March 2010

INTRODUCTION

Wow! The Second Session of the 111^th Congress come in like a lion with the special election victory of Scott Brown (R-MA) to replace the seat left open by the death of Senator Edward Kennedy (D-MA). Senator Brown’s election sent shock waves through the entire political establishment. All incumbents, Republican and Democrat, took heed of the results of an angry electorate. As a result, the Democrats and the President are scrambling to realign their legislative agenda to address the concerns of the voters. Enough with the political agenda of health care reform, energy policy, immigration and other similar massive big government programs and spending. The focus in 2010, an election year, will be on jobs, jobs and jobs. “It’s the economy, stupid” returns as the political catch phrase for this election year. A second dynamic is the rash of Congressional retirements for both the House and Senate leaving the control of both chambers up for grabs in the November elections. The final dynamic which will be at play this year will be the federal regulatory agencies and their potential activists’ agendas lead by the Environmental Protection Agency and the Department of Labor (OSHA, Wage and Hour). If these agencies begin to step-up their enforcement and regulatory efforts as we anticipate, the potential negative impact on the economy and jobs could wreck havoc politically for the Democrats in November. As always, NFDA will be extremely active in all these arenas protecting and advancing the interest of funeral service and small business.

LEGISLATIVE ISSUES

Estate Tax (H.R. 4154). Repealed as of January 1, 2010. So far, Congress has made no attempt to address the issue. Several staffers have told NFDA that some in the Leadership want to do nothing at let it return automatically in January 2011 at the 2001 exclusion and rate. Others, including the President, would like to see it set permanently at the 2009 exclusion amounts and rates. In fact, the President includes that assumption in his FY 2011 Budget which he submitted to Congress last month. The Senate can still act on the House-passed bill and make the 2009 estate tax permanent; but it is unclear at this time what Congress intends to do. NFDA strongly supports a permanent fix for the estate tax and is supporting efforts by Senators Lincoln (D-AR) and Kyl (R-AZ) to amend H.R. 4154 when (if) it gets to the Senate floor to increase the exclusion to $5 million and reduce the rate to 45%. They may propose to pay for this by taxing certain charitable trusts like those created by Bill Gates and Warren Buffet to avoid paying estate taxes. If that fails, NFDA would support passage of H.R. 4154 with an annual inflation adjustment. Stay tuned.

Health Care Reform (H.R. 3962/H.R. 3590). With the political fallout from the election of Sen. Scott Brown (R-MA), this issue has dropped off the legislative radar for the time being. It has become the “Third Rail” of politics in 2010. Whether Congress ever gets back to the issue is still uncertain. It remains a high priority for the President who is using recent increases in health insurance premiums by health insurers to stoke the public fires again and move Congress to act. In addition, he held a televised “Health Care Summit” with all stakeholders and has proposed a new health care reform plan that he hopes to use to jump start the process.

Codification of SSI Irrevocable Funeral/Burial Trust Exemption. (S. 427/H.R. 1352). We are still looking for appropriate legislative vehicles on which to attach our bill. The most recent effort by NFDA was to attach our bill to either the Omnibus Appropriations bill or the DOD Appropriations bill both of which passed late in December but we were unsuccessful. With the start of the 2^nd Session in late January, we are continuing to seek out viable legislative vehicles on which to attach our bill. Passage of these bills continues to be a high NFDA priority. NFDA members can send an e-mail to their members of Congress via Congress-at-a-click at www.nfda.org urging them to support H.R. 1352 and S. 427.

Simplified Union Organizing Bills (S.560/H.R.1409). In spite of strong union support, there was no attempt to move either of these bills in 2009. With the mood of the voters reflected in the election of Senator Scott Brown (R-MA), all support for passage of this bill in 2010 especially from conservative Democrats and those in Republican leaning states and districts has evaporated. This bill has no chance of passage in 2010. However, if it does rise from the ashes like a Phoenix, NFDA will continue to oppose it.

Unclaimed Veterans Remains (H.R. 2642). Another important issue for NFDA. We will continue to work with its sponsor, Rep. Pat Tiberi (R-OH), to get this bill passed and signed into law in 2010.

Subchapter S Corporations (H.R. 2910/S. 996). Introduced by Rep. Kind (D-WI) and Senator Lincoln (D-AR), these bills would modernize the current outdated  Subchapter S rules to make it easier to elect this corporate form, free up accumulated capital, attract new investors and utilize the value of appreciated property among other things. Since many NFDA members have indicated that they use this corporate form or would like to, we believe this legislation would be extremely helpful to those members. NFDA has joined with other business groups in support of these bills and will continue to work for their passage in 2010 even though it is clearly not going to be a high priority for Congress unless we can portray it as a job creator.

Financial Product Safety Commission Act of 2009 (H.R. 3126)This bill would establish a federal consumer watchdog agency over all consumer financial products, services and those who offer them to the public. This may also include preneed trusts, state association Master Trusts and those who sell and manage them. The bill passed the House as part of massive banking reform bill late in 2009 but is meeting resistance from Senate Banking Committee members including Chairman Dodd (D-CT) and Ranking Republican Shelby (R-AL). It looks now like it will not be included in any Senate Financial Reform package. Chairman Dodd and Senator Corker (R-TN) seem to have forged a bi-partisan partnership which will result in a financial reform bill that would establish, among other things, a consumer financial protection office in the Federal Reserve rather than as a standalone agency. This compromise is not sitting well with the more liberal Senators or Speaker Pelosi and other House supporters of a separate agency for consumer financial protection.

Bereaved Consumer’s Bill of Rights Act of 2009 (H.R. 3655). Rep. Rush (D-ILL) has introduced this bill in response to the Burr Oak Cemetery scandal that occurred in Illinois this year. It directs the FTC to initiate a federal rule that would regulate cemeteries and all sellers of funeral goods or services in much the same way the FTC Funeral Rule regulates funeral homes. NFDA strongly supports this bill and has indicated that to Chairman Rush in a letter as well as in testimony before his Subcommittee in January presented by NFDA Treasurer Randy Earl. NFDA members can send an e-mail to their members of Congress via Congress-at-a-click at www.nfda.org urging them to co-sponsor and support H.R. 3655. Chairman Rush (D-ILL) will address the attendees at the 2010 Advocacy Summit on March 10th in Washington, DC.

Indigent Funeral Expense Reimbursement Act of 2009 (H.R. 3809). At NFDA’s request,Representative Broun (R-GA) introduce legislation to allow a federal tax deduction of up to $3,000 for unreimbursed expenses for each indigent funeral and/or burial a funeral home performs at the request of the state or local government. NFDA members can send an e-mail to their members of Congress via Congress-at-a-click at http://www.nfda.org urging them to co-sponsor and support H.R. 3809. In addition, NFDA is working with NFDA member Rep. Charlie Wilson on another more targeted approach which would be more restrictive but provide at least some relief for funeral homes who voluntarily provide these services to their communities.

Bill to Exclude Small Business from FTC Red Flag Rules (H.R.3763)This bill, which passed the House in October 2009, would amend the Fair Credit Reporting Act with respect to the duties of users of consumer reports who take adverse actions on the basis of information contained in such reports. It would specifically exclude any health care practice, accounting practice, or legal practice with 20 or fewer employees from the meaning of creditor subject to Red Flag Guidelines regarding identity theft promulgated by the proper federal financial regulatory agency. More importantly for funeral homes, it would exclude any other business which the Federal Trade Commission (FTC) determines: (1) knows all its customers or clients individually; (2) only performs services in or around the residences of its customers; or (3) has not experienced incidents of identity theft, and identity theft is rare for businesses of that type. NFDA strongly supports this bill and will work for its passage in the Senate this year.

2. REGULATORY ISSUES

Mass Fatality Management NFDA continues to work with key officials in the federal government with responsibility for disaster management to ensure that the role and responsibilities of funeral homes, cemeteries and crematories and all funeral service personnel, including industry suppliers are included in the National Response Framework or any mass fatality and family assistance plans that may be adopted. Recent meetings with HHS, DHS, NORTHCOM and various state officials have generated the first ever comprehensive draft federal mass fatality management document (FM CONOPS) dealing with the recovery of human remains, morgue operations, family assistance and final disposition which has be submitted to senior government officials at HHS for review and adoption. Suffice it to say, NFDA will continue to be active in this process to insure the interests of funeral service are properly represented. This is particularly important with the sudden and devastating events in Haiti and the implications that may have on a similar disaster in the United States. In addition, NFDA continues to develop its own mass disaster plan to insure operational continuity in case of a natural or man-made disaster event.

Shipment of Human Remains by Commercial Air Carriers.The implementation of the TSA “Known Shipper” rules that went into effect for funeral service on August 1^st seems to have gone very smoothly. Thanks to NFDA’s advocacy and educational efforts, very few problems have arisen since the rules became effective. We will continue to address unique situations that may arise from time to time with the airlines or TSA to insure our members can properly serve their families. We are now preparing for and working with TSA on the new 100% screening for all air cargo program which will go into effect on August 1^st with one exception – the screening of human remains. The human remains portion of the screening program has now been postponed pending the development of an alarm resolution protocol. NFDA and other stakeholders in the human remains shipping business will be resuming meetings with TSA to resolve this specific issue soon. In that regard, TSA and airline officials will brief attendees on the requirements of this new program at the NFDA Advocacy Summit on March 9th, 2010 in Washington, DC.

Formaldehyde.We continue to monitor the international, federal and state regulatory landscape for any signs of interest or action on limiting the use of formaldehyde for embalming purposes and several interesting developments have recently occurred.

First, the NCI study on formaldehyde exposure and embalmers was published in late fall 2009. NFDA is analyzing the report and will present its analysis in early 2010. A preliminary analysis has already been published in the NFDA Bulletin and Director.

Second, the International Agency for Research on Cancer (IARC) has declared formaldehyde a carcinogen.

Third, the federal Environmental Protection Agency (EPA) is undergoing a review of the National Toxicology program and the possible link between formaldehyde exposure and leukemia.

In the meantime, NFDA has develop talking points and other materials for our members, the press, public and other audience to address the NCI study as well as these other proceedings surrounding formaldehyde. Also, all information on these studies and related materials have been posted on the NFDA website at www.nfda.org.

Fourth, our ventilation study is almost completed. We expect to have a full report by early 2010. We anticipate this to be a very valuable document for our members to use to evaluate and upgrade where necessary their prep room ventilation systems to insure they are providing the maximum protection for embalmers from formaldehyde exposure during embalming.

Fifth, we anticipate that both EPA and OSHA will propose some sort of regulations in the next year significantly limiting the use and exposure limits for formaldehyde based on all these studies. NFDA will be actively engaged in that process on behalf of funeral service.

OSHA - On December 16th President Obama signed the Fiscal Year 2010 Consolidated Appropriations Bill that provides $558.6 Million for the Occupational Safety & Health Administration which is an increase over the 2009 Budget of $513 Million. Of this amount, $223.4 Million has been earmarked for Federal Enforcement and $19.6 Million for Safety & Health Standards development. The American Society of Safety Engineers (ASSE) has been quoted as indicating that “this significant increase over the current budget should give OSHA enough resources in the current overall economic picture to raise the compliance bar . . .” Also on December 10th, David Michaels, the new head of OSHA, was quoted as stating that streamlining the rulemaking process and expediting the process for setting health exposure limits for hazardous chemicals are his two top priorities. On the same date, Jordan Barab, deputy head of OSHA indicated that the standard setting process currently takes 5 to 10 years and "that no way to run a worker protection agency." According to Barab, the system, to set permissible exposure limits for hazardous chemicals, is broken and that OSHA intends to work with the Department of Labor and with the White House Office of Management and Budget to expedite the process for rulemaking and standards setting. NFDA expects that OSHA will be very active in 2010 and we will advocate for funeral service when and where necessary.

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