NCLIR Releases CFA Mega-Merger Study

At a May 2 Capitol Hill press confer- "Most of these funds made their way ence organized by the National back into the investment stream, yet Council for Low Interest Rates, CFA Ex- still placed upward pressure on rates," ecutive Director Stephen Brobeck re- Brobeck said. "A portion of the funds re- leased a study linking the 1984 merger ceived by shareholders of target com- boom to recent interest rate hikes. panies was used to purchase goods or This event kicked off a legislative con- services or to pay capital gains taxes, ference on high interest rates featuring thus 'leaking out' of the stream. Another speeches by Sen. Alan Cranston (D-CA), larger portion was reinvested in stocks Sen. Max Baucus (D-MT), and Operat- or bonds, where it was less available to ing Engineers President and NCLIR banks." Chairman J. C. Turner. Besides Brobeck Moreover, even when the funds were and Turner, Rep. deposited in banks, there was always a (D-NY), Rep. John LaFalce ID-NY), and delay of several days to several weeks AFL-CIO Director of Housing and Mone- between the borrowing and the tary Policy Henry Schechter spoke at deposits. the press conference. At the press conference and follow- ing legislative conference, several other factors were cited as causing high rates. Turner blamed "tight-money policies Both in number and endorsed by the Reagan Administration dollar value, the merger and maintained by the Federal Reserve Board." Rep. Ferraro pointed to huge binge of the first four Treasury borrowings necessary to cover months of 1984 was Federal deficits. Sen. Cranston endorsed the NCLIR's Attending the NCLIR Capitol Hill press conference in early May were (left to right); unprecedented, legislative agenda as "a good place to Henry Schechter, AFL-CIO Director of Housing and Monetary Policy; Rep. John according to a new start" in bringing down interest rates. LaFalce (D-NY); CFA Executive Director Stephen Brobeck; Rep. Geraldine Ferraro The cornerstone of this program is rein- (D-NY); Jack Gillis, CFA Information Director; and Operating Engineers President CFA study linking the stating the Credit Control Act of 1969, and NCLIR Chairman, J. C. Turner. 1984 merger boom to with improvements, which according to Turner, "would restrict credit for cor- The NCLIR is a broad-based coalition Association, United Auto Workers, recent interest rate porate takeovers, for speculative invest- which includes CFA, the Operating En- Carpenters Union, and other national hikes. ments, for international money-market gineers, National Farmers Union, groups. speculation, and for other non-essen- American Public Power Association, (Copies of the merger study can be purchased from tial purposes." National Rural Electric Cooperative CFA for $5 each; free to CFA members.) The CFA study revealed that both in numbers and dollar value, the merger binge of the first four months of 1984 was unprecedented. 1983 was a year of Federation of America near-record merger activity, yet the will hold its Fourteenth Annual value of the big mergers in thisyearwas Awards Dinner on Thursday, June 14 to far exceeded by those in 1984. In 1983, 14th Annual honor distinguished consumer leaders there were 42 deals of at least $200 mil- in Congress and the public sector. Sena- lion each, worth a total of $26.0 billion, Awards tor Paul Tsongas and Congressman according to the study. Through April John Dingell will be awarded the Philip 26 of 1984, there had already been at Hart Public Sendee Awards, and Arnold least 32 mergers of this size, completed Dinner Mayer, Vice President of the United or near completion, worth more than Food and Commercial Workers Inter- $41 billion. The latter figure included national Union, will receive the Philip the $13.4 billion SOCAL paid for Gulf, Hart Distinguished Consumer Sendee and the $10.1 billion Texaco paid for Award. The Outstanding Consumer Getty. Media Service Award will be presented These mergers, the CFA study points to Roberta Baskin of television station out, increased the demand for credit in WLS/ABC in Chicago. two ways. Before making the 32 acquisi- tions, aggressor companies arranged In addition to honoring CFA's award lines of credit with banks totalling, in recipients, the dinner is the major fund- early 1984, at least $62.4 billion. These raising event of the organization. If you loan commitments restricted the ability would like to attend, contact Karen Epp- of banks to make medium and long- steiner, CFA, 1314 14th Street, N.W., term loans, thus curbing the availability Washington, D.C. Z0005 or call (202) of credit and pushing up rates. 387-6121. The reception will begin at 6 At least $29.9 billion of credit lines p.m., followed by a buffet dinner at 7 were actually drawn down to complete p.m. The event, which will also feature deals. These loans exceeded the record music and entertainment, will be held in borrowing in all of 1981 for larger the Congressional/Senate Room of the mergers, according to the study. Capital Hilton Hotel, Washington, D.C. Senator Tsongas Represen ta five Dingell CONSUMER FEDERATION OF AMERICA Page 2 May 1984 • CFAnews

The Truth About Formaldehyde: Everything You Credit Card Surcharges Wanted To Know But

by David I. Greenberg, poor people who do not qualify for Were Afraid To Ask CFA Legislative Director credit cards, people who pay by check, and people who pay cash thinking that REPRINTED WITH PERMISSION FROM they are avoiding the high costs of What is formaldehyde? Does formaldehyde cause cancer? Is there a safe level of USA TODAY. credit cards. exposure? These are the questions are asking in the light of Fed- Editor's Note: The ban on credit card It would be simple to end this hidden eral government regulations concerning the use of formaldehyde in foam insula- surcharges—which was enacted in t976 tax on cash customers by allowing mer- tion and pressed wood products. These are also the questions answered in a new and extended in 1978 and 1981—ex- chants to charge credit card users for all pamphlet, available from CFA. pired in early 1984. American Express, the costs of their cards. Such a sur- Formaldehyde—Everything You Wanted to Know But Were Visa, and MasterCard are furiously lob- charge would not create any new costs, Afraid toAskis part of an educational campaign CFA is develop- bying Congress to re-enact a ban, which it would just end merchants' need to ing to help consumers cope with air pollutants in their homes. may come up for a vole this summer. raise all prices in order to recover the "Air pollution may be 10 times greater inside our homes as out- fees they pay to credit card companies. Everything You Wanted Legislative Director David Greenberg To Know side," said Anne Averyt, Product Safety Director for CFA, and Would discounts for cash work better explained CFA's opposition to a credit But Vfcre Afraid author of the formaldehyde pamphlet. "As we make our homes than credit surcharges? To Ask card surcharge ban in the March 4 edi- more energy efficient and reduce the exchange of air, while in- It's difficult to know, since less than tion of USA Today, reprinted below. creasing the number of toxic products in our homes, we maybe 10 percent of retailers offer such dis- trapping harmful pollutants and jeopardizing our health." WASHINGTON—The debate about counts, even though they have been credit card surcharges is over who legal for 10 years. Formaldehyde is one indoor air pollutant that has received should pay for the costs of credit cards. To use a cash discount, merchants considerable national attention. It is used as an adhesive or (tight now, without knowing it, cash must first raise the prices of ail their "glue" in the manufacture of urea-formaldehyde foam insula- consumers are paying billions of dollars goods to reflect credit card costs and tion (UFFI) and pressed wood products like plywood, particle- in costs created by credit card users. then offer cash customers a lower price. board, medium density fiberboard and panelling. It can cause a That's because one of the costs of credit Why not just leave prices as they are number of short-term effects such as headaches, nausea, and raids is hidden in the overall prices of and charge credit card users for the respiratory problems, and has been linked to cancer in laboratory studies. goods in tin? marketplace. additional costs they alone create? The CFA pamphlet, the first of its kind to explain the causes, risks, and solutions This hidden credit card cost comes If we did that, could credit sur- for formaldehyde problems, is available free from CFA. Send a self-addressed from a fee that credit card companies charges be used as a sneaky way to raise stamped business envelope to Formaldehyde, Consumer Federation of America, (-barge merchants for each credit card prices for credit cards without giving 1314 14th Street, N.W., Washington, D.C. 20005. Limited bulk quantities are avail- sale. The fee averages 3 percent, but can cash customers a break? able on request. be as high as 6 percent of each credit Unlikely. The retail market is intense- card purchase. ly competitive. Any merchant trying to in 1980, merchants paid $1.5 billion in get away with the unfair use of sur- these Ices to American Express, Visa charges would lose business to com- and MasterCard. Like all merchants' petitors who could offer both cash and costs of doing business, the fees end up credit customers a better deal. Beer Bill: in the prices of goods. It's time to tell the truth about credit \ recent Federal Hooorvo Board study card costs by allowing surcharges. confirmed that these credit card costs Credit costs extra. It should pay its raise prices for everyone—including own way. Return of the Six-PAC

Product Liability Bill Millions of Americans watch tele- grassroots political campaign of the vision commercials in which two brewers and beer wholesalers has once celebrities argue strenuously over again produced a massive list of co- Advances whether their favorite beer "Tastes sponsors in both the House and the In a show of political support that If the bill is debated in the Senate, great" or is "Less filling." Meanwhile, in Senate. Right now, according to Bro- surprised many observers, a coali- Greenberg believes that its controversi- Washington, D.C. another group of ce- beck, the industry groups are attempt- tion of manufacturers, insurance com- al features may doom it in an election lebrities—the U.S. Congress—must de- ing to line up votes in the Judiciary panies, wholesalers and retailers, per- year. "How many Senators want to face cide whether to add a third description: Committees of both houses of Congress. suaded the Senate Commerce Commit- the charge that they supported legisla- "Costs more." For, according to con- tee to report Senator Kasten's product tion to make it harder for people in- sumer groups and grocery chains, that liability bill IS. 441 by a vote of 11-5. jured by dangerous drugs and chemi- would be the exact result of the legisla- Voting for the bill, which has been cals to receive compensation?" asked tion the beer industry has been pushing opposed unanimously by consumer, Greenberg. "And how many Senators for the last two Congresses. labor and victim groups, were Senators want to be responsible for a law that The Malt Beverage Interbrand Com- Kasten IR-WI), Gorton (R-WAI, Stevens many observers say eliminates punitive petition Act is better known simply as (R AK), Trible IR-VA), Pressler (R-SD), damages for corporations engaging in the beer bill. It would provide an anti- Goldwater (R-AZI, Danforth (R-MO), recklessly dangerous behavior?" trust exemption allowing the beer in- Kassebaum (R KS), I.ong(D-LA), Inouve Despite these controversial provi- dustry to create a system of exclusive (D-HAI and Exon (D-NE). Casting votes sions, Greenberg warned that the oppo- territorial monopolies for distributors against the bill were Senators Pack- nents of S. 44 have underestimated its of each brand of beer. Thus, Miller wood (R-OR), Hollings ID-SCI, Riegle appeal in the past. Greenberg cited edi- would be able to designate one dis- (D-MI), Heflin (D-AL) and Lautenberg torial commentary supportive of the bill tributor in a given area; no one else (D-NJ). in publications as diverse as Business could legally distribute Miller brands. Attention now shifts to the Senate Week and the Washington Post as evi- "What the beer industry is asking floor, where the industry groups will dence that support is building for pas- for," said CFA Executive Director push for a vote as early as late May. They sage. He also warned that since their Stephen Brobeck, "is a license to raise will face a number of serious hurdles, solid victory in the Senate Commerce beer prices. Studies from Indiana and according to CFA Legislative Director Committee, business groups have New York indicate that exclusive terri- For its part, CFA has taken the issue David Greenberg, including efforts by stepped up their lobbying activities on tories can lead to price increases of up to its own grassroots, seeking opposi- other committees to gain jurisdiction behalf of the bill. to 30%. If that were not bad enough, the tion to the bills from hundreds of con- over the bill, a number of "holds'' Finally, although no legislation is beer bill continues the dangerous sumer and public interest organizations placed on the bill by opposing Senators, mo\ing in the House, Greenberg precedent of special interests seeking around the country, through both mail- and threats of filibuster and other de- pointed out that support in favor of a to exempt themselves from the anti- ings and a telephone campaign. "The laying techniques. Federal product bill has been forth- trust laws, which form the foundation message from back home must be Also working in the consumers' favor, coming from key leaders of the Energy of competition in our economy." clear," said Brobeck. Congressmen and says Greenberg, is the fact that the and Commerce Committee like Chair- Brobeck cautioned consumers that Senators must hear that their constitu- Senate floor schedule is very busy with man John Dingell (D-MI), Subcommit- they had better take the legislation seri- ents do not want to see the antitrust budget and appropriations bills which tee Chairman Henry Waxman ID-CA) ously, even though it was unsuccessful laws bent to the needs of special inter- the Senate leadership views as much and ranking minority member Joel in 1982. He pointed to the fact that the est groups. Neither do beer drinkers higher priority than S. 44. Brovhill (R-NC). campaign contributions and extensive want to pay higher prices." May 1984 • CFAnews Page 3 NEW CFA STUDY: CWIP Short Circuits American Pocketbooks

On April 12, CFA issued the first in a scheduled for May 18. new series of economic reports By analyzing risk and rates of return, dealing with energy and utility issues. the report shows that the introduction The 30-page report is entitled The Con- of CWIP raises the possibility that un- sumer Economics of CWIP: A Short Cir- needed plants will be completed and cuit for American Pocketbooks. It ex- that construction efforts will be pro- amines the impact on consumers of longed on plants that are ultimately allowing utilities to recover the cost of decommissioned. By conducting what financing projects by including con- is known as "break-even" analysis, the struction work in progress (CWIP) in the study shows that even if CWIP raises the rate base. odds by only one chance in ten, con- The report, written by CFA's new sumers end up paying more for their Energy Director, Mark Cooper, ex- electricity than they should. amines CWIP from four perspectives— The report also shows that in the last rate of return, risk, alterations in utility ten years industry grossly overesti- investment choices, and impact on the mated its capacity needs. With perhaps structure of the utility industry. It con- $100 billion in construction projects cludes that CWIP distorts financial presently overhanging a market that al- markets, economic incentives for in- ready has excess capacity, the report vestment, and the structure of the concludes that "the absolute last thing utility industry. "Thus, except where a that the rational consumer would want utility is under severe financial distress, to do is give the industry an added in- CWIP is an economic disaster for con- centive to build." sumers," Cooper said. The study also points out that small, Dr. Mark Cooper, CFA's newly appointed Energy Director (second from left), dis- According to the report, the CWIP less capital intensive approaches to cusses "The Future of Electric Utilities'' last month on Flashpoint, a PBS television issue has been thrust to the forefront of meeting energy needs serve the con- series. A former Fulbright fellow with a Ph.D. from Yale University, Dr. Cooper is the Congressional consideration by a deci- sumer much better. In addition to being author of numerous articles and books including Equity and Energy (Westview sion of the Federal Energy Regulatory lower in cost and posing less of a threat Press, 1983) and The Transformation of Egypt (Johns Hopkins University Press, Commission to allow CWIP on an to the environment, they have shorter 1982). Before coming to CFA, Cooper served as the Research Director for the Con- across-the-board basis in wholesale lead times and diverse methods of sumer Energy Council of America, then as head of his own public interest research sales of electricity. The House of Repre- meeting energy needs, thereby creating firm, Citizen Research. sentatives responded with an over- better flexibility in our energy infra- whelming vote (288 to 113) to overturn structure. that decision. Finally, the report explains how competitive effectiveness. greater opportunity to abuse their mar- The CFA study was released in con- CWIP could weaken consumer protec- Second, the investor-owned utilities ket power," Cooper pointed out. junction with the start of Senate con- tion mechanisms in the industry: would rush to set up generation and "The report concludes that CWIP sideration of CWIP legislation. It will First, it would squeeze publicly and transmission subsidiaries that special- fails to pass muster on every count be- provide the basis for CFA testimony on cooperatively owned utilities who are ize in wholesale transactions which are cause it is simply an effort to bail out the issue before the Senate Committee large, wholesale customers of the in- beyond the control of the states. "The utilities that embarked on unwise over- on Energy and Natural Resources, vestor owned utilities, and reduce their net effect would be to give the utilities building programs in the past," he said.

CFA Urges HUD to Adopt Consumers Union Strict Formaldehyde Limits Wins Major Libel Suit The Consumer Federation of Amer- dominates in mobile homes. "So health ica called for the adoption of strict standards should be even more strin- emission levels for formaldehyde off- gent, not less stringent," she said. "The industry has made a great deal gassing in mobile homes, in comments Consumers Union, publisher of since May, 1936. Consumer Reports has of progress in lowering formaldehyde submitted in April to the Department of Consumer Reports and a found- a monthly circulation of 2.8 million. emissions," Averyt added. "In fact, new Housing and Urban Development. ing member of Consumer Federation of Karpatkin, and members of CU's re- conventional homes in the near future HUD has proposed emission levels America, won a major libel suit before gional offices, have been leaders in the will have levels of emissions at or below for wood products used in the manu- the Supreme Court in late April. The for many years. facture of mobile homes that would the 0.1 ppm we are advocating. But it is high court upheld a lower court ruling achieve indoor air levels of 0.4 parts per essential that the technology continue that there was inadequate evidenee to million (ppm) of formaldehyde. CFA justify a $210,000 libel judgment against charged in its comments that this level CU for its critical review of a stereo of emissions is far too high to provide speaker which Consumer Reports "reasonable protection"—the criteria BilE^^B stated allowed sound to "wander established by HUD for its rulemaking. around the room." According to CFA's comments, nearly CONSUMER FEDERATION OF AMERICA all the scientific and international stan- to be developed to lower mobile home This decision is vitally important not 1314 14th Street, N.W., Washington, D.C. 20005 dards for formaldehyde emissions emissions as well. If the commitment is only for Consumers Union, but for all (202) 387-6121 establish ambient levels close to 0.1 there, the industry can bring down the Americans who are concerned with the ppm. While there is no known level at emission levels in mobile homes just as First Amendment and maintenance of a President: Al Luzi which everyone is safe from the adverse they are now doing in conventional free press," said Rhoda H. Karpatkin, Executive Director: Stephen Brobeck Legislative Director: David Greenberg effects of formaldehyde, the CFA sub- homes." Executive Director of the non-profit organization. CU won its Appeals Court Administrative Director: Karen Eppsteiner mission documents many adverse ef- In its HUD comments, CFA also ad- Energy Director: Mark Cooper fects that have been reported at levels vocated adoption of a warning, jointly decision, overturning a District Court Public Affairs Director: Jack Gillis far below the 0.4 ppm level HUD is advo- agreed upon in February with the Man- ruling in favor of the stereo manufac- Product Safety Coordinator: Edith Furst turer, on the basis of First Amendment Secretary: Lydia Rivera Grogan cating. CFA has long supported indoor ufactured Housing Institute. HUD has Secretary: Marcia Stickle air levels of formaldehyde that do not already communicated to CFA and MHI review and because the manufacturer Administrative Assistant: Miguel Carpio that it hopes to adopt the warning in its never established "actual malice" on exceed 0.1 ppm. CFAnews Editor: Anne C. Averyt In addition, according to Product final rule. CFA also called on HUD to CUs behalf. Safety Director Anne Averyt, small chil- require that the warning be prominent- CU, which is headquartered in Mt. CFAnews is published 8 times a year. Annual subscription dren and elderly or sick persons are at ly displayed in mobile home units on Vernon, N.Y., has been testing and eval- rate is $25 per year. much higher risk from formaldehyde dealer lots, and included in information uating products for readers of its ©Copyright 1984 by Consumer Federation of America. CFA should be credited for all material. All Rights Reserved. and this is the population that pre- distributed to prospective buyers. monthly Consumer Reports magazine Design .v Typeset by: Design Consultants. Inc. Page 4 May 1984 • CFAnews CPSC Retains Hazardous Export Controls

REGULATORY NEWS In a major victory for consumers worldwide, the late through regulation," and told the Commissioners that if they want to change REGULATORY NEWS Consumer Product Safety Commission voted 3 to 1 the current export policy, "I urge you to submit those legislative requests for con- REGULATORY NEWS in mid-May to continue its policy restricting the ex- sideration by Congress." REGULATORY NEWS port of banned or non-complying products. Com- Although Commissioner Scanlon called for the policy change based on legal and REGULATORY NEWS mission Chairman Nancy Harvey Steorts, who said legislative questions, Mark Silbergeld, Director of the Washington office of Con- REGULATORY NEWS that the "Made in the U.S.A." label should not be sumers Union, and Art Delibert, Director of Citizens Committee for Fire Protection, REGULATORY NEWS compromised and that the CPSC has clear authority challenged Scanlon's interpretation at the public hearing and showed that both REGULATORY NEWS to prohibit hazardous exports, and Commissioner legal and legislative history support the Commission's historic position of restrict- REGULATORY NEWS Stuart Statler, who throughout the debate has ex- ing hazardous exports. pressed grave concern over the implications such a REGULATORY NEWS Esther Peterson, former Presidential assistant and currently U.N. representative policy reversal would have for both American con- on hazardous exports for the International Organization of Consumer Unions, told sumers and consumers abroad, were joined in their vote to continue the CPSC's current export control policy, by the CPSC's newest member, Commissioner the Commission hearing that the issue is not a legal one—it is a matter of public policy: "Third-world delegates at the ask me—'If Tris-treated chil- Saundra Armstrong. The lone dissenter was Commissioner Terrence Scanlon. "This vote is a victory for us all," said Anne Averyt, Product Safety Director for dren's pajamas cause cancer in America, don't they cause cancer in my country CFA. "The proposed change was bad public policy and had no real legal or legisla- too? Isn't the U.S. setting a double standard?' " Peterson headed the Carter Admin- tive basis. The Commission's strong action, reaffirming its commitment to protect istration Task Force on Hazardous Exports which forged the first coherent U.S. consumers' health and safety, is a loud message to the rest of the world that at least policy on this issue. In one of its earliest official acts, the Reagan Administration one U.S. agency is determined to serve the public good." rescinded that policy, and it has yet to establish any set policy on hazardous exports. CFA organized a coalition of public interest groups and individual consumer advocates which testified at a public hearing on the hazardous export issue before Public interest groups represented at the Commission hearing also included the Commission in April. Each of the seven groups represented at the hearing ex- Health Research Group, Women's Health Network, National Consumer's League, pressed strong opposition to a relaxation of the Commission's export policy. Averyt INFACT, and a letter from Rhoda Karpatkin, Executive Director of Consumers and other speakers warned that such a policy reversal would decrease the incen- Union and Vice-President of the International Organization of Consumers Unions. tive of American companies to make safe products, if they know they can recoup Several CFA state and local groups also submitted letters including Milwaukee their financial losses by shipping non-complying products overseas. In addition, Concerned Consumers League and Consumers League of Ohio. In addition to Con- said Averyt, budget cuts have already severely hampered the Commission's ability gressman Waxman, Representative Michael Barnes (D-MD), and Senator Howard to police the marketplace, and an increase of unsafe products may further strain Metzenbaum (D-OH) submitted letters opposing the policy switch. already scarce financial and manpower resources. "The policy proposal doesn't "This issue mobilized a broad-base of public interest groups and individuals," serve the long run interests of the business community either," Averyt added, noted Averyt. "The outpouring of concern was tremendous, as was the amount of "because the world market will soon become suspicious of the 'Made in America' space the press gave in its coverage of the debate. Ironically, there was very little label and could even respond with tougher trade restrictions on American goods.'' comment from the business community on the issue. This was not a special inter- Traditionally, the Commission has interpreted its mandate to include the au- est group issue. Nor was it a legal issue, where the Commission was overstepping thority to restrict the export of severely hazardous products. But Commissioner its authority. It was a policy issue that went to the heart of what the Consumer Terrence Scanlon raised the question whether in fact Congress ever meant to give Product Safety Commission is all about—protecting consumers. By their vote, the such authority to the Commission. In a strongly worded letter, Congressman Commission let us know they intend to do their best to continue keeping unsafe Henry Waxman (D-CA), chairman of the CPSC oversight committee, and author of products out of American homes and out of the homes of consumers in developing the legislation under question, sharply criticized the Commission's consideration countries. At a time when victories for consumers are few and far between, this of the issue. Waxman called the proposed policy reversal "a brazen attempt to legis- victory is particularly reassuring."

Bulk Hate Natural Gas Issue US. Postage PAIO Washington, D.C Revived In Congress Permit No. 44772

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After six months of apparent inaction, the natural gas issue has come back to life in Congress. On April 12 the House Committee on Energy and Commerce voted to report out the Sharp-Madigan bill and sent it to the Rules Committee to await floor action. Although the bill leaves a great deal to be desired from the consumer point of view, it does not contain old gas decontrol, which prompted one industry representative to call it "a disaster." The Reagan Adminis- tration, which hoped the issue would go away in a Presidential elec- tion year, was not pleased either because, when the bill moves to the floor, it will certainly provide an opportunity for a vote on the much more proconsumer Gephardt/Glickman bill (The Natural Gas Consumer Relief Act; H.R. 2154). Compared to the Consumer Relief Act, which has 157 cosponsors, the weaknesses in Sharp/Madigan are legion. According to Mark Cooper, CFA's new Energy Director, it does not roll back or extend ceil- ing prices on new gas or extend the power of Congress or the President to reimpose controls. In addition, it fails to reform the basic contract- ing process in the gas industry; it does not eliminate price escalators, which have tied the price of gas to the cartel-set price of oil, and it does not give pipelines the right to market out of high-priced contracts. Sharp/Madigan leaves the Federal Energy Regulatory Commission (FERC) with tremendous discretionary powers, the very powers that have been used to relentlessly raise the price of gas since the Natural Gas Policy Act was passed in 1978," Cooper pointed out. "For example, it allows FERC to raise old gas prices on a case-by-case basis and to create new categories of decontrolled gas. It leaves the ceiling price on high cost gas to a negotiation/arbitration procedure, rather than setting a specific lower ceiling than currently exists. Production cost add-ons, which producers frequently request, would not be subject to just and reasonable criteria." Although it was a feat to get a bill out of Committee, the obvious weaknesses of the bill mean a major floor fight over a more procon- sumer bill is likely.