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May 27, 2010Client Alert

Settlement Agreement between EPA and Environmental Groups May Mean More Clean Water Act Rulemaking Ahead for CAFOs

In 2009, several industry and environmental groups filed petitions to challenge the 2008 Final Concentrated Animal Feeding Operations (“CAFO”) Wisconsin Pollutant Discharge Elimination System (“WPDES”) Rule (“Final Rule”) in federal court. See Michael Best’s prior client alert: http://www.michaelbest.com/2008-cafo-rule/. The various petitions were subsequently consolidated to be heard in the Fifth Circuit Court of Appeals. On May 25, 2010 however, environmental groups and the Environmental Protection Agency (“EPA”) signed a settlement agreement resolving their challenges to the Final Rule, leaving only the industry’s challenges to the Final Rule yet to be heard.

The settlement agreement requires EPA to issue a guidance document, no later than May 28, 2010, that specifies “the kinds of operations and factual circumstances that EPA anticipates may trigger the duty [for CAFOs] to apply for [National Pollutant Discharge Elimination System (“NPDES”)] permits as discharging or proposing to discharge.” Presumably, this guidance would be used by EPA and states with delegated Clean Water Act (“CWA”) authority to review and/or inspect existing unpermitted livestock facilities and determine whether they do, in fact, “discharge or propose to discharge” and thus require a NPDES permit. Such a CAFO would be subject to enforcement action based on its failure to obtain a required permit, and if actually discharging, would be subject to further enforcement action for discharging without a required permit.

This provision and any such EPA guidance will likely have no affect on enforcement of the WPDES CAFO permitting program, because Wisconsin Administrative Code ch. NR 243 requires all CAFOs to obtain WPDES permits based on a “presumption” of discharge to groundwater. Importantly, the federal CAFO NPDES rules (and most other delegated state programs) do not currently presume a discharge, thus unpermitted CAFOs in other states could be subject to increased inspections and/or enforcement action based on EPA’s impending guidance document.

More troubling is that the settlement agreement also requires EPA to propose a rule “to require all owners or operators of CAFOs, as point sources under the Act, regardless of whether they discharge or propose to discharge, to submit information to EPA.” Such information would include, among other things, the location of the facility, number and type of animals, type and capacity of manure storage, quantity of manure produced annually, whether the facility uses a nutrient management plan and the amount of land available for land application. Pursuant to the settlement agreement, EPA is required to propose such a rule, receive public comment and “take final action” on the proposed rule by May 25, 2012.

Upon initial review, it appears that any such rule would be beyond the scope of EPA’s CWA authority and, in fact, would likely conflict with the “no-discharge certification” provisions of the Final Rule. (Pursuant to the Final Rule, a CAFO may submit to EPA information to demonstrate that it does not discharge or propose to discharge. Such a submittal is voluntary and constitutes a “no-discharge certification” which, in the event of an actual discharge, would protect a CAFO from enforcement action for failure to obtain a required permit.)

Although it is likely to face vigorous opposition by the agriculture industry nationwide, if EPA’s proposed rule is finalized and CAFOs do submit the required information, environmental petitioners have made it clear that they will use that information to identify “categories of operations” from which EPA could presume a discharge and would then request additional rulemaking from EPA to require NPDES permits for all such facilities. This outcome is potentially years down the road, and although it would not affect the WPDES permitting program, it would constitute a major shift in the federal NPDES CAFO permitting program.

As noted above, EPA is required to issue a proposed rule on this issue by May 25, 2011. We will provide additional updates as this rulemaking process unfolds.

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