GOVERNMENT
Superfund, Budget, Other Matters Addressed in Massive Bill In addition to extending Superfund through 1995, bill covers private pension plans, occupational safety and health, and budget process Lois R. Ember and Janice R. Long, C&EN Washington
The 101st Congress concluded well over a month ago and, when one gets past headline-making legislations such as the Clean Air Act reauthorization, it's still not completelyclear what happened during that final hectic week in October. The Congressional Record for the week beginning Monday, Oct. 22, and ending at 1:17 AM on Sunday, Oct. 28, is more than 4000 pages long. One of the pieces of legislation enacted during that final week was H.R. 5835, the Omnibus Budget Reconciliation Act of 1990, which President Bush signed into law late last month. The conference report that accom-
Congress reauthorizes Superfund, simply Congress has extended taxes to support Superfund for four years, until Dec. 31, 1995, and continues the program's authorization for three years, until Dec. 31, 1994. Among the provisions: • Taxes are extended without modification. • Taxes are on petroleum, listed hazardous chemicals, imported chemicals containing or using chemical derivatives of the listed chemicals, and corporate income. • The tax cap is increased to $11.97 billion.
Rostenkowski: agreed to plan panied H.R. 5835 is over 1200 pages long. Buried in its pages can be found provisions affecting topics as diverse as Superfund, private pension plans, occupational safety and health, and the budget process itself. That the Superfund provision was even in the omnibus bill was a surprise and came about because the chief budget negotiators cut a deal at the last moment. Extension of the program seemed dead in its tracks when the Senate Finance Committee refused to include Superfund in its reconciliation proposals. But by the week of Oct. 22, Senate Finance Committee chairman Lloyd Bentsen (D.-Tex.), House Ways & Means Committee chairman Dan Rostenkowski (D.-I1L), and House Energy & Commerce Committee chairman John D. Dingell (D.-Mich.) agreed to roll the extension plan into the massive budget conference agreement. With this simple maneuver, Sup e r f u n d was e x t e n d e d t h r o u g h 1995, saving it from running out of
money at the end of next year when it was slated to expire. As the deal finally emerged—the work primarily of Sen. Frank R. Lautenberg (D.N.J.)—the program's authorization was stretched out three years, to 1994, and its tax was extended four years, until 1995. That the program's taxing authority will exceed its authorization by one year is not considered a problem. The program is not expected to. shut down while taxes are collected for an additional year. Instead, Congressional staffers expect that the year's discrepancy will prod an earlier full reauthorization of Superfund. Bentsen initially opposed this simple extension of Superfund when it came up in the Finance Committee budget package. But he allegedly came around when both Rostenkowski and Dingell supported it. In fact Dingell's support was viewed as crucial to its renewal. He
Lautenberg: deal primarily his work December 3, 1990 C&EN
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December 3, 1990 C&EN
Government still has problems with Superfund but he believed that, with reauthorization of the Resource Conservation & Recovery Act on the docket for next year, his committee would not get around to Superfund. In a letter to Rostenkowski, Dingell and Energy & Commerce Committee ranking minority member Norman F. Lent (R.-N.Y.) said they "strongly supported" a three-year extension of Superfund. Further, they wrote, "To avoid a significant disruption of this important cleanup program, it will be necessary to extend the current authorization, including an extension of the financing and revenue provisions." All relevant players—the Administration, environmental groups, and affected industry—favored a simple two- or three-year extension of the hazardous waste cleanup program. Industry is not happy with Superfund's liability provisions, and environmental groups are not pleased with the Environmental Protection Agency's management of the program. But each segment wants time to clearly lay out its case against the program. They will get this opportunity in 1994 or 1995 when Superfund will be due for a complete overhaul. Then, the battles should be royal. But the five-year reauthorization of Superfund was not the only surprise to be found among the reconciliation bill's pages. Another major surprise is that it totally rewrites the Gramm-Rudman-Hollings deficit reduction act that made the reconciliation bill necessary in the first place in order to avoid massive across-theboard cuts in federal spending. The bill establishes new deficit reduction targets ranging down from $327 billion in fiscal 1991 to $83 billion in 1995. These targets differ in two ways from the old targets. On the negative side, the targets take into account spending on the savings and loan bailout program, but do not include, on the positive side, the money in the social security trust fund. Instead of across-the-board cuts, H.R. 5835 sets up three broad spending categories—defense, international, and domestic—and provides for so-called mini sequesters if the spending targets are exceeded for
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Dingell: strongly supports extension any one of the categories. In other words, domestic programs would not be cut because military pro grams exceed their spending targets and vice versa. The categorical spending targets generally freeze defense authoriza tions at about $290 billion over the next two fiscal years and allow do mestic programs to grow by the rate of inflation from a base of $183 bil lion. International spending would hover around $20 billion. Congress ceded to the Office of Management & Budget's authority to determine if the spending targets are being ex ceeded in any category. Going off in a totally different di rection, Title XII of the bill seeks to solve a problem that Congress has been grappling with since "merger mania" swept Wall Street in the ear ly 1980s. That is the premature ter mination of pension plans to con vert pension assets to other corpo rate u s e , such as p a y i n g for a successful, highly leveraged compa ny takeover. A company can terminate a pen sion plan when the plan's assets ex ceed those necessary to pay plan lia bilities on a particular date. The problem, according to Rep. William L. Clay (D.-Mo.), chairman of the House Education & Labor Subcom mittee, which deals with pension matters, is that although pension plans may be overfunded at a given point in time based upon current
obligations, the so-called excess as sets are needed to meet the future obligations. Early plan terminations, at best, usually mean reduced pension ben efits to current workers, who on av erage lose half of their funded bene fits, and no cost-of-living increases for already retired employees. How ever, termination offered major fi nancial advantages to the company, in that excess plan assets, once a 15% excise tax had been paid, were in cludable in the employer's gross in come, on which taxes might not be paid at all. To discourage early termination of pension plans, H.R. 5835 increas es the excise tax from 15% to 50%, which in itself makes plan termina tion much less attractive. The tax would be reduced to 20% if the em ployer either established a qualified replacement plan funded at 125% of current assets or substantially in creased benefits to participants in the plan being terminated. Again in a totally different area,
the bill increases sevenfold the ex isting maximum allowable civil pen alties proscribed in the Occupational Safety & Health Act and institutes a $5000 m a n d a t o r y , m i n i m u m as sessed penalty for willful violations of the act. The Congressional Budget Office estimates that these changes alone will produce almost $900 mil lion in new federal revenues over the next five years. All of those rev enues are to be used solely to reduce t h e federal deficit. M e a n w h i l e , states that run their own occupa tional safety and health programs will have to increase their fines to at least match the new federal fines. Finally the bill extends the cur rent 20% research and experimenta tion tax credit for qualified research expenditures for one year, until Dec. 31, 1991. Also extended for one year are the income tax exemption on employer-provided educational as sistance and Congress' prohibition of the issuance of new Internal Rev enue Service rules on foreign alloca tion of R&D expenses. D
When We Recommended Hydrogen Cyanide To Synthesize A Heterocyclic Intermediate, You Should Have Seen Their Reaction. R *HN
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GRACE ORGANIC CHEMICALS CIRCLE 39 ON READER SERVICE CARD December 3, 1990 C&EN
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