NGFA Newsletter

Volume 51, Number 10, May 20, 1999

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Contents

Country/Terminal Corner by Randall c. Gordon Vice President, Communications/Government Relations

USDA Hopes for LDP Rate Announcement by June 1

…Changes Still Being Reviewed by White House Office of Management and Budget…

The U.S. Department of Agriculture now hopes to announce implementation of a national loan deficiency payment (LDP) plan by June 1, the NGFA has learned.

Most of the past two weeks have been spent by USDA in preparing responses to a series of 15 questions, as well as several followup querries, posed by the White House Office of Management and Budget concerning the national LDP rate approach. Officials from USDA's Farm Service Agency were scheduled to meet this afternoon with the USDA's Office of the Chief Economist to review the department's answers to OMB's questions. The chief economist's office has only recently become involved in reviewing FSA's economic analysis of the proposal.

In addition to questioning the market relevance of a national LDP rate approach, the NGFA has learned that OMB also reportedly has estimated the additional cost of such a plan (compared to the current differential/posted county price approach) at up to $1 billion -- far exceeding the $280 million to $350 million price tag originally estimated by USDA. USDA reportedly has responded by raising its estimate of the cost of a national LDP rate to $400 million. USDA also projects that a national LDP rate will result in fewer 1999-crop loan forfeitures -- approximately 40 million bushels less -- than would occur under the current PCP-based approach because the average LDP will be higher, thereby encouraging less grain to go under loan.

FSA Officials Meeting with Congress, Producer Groups: Meanwhile, Farm Service Agency officials are continuing their efforts to sell the national LDP rate plan. They were to show maps of potential "winners and losers" under a national LDP rate during a scheduled meeting this afternoon with several members of the House Agriculture Committee, including Chairman Larry Combest, R-Texas, and Bill Barrett, R-Neb., who chairs the committee's General Farm Commodities, Resource Conservation and Credit Subcommittee, which has jurisdiction over farm programs.

But two influential senators -- Sens. Pat Roberts, R-Kan., and Sam Brownback, R-Kan. -- on May 13 issued a letter to Secretary of Agriculture Dan Glickman expressing concerns with proposed changes in the LDP program. "…[W]e believe that without proper caution being exercised, problems under the new program could actually be more severe than those that currently exist," the senators wrote. "We are particularly concerned with the effect proposals to establish a national LDP could have in counties and markets that are located large distances from terminal markets….In addition, this plan could result in significant grain forfeitures to the federal government and will cause USDA to get back into the grain storage and marketing business."

Roberts and Brownback posed four questions to Glickman:

"1. Will different areas of the country and/or states benefit at the expense of another area? If so, what areas?

" 2. How does USDA intend to implement a new LDP system when wheat harvest has already started in several areas of the country? Last year, many wheat producers could not take full advantage of the program because they and FSA staff did not fully understand program rules and regulations. Is this going to be allowed to happen again this year? Will those producers that (sic) are already harvesting and have signed up for the program remain in the old system, be forced to move to the new system -- if implemented -- or will they be allowed to choose between the two (LDP) systems?

"3. Will any changes in the regulations address problems with beneficial interest that developed in Kansas and other areas last year? USDA has repeatedly stated this will require a statutory change but has been unable to provide Congress with the appropriate section of the statute that prevents you from doing this through regulations….[W]e would like…to know what statutory changes are needed to address this problem.

"4. Would allowing the use of the lower of two terminal prices correct some of the inequities that currently exist in the calculation of PCPs and LDPs? [Note: This is a recommendation advanced by the National Corn Growers Association.]

"We fear that without proper analysis, some areas of the country could be harmed," Roberts and Brownback concluded. "Furthermore, we believe that wheat producers could again be denied the full benefits of the LDP program as they and FSA staff are again forced to learn a new system in the middle of the harvest season."

FSA officials also have met with representatives of the major farm and commodity organizations to explain the national LDP rate approach and their rationale for moving away from the current differential/posted county price approach for determining LDPs. Most farm groups releasing public statements following the meetings either have been lukewarm or mildly opposed to the national LDP rate plan.

Bottom Line: USDA officials told the NGFA today that they still believe the national LDP rate approach eventually will be approved by OMB, albeit with some changes. One such change is likely to be a weighting of terminal market prices -- rather than an olympic average -- when determining a national LDP rate. [See Step 4 in the accompanying box.]

In a related matter, the NGFA has learned that the House Agriculture Committee and Senate Minority Leader Tom Daschle, D-S.D., among others, have asked USDA for its internal analysis on the impact of updating county loan rates to reflect more current market values, as well as its analysis on the impact of setting wheat loan rates by class. USDA's county loan rates for 1999 crops of wheat and corn are essentially unchanged from rates in effect for the 1995 crops, which were based on 1993- and 1994-crop posted county prices that even at that time were considered to be in need of substantial revision to better reflect local market prices. In its testimony on LDPs released on May 6, the NGFA had encouraged Congress to obtain and make public USDA's internal analysis on loan rates. [Note: The complete text of the NGFA's testimony is available by accessing the NGFA's web site at: http://www.ngfa.org. Click on the "What's New" icon. Type all letters in lower case. Or contact the NGFA at (202) 289-0873, and a copy will be faxed or e-mailed to you.]

Basic Elements of USDA's National LDP Rate Plan

The following are the basic steps that would be used to determine a daily national LDP rate under USDA's proposed plan as submitted to OMB. [Note: It is important to stress that the details of the USDA-envisioned national LDP rate still may change as a result of further analysis and input from OMB.]

• Step 1: USDA would determine daily prices for each commodity at each of the terminal markets from which posted county prices currently are derived.

• Step 2: The daily price at each of these terminal markets then would be adjusted by subtracting: 1) the differential that applies to each respective terminal; and 2) any temporary adjustments (such as transportation-related variations) that exist in the area where the terminal is located. The resulting figure would represent the posted county price for each terminal.

• Step 3: The terminal PCPs then would be subtracted from the county loan rate in the areas where the terminals are located to arrive at an LDP rate for each terminal.

• Step 4: The LDP rates for each of the terminals then would be averaged, after deleting the high and low figures (olympic average) to arrive at the national LDP rate for that given day.

The new LDP rate concept would apply to 1999 crops only, not to remaining 1998 crops. A single national LDP rate would be determined for each 1999-crop commodity, and would apply for that commodity in every state and county for that given day. Every producer electing to receive an LDP would receive the national LDP rate in effect on that day. Unlike the current system, there would be no comparison to the local county loan rate to determine the LDP rate. In addition, every producer choosing to repay a loan would have the loan repayment rate adjusted by the LDP rate applicable on the date the loan is repaid.

EPA to Issue Revised Phosphine Proposal Prior to Stakeholder Meetings

The NGFA has learned that the Environmental Protection Agency plans to issue a revised proposal by late summer -- perhaps by August -- to regulate the future use of aluminum and magnesium phosphide, which produce phosphine gas.

The agency has told the NGFA that it will issue the revised proposal at least 30 days before the first of its three planned stakeholder meetings, which previously had been scheduled for June or July. That means the stakeholder meetings -- slated for Atlanta, Ga., Kansas City, Mo., and Sacramento, Calif. -- likely will not occur until October or November. EPA says it still hopes to issue a final rule by the end of 1999. The delay is caused, in large part, by the time required to analyze the more than 600 written comments -- an all-time record -- received by the agency on its original proposal.

Once a final rule is issued, registrants of aluminum and magnesium phosphide will have eight months to incorporate any new restrictions into the label for these chemicals.

Forum by Kendell Keith , President

Government's Role in Risk Management

_A major reassessment of the Commodity Futures Trading Commission's legal authority and flexibility has begun.

The House Agriculture Committee's Subcommittee on Risk Management and Specialty Crops this week began a series of hearings in preparation for legislation to reauthorize the CFTC. As a result of some controversial decisions by the CFTC -- in particular its announcement last year concerning its interest in regulating over-the-counter derivatives markets -- arguments will be presented that the law should be amended to more narrowly and tightly define the CFTC's regulatory authority.

The NGFA will support reauthorization of the CFTC. But your Association also will be urging that the agency's responsibilities should be narrowed, and will be offering specific recommendations for doing so. This new legislative direction has become important because the CFTC has demonstrated its ability to create risks and uncertainties that are unproductive, disruptive and unacceptable to commercial markets.

The agricultural marketplace has not been immune from the CFTC's unfortunate tendency to overregulate. In 1998, the agency created an agricultural trade options pilot program with enough regulatory snarls to dissuade the entire industry from participating. And by prohibiting cash settlement, the CFTC also eliminated much of the pilot program's value. Why sign a contract that parties cannot mutually agree to amend at a later date for a negotiated amount of money -- a flexibility that exists in every other cash contract?

Government plays other roles in risk management. A growing one is crop insurance. Once a minor program, crop insurance now attracts annual government subsidies of $1.5 billion a year. And Congress has granted budget authority to almost double that figure. Crop insurance is good for some farmers, in particular those who can't afford to miss a crop. But how does it affect other risk-management tools and practices? USDA research has shown that the revenue-type products like crop revenue coverage (CRC) can encourage cash contracting or futures hedging up to a point. But at higher levels of coverage -- 75 percent coverage seems to be the turning point -- the nature of the CRC policy changes. At that point, CRC coverage, rather than encouraging farmers to further manage risk, tends to discourage the use of futures and cash contracting by farmers.

As Congress debates the legal authorities of the CFTC and the merits of more money for crop insurance, NGFA will be advocating the following principles:

• Strong CFTC authority to protect against market manipulation and fraud, but a more narrowly and specifically defined set of legal authorities.

• A more level playing field among competitors in the offering of risk-management services of all types. Government must guard against creating privileged classes of competitors through legal boundaries or extreme subsidies that distort markets.

• Laws and regulations that rely more on competitive markets rather than direct government oversight to police behavior.

Better risk management is a necessity for farmers under the market-oriented 1996 farm law. The competitive marketplace can develop the needed risk management tools and services. But it can do so only if the Congress, USDA and the CFTC support an environment to let competition drive the process.

On Capitol Hill by David C. Lindsay Director of Legislative Affairs

Supplemental Spending Bill Approved

After three months of debate, Congress today gave final approval to a $15 billion supplemental appropriations bill (H.R. 1141) for fiscal 1999 that includes about $570 million in agricultural spending.

The Senate approved the measure late today, after the House had done so by a 269-158 vote on May 18. President Clinton is expected to sign the measure into law shortly.

The majority of the funds authorized in the appropriations bill are designated for military preparedness, financing of the air war against Yugoslavia, and Central American hurricane and domestic natural disaster relief. Included in the agricultural spending are:

• $109.6 million to replenish USDA loan accounts;

• $42.75 million for Farm Service Agency salaries and expenses;

• $70 million for additional Livestock Disaster Assistance payments;

• $28 million to fund Conservation Reserve Program technical assistance to farmers and ranchers for the remainder of fiscal1999 and $35 million for fiscal 2000; and

• $145 million in assistance available to agricultural producers.

During a joint House-Senate conference committee session to reach final agreement on the bill, Sen. Tom Harkin, D-Iowa, was defeated on a tie (14-14) vote in his attempt to allocate an additional $2.8 billion in increased direct farm program (AMTA) payments and market loss assistance to producers. However, lawmakers already have begun meeting with representatives of commodity and producer groups to develop another agricultural spending bill that likely will be considered later this year.

Congress Begins Action on Fiscal 2000 Appropriations Bills: Meanwhile, consideration of the appropriations bills for fiscal year 2000 (which begins Oct. 2) began this week.

The House Appropriations Committee reached agreement on a bill that grants $60.9 billion in spending for USDA and the Food and Drug Administration. About $47.1 billion of that amount is earmarked for mandatory programs, such as food stamps, school lunch programs, and USDA commodity loans. Discretionary spending, which includes funding for such initiatives as agricultural research, was set at $13.7 billion, $200 million more than proposed by the administration. The Senate Appropriations Committee has not yet set a date to begin work on its version of the bill.

Hill Highlights

There were these other developments on Capitol Hill of interest to the grain, feed and processing industry:

Jones Act Reform Bill Introduced: As expected, Sen. Sam Brownback, R-Kan., introduced legislation (S. 1032) that would amend the nation's outdated maritime laws, collectively referred to as the Jones Act. The four initial cosponsors of the bill are Sens. Richard Lugar, R-Ind., Jesse Helms, R-N.C., Conrad Burns, R-Mont., and Peter G. Fitzgerald, R-Ill. The bill would amend existing laws by allowing the use of foreign-built deepwater cargo vessels in domestic shipping, provided the cargoes are bulk commodities and the ships are American- owned, flagged and crewed. The NGFA is supporting the bill, and urges members to help by notifying senators and urging that they become co-sponsors.

Subsidized Grain Cleaners at Gulf Endorsed by Roberts, Brownback: In an April 27 letter to Secretary of Agriculture Dan Glickman, Sens. Pat Roberts and Sam Brownback, both R-Kan., urged USDA to finance the construction of high-speed grain-cleaning equipment at Gulf port terminals. The authors asserted that such a subsidy should be considered an investment in U.S. competitiveness overseas. The issue of whether to subsidize cleaning equipment at Gulf export facilities has been under review at USDA for several months.

Harbor Maintenance Tax Bill Gains Steam: Legislation (H.R. 1260) that would repeal the harbor maintenance tax -- the export portion of the statute was declared unconstitutional last year -- and require federal harbor infrastructure activities to be funded from general revenues now has 25 cosponsors and will be the subject of a House committee hearing on May 26. The NGFA urges its members to contact their congressman and urge support for the measure.

Verbatim

`Free trade is indispensable to our prosperity….[T]he less America trades, the poorer America will be….I am not indifferent to the suffering of Americans who are lost in the transition to a global economy. But the answer to their suffering cannot be the adoption of policies that will sustain one industry by tariff or subsidy at the expense of the long-term health of industries that are the foundation of our future economic growth. Protected markets overseas are a challenge to our diplomacy; they must not be a cause for trade wars. Embracing protectionism here to retaliate for it elsewhere is akin to a murder-suicide pact, and we should resist the temptation whether the product in question is bananas or sugar or steel….Only risks to the security of our vital interests or egregious offenses to our most cherished political values should disqualify a nation from entering into a free trade agreement with us."

— Sen. John McCain, R-Ariz., chairman of the Senate Commerce, Science and Transportation Committee in an address to the National Press Club, May 20, 1998.

Feed Facts by Randall C. Gordon V.P., Communications/Gov't Relations

GIPSA Proposes to Regulate Scales Used to Weigh Feed

The U.S. Department of Agriculture's Grain Inspection, Packers and Stockyards Administration has proposed to amend its existing regulations under the Packers and Stockyards Act to include requirements for weighing feed provided by integrators and others under a "livestock or poultry growing arrangement" in which the weight of the feed is a factor in determining the payment to the grower.

In an April 2 Federal Register notice, GIPSA said that its current regulations "do not contain any requirements regarding the weighing of feed although, in some circumstances, feed weight affects payment or settlement to livestock growers and poultry growers." Its proposed rule would apply to stockyard owners, market agencies, dealers, packers or live poultry dealers where the weight of the feed is a factor in determining payment or settlement to a livestock or poultry grower.

Specifically, the rule would require that such entities issue duplicate scale tickets that show: 1) the name of the agency performing the weighing service or the name and location of the firm supplying the feed; 2) the name and address of the livestock or poultry grower; 3) the name or initials of the person who weighed the feed (or the signature of the weigher if required by state law); 4) the location of the scale; 5) the gross weight, tare weight and net weight of each lot of feed assigned to an individual grower (if applicable); 6) the date and time the gross weight and tare weight (if applicable) are determined; 7) the identification of each lot of feed assigned to an individual grower by vehicle or trailer compartment number and seal numbers (if applicable); 8) whether the driver was on or off the truck at the time of weighing; and 9) the license number or other identification numbers of the truck and trailer, if weighed together, or trailer if only the trailer is weighed.

The proposed rule also would require that the scales be: 1) equipped with a printer; 2) installed, maintained and operated to meet the applicable requirements contained in the National Institute of Standards and Technology's Handbook 44; and 3) tested at least twice annually (approximately every six months) by a "competent person," with the test results filed with the regional Packers and Stockyards Office. It also would require that such firms employ "qualified persons" to operate the scales.

Submitting Comments: The NGFA's Feed Industry Committee and Grain Grades and Weights Committee have reviewed the GIPSA proposal, and will submit comments on behalf of the association. Members interested in submitting comments by the June 1 deadline may do so by writing to: Deputy Administrator; GIPSA/USDA; Packers and Stockyards Programs; Stop 3641; 1400 Independence Ave., S.W., Washington, D.C., 20250-3641. Comments also may be faxed to GIPSA at (202) 205-3941, or e-mailed to PSP.GIPSA@usda.gov.

Rails, Rivers and Roads by Randall C. Gordon V.P., Communications/Gov't Relations

STB Announces June 1 Division of Conrail

The Surface Transportation Board announced that it had been notified by the CSX Corp. and the Norfolk Southern Corp. that they will assume control over Conrail effective June 1.

In a decision released today [Decision No. 127 in STB Finance Docket No. 33388], the STB noted that it will continue to "extensively monitor" the transition of operations from Conrail to the CSX and the Norfolk Southern after it occurs on June 1. For instance, the STB said, it will receive in-depth weekly reports both for Conrail lines acquired by the CSX and Norfolk Southern, as well as existing CSX and Norfolk Southern lines. These include condition reports for shared-asset areas, the Chicago gateway operations, yard and terminal operations; and on-time performance. The STB said it also will continue to monitor safety conditions on the affected lines until such time as the Federal Railroad Administration advises that the Conrail transaction has been implemented safely.

The STB also announced that the CSX and Norfolk Southern have reached, through private negotiations, final implementing agreements with all labor unions affected by the Conrail acquisition.

The agency has required the filing of monthly reports since last August by the carriers on such matters as labor implementing agreements; construction and other capital projects; information technology; and customer service.

Obtaining the STB Decision: The STB's decision announcing the June 1 effective date is available for viewing and downloading by members by accessing the NGFA's web site at: http://www.ngfa.org. Click on the "What's New" icon. When prompted, the "user's name" is: ngfa. The password is: soybean. Type all letters in lower case.

Corps of Engineers Schedules Inland Waterway System Workshops

The U.S. Army Corps of Engineers has scheduled a series of "workshops" on its Upper Mississippi River-Illinois Water System Navigation Study in July and August at seven Midwest locations.

The workshops will be the first opportunity for barge users to hear the initial results of the corps' $50 million-plus navigation study, which is expected to fall short of the industry-recommended improvements in the locks and dam system on the Upper Mississippi and Illinois River systems. The corps' said that during the workshops, it will present "alternatives with both economic and environmental inputs" available thus far that have been used in developing the study's recommendations.

Workshop Schedule: The workshop schedule is as follows:

• July 26: St. Louis, Mo. (Henry VIII Hotel and Conference Center, located near Lambert International Airport)

• July 27: Quincy, Ill. (Quincy University)

• July 28: Peoria, Ill. (Illinois Central College, East Peoria)

• July 29: Bettendorf, Iowa (Scott Community College)

• Aug. 3: Des Moines, Iowa (Des Moines Botanical Center)

• Aug. 4: La Crosse, Wis. (University of Wisconsin, La Cross)

• Aug. 5: St. Paul, Minn. (Inver Hills Community College, Inver Grove Heights)

Important to Attend: The NGFA encourages all members with an interest in barge transportation on the Upper Mississippi and Illinois River Systems to attend one or more of the workshops. The corps has requested that those who are considering attending send a note with your name and address, as well as the workshop site(s) you plan to attend, to: U.S. Army Engineer District, Rock Island; Attn.: PM-A; Clock Tower Bldg.; P.O. Box 2004; Rock Island, Ill., 61204-9908.

FRA Issues Proposed Rule on Rail Lending Program

The Federal Railroad Administration today issued proposed rules to implement the new rail loan and loan guarantee programs authorized under the Transportation Equity Act for the 21^st Century approved by Congress last year.

Dubbed the "Railroad Rehabilitation and Improvement Financing Program," it authorizes the federal government to provide direct loans and loan guarantees to state and local governments, government-sponsored authorities and corporations, railroads, and joint ventures that include at least one railroad. Importantly, the program is intended to be a lender of last resort for railroad applicants, which must provide two letters of refusal of financing from commercial lenders before proposals are eligible for consideration.

The types of projects eligible for financing are:

• acquisition, improvement or rehabilitation of intermodal or rail equipment or facilities (including tracks, bridges, yards, buildings and shops);

• refinancing of outstanding debt incurred for such purposes; and

• development or establishment of new intermodal or railroad facilities.

Loans and loan guarantees cannot be used for railroad operating expenses, and the aggregate unpaid principal of obligations cannot exceed $3.5 billion at any one time.

In granting loan applications, the FRA is required to give priority to projects that: 1) enhance public safety; 2) enhance the environment; 3) promote economic development; 4) enable U.S. companies to be more competitive in international markets; 5) are endorsed by the state(s) in which the project is located; or 6) preserve or enhance rail or intermodal service to small communities or rural areas. [Emphasis added.] In addition, $1 billion is reserved for railroad projects benefiting non-Class I carriers.

Submitting Comments: The FRA proposal can be obtained by accessing the NGFA's web site at: http://www.ngfa.org. Click on the "What's New" icon. When prompted, the "user's name" is: ngfa. The password is: soybean. Type all letters in lower case.

Comments are due on or before June 21, and should be sent in duplicate to: Docket No. FRA 199-5663, DOT Central Docket Management Facility, Room PL-401, Plaza Level, Nassif Bldg., 400 Seventh St., S.W., Washington, D.C., 20590.

Tech Talk by Thomas C. O'connor Director of Technical Services

USDA: Global Warming Treaty Would Have `Modest' Impact on Ag

The U.S. Department of Agriculture has issued a report that concludes that compliance with the provisions of the so-called Kyoto Protocol on global warming "would have a relatively modest impact on (U.S.) agriculture." In fact, USDA said that compliance with the protocol "could create substantial economic opportunities for farmers."

The Kyoto Protocol, which was signed by the Clinton administration in 1997 but has not been submitted to the Senate for ratification, commits industrialized nations (including the United States) to reduce emissions of so-called "greenhouse gases" over the period 2008-12 to about 5 percent below 1990 levels. Some scientists believe the buildup of greenhouse gases, including carbon dioxide and methane, over the last century is slowly warming the earth and could lead to more droughts, intense floods, disease and rising sea levels. But some developing nations, such as China, are not covered by the Kyoto Protocol, which has raised concerns that compliance could put the United States at a competitive disadvantage. In response, the Clinton administration has pledged not to submit the Kyoto Protocol to the Senate for consideration until it includes developing nations.

USDA's Analysis: The USDA report, entitled "Economic Analysis of U.S. Agriculture and the Kyoto Protocol," concluded that implementation of the Kyoto Protocol would result in only modest declines in U.S. agricultural production -- ranging from 0.1 percent for soybeans to 0.9 percent for rice. It also found that these small declines would be offset partially by increased commodity prices, such that net cash returns to farmers would decline by only about 0.5 percent. These results are based upon the assumption that the United States would take advantage of the agreement's cost-cutting provisions, such as international trading of emissions permits. In addition, the study assumes that farmers would respond to changes in production costs by changing the mix of inputs, modifying production practices and reducing output.

USDA also criticized studies by the American Farm Bureau Federation and Sparks Companies Inc., which concluded that compliance with the Kyoto Protocol would severely damage U.S. agricultural competitiveness. USDA said these studies failed to account for the key cost-cutting mechanisms in the Kyoto Protocol, such as the international permit-trading system for greenhouse gas emissions.

The USDA report also noted that the Kyoto Protocol's provisions for creating so-called "carbon sinks" to sequester carbon through improved conservation practices or converting marginal farmland to forests would provide an economic opportunity for farmers to supplement income. In addition, using trees, crops and agricultural wastes to produce power would provide a potentially significant opportunity for farmers to reduce net emissions and supplement income, USDA's report said.

Tech Tidbits

There were these other recent developments of interest to grain, feed and processing facility operations:

• GIPSA Expands Use of GAC 2100 Moisture Meter for Official Inspections: Starting May 1, all official moisture content measurements for barley, oats, long and medium grain rough rice, sorghum and all classes of wheat inspected under the U.S. Grain Standards Act began being determined with the Dickey-john GAC 2100 moisture meter. The transition date for corn, soybeans and oil-type sunflower seeds was Aug. 1, 1998.

• GIPSA Cancels Desert Durum Protein Calibration: On April 9, GIPSA formally announced that it was canceling the implementation of a separate calibration and standard slope setting for Desert Durum wheat protein for near-infrared transmittance (NIRT) instruments. The agency said it took the action because it determined that it would be in the best interest of the durum market to continue with a single NIRT protein calibration standard for all types of Durum.

• OSHA Issues Clarification on Powered Industrial Truck Training Requirements: The Occupational Safety and Health Administration has issued a clarification that companies must comply with current vehicle operator training requirements specified in the powered industrial truck standard [29 CFR 1919.178] until they come into compliance with the new standard, which is required by Dec. 1.

The new training requirements for operators of powered industrial trucks, such as folk lifts, were published on Dec. 1, 1998. Operators employed before Dec. 1, 1999 are required to complete initial training and evaluation by that date. Operators hired after Dec. 1, 1999 are to be trained and evaluated prior to being assigned to operate a powered industrial truck. The agency noted that employers will not be cited for violating the new requirements prior to Dec. 1, 1999. Conversely, employers who choose to meet the new standard before Dec. 1, 1999 will not be cited under the old requirements, OSHA said.

From the Bench by Randall C. Gordon V.P., Communications/Gov't Relations

U.S. Appeals Court Overturns EPA Air Quality Rules

In a significant decision issued May 14, a U.S. appeals court ruled that the Environmental Protection Agency had overstepped its legal and constitutional authority when it issued final rules revising the national ambient air quality standards for particulate matter and ozone.

In its 2-1 decision, a three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit said EPA's regulations on particulate matter and ozone represented an "unconstitutional delegation of legislative power." The court found that EPA was "arbitrary and capricious" in selecting particulate matter that is 10 microns or greater in size (PM-10) as the definition of coarse particulate matter. Further, the court ruled that the 1990 revisions to the Clean Air Act limit EPA's ability to enforce new ozone regulations and that the agency "cannot ignore the possible health benefits" of ozone.

Concerning EPA's decisions to regulate PM-10 and ozone, the court wrote: "…[T]he only concentration for ozone and particulate matter that is utterly risk-free, in the sense of direct health impacts, is zero. Section 109(b)(1) [of the Clean Air Act] says that EPA must set each standard at the level `requisite to protect the public health' with an `adequate margin of safety….' For EPA to pick any non-zero level, it must explain the degree of imperfection permitted….[W]hat EPA lacks is any determinate criterion for drawing lines. It has failed to state intelligibly how much is too much."

The ruling is potentially significant for the grain-handling industry, since PM-10 is the size of particulate matter emissions currently regulated -- and taxed -- by EPA and states under Clean Air Act permitting programs. The appeals court remanded the regulations to EPA for revision. EPA has said it is considering appealing the decision to the full U.S. appellate court for the D.C. circuit, or to the U.S. Supreme Court.