1. Air Quality Regulation of Agriculture - A Legal Perspective David E.Cranston Greenberg Glusker LLP Dcranston@ggfirm.com

2. Animal Feeding Operations in California 1500 dairies in San Joaquin Valley alone Emissions of concern - VOCs and PM 10 Permitting commenced in 2004 Understanding of emissions sources and volume continuing to develop Operations vary considerably Need for flexibility in controls

3. Pre-2004 Permitting Authority of California Air Districts Authority to permit “any article, machine, equipment, or other contrivance” (H&SC § 42300) Agricultural Equipment Exemption (former H&SC § 42310(e)) –Historical interpretation by regulators was very broad

4. Challenge to Ag Exemption 2002: Suits challenging EPA approval of SIP 2003: EPA finding that SIP deficient and calling for repeal of Ag exemption (68 FR 37746) 2003: Enactment of SB 700

5. SB 700: Effective 1/1/2004 Eliminated agricultural exemption Requires permitting of “Agricultural Sources” as required under Title I and Title V Requires rulemaking and then permitting of Large Confined Animal Facilities (“LCAF”) –Rulemaking to be completed by July 2006 for SJVAPCD (H&SC § 40724.6) –LCAF later defined by CARB as 1000+ milk- producing cows

6. San Joaquin Valley APCD Interpreted SB 700 to require all existing and new dairies above statutory threshold (50% of major source = 12.5 tons/yr for VOCs) to be permitted If above threshold, then NSR would be triggered for new or expanding dairies Not what dairy industry thought they were getting under SB 700

7. 2004: Very limited science available for permitting dairies Only emission factor (used by CARB for inventory purposes) based on discredited 1938 Study of total organic gases. 2004 Emission Factor viewed as unreliable by Industry, Scientists and even CARB.

8. Litigation against District WUD/AWMP v. SJVAPCD Grounds for Dairy Industry Suit –Challenged authority to require dairy permits until § 40724.6 rulemaking completed –Challenged application of EF based on 1938 study to permitting thresholds

9. Settlement of WUD/AWMP v. SJVAPCD Creation of Dairy Permitting Advisory Group Analysis and research into dairy emissions Collaborative evaluation of best available control technology

10. Emission Factors Source of VOC emissions –Waste (manure and urine) –Waste handling areas including lagoons and corrals –Feed –Enteric Emissions Source of emissions more important than volume EPA study & Consent Decree Studies ongoing Impact on BACT

11. Need for Flexible Regulation EPA: “[f]lexibility is needed in any program controlling agricultural sources.” 71 FR 7683, 7684 (February 14, 2006) “Agricultural sources are unlike other stationary sources and are unlike sources such as automobiles that have common design features and may be subjected to a common or uniform control measure.” Vigil v. Leavitt, 381 F.3d 826, 838 (9th Cir. 2004).

12. Rule 4550 - PM 10 Rule for Agriculture Driven by 2003 PM-10 Plan Commitment CAA: Best Available Control Measures (BACM) 42 U.S.C. § 7513a(b)(1)(B) Menu of choices Approved into SIP Petition for Review before 9th Cir. (LIF v. EPA) –Cafeteria Plan does not meet BACM Valley now in attainment of PM-10 Standard (but finding challenged by Earth Justice)

13. Rule 4570 - VOC rule for LCAFs Required by SB 700 (Health & Safety Code § 40724.6) Best Available Retrofit Control Technology (BARCT) Menu of Choices Dairies with less than 1000 milking cows exempt Writ of Mandate in Fresno Superior Court (AIR v. SJVUAPCD) –Does flexible Menu Plan meet BARCT?

14. CAA Suits against Individual Operators AIR v. Schakel and AIR v. Vanderham (E.D. Cal.) Commencement of construction without ATC permit and NSR

15. Future Challenges to Authority to Construct Permits First LCAF ATC permit issued to Foster Farms – permit challenged in CAA suit. ATC permits issued to dairies may suffer same fate. Emission Reduction Credits and BACT will be key issues: –ERCs and SB 700: If can’t sell them, Districts can’t make you buy them –Environmental groups have challenged this position –BACT: achieved in practice?

16. Other Issues on Horizon For the first time – permitting and regulating emissions from living things –District’s definition of air contaminant – “release, discharge...caused by man.” – If enteric emissions from animals can be regulated - are VOC emissions from crops next? Ammonia Emissions Greenhouse Gases (AB 32)

17. New Ozone plan Where will the VOC reductions come from? Does agriculture present regulators with perception of low hanging fruit from which to obtain reductions?

18. Conclusion