All Posts from October 5, 2018

TFI World Conference Draws Upbeat Crowd

Many attendees at The Fertilizer Institute’s (TFI) World Fertilizer Conference in San Francisco on Oct. 1-3 were upbeat, citing firming fertilizer prices. Some were surprised by the price increases the industry has seen since the Southwestern Fertilizer Conference in July. The question now is how much stamina pricing will have going into the fall and spring seasons.

Most players at the conference said they expect an early harvest with high yields, which will pull many nutrients from the soil and prompt farmers to apply plenty of NPK, weather permitting. Despite concern about low soy and corn prices, most expect 2019 corn acreage to be up significantly, climbing to 92-95 million acres, if not higher. With a large jump in corn acreage, sources expect plenty of fertilizer to be used in 2019.

At the general session, TFI President Chris Jahn reminded attendees of the ongoing public relations issues faced by the industry as TFI continues to work to protect their right to operate. He mentioned the current media tour of environmentalist Erin Brockovich in Florida, who is highlighting the red tide issue, as well as Ohio Governor John Kasich’s proposal to designate fertilizer as an ag pollutant, which would result in more regulation of fertilizer.

Jahn noted that Global Fertilizer Day is Oct. 13, and said TFI has plenty of resources to help members to engage with the public on social media.

Former National Security Advisor and CIA Director Michael Hayden gave an overview of the current global geopolitical situation. While noting that there have been much more dangerous times in U.S. diplomatic history, citing the Cuban missile crisis, he warned that he has never seen a more complicated environment than at present. He said he has never seen a time when actions could be more immediate, observing that when things happen here, they bump events elsewhere.

Hayden said he has not personally criticized President Trump, but he has taken issue with some of his policies. He said the last 75 years of peace, productivity, and improved health and education have been guided by the U.S. He said Trump’s “America First” policy is not compatible with that world leadership, however. He said if the U.S. does not lead, then there will be no leader unless it is China, which traditionally looks inward.

Hayden said three major categories are good for America – immigration, trade, and alliances. Today, all three are jump balls or are being hotly debated. Hayden and the other session speaker, Brian Beaulieu, CEO of ITR Economics, both had the same advice for President Trump – get off the phone.

Beaulieu gave an upbeat view of the economy, saying it is at a very good place in the business cycle, with much upside potential over the next four years. He said he does expect the economy to stall a bit in 2019-2020, but he sees long-term growth. While we may see a stock market correction in the first quarter of 2019, he advised attendees to buy into it, as the economy and market will continue to go up for some time.

Beaulieu told those aged 57 and older not to worry, but he cautioned those 44 and younger, saying they can expect a major economic downturn at some point. He said he foresees no Great Recession until at least 2030. He also sees high rates of inflation on the horizon. He advised buying real estate and borrowing money at today’s rates and investing.

As for tariffs, Beaulieu said the U.S. has never had them at the top of the business cycle; it has always been at the bottom. He said he is particularly concerned about China, noting that if we push them too hard, they can push back hard given that they own so much of the U.S. debt.

He said he is also concerned that the U.S. has continued to add to its debt, with some $953 billion added under Trump. He said if the U.S. does not figure out how to deal with the debt, the rest of the world will lose confidence in the U.S. He said currently the U.S. government is a major problem for the world.

In other news, it was the last TFI meeting to be presided over by Linda McAbee, TFI Director, Meetings and Conferences. McAbee is retiring after some 40 years and service under five TFI presidents.

TFI, ARA Voice Strong Support for CFATS as Program Reauthorization Looms

The Fertilizer Institute (TFI) and the Agricultural Retailers Association (ARA) in late September urged the Senate Committee on Homeland Security and Government Affairs to approve the “Protecting and Securing Chemical Facilities from Terrorist Attacks Act of 2018 (S. 3405),” a bill that would reauthorize the decade-old Chemical Facility Anti-Terrorism Standards (CFATS) program.

The CFATS regulatory program, which was implemented in 2007 (GM Nov. 5, 2007) and is administered by the Department of Homeland Security (DHS), enforces security requirements for chemical facilities that produce, store, handle, or sell certain chemicals of interest (COI) at specific threshold quantities. The program has tiered regulatory requirements that are determined by risk assessment reporting and a screening process. Anhydrous ammonia and ammonium nitrate are among the more than 320 chemicals on the COI list.

CFATS was subject to annual reauthorizations by Congress until 2014, when a four-year authorization was approved (GM Dec. 15, 2014). The program is now set to expire in January 2019. CFATS currently covers approximately 3,500 chemical facilities, including ag retailers.

“The CFATS program provides an important framework to ensure facilities are taking appropriate steps to be safe and secure,” TFI President Chris Jahn and ARA President Daren Coppock said in a Sept. 25 letter to Sens. Ron Johnson (R-Wisc.) and Claire McCaskill (D- Mo.), committee chairman and ranking member, respectively. “The current Congressional authorization for CFATS is set to expire in January of 2019. Any lapse in authorization of the CFATS program would subject our members to uncertainty in an already volatile agricultural market and environment.”

TFI and ARA noted several changes that S. 3405 makes to CFATS, which are supported by both associations. The legislation requires DHS to conduct notice and comment rulemaking to make any changes to its COI list, which is known as Appendix A. “This requirement will ensure a thorough exchange of information is done so the most informed decisions can be made,” TFI and ARA said.

The bill also includes Section 7, which would make the Personnel Surety Program (PSP) requirements of CFATS optional for tier 3 and 4 facilities. PSP requires the vetting of facility personnel and unescorted visitors seeking access to restricted areas at high-risk chemical facilities.

“Tiers 3 and 4 facilities do not face the same insider threat possibility as tiers 1 and 2,” TFI and ARA said. “This provision gives industry the flexibility to find a personnel surety solution that best fits their facility and security needs.”

TFI and ARA said they also “strongly support” the bill’s Section 5 CFATS Recognition Program, which allows DHS to recognize voluntary industry programs that seek to fill regulatory gaps in CFATS. TFI and ARA identified the ResponsibleAg program as one such effort.

“Stewardship programs, like ResponsibleAg, are already working to identify gaps in CFATS compliance at agricultural retail facilities,” TFI and ARA said. “When gaps in compliance are identified, ResponsibleAg works with the facility on a timely and thorough corrective action plan to bring that facility into compliance. A ‘CFATS Recognition Program’ would be a great ‘win-win’ and strengthen the collaborative partnership between industry and government.”

DHS implemented a number of modifications to CFATS after the deadly April 2013 West Fertilizer Co. ammonium nitrate explosion, and in response to an executive order issued by then-President Obama after the tragedy.

Among these, DHS now conducts Compliance Assistance Visits to assist CFATS-regulated facilities in understanding and meeting the program’s risk-based standards; shares certain CFATS information with authorized federal, state, local, tribal, and territorial agencies through a Infrastructure Protection Gateway (IP) interface, which was developed to help strengthen community preparedness and response; solicits feedback through a CFATS Advance Notice of Proposed Rulemaking on potential modifications to regulations; and works with EPA to identify and notify potentially noncompliant facilities that possess threshold COI quantities.

DHS said it also improved the CFATS methodology used to identify and assign risk tiers to high-risk chemical facilities by having external experts from industry and government review the process, and by developing improved guidance for the CFATS risk-based performance standards.

A report released in August by the U.S. Government Accountability Office (GAO), however, said DHS should do more to ensure that first responders have access to CFATS information through the IP Gateway. GAO said its survey found that the IP Gateway “is not widely used at the local level,” noting that 13 of some 15 local emergency planning committees reported that they did not have access to CFATS data in the IP Gateway.

GAO also recommended that DHS take action to measure reductions in vulnerability of high-risk facilities, and use that data to assess program performance. GAO said in the report that DHS concurred with both recommendations, and has outlined efforts either already underway or planned to address those issues.

The GAO report said there were 29,195 facilities assessed for security risks under CFATS as of February 2018, and DHS had designated 3,500 of those as high risk. It said that as of May 2018, DHS had conducted 3,553 compliance inspections and had begun to update its performance measure for CFATS to evaluate security measures implemented both when a facility submitted its initial security plan and again when DHS approves its final security plan.

EPA Decides Not to Challenged Appeals Court Ruling on Amended RMP

The U.S. Environmental Protection Agency (EPA) has apparently decided not to pursue further legal action following a federal appeals court decision in August ordering the agency to enforce its amended Risk Management Program (RMP), according to Bloomberg Law.

The agency had until Oct. 1 to file a petition in response to the Aug. 17 ruling by the U.S. Court of Appeals for the District of Columbia (GM Aug. 31, p. 1), which found that the enforcement delays imposed by former EPA Director Scott Pruitt against the amended RMP were “arbitrary and capricious” and made “a mockery of the statute.”

Bloomberg Law, citing legal records, reported that the government declined to file a petition for a rehearing of the case before the Oct. 1 deadline. As a result, the amended RMP, which was drafted in response to the West Fertilizer Co. tragedy, could go into effect as early as this month for all chemical facilities that fall under the RMP’s Program 3 classification.

The amended RMP contains a number of provisions that were strongly opposed by chemical industry trade groups (GM April 22; May 27, 2016), including The Fertilizer Institute (TFI) and the Agricultural Retailers Association (ARA).

These provision include increasing the frequency and scope of “independent third-party compliance audits” while narrowing the pool of eligible auditors; requiring “root cause investigations” for chemical incidents and “near misses;” requiring companies to evaluate the feasibility of adopting inherently safer technologies (IST) as part of their process hazard analyses; enhancing coordination with local emergency response organizations; and enhancing public information sharing.

EPA previously estimated that some 10,628 facilities nationwide would be impacted by the amended RMP, including those that store more than 10,000 pounds of anhydrous ammonia. Bloomberg Law said EPA has estimated that fully implementing the amended RMP would cost companies about $131 million per year, while preventing some of an estimated $274.7 million in annual damages from unplanned chemical releases.

Originally slated to take effect in March 2017, EPA under Scott Pruitt’s leadership first placed a 90-day hold on the amended RMP (GM March 17, 2017), and then proposed a two-year delay (GM April 14, 2017), pushing the effective date back to Feb. 19, 2019. TFI at that time (GM April 21; May 26, 2017) said it supported the extension, and called on EPA “to reexamine several parts of the RMP proposal that will have unintended security and emergency response consequences.”

Earlier this year, Pruitt released another proposal to rescind several provisions of the amended RMP (GM May 25, p. 27), including those related to safer technology and alternatives analyses, third-party audits, incident investigations, information availability, and “several other minor regulatory changes.” In addition, EPA proposed to modify amendments relating to local emergency response coordination and notification.