WASHINGTON REPORT Food Marketing Institute · 800 Connecticut Avenue, NW · Washington, DC 20005 · 202/452-8444

FMI Seeks Full Participation in Hours of Service Regulations
The Federal Highway Administration (FHWA) is considering recommendations from its advisory panel report on traffic safety and driver fatigue. The recommendations include: restricting driving time between the hours of midnight and 6 a.m. with a weekly maximum of 18 hours; allowing commercial motor vehicle drivers a total of 14 hours on-duty with no distinction between driving and non-driving; and requiring longer rest times, possibly 30 hours, following weekly work cycles.

Beltway Briefs FMI Chairman and SUPERVALU INC. Chairman of the Board and CEO Mike Wright, Kroger Executive Vice President, Information Systems and Services Mike Heschel and FMI President and CEO Tim Hammonds will be testifying at the Senate Y2K hearing -postponed last month due to the impeachment trial - on March 2. The hearing will focus on the year 2000 issues facing the food industry from "field to fork." Rep. Greg Ganske (R-IA) introduced his own version of the Patients' Bill of Rights (H.R. 719) on February 11. This is a bad bill for the industry because, among other things, it would overturn ERISA preemption. The bill already has 10 GOP cosponsors. See next week's Washington Report for more details. Last week, the full House passed the Mandates Information Act (H.R. 350), which would allow any member of Congress to raise a point of order against a bill imposing more than $100 million in mandates on the private sector. If a point of order were raised, there would be a separate debate and vote on whether to proceed with the legislation.

Any changes to the hours-of-service regulations would seriously alter the way many industries conduct their operations and could have a significant impact on operating expenses. To that end, FMI and 10 other industry associations sent a letter to Department of Transportation Secretary Rodney Slater urging him to give all impacted industries an opportunity to fully participate in any rulemaking. The group also asked that any decisions by FHWA be considered in a "real-world" environment. Please contact Eric Nicoll in FMI's Government Relations Department for more information.

EPA Releases Pesticide Brochure, Begins Distribution to Retailers for Display
The Environmental Protection Agency (EPA) released for distribution its brochure entitled, "Pesticides and Food: What You and Your Family Need To Know." As we previously reported, the Food Quality Protection Act (FQPA), enacted in 1996 to modify the federal regulation of pesticides, requires EPA to publish a brochure on residual pesticides in the food supply and to distribute the pamphlet to retailers for display in their stores.

Although the final pamphlet is much shorter and more general in nature than previous drafts that FMI reviewed, a relatively significant portion is devoted to the agency's explanation of why "infants and children may be more vulnerable to pesticide exposure." "Pesticides and Food" also describes "healthy, sensible food practices" intended to reduce exposure to pesticides, including washing fresh produce under running water, peeling and trimming fresh produce and meats, and eating a varied diet. A single blanket statement endorses the consumption of five servings of fruits and vegetables per day, along with a variety of other foods. The pamphlet also mentions "organic" produce as an alternative, but notes that no national standards currently exist for "organic" foods.

As required by FQPA, EPA will distribute the brochure to approximately 40,000 food retailers. We expect packages of approximately 100 brochures to be shipped to each location. EPA will also ship packs of 10 brochures to the corporate offices of chain stores. All shipments will include an order form for additional copies. FQPA grants retailers wide latitude with respect to the way in which the brochure is displayed, and does not allow for penalties to be levied against retailers. See EPA's Web site at www.epa.gov/pesticides/food to view the brochure. Please contact Jim McVaney in FMI's Government Relations Department for more information.

ISSUEGRAM

Another tax increase proposal in the president's budget would deny companies the deduction for punitive damages.

The Clinton Administration's plan will devote the Social Security surplus to paying down the national debt. Essentially, the proposal would take trillions of dollars in excess Social Security payroll taxes over the next 15 years, credit them to the Social Security trust funds in the form of special Treasury bonds, as is now routinely done, and then use the cash to begin to retire the nation's $3.7 trillion publicly held debt. Even though this will likely give the economy a boost while cutting the amount of money the federal government pays every year in interest, the complexity of the plan has been a huge obstacle to its acceptance on Capitol Hill, even among Democrats.

Upon paying off part of the debt, the proposal would then credit a second set of Treasury bonds back to the Social Security program in roughly the amount of the retired debt. Some budget analysts insist that the plan makes sense because the government is effectively restructuring debt by moving it out of public hands and into government accounts. Sen. Don Nickles (R-OK), however, told Treasury Secretary Robert E. Rubin in last week's Finance Committee hearing that the proposal "to artificially credit the Social Security surpluses twice… is not going to fly. It's so deceiving." Secretary Rubin defended the plan, saying it would "preserve and invest the surplus, rather than eliminate it through tax cuts or spending."

Most top House Republicans are backing a 10 percent across-the-board tax rate cut (H.R. 3) as the preferred plan on how to spend the non-Social Security surplus, but there are several other tax options floating among the majority party. Those include a much smaller, less expensive package of targeted tax breaks introduced by House GOP moderates, as well as calls by some Republicans to forgo tax cuts completely this year until the financial future of Social Security is settled.

One of FMI's top tax priorities is estate tax repeal. Legislation (H.R. 8) to eliminate the federal estate tax from its top 55 percent rate by five percent each year over 10 years (by 2009), will be reintroduced in the House next week by Reps. Jennifer Dunn and (R-WA) John Tanner (D-TN). Their bipartisan plan is identical to legislation (S. 38) that has been reintroduced in the Senate by Sen. Ben Nighthorse Campbell (R-CO). Both proposals were under consideration for inclusion in a large GOP tax cut package last Congress.

In December 1998, The Joint Economic Committee of Congress published a "dynamic" analysis, called The Economics of the Estate Tax, which examines the arguments for and against the federal estate tax and concludes that the estate tax generates costs to taxpayers, the economy and the environment that far exceed any potential benefits that it might arguably produce.

February 15, 1999

Copyright © 1999 by Food Marketing Institute