Wednesday, December 22, 2010

Fall 2010 Regulatory Agenda – Ammonium Nitrate

Long time readers of this blog knew that this post was coming; my twice a year note that the most recent Regulatory Agenda once again slipped the expected date of the publication of the notice of proposed rule making for the control of the sale and distribution of ammonium nitrate. It now lists (75 FR 79542) the expected date of the publication of the NPRM as March, 2011; the law mandating the development of this regulation required the NPRM to be published by May 26, 2008.


As part of the 2008 Consolidated Appropriations Act (Subtitle J, §563, PL 110-161), Congress required DHS to “regulate the sale and transfer of ammonium nitrate by an ammonium nitrate facility. . .to prevent the misappropriation or use of ammonium nitrate in an act of terrorism”. This requirement was recognition of the ease of converting ammonium nitrate into explosive devices, particularly the large, vehicle borne improvised explosive devices that were used in Oklahoma City and New York. In fact, ANFO (an ammonium nitrate fuel oil mixture) is a widely used commercial explosive and is already federally regulated.

Various forms of ammonium nitrate are included in Appendix A to 6 CFR part 27, so individual facilities that use, manufacture or store ammonium nitrate are potentially covered by the CFATS regulations. But the CFATS regulations cover facility security measures not the sale or transfer of ammonium nitrate. And because of the §550 restrictions on CFATS, there would be no way that a registration regime could be established under that program.

DHS issued an advance notice of proposed rulemaking (ANPRM) for this regulation back on October 29, 2008 (73 FR 64280). I blogged about the ANPRM and did a number of postings about the public comments received (11-07-08, 12-05-08, 12-12-08, 12-22-08, 12-29-08, 01-09-09, and 01-30-09). There were a number of interesting and complex issues addressed in those public comments and it was obvious, to me at least, that Congress had under estimated the complexity of the ammonium nitrate issue. Even so, a regulation (probably both an NPRM and final rule) should have been able to have been written in the almost two years since the close of the comment period on the ANPRM.

Political Issues

About twice a year I make an official request to DHS about the status of the Ammonium Nitrate regulations and I get told by highly placed officials in ISCD that the NPRM will be published in a couple of months. When I ask about the delays to date, I get vaguely worded comments about the current draft being reviewed by the Administration. Now, I trust these people to be giving me the correct information, as far as they know it. They have not been reticent about telling me that they can’t tell me something when it was appropriate.

So what could cause the people working directly with the regulation to be so unsure of when it will be published? The short answer is simply politics; and as usual the simple answer is very complex. First one has to realize that this is inevitably going to end up being another bureaucratic requirement that will provide no discernable benefit to the regulated community. So industry will have some amount of added costs without any appreciable benefit.

The manufacturers and distributors of ammonium nitrate will have a new record keeping burden imposed upon them. The actual cost of registration and recording and storing the transaction histories will be relatively minor (‘relatively minor’ is perhaps a stretch in an economy as challenged as the current one is). There will be the additional burdens of keeping up with a new set of regulations, inevitable inspections (if there are no inspections there is no regulation) and the potential for stiff fines. In addition there is increased legal liability for any use of ammonium nitrate as a terrorist weapon (instead of a ‘reasonable person’ standard there will now be a detailed regulatory standard that will be used to determine if a company took appropriate precautions to prevent the terrorist’s use of the ammonium nitrate).

Another side of the political issue rests with additional burdens imposed on the largest users of ammonium nitrate, farmers; both large agribusinesses and smaller family farmers and co-ops. The cost of registration should be relatively low (assuming that there is a registration fee and that seems to be inevitable). The bigger problem is having to go through the registration process, particularly if individual farm workers, who will physically pick-up the ammonium nitrate from the distributor, have to be registered and have an Ammonium Nitrate Registered User ID.

One other party that may be affected by the ammonium nitrate regulations will be the State agencies that currently regulate fertilizer use/sales. It currently looks like they may be the people that actually administer the registration program. The added program would impose additional costs on those agencies. In the current economic climate States can ill afford to have any additional regulatory burdens imposed upon the by the federal government.

Agriculture Lobby

The three groups identified above (manufacturers/distributors, farmers, and State regulators) are all a part of the great amorphous political blob known as the agriculture lobby or more commonly, the farm lobby. They are one of the most powerful political powerbases in Washington, DC and they wield their power fairly effectively. One only has to look at how they forced DHS to cave on the propane screening threshold quantity issue and the ‘temporary top screen’ exemption that they forced ISCD into issuing to see how effective a lobbying force they are.

They have also forced the Department of Transportation to provide hours-of-service exemptions for the delivery of farm supplies and commodities and to exempt farmers from the Hazmat Endorsement requirements for hauling hazardous materials like ammonium nitrate and anhydrous ammonia. They have ensured that safety and security will take second place to the hallowed rights of the yeoman farmer.

Full Disclosure Note: For years my father operated what can only be called a hobby sheep ranch (no more than 50 head of pure-bread sheep) and every year he filled out the paperwork for and cheerfully cashed his wool subsidy check. And typically took my mother out to dinner with the small proceeds.

Political Inaction

With the Obama administration concentrating on a number of controversial economic and social issues, it is not surprising that there has been little effort to move this regulatory process forward. They have little to gain in opening another contentious issue to public discussion, even when required to do so by law.

Meanwhile, the career folks at ISCD are playing the part of the dutiful soldiers. They don’t complain when their political bosses put politics above protecting the public from potential terrorist attacks using legally obtained ammonium nitrate. Unfortunately, they will also probably be the ones getting the lion’s share of the blame when the next ANFO VBIED goes off in an American city.

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