Excerpt from prepared text of Steve Wilson, CF Industries president and CEO, presented at Agricultural Retailers Association annual meeting and expo in Dec., 2010.

Even if we win every battle for the hearts of our elected officials, we can still lose the war. So-called greenhouse gas regulation provides a stunning example of this principle.

Our legislators considered sweeping new laws that would have changed the way we all do business, and had the potential to weaken the domestic fertilizer industry materially. Over time, the result of the proposed legislation could have been further loss of production and jobs in the U.S. and increased reliance on imports from countries without greenhouse gas regulation.

Irrespective of our individual beliefs about the global warming debate, I think we can all agree that shifting the production of CO2 to a different part of the globe at the expense of American jobs and competitiveness is not a solution.

The public, informed by more adequate debate on the science, a better understanding of the costs involved, and an appreciation of higher priorities, has changed its opinion. Legislation has been deferred and the most onerous proposals are, for now, less likely. But this has barely slowed the pace of "regulation," as the EPA now seeks to regulate CO2 emissions without new legislation. This means that we cannot rest just because we may feel better about the legislative environment.

We must continue to reach out to all stakeholders: to regulators to demand scientific rigor and our rightful place in the debate, to the general public to help them understand the critical role of our products and services as well as the costs and benefits of proposed regulations, and to our lawmakers in hopes that they will bring the debate back into the legislative arena where the will of society and due process of law are better served.

But as troubling as the recent trend toward "legislation by regulation" is, I am even more concerned about "regulation by litigation." Environmental stakeholders are increasing their attempts to set environmental policy in the courts, both circumventing the legislative branch of our government, whose job is to set environmental policy, and short-circuiting the intended rule-making process in the executive branch.

There is an emerging practice of allowing the EPA to settle lawsuits with environmental groups under consent orders that bind the EPA to rules and regulations that have not been properly vetted. This leaves us, the regulated community and our elected officials on Capitol Hill, out of the process.

Unfortunately, we have to confront the fact that environmental groups committed to regulating the fertilizer industry through the court system have had some successes. One example is the numeric nutrient criteria initiative.

Florida Nutrient-Control Example

Environmental groups sued the EPA for allegedly failing to protect rivers, streams and lakes from excessive nutrient content because the EPA had not imposed statewide quantitative requirements on Florida. In fact, the Florida Department of Environmental Protection had been working diligently for years to tailor criteria to the circumstances of each waterway based on sound science.

The settlement reached with environmental groups called for stricter requirements than even the EPA had proposed. As a result, 80 percent of Florida's most pristine waterways would be deemed impaired because of downstream protection values.

Florida's congressional delegation sent three letters to the EPA asking it to subject its proposed criteria to third party scientific review and economic analysis prior to finalizing its rules. These letters were signed by both senators and 23 of Florida's 25 members of the House of Representatives. But EPA did not conduct the requested scientific review before releasing the final rule on November 15th.

However, the efforts of the congressional delegation and industry leaders were not all in vain. The EPA announced that it would delay implementation of the final rule for 15 months, during which time legal challenges are sure to be advanced and Congress now will have the opportunity to pass legislation that could affect the rule or its implementation. Similar lawsuits and rule-making are now ongoing in other states as well.

Florida Phosphate Mining Example

Another case of regulation by litigation in Florida directly impacted the market for phosphate fertilizer. One of our competitors spent several years meticulously following the legal process to receive permits to mine a new area. The permits were issued, but shortly before mining was to begin, environmental groups sued the Army Corp of Engineers over the permit review process. The courts issued an injunction barring mining while the case is being heard, prompting our competitor to notify 200 workers that they would be subject to lay-offs as a result.

Although the court subsequently granted a motion allowing limited mining in a restricted portion of the new mine, the precedent of revoking or impairing previously issued permits is disconcerting. We must continue to challenge these end-run tactics and find a way to return to the proper order for establishing environmental policy in this country.

When we evaluate the market for phosphate fertilizers over the last several months, it is clear to us that the increased regulatory burden faced by U.S. producers has had a meaningful impact on the supply/demand balance and on the prices that retailers and farmers face. This is only one illustration of how the regulatory interests of producers and retailers are intertwined.

I believe the constructive resolution of these issues and others affecting participants in the agricultural supply chain, is essential in allowing us all to continue to do what we do so well today — feed the world.

Of course success in resolving these issues is necessary for our business success. More importantly, resolution is essential to providing food to 7 billion people today and an estimated 9 billion people by 2045. That has to be the consistent message that we all provide to these key audiences: without fertilizer there would not be an adequate food supply. We need to educate all of our stakeholders about our dedication to ensuring an adequate food supply by producing safe products in an environmentally responsible manner.

Request for Retailer Cooperation

...The executive branch under the Obama Administration has produced a significant amount of environmental regulatory activity. Our fates are intertwined on these challenges, and on other public policy issues we face as an industry. If we lose on these issues and are unable to change the course of these regulations and legislation we, and our customers, are going to suffer economically. It will only be a question of how much.

I ask that you work with us on these policies. We have learned a great deal in our experience with the Florida numeric nutrient criteria issue that unrelated — and even sometimes competing — interests can collaborate effectively to achieve a shared objective.

It would be most helpful for us to speak collectively on regulatory predictability and its effect on cost and jobs. You can help by joining us in letter-writing campaigns to Congress, the White House, the Office of Management and Budget and the EPA.

We hope you will consider signing on to our group letters about the impact of these measures on jobs, about the need for good science and about the substantial economic impact of regulation on all of us.

You might also create a rapid response team to get your voice heard when the newspapers, or the blogs, send only the environmental community's voice to policymakers and local stakeholders. One more step would be to send these same messages back to your grassroots networks so they can provide consistent messages to the broader agricultural community.

Here are a few examples of policy issues on the horizon where we can work together to achieve success:

  • Work with Congress to ensure that no funds are made available to EPA in its effort to regulate industrial sources of greenhouse gas emissions. Also, ensure that farmers are not required to measure and report GHG field emissions to EPA. 

  • Work with Congress to ensure that no funds are made available to EPA in its effort to enforce the final numeric nutrient criteria rule for the State of Florida. 

  • Continue to lobby Congress and the Department of Homeland Security (DHS) against the inclusion of Inherently Safer Technology language in any reauthorization of the Chemical Facility Anti-Terrorism Standards. 

  • Continue to educate Congress and the Surface Transportation Board on the benefits of shipping our products via the nation’s rail system, and work to prevent the railroads from passing the entire costs of security measure requirements onto shippers of hazardous materials. 

  • Finally, please continue to work with farmers through ARA outreach efforts and the great work of your agronomists and certified crop advisors to promote sound stewardship and best management practices of our products, including the 4R system.

The final excerpt from Steve Wilson’s presentation will appear in next week’s Dealer Update. It contains his explanation of efficiency in growing crops using less fertilizer.