take steps to effectively reduce sulfur dioxide emissions nationwide," Hair says. Not according to the coal industry. Chairman of Consolidation Coal B. R. Brown says the academy's report "clearly supports [our] position on the need for more research on acid deposition before costly legislative controls are enacted." National Coal Association president Carl E. Bagge agrees. "The proposed control bills have been built on the quicksand of politics, rather than the bedrock of science," he says. The academy's report "exposes the Achilles' heel" of pending legislation, he adds. Still, the coal and utility industries must be reeling from the conclusions reached by scientists appointed by the White House. In a summary statement released by the Office of Science & Technology Policy two days before the academy's report, the scientists called for immediate but cost-effective steps to reduce sulfur emissions. This OSTP panel said that if "we must wait until the scientific knowledge is definitive, the accumulated deposition and damaged environment may reach the point of 'irreversibility.' " Many saw the OSTP statement as heralding a political shift in the Administration's stance on acid rain. By fall, when the full OSTP report is released, Environmental Protection Agency Administrator William D. Ruckelshaus will have completed his internal review of control options. Then, the Administration is expected to call for a national control program that will spread the costs among federal and state governments and private industry. Also in September, the Congressional Office of Technology Assessment is expected to release its acid rain report. This will be a further prod to Congressional action already energized by the academy's report. Senate Environment Committee chairman Robert Stafford (R.-Vt.) hopes for passage of legislation later this year. Needless to say, the Canadians are elated by the academy and OSTP studies. Minister of the Environment John Roberts says the two reports "encourage the U.S. government to begin action now to control the acid rain problem." D
States can tax global earnings, high court rules The Supreme Court ruled last week that states have the right to include the international income of a U.S. -based multinational corporation in calculating that company's state tax base. In particular, the decision upholds the constitutionality of the worldwide unitary tax concept, the method by which a certain portion of a corporation's worldwide earnings is allocated to a state for tax purposes. The decision adds no immediate extra tax burden to chemical companies or other firms with overseas operations because the 11 states now applying the unitary concept have been doing so for some time. But companies say the ruling, which specifically ended Container Corp.'s challenge of California's use of the concept, is significant because it increases the danger that they will be taxed twice—once by the host nation and once by the state—on overseas income. Firms also fear that other states that have been waiting for the litigation to be settled will now move to unitary tax formulas as well. In general, unitary tax formulas
average the shares of a company's overall payroll, sales, and investment (property) that are attributable to a state. That percentage becomes the portion of the company's worldwide income liable to state tax. Typically, the additional money entailed by unitary tax calculations per company is relatively small. Container Corp., for example, was disputing a difference of just $23,000. And, a company having profitable operations in a state but suffering losses overseas actually could find its tax liability lowered. The relatively small gains per company, however, have been estimated to amount to about $600 million per year in extra tax income for the 11 states that apply the unitary concept. Chemical industry state tax burdens are generally minor. Dow Chemical, for instance, the industry's most multinational company, paid just 0.4% of pretax income on state and local taxes in 1982. But firms note that in some circumstances, unitary taxation could influence a decision on plant location. States without unitary taxes conceivably could be favored. D
Hercules to acquire aerospace firm Hercules plans to deal itself much further into the high-technology aerospace business and further away from commodity chemicals with a major, expensive acquisition. In an apparently friendly move, Hercules and its target company, Simmonds Precision Products Inc. of Tarrytown, N.Y., say they have a definitive merger agreement. Provided certain requirements are met, including approval by Simmonds shareholders, the transaction will be completed later this year. Hercules is bidding high for Simmonds and could wind up spending almost $400 million. Simmonds posted $152.9 million in sales last year (mostly in aircraft instruments and equipment), $11.4 million earnings, with 5.0 million shares, and a stock price of $48.50 per share before the merger announcement. This means that Hercules is bidding about 26 times Simmonds' cur-
rent earnings. Even though Simmonds has been a fast-growing company, that price-earnings ratio is fairly high. Specifically, the merger agreement provides payment in Hercules stock (up to 1.5 shares per Simmonds share) worth about $60 per Simmonds share. Hercules estimates this part of the purchase at about $325 million. Further options in the agreement involve another 1.16 million unissued or privately held Simmonds shares worth another $70 million. Simmonds makes precision control aerospace products such as fuel gauging and management systems, ignition systems, and flight control actuators. Hercules has a longestablished aerospace business of about $320 million annually in propulsion systems, graphite-containing composite structures, and other products. D July 4, 1983 C&EN
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