United Steelworkers Local 632 and the Southeast Idaho Mule Deer Foundation have filed motions in U.S. District Court in Idaho to intervene in support of a government land swap with the J.R. Simplot Co. The Shoshone-Bannock Tribes say the swap could lead to greater pollution, a loss of treaty territory, damage to fish and wildlife species, and poor air quality for the Fort Hall Indian Reservation.

Last January the tribes filed a complaint in federal court against the U.S. Department of the Interior (Interior) and the Bureau of Land Management (BLM) to block the transaction, which would provide Simplot more land for a gypsum stack. Company officials say Simplot needs the land in order for its Don phosphate fertilizer complex west of Pocatello to survive, and that the plant’s long-term viability depends on the company’s ability to handle the gypsum. The gypsum is formed after phosphate is removed from slurry pumped from the company’s Smoky Canyon Mine about 90 miles to the east on the Caribou-Targhee National Forest near Wyoming.

In 2007, Interior and the BLM approved the deal, which would trade approximately 670 acres of Simplot-owned key mule deer winter range near Blackrock Canyon about nine miles southeast of Pocatello for about 720 acres of BLM property on Howard Mountain in the Trail Creek area near the Don plant.

The tribes argue federal regulations were not properly followed when the government approved the swap; that increasing the gypsum stack would degrade air quality and pollute the nearby Portneuf River, which runs through the Fort Hall Reservation. They criticize BLM for not issuing an Environmental Impact Statement on the land swap. The tribes said BLM is commissioned to ensure the land it gets from Simplot is of equal or more value to the Trail Creek area property, much of which was charred by a wild fire in June 2007.

The 2,530 acres on which the Simplot plant and the former adjacent FMC elemental phosphorus plant operated were designated by the U.S. Environmental Protection Agency (EPA) in 1990 as the Michaud Flats Superfund site. Heavy metals, arsenic, cadmium, selenium, and other industrial-related contaminants have been identified there. FMC ceased making $1.5 million annual environmental impact payments to the Shoshone-Bannock Tribes after its elemental phosphorus plant closed in December 2001.

EPA says phosphogypsum is a radioactive waste product created when phosphate ore is processed. When it decays, phosphogypsum forms radon, a radioactive gas that can cause cancer.

In 2009, federal environmental regulators began pressuring Simplot to do more at its fertilizer plant to stem the flow of phosphates and other pollutants into groundwater and streams. The tribes say they have the right to sue because the Simplot property borders their land and part of their aboriginal homelands. Simplot acquired the acreage near Blackrock Canyon in the early 1990s.

The BLM hosted a public scoping meeting for public comment about the land swap. BLM officials said the land exchange and environmental concerns are separate issues.

In its motion to intervene, United Steelworkers Local 632 said failure to proceed with the land transaction could mean the loss of jobs at the Simplot plant. The labor union represents more than 250 of the 350 plant employees, who earn between $50,000 and $60,000 annually.

Noting that Simplot has been negotiating for more than 15 years with the BLM and other parties to obtain a cost effective expansion of the gypsum stack, the steelworkers said expansion of the stack is essential to the Don plant’s continued operation, contending other proposed options are not economically feasible.

“Having the expansion of the gypsum stack next to the existing plant helps protect the environment by having the operations centrally located for purposes of management and supervision by the company and environmental regulators,” the motion states.

In its June motion to intervene, the Southeast Idaho Mule Deer Foundation said the Blackrock property has long been recognized as important mule deer habitat essential for creating and maintaining healthy deer herds in Southeast Idaho.

Formed in 1999 after years of severe decline in the region’s mule deer populations, the foundation recently began a fencing program along the property’s border to protect deer from getting killed on Interstate 15. It also has planted winter browse such as bitterbrush on public lands to provide food sources for wintering deer.

Representing the intervenors, Pocatello attorney David Maguire said a federal judge could rule on the ShoshoneBannock Tribes’ complaint by this fall.

The Mosaic Co. confirmed that the temporary restraining order issued by the U.S. District Court for the Middle District of Florida, Jacksonville Division (GM, July 12, p. 11), that keeps it from proceeding with its new permit for an expansion at the South Fort Meade phosphate rock mine has been extended from Wednesday, July 28, to Friday, July 30. It was not clear if a decision would come before or after the Green Markets press deadline.

U.S. Senior District Judge Henry Lee Adams Jr. said the order should remain in effect up to and including July 30. On July 27 he struck Mosaic’s rebuttal memorandum for not being typed in twelve-point or larger type. He gave Mosaic until 3:00 p.m. on July 28 to comply, and they did so.

On July 23, Mosaic Executive Vice President, General Counsel, and Corporate Secretary Richard Mack told analysts that there is a high bar on a party requesting such an action, and that the court normally provides substantial deference to the federal agencies who actively reviewed and approved the permit. “Let me assure you that the Army Corps of Engineers, along with several county, state, and other federal agencies, exhaustively reviewed the permit applications over a seven-year period,” he said. “In fact, the process included dozens of in-depth meetings with regulators and numerous requests for additional information, and resulted in an administrative record in excess of 100,000 pages and a final permit exceeding 2,500 pages. This was comprehensive.”

Mack said the permit provides for significant protections to the environment, including preservation of more than 73 percent of the site’s wetlands, over 2,600 acres of permanent conservation easements, and a robust mitigation plan using state-of-the-art reclamation practices. “The Florida Department of Environmental Protection, who also extensively reviewed and approved the permit, has characterized the South Fort Meade tract in question as heavily degraded and has said that it will be in a better environmental condition after mining and reclamation have been completed.”

The plaintiffs argued to the court that Mosaic should only be allowed to mine on the upland area of the reserve. Mosaic responded that this was only a ruse to scuttle the entire project, as mining only the uplands was not feasible and was regarded as impracticable by the Corps. If only uplands were mined, said Mosaic, it would limit mining to a very small area – only about 1,000 acres – and strand the remaining 46 million tons of phosphate reserves.

As for the wetlands, Mosaic said that over the past 30 years it has successfully constructed over 21,000 acres of wetlands and has received numerous awards for its successes. The company presented photos to the court as evidence.

Judge Adams issued the restraining order July 1 (GM, July 12, p. 11). The Mosaic Co. on July 12 issued a conditional warn notice to 221 mine employees advising them that in 60 days the company’s South Fort Meade mine may close indefinitely (GM, July 19, p. 1).

Mosaic President and CEO James Prokopanko told analysts July 23 that the situation regarding the mine would not have any impact whatsoever on first-quarter results. Prokopanko told analysts that it might make sense to use newly-acquired Bayovar, Peru, rock to take the place of South Fort Meade rock. However, he said that while the company is doing a lot of contingency planning, it was still too premature to comment on that at the present time.

PotashCorp reported net income of $472 million ($1.55 per diluted share) on sales of $1.44 billion for the second quarter ending June 30, compared to the year-ago $186.2 million ($.61 per diluted share) on sales of $856 million. PotashCorp said these earnings were the second-highest second-quarter sales in company history.

PotashCorp said the results reflected a continuing recovery in fertilizer demand, particularly for potash, as well as a $69.6 million special dividend ($.17 per share) from its investment in Israel Chemicals Ltd.

PotashCorp President and CEO Bill Doyle said after visiting with various customers in San Antonio earlier in the week that everyone is looking at $4.00 as the floor for corn, and moving to $5.00 in the not-too-distant-future. Doyle cited adverse weather problems across the world, including in Russia and Canada, as well as in grain-hungry China, which is importing 1 million tons of soybeans per week. Doyle said not so long ago China was a 15-million-tons exporter of corn, and that some reliable forecasts are for it to import that much corn by 2015. In addition to corn, he expects the country to use more potash – 11 million mt in 2011, versus an estimated 8.5 million in 2010. “When China re-engages, look out,” he said.

In the near term, Doyle said the North American market will begin to restock with granular potash at the same time that demand will pick up in Brazil.

Second-quarter potash gross margins soared, to $396.6 million on sales of $641 million, from the year-ago $106.2 million on sales of $210.7 million. Tons sold during the quarter were a whopping 1.9 million mt, versus the year-ago 394,000 mt. Most of the increase came from offshore, at 1.33 million mt versus 194,000 mt, whereas North America was also up, at 575,000 mt from 200,000 mt. The average price was $308.64/mt, down from the year-ago $473.05/mt. The average offshore was $282.20/mt versus the year-ago $366.70/mt, while North America was $369.82/mt, down from $576.29/mt.

Phosphate margins moved up to $62 million on sales of $363.5 million, compared to the year-ago $19 million on sales of $324.7 million. Total tons sold (all phosphate products) were 719,000 mt with an average price of $458/mt, versus the year-ago 723,000 mt at an average price of $403.96/mt.

Nitrogen margins more than tripled, to $125 million on sales of $433.3 million, versus the year-ago $43.9 million on sales of $320.6 million. Total tons sold for all nitrogen were 1.32 million mt at an average price of $287.22/mt, versus the year-ago 1.2 million mt at an average price of $238.67/mt.

Six-month net income was $921.2 million ($3.02 per share) on sales of $3.15 billion, up from the year-ago $493.6 million ($1.63 per share) on sales of $1.78 billion.

Six-month potash margins were $913 million on sales of $1.53 billion, versus the year-ago $272.8 million on sales of $479.9 million. Tons sold were 4.37 million mt with an average price of $315.80/mt, versus the year-ago 868,000.

The U.S. Senate Committee on Homeland Security and Governmental Affairs voted unanimously on July 28 to amend the Chemical and Water Security Act of 2009 (H.R. 2868), which was passed by the U.S. House of Representatives in November 2009. The House bill was replaced with a substitute amendment offered by Sen. Susan Collins (R-Maine) that will reauthorize the existing Chemical Facility Anti-Terrorism Standards (CFATS) program until Oct. 4, 2013, and without an inherently safer technologies (IST) provision.

Many industry trade groups had voiced strong opposition to the IST language in the House bill. The Fertilizer Institute (TFI) and the National Association of Chemical Distributors (NACD) last week issued statements in support of the Senate measure.

“The fertilizer industry is strongly committed to security measures that prevent fertilizers from being used for any purpose for which they are not intended,” said TFI President Ford B. West. “However, we have not been able to support provisions, such as IST, which will unnecessarily jeopardize the availability of widely used, lower-cost sources of essential plant nutrient products, and as such we’re pleased with the outcome of the Senate Homeland Security Committee’s consideration and amendment of H.R. 2868.”

In addition to eliminating IST and reauthorizing the current CFATS program, Sen. Collins’ substitute amendment will reportedly establish voluntary programs through the Department of Homeland Security (DHS) that will facilitate training courses to improve partnerships between the private sector and state and local communities under CFATS, and provide chemical facilities the opportunity to receive recommendations from DHS to aid in their compliance under the CFATS program.

Collins’ substitute amendment will also create an inventory of chemical facility security best practices and will establish an advisory board to advise DHS on the implementation of the CFATS program and the new voluntary measures that have been introduced.

“Overall, TFI is satisfied with the passage of Sen. Collins’ substitute amendment, and we look forward to continuing to engage with lawmakers and DHS in crafting regulations to ensure the safety and security of our industry’s facilities and products,” said West.

Committee Chairman Joe Lieberman (I-Conn.) expressed his support for IST and other provisions of H.R. 2868, but agreed to postpone consideration of those elements.

NACD President Chris Jahn also expressed support for the Senate vote. “The three-year extension would provide more regulatory certainty to the facilities now working hard to implement their site security plans,” Jahn said. “Unlike the version of H.R. 2868 passed by the House of Representatives late last year that imposes inherently-safer technology mandates and other significant changes to the current program, the HSGAC bill would promote increased security by allowing the current CFATS program to continue to be implemented without disruption. NACD will urge the full Senate as well as the House to adopt the chemical security legislation as passed by the HSGAC Committee today. This is common sense, bipartisan legislation that will truly enhance security.”

CHS Inc. reported that its Ag Business unit’s Wholesale crop nutrient unit saw a 10 percent increase in fertilizer volumes for the third quarter ending May 31, 2010, compared to the year-ago quarter. The Ag Business unit was credited with helping to boost CHS third-quarter net income (GM, July 12, p. 8). Third-quarter Ag Business earnings were $94.6 million, versus the year-ago $23.6 million.

Third-quarter Wholesale crop nutrient revenues totaled $578.4 million, versus the year-ago $675.9 million. The decrease was due to lower average fertilizer prices somewhat offset by the higher volumes. The average sales price of all fertilizers sold reflected a $98/st drop (22 percent) versus year-ago levels.

Third-quarter earnings from the Wholesale unit were up $39.8 million from the year-ago quarter.

The Ag Business unit’s non-wholesale crop nutrient and non-grain business had third-quarter revenues of $762.9 million, up $59.4 million (8 percent) from year-ago levels. This reflected increased revenues in country operations from retail seed, energy, and crop protection products, partially offset by decreases in feed and sunflower products.

Country operations earnings increased $30.3 million versus the year-ago quarter, primarily as a result of improved retail crop nutrient and processed sunflower margins, in addition to overall increased margins related to higher volume, primarily attributed to acquisitions made over the past year.

Also during the quarter, CHS recorded a $10 million gain related to the sale of many of its Agriliance LLC locations. This, along with improved financial performance by Agriliance, resulted in a $10.9 million combined increase in earnings, net of allocated internal expenses.

Wholesale crop nutrient volumes were up 7 percent for the nine months ending May 31. Earnings improved $117.2 million, while revenues totaled $1.2 billion, down from the year-ago $1.6 billion. As with the third quarter, YTD was impacted by lower fertilizer prices, somewhat offset by higher volumes. The average sales price of all fertilizer sold reflected a decrease of $153/st (32 percent) versus the year-ago period.

Nine-month revenues from the non-grain and non-wholesale crop nutrient business were $1.4 billion, down $59.3 million from year-ago levels. This was primarily the result of decreased revenues in country operations retail crop nutrients and feed products business, partially offset by increased revenues from seed, crop protection, and energy products.

Nine-month country operations earnings increased $41 million, primarily as a result of improved grain margins and increased overall margins, mostly from acquisitions and improved retail crop nutrient margins.

In addition, during the period CHS recorded a gain related to the sale of Agriliance units of $23.7 million.

As of May 31, 2010, CHS reported that it had 253,000 st of crop nutrients under purchase contracts and 426,000 st under sales contracts, versus the year-ago 495,000 st for purchase contracts and 739,000 st for sales contracts.

Industry sources doubt there’s a connection between fertilizer and nitrates in drinking water, which have been linked in health studies with a higher incidence of thyroid cancer in older women and underperforming thyroids in infants.

According to The Fertilizer Institute (TFI), its own product testing program has demonstrated that fertilizers are safe. “These studies were reviewed and approved by both the U.S. Environmental Protection Agency (EPA) and the Organization for Economic Cooperation and Development (OECD), and are solid evidence that there is no connection between fertilizers and increased risk of thyroid disease,” stated TFI spokeswoman Kathy Mathers. “It should also be noted that perchlorate and thiocyanate, the other chemicals in the studies, bind the receptor much more strongly, thus are more potent than nitrates.”

In the National Institute of Health (NIH) study of nearly 22,000 women in Iowa ages 55 to 69, researchers found a nearly three-fold increase of thyroid cancer in women who for more than 10 years had used public water supplies with nitrate levels of 5 milligrams per liter – or less than half the maximum allowable level of nitrates in the U.S. According to the report, cancer incidence was determined by using the state health registry, and nitrate intake was estimated from public drinking water sources using a public database of nitrate measurements.

“These positive findings are of interest in light of the increasing incidence of thyroid cancer over the past decades, and the ubiquitous exposure to nitrate from dietary and drinking water sources – the latter occurring mostly in agricultural regions,” the NIH researchers noted.

The other study included 92 full-term infants between birth and 1 year of age. Perchlorate, thiocyanate, and nitrate were measured in 206 urine samples. The thyroid stimulating hormone (TSH) and thyroxine were measured in urines and in 50 blood samples. Infants with higher exposures to three contaminants – perchlorate, nitrate, or thiocyanate – found in water, food, and tobacco smoke, had increased levels of TSH, which researchers say is a sign that the thyroid gland may be underfunctioning.

NIH’s Iowa study of thyroid diseases focused on an agriculture state where nitrate is common in drinking water because of heavy nitrogen fertilizer applications in cornfields. This situation led Des Moines waterworks (DMWW) to build the largest nitrate removal facility in the world. DMWW recently took the additional step to assure the effectiveness of the nitrate-removal plant by diverting Raccoon River water into off-river storage reservoirs, where it’s held long enough for microorganisms to consume nitrate present in the river water. DMWW officials pointed out that nitrate levels rapidly diminish in the storage reservoirs, enabling DMWW to use the water as low-nitrate diluted, which is then mixed with DMWW’s other high-nitrate water sources. These efforts recently earned an environmental excellence award from Iowa Gov. Chet Culver.