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U.S. could tax CFC replacements.

Since Congress reconvened in early September, polyurethane and polyisocyanurate foam producers have been keeping a close eye on the Senate Energy and Natural Resources Committee, hoping to learn what the committee will do with the House of Representatives' version of the National Energy Efficiency Act (HR 776).

The fear among the trade associations representing makers of foam insulation is that the Senate committee could tack on an amendment to the energy bill that would add a tax on the use of CFC substitutes. The feeling among some industry watchdogs is that the committee could recommend the additional tax before the energy bill goes to a joint House-Senate conference committee later this year. Despite what they call "gut feelings" that Congress will forgo levying any taxes on HCFCs and HFCs, SPI and other industry groups monitoring the progress of the energy bill say such a tax would hurt both consumers and the environment by making the use of HCFCs and HFCs in insulation prohibitively expensive. Thus, they say, they have petitioned the Senate Energy and Natural Resources Committee to avoid taxing the alternatives.

"It will always be appealing to them to tax something considered bad for the environment," says Maureen Healey, SPI's assistant director of federal affairs. "If this tax is passed, the U.S. marketplace would lose its most energy-efficient insulation, and energy consumption would increase in new construction and new appliances with a consequent increase in global warming. But," she adds, "it's probably not in the stars for this Congress."

Other insulation industry representatives concur with her hunch. "Certainly, there would be concern if that would occur," says Jared Blum, president of the Polyisocyanurate Insulation Manufacturers Association (PIMA) in Washington, D.C. "But I think the members of Congress see HCFCs and HFCs as a transitional substance and to tax them would only hamper that transition."

As part of the energy bill, the entire House and the Senate Finance Committee have already approved tax incentives for builders and homeowners who install insulation; and have asked for an increase in the taxes on ozone-depleting substances such as CFCs. Under the proposal, taxes on CFCs used in flexible foams would immediately go from $1.67 to $1.85/lb. The tax would jump to $2.75/lb in 1993 and $3.65/lb in 1994. Blowing agents used in rigid foams are exempt from the tax increases, remaining at 26|cents~/lb through 1994. This, Blum says, is important, because rigid foam is the prime candidate for the insulation that the bill encourages builders to use in order to boost energy efficiency. The entire Senate must pass the tax provisions before the measure reaches the joint conference committee.


After a recent meeting with the SPI Food, Drug and Cosmetic Packaging Materials Committee, federal FDA Deputy Commissioner For Policy, Michael Taylor said his agency may be willing to rewrite the preamble to the controversial Final Rule on Colorants for Polymers, giving industry more self-regulation in the matter.

As currently written, the preamble sets a broad interpretation on what is considered a food additive, saying all colorants used in packaging that could possibly migrate to food fall under the definition. Packagers and resin suppliers would not have a say in determining what is, or is not, a food additive, the current preamble says.

The revised preamble would give some control back to industry. "Taylor reinforced our belief that industry has the right and the duty to determine for itself what the state of its products are, with the understanding that if the FDA disagrees, that |industry~ determination is not binding on FDA," says SPI General Counsel Jerome Heckman.
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Title Annotation:proposed legislation on insulation industry taxes
Author:Monks, Richard
Publication:Plastics Technology
Date:Oct 1, 1992
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