Environmental cleanup may hurt credit ratings Meeting future environmental cleanup and compliance costs may have a damaging effect on corporate credit ratings, states a report just issued by Moody's Investors Service. Corporations that handle hazardous chemicals—especially in the chemical, petroleum refining, pulp and paper, plastics, and pharmaceutical industries—are especially vulnerable. That this effect has not yet been felt may only be because the 1980s was a strong decade for most major corporations dealing with chemicals, says Moody assistant vice president Robert D. Buhr, author of the credit analysis. "The chemical industry is in much better shape financially than, say, the steel industry/ 7 he notes. Major environmental laws of biggest concern to the analysts are Superfund, the Resource Conservation & Recovery Act (RCRA), and the 1990 Clean Air amendments. "Our feeling is that the total effect of Superfund liability isn't being felt yet/' Buhr says. "It will be in the 1990s." The industries of concern are somewhat cyclical, he adds, and if sudden environmental liabilities come at a low point in the cycle, many firms could suffer. Moody's says cleanup of plant sites regulated under RCRA will account for much of the future costs. In effect, the hazardous waste industry will expand from just companies that dispose of and treat hazardous waste to encompass all firms subject to RCRA regulations. Although larger firms may be able to absorb these disposal costs, in many cases they will be passed on to customers. Moody's notes that less well- capitalized companies, particularly smaller niche firms, could be squeezed out of business by their regulatory compliance costs. It is too early to assess what problems may be caused by the clean air a m e n d m e n t s , but, as the report notes, the chemical industry will bear major expenses for compliance. Moody's says that it will monitor how these costs are affecting the industry's international competitive position.
Buhr says so far no chemical company has had its credit rating lowered because of environmental liability, but the potential is there. "Things are tighter for companies now than they were, and there is going to come a point where these costs will become an important factor, especially in international competition against some of the developing nations."
A lowered credit rating from a service such as Moody's makes a company's financial position less attractive to investors, and forces it to pay higher interest and dividends. Higher investment costs also hurt the competitiveness of U.S. corporations in world markets, since many nations have environmental rules less stringent than the U.S.'s. David Hanson
Executives acquitted of harming workers' health A suburban Chicago manufacturing firm and five of its current or former executives have been acquitted of criminal charges of damaging workers' health. The landmark case was the first in which a firm and its officers faced criminal prosecution for nonfatal workplace injuries. The case began in 1984, when Chicago Magnet Wire Corp., Elk Grove Village, 111., and five executives were indicted for aggravated battery and lesser charges. The pros-
ecution argued that workers at the wire coating firm had suffered nerve and lung disorders, kidney failure, impotence, and other disorders as a result of their exposure to toxic chemicals. Cook County Criminal Court Judge Earl Strayhorn dismissed the case in 1985 on the basis that Occupational Safety & Health Administration rules preempted criminal prosecution. On appeal, the ruling was reversed in 1989. A new, nonju-
NASA rolls out new space shuttle, Endeavour To music from the film "2001: A Space Odyssey," the National Aeronautics & Space Administration rolled out its new space shuttle, Endeavour, before several thousand invitees at contractor Rockwell International Corp.'s facility in Palmdale, Calif. Built at a cost of $1.8 billion, Endeavour was ferried to Kennedy Space Center in Florida last week to start 13 months of testing before its maiden flight next May. Endeavour will give NASA four operational shuttles for the first time since the Challenger explosion of January 1986. Many systems have been upgraded from those originally on the other three shuttles, and Endeavour will be capable of missions of up to 28 days in orbit, twice the capacity of its sister ships. Its second flight, in September 1992, will carry out a joint Spacelab mission with Japan, doing life sciences, microgravity, and other research.
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News of the Week ry trial began last August, again before Strayhorn, with the state presenting more than 100 witnesses, the defense only six. The defense argued that OSHA had found no serious violations during an investigation of the plant, that no one was harmed by chemicals at the plant, and that the state's case was based only on workers' subjective complaints. Strayhorn conceded that the plant wasn't a nice place to work. But he found that the firm had met OSHA standards, and the prosecution had failed to prove that workplace conditions had injured any workers or that management had intended to harm them. The trial disposes of criminal charges, but a civil suit for millions of dollars in damages is still pending. And Cook County State's Attorney Jack O'Malley says that despite the setback, his office will continue to bring criminal charges "where facts show us that workers' safety is in jeopardy or that owners of factories or businesses may be operating in a criminal manner." His office also plans to retry the Film Recovery Systems case, perhaps this fall. Three executives of that firm (also in Elk Grove Village) were found guilty of murder and the firm guilty of manslaughter in the 1983 death of a worker by cyanide poisoning. But the convictions were overturned on appeal (C&EN, Jan. 29, 1990, page 6). Ward Worthy
Duty placed on imports of ibuprofen from India Ethyl Corp., sole U.S. producer of bulk ibuprofen, no longer will have to compete with duty-free imports of the analgesic and anti-inflammatory drug from India. The U.S. Trade Representative's office (USTR) has notified Ethyl that President Bush has approved the company's petition to withdraw the preferential, duty-free treatment being given bulk ibuprofen imports from India (C&EN, July 30, 1990, page 13). Ethyl filed its petition under provisions of the Generalized System of Preferences. Under GSP, 8
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the U.S. grants duty-free treatment to imports from developing countries if those imports and countries meet certain conditions. Starting July 1, U.S. importers of Indian ibuprofen will have to pay the usual duty of 6.8%, waived under GSP. Bulk ibuprofen also is imported from Britain and Italy, but the 6.8% duty has always been paid on those imports. Indian ibuprofen is only about 10% of U.S. imports and is not a big market factor. But several other nations are seeking Food & Drug Administration approval for imports. If they get it and the Indian precedent were not corrected, Ethyl explains, low-priced ibuprofen imports could become significant. USTR acted on Indian ibuprofen primarily because of that nation's poor record in protecting intellectual property rights. But Ethyl's petition listed several other complaints.
Max L. Turnipseed, Ethyl's manager of international trade affairs, attributes the success of India's ibuprofen export drive to massive export subsidies it gives its industries. He also notes that India has failed to live up to a 1981 U.S.-India bilateral subsidies agreement, which called for India to eliminate or reduce its subsidies. Ethyl's successful GSP petition is one of several moves the firm will make to get what it calls "substantially equivalent competitive opportunities" in the world ibuprofen market. It also is considering seeking additional relief from Indian imports under U.S. antidumping and countervailing duty laws. And it is considering action under Section 301 of the 1988 trade act, which authorizes appropriate action by the President against unfair trade practices of other countries. Earl Anderson
National Academy of Sciences elects new members At its 128th annual meeting in Washington, D.C., last week, the National Academy of Sciences elected 60 new members and 15 foreign associates, recognizing their distinguished and continuing achievements in original research. NAS now has 1626 members plus 277 foreign associates. New members elected who are chemists or work in chemically related areas include: Andreas Acrivos, Albert Einstein Professor, City College of the City University of New York. Norman L. Allinger, research professor, University of Georgia, Athens. John E. Casida, professor of entomology and director, pesticide chemistry and toxicology laboratory, University of California, Berkeley. Anthony Cerami, professor and head, laboratory of medical biochemistry, Rockefeller University. Francis J. DiSalvo, professor of chemistry, Cornell University. Stephen C Harrison, professor and chairman, department of biochemistry and molecular biology, Harvard University. Robert Haselkorn, F. L. Pritzker Distinguished Service Professor of Molecular Genetics & Cell Biology, Biochem-
istry & Molecular Biology, & Chemistry, University of Chicago. Paul J. Kaesberg, Beaman Professor of Biophysics & Biochemistry, University of Wisconsin, Madison. James L. Kinsey, R. D. BullardWelch Foundation Professor of Science, Rice University. Robert A. Laudise, director, materials chemistry research laboratory, AT&T Bell Laboratories. Richard A. Lerner, professor, department of chemistry, and director, Research Institute of Scripps Clinic. Royce W. Murray, Kenan Professor of Chemistry, University of North Carolina, Chapel Hill. Darwin J. Prockop, professor and chairman, department of biochemistry and molecular biology, Thomas Jefferson University, Philadelphia. Jane S. Richardson, medical research associate professor, department of biochemistry, Duke University. Robert T. N. Tjlan, professor of biochemistry, University of California, Berkeley. Don C Wiley, professor of biochemistry and biophysics, Harvard University. Peter G. Wolynes, professor of chemistry, University of Illinois, Urbana.
