[Congressional Record Volume 141, Number 46 (Monday, March 13, 1995)]
[Senate]
[Pages S3842-S3848]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS
By Mr. CONRAD:
S. 542. A bill to amend the Solid Waste Disposal Act to allow States
to regulate the disposal of municipal solid waste generated outside of
the State, and for other purposes; to the Committee on Environment and
Public Works.
interstate shipments of municipal solid waste
Mr. CONRAD. Mr. President, today I am introducing legislation that
would give States and local governments the power to regulate and, if
they choose, reject interstate shipments of municipal solid waste.
This is a problem Congress has grappled with now for years and it
only grows more and more serious. An estimated 18 million tons of
municipal solid waste travels across State lines each year. Landfills
are filling up around the country and communities are searching for new
places to send their trash.
Where are they searching? Mr. President, they are searching in rural
areas like my home State of North Dakota and, no doubt, they are
looking in the State of the distinguished occupant of the chair, the
State of Idaho.
Mr. President, rural States like ours, where pollution has not
spoiled the land, where small communities may be willing to take large
amounts of money from a waste company in exchange for landfill space,
are the places they are looking. Whether they want this imported waste
or not, States are almost powerless to stop the flow of garbage across
their borders.
Mr. President, I can remember very well being involved in a debate on
this matter a number of years ago, and the trash merchants had their
lobbyists lining the Halls. I have never seen so many people off the
Chamber of the Senate. The trash merchants want to ship this stuff
someplace, and they are looking for States that are willing to take it.
Mr. President, States ought to have an ability to say ``no.'' Waste
is already coming to my State of North Dakota. We take industrial waste
from General Motors plants from all around the country. We take
municipal solid waste incinerator ash from Minnesota. A waste company
continues its efforts to open a superdump in my State that would take
garbage from Minneapolis-St. Paul. This one landfill, Mr. President,
would receive almost twice as much garbage as is produced in my entire
State. This situation is not unique. It is happening all over the
country.
States should be able to do something about it. They should be able
to
[[Page S3843]] regulate how much solid waste comes into the State so
they can implement effective waste disposal policy. The Federal
Government requires the States to manage and oversee solid waste
disposal programs. States are required to issue permits, monitor
existing sites, and enforce landfill regulation. Why, then, should
States not also be able to regulate how much waste comes in from out of
State? It only makes sense that they have this power.
Mr. President, imported waste not only takes up precious landfill
space, but it also puts a strain on services of the importing State
without properly compensating that State. Waste trucks from out of
State wear down the roads of the importing State, but the exporting
community pays nothing. Similarly, States must spend money to run their
solid waste program, but they get no additional payments for accepting
out-of-State wastes. In other words, exporting communities are passing
their waste problems, and the costs associated with them, on to
importing States. This is not fair, and it should be changed.
The bill I am introducing today takes strong steps to address the
problems of interstate waste. First, it gives States the authority to
regulate interstate waste. If a State wants to reject new solid waste
shipments, my bill would allow that.
Second, it requires that affected local governments formally approve
of any waste import. This gives the communities the ability to veto
proposed shipments of out-of-State wastes. Why should not those
communities that are affected by waste shipments have the ability to
say no?
Third, it provides the opportunity for the area surrounding the host
community to be involved in the decision to accept out-of-State wastes.
A decision on siting a solid waste landfill, especially one that will
take large amounts of imported waste, must be a collective one, and a
small community alone should not be able to make a decision that will
affect a much larger surrounding area.
Finally, my bill requires that waste companies publicly release all
of the relevant information about their proposed landfill before a
community makes a decision on it. This information should include
estimated environmental impacts and mitigation, economic impacts,
planned expansion, financial disclosure, and records of past violations
by the owner and operator of the disposal site. Waste companies hold up
the promise of jobs and economic incentives, but they do not want to
reveal the potential risks involved in their plan. In many cases, they
may not even reveal their overall plans until it is too late to stop
them. One practice I have seen involves having a local developer
purchase the site and get a permit to dispose of modest amounts of
solid waste. A big waste company then buys out the local party and
aggressively expands the site's permit. The local community does not
have a chance. This is not fair and cannot be allowed to continue.
Communities must be able to make informed choices.
Mr. President, how often have we seen it, where one of these trash
merchants comes into a State and they spend lots of money up front,
talking about the opportunities, talking about the jobs, talking about
the good things, but failing to reveal the real plan, failing to tell
how big the operation is really going to be? They fail to tell of past
violations. We have seen companies go into States that are bad
operators, that have a bad record, that have a bad reputation, but they
do not reveal that. They do not talk about that before the community
has a chance to vote.
Mr. President, many of us believe that a local community ought to
have a choice and it ought to be an informed choice. They ought to know
the record, they ought to know the plan before they make a final
decision.
We have been working on the interstate waste problem in the Senate
for many years now. During the years we have been debating this issue,
the problem has not gone away. It has simply gotten bigger. The trash
is still moving, and States and communities are almost powerless to
stop it. It is time to enact interstate waste legislation into law.
Congress came very close to passing an interstate waste bill in 1994.
I hope we can build on the work that has been done and take quick
action in 1995.
I look forward to working with Chairman Chafee, Senator Baucus,
Senator Coats, and others to move this matter forward.
Mr. President, I ask unanimous consent that the text of my bill be
printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 542
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. AUTHORITY TO REGULATE OUT-OF-STATE WASTE.
(a) Amendment.--Subtitle D of the Solid Waste Disposal Act
(42 U.S.C. 6941 et seq.) is amended by adding at the end the
following new section:
``SEC. 4011. AUTHORIZATION FOR STATES TO REGULATE MUNICIPAL
SOLID WASTE GENERATED IN ANOTHER STATE.
``(a) Definitions.--In this section:
``(1) Affected local government.--The term `affected local
government' means the elected officials of a political
subdivision of a State in which a facility for the treatment,
incineration, or disposal of municipal solid waste is located
(as designated by the State pursuant to subsection (d)).
``(2) Affected local solid waste planning unit.--The term
`affected local solid waste planning unit' means a planning
unit, established pursuant to State law, that has--
``(A) jurisdiction over the geographic area in which a
facility for the treatment, incineration, or disposal of
municipal waste is located; and
``(B) authority relating to solid waste management
planning.
``(3) Municipal solid waste.--The term `municipal solid
waste'--
``(A) means refuse, and any nonhazardous residue generated
from the combustion of the refuse, generated by--
``(i) the general public;
``(ii) a residential, commercial, or industrial source (or
any combination of the sources); or
``(iii) a municipal solid waste incinerator facility; and
``(B) includes refuse that consists of paper, wood, yard
waste, plastic, leather, rubber, or other combustible or
noncombustible material such as metal or glass (or any
combination of the materials); but
``(C) does not include--
``(i) hazardous waste identified under section 3001;
``(ii) waste resulting from an action taken under section
104 or 106 of the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 (42 U.S.C. 9604,
9606);
``(iii) material collected for the purpose of recycling or
reclamation;
``(iv) waste generated in the provision of service in
interstate, intrastate, foreign, or overseas air
transportation;
``(v) industrial waste (including debris from construction
or demolition) that is not identical to municipal solid waste
in composition and physical and chemical characteristics; or
``(vi) medical waste that is segregated from municipal
solid waste.
``(b) Authority To Regulate.--
``(1) In general.--Each State is authorized to enact and
enforce a State law that regulates the treatment,
incineration, and disposal of municipal solid waste generated
in another State.
``(2) Authorities.--A State law described in paragraph (1)
may include provisions for--
``(A) the imposition of a ban or limit on the importation
of municipal solid waste generated outside of the State; and
``(B) the collection of differential fees or other charges
for the treatment, incineration, or disposal of municipal
solid waste generated in another State.
``(c) Local Government Approval.--
``(1) In general.--Except as provided in paragraph (2) or
as otherwise provided under State law, the owner or operator
of a landfill, incinerator, or other waste disposal facility
in a State may not accept for treatment, incineration, or
disposal any municipal solid waste generated outside of the
State unless the owner or operator has obtained a written
authorization to accept the waste from--
``(A) the affected local government; and
``(B) any affected local solid waste planning unit
established under State law.
``(2) Exceptions.--
``(A) In general.--Paragraph (1) shall not apply with
respect to an owner or operator of a landfill, incinerator,
or other waste disposal facility that--
``(i) otherwise complies with all applicable laws of the
State in which the facility is located relating to the
treatment, incineration, or disposal of municipal solid
waste; and
``(ii) prior to the date of enactment of this section,
accepted for treatment, incineration, or disposal municipal
solid waste generated outside of the State.
``(B) Existing authorizations.--An owner or operator of a
facility described in paragraph (1) that, prior to the date
of enactment of this section, obtained a written
authorization from--
``(i) the appropriate official of a political subdivision
of the State (as determined by the State); and
[[Page S3844]] ``(ii) any affected local solid waste
planning unit established pursuant to the law of the State,
to carry out the treatment, incineration, or disposal of
municipal solid waste generated outside of the State shall,
during the period of authorization, be considered to be in
compliance with the requirements of paragraph (1).
``(C) Facilities under construction.--If, prior to the date
of enactment of this section, an appropriate political
subdivision of a State (as determined by the State) and any
affected local solid waste planning unit established under
the law of the State issued a written authorization for a
facility that is under construction, or is to be constructed,
to accept for treatment, incineration, or disposal municipal
solid waste generated outside the State, the owner or
operator of the facility, when construction is completed,
shall be considered to be in compliance with paragraph (1)
during the period of authorization.
``(3) Expansion of facilities.--An owner or operator that
expands a landfill, incinerator, or other waste disposal
facility shall be required to obtain the authorizations
required under paragraph (1) prior to accepting for
treatment, incineration, or disposal municipal solid waste
that is generated outside the State.
``(4) Prior disclosure.--Prior to formal action with
respect to an authorization to receive municipal solid waste
or incinerator ash generated outside the State, the affected
local government and the affected local solid waste planning
unit shall--
``(A) require from the owner or operator of the facility
seeking the authorization and make readily available to the
Governor, adjoining Indian tribes, and other interested
persons for inspection and copying--
``(i) a brief description of the planned facility,
including a description of the facility size, ultimate waste
capacity, and anticipated monthly and yearly waste quantity
to be handled;
``(ii) a map of the facility site that discloses--
``(I) the location of the facility in relation to the local
road system and topographical and hydrological features; and
``(II) any buffer zones and facility units that are to be
acquired by the owner or operator of the facility;
``(iii) a description of the then current environmental
characteristics of the site, including information
regarding--
``(I) ground water resources; and
``(II) alterations that may be necessitated by or occur as
a result of the facility;
``(iv) a description of--
``(I) appropriate environmental controls to be used at the
site, including run-on or run-off management, air pollution
control devices, source separation procedures, methane
monitoring and control, landfill covers, liners, leachate
collection systems, and monitoring and testing programs; and
``(II) any waste residuals generated by the facility,
including leachate or ash, and the planned management of the
residuals;
``(v) a description of the site access controls to be
employed and roadway improvements to be made by the owner or
operator and an estimate of the timing and extent of
increased local truck traffic;
``(vi) a list of all required Federal, State, and local
permits required to operate the landfill and receive waste
generated outside of the State;
``(vii) estimates of the personnel requirements of the
facility, including information regarding the probable skill
and education levels required for jobs at the facility that
distinguishes between employment statistics for pre-
operational levels and those for post-operational levels;
``(viii)(I) information with respect to any violations of
regulations by the owner or operator, or subsidiaries;
``(II) the disposition of enforcement proceedings taken
with respect to the violations; and
``(III) corrective action and rehabilitation measures taken
as a result of the proceedings;
``(ix) information required by State law to be provided
with respect to gifts, contributions, and contracts by the
owner or operator to any elected or appointed public
official, agency, institution, business, or charity located
within the affected local area to be served by the facility;
``(x) information required by State law to be provided by
the owner or operator with respect to compliance by the owner
or operator with the State solid waste management plan in
effect pursuant to section 4007;
``(xi) information with respect to the source and amount of
capital required to construct and operate the facility in
accordance with the information provided under clauses (i)
through (vii); and
``(xii) information with respect to the source and amount
of insurance, collateral, or bond secured by the applicant to
meet all Federal and State requirements;
``(B) provide opportunity for public comment, including at
least 1 public hearing; and
``(C) not less than 30 days prior to formal action--
``(i) publish notice of the action in a newspaper of
general circulation; and
``(ii) notify the Governor, adjoining local governments,
and adjoining Indian tribes.
``(d) Designation of Affected Local Government.--Not later
than 90 days after the date of enactment of this section, the
Governor of each State shall, for the purpose of this
section, designate the type of political subdivision of the
State that shall serve as the affected local government with
respect to authorizing a facility to accept for treatment,
incineration, or disposal of municipal solid waste generated
outside of the State. If the Governor of a State fails to
make a designation by the date specified in this subsection,
the affected local government shall be the public body with
primary jurisdiction over the land or use of the land on
which the facility is located.''.
(b) Table of Contents.--The table of contents for subtitle
D of the Solid Waste Disposal Act is amended by adding after
the item relating to section 4010 the following new item:
``Sec. 4011. Authorization for States to regulate municipal solid waste
generated in another State.''.
______
By Mr. HATFIELD:
S. 543. A bill to extend the deadline under the Federal Power Act
applicable to the construction of a hydroelectric project in Oregon,
and for other purposes; to the Committee on Energy and Natural
Resources.
eugene water & electric board ferc license extension
Mr. HATFIELD. Mr. President, today I am introducing legislation to
allow the Federal Energy Regulatory Commission to grant the Eugene
Water & Electric District, in Lane County, OR, an extension of its
hydro project construction completion deadline.
The subject of this license is a 21 megawatt hydroelectric project at
the Blue River Dam, an existing Corps of Engineers flood control
project. The Federal Energy Regulatory Commission granted the license
for the project in November 1989. The deadline for completion is
October 31, 1995. Construction has begun and EWEB has invested $4.5
million to date.
The Eugene Water & Electric Board, also known as EWEB, has asked for
an extension to the construction completion deadline because its
ability to complete construction has been, and will continue for some
time to be, impeded by the ongoing fish mitigation efforts of the Corps
of Engineers. These efforts are focused on minimizing temperature
variations in the McKenzie River caused by both the Blue River and
Cougar Dams. The corps' work will entail drawing down reservoirs to
very low levels.
I support this temperature control work being done by the corps.
However, until the corps completes these fish mitigation improvements
on Blue River Dam, the hydroelectric project currently licensed and
being pursued by EWEB will be untenable. The corps is expected to first
construct temperature control improvements at nearby Cougar Dam. This
project is not expected to be completed until 2001. At that time, the
corps will begin work on similar improvements at Blue River Dam, which
it expects to finish by 2005.
The legislation I am introduction today is designed to accommodate
both the beneficial fish mitigation efforts being pursued by the corps
and the ongoing hydroelectric project being pursued by EWEB. My
legislation directs FERC, at the request of EWEB, to extend the time
for completion of construction to the later of October 31, 2002, or a
date 1 year after the corps completes construction of temperature
control structures on the Blue River Dam. The legislation also requires
EWEB to file a construction completion progress report with FERC each
year until construction is completed.
I look forward to working with members of the Senate Energy and
Natural Resources Committee to ensure that this proposal receives
prompt and thorough attention.
Mr. President, I ask unanimous consent that the text of the bill and
additional material be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
S. 543
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. EXTENSION OF DEADLINE FOR BLUE RIVER PROJECT.
(a) Extension.--Notwithstanding the time period specified
in section 13 of the Federal Power Act (16 U.S.C. 806) that
would otherwise apply to the Federal Energy Regulatory
Commission project numbered 3109, the Commission shall, at
the request of the licensee for the project, extend the time
for completion of the construction of the project to the
later of--
(1) October 31, 2002; or
[[Page S3845]] (2) the date that is 1 year after the date
on which the Army Corps of Engineers completes construction
of water temperature control structures at the Blue River
Dam.
(b) Reports.--The licensee for the project described in
subsection (a) shall file with the Federal Energy Regulatory
Commission, on October 31 of each year until construction of
the project is completed, a report on progress toward
completion of the project and of water temperature control
structures at the Blue River Dam.
____
Eugene Water & Electric Board,
Eugene, OR, February 20, 1995.
Hon. Mark O. Hatfield,
U.S. Senate,
Washington, DC.
Dear Senator Hatfield: The Eugene Water & Electric Board
requests your help in seeking Congressional action which will
allow us to extend, by eleven years, the construction
completion deadline required by FERC on our Blue River
hydroelectric project. The Blue River Dam is one of two
facilities on the McKenzie River for which you have
introduced legislation to facilitate and clarify financing
for temperature control work by the Corps of Engineers. Due
to the Corps' construction schedule and recent changes in BPA
financing we are unable to meet the construction deadline of
October, 1995 as required in our FERC license. For us to
complete this project we will need additional time to
coordinate our construction schedule with that of the Corps.
This is not a standard extension request and it is unlike
other legislation to extend construction deadlines for
hydroelectric projects. Timing problems, financial and
environmental considerations necessitate a longer extension
than those which have been granted to other licensees. Also,
unlike other licensees, EWEB has already started construction
on the project and seeks only an extension of the completion
deadline.
The Proposed Project
For over a decade EWEB has been pursuing development of a
hydroelectric project at the existing Corps of Engineer's
flood control dam at Blue River. The project would generate
21 Mw, enough to provide power for 2000 homes annually. Our
license for the project was granted in November, 1989. The
deadline for completion is October 31, 1995. Construction
began with the fabrication of the turbine and other
associated equipment. Our investment to date is $4.5 million
and the license has a duration of 50 years. The attached
Briefing Document of January 26th describes the project in
detail.
Federal Actions Beyond Our Control
The existing Corps flood control dams at Cougar and Blue
River Reservoir will be modified to alter temperature
variations (caused by the dams) which severely threaten
salmon fry. This will be accomplished by installing multi-
level release port towers. Construction is scheduled first a
Cougar Reservoir as this is the larger project and it has a
greater impact on fish mortality. After completion of the
Cougar project in 2001
the Corps will begin work on Blue River with a scheduled
completion date of 2005. Each year, over this four year
construction period, the Corps will have to draw down the
reservoir to very low levels. Generation from EWEB's power
plant would be substantially reduced as would the revenue
and operational benefits during the early years of the
project's operation. Also, EWEB's design for the
hydroelectric facility may have to be modified based on
the Corps design and operating plan.
Our Blue River project was also accepted as a billing
credit project by BPA. Billing credits is a financial benefit
awarded by BPA in response to the Northwest Regional Power
Act to help utilities overcome the negative short-term
economics associated with developing new resources during the
early life of the project. Due to market changes and BPA's
growing financial problems negotiations on our billing
credit's contract was cancelled.
The timing and sequence of the Corps projects along with
the loss of billing credits will make the project untenable.
environmental benefits
A settlement agreement, approved by FERC and incorporated
into the license, was reached between EWEB, the Oregon
Department of Fish and Wildlife, the National Marine
Fisheries Service and the U.S. Fish & Wildlife Service. The
original fish mitigation plans for Blue River called for a
fish screen and bypass facility. The agencies determined that
only a fish barrier was needed at Blue River and the McKenzie
River could be better served by investing screen and bypass
costs into improving salmon habitat. As a result, EWEB will
contribute $2,200,000 to a trust fund for fish enhancement
rather than building a screen and bypass facility.
(Settlement Agreement attached).
In addition, the project itself will benefit fish simply
through its construction. Currently, water released from the
reservoir passes through an outlet tunnel many feet below the
reservoir's surface. This results in rapid water
depressurization causing a fish mortality rate of 60%. We
would pressurize the tunnel by installing outlet gates
downstream. The transition from pressurized to depressurized
water will be slowed enough to reduce fish mortality by more
than half resulting in an overall survival rate exceeding
70%.
consultation with FERC
Before approaching your office with this extension request
we spoke with Fred Springer, Director, Office of Hydropower
Licensing and Mark Robinson, Director, Division of Project
Compliance and Administration at FERC. They were clear that
although the Commission has the authority to extend
completion dates, an extension of an 11 year duration is
unusual. Extensions are usually granted when the applicant
can show diligence or continuous progress toward project
completion. We would be
unable to make that showing, especially while the Corps work
is underway. Additionally, 11 years is a lengthy extension
compared to other extension requests which have been
granted by either legislative or administrative means. In
terms of financial factors, extensions may be granted when
the licensee needs more time to secure a power sales
contract or another means of financing. FERC acknowledges
the revenue losses we would incur by completing a project
we could only operate part time is a serious concern.
However, this too is an uncommon situation which falls
outside the generally accepted rationale for granting
construction extensions. According to FERC staff, these
circumstances are so unusual, that the Commission would be
hard pressed to give us a favorable ruling. FERC would
need a legislative directive to grant us the extension we
request.
Consistent with the Regional Act, EWEB has aggressively
pursued conservation and renewable resources. As you consider
helping us with the Blue River project we ask you to note
that we have three others, all renewable resource projects,
with existing agreements or contracts with BPA. EWEB recently
learned that all three projects are at risk of being
abandoned by BPA due to continuing budget constraints. We
have made substantial investments in two of them. Regional
funding from BPA for conservation will also likely end
requiring EWEB to sustain local conservation investments
alone. Additionally, we are facing yet to be determined rate
impacts from BPA's reinvention. The combination of all these
actions at BPA and the Corps shifts significant obligations
to EWEB and its ratepayers. The increased financial
obligation for conservation and renewable resource
development makes it economically imprudent to proceed with
the Blue River Project under the current schedule even though
it may be one of the few resource options remaining at this
time.
We thank you for your serious consideration of our request.
Randy L. Berggren.
______
By Mr. BUMPERS (for himself and Mr. Graham):
S. 545. A bill to authorize collection of certain State and local
taxes with respect to the sale, delivery, and use of tangible personal
property; to the Committee on Finance.
consumer and main street protection act
Mr. BUMPERS. Mr. President, I come today to introduce a bill dealing
with the mail-order catalog business. This issue has become almost an
obsession with me over the past 2 years, and one of the reasons for
that obsession is that, before I became Governor of Arkansas, I was a
hardware, furniture, and appliance dealer, practicing law in a small
town, raising cattle, doing anything to put bread on the table. And the
biggest competitor I had was the Sears, Roebuck catalog. Sears, Roebuck
was tough competition for me because they were big, had a much bigger
variety of goods, and were reasonably cheap by comparative standards.
But while Sears, Roebuck was tough competition, it was also fair
competition. They bore the same burdens of doing business that I did.
One of those burdens was collecting sales taxes. Because Sears, Roebuck
had stores in every State in the Nation, they had to collect sales
taxes on everything they sold through their catalog operation, just
like I had to collect sales taxes on everything I sold in my hardware
store. The reason Sears, Roebuck had to collect those taxes was that,
under the law, if you have a physical presence in any State, you must
collect sales tax on goods shipped into that State, even if the goods
are sold through a catalog.
Over the past few years, however, an entirely new situation has been
developing in the competition between Main Street retailers and catalog
operations. And that situation is not one of fair competition. What has
been developing is that the catalog operations often limit their
physical operations to one State, or a few States, and refuse to
collect the taxes that are due on goods shipped into other States. This
is increasingly significant because catalog sales are $100 billion a
year. Fingerhut, one of the biggest mail-order houses in America, has
annual sales in excess of $1 billion a year. They sent out 476 million
catalogs in 1993 alone. Mr. President, bear in mind that Fingerhut is
only one of several very large mail order operations. Lands' End, L.L.
[[Page S3846]] Bean, some of the big ones, have similar sales figures.
In all, there are around 7,500 mail-order houses in this country, and
they are growing like mad.
I daresay that on an average day, I get somewhere between 4 and 10
catalogs in my mail chute every night. If you live in my home State of
Arkansas and order something from L.L. Bean or Lands' End, the company
collects no sales tax. That does not mean there is no sales tax in my
State, because there is. But do you know who has the responsibility for
remitting the tax to the State revenue department, Mr. President? The
consumer. If you buy a $10,000 fur coat from a mail-order house, you
are personally responsible for remitting the $500 tax on that purchase
to the State revenue department. And it is not just mail-order houses
that play this game. Sometimes, if you buy it in New York City, they
will say, ``You have a southern accent; are you not from New York?''
``No, I am not; I am from Arkansas.'' ``Would you like for us to mail
this to your home and save you $500?'' Of course, the consumer is going
to say, ``Yes, I would like that.'' The company will then mail it to
your home and not charge you one red cent of sales tax. But what the
unsuspecting consumer does not know is that he or she does owe tax on
that purchase, and that he or she is personally responsible for paying
it to the State.
My State imposes its sales tax on all goods, regardless of whether
they are purchased in State or out of State. The 44 other States which
have sales taxes also apply those taxes to both in-State and out-of-
State purchases. Technically, the tax on out-of-State goods is called a
use tax, while the tax on in-State goods is called a sales tax. But for
all intents and purposes, the use tax is identical to the sales tax.
But because out-of-State companies usually refuse to collect the
applicable use tax, the consumer does not even know there is a tax when
purchasing merchandise via mail order.
The Presiding Officer is from the great State of Idaho. Idaho has a
sales tax, and Idaho applies that sales tax to goods shipped into the
State, just like it does to goods sold by Idaho department stores. So
if Idaho's sales tax is 4 or 5 percent, the person who buys a $10,000
fur coat via mail order would be liable for $400 or $500 in sales
taxes.
Some people say, ``There is already a tax on mail-order sales. It is
the use tax. What are you trying to do?''
What I am trying to do is make sure that mail-order companies do not
blind-side their customers. Consumers buy from mail-order companies
thinking their sales are tax free, and then they learn otherwise after
the fact. Last year in Florida, 19,000 people got notices in the mail
that goods they bought from direct marketers were not tax free, as the
company had lead them to believe. The furniture they bought in North
Carolina or the merchandise they bought from Lands' End or L.L. Bean,
they owed a tax on it. Admittedly, not every mail-order customer gets
caught. Sometimes the State finds out about the purchase, and sometimes
they do not. But when they do, the consumer has to pay.
This is not a new tax. Of course, it is not. Think about it for a
second. Why would any State have a tax structure that required Main
Street merchants to collect sales tax and allowed out-of-State
companies to ship the same merchandise into the State and collect
nothing? No State would ever do that, and no State does it.
Oh, how everybody's heart bleeds around here for the poor, small
town, Main Street businessman. But when it comes to catalog operations,
we give them a huge advantage, 5 to 8 percent or more, and nobody wants
to stand up for the Main Street businessman.
Recently the argument was made by one of the Senators from Maine that
Maine does not have the problem I am describing because they have
something that says on the State income tax return in Maine, ``List all
your catalog purchases from last year.''
Now, who knows what all they bought from catalogs last year? There
are a lot of people who order something every other day from a mail-
order house, and of course they do not take the time to keep a record
of every purchase. People just do not keep up with it.
Do you know what Maine collected last year on that? You guessed it.
Not much. Only around $1 million of the total $13 million they should
have collected on out-of-State mail order purchases. But Maine is fat
and happy because L.L. Bean is located there and L.L. Bean
does around $1 billion a year in sales and they pay sales tax on every
dime of merchandise sold to customers living in the State of Maine. It
is those other 49 States that do not get anything.
The direct marketing industry says, ``Oh, this is such a burden,
Senator. You have got a city tax, you have got a county tax, you have
got a State tax. Do you expect me to keep up with all of that?''
No, I do not. And this legislation would allow mail-order companies
the option of collecting a single blended rate for each State where
they do business. Then the mail-order companies would simply send a
quarterly payment to the State revenue department and let them
distribute it to the local jurisdictions that have a sales tax.
Do you want to hear a true anecdote? One of the finest Republican
Senators to come to the U.S. Senate since I have been here is Senator
Bob Bennett from the great State of Utah. Senator Bennett founded a
mail-order company years ago. In a Small Business Committee hearing
last year on this legislation, he said, ``The people in the company
with me sat around the table with me and we debated this issue. Shall
we or shall we not collect sales tax on our sales made to other
States?'' He said the decision was almost unanimous, ``Yes, let's be
good citizens and let's collect a sales tax.''
Anybody who wants to make the argument about what a terrible burden
this is on these mail-order houses, talk to Bob Bennett. He says, ``We
punch a computer button at the end of the month, and that is it. It is
no problem whatever to collect this sales tax. We do it and we do
millions in business a year.'' So much for the burden. Another argument
they make is, ``But, Senator, we do not require fire protection, law
enforcement, all those things that your sales taxes go for.''
That is true. But I will tell you what burden you do impose on other
States. You contribute almost 4 million tons of waste to the landfills
of this country annually. Talk to any mayor: ``Mayor, what is the
biggest problem you have?'' ``Trying to find enough landfill to take
care of our garbage.'' And here is a contributor of around 4 million
tons a year that mayors have to find some method of disposing of. And
the mail-order houses do not contribute one penny, except companies
like Bob Bennett's.
``Well, we don't want to have to do this every month.'' Fine. My bill
says you only have to remit every 3 months.
Now, if that ``ain't'' a deal. I wish I had had that kind of
opportunity when I was in business. If I did not pay my sales tax by
the 20th of each succeeding month, I did not get a 2-percent discount.
Mr. President, I have gone even further than that. In order to take
care of some of these smaller mail-order houses, we have exempted in
this bill, in the interest of being for small, fledgling businesses--
and, I must say, $3 million a year is not exactly my idea of small--we
say, ``If you do less than $3 million a year of business, you do not
have to mess with this bill.'' Of the 7,500 catalog companies in the
United States, not very many of them do more than $3 million of
business a year. Only 825 of the 7,500 mail-order houses in this
country that would be covered by this bill.
Mr. President, there is another element of unfairness besides the
competitive advantage that these mail-order houses get. Some of them do
advertising that is very offensive to me and I think it would be to any
Senator.
Here are a couple of charts. I do not know the name of this company.
But here is what their ad says. ``Nobody beats our deal.'' ``No sales
tax added outside of North Carolina.''
Now, technically, that is correct. They do not add any sales tax. The
poor consumer who buys that yacht, or whatever, is subject to a tax,
but he is misled by this ad into believing that he will never have to
pay any sales tax.
Here it is, ``No sales tax added.'' Now, it is true they do not add
it, but if a State you live in happens to catch you buying that, they
can assess a sales tax against you.
[[Page S3847]] I have some letters that I will put in the Record in a
moment, Mr. President, from people from all over the country who have
gotten the sad news that they thought they were buying $10,000 worth of
furniture tax free.
And the clerk that sold them assured them, ``We will ship this from
North Carolina to Florida, and you will not have to pay sales tax on
it.''
But think about this. Wallcovering, Inc.--I blocked out the address
of this company--here is their advertising: ``Discount wallcovering,
the phone way.'' Now, all these mail order houses have their 1-800
number listed on every page of their catalog. ``The phone way, save 33
to 66 percent.''
And what do you think? No sales tax outside of Pennsylvania. That is
not the worst of it. A lot of them have advertised ``No sales tax.''
They do not say, ``No sales tax added,'' as they do here. They just say
``No sales tax.'' A person getting ready to order wall covering, I
promise, would assume that there is no sales tax.
But that is not the worst of this firm. Listen to this: ``Stop in
your neighborhood, write down the pattern number, and then call us.''
Use that poor stiff down on Main Street. Go into his store and shop.
Get the model number, get the cover number, whatever, and then call our
800 number and save the sales tax.
I have never introduced a piece of legislation in this body, Mr.
President, that I thought was more meritorious than this. When I
offered this amendment on the unfunded mandates bill these mail order
houses started sending telegrams to every single person they had ever
sold 10 cents worth to and said ``Write your Senator. Tell them you
don't want any more taxes. Tell them Senator Bumpers' proposal will
cost them an arm and a leg.'' And a lot of people bought into that
business about it being a new tax, and scared to death they will get a
30-second spot running against them the next time they run, being a
taxer and a spender.
Ask the little shopkeeper in your hometown on Main Street what he
thinks about it. Ask your Governor or your mayor how he or she feels
about it.
We had a music dealer in North Little Rock testify. This music dealer
said, ``People come into our shop all the time, get model numbers off
our musical instruments so they can order from a mail order house. They
get it from a mail order house, it does not work, and then they bring
it in here for repair, and they think we ought to repair it free
because we sell that same product.''
Now, Mr. President, if the Presiding Officer will pardon this odious
comparison, it is just like mining law reform. It may not happen this
year, may not even happen next year, but this is going to happen.
Do Senators know who collects taxes in every single State? The Boy
Scouts. When ordering Scout uniforms out of their catalog, order it
from Florida, they collect the tax and send it to the State of Florida.
If the Boy Scouts can do it, surely the Lands' End and L.L. Bean and
all the others can do it.
I am not going to bore Members with a bunch of catalogs. I keep a
couple hundred in the office just for amusement. I am not going to bore
Members with them, but that argument about how complex it is, it would
take a Philadelphia lawyer to decipher the instructions on some of
these mail order houses. Some of them do business in 25 States. If you
live in this State, this State and this State, add 5 percent for sales
tax; if you live in this State, add 4 percent sales tax, plus sales tax
on the shipping charges; if you live in this State, allow 3 days for
delivery; if you live in this State allow 2 days for delivery. And they
talk about this being complicated.
Mr. President, the reason I say this is an idea whose time has come,
and it will pass ultimately, is because this business is growing a lot
faster than the retail business in your hometown.
So I always want to say to these people who say this is too
burdensome, it is a new tax. All of those arguments we will hear when
we debate this, they are the most specious arguments I have ever heard.
I want to say to those people, what if everybody in the country decides
to start ordering from mail order houses? Who will educate our
children? Who will provide for fire protection and law enforcement and
the landfills? If they continue to grow as fast as they are growing
right now, compared to Main Street merchants, that is where we are
headed.
The Senator from Maine--do not misunderstand me--I am not quarreling
with the Senator from Maine. They have L.L. Bean in their State doing
almost $1 million a year. I understand we all protect our own local
interests, but you want to say to a lot of those people, ``You are
getting your sales tax from the biggest mail order house in the
country, but nobody else is.''
Is it fair for people to get this sudden notice when they thought
they bought merchandise with no sales tax? Is it fair for them to
suddenly get a notice from the State Revenue Department because their
next door neighbor squealed on them for buying that oriental rug out of
New York? It is patently unfair to the purchaser to suddenly find out
that he owes a big tax bill that he was told by the mail order house
that he would not have to pay.
So far as the burden is concerned, I want Senators to listen to this.
These are not my words. These are Fingerhut's words, last quarter of
1993, Fingerhut in their annual report to their stockholders:
To the extent that any States are successful in requiring
use tax collection the cost of the company's business, doing
business, could be increased although it does not believe any
increase would be material.
Lands' End, probably the first quarterly report of 1994,
Although collecting use taxes would likely influence the
buying decisions of some customers, the company believes
there would be no material adverse affects on financial
results.
They are two of the biggest ones in the United States saying, ``We do
not think the imposition of the collection of these sales taxes will
affect our profits.''
Finally, why are we doing this now? Because until 1992, we could not.
In 1967 the Supreme Court said in the famous case of Bellas Hess, a big
mail order catalog house, the Supreme Court said the States may not
impose a tax on mail order catalog houses because it would constitute
an undue burden on commerce, interstate commerce, as prohibited by the
Constitution, and would also be a violation of the due process clause
of the 14th amendment. That was in 1967. Nobody can do anything because
the Supreme Court said they could not.
In 1992 in the case of Quill versus North Dakota, the Supreme Court
reversed half of that and said, ``We no longer believe that the
imposition of a tax by the States on mail order houses is a violation
of due process.'' Since the determination as to what burdens interstate
commerce can be determined by Congress, it is now up to Congress to
pass a law, if they choose, that allows the States to impose this tax
on this roughly 825 mail order houses.
So in 1992, the Supreme Court said, ``Congress, it's up to you. If
you want to help the States and the States want to impose this sales
tax collection burden on the mail order houses, like they do on that
poor Main Street merchant, Congress is going to have to pass a law
enabling them to do it.''
So it has only been since that 1992 Supreme Court decision that we
have had the authority to allow the States to do this.
Mr. President, if we cannot pass this, I hope I do not hear anymore
whining, groaning, moaning, and gnashing of teeth about unfunded
mandates on the States when you refuse to help the States collect a
legitimate tax to deal with unfunded mandates and a whole host of other
problems.
And if this bill does not pass, I hope I do not hear any moaning
about the poor small business people in this country, how we ought to
do something for the small business people. Everybody is always willing
to do something for small business people as long as it does not affect
big business people.
Mr. President, I ask unanimous consent that a letter from Ray Jones,
owner of Long Beach Yacht Sales, Long Beach, CA; a letter from Mamie R.
Willis, Portland, TN, the sad recipient of a pretty good sized order
only to find out that she owed the sales tax; White Furniture Co. in my
own home State from Debbie White, who talks about how competitively
unfair it is for her to have to charge sales tax on furniture sold all
over town and people ordering furniture from mail order
[[Page S3848]] houses and paying no sales tax; and finally a letter
from an ordinary citizen, John Dix, who bought a house full of
furniture in North Carolina, almost $10,000 worth, and suddenly was
slapped with a tax bill of $700 that he and his wife never dreamed even
existed. If you want to stop all of that, fine.
There being no objection, the letters were ordered to be printed in
the Record, as follows:
Long Beach Yacht Sales,
Long Beach, CA, January 18, 1994.
Attention: Mr. Stan Fendley, Tax Council
Hon. Senator Bumpers,
Chairman, Committee on Small Business,
Russell Senate Office Building, Washington, DC.
Thank you, in advance, for your sponsorship of legislation
regarding the collection of interstate sales tax. This week
we lost a $240,000 deal as a result of a sales tax issue.
They buyer bought a boat in Oregon to avoid our local and
state sales tax. The vessel will be kept out of state for the
required period of time and will be subsequently brought into
California after the waiting period has elapsed. Based on our
local tax rate of 8.25% the resulting tax would have been
$19,800.
Not only did we (and the State) lose this deal, but we also
lost the time and expenses involved in upselling the customer
to a more expensive boat (from $140,000 to $240,000), sea
trialing the boat and providing extensive consultation
regarding the product. The customer thanked us but basically
said for $19,800 he would have to make an economic choice to
buy elsewhere. We did not have the margin to discount the
product further to even attempt to compete.
In todays economic environment it is tough enough to
succeed but without some form of a fair interstate sales tax
collection program we, as a responsible and law abiding
dealership, can not compete fairly against some of our out of
state competitors that are not required to collect sales tax
or tax at a significantly lower rate.
Again, thank you for sponsoring this important piece of
legislation. Hopefully this will create a fair arena in which
we can compete. As always, please feel free to contact me
with any questions or comments that you may have.
Sincerely,
Ray Jones,
Owner.
____
Portland, TN, September 8, 1994.
Senator Dale Bumpers,
Russell Senate Office Building, Washington, DC.
Dear Senator Bumpers: When I moved from Nashville to a
small town a number of years ago, I discovered the
convenience of mail-order buying. I buy several hundred
dollars worth of merchandise per year. I am 75 years old and
can no longer drive to the city to shop. I know there are
probably thousands in my situation.
Several months ago I heard on our local news that people
purchasing goods from mail order catalogs must pay State
sales and use tax on these items. That was news to me. I, and
I know many others, have always thought that merchandise
purchased outside our state was not subject to sales tax
unless such a vendor had a store within our state.
Since I have always tried to be a law-abiding citizen, I
added up from my records all purchases made in recent years,
figured the sales tax, and mailed a check to the State
Department of Revenue. But what about those many people who
still do not know they are liable for these taxes? This
situation makes it unfair to those who are paying.
I once ordered many Christmas gifts from catalogs. Now I am
inclined to send money to my out-of-town relatives, avoiding
the hassle of tax-record keeping.
I believe it is the duty of mail order companies to collect
sales taxes due, just as other stores and grocers do. Modern-
day computers certainly make it easy for them.
I understand you are working on legislation to correct this
situation. I hope you will succeed.
Sincerely yours,
Mamie R. Willis.
____
White Furniture Co.,
January 19, 1994.
Senator Dale Bumpers,
Dirksen Building, Washington, DC.
Dear Senator Bumpers: I want to make you aware of an unfair
tax situation that has been occurring for years in the
furniture business. For quite some time we tried to ignore
this, but when you see or hear the results every day of the
week you have to finally stop and take notice.
My family has a small retail furniture business in
Arkansas. We have paid taxes in the same small town for
years. Now we have customers who are being educated by
advertisers to shop their local retail stores for model
numbers and prices--then call North Carolina and order and
avoid paying our state sales taxes.
I have personally lost individual sales in my area for
fifteen to twenty thousand dollars. We have found that the
larger sales are the ones that people do out of state because
of the high percentage of tax.
I'm not crying about the prices; I would just like to have
a level playing field. We service our clients with free
delivery; we furnish the showrooms where they can touch and
feel the merchandise; we finance the merchandise locally, and
we employ Arkansas people to sell and deliver the furniture.
Last year NBC did a travel segment and, on over 200
stations across our country, showed people how to take their
vacations in North Carolina, shop while they are there and
save enough in sales tax to pay for their vacation. Then CBS
did a week long special on ``Good Morning America,'' devoting
one day to furniture, one to cars, and another to clothes,
etc.
I don't know about the other 49 states, but I do know that
our state could use the revenue from those lost sales taxes
for our schools, roads, and local government.
I will be proud to support you in any effort you can make
to help our state collect these unpaid taxes.
Thank you.
Debbie White.
____
Hilton Head, SC, September 12, 1994.
Hon. Dale Bumpers,
Chairman, Committee on Small Business,
U.S. Senate, Washington, DC.
Dear Senator Bumpers: While on a trip to North Carolina a
few years ago, my wife and I visited a furniture store to
look for items for our winter home in Hilton Head, South
Carolina. As you are no doubt aware, North Carolina is the
furniture center of America. People come from all over
America to buy furniture in North Carolina, drawn by word of
mouth and various means of advertising.
As we shopped at one store in High Point, my wife and I
found a number of furniture pieces that we were interested in
buying. While considering the purchase, we were told by the
sales staff that if this furniture were delivered to our home
in South Carolina, no sales tax would be collected. This
represented a savings of several hundred dollars, and became
one factor in our decision to make the purchase.
Subsequently, we concluded the purchase agreement, and the
furniture was delivered to our home in South Carolina a short
time later.
Approximately four years after making that purchase, we
were surprised to receive a letter from the South Carolina
Department of Revenue informing us that the furniture we had
purchased in North Carolina was subject to South Carolina's
use tax. (South Carolina had learned about the purchase when
North Carolina audited the furniture company and shared the
audit information with South Carolina.) In addition to the 5
percent tax, we owed interest and penalties because we had
failed to pay the tax promptly. On our furniture of some
$10,000, the total we owed for tax, interest and penalties
was approximately $700.
As you can imagine, we were shocked and upset at this news.
We had no idea that we owed tax on this purchase. Like most
consumers, we were accustomed to having sales taxes collected
at the time of purchase, and it seemed odd to expect the
customer to know when, where and how much tax to pay. And
because the furniture salesman had told us that no tax would
be ``collected,'' we assumed that no tax existed.
I am not complaining about the tax itself. I certainly do
not enjoy paying taxes, but had we known about this tax at
the time of purchase, it wouldn't have been so bad. In that
case, we could have considered the tax as part of the cost of
the transaction and then made an
informed decision about whether to make the purchase or not.
Indeed, it's quite possible that we would still have
bought the furniture. But we were blindsided. We were led
to believe that there was no tax, then told four years
later that there was a tax. That simply is not fair.
The worst part of this situation is that we were expected
to pay interest and penalties. As I told the South Carolina
Department of Revenue, I felt that this was particularly
unreasonable since we didn't even know we owed the tax--and
they didn't know we owed the taxes for four years. In the
end, I won half the battle: they agreed to waive the
penalties, but we still had to pay the interest.
I understand that the State of South Carolina cannot
control what North Carolina merchants tell their customers.
But the United States Congress can and should do so. I urge
you to pass legislation immediately correcting this situation
so that other consumers do not have the same bad experience
we had.
In my opinion, you should require merchants who ship goods
to other states to inform those customers that taxes may
apply. The disclosure should be in writing, and the
customer's signature should be required. Any merchant who
fails to give the disclosure should have to pay 50 percent of
any penalties or interest that occur. I believe this would
discourage companies from failing to share important
information with the consumer.
Thank you for the opportunity to share my thoughts with you
on this issue. I hope that you will move quickly to ensure
that other consumers aren't misled the way my wife and I
were.
Sincerely,
John Dix.
____________________