Chemicals in Farm Runoff Rattle States on the Mississippi

Dead zones have been occurring in the gulf since the 1970s, and studies show that the main culprits are nitrogen and phosphorus from crop fertilizers and animal manure in river runoff. They settle in at the mouth of the gulf and fertilize algae, which prospers and eventually starves other living things of oxygen.

Government studies have traced a majority of those chemicals in the runoff to nine farming states, and yet today, decades after the dead zones began forming, there is still little political common ground on how to abate this perennial problem. Scientists who study dead zones predict that the affected area will increase significantly this year, breaking records for size and damage.

For years, environmentalists and advocates for a cleaner gulf have been calling for federal action in the form of regulation. Since 1998, the Environmental Protection Agency has been encouraging all states to place hard and fast numerical limits on the amount of those chemicals allowed in local waterways. Yet of the nine key farm states that feed the dead zone, only two, Illinois and Indiana, have acted, and only to cover lakes, not the rivers or streams that merge into the Mississippi.

The lack of formal action upstream has long been maddening to the downstream states most affected by the pollution, and the extreme flooding this year has only increased the tensions.

“Considering the current circumstances, it is extremely frustrating not seeing E.P.A. take more direct action,” said Matt Rota, director of science and water policy for the Gulf Restoration Network, an environmental advocacy group in New Orleans that has renewed its calls for federally enforced targets. “We have tried solely voluntary mechanisms to reduce this pollution for a decade and have only seen the dead zone get bigger.”

Environmental Protection Agency officials said they had no immediate plans to force the issue, but farmers in the Mississippi Basin are worried. That is because only six months ago, the agency stepped in at the Chesapeake Bay, another watershed with similar runoff issues, and set total maximum daily loads for those same pollutants in nearby waterways. If the states do not reduce enough pollution over time, the agency could penalize them in a variety of ways, including increasing federal oversight of state programs or denying new wastewater permitting rights, which could hamper development. The agency says it is too soon to evaluate their progress in reducing pollution.

Don Parish, senior director of regulatory relations for the American Farm Bureau Federation, a trade group, says behind that policy is the faulty assumption that farmers fertilize too much or too casually. Since 1980, he said, farmers have increased corn yields by 80 percent while at the same time reducing their nitrate use by 4 percent through precision farming.

“We are on the razor’s edge,” Mr. Parish said. “When you get to the point where you are taking more from the soil than you are putting in, then you have to worry about productivity.”

Dead zones are areas of the ocean where low oxygen levels can stress or kill bottom-dwelling organisms that cannot escape and cause fish to leave the area. Excess nutrients transported to the gulf each year during spring floods promote algal growth. As the algae die and decompose, oxygen is consumed, creating the dead zone. The largest dead zone was measured in 2002 at about 8,500 square miles, roughly the size of New Jersey. Shrimp fishermen complain of being hurt the most by the dead zones as shrimp are less able to relocate — but the precise impacts on species are still being studied.

The United States Geological Survey has found that nine states along the Mississippi contribute 75 percent of the nitrogen and phosphorus. The survey found that corn and soybean crops were the largest contributors to the nitrogen in the runoff, and manure was a large contributor to the amount of phosphorus.

There are many other factors, of course, that determine what elements make it from crops into river water, for example, whether watersheds are protected by wetlands or buffer strips of land.

John Downing, a biogeochemist and limnologist at Iowa State University, said structural issues were also to blame. Many farms in Iowa, he said, are built on former wetlands and have drains right under the crop roots that whisk water away before soils can absorb and hold on to at least some of the fertilizer. ? ?

Still, overapplication of fertilizers remains a key contributor, he said. “For farmers, the consequences of applying too little is much riskier than putting too much on.”

This article has been revised to reflect the following correction:

Correction: June 3, 2011

An earlier version of this article used an incorrect spelling of a chemical that runs off into rivers from crop fertilizers and animal manure. It is phosphorus, not phosphorous.

This article has been revised to reflect the following correction:

Correction: June 5, 2011

A picture on Friday with an article about farm chemicals and waste that are carried south by the surging Mississippi and that are expected to result in the largest dead zone ever in the Gulf of Mexico was published in error. The picture showed volunteers sandbagging a farm south of Oslo, Minn., along the flooding Red River in April. The Red River, which flows north into Canada, is not part of the Mississippi River watershed.

View the original article here

New Federal Crackdown Confounds States That Allow Medical Marijuana

As some states seek to increase regulation but also further protect and institutionalize medical marijuana, federal prosecutors are suddenly asserting themselves, authorizing raids and sending strongly worded letters that have cast new uncertainty on an issue that has long brimmed with tension between federal and state law.

How can a drug that federal drug law says is criminal be considered medicine under state law?

“It’s weird,” said Kevin Griffin, co-founder of West Coast Wellness, a medical marijuana dispensary that opened here in February. “We’re not a pharmacy. We spent a lot of time gathering information, and this is what we came up with as the most responsible, legal way.”

Posters featuring Pink Floyd and Tupac Shakur lined the white walls of the office, in the back of a bland building just inside Seattle’s northern boundary. Glass pipes decorated a shelf. And then there was the medicine, available by “donation only,” which included less expensive “medibles” like lollipops and “pot” pies and the traditional smoked dosages at about $280 an ounce. Questions? Just ask the “budtender” — while you still can.

“I’m worried,” Mr. Griffin said. “We might lose something we put a lot of money into.”

West Coast Wellness, one of scores of new dispensaries in the state, opened just as Washington appeared ready to approve one of the nation’s most expansive medical marijuana policies, broadening its original 1998 law to include licensing growers and dispensaries. The Legislature passed the measure last month. Yet while Gov. Christine Gregoire had initially expressed support, she instead vetoed most of the bill, specifically citing new concerns about federal opposition.

“The landscape has changed,” said the governor, a Democrat.

Letters so far have gone out to governors in Arizona, Colorado, Montana, Rhode Island, Vermont and Washington, prompting some states — including Rhode Island and Montana, in addition to Washington — to revise or back away from plans to make the medical marijuana industry more mainstream.

In Washington, Ms. Gregoire asked for guidance from the state’s two United States attorneys, Mike Ormsby and Jenny Durkan. In a reply to the governor last month, they said the federal government would prosecute “vigorously against individuals and organizations that participate in unlawful manufacturing and distribution activity involving marijuana, even if such activities are permitted under state law.”

The changes have angered supporters of medical marijuana, who say the federal government is sending mixed signals, even as they argue that it has not technically changed its position.

“How they’re obviously coming across is saber rattling,” said Alison Holcomb, director of drug policy for the American Civil Liberties Union of Washington. “If there has been a shift, then somebody needs to own up to that. We have a very clear memo from 2009.”

In October 2009, the Justice Department said in a memorandum drafted by David W. Ogden, then the deputy attorney general, that it would not focus on “individuals whose actions are in clear and unambiguous compliance with existing state laws providing for the medical use of marijuana.”

The memo did not allow farms and dispensaries or the buying and selling of marijuana. In many states that allow medical marijuana, state law does not specify that dispensaries are also legal. The Washington State Department of Health’s Web site specifically says that dispensaries are illegal, as is buying and selling marijuana. It says that people who qualify for medical marijuana are allowed to grow their own.

Yet with some states and even the federal government appearing to look the other way, farming collectives and dispensaries flourished. And law enforcement officials at various levels took notice. In Spokane, Wash., federal agents recently conducted searches of seven dispensaries, though no one was arrested.

“There didn’t seem to be a recognition that the use and sale of marijuana is against federal law,” said Mr. Ormsby, the United States attorney for the Eastern District of Washington.

When the Legislature was drafting the bill it passed in its most recent regular session, Mr. Ormsby said, “No one consulted with me about what I thought of what they were going to do and did I think it ran afoul of federal law.”

Of the state’s current medical marijuana law, he added, “We believe, of course, under federal law no part of the state law is legal.”

Mr. Ormsby and other prosecutors say they agree that the federal position has not changed, and they say they have been given no new directive from the Justice Department (Mr. Ormsby’s and Ms. Durkan’s letter to Ms. Gregoire said they had “consulted with the attorney general,” Eric H. Holder Jr.).

A spokeswoman for the Justice Department, Jessica Smith, said: “This is not a change in policy. It’s a reiteration of the guidance that was handed down in 2009 by the deputy attorney general.”

Ms. Smith noted that the 2009 memo “says definitively that distribution continues to be a federal offense.”

Some federal prosecutors say states have simply let medical marijuana get out of hand. Many supporters of medical marijuana agree.

“Seeing storefront dispensaries advertise with neon pot leaves is inconsistent with the idea most people have of medical marijuana,” said Ms. Holcomb, of the A.C.L.U. “But until you let states regulate these dispensaries, you have no way to control that.”

Some people on each side say the issue could quickly be solved if the federal government reclassified marijuana from a Schedule 1 drug, a category that includes heroin, to a Schedule 2 drug, which includes medicines that can be prescribed.

“I think the onus is on the federal government,” said State Senator Jeanne Kohl-Welles, a Democrat from Seattle who sponsored the bill that Ms. Gregoire vetoed. “Whether the Obama administration is signaling that it’s going to be more aggressive or back off from what’s in that Ogden memo, I don’t know.”

Noting that Ms. Gregoire cited concerns that state employees could face legal action for licensing growers and dispensaries, and that prosecutors had insisted that state employees “would not be immune” from prosecution, Ms. Kohl-Welles said: “I keep trying to visualize federal agents going into a state building, the Department of Health, and hauling people off.”

She continued, “I can’t conceptualize that.”

This article has been revised to reflect the following correction:

Correction: May 8, 2011

An earlier version of this article erroneously classified cocaine as a Schedule 1 drug.

 

Seeking Business, States Loosen Insurance Rules

Today, all it takes is a trip to Vermont.

Vermont, and a handful of other states including Utah, South Carolina, Delaware and Hawaii, are aggressively remaking themselves as destinations of choice for the kind of complex private insurance transactions once done almost exclusively offshore. Roughly 30 states have passed some type of law to allow companies to set up special insurance subsidiaries called captives, which can conduct Bermuda-style financial wizardry right in a policyholder’s own backyard.

Captives provide insurance to their parent companies, and the term originally referred to subsidiaries set up by any large company to insure the company’s own risks. Oil companies, for example, used them for years to gird for environmental claims related to infrequent but potentially high-cost events. They did so in overseas locations that offered light regulation amid little concern since the parent company was the only one at risk.

Now some states make it just as easy. And they have broadened the definition of captives so that even insurance companies can create them. This has given rise to concern that a shadow insurance industry is emerging, with less regulation and more potential debt than policyholders know, raising the possibility that some companies will find themselves without enough money to pay future claims. Critics say this is much like the shadow banking system that contributed to the financial crisis.

Aetna recently used a subsidiary in Vermont to refinance a block of health insurance policies, reaping $150 million in savings, according to its chief financial officer, Joseph M. Zubretsky. The main reason is that the insurer did not need to maintain conventional reserves at the same level as would have been required by insurance regulators in Aetna’s home state of Connecticut.

In other big transactions, companies including MetLife, the Hartford Financial Services Group, Swiss Reinsurance, Genworth Financial and the American International Group, among others, have refinanced life, disability and long-term-care insurance policies, as well as annuities.

For the states, attracting these insurance deals promotes business travel and creates jobs for lawyers, actuaries and other white-collar workers, who pay taxes. States have also found that they can impose modest taxes on the premiums collected by captives.

For insurers, these subsidiaries offer ways to unlock some of the money tied up in reserves, making millions available for dividends, acquisitions, bonuses and other projects. Three weeks after Aetna’s deal closed, the company announced it was increasing its dividend fifteenfold.

And as changes to the nation’s health systems are phased in, such innovations might even help hold down the cost of insurance for consumers, much as selling pooled mortgages to investors has made buying a home less expensive.

The downside, though, is that the states are offering a refuge from other states’ insurance rules, especially the all-important ones requiring companies to have sufficient reserves. California, for one, has already chosen not to try to lure such businesses. “We are concerned about systems that usher in less robust financial security and oversight,” said Dave Jones, the California insurance commissioner.

While saying that he wanted to remain open to innovation, Mr. Jones added, “We need to ensure that innovative transactions are not a strategy to drain value away from policyholders only to provide short-term enrichment to shareholders and investment bankers.”

The cost of some of the deals has been considerable. In 2008, MetLife used a subsidiary in Vermont to handle a crucial $3.5 billion letter of credit, with help from Deutsche Bank, because the subsidiary was not subject to the same collateral requirements as in New York. The trade immediately bolstered MetLife’s balance sheet, helping the company to endure that year’s market turmoil without government assistance. But MetLife agreed to pay Deutsche Bank $3.5 million a year for 15 years, according to internal documents obtained by The New York Times — locking itself into high costs for years.

MetLife said its transaction was in keeping with industry rules and norms, and Deutsche Bank declined to comment.

Another issue is public oversight. State regulators normally require insurance companies to make available reams of detailed information. A policyholder can find every asset in an insurer’s investment portfolio, for instance, or the company the carrier turns to for reinsurance. But not if the insurer relies on a captive. The new state laws make the audited financial statements of the captives confidential.