Ammonium Nitrate Rule Legislative Background

In my blog yesterday (see: “Comments on Ammonium Nitrate ANPRM – 12-19-08”) I noted that the Institute of Makers of Explosives (IME) commented in their submission that there was no legislative history for the § 563 authorization for this rule; that that section had been added to the Consolidated Budget Bill outside of the normal legislative process. I agreed with that assessment and pointed to some of the problems that that had caused for DHS in their rule development process. After writing and posting that blog, I did a little bit of digging on Thomas.LOC.gov, the Library of Congress web site dedicated to maintaining a history of the progress of legislation. In that digging I found that there was more of a legislative history to § 563 than I gave credit for in yesterday’s blog. Secure Handling of Ammonium Nitrate Act of 2007 Section 563 started out as HR 1680, the Secure Handling of Ammonium Nitrate Act of 2007. It was introduced by Chairman Thompson of the House Homeland Security Committee on March 26th, 2007. It was assigned to the Subcommittee on Emerging Threats, Cybersecurity, and Science and Technology. No hearings were held on this bill, relying on a single subcommittee hearing held in the 109th Congress on HR 3197, a similar bill, in December 2005. The Homeland Security subcommittee considered HR 1680 in a meeting on March 28th, 2007. It was reported favorably to the full committee without amendment after that meeting. The full committee considered the bill in meetings on April 17th and 26th, amending the bill and ordered it reported to the House, as amended, by a voice vote. House Report 110-357 House Report 110-357 was produced on October 2nd, 2007. The report points to a number of terrorist attacks and thwarted attacks where ammonium nitrate was used to make the bomb used in the attack. It then notes (page 7):

“This legislation is needed to create a nationwide, minimum standard for regulating the sale of ammonium nitrate based fertilizers nationwide that could be used in terrorist acts, without unduly burdening the agricultural sector’s access to ammonium nitrate fertilizer for farming and other legitimate agricultural purposes.”

The House Report incorporates the Congressional Budget Office estimates of costs and revenues for the implementation of this proposed legislation. The CBO estimates the cost of implementing this bill by DHS to be $45M through 2012. Principally this would be the cost of hiring 60 inspectors and 20 administrative personnel. The CBO estimated that the costs to owners of ammonium nitrate facilities and users to “be small relative to the annual threshold” (page 12) of $131M set by the Unfunded Mandates Reform Act. The report provides a lengthy discussion of the intent of the Homeland Security Committee in the ‘Section-by-Section Analysis of the Legislation’ section (pages 13 – 18). While that discussion does address the IME’s concern about requiring DHS registration of ATF registered users of the explosive form of AN (page 14), it does not address their concerns about the corporate ownership issue. The discussion does address the ‘point of sale’ versus ‘point of distribution’ issue. On page 15 the report states:

“Moreover, the Committee emphasizes that not only must an owner verify the identity of a purchaser in a manner determined appropriate by the Secretary, but that such identity verification shall include confirmation of the agency relationship where an agent takes possession of ammonium nitrate for the buyer.”

This would make it very difficult not to make transportation personnel agents in the transaction. It appears that they would either have to be agents of the buyer by taking ‘possession of ammonium nitrate’, or they need to act as agents of the seller by verifying the registration status of the receiver upon delivery. In either case this causes the complications indicated in the IME submission. Action in the House HR 1680 was brought to the floor of the House on October 23, 2007. It was discussed for less than 40 minutes; discussed, not debated (Congressional Record H11864-6). Four speakers rose to address the issues associated with this bill. All four speakers were from the Homeland Security Committee and all four, two Democrats and two Republicans, enthusiastically supported the bill. After the conclusion of the ‘debate’ the bill passed in the House on a voice vote. The next day the bill was received in the Senate and referred to the Committee on Homeland Security and Governmental Affairs. There is no record of any additional action taking place on this legislation until identical provisions showed up in the Omnibus Budget Bill in late December 2007 (see: “DHS and the Omnibus Spending Bill”). Adding homeland security legislation that passed in the House to spending bills is a tactic that Chairman Thompson has both advocated (see: “House Passes HR 4806 and HR 6193”) and used to good effect. It makes tracking the legislative history of a bill a tad bit more difficult. We can expect to see the same thing in the future.

Ammonium Nitrate ANPRM – Comments Requested

Yesterday I noted that DHS had published their ANPRM for Ammonium Nitrate. DHS is looking for public input as they develop the regulations that will implement the requirements set forth in § 563 of the 2008 Consolidated Appropriations Act, Subtitle J, Secure Handling of Ammonium Nitrate (``Section 563''), Public Law 110-161. 

Section 563 Requirements Last year I described the Ammonium Nitrate requirements from § 563 (see: “DHS and the Omnibus Spending Bill”). Generally speaking that section requires DHS to establish a regulatory structure to control the sale and transfer of Ammonium Nitrate (AN) in a variety of forms and concentrations. The regulations would require the registration of AN manufacturing, sales and using facilities. It would also require the sale or transfer of AN could only take place between registered individuals or facilties. 

DHS breaks the requirements down into four categories of ‘activities’ and a number of supporting ‘sub-activities’ that would be regulated. Their listing would look like this: Category 1: Registration Activities

A. Registration Applications.

          B. Terrorist Screening Database (TSDB) Checks. 

         C. Registration Numbers.

Category 2: Point-of-Sale (POS) Activities

A. Seller Verification of Purchaser's Registration and Identity.

          B. Recordkeeping.

Category 3: Additional Regulatory Activities/Requirements

A. Reporting Theft or Loss of AN.

          B. Inspections and Audits. 

          C. Guidance Materials and Posters

Category 4: Administrative Activities

A. Appeals and Penalties.

          B. Establishing Threshold Level of AN in a Substance

Comments Requested 

The ANPRM provides a list of thirteen areas that DHS would like to have addressed by the soon-to-be-regulated community. These comment areas range from data about the computer skills employees working in the various parts of the AN industry (to evaluate the potential use of computers instead of paper for record keeping) to the potential economic impact of these regulations. 

The area of economic impact, both to various levels of government and the regulated community, is one of apparent special interest to DHS. They provide some of the highest level of detail in describing the type of data they are looking for. There are separate descriptions of governmental and civilian data requests. DHS explains the civilian data request this way:

“Comments on the monetary and other costs anticipated to be incurred by U.S. citizens and others as a result of the new compliance requirements, such as the costs in time and money that an individual may incur to obtain an AN registration. These costs may or may not be quantifiable and may include actual monetary outlays, transitional costs incurred to obtain alternative documents, and the costs that will be incurred in connection with potential delays at the point of sale.”

Late Rule Making Progress 

The legislation sets out a fairly aggressive schedule for developing and adopting the regulations to support this requirement. The following schedule was provided:

90 Days (3-25-08) Establish threshold concentration of AN in solution

         6 Months (6-26-08) Publish Proposed Rule 

         12 Months (12-26-08) Publish Final Rule

DHS could justifiably claim that the 90 day requirement was achieved before this legislation was passed last December. Appendix A to 6 CFR part 27 provides concentrations for both explosive AN (any commercial grade) and fertilizer AN (33% solid AN). DHS does not take that position in this ANPRM. One of the comment areas in the ANPRM deals with the “detonability of AN at certain concentrations”. 

DHS has missed the Proposed Rule deadline by five months already. By the time the current comment period is closed eleven months will have already passed since the legislation was passed; it is unlikely that even the proposed rule will be completed in the time remaining for the Final Rule Deadline.

Reasons for Delay 

There are a number of probable reasons for the delay. The first would be the matter of priorities; CFATS implementation has obviously been given a higher administrative priority. When this legislation was passed, the DHS chemical security people were deep into receiving Top Screen submissions. In fact, the Section 563 requirement complicated the already difficult agricultural submissions and was partially responsible for Agriculture Top Screen Extension (see: “Update on Agriculture Top Screen Extension”) 

The Top Screen was followed by preparing the SVA program for implementation. This included writing two new manuals. Additionally, the two Top Screen manuals were revised to reflect the lessons leaned in the first mass Top Screen submission. Once the SVA submissions started (with the attendant problems that have not been made public) the rewrite of the two CVI manuals was the next big role-out followed quickly by the publication of the draft RBPS Guidance document. The chemical security writers and reviewers have been busy campers. 

Another possible reason for the delay can be found in a presidential directive not to publish last minute rules in the closing months of the current administration. Apparently President Bush remembered well the flurry of rule making that marked the waning days of the Clinton Administration. He expressed a desire not to inflict the same burden on the next administration. 

Additionally, there appears to be at least some Congressional complicity in the delay of the development of these regulations. We can deduce this using the Sherlock Holmes technique of noticing what the dog did not do; there has been no vocal outcry from Chairman Thompson about the delay. Chairman Thompson has never been known to shy away from taking the Secretary to task for programmatic delays, but we have seen no such public pillaring over this issue. This probably indicates that the Chairman is looking forward to an Obama administration developing these rules. 

Finally the power of the agriculture lobby can not be discounted as a contributing factor in the delay in developing this rule. There has not been the same public level of opposition to this rule as we saw last year in the great propane fight, but there was undoubtedly pressure brought to bear to delay this rule. In any case, the next administration will have the opportunity to publish the Proposed Rule for the regulation of Ammonium Nitrate sales and transfers.