United States: Recent Second Circuit Decision May Have Significant Impact on Hoosier Farmers

A recent case should have a significant impact on Concentrated Animal Feeding Operations ("CAFOs") in Indiana and in the United States. In Waterkeeper Alliance, Inc. et al. v. United States Environmental Protection Agency, 2005 WL 453139 (2nd Cir. 2005), the Second Circuit Court of Appeals reviewed the EPA’s recent amendments to its CAFO rule. See 40 C.F.R. Parts 9, 122, 123, and 412 (the "Rule"). The Rule was challenged by two groups of petitioners with opposing views: the Waterkeeper Alliance, the Sierra Club, and the National Resources Defense Council (the "Environmental Petitioners") and American Farm Bureau Federation, the National Chicken Council, and the National Pork Producers Council (the "Farm Petitioners").

The EPA’s CAFO Rule was promulgated pursuant to the federal Clean Water Act. It is part of its larger regulatory scheme to control water pollution, the National Pollutant Discharge Elimination System ("NPDES"). Entities that discharge pollutants into navigable waters from "point sources," those "discernable, confined, and discrete conveyance[s]," are required to obtain NPDES permits that regulate their effluent discharges.

The CAFO Rule was a reaction to the growth of large CAFOs in the United States. Of its many provisions, three were important to the Second Circuit’s ruling: first, the CAFO Rule’s requirement that all large CAFOs apply for NPDES permits, based upon an assumption that all large CAFOs have the "potential" to discharge pollutants; second, the requirement that each CAFO develop a "Nutrient Management Plan" to outline the land application methods and rates by which it may apply manure and other waste materials as fertilizer; and, finally, treating land application areas as part of CAFOs, such that discharges from fields are subject to NPDES requirements. These provisions are also incorporated into the Indiana Department of Environmental Management’s NPDES regulations. See 327 IAC 5 and 327 IAC 15.

The Farm Petitioners challenged the CAFO Rule’s requirement that, in essence, "all" CAFOs apply for an NPDES permit. The Second Circuit held that this requirement violated the Clean Water Act, because, "[i]t imposes obligations on all CAFOs regardless of whether or not they have, in fact, added any pollutants to navigable waters." The court concluded that the Clean Water Act gives the EPA jurisdiction to regulate only actual discharges of pollutants, not potential discharges.

The CAFO Rule also requires that all large CAFOs develop and implement a Nutrient Management Plan that outlines proper land-application methods and rates for manure and other production wastes. A copy of the Nutrient Management Plan must be kept on site at all times, and failure to follow it is a violation of an NPDES permit. The Second Circuit held that this method for compelling proper manure and waste management fell short of the Clean Water Act’s requirement that permits "ensure" all discharges of pollutants meet certain effluent limitation standards. It held that CAFOs must not only develop and implement Nutrient Management Plans, but these plans must be reviewed by the appropriate agency to ensure proper compliance. Furthermore, the terms of the Nutrient Management Plan must be included in the actual NPDES permit language. The court relied on policy arguments, noting that this requirement fosters the intent of the Clean Water Act by making Nutrient Management Plans available to the public and subject to public comment. As it is presently written, the CAFO Rule "deprives the public of its right to assist in the ‘development, revision, and enforcement of [an] effluent limitation’" (citing the Clean Water Act, 33 U.S.C. §1251(e). The CAFO Rule also makes discharges from land application areas subject to NPDES requirements; however, it carves out an exception for discharges of "agricultural stormwater." The Rule defines "agricultural stormwater" as any "precipitation-related discharge of manure, litter, or process wastewater" from land application areas. 40 CFR §122.23(e). The Environmental Petitioners challenged this exception, arguing that all discharges from CAFOs should be subject to regulation.

The Second Circuit disagreed. The Clean Water Act expressly excluded "agricultural stormwater" discharges from the definition of "point source." The court examined the legislative intent of the statute: "when Congress added the agricultural stormwater exception to the Clean Water Act, it was affirming the impropriety of imposing on ‘any person,’ liability for agriculture-related discharges triggered not by negligence or malfeasance, but by the weather." The court concluded that "discharges from land areas under the control of a CAFO can and should be generally regulated, but where a CAFO has taken steps to ensure appropriate agricultural utilization of the nutrients in manure, litter, and process wastewater, it should not be held accountable for any discharge that is primarily the result of precipitation."

The Farm Petitioners argued that no land application discharges can be "point sources" because they do not come from defined channels or collection points. In answering the challenge, the court turned to the broad definition of "point source" under the Clean Water Act: "any discernable and discrete conveyance, including any but not limited to any pipe, ditch, channel, tunnel, conduit, well, discrete fissure, container, rolling stock, concentrated animal feeding operation . . . from which pollutants are discharged." 33 U.S.C. §1362(14). The court held that land application areas, which are an indispensable part of a CAFO operation, are properly regulated under the CAFO Rule provided they are "under the control" of the permitted operation.

These holdings will have a significant impact on Hoosier livestock producers. The integration of Nutrient Management Plans into NPDES permits will undoubtedly add to the time and expense of obtaining an operating permit. It will also open land-application practices to public scrutiny, as Nutrient Management Plans become subject to public comments and administrative and judicial review. On the other hand, the Second Circuit’s interpretation of the "agricultural stormwater" exception to the Clean Water Act should give farmers comfort to know that forces outside their control—precipitation- related discharges from fields— should not result in regulatory violations.

Finally, the fact that a court sitting in New York can make an impact on how Hoosier farmers go about their business underscores the global realities of modern agriculture.

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