GENERAL ASSEMBLY TAKES A BREAK, NO BUDGET YET

The General Assembly has all but finished its Spring Session except for its most important business – passing a budget. The good news so far is no bills opposed by the Chemical Industry Council of Illinois (CICI) advanced to the Governor. All efforts to ban chemicals and chemical products, raise taxes or fees, and eliminate industry tax incentives have failed to reach the Governor.

As for the budget, the Senate late last Friday was able to pass a few measures pertaining to the budget, including empowering Governor Quinn with the extraordinary authority to manage a $13 billion deficit on his own through cuts, raiding special funds, and suspending certain payments. The House, however, failed to muster enough votes for these measures. Thus, budget negotiations continue and it's expected that the General Assembly will return in the next week or so to try again at passing a fiscal year 2011 spending plan.

Further, there appears to be no will to enact Governor Quinn's 1% income tax increase. Instead lawmakers may be considering other proposals to generate more revenue, including borrowing from Tobacco Settlement proceeds, creating a tax amnesty program, and even a $1 per pack tax increase on cigarettes.

In the mean time, below is an overview of the measures that CICI has been working on this legislative year. Once lawmakers return to Springfield and pass a budget, CICI will send another Legisletter detailing the provisions of the budget.

KEY MEASURES DEFEATED

None of the following pieces of legislation passed both houses at the time of this writing. However, no bill ever truly dies in Springfield. When the General Assembly returns during the later part of May, or in the Fall Veto Session, which begins after the November elections, the General Assembly may revisit some of these issues.

12% Oil Products Tax
Thanks to the determined efforts of numerous CICI members calling their State Senators on the devastating impacts of this new tax, this measure, HB 3659 (sponsored in the Senate by Senator Kotowski, D-Park Ridge) will not be advancing. While the General Assembly still has not concluded the important business of passing a budget, CICI is confident that this tax will not be a part of a final budget solution.

This 12% tax would have been placed on the gross income of “oil companies” which was very broadly defined as "an entity doing business in the state that performs exploration, drilling, importation, refining, or wholesale distribution of petroleum products, excluding retail sellers." The bill also has a broad definition of petroleum products as "any products that contain or are made from petroleum or a petroleum derivative." This means virtually all of the chemical industry and our customers. CICI opposed this measure.

Single Sales Factor
This measure, SB 3257 (Sandoval, D-Cicero), apportioned business income, for tax years ending on or after December 31, 2010, by using a 3-factor formula of property, payroll, and sales. Currently, business income is only apportioned through a single sales factor. This change has been estimated to cost the state’s business community approximately $70 million a year. This bill is especially damaging for manufacturers with a significant Illinois presence. CICI opposed this measure.

Bisphenol A (BPA) Bans
CICI and many other groups and businesses fought all session long to defeat efforts to ban BPA in its current uses. While we believe that SB 3750 (Kotowski, D-Park Ridge) will not be moved when the legislature returns to pass a budget, CICI is anticipating another subject matter hearing on this issue sometime over the summer, making it the 4th time the General Assembly has taken testimony on the issue this year.

SB 3750 would ban the use of BPA in many different applications, most notably baby bottles, sippy-cups, canned infant formula and baby food. In the House, a companion bill, HB 6088 (Nekritz, D-Northbrook), was sent back to the House Rules Committee effectively killing that bill number for 2010.

While your company may not make or even use BPA, this issue is important for the entire chemical industry. It’s been CICI’s contention that if the environmental community can use junk science to ban such a benign, ubiquitous, and useful product such as BPA, they can ban anything. Your products could be next. CICI opposed this measure.

KEY MEASURES ADVANCING TO THE GOVERNOR

The following bills have made it through the legislative process and are awaiting gubernatorial action. Once the governor receives the bill, he has 60 days in which to act upon it or it automatically becomes law. CICI will be issuing another Legisletter later in the summer detailing any gubernatorial action on these bills.

Research & Development (R&D) Tax Credit Extended
Due to a legal interpretation by the Illinois Department of Revenue that the R&D tax credit expired at the end of 2009, legislators unanimously passed SB 3655 (Kotowski, D-Park Ridge) providing for a one-year extension of the credit. CICI supported this measure.

County Property Taxes - 7% Solution
Unfortunately, this issue made it back into the minds of legislators and passed both chambers in a matter of just a few days. This measure, SB 3638 (Link, Lake Bluff), extends the life of the so-called 7% solution for Cook County property taxes for another 3 years at a $20,000 level for the first year, $16,000 for the second, and $12,000 for the final year. Specifically, the bill will cap residential assessments and shift the property tax burden in Cook County to businesses with industrial and commercial real estate. CICI opposed this measure.

Dept. of Ag - Pesticide Fee Increases/Two-Year Registration
The measure, HB 4866 (Reitz, D-Sparta), increases the annual pesticide product registration fee from $200 to $300. Language has been adopted to the bill, per an agreement between CICI and the Department of Agriculture, allowing for a 2-year registration.

The measure also increases or establishes other fees such as the annual experimental use permit fee, the special local need pesticide registration fee, the renewal fee for pesticide registrations, and the private pesticide applicator license fee. The bill also authorizes the Department of Agriculture to collect a public or commercial not-for-hire pesticide applicator license fee, a public or commercial not-for-hire pesticide operator license fee, and associated late fees.

The measure also requires certain agrichemical facilities to apply for an agrichemical facility containment permit and to pay a permit fee. It also requires a permit fee to be submitted with each permit application and each permit renewal application for those under the Lawn Care Products Application and Notice Act. With the 2-year registration provision included in the bill, CICI is neutral on this measure.

Asian Carp, Chicago Area Waterways
The General Assembly and the City of Chicago have all introduced resolutions that urge the United States Army Corps of Engineers (USACE) to seek alternatives to the closure of the Chicago Area Waterway systems of locks and canals that would not impede commerce. As this is becoming an important issue for the chemical industry in terms of a definite economic calamity if these waterways are shut down for commerce, this is great news that the city of Chicago and State Representatives and Senators are starting to take notice. As of this date, however, only the Senate Resolution, SR 779 (Wilhelmi, D-Joliet), has been adopted. Chicago Alderman Ed Burke is sponsoring the City's resolution and is scheduled for a hearing this week. CICI supported this measure.

OTHER MEASURES ADVANCING TO THE GOVERNOR

IPCB Actions, Stays
This measure, SB 2812 (Harmon, D-Oak Brook), requires the Illinois Pollution Control Board (IPCB), if requested by an applicant (no 3rd party), to stay the effectiveness of certain actions taken or permit conditions imposed by the IEPA in the course of administering the Clean Air Act Permit Program (CAAPP).

If IPCB stays any condition, then any related conditions from any prior existing permit will continue in full force and effect until they make a final decision regarding the appeal of the granted CAAPP permit.

The bill provides that, if the Board stays all conditions, then the applicant shall continue to operate in accordance with "all" related terms and conditions of any other applicable permits until final IPCB action in the review process. Any stays granted shall be deemed effective upon the date of final IEPA action appealed by the applicant.

Green Manufacturing Incentives
This measure, HB 6030 (May, D-Highland Park), creates a green manufacturing grant program authorizing the Department of Commerce and Economic Opportunity (DCEO) to provide grants, subject to appropriation, to manufacturers with 500 or fewer employees toward the cost of capital equipment that will reduce environmental impact and achieve cost savings.

The legislation once had an appropriation of $10 million from the General Revenue Fund to pay for this program but was taken out by amendment over cost concerns considering the state’s dire fiscal situation. Also, grant funds may be used for developing, expanding, or retooling a manufacturing facility to produce renewable energy or energy efficiency products or components. CICI will keep you abreast of whether any appropriation ever makes it into the budget for this program.

Metro-East Floodplains
This measure, SB 2556 (Haine, D-Alton), is just one of many efforts aimed at addressing an unfortunate situation in the Metro-East area of St. Louis, namely parts of Madison and St. Clair Counties, that have come under increased federal pressure to be mapped into a 100-year floodplain. Adding to this problem is little-known Executive Order (EO) 2006-5 from the Blagojevich era, which prohibited many types of construction and other permitting within a 100-year floodplain, a term which has never been defined in Illinois statute.

This bill defines "100-year floodplain" as the lowland and relatively flat areas adjoining inland and coastal waters, including flood-prone areas of offshore islands, that are inundated by a flood that has a 1% or greater chance of recurring in any given year or a flood of a magnitude equaled or exceeded once in 100 years on the average over a significantly long period. However, areas that lie within an area protected by a levee or levees located in a flood prevention district established by the Flood Prevention District Act (Metro-East St. Louis area) are deemed by operation of law not to be within the 100-year floodplain. The bill further provides that to the extent that EO 2006-5 is inconsistent with the provisions of this amendatory act, then the provisions of this amendatory act will govern. CICI supported this measure.

Carcinogens in Community Water Systems
This proposal, SB 3070 (Althoff, R-Crystal Lake), provides that if a carcinogenic volatile organic compound is detected in the finished water of a community water system at a certain level, then the owner or operator of that system must submit a response plan that meets certain requirements to the IEPA. Once approved, owners or operators will implement the plan. Upon completion of the plan, the owner or operator will submit a response completion report. Further, actions taken by IEPA to disapprove or modify a plan or report may be appealed to the IPCB.

Mercury Thermostat "Take-Back" Program
This is an issue which has been debated in the General Assembly for the past few years. An agreement has finally been reached between the environmental community and manufacturers of thermostats to initiate a collection and management program for out-of-service mercury thermostats. The measure, SB 3346 (Steans, D-Chicago), sets up statewide goals for the collection of mercury thermostats taken out of service in the state. The measure authorizes the IEPA to reduce, beginning in calendar year 2018, these statewide goals if it, in consultation with mercury thermostat manufacturers, thermostat wholesalers, contractors, environmental organizations, and other stakeholders, determines that mercury thermostats no longer pose a threat to the environment and public health in Illinois. Further, if the statewide goals are not met by the manufacturers, then the manufacturers must provide a specified financial incentive to achieve these goals.

The bill also provides that contractors, thermostat wholesalers, thermostat manufacturers, and thermostat retailers participating in the program must handle and manage out-of-service mercury thermostats in a manner that is consistent with the provisions of IPCB rules regarding the disposal of universal waste.

The measure also prohibits, on and after July 1, 2011, a thermostat wholesaler from selling, offering to sell, distributing, or offering to distribute thermostats unless the wholesaler participates in the collection program. It also prohibits, beginning July 1, 2011, the mixing of out-of-service mercury thermostats with municipal waste that is intended for disposal at a sanitary landfill. Finally, if this bill becomes law, it will be repealed January 1, 2021.

Cadmium in Children's Jewelry
This measure, HB 5040 (Jakobsson, D-Urbana), once banned cadmium in a whole host of consumer products, but most notably children’s products, and set up a very onerous chemical regulation program. Through negotiations, the bill now provides that, after July 1, 2011, no person may manufacture, knowingly sell, offer for sale, distribute for sale, or distribute for use children's jewelry containing cadmium in any paint or surface coating or accessible substrate that exceeds 75 parts per million, per ASTM standards.

Antifreeze Bittering Agents
This measure, HB 4722 (Feigenholtz, D-Chicago), creates the Antifreeze Bittering Act to provide that any engine coolant or antifreeze that is manufactured after January 1, 2011, and subsequently sold within the state, and that contains more than 10% ethylene glycol, shall include denatonium benzoate at a minimum of 30 parts per million and a maximum of 50 parts per million as a bittering agent within the product so as to render it unpalatable. The bill also requires a manufacturer of a product subject to this Act to maintain a record of the trade name, scientific name, and active ingredients of any bittering agent used and to make such information available to the public upon request. This proposal further provides that subject to certain exceptions, a manufacturer, processor, distributor, recycler, or seller of an engine coolant or antifreeze that is required to contain an aversive agent shall not be liable to any person for any personal injury, death, property damage, damage to the environment (including natural resources), or economic loss that results from the inclusion of denatonium benzoate in any engine coolant or antifreeze, provided that the inclusion of denatonium benzoate is present in concentrations mandated under the Act.

Motor Fuel Standards
This piece of legislation, SB 2573 (Frerichs, D-Champaign), among many other provisions, amends the Motor Fuel and Petroleum Standards Act, creating an octane requirement for midgrade gasoline and increases the octane requirement for premium and super grade gasoline. The bill also deletes provisions that establish labeling requirements for biodiesel blends and increases monetary penalties for violations.

Through Senate and House amendments, the bill now further requires all biodiesel with a numerical value of B99 or above (rather than B100) that is sold or offered for sale in the state to conform to a specific ASTM standard. Also, gasoline-oxygenate blends sold or offered for sale in the state must meet the standards set forth in Section 2.1.1.1 or Section 2.1.1.2 of the Uniform Engine Fuels, Petroleum Products, and Automotive Lubricants Regulation, rather than the standards set forth in Section 2.1.3 of the Uniform Engine Fuels and Automotive Lubricants Regulation.

TACO – Underground Storage Tanks Cleanup
This proposal, SB 3320 (Jones, J., R-Mt. Vernon), is an initiative of the IEPA and provides, for the purpose of payment from the Underground Storage Tank Fund, that corrective action activities required to meet minimum requirements include compliance with certain provisions related to the Tiered Approach to Corrective Action Objective (TACO) rules. The bill requires that the bidding process adopted under IPCB rules to determine the reasonableness of costs of corrective action also provide for a publicly-notified, competitive, and sealed bidding process that is, among other things, optional and allows bidding only if the owner or operator demonstrates that corrective action cannot be performed for less than a certain amount. The legislation also decreases the deductible that must be applied before an owner or operator may access moneys in the fund. It also authorizes the IEPA each fiscal year, subject to appropriation, to commit up to $10 million of the moneys in the fund, which have been appropriated for the payment of corrective action costs, to the payment of corrective action costs for legacy sites that meet certain criteria.

The bill also provides that the Petroleum Underground Storage Tank Title of the Environmental Protection Act applies to all underground storage tank releases for which a NFR letter is issued on or after the effective date of this bill but that (1) costs incurred prior to this effective date will be payable from the Underground Storage Tank Fund in the same manner currently allowed and (2) releases for which corrective action was completed prior to this effective date be eligible for a NFR in the same manner currently allowed at the time the corrective action was completed. Further, if a change in state or federal law requires additional remedial action in response to releases for which NFR letters have been issued, then the IEPA will propose legislation to allow owners and operators to perform the additional remedial action and seek payment from the fund for the costs of the action. Finally, the bill also authorizes payment from the fund of certain costs incurred after the issuance of a NFR letter.

Lobbyists Fees, Registrations
Due to a recent federal court decision in an ACLU lawsuit on the new lobbyist registration fees, indicating that the $1000 fee was an unconstitutional tax on the first amendment, there are no current lobbyist registrations fees until SB 1526 (Schoenberg, D-Wilmette) is signed into law. If and when this legislation is signed into law, the Secretary of State's office (SOS) will immediately begin sending invoices for payment.

This bill will allow for the SOS to begin registering lobbyists and organizations at a registration fee of $300 all lobbyists and entities. For business lobbyists, this is a $700 savings from current law and a $50 savings from previous years’ fees. This bill also includes developing new reporting that will require twice monthly reports regardless of whether the legislature is in session.

OTHER MEASURES FAILING TO ADVANCE

Enterprise Zone Extensions
This measure, SB 3659 (Hutchinson, D-Olympia Fields), would have extended Enterprise Zones by up to twenty years. Some of these zones are scheduled to begin expiring in 2014. The business community thought it critical that lawmakers extend these zones so that companies and economic development officials have security and predictability. This measure passed the Senate unanimously but became stalled in the House. CICI supported this measure.

Federal Healthcare Implementation
Due to strong opposition from businesses and health insurance companies, a proposal that would have led to a massive expansion of state-run health care has been stalled. Under the proposal offered by Governor Quinn and his Department of Insurance Director, and supposedly for the sake of the new federal healthcare law, more than $100 million in new costs would have been assessed on health companies who would then pass the costs along in the form of higher premiums for businesses. Even worse, the proposal would have allowed the Director of Insurance to have the unilateral power to impose price controls on private companies through rate regulation. None of these provisions were even required under the new federal health care law. CICI opposed this measure.

Chemical Bans by Administrative Rule
This proposal, HB 6118 (Nekritz, D-Northbrook), requires the Director of the IEPA to publish a list of chemicals of high concern and to designate chemicals of high concern and other chemicals as priority chemicals. Every manufacturer and distributor of children's products that contain designated chemicals are to provide certain information to the Director. The IEPA, under certain circumstances, will then prohibit, by rule, the sale and distribution of children's products containing a priority chemical. CICI opposed this measure.

Listing of Chemicals of High Concern
This measure, HB 5338 (May, D-Highland Park), provides that by July 1, 2010, the Department of Public Health, after consultation with the IEPA, generate a list of chemicals of high concern and priority chemicals that are in children’s consumer products. The bill also authorizes the Director of the IEPA to accept donations, grants, and other funds in order to generate this list. It also allows the state to cooperate with other states in an interstate chemicals clearinghouse regarding chemicals in children’s consumer products. CICI opposed this measure.

IEMA Tier I & II Inventory Permit Fees
This bill, HB 5521 (Harris, D-Chicago) establishes fees, by administrative rule, for filing an inventory form. The bill also provides for the rules to establish procedures for collection, management, and disbursement of the fees and may include penalties for late filing of forms, though it may provide an exemption for state, county, and municipal entities, special districts, and other public bodies or political subdivisions that IEMA deems appropriate. The fees will be used for local emergency planning committees and for training initiatives authorized by the State Emergency Response Commission (SERC). CICI opposed this measure.

Administrative Citation Authority – NPDES Permits
This legislation, HB 6120 (Nekritz, D-Northbrook), makes it a violation to fail to (1) submit to the IEPA a discharge monitoring report as required under an NPDES permit, (2) perform monitoring as required under an NPDES permit, (3) obtain a stormwater NPDES permit for a construction site, (4) renew an NPDES permit, and (5) maintain at a construction site a stormwater pollution prevention plan as required under an NPDES permit. Moreover, the bill authorizes these violations, and rules adopted under its authority, to be enforced by administrative citation authority. CICI opposed this measure.

IEPA Expedited Permits
This measure, SB 3344 (Clayborne, D-E St. Louis), requires the IEPA to create an expedited permitting unit for the purpose of implementing an expedited permitting process. The bill provides that permit applicants may access the expedited permitting process if the permit is necessary to commence a construction or maintenance project that results in an investment by the applicant of at least $10 million and the applicant pays an expedited permit fee. The measure further requires the IEPA to adopt an expedited process for NPDES permit renewals if the applicant determines and certifies that no change necessitating a permit revision has occurred. The expedited permit fee will be established by rule, but cannot exceed 200% of the standard fee for an unexpedited permit. These expedited permit fees will be used to carry out expedited permitting activities.

The bill is in the House where talks continue between industry and the IEPA on lessening the supposed burden on the IEPA in expediting these permits. Some of the talks are centered around a pilot project for particular permits and a review before continuing with the creation of an expedited permitting unit. CICI supported this measure.

Green Special Service Areas – “Berkeley Plan”
This measure, SB 2505 (Frerichs, D-Gifford), also known as the Berkeley Plan, provides that the Illinois Finance Authority has the power to purchase special service area bonds and to accept assignments or pledges, or both, of special service area bonds or agreements relating to public and private green special service area projects. Any unit of local government with the authority in connection with green special service area projects can provide special service area financing under specified provisions, including bonds. Corporate authorities of a county or a municipality may establish a green special service area and specifies the criteria for the creation of the areas, including energy efficiency improvements, renewable energy improvements, or water use improvements. Each county or municipality will have the authority to engage in specified activities, including energy efficiency improvements, renewable energy improvements, and water use improvements that relate to green special service areas. The bill further provides energy conservation projects must achieve energy cost savings sufficient to cover debt service and other project costs within 20 years after the date of project installation.




Please note that the Chemical Industry Council of Illinois Legisletter is not intended to convey legal advice or set forth all legal requirements applicable to particular circumstances.


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