Thanks in part to a government shutdown earlier this year, Congress seems motivated to do something — as evidenced by a recent budget deal and extension of the Farm Bill. Yet, important regulatory and legislative challenges remain for agricultural retailers.
West Fertilizer Response
The regulatory fallout from the accident at West Fertilizer plant will continue to dominate public policy efforts for the Agricultural Retailers Association (ARA). The retail industry’s response to the accident in West, TX, continues to develop and evolve.
Prior to the explosion in April, ARA had established a working group to develop best practices around ammonia and ammonium nitrate safety and regulatory compliance. Since the accident, ARA’s working group has grown into an industrywide initiative in partnership with The Fertilizer Institute (TFI), and is now known as ResponsibleAg.
ResponsibleAg would establish a safety management system for retailers who handle ammonia and ammonium nitrate. ARA hopes an industry-led effort will head-off potential regulation, as it has for the petroleum and chemical industries. We have been actively reaching out to members of Congress, their staff and committees of jurisdiction to educate them about the ag retail industry and products of interest.
In August, President Barack Obama signed Executive Order 13650: Improving Chemical Safety and Security. The order addresses enhancing communication within federal government agencies and to first responders and industry partners, along with specific regulatory proposals aimed at retail facilities and their products.
Recently, Senior Vice President of Public Policy Richard Gupton and Public Policy Counsel Michael Kennedy presented ARA’s position to a multi-agency listening session for the executive order. Gupton and Kennedy advocated for ResponsibleAg, and emphasized regulations impacting retailers need to be practical, economically feasible and not outweigh the perceived benefits.
ARA will continue to discuss alternative options with regulators, oppose duplicative regulations and ensure existing regulations are workable and easily understood by the regulated community and local first responders.
ARA has significant interest in the passage of a long-term Farm Bill. If passed, we are likely to see the preservation of a strong crop insurance program, streamlining the biotechnology review process and conservation reforms, such as reduction of the Conservation Reserve Program (CRP) acreage cap changes to the Technical Service Provider (TSP) program and increased industry participation in conservation programs. ARA continues to advocate for retailers as the Farm Bill situation unfolds.
During the government shutdown, the Chemical Facility Anti-Terrorism Standards (CFATS) program was not only unfunded, but had no legal power to enforce its own laws. The CFATS program, which requires chemical retailers to develop, implement and follow a specific site plan, had been attached to an appropriations bill. ARA expressed its concern and Congress has begun to draft legislation to ensure regulatory certainty for retailers.
ARA has testified before the House Homeland Security Committee recommending common sense approaches to moving the program forward, including: third-party audits, ARA and Department of Homeland Security (DHS)-partnered outreach and adequate methods for screening employees. ARA is working directly with DHS and policy-makers in Congress towards legislation intended for release before 2014.
The fight continues on a key priority from 2013, stopping implementation of a Pesticide General Permit under the Clean Water Act (CWA) for aquatic pesticide applications.
The agricultural industry has been advocating for legislation (H.R. 872 & S. 3605) that eliminates the need for CWA National Pollution Discharge Elimination System permits for pesticide applications that are FIFRA-compliant (Federal Insecticide, Fungicide, and Rodenticide Act). ARA and others see this as a redundancy that adds more cost and paperwork to regulations for which applicators are already in compliance.
EPA also continues pursuing expanding the definition of navigable waters under CWA to include all ephemeral streams. The CWA clearly limits jurisdiction to navigable streams and waterways that have a continuous flow. ARA continues to work with Congress, the agencies and other allied groups to thwart attempts by EPA to overreach its authority and create unnecessary rules.
In 2014, EPA will move forward with further regulation to limit the amount of nitrogen, phosphorus and sediment a body of water may contain.
ARA intends to challenge the data and methodology used in determining thresholds and criteria for water quality standards. The EPA generally overestimates agriculture’s impact on water quality and refuses to recognize agriculture’s conservation practices.
Congress and the Internal Revenue Service will likely revisit the seven-year depreciation schedule applied to farm equipment in 2014. ARA and others will be advocating for the permanent adoption of the five-year schedule to help growers receive favorable financing to replace older equipment. This fix will promote a more consistent tax code and better align debt service and depreciation. We anticipate a revised depreciation schedule could increase farm income by more than $850 million annually.
Internet Sales Tax
The Marketplace Fairness Act, or “Internet tax bill,” stands to add significant costs for retail cooperatives if enacted as is. Currently, most ag retail transactions are exempt under state and local laws, but under the new bill, new transaction reporting requirements and responsibilities would fall on retailers.
Agribusinesses will have to study the laws of all states that impose sales tax, determine application of those laws to the seller’s product line and obtain and retain exemption certificates. The additional effort and expense will be solely to defend agribusinesses from state sales tax audits, where the majority of sales would be eligible for exemption in the first place.
The costs associated with these obligations would be a major deterrent for agricultural retailers currently involved in e-commerce, and will likely prevent other agribusinesses from expanding online in the future.
This law should provide for appropriate and lawful tax collection within the existing framework, not become a barrier to interstate commerce. Fortunately, the House Judiciary Committee staff — where the bill currently resides — is open to ARA’s suggested changes to protect ag retailers. The bill’s expected to be reintroduced in the next legislative session.
With several major issues impacting ag retailers, 2014 will be a busy year for ARA as we support the legislative and regulatory interests of America’s farm suppliers. For more information on ARA’s policy issues, visit www.aradc.org.