Updated June 2011

INTRODUCTION

Contrary to my last update, the economy is sputtering, the housing market has tanked (again) and jobs are not being created. So while Congress is still actively debating the budget and how to cut spending and reduce the national debt, jobs and the economy are no longer background noise but are front and center in the news and with members of Congress and the White House. The debate in Congress now is will cutting spending and reducing the deficit along with tax reform stimulate the economy. If not, what else can/should be done? Remember the stimulus bill passed last Congress and the first-time homebuyer's $5,000 tax credit? Could we see them recast with another name and considered? Probably not. The general consensus in this Congress is that more government spending is not the answer. But what is? It seems both Republicans and many Democrats believe that reducing the federal deficit and some sort of tax reform is the way to go.....at least politically. The question is how to get there. Ah, the eternal debate. However, in the midst of all this macro political discussion on how to save the economy, NFDA continues on a micro level to advocate for issues that benefit funeral service. Should make for an interesting summer.

For more information about any of these issues, contact NFDA's Advocacy Division staff:

John Fitch, senior vice president, Advocacy Division, 202-547-0441, jfitch@nfda.org
Lesley Witter, director of political affairs, 202-547-0877, lwitter@nfda.org

• Legislative Issues
  • Codification of SSI Irrevocable Funeral/Burial Trust Exemption
  • Bereaved Consumer's Bill of Rights Act of 2011
  • Indigent Funeral Expense Reimbursement Act of 2011
  • Estate Tax
  • Subchapter S Modernization Act of 2011
  • Veterans Missing in America Act of 2011
  • Small Business Health Relief Act of 2011
  • Small Business Regulatory Freedom Act of 2011
• Regulatory Issues
  • Formaldehyde
  • Shipment of Human Remains by Commercial Air Carriers
  • OSHA

Legislative Issues

Codification of SSI Irrevocable Funeral/Burial Trust Exemption (H.R. 935/S. 863). NFDA is working closely with our House and Senate sponsors to devise a strategy to get this bill passed into law this year. Rep. Steve Southerland (R-FL), the primary sponsor of the bill, is really working hard to help us secure more co-sponsors and get this bill passed. Senator Olympia Snowe (R-ME) and several co-sponsors introduced the Senate version on April 14th right before they adjourned for the Easter Recess. Passage of these bills continues to be a high priority for NFDA. Members can send an e-mail to their members of Congress via Congress-at-a-Click, urging them to co-sponsor and actively support passage of H.R. 935 and S.863.

Bereaved Consumer's Bill of Rights Act of 2011 (H.R. 900). At NFDA's request, Rep. Bobby Rush and nine co-sponsors have again introduced the Bereaved Consumers Bill of Rights Act with only one change from last year's bill. The change would exempt all non-profit religious cemeteries owned, operated and managed exclusively by them and not by any for-profit funeral service company. The latter would still be covered by the bill. NFDA is close to obtaining a Senate sponsor to introduce a Senate version which NFDA can then work through the Senate and send over to the House for consideration. NFDA members can send an e-mail to their members of Congress via Congress-at-a-Click, urging them to co-sponsor and actively support passage of H.R. 900. We will advise you when a Senate bill is introduced.

Indigent Funeral Expense Reimbursement Act of 2011 (H.R. 1033). Again this year, Rep. Broun (R-GA) has introduced legislation, at NFDA's request, to provide an above the line tax credit to funeral homes for unreimbursed expenses for providing funeral and/or burial services and merchandise for indigents. The term indigent is defined by state law and the credit is capped at $3,000. With state and local funding for these services being reduced or eliminated, NFDA is seeking legislative tax relief for funeral homes who voluntarily provide these services to their communities generally at the request of state or local officials. In addition, NFDA is working with several Senate offices to have a Senate version of H.R. 1033 introduced as well. NFDA members can send an e-mail to their members of Congress via Congress-at-a-Click, urging them to co-sponsor and actively support passage of H.R. 1033. We will advise you when a Senate bill has been introduced.

Estate Tax (H.R. 1259 and H.R. 1757). NFDA and other members of the Family Business Estate Tax Coalition have begun efforts to advocate that Congress make permanent the current estate tax law that expires at the end of 2012. At that time, the estate tax will revert back to the 2001 levels of a $1million ($2million per couple) exclusion and a 55% rate. The exclusion is not indexed for inflation. The current law sets the exclusion at $5 million ($10 million for a couple) and a tax rate for amounts above that of 35%. This exclusion is indexed for inflation and a stepped-up basis is included as well. While this issue has not matured yet politically, two bills have been introduced in the House to begin the debate. H.R. 1259 introduced by Rep. Kevin Brady (R-TX) would fully repeal the estate tax effective January 1, 2013. H.R. 1757, introduced by Rep. Shelley Berkley (D-NV) would make permanent the current exclusion and rate. NFDA and the Family Business Estate Tax Coalition have not yet taken a position on either bill at this time pending discussions with both House and Senate leadership. NFDA believes the Berkley bill stands the best chance of passage but we will determine our position after discussions with the Leadership and other Coalition members. Both bills are supported by the NFDA Public Policy Position on the Estate Tax.

Subchapter S Modernization Act of 2011 (H.R. 1478). House Ways & Means Committee members Reps. Dave Reichert (R-WA) and Ron Kind (D-WI) introduced the S Corporation Modernization Act of 2011. The legislation is a critical measure to modernize the outdated rules that apply to S corporations. The Reichert-Kind legislation would make it easier for S corporations to raise capital, invest in new buildings and equipment, and hire new workers. Among other items, the bill would permanently reduce the built-in gains holding period to five years allowing access to S corporations' own locked-up capital, allow non-resident aliens to invest in S corporations through small business trusts, reduce the negative impact of the so-called sting tax, and encourage charitable giving by S corporations by simplifying related rules. A recent study authored by Drs. Robert Carroll and Gerald Prante of Ernst & Young LLP-finds that fifty-four percent of all private sector employees (69 million) work for pass-through businesses, and one out of four private sector workers (31 million) is employed by an S corporation. The study also finds that the existence of flow-through businesses-S corporations, partnerships, limited liability companies, and sole proprietorships-results in higher levels of capital investment and employment than if all firms were structured as C corporations.

Since many NFDA members use the Subchapter S form of organization, NFDA will be actively advocating for passage of H.R. 1478. NFDA members can also voice their support for this bill by sending an e-mail to their members of Congress urging them to co-sponsor and actively support passage of H.R. 1478 by going to the Congress-at-a-click program on the member side of the NFDA website.

Veterans Missing in America Act of 2011 (H.R. 2051). Introduced by Reps. Pat Tiberi (R-OH) and Steve Stivers (R-OH), the bill would direct the Secretary of Veterans Affairs to work with veteran's service organizations and other groups in assisting funeral homes in possession of unidentified or abandoned remains in determining if the remains are that of a veteran eligible for burial at a National Cemetery. If remains are determined to be that of an eligible veteran, there is no next of kin, and there are no available resources to cover burial and funeral expenses, then the Secretary of Veterans Affairs shall cover the cost of burial. In addition, the bill would call on the Secretary of Veterans Affairs to establish a public database of the veterans identified in this project. NFDA strongly supports this bill and encourages NFDA members to e-mail their support by going to the Congress-at-a-Click program on the member's side of the NFDA website and send their representative an e-mail asking them to co-sponsor it and actively advocate for its passage.

Small Business Health Relief Act of 2011 (S.1049/H.R. 1370). These bills, sponsored by Sen. Jon Kyl (R-AZ) and Reps. Charles Boustany (R-LA) and Dan Boren (D-OK) respectively would repeal section 9010 of the Patient Affordability and Protection Care Act which would create a substantial new tax (Health Insurance Tax –HIT) on health insurance companies. This new tax will be passed along to their fully insured market clients who are primarily small business. This would disproportionately impact funeral homes and other businesses that do not self-insure. NFDA strongly advocates for access to affordable health insurance for its members. As a member of the HIT Coalition with other small business groups, we strongly support these bills which would repeal this onerous tax which is scheduled to go into effect in 2014. NFDA members can send their support for these bills to their Senators and Representatives via the Congress-at-a-click program on the member side of the NFDA website.

Small Business Regulatory Freedom Act of 2011 (S. 1030). Introduced by Sen. Olympia Snowe (R-ME) and others, S. 1030 expands the scope of the Regulatory Flexibility Act (RFA) by forcing government regulators to include the indirect impact of their regulations in their assessments of a regulation's impact on small businesses. The bill also provides small business with expanded judicial review protections, which would help to ensure that small businesses have their views heard during the proposed rule stage of federal rulemaking.

The legislation strengthens several other aspects of the RFA, such as clarifying the standard for periodic review of rules by federal agencies; requiring federal agencies to conduct small business economic analyses before publishing informal guidance documents; and requiring federal agencies to review existing penalty structures for their impact on small businesses within a set timeframe after enactment of new legislation. These important protections are needed to prevent duplicative and outdated regulatory burdens as well as to address penalty structures that may be too high for the small business sector.

NFDA strongly supports this bill. Members can send a supporting e-mail to their Senators by going to the Congress-at-a-click program on the member side of the NFDA website.

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Regulatory Issues

Formaldehyde. In a report issued April 8, 2011, the National Academy of Sciences (NAS) concluded that US EPA's draft health assessment of formaldehyde required "substantial revision". The NAS disagreed with a number of EPA's key findings that formaldehyde causes leukemia, specific cancers of the respiratory tract, and several other noncancerous health effects, such as asthma. The NAS concluded that EPA had not adequately supported those findings. The report also provided recommendations for EPA to revise its draft, including a "road map" for generally improving the agency's risk assessment process. Industry groups have met with EPA, but, to date, EPA has not decided whether and if so, how to address the NAS recommendations.

Among the NAS report's key findings:

• Overall, the assessment was not prepared in a logically consistent fashion and did not document methods and criteria for selecting and evaluating the studies considered. The assessment mirrored the same problems as earlier EPA chemical assessments that the NAS reviewed, such as lack of clarity and transparency of methods. NAS recommended that EPA change its risk assessment methodology.
• Humans and animals produce formaldehyde as part of normal metabolism. Formaldehyde is usually present in all tissues, cells, and bodily fluids. But the presence of formaldehyde in the body complicates the risk associated with formaldehyde inhalation.
• Formaldehyde is absorbed in the body at the site of first contact. This means that formaldehyde is likely to remain in the body in the respiratory cells that line the airways.
• EPA correctly concluded that formaldehyde is genotoxic, meaning that it causes impacts on cell DNA. Although the NAS could not find support that formaldehyde exposure impacts cells far from the point of inhalation, effects have been observed in highly exposed people.
• EPA mistakenly grouped all leukemias and lymphomas together but not all such cancers are closely related. EPA's conclusion that formaldehyde exposure caused leukemia was not adequately supported.
• EPA's assessment properly concluded that formaldehyde can cause cancer in the nose, nasal cavity, and back of throat (nasopharynx). But there was insufficient reliable data to show that formaldehyde exposure caused other cancers.

Over the past several years, at NFDA has taken steps to educate funeral directors and provided guidance on reducing exposure to formaldehyde-based embalming products in the preparation room. In 2009, NFDA issued recommended formaldehyde best management practices (BMPs). The BMPs offer guidance on risk reduction practices that funeral directors should adopt to lessen their exposure to formaldehyde. In 2010, NFDA issued its groundbreaking ventilation study, which identified those features of an effective ventilation system that will remove formaldehyde from the embalmer's breathing zone and reduce risk of formaldehyde inhalation. Ventilation has been found to be the single most effective way to control formaldehyde vapor levels and NFDA undertook this study because there were no consensus ventilation standards applicable to funeral homes. In 2010, NFDA also initiated its Green Funeral Practices Certificate Program™, an award program recognizing exceptional NFDA funeral homes that have adopted and implemented ethical, sustainable green funeral and business practices in order to become more environmentally responsible to client families, employees, and their communities. In December, 2010, NFDA recognized the first Certificate recipients. NFDA is now planning a study of formaldehyde free embalming products that is expected to begin shortly.

Funeral homes that carefully follow NFDA's Formaldehyde BMPs and NFDA's Ventilation Guidance can reduce formaldehyde exposure in the preparation room. Careful control of formaldehyde exposure in the preparation room continues to be the strong recommendation of NFDA for protecting the health and safety of embalmers.

International and domestic organizations continue to consider the hazards associated with formaldehyde exposure. In 2004, the International Agency for Research on Cancer (IARC), the leading international cancer agency, reclassified formaldehyde as a Group I carcinogen, finding a link between formaldehyde and nasal cancer. In 2009, IARC found sufficient evidence to conclude that formaldehyde exposure may cause leukemia, a disease of the blood and bone marrow. Also, in 2009, following a twenty year study of embalmers, the National Cancer Institute published a report, which found a link between embalming and death from myeloid leukemia, with the greatest risk among those who practiced embalming for more than twenty years and who experienced great formaldehyde exposure in the preparation room. (The embalming study is not mentioned in the NAS report.) In 2010, an expert panel of the Health and Human Services (HHS) National Toxicology Program (NTP) recommended the listing of formaldehyde as a known human carcinogen in its 12th Report on Carcinogens. However, the NAS report noted that some scientists disagree with the IARC and NTP conclusions and have published studies that they claim raise questions about those findings. The NTP's proposed listing determination for formaldehyde has not yet been finalized and continues to be under consideration by HHS Secretary Kathleen Sebelius. In April of this year, OSHA issued a hazard alert after finding high levels of formaldehyde in hair salon products that were labeled as formaldehyde-free. Testing performed by California and Oregon OSHA revealed that some products advertised as formaldehyde-free had high levels of formaldehyde and/or methylene glycol and formalin, which are considered formaldehyde equivalents. House Democrats have urged the Food and Drug Administration to issue product recalls.

NFDA will actively monitor the response of both EPA and OSHA to the findings and recommendations contained in the NAS report. We will act quickly if their actions will adversely impact funeral service.

Shipment of Human Remains by Commercial Air Carriers. NFDA continues to meet with TSA officials and the airlines to try to solve issues surrounding the development of a protocol for resolving security alarms that may be triggered during the screening process. Under the law, if a shipment of human remains sets off a security alarm, the shipping container must be opened for a physical inspection. This continues to be a real issue for all involved. A pilot program to test certain screening processes and alarm resolution protocols has been established at Miami International Airport. This pilot program is expected to last 3-4 months. Several NFDA members will be participating in this pilot program and will offer real life recommendations and suggestions that meet the requirements and expectations of the funeral directors and the families they serve. We will keep NFDA members posted on the findings and recommendations of this pilot program as it proceeds. The results of the program will be vetted with NFDA and all airlines and once finalized will be implemented with plenty of lead time for funeral homes and the airlines to prepare for it. It will be at least a year or more before that happens.

OSHA. OSHA continues its inspection of funeral homes for compliance with the hazard communication, blood borne pathogen, formaldehyde and respirator standards. On both the national and state level, the OSHA Asbestos Standard is being enforced against both funeral and non-funeral related employers whose employees are either potentially exposed to asbestos containing products at their work site or who use their untrained employees to remove suspected asbestos containing materials during repairs or renovations. On the national level, federal OSHA has issued a voluntary survey of 19,000 employers, of all sizes and in all industries, upon which future rules, compliance assistance and outreach efforts are to be based, focusing on workplace safety and health management practices, self inspections and the type of hazards encountered at an employer's facilities. A revision of the blood born pathogen standard, infectious disease, and injury and illness prevention programs are in the Pre-Rule stage, according to the current, published OSHA Regulatory Agenda. There is a Proposed Rule being considered to modernize and revise OSHA's reporting system. In the Final Rule stage, OSHA is revising the hazard communication standard, to include revision of the contents of material safety data sheets and hazard warnings, using the Globally Harmonized System of Classification and Labeling of Chemicals (GHS), with final action scheduled for August, 2011. The revision of the hazard communication standard will require retraining of funeral home employees in the use and understanding of revised material safety data sheets, hazard warning labels, and other changes to the hazard communications standard. NFDA members are strongly urged to ensure they are in full compliance with all safety and health standards applicable to funeral service including all required training of employees.

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