CFO and CAFO Regulatory Issues IN Pork Producers January 30, 2007

General Issues  Introduce Ryan Westerfeld  EPA CAFO Rule Status  IN Senate Environmental Committee Hearing Summary—3 Bills 3 Year Moratorium Increased Fees, Increased Inspections, Increased Notification, Good Character, OISC Shall regulate Nutrient Application Preemption Language

Environment, who pays?  Issue permits  Protect Surface and Ground Water Quality  Approve Long Term Control Plans  Write petitions to redesignate communities to attainment for Ozone  Inspect for compliance Protecting human health and the environment in Indiana is not free

Environmental Fees Funding for environmental regulation comes from three sources:  Federal – currently 28%  State – currently 21%  Dedicated – 51%

Fee Comparisons   Federal: $57,530,097 (18.92%) Red General: $61,750,166 (20.31%) White Dedicated: $86,969,087 (28.61%) Dedicated: $91,318,803 (30.05%) Federal: $84,618,622 (27.85%) Red General: $64,860,832 (21.35%) White ELTF: $63,047,325 (20.75%) Blue ELTF: $97,769,864 (32.16%) Blue

Programs funded by users I believe the most responsible funding for environmental programs is user-based fees. I propose increasing fees or establishing new fees to support environmental programs

Programs funded by users  Incremental move towards fee supported programs  Faster permits, trained staff, quality assessments require fully funded programs  Improved technologies to make doing business with IDEM easier

Last major IDEM fee increase Recent Fee increases:  2003 the Indiana General Assembly passed a fee for drinking water systems.  2005 the Excess Liability Trust Fund received an additional $0.002 per gallon and a full $0.01 on special fuels, formerly exempt.  2006 the Air Pollution Control Board increased Title V air permits by 25%

Accomplishments  Reduce permit backlogs in all programs  Petitioned EPA to redesignate all communities to attainment for Ozone  Reduce outside contracts for regulatory functions  Reduce administrative duplication by combining support functions with other state agencies (e.g. IOT, SPD, OLC)

Agency Goals IDEM will continue towards our goal to be clear, consistent and speedy. In order to sustain the current activity or meet even higher standards of responsiveness the level of funding for programs needs to be sustained.

Fee Proposals  CAFO/CFO – 25 staff (17 FTEs)  Fee Revenue: $42,000  Expenses: $1.2M  Proposed Fee Revenue: $2.8  Annual Number of permits issued: 121  Annual Number of Permit renewals: 435  Number of Compliance Inspections: 1100 (Proposed)

Fee Proposals  NPDES – 79 staff  Fee Revenue: $3.8M  Expenses: $5.5M  Proposed Fee Revenue: $4.75M  Annual Number of permits issued: 340  Proposed increase is 25%  Currently 68% fees / 32% general funds

Fee Proposals  Drinking Water/Wastewater Operator Certification – 6 staff  Fee Revenue: $146,000  Expenses: $420,500  Proposed Fee Revenue: $526,000  Annual Number Certifications/tests issued: 4469

Fee Proposals  Wetland/Water Quality Certification – 7 staff  Fee Revenue: $0 (60% federal funds/40% state funds)  Expenses: $538,000  Proposed Fee Revenue: $ 426,000 to $549,000  Annual Number of permits issued: 760

Fee Proposals  Stormwater Fees – 8 Staff  Fee Revenue: $365,000  Expenses: $698,000  Proposed Fee Revenue: $1.4M  Annual Number of permits issued: 4,050  Rules 5, 6 and 13 have been funded through fees and enforcement fines

Fee Proposals  Hazardous Waste – 96 staff  Fee Revenue: $1.3M  Expenses: $8M  Proposed Fee Revenue: $4.1M  Permit Review, renewal, modifications and Corrective action plan reviews: 375  Federal funding (currently) 33%  State funding (currently) 31%  Fee funding (currently) 36%

CAFOs  There are currently 625 CAFOs in Indiana  CAFOs produce approximately 80 percent of the animals from regulated farms  IDEM is EPA’s CAFO permitting authority in Indiana  CAFOs are subject to more regulatory requirements than CFOs  CAFO environmental requirements may be enforced by EPA and private citizens

Compliance Inspections  IDEM has 16 CAFO/CFO Inspectors These inspectors are also responsible for landfills, transfer stations, open dumps, and tire processors Trained in various aspects specific to CAFOs/CFOs, such as nutrient management calculations  Changing Inspection Focus Inspections becoming more complex Assistance Inspections for new facilities and/or significant new requirements For new CAFOs, one or two inspections during construction, an assistance inspection within six months of start-up and a formal inspection six months later Biosecurity Issues

Number of Farms (CFO & CAFO)

Number of Animals Raised in Indiana

IDEM Today  CFO permits are issued on average at 71 calendar days, 90 permit days is the statutory limit  IDEM is using a compliance assistance approach to help producers understand their environmental responsibilities in response to regulatory changes In Applications Received CAFO 124CFO 74 90Approvals54 32Pending13 2Withdrawn7

IDEM’s Regulatory Program  IDEM’s regulations protect human health and the environment  Illegal discharges and permit violations result in enforcement actions  IDEM is receptive to considering best practices and alternatives to traditional land application  Joining ISDA in examining fragmented State regulatory structure ISDA, IDEM, Office of State Chemist, Board of Animal Health

Unresolved CFO & CAFO Issues  Odor management & Air Pollution No evidence that CAFO’s emit enough air pollution to require regulation as air pollution sources ISDA task force on odors U.S.EPA study on air pollution emissions  Local zoning and planning Suburbs encroaching upon farms Environmental regulation addresses the question: “Is human health and the environment protected?” IDEM does not address local land use issues  Increased Number of Inspectors  Continued Inspector Training

Summary Comments  CFO/CAFO Regulation is evolving  IDEM is working with ISDA and U.S. EPA to develop sensible regulatory approaches to agricultural production and processing  Indiana’s farmers have always been concerned about the environment and the vast majority are good stewards of the environment  A strong economy means farms that are better able to provide excellent environmental protection