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f 9:00 a. m. 9:01-9:02 9:02-9:03 9:03-9:05 9:05-9:10 9:10-9:30 9:30-10:00 10:00-10:10 10:10-10:20 10:20-10:30 10:30-10:40 10:40-10:45 10:45 AGENDA CMA EXECUTIVE COMMITTEE MEETING 9r00 a. m. , Tuesday, May 13, 1980 CMA Headquarters (Room 407) Washington, D. C. 1. Call to Order -- Chairman Morley 2. Minutes of Last Meeting -- B. M. Barackman TAB 1 3. Report on New Member -- B. M. Barackman 4. Treasurer's Report -- G. C. Herrman 2 5. Report of the Nominating Committee -- J. M. Henske 6. Superfund Policy Group Report -- W. C. Krumrei 7. Association Activities -- R. A. Roland a. Formation of Task Groups b. Formation of Hazards Communications Special Committee c. Report of Program Committee d. Proposed Guidance for Evaluation, Risk Assessment and Control of Chemical Embryo-fetotoxins -- Gloria Portela-Cubria, The Standard Oil Company (Indiana) 3 4 5 8. ChemCAP Update -- J. N. Sites 9. Report of Director of Government Relations -W. M. Stover o 10. Report of General Counsel -- E. B. Frost 7 11. Regulatory Compliance - SOCMA Activities -E. B. Poliak 12. New Business 13. Adjournment CMA 039184 MINUTES OF MEETING CMA EXECUTIVE COMMITTEE 9:00 a. m. , Tuesday, May 13, 1980 CMA Conference Room #407 Washington, D. C. 1. The meeting was called to order by Board Chairman Henske. There were present: John M. Henske, Acting Chairman J. Earl Burrell Louis Fernandez Vincent L. Gregory, Jr. Richard J. Hughes William C. Krumrei Duncan J, MacLennan PaulF. Oreffice L. John Polite, Jr. Robert A. Roland William G. Simeral Raymond C. Tower Bruce M. Barackman, Secretary Gary C. Herrman, Treasurer By Invitation: Richard F. Gold, Stauffer Chemical Company Stephen L. Goldstein, Olin Corporation Richard B. Hoots, Jr. , ICI Americas Inc. E. B. Poliak (SOCMA), Olin Corporation George F. Polzer, Witco Chemical Corporation James N. Sites, CMA William M. Stover, CMA Gordon D. Strickland, CMA David F. Zoll, CMA 2. Minutes of the Last Meeting The minutes of the April 8, 1980 meeting, as distributed, were approved. 3. Superfund Policy Group Report Departing from the agenda, Mr. Henske called on Dr. Fernandez who reviewed the status of Superfund legislation following which discussion commenced concerning new develop ments and the posture which CMA should assume in response to them. Staff and invitees were then excused and the Executive Committee convened in executive session. Following a morning of deliberation, the committee then adjourned for lunch, after which it continued in regular session in the Arlington Room, The Madison, Washington, D. C. CMA 039185 2- - 4. Report on New Members Mr. Barackman was requested to poll the members of the Executive Committee by mail in regard to pend ing applications processed by the Membership Committee. 5. Association Activities State Activities -- Mr. Roland reported on progress to date of the Ad Hoc Committee on State Activities chaired by Mr. Polzer. While it is not the purpose to develop more Chemical Industry Councils (CICs), it is planned to improve the two-way communications between CMA and the existing effective CICs and, using the CICs as a cornerstone, build on that in the legislative and regulatory area at the state level. New Task Groups -- The formation of a Large Electric Motors Task Group by the Engineering Advisory Committee, and a Groundwater Management Task Group by the Environmental Management Committee was announced. Special Committee on Hazards Communications -- The formation of a Hazards Communications Special Committee, Exhibit A, was discussed. The charter was approved. Mr. Krumrei, who was appointed committee chairmen, will submit to the Executive Committee for its consideration, recommendations concerning the organization and operations of the special committee. Report of Program Committee -- Mr. Roland described briefly the program for the Annual Meeting at The Greenbrier, June 5-6, 1980. The committee is scheduled to meet at The Greenbrier to discuss further the plans for the Semiannual Meeting, October 27-28, 1980 in Houston. Committee Appointments -- Nominees to fill unexpired terms of Committee members who have withdrawn were appointed as follows Engineering Advisory Committee T. R. Brown, The Procter and Gamble Company (term ending May 31, 1981); and Glen E. Twitchell, Chevron Chemical Company (term ending May 31, 1982). Proposed Guidance for Evaluation, Risk Assessment and Control. of Chemical Embrvoietotoxins -- Mr. Strickland distributed to those present the reworked draft of guidelines. Exhibit B, result^ CMA 039186 i -3- I Vj from the review recommended by the Executive Committee at its March 11 meeting. During discussion it was pointed out that probably the numbered paragraphs in the control section would be viewed as a listing of actions in order of priority, in which case they should be rearranged. In this connection, particular reference was made to paragraph two on page three and para graph three on page four. It was considered desirable to make clear that the listed factors to be taken into account in controlling exposure to a substance presenting a risk of embryo-fetotoxicity, should be applied by the employer, according to his workplace, in the best practicable combination of engineering controls, ad ministrative controls, work practice controls, and, as a last resort, respiratory protection to reduce such exposure. This recognizes that workplaces vary substantially in terms of how a substance is used, number of employees, plant age, and many other variables. J' Mr. Strickland advised that the final draft will incorporate the comments received from the American Industrial Health Council. The CMA Occupational Safety and Health Committee still desires to publish, with Executive Committee agreement, the final document. Subject to the foregoing comments, the draft was approved for use in responding to EEOC/DOL Proposed Guidelines on Reproductive Hazards in the Workplace. 6. ChemCAP Update Mr. Sites distributed to those present an in formation kit containing selected materials relating to the program. He re viewed the contents of "ChemCAP Action Roundup"; invited attention to "Protecting America's Water", the third of six ads, all of which will be placed by late June; and discussed "Protecting the Environment", which is expected to be the best seller of four booklets. 7. Report of Director of Government Relations Mr. Stover introduced his report. Exhibit C, with a brief update on developments concerning a sub stitute Superfund bill by Rep. Florio which has been submitted to the House Interstate Foreign Commerce Committee for their consideration. 8. Report of General Counsel Exhibit D. Mr. Frost's report is attached as 9. New Business Mr. Henske advised that a nominee should be named to represent the chemical industry on the Industrial Policy Advisory Committee (IPAC) whose function is to work closely with trade policy officials of the govern ment in the Department of Commerce and the Office of the U.S. Trade Represen1 CMA 039187 -4- ative. Mr. Sneath, formerly Chemical Industry Trade Advisor, was on IPAC but will not serve again in that capacity. During discussion, Mr. 'i"':l,es agreed to make inquiries and report back on a potential nominee. Certified correct: John M. Henske Acting Chairman CMA Executive Committee Bruce M. Barackman Secretary- CMA 039188 Exhibit A FORMATION OF HAZARDS COMMUNICATIONS SPECIAL COMMITTEE SIMMARY: Recarrrnendations are made for the oanrattee chairman, a revised charter and structure. These changes respond to the greater effort level anticipated to be required for the iranagenent of the chemical industry's response to EPA and OSHA with respect to the hazards aaranunication area. A sunset provision is provided. PROPOSAL: 1. Restate Charter Language (see attached) clarifies reporting relation, defines scope, responsibilities and activities of ocnmittee. 2. Designate New Cha-i-nrwn - Should be of high level (for contact purposes) and of broad overview. Possible Candidate: William C. Krumrei - Vice Chairman should also be selected. 3. CoOTruttee Structure - Either of two: A. Three issue groups feeding into the two present EPA and OSHA task groups. Issue groups as follows: - Technical: -definition of chronic hazard trigger mechanisms threshold levels AIHC scientific issues difficulty of trace analysis ~ Econazflic: -disclosure of trade secrets inpact of listing chronics costs of testing other ccjtplianoe costs " ' " confidentiality statutory authority for regulating 3. Four task groups: EPA issues, OSHA issues, chronic hazards, and disclosure-confidentiality. CMA 03918 2- - 4* Timing Revise charter and establish new chairman by June (Greenbrier) organization meeting of Board. (Therefore, action at May Executive Committee meeting would be required.) Establish and staff task and issue groups as soon as possible. 5. Resources/Ccmnunication As appropriate, the chairman shall draw upon the resources of the CMA standing ccumittees, CMA staff, and other associations and communicate developments to these groups. TfTTTTTTTTTnr HBMorley CMA EC-5/13/80 CMA 039190 HAZARDS COMMUNICATIONS SPECIAL COMMITTEE CHARTER Within Limits of authority specified by Executive Committee, the Special Committee will oversee Association hazards communication activities. The scope of these activities include EPA and OSHA proposals for product labeling, in-plant labeling, material safety data sheets and substance identifications lists. Within this scope, the Special Committee will identify key issues and focus on matters of greatest significance to the chemical industry; establish specific objectives and mobilize resources to produce timely results; advocate responsible regulation within existing statutes; and seek relief from unreasonable regulation by providing alternative language to the agencies, submitting comments to proposed rulemaking, and initiating legal action where appropriate. The Special Committee will communicate major trends and develop ments to the Executive Committee, the Board of Directors, the Association President, member companies and other trade associations. The Special Committee will serve for a period of two years on an ad hoc basis. At the end of two years, the Committee's status will be reviewed by the Executive Committee. HBMorley CMA EC-5/13/80 CMA 039191 Exhibit B DRAFT GUIDANCE FOR EVALUATION, RISK ASSESSMENT, AND CONTROL OF CHEMICAL EMBRYOFETOTOXINS CMA EC - 5/13/80 CMA 039192 (Inside of Front Cover) PURPOSE The CMA Occupational Safety and Health Committee has sponsored the development of this document to respond to the growing need for guidance related to chemical embryofetoxins. Its purpose is to assist management in recognizing, evaluating, and controlling chemicals which are known or suspected to have this toxic characteristic. Although advice from appropriate professional per sonnel will be required for its implementation, the guidelines contained in this document will allow management to assess the evaluations which are made and the need for and effectiveness of the control procedures. CMA 039193 *, ; .4 Vwr\. GUIDANCE FOR EVALUATION, RISK ASSESSMENT, AND CONTROL OF CHEMICAL S.MBRYOF5TOTOXINS Introduction Concern for the unborn has generated tremendous pressure upon industry and regulatory agencies to provide an effective solution for controlling potential chemical embryofetotoxins. The issue with exposure to embryofetotoxic chemicals is one of protecting the susceptible embryofetus from chemical substances which can cross the placenta and cause damage to the embryofetus, almost always at concentrations which would have no adverse effect on the female or male adult. It is not one of the female employee being more susceptible than male employees or the female employee being at greater risk of adverse health effects from exposure. It is not an issue of discrimination against the female employee because she is female. The female is involved only because she is unique by being of the sex capable of becoming pregnant and bearing children. The determination of the intrinsic embryofetotoxic potential of a chemical and the estimation of risk from exposure are scientific endeavors, while the acceptability of an esti mated embryofetotoxic risk for the unborn to a given exposure is a societal and regulatory decision. ^ CMA 039194 Scooe This document provides general guidance for evaluating the quality of the data, assessing its significance, and con trolling the degree of risk of exposure to embryofetctoxic chemicals. It is not all inclusive nor specific, and recognize the requirements for sound scientific judgment for each chemicSy It does not address either male or female gonadal toxins or mutagens, but is concerned with the conceptus, embryo, or fetus. The importance of the legal considerations involved are also . summarized in the paper. An embryofetotoxin is designated as a chemical which manifests an effect, during any of the stages of gestaticr., upon the conceptus from fertilization until birth. It may induce death, structural malformations, metabolic cr physio logical dysfunction, growth retardation, or psychological anc behavioral alteration in the offspring that are manifest , at birth cr in the postnatal period. Death of the embryo, fetus cr newborn is included. For purposes of this document, in-utero-induced carcinogenicity and mutagenic induced abnormalities are not included. This definition is consistent with Environmental Protection Agency definition of teratogen as contained in Code of Federal Pegu- j lations, title 40, para. 162.3. In assessing the risk of exposure to embryofeto- toxic chemicals, two basic toxicological principles must be considered; j ! !> j i > CMA 039196 3 rtL-\::i .A 1. Risk is a function of both the intrinsic embryofetotoxic potential of the chemical and the degree of exposure to the chemical. 2. A dose response relationship holds for each embryofetotoxic response and there exists a threshold exposure level (dose) for each chemical below which no effect is to be expected. The Appendices to this document provide background and information which will be of assistance in determining if a chemical poses a risk of embryofetotoxicity for which special controls are needed. Control of Chemicals Posing a Potential Zmbrvof e'lotox ic Risk When it has been determined that- a substance pre sents a risk of embryofetotoxicity, the following actions should be considered: 1. Employees who may be affected should be informed of the possible consequences of exposure to such substances and appro priate safe handling procedures esta blished and communicated. 2. Engineering controls should be used to the extent practical to reduce and maintain exposure to the embryofetotcxins to accept able levels. Such controls should be augmented by administrative controls as appropriate. CMA 039196 3. Whenever further engineering and administrative t controls are not practical to keep exposures at or below acceptable levels, the use of per sonal protective equipment should be required ! jwhere appropriate. Employees who are required to use such equipment should be adequately f trained in its proper use. 4. Where there is potential for exposure to an embryofetotcxin for which an acceptable exposure level cannot be set due to inade quate data, women of reproductive potential should be excluded from the work area. 5. Where engineering and administrative controls, augmented as appropriate by personal protec tive equipment, are determined to be inadequate to insure acceptable levels of exposure to an embryofetctoxic compound, women of repro ductive potential should be excluded from the work area. CMA 039197 APPENDIX A MEDICAL ISSUES Recent surveys indicate that up to 7.5% of all deliv ered infants have developmental abnormalities that interfere with their survival or result in clinical disease. Selective elimination of many malformed human ova, embryos, and fetuses occurs either soon after conception (between day 2 and day 17) or by spontaneous abortion of the fetus before the 22nd week of gestation. Over a third of all embryos die before recognition of pregnancy, and about 15% of recognized pregnancies abort spontaneously. It has been estimated that about 40% of those lost embryos and fetuses would have been malformed had they survived. Historically, lead has been used as an abort if acient. At the turn of the century in the lead indus tries, women workers were known to have decreased fertility and an increased abortion rate, along with symptoms of lead poisoning. This led to the widespread enactment in the early 1900's of labor codes forbidding the employment of women in industries involving a lead hazard. In 1956, Minamata disease was described and its cause proven by 1959. In this disease, the potential mother does not become pregnant if her methyl mercury intake is so great that she becomes acutely ill. At a lower dose, the woman may become pregnant and the child may be spontaneously aborted or CMA 03919 (Appendix A) born dead. At even lower doses, a child may be born with congenital Minamata disease, evidenced by neurologic symptom^ Maternal alcoholism is thought to be the leading known cause of teratogenic effects in humans but the full extent is unknown. Twenty percent of all birth defects are estimated to be caused by known genetic transmission. Chro^. somal aberrations cause 3 to 5% of such defects and ionizing radiation, including but not limited to diagnostic and therapeutic, accounts for less than 1%. Infections, such as rubellj virus, cytomegalovirus. Herpes Virus Hominis, toxoplasma, and syphilis account for 2 to 3%. Maternal metabolic imbalanct such as endemic cretinism, diabetes, phenylketonuria, and virilizing tumors account for 1 to 2%. Drugs ana environmental chemicals including androgenic hormones, folic acid antagonist! Thalidomide, organic mercury, some hypoclycerr.ics and some anti convulsants account for 2 to 3%. The remaining 65 to 70% of the causes are unknown. The Thalidomide experience aroused much interest in teratogenicity and increased the determination to identify teratogens in advance in order to prevent similar experiences; ; the future. For instance, the FDA now requires animal teratogenicity studies on all new drugs and the .E?A requires these tests on agrichemicals if "the product use may reasonably be expected to result in exposure to human females, or if use result in residues in food or feed." The human embryo is most -Isensitive to teratogens during the period of organogenesis (cay 18 through day 60 CMA 039199 . it - 3_ (Appendix A) 4t . of gestation). The most critical period is during early dif ferentiation (day 18 through day 30). At this time, the woman usually does not know she is pregnant, for there is no reliable method to ascertain human pregnancies sooner than three weeks after conception. Severe insults during the first 17 days after fertilization will usually result in death of the fertil ized ovum. Lower level exposures to some substances for longerperiods of time may not produce abnormalities obvious at birth but which may be noted months or years after delivery. During the period of advanced differentiation (after day 60) the susceptibility of the fetus to teratogenic agents affecting structure rapidly lessens with time. CMA 039200 ~ i rr L/Y.Af i. APPENDIX 3 EVALUATION 0? RISK Assessment of Intrinsic Embryofetotoxic Potential The intrinsic embryofetotcxic potential of a chemical for a given species is dependent upon the toxic properties of the chemical and its metabolites. The response may be modified by the defense mechanisms of the host and the target embryo and by the chemical's ability to cross the placental barrier. The assessment of intrinsic enbrycfetotcxic potential of a chemical requires sound scientific data and judgment of scientists with training and experience in the field. After reliable data are developed, the relevancy must be judged scientifically, considering numerous factors including the following: 1. Response a. Type (structural, biochemical, functional, etc.) b. Severity (life threatening, incapacitating, reversible, etc.) c- Relativity (ratio to other toxicities, primary or secondary effect, etc.) 2. Dose-Response a. Threshold exposure level CMA 039201 v -2(Appendix B) fc. Slope of the dose-res?cnse curve c. Critical time of dosing 3. Route of Exposure a. Inhalation b. Dermal c. Oral 4. Biological Variation a. Biochemical toxicology b. Target site c. Species (strain) d. Type of placenta 5. Biochemical Toxicology a. Absorption b. Distribution c. Biotransformation d. Excretion 6. Biometrics a. Sensitivity of the study b. Limitation of the study 7. Host Response a. Biochemical b. Physiologic c. Pharmacologic d. Pathologic e. Immunologic f. Tissue and biochemical repair i CT W >4 CMA 039202 (Appendix B) w?I 1 i^-.nn if-- i1I, 8. Replication of Results 9. Number of Species Involved Assessment of Human Exposure Human exposure in the workplace is controllable. Understanding the degree and nature of the potential exposure permits some measure of control of risks associated with a chemical which has intrinsic embryofetotoxic potential. Assess- ment of the exposure includes evaluation of: 1- Physical Properties of the Chemical a. Solid b. Liquid c. Gas d. Aerosol e. Oust f. Vapor pressure g. Melting point h. Boiling point i. Solubility 2. Route of Exposure a. Respiratory (inhalation) b. Percutaneous (dermal) c. Gastrointestinal (oral) 3. Dose a. Concentration b. Volume CMA 039203 (Appendix B) V\!f 4. Characteristics of Exposure a. Frequency b. Continuous c. Intermittent d. Duration e. Details of the process 5. Population at Risk a. Age b. Sex c. .Health d. Occupation e. Number Assessment of Risk Following the evaluation of the intrinsic embryo- fetotoxic potential of a chemical,'an assessment of risk based on scientific principles must be made. Most critical to this judgment are the following: 1. Does che embryofetotoxic response occur in more than one species? 2. Does the embryofetotoxic response occur at exposures substantially below exposures which produce other nonteratoaenic toxic effects? 3. Do the data indicate a dose-response relation ship? 4. Has the test been done in the most appropriate animal model for the Class of chemical evalu ated and in an exposure route applicable to man? CMA 039204 -5(Appendix 3) rr L'I'.rii !, 5. What are the threshold and no-observable effect levels of exposure for the animal model? 6. What populations are at risk (exposed) and what characterizes the exposures? Estimation of Acceptable Exposure Levels After assessing the embryofetoxic potential of the chemical, the potential for human exposure and the risk, an acceptable exposure level should be estimated, taking into consideration the degree of confidence in the data and vari ability and nature of the population at risk. Where acceptable exposure levels can be estimated they should be accompanied by documentation and statements of rationale. CMA 039205 APPENDIX C LEGAL ISSUES A great many legal issues in various specialized areas are involved in the evaluation, risk assessment, and control of embryofetotoxins. Company counsel should be con sulted on all such issues. For example, there are a number of equal employment opportunity matters to be considered when a company concludes that it must exclude women of reproductive potential from workplace areas as a means ci controlling expose The Company may be called upon to demonstrate that the embryofetotoxic effect is due to exposure of the embryo or fetus during gestation and not due to toxic effects on the mother due to the exposure during pregnancy. If only women of reproductive potential are excluded, the employer may have to demonstrate that the toxic effects result only from ir.-utero exposure of the embryo or fetus and r.ct from preconception exposure of either parent. Consideration must be given to what constitutes suitable alternate assignments and compensation for employees excluded from certain jobs because of potential exposures. Counsel should be consulted at an early date on these and all other legal issues which may be involved. CMA 039206 3:3*-:cc?A5:-iy n m rT UiVa i. Tone, A. X. (196). Perinatal pharma col cry. Ann.. Hev. Pharmacol. 6: 189-208. "raser, ?. C. (1965). Some genetic aspects of teratology. Teratol.: Prlne. and Tech. (J. C. Wilson and J. Varkany, ids.), 21-33. Univ. of Chicago Press, Chicago. Gibson, J. P., Staples; 5. E. and Newberne, J. W. (1966). * Use of the rabbit in teratogenicity studies. Toxicol. and Aon! . Pharmacol. 9 : 39 2--0 3. Health and Welfare Agency of Canada (1973). The testing of chem icals for carcinogenicity, mutagenicity and teratogenicity. 135-183. Hurley, 1,. S. ( 1967)- Studies cn nutritional factors-in mammalian development-. J. Nutr. 91: 27-33. Hurley, L. S. (1968). Approaches to the study of nutrition in mammalian development. Ted. ~ r 0 c . 27: 193-195. Jusko, W. J. (1972). Pharmacodynamic principles in chemical tera tology: cose effect re let icr.ship. J. ?h arm a col. Ext>. Ther. 133: H69-i>80. Kimmel, C. A. and Wilson, .7. G. (1973). Skeletal deviations in rats: cal formations or variations? Teratol. 8_: 35 - 516. 4 Xoll, W. (1963)- Seme consideratiers concerning testing teratogenic action. Proceed. Eur. Soc. for Study of Drug Toxicity. International Congress Series No. 73 Excerpta Medical "ourdation, Amsterdam. :* -- CMA 039207  vcn . K.-sy*.: r , 7. c.-.d von y.reyMg-Hs cVer.berger, I. (1 ~ S 7 ) - basic principles of besting teratogenic e ..5 r.!' L'i;, Arangjnlttel - -orsch. 17( 3): 390-392. (Translation). Murphy, H. L. (195). ractors Influencing teratogeni-c response to drugs. Teratol.: ?rlnc. and Tech.- (J. G. Wilson and J. V ark any, Eds.), H5-181I. Univ. of Chicago Press, Chicago. U.S. Department of Health, Education and Welfare. (1977)- Chapter. 12: Peproducclon, Teratology and Human Development... Human Health and the Hnvironment: Some Pesearch Heeds 315-32S. U.S. environment Protection Agency (19 75) - Guidelines for registering pesticides in the United States. Fed. Peg. 0: 123U.S. national Academy of Sciences (1975). Chapter 10: Environ mental Chemicals as Potential Hatarcs to Peproduction. Principles for Evaluating Chemicals in the Environment. * 15S-197. 'Washington. U.S. National research Council. Penroduction and Teratogenicity fests. Part VII. VarV.any, J. (1965)- Development of experimental mammalian tera tology. Teratol.: Trine., and Tech. (J. G. Wilson and J. Varkany, Eds.), 1-20. Univ. of Chicago Press, Chicago. Warkany, J. (1970)- Trends in-teratologic research. Epilogue to the Third In ter national Congress on Congenital >5alf ormations. Teratol. S9-92. Wilson, J. G. (195*0.Teratogenic Interaction cl chemical agents in the rat. J. Pharmacol. Exp. Tber. lfjjj: ^29-^36* t " CMA 039208 '-ili.cn, j. C . U(139i-55)-. Ir.tryological cons i - ;ra: i c.ns in te.-itclcgy. T r r a t a 1: Prints, and Tech. (J. G. Vi Ison and j. Van/any, Eds 251-251. Univ. of Chicago P.-sss, Chicago. viison, J. G. (1965). Methods for administering agents -and ` detecting malformations in experimental animals. T e r a: o j . ; Prints, and Tech. (J. G. Wilson and J. Varkany, -ds.) 252-277. Univ. of Chicago Press, Chicago. Vilson, J.. G. (1973). Press, New York. nvironnant and 5 i r z h Defects. .Academic' Vilson, J. G. (1973) Present status of drugs as teratogens in" "an. Teratol. 7j 3-15. 'Wilson, J. G. (1973)* Teratogenic effects of environ.tental chemicals. Ted. Proc. 3o: 1598-1703. ' World Healtn Organization (1967). Technical Peoort Series. 35^. vised 3/2/79 vised 2/5/60 CMA 039209 Exhibit C REPORT OF THE DIRECTOR OF GOVERNMENT RELATIONS WILLIAM M. STOVER MAY 13, 198Q MUSKIE TO BE SECRETARY OF STATE President Carter's April 29 appointment of U.S. Senator Edmund S. Muskie (D-Maine) as Secretary of State brings im mediate and significant changes in key Senate leadership posts, and in the legislative outlook in several key areas. Astonishing most Washington observers, the selection of Muskie appears motivated by his wide national reputation and po tential for blunting Congressional criticism rather than his somewhat limited background in diplomacy. The Senator's service on the Foreign Relations Committee is a point of reference, but was probably overshadowed by the value of his image as a respected former national candidate and his capacities as a "Washington in sider. " Senator Muskie leaves behind the Chairmanship of the in creasingly powerful Senate Budget Committee, which is even now gearing for fierce floor fights on this year's money resolutions. He also relinquishes his longtime post as Chairman of the Subcommittee on Environmental Pollution, where he led innumerable successful legislative battles for stringent laws regulating en vironmental quality. His qualities of wit, tenacity and politi cal skill enabled him to wield formidable power in the Senate, and he was seldom denied environmental legislative objectives. His departure will cause a major readjustment of influence within that chamber, and it must certainly be viewed with regret by environ mental extremists. CHEMICAL INDUSTRY LEADERS AT WHITE HOUSE On Friday, April 11, 1980, President Carter conducted a White House anti-inflation meeting with 24 chemical industry executives. This meeting was one of a series being held with various groups to urge wage and price restraint. President Carter asked the exec utives to hold down price increases even if it means lower profits. CMA 039210 -2- He criticized the chemical industry's recent price increases as "very high" and asked that they "restrain your price increases below what you would have done otherwise." After the 15-minute session with the President, the execu tives met separately with Treasury Secretary G. William Miller and COWPS Chairman Alfred E. Kahn. Clearly, the Administration believes that the industry has been raising prices more than needed to cover increased costs, possibly because of fears of eventual wage-price mandatory controls. President Carter reiterated his opposition, however, to such mandatory controls. He felt that action by the food and drug industries to freeze prices were a good model for the chemical industry to follow. He asked the executives to "consider very seriously taking the same action," even though it "may result in some decrease in profits." The chemical executives, particularly in the meeting with G. William Miller, carried out an effective dialogue on the extreme costs of regulatory burdens on the industry. The Admin istration representatives agreed that closer cooperation in this area could reduce the cost of compliance for industry and in crease its productivity. As the next move to better industry and government cooperation to achieve mutual goals, it was agreed that a working group of industry executive and governmental of ficials would be formed. A further meeting with Alfred Kahn is planned. The White House meeting was regarded by both government and industry officials as being cordial. Industry representatives particularly felt that they had a most important opportunity to present their case for more realistic environmental and health controls to the highest level of government. On April 15, John Henske and Robert Roland, Chairman of the Board and President of CMA, respectively, sent a letter to CMA Executive Contacts. An account of the meeting was followed by a request to forward to CMA examples of problems with the anti inflation program and unreasonable regulatory burdens. ENERGY.- INCREMENTAL PRICING OF NATURAL GAS On March 20 the Federal Energy Regulatory Commission (FERC) announced the intention to extend the incremental pricing of natural gas to all industrial uses including feedstock, process and other non-boiler uses. On April 3 a hearing was held before the House Commerce Energy and Power Subcommittee on the proposed extension of CMA 099111 -3- incremental pricing. FERC is expected to have a staff draft ready and a meeting to discuss the final Rule II proposal the week of April 28. The final proposal, which is expected to be a broad one, must be submitted to Congress no later than May 9. Either House of Congress may veto the proposed Rule II extension within 30 days. An additional hearing may be scheduled in the House around May 15 and Senate Energy Committee hearings may be announced for May 16 or 19. If Rule II is vetoed, FERC may come back in six months, but no later than two years. The language of the statute is permis sive. CMA efforts are directed towards a legislative veto. The repeal effort has picked-up more sponsors. ENERGY: COAL CONVERSION The Powerplant Fuel Conservation Act of 1980, H.R. 6930, has been introduced at the request of the Administration to reduce the amount of oil and gas used by electric utilities. Phase I of the proposal contains $3.6 billion for the expedited con version of approximately 100 coal-capable facilities from oil to coal. Phase 2 contains $6 billion for the development of other alternate energy sources which will displace oil. Hearings were held April 18 and 26 before the Energy and Power Subcommit tee of the House Commerce Committee. In the House there appears to be bipartisan opposition to the present utility oil reduction bill. Energy and Power Subcom mittee Chairman John D. Dingell (D-MI-16) may strengthen the bill environmentally and the subcommittee staff are looking for a scaled down compromise version. The perception is that most utilities have converted or are in the process of converting and this is something they should be doing without assistance. How ever, the Administration is pushing for legislative action. At this time it does appear likely that a bill will get out of sub committee. A similar utility oil reduction bill, S.2470, had been introduced by Senator Wendell H. Ford (D-KY). Hearings were held before the Energy Committee on April 23 and 25. The Majority Leader has accorded the bill the highest priority, but chances of legislation by May 15 appear slim. A task group of the CMA Energy Committee has developed proposed amendments to the Fuel Use Act in the event that a utility backout measure would provide CMA an opportunity to seek corrective amendments. CMA 039212 ENERGY: EFFICIENCY STANDARDS The report to evaluate the energy efficiency of pumps and mo tors required under the National Energy Conservation Policy Act will be the subject of Department of Energy (DOE) hearings in Washington, D.C. on May 1 & 2, May 6 & 8 in San Francisco and Chicago respectively. CMA will testify before DOE in Washington. The House Commerce Energy and Power Subcommittee is waiting to receive DOE findings before deciding whether to schedule any hearings on the Senate-passed energy efficiency measure (S.1398) No Congressional action, if any, is expected before late summer. ENERGY: MOBILIZATION BOARD On April 23 the House and Senate conferees broke a four month impasse regarding the authority of an Energy Mobilization Board (EMB) to expedite the permit process for priority energy projects The five-member EMB would decide which projects should be put on a "fast track" and then set deadlines and take other action to assure "streamlining" prompt action by federal, state and local agencies whose approval is needed. The compromise approved April 23 provides that federal laws may be waived at the request of the EMB only with the approval of the president and both houses of Congress. The House broke the stalemate by agreeing in addition that committees having jur isdiction over laws to be waived could bottle up a waiver proposal and not let it go to the floor of the House or Senate for a vote. Only 12 requests for waivers could be made during the two year life of a Congress. The conferees are expected to meet April 29 for a final sessior to draft the technical details. The bill could be passed by both Houses and signed by President Carter by the end of May. ENERGY: OIL IMPORT FEZ "* The President has imposed a fee on crude oil of $4.62 per barrel. He has issued a proclamation implementing the pass-throuf of the fee to motor gasoline only. It is expected that this wil1 amount to approximately 10 cents a gallon at the pump and will start on May 15, 1980. A hearing was held on April 24 before the Trade Subcommittee of the House Ways and Means Committee. Chairman Charles A. Vanik, (D-OH-22) , who supported the PreS^ dent's action, predicted that a majority of the House may soon be supporting legislative proposals to kill it. Many Members of CMA 039213 -5- Congress feel Che Administration's oil import fee is noc really for the purposes of conservation, but rather a disguised revenue or taxation measure. Congressional opposition is focusing on joint resolutions introduced in both the House and Senate that would use authority granted Congress under section 402 of the Wind fall Profit Tax Act recently signed into law. Presidential veto of a joint resolution would have to be overturned by a two-thirds vote in both houses. TRANSPORTATION: RAILROAD DEREGULATION On April 1, 1980, the Senate passed by a 91-4 vote the Rail road Transportation Policy Act (S.1946), to substantially re duce government economic regulation of railroads. The final bill provides for a great degree of protection for captive rail ship pers because of a Cannon/Long compromise amendment. That amend ment would establish a threshold, to be set by the Interstate Com merce Commission (ICC), at which a shipper can challenge a rail road's rate. The threshold would be a ratio of revenues-tovariable costs expressed as a percentage. The ICC would be given latitude to investigate the reasonableness of the contested rate that exceeds the threshold. The ICC also could choose not to in vestigate and explain why. In deciding whether to investigate the rate, the ICC would have to consider the national energy goal of increasing the use of coal, but would not have to consider that factor in determining the rate's reasonableness. On the House side, after release of four working drafts, the Rail Act of 1980, H.R. 7110, was introduced April 24 by Transpor tation and Commerce Subcommittee Chairman Florio. No hearings have been held since March 25 before the release of the second un numbered bill. The record closed on April 25 and CMA submitted comments on that date. Subcommittee mark-up begins April 29. The Senate-passed bill has not been introduced in the House and neither has a draft shippers' compromise bill. It has been suggested that Chairman Florio may attach his rail reform version to an authori zation or financial vehicle before May 15. TRANSPORTATION: TRUCKING DEREGULATION The Motor Carrier Reform Act, S.2245, passed the Senate April 15 by a vote of 70 to 20. Basically, the reform bill provides easier and broader access into the trucking industry, eliminates antitrust immunity to meet and set freight rates on single line traffic, and permits truckers to set freight rates within an CMA 039214 established range without ICC approval. An amendment proposed by Senator J. James Exon (D-Neb), to extend Federal insurance requirements to nonregulated carriers and to give the Secretary of Transportation discretion to set minimum insurance limits was accepted. The original bill, as reported out of the Senate Committee on Commerce, Science and Transportation, would have established a $2 million minimum insurance requirement for most truck firms and a $5 million minimum for firms handling hazar dous materials. The bill now under consideration in the House Public Works Surface Transportation Subcommittee, H.R. 6418, will either be substantially revised more towards deregulation or the Senatepassed bill will be substituted. Markup is planned for the week of May 5. The goal of the Senate and House leadership remains to have a bill cleared for President Carter's signature by June 1. TSCA REAUTHORIZATION AND OVERSIGHT HEARINGS Chairman James Scheuer's (D-N.Y.) Subcommittee on Consumer Protection held four days of hearings April 15-17 and 22 on TSCA reauthorization and oversight. SOCMA testified first regarding impacts of the Act on new small volume chemicals - the source of innovation and life-blood of the chemical industry - and defended the adequacy of PMN no tices submitted to date. Environmentalists criticized EPA for lengthy delays in implementing TSCA (due, in their opinion, to attempts to achieve "scientific perfectionism" in proposed rules), failure to require toxicity test data in PMN submissions, and allowing U.S. companies to dump hazardous chemicals on ill-inforw third world countries. Chairman Scheuer severely criticized EPA for having failed to prevent accidental PCB contamination of food products, in "fla grant disregard" of section 6 of the Act. He promoted his TSCA amendment requiring replacemement of all PCB-containing elec trical equipment used by food or food packaging manufacturers. Chairman Scheuer also recited a litany of general delays and faii ures by the Agency. EPA's Steven Jellinek defended his implementation of the Act, listing past and future activities by whic the Agency will have initiated action on every major section ot TSCA. CMA testified on the final day of hearings, April 22. Richa*"' Fleming, Executive Vice President of Air Products and Chemical'^ was our lead spokesman. He was supported by a panel comprised Shell's Dr. Curtis Smith, Dupont's Eugene Berman, and Exxon's Carl Umland. We presented a balanced evaluation of EPA's per formance to date - commend where deserved, and criticize where CMA 039215 -7- justified. We emphasized that it would be premature for Con gress to undertake any major review of the Act's implementations thus far, too soon to consider substantive amendments, and sup ported the two year reauthorization provision in Chairman Scheuer's bill, H.R. 7003. Our witnesses did an excellent job in getting the Chairman's attention and engaging in meaningful dialogue throughout the hearing. He came to understand the competitive disadvantage our companies may face with European competitors if we are forced to comply with a U.S. toxics law which is more stringent than the EEC Sixth Amendment. He learned how the European law's greater protection of confidential business information could lead to relocation of our R & D activities abroad, and said "the last thing we want to do is export jobs to Europe." Our witnesses were thoroughly prepared, and Chairman Scheuer appreciated their expertise and direct responsiveness on the issues raised. Per haps most importantly, Richard Fleming and our witness team es tablished essential credibility with this important subcommittee for the time when major legislative review of TSCA is undertaken in the future. TSCA ECONOMIC IMPACT STUDY Questionnaires for the Economic Impact Study of TSCA being conducted by the National Economics Research Associates (NERA) have been in the field since the first of the year. The majority of the questionnaires have now been returned to Price-Waterhouse CPW). PW is currently conducting follow-up visits to six respondents to verify their questionnaire responses. Both PW and NERA appear to be pleased with the responses to the questionnaires. An addi tional favorable preliminary finding shows that the questionnaires have involved less effort on the part of the respondents than was originally estimated. An Advisory Panel of knowledgeable persons from the areas of academia, labor, government, and consumer interests has been formed to assist NERA and CMA in their analysis of the data sup plied by participating companies. Dr. Richard Zeckhauser of Har vard University is the chairman of the Panel. Other Panel members include Dr. Robert Crandall of the Brookings Institute, Dr. Allen Kneese of Resources for the Future, and Mr. Francis Burkhardt of the International Brotherhood of Painters and Allied Trades. CMA 039216 -8- The final report of this phase of the study (the pilot test portion involving 40 CMA member companies) is expected to be transmitted by NERA to CMA on July 31, 1980. OSHA REFORM The Senate Labor Committee continued hearings April 15, 16, and 25 on Senator Schweiker's (R-Pa.) OSHA Reform bill, S. 2153, to exempt from routine safety inspections firms with a good safe ty record. Industry groups, led by the U.S. Chamber of Commerce and National Association of Manufacturers, testified in favor of the legislation. CMA will be submitting a generally supportive written statement for the record. As expected, OSHA and organized labor were adamantly in opposition to the bill, and exaggerated its impact by claiming the bill would "gut the agency." The hearings have been completed, unless something unforeseen arises, and the Committee will review the record of testimony over the next several weeks to determine its future course of action. Chances of Senate passage hinge on Chairman "Pete" Williams, a liberal Democrat from New Jersey, who remains a cosponsor but has reservations about some of the language in the bill. If he actively promotes the bill in Committee, sufficient bipartisan support could be mustered for reporting it. Once reported to the Senate floor, the bill would have a good chance for passage. The House is a different story. Congressman Gaydoes (D-Pa.), Chairman of the Education and Labor Subcommittee on Health and Safety has vowed OSHA Reform legislation will never get through his subcommittee. Nevertheless, it is important for industry groups to pull together on this issue and develop the coalition needed to achieve significant OSHA reform in the future. WORKMEN'S COMPENSATION Chairman Beard's House Labor Standards Subcommittee is con tinuing hearings through May 1 on H.R. 5482, to establish uni form national minimum standards for state workers' compensationCMA will be submitting a written statement for the record expr5' sing our concerns about the overall impact of the legislation^ making constructive suggestions to improve the scientific basis for the occupational disease standards in section 5 of the bill- The Senate Labor Committee hearings on S. 420 (the Williams/ Javits counterpart to the Beard bill) have been in abeyance sin^ last year. A joint Administration/Committee task force formed recommend a compromise legislative package never got off the Though the Committee could move on the legislation, it is unli*6 ; CMA 039217 -9- the full Senate would enact such far-reaching and potentially costly changes in this session of Congress. The same reasoning would apply to the House this year. However, the groundwork is being laid for eventual reform of the workers' compensation system. TAXATION: VALUE ADDED TAX (VAT On April 2, Representative A1 Ullman (D.-Or.), Chairman of the House Ways and Means Committee introduced H.R. 7015, a revised version of his value added tax bill, H.R. 5665, which he initially proposed last fall. The new bill differs in a num ber of aspects from the initial proposal, but the basic VAT is essentially the same, namely, a 10% tax on the value of property and services sold at each stage of production and distribution. When Mr. Ullman introduced his original VAT bill, he said that the value added tax would be a substitute for existing income and payroll taxes. One of the most frequent criticisms of H.R. 5665 was that the VAT could be used as an "add-on" tax rather than as a replacement tax. Mr. Ullman has attempted to meet this criticism in the new bill by including a provision that would limit federal spending to a percentage of the Gross National Product. The limitation would be 22.6% of GNP for fis cal year 1981, 22% for 1982 and one half of 1% less in each successive year until it reaches 20%. Although it appears unlikely that hearings on VAT will be held during the remainder of the 96th Congress, our Tax Policy Committee is studying the new bill in order to be ready for any Congressional activity that might develop. PATENTS: PENDING LEGISLATION The House Judiciary Subcommittee on Courts, Civil Liberties and the Administration of Justice conducted five days of hearings during April on several legislative proposals concerning the patent laws. Among these are: H.R. 2414, the "University and Small Business Patent Proce dures Act," which would permit small businesses and universities to obtain patent rights to inventions developed under government contracts. H.R. 6933, an Administration proposal to amend tr.e patent CMA 039218 -lo an d trademark laws. This bill provides for a uniform govern ment patent policy, restructures the fee system of the Patent and Trademark Office and authorizes a system of reexamination of patents. H.R. 3806 would create a unified patent appeals court. An additional day of hearings on these legislative proposals is expected, but not yet scheduled. CMA expects to submit a statement for the hearing record. EEC COMPLAINTS AGAINST U.S. EXPORTS The European Economic Community (EEC) continues to press a complaint against U.S. exports to the Market of manmade fibers and petrochemicals. It has had difficulty, however, determining which international trading rule or agreement is being violated and what the remedy should be. On February 18, 1980, the EEC authorized the UK to impose quotas on polyester filament yam and nylon carpet yam. The U.S. has protested the action because it is applied selectively to the U.S., Canada, and Japan. The U.S. Trade Representative's Office has asked for $55 million of compensation in the form of trade concessions benefiting manmade fiber producers. Further, the EEC is considering starting dumping actions on selected products, including petrochemicals; one acrylic fiber dumping case has already been concluded against a U.S. company. In an evasion of both the Italian and EEC governments, Italian manmade fiber producers have won a court restriction against im ports of American Cyanamid and Carter Moore Corp. acrylic and polyester yams. The EEC asserts that U.S. price controls on crude oil and natural gas provide a substantial cost advantage to U.S. pro ducers and are a subsidy. The Market understands that U.S. price controls phase out on crude oil in 1981 and on natural gas in 1985. However, they believe that solution is too long range. Total U.S. chemical exports of $17.3 billion in 1979 are nearly 50% above last year's record, creating a surplus over imports of $9.8 billion. The U.S. government will continue to CMA 039219 -11- encourage this level of export activity. Indications are that the problem of high U.S. exports to the EEC will continue in 1980. Action by the chemical industry: On July 18, a representative from the Office of the Special Trade Representative informed Deputy CITA Myron T. Foveaux of the EEC complaint. Individual discussions were held immediately with representatives from the OSTR, the U.S. Department of Commerce, and the International Trade Commission. A task group was formed in response to the government's r quest that we jointly prepare a defense against the EEC charges. On August 28, William S. Sneath, Chemical Industry Trade Advisor, wrote Ambassador and Special Trade Representative Alonzo L. Mc Donald, assuring him of chemical industry support in this matter. The task group has met a number of times on the problem, fre quently including representatives from five government agencies (the U.S. Trade Representative, U.S. Departments of Commerce, Energy, and State, and the International Trade Commission). The chemical industry believes that U.S. hydrocarbon price con trols are only a small part of the competitive problem. The phase out of U.S. price controls will eliminate even this advantage. It is the industry's hope that no further overt actions by the EEC will occur that would bring unfortunate countermeasures. . EXPORT OF HAZARDOUS SUBSTANCES The chemical industry has been criticized increasingly in the press for exporting products banned in the United States to other countries. In early summer of 1978, an interagency Work ing Group including: Consumer Affairs Departments of: State Agriculture Commerce Energy HEW Justice Defense Labor Treasury (White House) FDA EPA Consumer Product Safety Com mission Export-Import Bank OPIC Action CEQ Nuclear Regulatory Commission Office of Management and Budget and other Executive Offices was formed to consider Federal policy on export of hazardous substances. The catalyst was the controversy over exports of TRIS-treated children's sleepwear. Heading the effort was Esther Peterson, Special Assistant to the President for Consumer Affairs. CMA 039220 -12- The chemical industry was aware of the ongoing work and saw preliminary drafts of the group's work. The fourth draft became available along with a letter from Ms. Peterson, dated February 25, 1980, which solicited reactions from outside groups, including those from industry, labor, consumer, envir onmental, and health. Her letter made it clear the draft report did not represent the position of the White House or the Admini stration. It is considered an "evolving document of the inter agency working group." The report calls for an Executive Order to include the following: 1. Notification to the receiving country by the U.S. State Department of a first shipment of a product banned in the United States. Information to be forwarded would in clude : a. name of product b. summary of any agency's action c. summary of risks involved d. other documents or facts 2. Special procedures for cases where a U.S. shipper is for warding a product which requires U.S. registration before manufacture, production, use, or sale in the United States but the registration has not been sought. 3. Special authority, including ban, when a firm intends to export a hazardous substance that would endanger citizens or environment of the importing country. 4. Special authority, including ban, of a hazardous substance that would entail severe hazards to the environment or citizens of a country other than the importing country or to the world environment. An ad hoc working group from the industry met with repre sentatives of the Consumer Affairs Office, CEQ, Departments of Commerce and State. There was a willingness by the government to listen to industry comments and suggestions for changes in the draft report. The fifth draft report is likely sometime in May. CMA will be offered the opportunity to respond to it. CMA has organized a Task Force under the new International Trade Group to deal with this issue with Mr. Ken Davis, Rohm & Haas, as Chairman. It will work cooperatively with other in terested trade associations. CMA EC-5/13/80 **** CMA 039221