing establish ments, this proposed legislation has implications extending beyond these areas. Under the manufacturing sections, surveillance features are included relating to the establishment of safety assurance pro cedures within plants, product coding, record keeping, and inspections, in addition the Bill contains provisions for requiring registration of food establishments. However, in a broader context, the Bill imposes obligations on food processors to immediately notify the institution of a recall as well as the possibility that processed foods "may be adulterated." Citizens civil actions also are authorrized under the Bill. Additionally, the Bill contains extensive new requirements pertaining to the label identification of all ingredients. In addition to these activities, the Committee has also monitored the NCI Carcinogenic Bioassay program, the FCC and FAO/WHO monographs for food chemicals, and the FDA review of GRAS substances. CMA 036992 -3- These activities have been carried out primarily under the program of the scientific subcommittee together with a number of other projects relating to technical developments in the area of food, drug, and cosmetic chemicals, The development of proposed Good Manufacturing Practices Guidelines for bulk drugs and food chemicals is presently under study by this subcommittee. In addition, technical liaison is carried out with the activities of PMA, as they relate to bulk drugs and with GMA, as they relate to food chemicals. A project presently active within the communications sub committee is the development of a proposal for the formation of a chemical industry information center. Although the details of the organization and operation of such a center and various considerations relating to its establishment are not yet defined in concrete terms, it is believed that such a center could help to improve the public's understanding of questions and controversies that confront our industry. While the above describe briefly the broad spectrum of activ-, ties that have been carried forward during the past year, a summary1 of the Committee's activities would not be complete without an appropriate evaluation of this work as it relates to the objectives of the Committee's responsibilities to MCA. Such objectives clearly must be understood in the light of the legislative and regulatory climate that exists today. Seen in this perspective, one can only feel a keen sense of inadequacy -- of constantly striving to bar ly keep up with developments and the frustration of being able only to superficially react to the various problems that continue to arise. Despite the diligent efforts of restructuring the FDCC Committee, it is believed that a more fundamental reevaluation of the MCA activity in this area should be undertaken. There are, of course, a variety of ways in which response to the greater burden in this area of our activities can be made. I would not propose as part of this brief report to attempt to define in detail any partic ular solution. It is appropriate, however, to recognize that the time may have arrived when the means which have served us well in the past are no longer adequate to serve industries' needs in the area of food, drug, and cosmetic chemicals. MCA has always prided itself on the fact that committee leader ship and most of the working input comes from the member companies. I suggest that this policy may no longer be appropriate in areas of CMA 036993 -4proliferating legislation and regulation, such as food, drug and cosmetic law. These regulations are targeted at many areas, frequently beyond the scope of interest of any single member company. Therefore, I urge this Board to appoint a committee to study the issue of from where should the leadership of any particular committee come. Should it be from the MCA staff, or should it continue to come from the member companies. The conclusion may not be the same for all committees. Nevertheless, I think this situation should be given a fresh look. i 1 CMA 036994 Exhibit G REPORT TO THE BOARD OF DIRECTORS MANUFACTURING CHEMISTS ASSOCIATION GEORGE A. COFFENBERG, CHAIRMAN TRANSPORTATION AND DISTRIBUTION COMMITTEE MAY 11, 1976 In my initial report for the Transportation and Distribution Committee on April 8 of last year, I restricted my comments to two items of major sig nificance having future impact on the chemical industry. A more detailed report on the Committee's activities was appended to my remarks. Today my oral report will focus on three topics and I refer you to the filed report for the balance. The chemical industry owns or operates approximately 67,000 tank cars and is compensated by the railroads through a mileage allowance of from 11.07si to 23.81d per loaded car mile depending on the value of the car. The rail roads pay an allowance to suppliers of private rail cars In that freight rates take into consideration a cost to the railroads of supplying cars. Prior to 1964, the allowance per mile was a one-level allowance. A car owner or opera tor was paid the same rate per mile irrespective of whether a car had a value of $5,000 or $25,000. The chemical industry, having the newer and higher valued cars, was of the opinion that the compensation paid by the railroads should recognize the difference of investment in the cars and pay a higher allowance to the more valuable cars than paid to cars of lower value. After long negotiations, a tri-level system of compensation was established in November 1964. However, because of disagreement among the railroads as to how the system was to work, the matter was contested before the Interstate Commerce Commission (ICC) with the car suppliers on one side and the railroads on the other. Commencing in 1964 through May of this year, three major car compensa tion cases have been adjudicated before the ICC. In 1971, after a favorable ICC decision to an MCA complaint, the three-level system of compensation es tablished in 1964 wee changed to a six-level system. However, the rates of compensation to be paid by the railroads were frozen to car values established in 1968. The final case, ICC Docket 35537 Instituted by MCA over four years ago, is about to be discontinued as a result of an interim agreement negotia ted between the litigants. The negotiations followed a favorable decision by Division 2 for MCA. MCA's complaint was supported by. the American Petroleum * Institute, the Corn Refiners Association, the Institute of Shortening and Edible Oils, the major tank car leasing companies and Allied Chemical Corp ra tion. The interim agreement accomplishes the following: (1) The mileage rate for all six levels of compensation was to be increased on thirty days' notice by 22-1/2Z. This increase became effective May 1, 1976. Tank car compen sation had not been increased since January 1, 1971. It is estimated that the increase annualized will return to the tank car operators an additional $40 million. The chemical Industry's share is estimated at $20 million. CMA 036995 2 (2) Sin<.e 1964, the railroads only adjusted tank car compen sation upward after adjudication of a complaint before the ICC. the agreement provides thac tank car compensa tion will be adjusted in relation to and at the time the railroads adjust the compensation paid one another for use of each other's cars. The railroads have increased the compensation paid to each other four times, aggregat ing 45%, since the last time tank car compensation was increased. We expect the new rates of compensation, effective May 1, will again be increased in the first quarter of 1977 when the railroads increase car compensa tion to each other, (3) New cank cars entering the rail fleet, frozen at 1968 valuations for the purpose ot compensation, will now enter the fleet at their fair market value. For example, a car valued in 1976 dollars at $27,000 will call for a mileage race of 23.81^ per loaded mile whereas prior to this agreement, such cars would have been adjusted by a formula to a value of $18,500 and compensated at a rate of 2i.89d. Existing cars will be re-evaluated and if the fair markec value of the car places it in a higher mile age group, the car will be reassigned to the higher group. (4) Tank car owners and operators will support the establish ment of an equalization rule whereby, the railroads will be compensated for excess empty miles when empty miles exceed loaded miles by more than 1057.. (5) The ICC will issue an order commencing a rule making proceeding for the purpose of establishing rules and methods for determining cank car compensation in the future. When completed, the ICC will issue another or der canceling the interim agreement and prescribing the basis on which tank car compensation is to be paid and the mechanisms for its implementation. Rule making may take as long as three years to complete. In suomary, we not only see the light at the end of the tunnel, but we can see the end of the tunnel. During the next three years, complex and difficult negotiating will be carried out with the railroads under ICC super vision. MCA's objective will be to do its best to assure chat the rules finally prescribed will provide equitable compensation for those who supply tank cars. Jfy last report dealt at length with Public Law 92-500, the Federal Water Pollution Control Act, and in particular, the 1972 amendments covering spills of hazardous polluting substances and the civil penalties provided for such spills in section 311. I advised that an ad hoc inter-industry committee, including MCA, was seeking legislative relief from the punitive provisions of this section. H.R. 9560 was introduced September 11, 1975 to amend several sections of the law and section 12 of the bill, while not totally to the lik ing of the ad hoc committee, would have been a vast improvement from the existing law. MCA testified in support of the bill with caveats as to the CMA 036996 t 3- meaning intended by certain language in the bill. MCA offered to work with the Environmental Protection Agency (EPA) on the development of guidelines to carry out the intent of the dubious language along the lines of MCA's testi mony. EPA Administrator, Russell Train, testified in support of H.R. 9560, including support of section 12. The desired revisions tn the law, as en compassed in section 12, were recommended by the House Public Works Subcom mittee handling the bill. However, in mark-up before the full House Committee on Public Works and Transportation, the penalty language in section 12 underwent a significant and unfortunate twist. The bill provided for a maximum penalty of $50,000. In mark-up, to placate certain Committee members who were seeking to preserve the maximum penalty of $5,000,000 when from a vessel and $500,000 when from a shore-based facility, as provided in the 1972 amendments, the Committee ap proved a three-tier approach to penalties. The amendment, in effect provides a maximum penalty of $50,000 for a first spill, a maximum of $100,000 for a second spill, and a maximum of $500,000 for spills in excess of two during a three-year period. The mark-up made no change in the language concerning spills involving willful negligence or willful misconduct. H.R. 9560 is expected to' obtain a rule from the Rules Committee for con sideration by the House some time this month. It is the best judgment of those who are familiar with legislative procedures that the mark-up committee has made such a "Christmas Tree" of the bill, chat it stands a very good chance of being voted down by the House. If this does not occur, because S. 2710, the Senate's companion bill is so different than H.R. 9560, an ef fort will be made to return the penalty language to its original form during the House and Senate conference. The fallback position will be to eliminate section 12 in its entirety. The transportation of hazardous materials continues to receive adverse publicity far out of proportion to the safety its transportation record de serves. The Department of Transportation (DOT), through its Director of the Office of Hazardous Materials when testifying on the Transportation Safety Act of 1974, estimated chat there are over two billion tons of hazardous materials shipped annually with as many as 250,000 shipments tendered daily. Major accidents involving hazardous materials have been relatively few when considering the exposure, but each one raises new cries for increased regula tion. Since 1968, the Department of Transportation has been attempting to develop a new hazard information system integrating vehicle placards and shipping papers with the ability for a quick emergency response. The DOT's most recent effort is an advance notice of rule making identified Hazardous Materials Docket No. 126. The DOT requested that responses to the docket evaluate nine hazard information systems proposed by respondents in a past docket against nine criteria that a hazard information system should meet. MCA's response was a modification of its prior proposal and it is believed more adequately meets the nine criteria than any of the other systems. It integrates the vehicle placards, the shipping papers, an immediate ability i > to respond, and CHEMFKEC. The system is not only practical for implementa tion domestically including intermodal transportation, but is readily adapt able for international shipments. We believe the MCA response is the lead ing candidate to be adopted by the DOT as a basis for a rule making proceed ing. CMA 036997 -4- The committee has a roster of thirty-six members and is organized around eight standing subcommittees with the following areas of responsibility--hazardous materials, highway carriers, legislation, marine, physical distribution, rail carriers, transportation environmental regula tions and a steering subcommittee. The steering subcommittee is comprised of the other subcommittee chairmen and the committee officers. Important matters currently involving the Transportation and Distribu tion Committee are: I. Hazardous Materials Regulations. The hazard information (HI) system proposed in HMRB Docket No. 103; Notice 73-10, involved a two-digit number for use on the vehicle placard and shipping paper as a key to a response manual giving guidelines for an emergency response in the event of a spill, leak or fire. DOT has discontinued HM-103 with regard to the HI numbers. Simultaneously with the discontinuance of part of HM-103, DOT instituted HM-126, and advance notice of rule making inviting responses to evaluate nine HI systems received in response to HM-103. MCA filed a timely response to HM-126 on March 25, 1976. The revised MCA HI system filed is believed to meet more closely the nine criteria against which each HI system is to be evaluated than any other system. * Hazardous Materials Docket 127--Exemption Frocedures. The Trans portation Safety Act of 1974 authorized the Secretary of Transpor tation to grant exemptions from the Hazardous Materials Regulations' similar to those formerly granted by DOT under the title of "Spe cial Permits." The rules and procedures for obtaining exemptions became effective October 15 on conclusion of HM-127. Prior to January 4, 1975, authority for the regulation of hazardous materials was vested in each modal administrator (rail, highway, water and air). Under the new Act, the Secretary has created the Materials Transportation Bureau (MTB) with responsibility for the operational functions of regulations, exemptions and compliance with the Hazardous Materials Regulations. The MTB replaces the Hazardous Materials Regulations Board (HMRB) which formerly co ordinated such matters. II. Rail Carriers. Since April 1975, numerous freight rate dockets substantially escalating charges for switching loaded and empty cars appeared with little or no justification. MCA challenged these dock et*- and, in all but Isolated situations, the dockets were later withdrawn by the carriers. DOT Issued Emergency Order No. 5 requiring DOT Specifications 112A and 114A, on uninsulated pressure tank cars containing flamnable gases, to be shoved to rest, prohibiting humping or rolling switch es, as a result of railroad accidents in which such cars ruptured. Through their freight rate dockets, the railroads proposed an arbi trary charge of from $100 to $300 per car per shipment for extra handling. MCA challenged this arbitrary action and the carriers later withdrew the proposal. CMA 036998 5 III. Highway. -ICC Docket MC-32155 (Sub.4) was an investigation under taken after petition by the National Tank Truck Carriers, Inc. to identify, segregate and accumulate cost for the cleaning of cargo tanks. ICC accounting requirements did not make provision for such segregation. MCA filed statements supporting the segregation and identification of those costs. The proceeding has been successfully concluded. National Classification Board Docket 744, Subject 40, proposed the arbitrary reclassification of Class A and B poisons to 200 times first class for LTL shipments and 100 times first class for truckload shipments regardless of the classification rating for a par ticular product. Challenged, this arbitrary action by the National Classification Board has been placed in suspension by the Board and is believed dead. The Federal Government, as an offset to the truckers because of the national maximum speed limit of 55 miles per hour, authorized an increase in the maximum weight for trucks on the Defense and Inter state Highway System from a gross weight of 73,280 to 80,000 pounds. In order for vehicles to leave the Interstate System to pick up and deliver freight, state weight limits must be increased allowing the higher gross weight. The committee has recommended support for state actions raising state weights to the interstate level, IV. Physical Distribution, At a one-day educational seminar preceding the May Transportation and Distribution Committee meeting, MCA member companies described the interface of transportation informa tion with order entry and data base concepts. Several systems for computerization of freighc rates and routes were described. During the October meeting, representatives of the National Tank Truck Carriers, Inc. discussed service and economic problems faced by the tank truck carrier industry. Arrangements are being made to continue such dialogues with other major transportation services at future meetings. V. Marine. The development of regulations to implement the civil penalties of section 311 of P.L. 92-500, the Federal Water Pol lution Control Act,has been monitored. Action seeking legisla tive relief from the punitive penalties of section 311 has not been successful so far. VI. Environmental Regulations. The State of Illinois, through its Pollution Control Board, has been considering, for some time, proposed toxic substances regulations. Transportation, in and through the state, would have been seriously affected by the proposed regulations. MCA participated in hearings opposing inclusion of transportation in che regulations of the EPA. The latest draft of the proposed regulations eliminates applica tion to transportation equipment. CMA 036999 -6 - MCA and the National Tank Truck Carriers, Inc. have scheduled a seminar on " Tank Truck Waste Water Effluents--Regulations and Disposition" on June 10-11, 1976 at the University of Wisconsin in Madison. Although the EPA currently has assigned a low priority to waste water treatment discharged from transporta tion equipment, an understanding of the problems is being sought through such meeting. VII. Legislative. 1975 was the year for transportation legislation. In September, MCA testified on several bills bearing various titles affecting the rail industry (H.R. 9802, S. 1876 and S. 2718). The composite of legislation eventually became S. 2718--"The Railroad Revitalization and Regulatory Reform Act of 1976." Several of the points made by MCA were adopted in the legislation. The Administration presently has before the Congress, a major reform of the common and contract carrier regulatory system. The legislation is termed the "Truck Regulatory Reform Act," The T&D Committee has adopted positions with regard to princi ples incorporated in the bill. To date, hearings have not been scheduled. Meanwhile, meetings with framers of the bill in the Department of Transportation have provided Insight as to the basis for the proposal and allowed explanation of chemical industry reaction. #*# CMA 037000 Exhibit H fry REPORT TO THE BOARD OF DIRECTORS MANUFACTURING CHEMISTS ASSOCIATION BY R. E. PHILLIPS, CHAIRMAN TRANSPORTATION EQUIPMENT COMMITTEE May 11, 1976 This report is on behalf of the MCA Transportation Equipment Committee. The TEC needs no introduction but a review of its charter is useful. The Committee is comprised of 25 representatives of member companies and handles technical and technically related problems having to do with the transportation of chemicals by tank car, tank truck, portable and intermodal tank, barge and bulk ship. To accomplish this task, three \ standing subcommittees deal in the separate areas of rail, truck/portable tank, aid marin . The chairmen of these groups are E. G. Hansen (duPont), V. H. Goodwin (Exxon) and M. M. Anderson (Union Carbide) respectively. Our vice chairman is J. R. Hopkins (Dow). We operate under rules of practice as by the MCA board approved. To enhance our technical activities, we enjoy advisory support from individual tank car engineers, and we have an associate member from the Bureau of Explosives. The TEC chairman represents the MCA as a member of the AAR` Tank Car Committee. We have a voice on the American National Standards Institute committee dealing with intermodal containers and we have informal liaison with the National Tank Truck Carriers and the Truck Trailer Manufacturers Association. Several of our Marine Subcommittee members are active on the Coast Guard's Chemical Transportation Industry Advisory Committe . Our most famous alumnus is J. T. Curtis, Jr. formerly of U. S. Steel and now Director f the Materials Transportation Bureau of DOT. Highlights of Current Activities D. M. Long's report of Committee activites in May, last year, still empties in great measure. We continue to devote significant activity to these items: 1. Taik car safety relief devices. Proposals are being processed for suggested rulemaking concerning safety relief valves for tank cars carrying products which should not be vented. Studies of safety vent materials are continuing. 2. We are following with interest the various tank car research programs which will foster such innovations as thermal shielding, bottom outlet protection and revised specifications for insulated tank cars. 1 CMA 037001 3. The current tank truck and portable tank inspection requirements, (both domestic and international) have been tabulated for the first time as a working document for use in responding to anticipated regulatory revisions. 4. The success of our audio-visual training aid for pre-trip tank car inspection has encouraged us to begin preparation of a similar program related to tank trucks. 5. Our draft "Guidelines for Prevention and Control of Chemical Spills in Bulk Rail and Highway Transportation" is in the final review stage befor presentation to the Association for publication. 6. Several regulatory proposals in the marine area continue to require our attention, including tankerman regulations, barge fleeting requirements, and developments on manned vessel rulemaking. 7. We are concerned with the Environmental Protection Agency's hazardous materials spills proposals and are contributing to the Associations' response. 8. DOT Docket HM 112 was finalized last month. This consolidation f the hazardous materials regulations adopted several of MCA's recommendations. Certain areas, such as the classification of poisons were put in abeyance and will require our continued study. Items for Future Consideration Many of our "current" activities are "in anticipation" of future problems: 1. Recommend unloading hose requalification procedures are being developed. 2. We have actively participated in the development of proposals for a hazard information system. 3. Possible revocation of visual inspection procedures for tcmk trucks is a matter on which the Committee is developing a position. 4. There is a possibility that the environmental effect of chemical spills may be a matter for additional classification of commodities. < CMA 037002 Hie new Materials Transp rtation Bureau has revised the pr cedures f r btaining exemptions from the regulations. It is now necessary to provide full container and commodity data aid experience along with justification and safety analyses to obtain exemptions for handling chemicals or containers not now included in the regulations. The Transportation Equipment Committee will continue its efforts toward safety in the haidling and shipping of the industry's products, both by attention to the specific areas ennumerated and to others as the need develops. 4 CMA 037003 Exhibit I STAFF REPORT by William J. Driver May 11, 1976 Amendments to the Clean Air Act were scheduled to be brought to the floor of the Senate on May 4, while action on a House bill is expected sometime in June. Senate bill S.3219 defines "significant deterioration" as a specified amount of additional pollutant m all clean areas. Federal lands having unique values related to air quality would be further protected, and Best Available Control Technology would be mandated. The intention is to prevent a major decline in air quality in clean air areas and to provide a safety margin. States , would issue permits, but in no case would air quality be permitted to deteriorate to a level that would exceed any national air quality standard. Penalties for non-compliance would be established. They would be paid monthly and would be set at amounts needed to cancel all monetary benefits of non-compliance (including competi tive advantage). The specified pollutants are sulfur dioxide and particulates, but nitrogen oxides and hydrocarbons must be added within one year. *** During full committee markup on House amendments to the Federal Water Pollution Control Act, Rep. William H. Harsha (R-Ohio) introduced an amendment to H.R. 9560 that changes radically the proposed penalty provisions of section 311 in P.L. 92-500. Escalating penalties would be established. The first spill within a three year period would invoke a $50,000 penalty; the second $100,000; the third and all thereafter $500,000. The only constraint on the administrator would be to not cause bankruptcy or insolvency, except that if willful negligence is determined that constraint would be removed. Any substance, m any amount, would be covered. while MCA, with some caveats, earlier supported the proposed provisions, it did so in the belief that the same negligence language would prevail m H.R. 9560. The new proposed penalty revisions are unsatisfactory to the chemical industry and we hope they will not be adopted in the final enacted legislation. *** New reporting requirements for direct and indirect lobbying are being considered by the Senate. In S.2477, a lobbyist would be defined as an organization which has paid officers, directors, or employees and which initiates one or more of the following activities: CMA 037004 2 (a) pays a law firm or like firm $250 or more in a three-month period to conduct lobbying, (b) makes 12 oral contacts with Congress on its own behalf in a three-month period, or (c) spends $7,500 or more in a three-month period on campaigns to encourage others to contact Congress on a special issue. The bill would require that any lobbyist register with the Comptroller General once a year. The lobbyist would also have to file quarterly reports stating the issues being pursued with the Congress and naming persons who were the official contacts. *** MCA supports the petition of the Association of American Rail roads to the Federal Railroad Administration for a four-year exten sion of the present deadline of December 31, 1976, for the inspection of all rail cars. In an April 20 letter to the Federal Railroad Administration, we pointed out that, while the railroads have been given the responsibility for conducting car fleet inspections, the railroads do not have the capabilities to perform the inspections within the time allotted. Delegating the inspections to facilities not owned by the railroads has caused procedural difficulties to arise. The upshot is that member companies see no possible way to complete initial car inspections by the end of 1976 and are convinced that properly phased inspections will require the four-year extension. *** Nearly 1100 representatives of chemical companies or companies connected with the chemical industry attended the four presentations of MCA's Symposium on Transportation of Hazardous Materials arranged by the Chemical Packaging, Transportation Equipment and Transportation and Distribution Committees. The symposia were held in Philadelphia in January, Houston in February, San Francisco in March and Chicago in April. All speakers were employees of member companies. *** Regulations for the transportation of hazardous materials by rail, highway, air or water have been gathered into a single volume and published in the Federal Register on April 15. The consolidation came in amendments to the Department of Transportation's Hazardous Materials Regulations. Generally, the amendments become effective July 1, 1976, although certain provisions relating to changes in shipping papers and placards for truck and rail transportation become effective later. Many of MCA's comments on the proposed amendments were reflected in the promulgated amendments, but some of the amend ments appear inappropriate and are inconsistent with the analysis of comments in the preamble to the subject rulemaking. Because of the CMA 037005 3 large number of changes adopted, many of which are complex, MCA has asked for an extension of the time provided for the 'iling of petitions of reconsideration. * *# More than 50 persons from member companies attended the first on-lme information retrieval seminar arranged by MCA's Technical Information Retrieval Committee in New York May 3 and 4. Assisting the committee was the National Federation of Abstracting and Indexing Services. Response to the seminar was so large that original plans to hold several sessions for different levels of experience were discarded, and the May seminar was restricted to beginners and intermediates. A seminar for advanced users will be held the week of September 27 in New York. ** The Consumer Information Section of the Public Relations Department arranged the taping of 48 television interviews with IS* member company representatives at the annual meeting of the American Women m Radio and Television in Philadelphia on May 6, 7 and 8. More than 50 radio interviews also were arranged. *** CMA 037006