Susan Parker Bodine Barnes & Thornburg 202-371-6364 susan.bodine@btlaw

1. Environmental Challenges Facing the Agricultural Community Legislative Agriculture Chairs Summit X January 16, 2011 Susan Parker BodineBarnes & Thornburg202-371-6364susan.bodine@btlaw.com

2. New Regulations Affecting Agriculture • Nutrients • Water Quality Standards Regulations • Concentrated Animal Feeding Operations • Pesticide Permits • PM 10 and PM 2.5 • Release Reporting Under CERCLA and EPCRA • SPCC

3. Nutrients – Florida Numeric Standards Timeline • In July 2008, Florida Wildlife Federation sued EPA for failing to perform a non-discretionary duty by failing to establish federal numeric nutrient criteria in Florida. • In January 2009 (under the Bush Administration, EPA determined that federal numeric nutrient criteria in Florida were “necessary.” • In August 2009, EPA settled the lawsuit with the Florida Wildlife Federation lawsuit by agreeing to promulgate federal nutrient criteria for Florida by a date certain. • In January 2010, EPA proposed numeric nutrient criteria. • On November 14, 2010, EPA signed a final rule established federal numeric nutrient criteria for nitrogen and phosphorus for Florida lakes and flowing waters.

4. Nutrients – Florida Numeric StandardsConsequences • The Secretary of Florida’s Department of Environmental Protection has said the numeric nutrient criteria will drive millions of dollars in useless cleanup costs. • “Unfortunately, you will see a significant amount of error,” meaning “false positives,” when municipalities, farms and others must limit their discharges into healthy streams and “false negatives,” when the numeric nutrient criteria will not require discharge limits for impaired streams. • EPA attempts to address this issue by providing for site-specific alternative criteria.

5. Nutrients – Florida Numeric StandardsCosts • Florida Department of Environmental Protection: $2.1 billion a year. Most Florida waters would be considered impaired. • Florida Department of Agriculture and Consumer Services: $902 million and $1.605 billion annual costs to the agriculture industry. • Florida Water Environmental Association: $24.7 and $50.7 billion in capital costs cost for upgrading wastewater utilities to advanced nutrient treatment to be between, with an additional $0.4 to $1.3 billion in annual operating expenses. • EPA: • initially: $4.7 to $10 million a year; • revised: $135.5-206.1 million a year, of which only $20-23 million would be costs to agriculture. • Benefits: $28.2 million a year, based on using contingent valuation methodology.

6. Nutrients – Florida Numeric StandardsIssues • EPA provides no support for its conclusion that federal criteria were “necessary.” • EPA’s reliance on site-specific alternative criteria is an admission that Florida’s original site-specific approach was appropriate. • EPA’s standards for streams are based on levels of nutrients in streams that have not been impacted by humans. But EPA has not even tried to show how these nutrient levels are necessary to meet Florida designated uses. • Even though the stream criteria are based on unimpacted streams, EPA is requiring even lower standards if a lake downstream is not meeting its lake criteria. • The state of Florida has filed suit to challenge these new criteria.

7. Nutrients – Chesapeake BayTimeline • On May 12, 2009, President Obama issued Executive Order 13508. Under this Order, EPA announced it would complete a federal TMDL for the Chesapeake Bay by December 2010. • On December 29, 2009, EPA sent a letter to each Bay jurisdiction threatening “consequences” if the states did not go along with EPA’s plans • On May 10, 2010, EPA settled a lawsuit with Chesapeake Bay Foundation by committing to, among other things, issuing a final TMDL by December 31, 2010. • EPA released the draft TMDL on September 24, 2010. EPA proposed “backstop allocations” for each state because it did not agree with any of the draft state plans. • EPA plans to issue the final TMDL on December 31, 2010.

8. Nutrients: Chesapeake Bay TMDLConsequences • EPA’s allocations to agriculture for nitrogen are not technically achievable unless 40% of the crop land is taken out of production. • EPA’s allocations to wastewater treatment plants require treatment to the limit of technology, costing billions. • EPA’s allocations to urban runoff assume 50 percent of developed lands will be retrofitted to keep rainwater on-site. EPA has suggested that retrofitting developed land in the watershed to meet load reductions would cost $7.9 billion a year. • EPA has provide no estimates of the total costs or benefits of the TMDL. • EPA started, then stopped (in April 2009) a “use attainability analysis” that would have determined what level of controls were affordable. EPA now says it won’t do a UAA until 2020.

9. Nutrients – Chesapeake Bay TMDLIssues • Chesapeake Bay Watershed Model • Watershed scale – cannot be used for allocations a scale smaller than a watershed, but EPA used the model to assign draft allocations to individual sources (and even individual residences). • Is based on inputs from the Scenario Builder model that were never been subject to public review until the end of the comment period. • Scenario Builder Model • Assumes no manure is transported out of the watershed. • Assumes non-compliance with nutrient management plans. • Assumes 14% of manure at animal feeding operations is “lost” and ends up in the Bay. • Fails to take into account reductions in sediment and nutrient from most agriculture best management practices. • Uses a soil loss model (Uniform Soil Loss Equation) to estimate sediment loadings that scientists have shown to overestimate sediment losses by 100%. • Uses outdated, inaccurate, or inconsistent land use assumptions. USGS says the estimate of impervious surface is off by 100%. USDA data shows 3.3 million more acres in cropland than EPA assumes exists. • Is inconsistent with USDA estimates of nitrogen, phosphorus, and sediment loadings from agriculture in USDA’s Conservation Effects Assessment Project study.

10. Comparison of USDA’s CEAP Study and EPA Draft TMDL LimnoTech, Comparison of Draft Load Estimates for Cultivated Cropland in the Chesapeake Bay Watershed, available at http://nutrientpolicy.org/ANPC_News.html

11. Nutrients – Mississippi River Watershed • The Region 7 Regional Administrator has announced that EPA may lead the development of a basin-wide nutrient control strategy. • EPA claims it is not developing a TMDL for the Mississippi River watershed (yet). • EPA recently issued a RFP seeking consultants to evaluate Louisiana’s dissolved oxygen criteria for the Gulf of Mexico. • Louisiana did not ask for this assistance and the Gulf is meeting LA’s DO criteria. • EPA claims that “stakeholders” have asked for help in determining what nutrient levels can be discharged upstream of the Gulf and still protect water quality in the Gulf.

12. Nutrients – Where next? • EPA claims Florida is unique and EPA does not plan to make any more determinations that federal nutrient criteria are “necessary.” • Kansas may end up with federal criteria: • An environmental group filed a notice of intent to sue EPA for its failure to establish numeric water limits for nitrogen and phosphorus in the Kansas River, copying the allegations made by the Florida Wildlife Federation in Florida. EPA is currently negotiating a settlement that likely will put EPA under a deadline to promulgate such standards. • Wisconsin may escape federal criteria: • In November 2009, environmental groups sent EPA a notice of intent to sue for numeric criteria in Wisconsin. The threat of a suit prompted Wisconsin officials to propose numeric criteria for phosphorus. The new water quality standards were approved by the Wisconsin Natural Resources Board in June 2010 but still must be approve by EPA. • Other States that are developing numeric nutrient water quality standards and related procedures include Ohio, New York and North Carolina.

13. Revisions To Water Quality Standards Regulations • Proposal expected Summer 2011. • EPA is considering changes to provisions relating to anti-degradation, designated uses, variances, compliance schedules, listing impaired waters, triennial reviews.

14. Anti-degradationRulemaking • Anti-degradation reviews apply to Tier 2 waters that meet or exceed water quality standards. • Approval of a new or expanded discharge requires an alternatives analysis. • If the selected alternative would degrade water quality, it must be justified through a socio-economic analysis. • Can be used to tighten permit limits. • Suggested Changes: • Specify minimum elements that must be included in a state’s anti-degradation implementation procedures. • Provide that a state’s implementation procedure must be adopted into a state’s water quality standards and then submitted to EPA for approval.

15. Anti-degradation Rulemaking Issues • De minimis exemptions. • 6th Circuit ruled in 2008 that exemptions must be de minimis and defined de minimis as 10% of the assimilative capacity of the water body. • On November 9, 2010, EPA disapproved the part of Kentucky’s anti-degradation regulations that allowed de minimis exemptions, determining that the cumulative effect of all de minimis exemptions must be 10% or less of the assimilative capacity. • General permits (including CAFO permits) • EPA also disapproved Kentucky’s anti-degradation provisions for general permits determining that the state must do a Tier 2 review when developing the general permit or when a person submits a notice of intent. • Impaired Waters – Tier 2 reviews only apply to waters that meet or exceed water quality standards. Environmental groups want impaired waters to undergo an anti-degradation review, particularly for discharges of pollutants that are not currently causing an impairment (applying anti-degradation on a pollutant-by-pollutant basis).

16. Concentrated Animal Feeding Operations NRDC Settlement • The Clean Water Act only regulates discharges, not the threat of a discharge. • 2008 CAFO rule requires permits for CAFOs that “propose to discharge.” • The 2008 CAFO Rule was challenged by both agriculture and environmental groups. • EPA settled claims by NRDC, Sierra Club, and the Waterkeeper Alliance (without letting the agriculture plaintiffs know).

17. Concentrated Animal Feeding Operations NRDC Settlement, continued • EPA agreed to issue guidance on determining when a CAFO proposes to discharge. • EPA issued that guidance on May 28, 2010, two days after signing the settlement agreement. • In this guidance, is attempting to assert authority over CAFOs that do not discharge, by alleging that a discharge could occur. • In a Fifth Circuit challenge by agricultural groups (5th Circuit (National Pork Producers Council, et al. v. EPA, et al) EPA is asserting the authority to create a presumption that a discharge will occur. • EPA also agreed to propose by May 26, 2011, and finalize by May 26, 2012, a rule that would give EPA the authority to collect information from CAFOs whether or not they discharge • Such a rule exceeds EPA’s authority under section 308 of the Clean Water Act. • The environmental groups want to use the data to argue that categories of CAFOs presumptively discharge and require permits.

18. Concentrated Animal Feeding Operations Chesapeake Bay Foundation Settlement • On May 10, 2010, EPA settled a lawsuit filed by the Chesapeake Bay Foundation by agreeing to issue a variety of new regulations, including new CAFO regulations. • EPA agreed to propose new CAFO regulations by June 30, 2012, that will • make it easier to designate an AFO as a CAFO or will expand the number of AFOs that qualify as CAFOs • impose more stringent requirements for the land application of manure, considering “next generation” nutrient management plans and off-site manure transfer reporting and recordkeeping.

19. Pesticide General PermitTimeline • In response to the 9th Circuit Talent and Forsgren cases, in 2006 EPA promulgated a regulation to exclude pesticide applications consistent with FIFRA from any requirement to obtain a Clean Water Act permit. • In January 2009, the 6th Circuit National Cotton Council case vacated EPA’s permitting exemption for FIFRA-compliant pesticide applications, but the vacature does not go into effect until April 9, 2011. • On April 9, 2011 NPDES permits will be required for discharges to waters of the U.S. from the application of biological pesticides and chemical pesticides that leave a residue.

20. Pesticide General PermitConsequences • EPA estimates that permittees and permitting authorities will spend more than a million hours and more than $50 million a year to collect, report and evaluate information related to NPDES permits for pesticide applications to or over, including near, waters of the United States. • EPA estimated that it will take 356,000 permittees over a million hours at a cost of about $50 million a year to comply with the new permits. This comes out to an estimated $137 a year per person. • These low costs are due to EPA’s assumption most of the permit conditions are already FIFRA label requirements. • Final general permit will include 3 categories: large operators, small businesses and small municipalities (regardless of area to be treated), and small landowners. • General permit will be applicable in only 6 states: OK, AK, MA, NM, NH, ID. EPA claims states are on track with their own permits.

21. National Ambient Air Quality Standards PM 10 (coarse particles aka dust) • PM10 (first promulgated in1987) – Consequences for non-attainment. • Maricopa Co., AZ – EPA recently disapproved part of AZ’s SIP because it did not specify the type of agricultural equipment to prevent dust from cropland; did not specify the amount of water to be sprayed on non-cropland to control dust, and does not specify the size of and materials used for artificial wind barriers. • EPA staff and EPA’s Clean Air Scientific Advisory Committee recommend tightening the existing PM10 standard, which will increase the number of areas subject to EPA scrutiny.

22. National Ambient Air Quality Standards PM 2.5 (fine particles, ammonia is a precursor) • EPA staff has concluded that existing 2.5 PM standard is not protective. • EPA plans to propose revisions to its PM 2.5 standard in February 2011 and finalize those revisions by October 2011. • A new standard will mean more non-attainment areas – More opportunities for federal controls.

23. CERCLA/EPCRA/Clean Air Act Air Compliance Agreement • Courts upheld citizen suits seeking reporting of emissions from agriculture facilities. • 2005 EPA entered into a consent decrees with 2568 animal feeding operations representing 13000 farms, exchanging an enforcement shield for data collection. • Data collection is complete. EPA is evaluating it and developing emissions factors. • EPA plans to finish this work by December 2011, but also plans to issue emissions estimating methodologies for notice and comment as they are completed. The methodology for chickens will be completed first. • Under the agreement, within 120 days after EPA has published an emissions estimating methodology for a particular type of farm, the farm will have to submit all required Clean Air Act permit applications.

24. CERCLA/EPCRA ReportingAdministrative Reporting Exemption • December 18, 2008, EPA promulgated an administrative reporting exemption from CERCLA release reporting from emissions from animal waste at farms and an exemption from release reporting under EPCRA for all but large CAFOs. • Agriculture and environmental groups sued. • July 2010, EPA sought a voluntary remand. The court granted that remand, without vacating the rule so the CERCLA reporting exemption remains in effect. • EPA also is not under any court-ordered deadline to complete reconsideration. • EPA has begun its reconsideration rulemaking, but it is in a very early stage. Staff believe it should wait until the emissions estimating methodologies are completed.

25. Spill Prevention Control and Countermeasure Regulations • SPCC applies to any facility, including a farm, that: • Stores, transfers, uses, or consumes oil or oil products, such as diesel fuel, gasoline, lube oil, hydraulic oil, adjuvant oil, crop oil, vegetable oil, or animal fat. • A PROPOSED RULE TO EXEMPT MILK IS STILL PENDING AT EPA. • Stores more than 1,320 US gallons in aboveground containers or more than 42,000 US gallons in completely buried containers (container holding less than 55 gallons are not counted). • A FACILITY OWNER HAS THE DISCRETION TO DECIDE THAT SEPARATE PARCELS OF LAND ARE SEPARATE FACILITIES, EVEN IF CONTIGUOUS. • Could reasonably be expected to discharge oil to waters of the US or adjoining shorelines, such as interstate waters, intrastate lakes, rivers, and streams. • YOU CAN DETERMINE THIS BY LOOKING AT THE LOCATION OF YOUR FACILITY RELATIVE TO WATERS OF THE U.S., INCLUDING DITCHES THAT COULD TRANSPORT OIL TO A STREAM OR RIVER. ASSUME ALL THE OIL IN THE TANK IS RELEASED AND CONSIDER WHETHER RAINFALL COULD CARRY OIL FURTHER. YOU CANNOT TAKE MANMADE FEATURES SUCH AS DIKES OR BERMS INTO ACCOUNT. IF YOU DO NOT THINK THE OIL FROM YOUR TANK COULD REACH A WATERWAY BASED ON THESE ASSUMPTIONS, YOU ARE NOT SUBJECT TO THE SPCC RULE.

26. SPCC Assistance Available to Farms • NRCS will provide up to $3 million in Idaho, Louisiana, Nevada, New York, North Dakota, Oklahoma, Texas, Utah and the Caribbean area to help farmers and ranchers comply with the SPCC rule. The agency will help develop or update existing spill prevention plans that avoid and mitigate on-farm oil spillage. SPCC plans must be updated no later than November 10, 2011. • 84 percent of farmers and ranchers have less than 10,000 gallons of oil storage on site and are able to “self certify” by completing an on-line template. Operators with above ground storage capacity of 10,000 gallons or more are required to have a plan prepared by a registered Professional Engineer. • http://nmpf.org/files/file/SPCC-Plan-Template-Final-Sept-20-2010-FORM.pdf (says revised SPPC plan needed by 11/10 – extended to 11/11 • http://www.epa.gov/ceppo/web/content/spcc/tier1temp.htm • http://www.epa.gov/ceppo/web/docs/oil/spcc/spccfarms.pdf

27. Questions? Susan Parker Bodine Barnes & Thornburg202-371-6364 susan.bodine@btlaw.com