[Federal Register Volume 66, Number 9 (Friday, January 12, 2001)]
[Proposed Rules]
[Pages 2960-3145]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-1]



[[Page 2959]]

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Part II





Environmental Protection Agency





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40 CFR Parts 122 and 412



National Pollutant Discharge Elimination System Permit Regulation and 
Effluent Limitations Guidelines and Standards for Concentrated Animal 
Feeding Operations; Proposed Rule

  Federal Register / Vol. 66, No. 9 / Friday, January 12, 2001 / 
Proposed Rules  

[[Page 2960]]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 122 and 412

[FRL-6921-4]
RIN 2040-AD19


National Pollutant Discharge Elimination System Permit Regulation 
and Effluent Limitations Guidelines and Standards for Concentrated 
Animal Feeding Operations

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: Today the Environmental Protection Agency proposes to revise 
and update two regulations that address the impacts of manure, 
wastewater, and other process waters generated by concentrated animal 
feeding operations (CAFOs) on water quality. These two regulations are 
the National Pollutant Discharge Elimination System (NPDES) provisions 
that define which operations are CAFOs and establish permit 
requirements, and the Effluent Limitations Guidelines for feedlots 
(beef, dairy, swine and poultry subcategories), which establish the 
technology-based effluent discharge standards for CAFOs. EPA is 
proposing revisions to these regulations to address changes that have 
occurred in the animal industry sectors over the last 25 years, to 
clarify and improve implementation of CAFO permit requirements, and to 
improve the environmental protection achieved under these rules.
    Environmental concerns being addressed by this rule include both 
ecological and human health effects. Manure from stockpiles, lagoons, 
or excessive land application can reach waterways through runoff, 
erosion, spills, or via groundwater. These discharges can result in 
excessive nutrients (nitrogen, phosphorus, and potassium), oxygen-
depleting substances, and other pollutants in the water. This pollution 
can kill fish and shellfish, cause excess algae growth, harm marine 
mammals, and contaminate drinking water.
    Today's action co-proposes two alternatives for how to structure 
the revised NPDES program for CAFOs; the alternatives offer comparable 
environmental benefits but differ in their administrative approach. EPA 
also requests comment on two other alternatives that the Agency is 
considering and may pursue after evaluating the comments.
    EPA is also proposing to revise effluent guidelines applicable to 
beef, dairy, swine, and poultry operations that are defined as CAFOs, 
pursuant to the NPDES revisions. The proposed effluent guidelines 
include regulations for both new and existing animal feeding operations 
that meet the definition of a CAFO. Today's effluent guidelines 
revisions do not alter the requirements for horses, ducks, sheep or 
lambs.

DATES: Comments must be received or postmarked on or before midnight 
May 2, 2001.

ADDRESSES: Public comments regarding this proposed rule should be 
submitted by mail to: Concentrated Animal Feeding Operation Proposed 
Rule, Office of Water, Engineering and Analysis Division (4303), USEPA, 
1200 Pennsylvania Avenue, NW., Washington, DC 20460. Hand deliveries 
(including overnight mail) should be submitted to the Concentrated 
Animal Feeding Operation Proposed Rule, USEPA, Waterside Mall, West 
Tower, Room 611, 401 M Street, SW., Washington, DC 20460. You also may 
submit comments electronically to [email protected]. Please submit 
any references cited in your comments. Please submit an original and 
three copies of your written comments and enclosures. For additional 
information on how to submit comments, see ``SUPPLEMENTARY INFORMATION, 
How May I Submit Comments?''

FOR FURTHER INFORMATION CONTACT: For additional technical information 
contact Karen Metchis or Jan Goodwin at (202) 564-0766.

SUPPLEMENTARY INFORMATION:

What Entities Are Potentially Regulated by This Action?

    This proposed rule would apply to new and existing animal feeding 
operations that meet the definition of a concentrated animal feeding 
operation, or which are designated by the permitting authority as such. 
Concentrated animal feeding operations are defined by the Clean Water 
Act as point sources for the purposes of the NPDES program. (33 U.S.C. 
Sec. 1362).
    The following table lists the types of entities that are 
potentially subject to this proposed rule. This table is not intended 
to be exhaustive, but rather provides a guide for readers regarding 
entities likely to be regulated by this action. Other types of entities 
not listed in the table could also be regulated. To determine whether 
your facility would be regulated by this action, you should carefully 
examine the applicability criteria proposed at Sec. 122.23(a)(2) of the 
rule. If you have questions regarding the applicability of this action 
to a particular entity, consult one of the persons listed for technical 
information in the preceding FOR FURTHER INFORMATION CONTACT section.

----------------------------------------------------------------------------------------------------------------
                                        Examples of regulated         North American        Standard Industrial
              Category                         entities            Industry Code  (NAIC)   Classification Codes
----------------------------------------------------------------------------------------------------------------
Federal, State and Local Government
Industry...........................  ...........................  See below.............  See below
                                     Operators of animal
                                      production operations that
                                      meet the definition of a
                                      concentrated animal
                                      feeding operation.
                                       Beef cattle feedlots.....  112112................  0211
                                       Hogs.....................  11221.................  0213
                                       Sheep and goats..........  1241, 11242...........  0214
                                       General livestock, except  11299.................  0219
                                      dairy and poultry.
                                       Dairy farms..............  112111, 11212.........  0241
                                       Broilers, fryers, and      11232.................  0251
                                      roaster chickens.
                                       Chicken eggs.............  11231.................  0252
                                       Turkey and turkey eggs...  11233.................  0253
                                       Poultry hatcheries.......  11234.................  0254
                                       Poultry and eggs, NEC....  11239.................  0259
                                       Ducks....................  112390................  0259
                                       Horses and other equines.  11292.................  0272

[[Page 2961]]

 
                                     Meat packing or poultry
                                      processing companies that
                                      may be a potential co-
                                      permittee because of
                                      substantial operational
                                      control over a CAFO.
                                       Animal Slaughtering and    3116..................  02
                                      Processing.
                                     Owners or operators of crop
                                      production operations that
                                      may receive CAFO manure
                                      for use as a fertilizer
                                      substitute.
                                       Crop Production..........  111...................  01
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How May I Review the Public Record?

    The record (including supporting documentation) for this proposed 
rule is filed under docket number OW-00-27 (proposed rule). The record 
is available for inspection from 9 a.m. to 4 p.m. on Monday through 
Friday, excluding legal holidays, at the Water Docket, Room EB 57, 
USEPA Headquarters, 401 M Street, SW, Washington, DC 20460. For access 
to docket materials, please call (202) 260-3027 to schedule an 
appointment during the hours of operation stated above.

How May I Submit Comments?

    To ensure that EPA can read, understand, and therefore properly 
respond to comments, the Agency requests that you cite, where possible, 
the paragraph(s) or sections in the preamble, rule, or supporting 
documents to which each comment refers. You should use a separate 
paragraph for each issue discussed.
    If you want EPA to acknowledge receipt of your comments, enclose a 
self-addressed, stamped envelope. No faxes will be accepted. Comments 
may also be submitted electronically to [email protected]. 
Electronic comments must be submitted as an ASCII, WordPerfect 5.1, 
WP6.1, or WP8 file avoiding the use of special characters and forms of 
encryption. Electronic comments must be identified by the docket number 
OW-00-27. EPA will accept comments and data on disks in WordPerfect 
5.1, 6.1, or 8 format or in ASCII file format. Electronic comments on 
this notice may be filed on-line at many Federal depository libraries.

Table of Contents

I. Legal Authority.
II. Purpose and Summary of the Proposed Regulation.
III. Background.
    A. The Clean Water Act.
    B. History of EPA Actions to Address CAFOs.
    C. Which Requirements Apply to CAFOs.
    D. How Do Today's Proposed Revisions Compare to the Unified 
National AFO Strategy?
IV. Why is EPA Changing the Effluent Guidelines for Feedlots and the 
NPDES CAFO Regulations?
    A. Main Reasons for Revising the Existing Regulations.
    B. Water Quality Impairment Associated with Manure Discharge and 
Runoff.
    C. Recent Changes in the Livestock and Poultry Industry.
    D. Improve Effectiveness of Regulations.
V. What Environmental and Human Health Impacts are Potentially 
Caused by CAFOs?
    A. Which Pollutants Do CAFOs Have the Potential to Discharge and 
Why are They of Concern?
    B. How Do These Pollutants Reach Surface Waters?
    C. What are the Potential and Observed Impacts?
VI. What are Key Characteristics of the Livestock and Poultry 
Industries?
    A. Introduction and Overview.
    B. Beef Subcategory.
    C. Dairy Subcategory.
    D. Hog Subcategory.
    E. Poultry Subcategory.
VII. What Changes to the NPDES CAFO Regulations are Being Proposed?
    A. Summary of Proposed NPDES Regulations.
    B. What Size AFOs Would be Considered CAFOs?
    C. Changes to the NPDES Regulations.
    D. Land Application of CAFO-generated Manure.
    E. What are the Terms of an NPDES Permit?
    F. What Type of NPDES Permit is Appropriate for CAFOs?
VIII.What Changes to the Feedlot Effluent Limitations Guidelines are 
Being Proposed?
    A. Expedited Guidelines Approach.
    B. Changes to Effluent Guidelines Applicability.
    C. Changes to Effluent Limitations and Standards.
IX. Implementation of Revised Regulations.
    A. How do the Proposed Changes Affect State CAFO Programs?
    B. How Would EPA's Proposal to Designate CAFOs Affect NPDES 
Authorized States?
    C. How and When Will the Revised Regulations be Implemented?
    D. How Many CAFOs are Likely to be Permitted in Each State and 
EPA Region?
    E. Funding Issues.
    F. What Provisions are Made for Upset and Bypass?
    G. How Would an Applicant Apply for Variances and Modifications 
to Today's Proposed Regulation?
X. What are the Costs and Economic Impacts of the Proposed 
Revisions?
    A. Introduction and Overview.
    B. Data Collection Activities.
    C. Method for Estimating Compliance Costs.
    D. Method for Estimating Economic Impacts.
    E. Estimated Annual Costs of the Proposed Regulatory Options/
Scenarios.
    F. Estimated Economic Impacts of the Proposed Regulatory 
Options/Scenarios.
    G. Additional Impacts.
    H. Cost-Effectiveness Analysis.
    I. Cost-Benefit Analysis.
    J. Initial Regulatory Flexibility Analysis.
XI. What are the Environmental Benefits of the Proposed Revisions?
    A. Non-Water Quality Environmental Impacts.
    B. Quantitative and Monetized Benefits.
XII. Public Outreach.
    A. Introduction and Overview.
    B. Joint USDA/EPA Unified AFO Strategy Listening Sessions.
    C. Advisory Committee Meeting.
    D. Farm Site Visits.
    E. Industry Trade Associations.
    F. CAFO Regulation Workgroup.
    G. Small Business Advocacy Review Panel.
XIII. Administrative Requirements.
    A. Executive Order 12866: ``Regulatory Planning and Review''.
    B. Regulatory Flexibility Act (RFA) as Amended by the Small 
Business Regulatory Enforcement Fairness Act of 1996 (SBREFA), 5 
U.S.C. 601 et seq.
    C. Unfunded Mandates Reform Act.
    D. Executive Order 13045: ``Protection of Children from 
Environmental Health Risks and Safety Risks''.
    E. Executive Order 13084: Consultation and Coordination with 
Indian Tribal Governments.
    F. Paperwork Reduction Act.
    G. Executive Order 13132: ``Federalism''.
    H. Executive Order 12898: ``Federal Actions to Address 
Environmental Justice in Minority Populations and Low-Income 
Populations''.
    I. National Technology Transfer and Advancement Act.
XIV. Solicitation of Comments.
    A. Specific Solicitation of Comment and Data.
    B. General Solicitation of Comment.

I. Legal Authority

    Today's proposed rule is issued under the authority of sections 
301, 304, 306, 307, 308, 402, and 501 of the Clean

[[Page 2962]]

Water Act (CWA), 33 U.S.C. 1311, 1314, 1316, 1317, 1318, 1342, and 
1361.

II. Purpose and Summary of the Proposed Regulation

    Today, the Environmental Protection Agency proposes to revise and 
update two regulations that address the impacts on water quality from 
manure, wastewater, and other process waters generated by concentrated 
animal feeding operations (CAFOs). The National Pollutant Discharge 
Elimination System (NPDES) provisions in 40 CFR Part 122 define which 
operations are CAFOs and establish permit requirements for those 
operation. The Effluent Limitations Guidelines (ELG), or effluent 
guidelines, for feedlots in 40 CFR Part 412 establish technology-based 
effluent discharge standards that are applied to CAFOs. Both 
regulations were originally promulgated in the 1970s. EPA is proposing 
revisions to these regulations to address changes that have occurred in 
the animal industry sectors over the last 25 years, to clarify and 
improve implementation of CAFO permit requirements, and to improve the 
environmental protection achieved under these rules.
    Environmental concerns being addressed by this rule include both 
ecological and human health effects. Manure from stockpiles, lagoons, 
or excessive land application rates can reach waterways through runoff, 
erosion, spills, or via groundwater. These discharges can result in 
excessive nutrients (nitrogen, phosphorus, and potassium), oxygen-
depleting substances, and other pollutants in the water. This pollution 
can kill fish and shellfish, cause excess algae growth, harm marine 
mammals, and contaminate drinking water.
    On October 30, 1989, Natural Resources Defense Council, Inc., and 
Public Citizen, Inc., filed an action against EPA in which they 
alleged, among other things, that EPA had failed to comply with CWA 
section 304(m). Natural Resources Defense Council, Inc., et al. v. 
Reilly, Civ. No. 89-2980 (RCL) (D.D.C.). Plaintiffs and EPA agreed to a 
settlement of that action in a consent decree entered on January 31, 
1992. The consent decree, which has been modified several times, 
established a schedule by which EPA is to propose and take final action 
for eleven point source categories identified by name in the decree and 
for eight other point source categories identified only as new or 
revised rules, numbered 5 through 12. After completing a preliminary 
study of the feedlots industry under the decree, EPA selected the swine 
and poultry portion of the feedlots industry as the subject for New or 
Revised Rule #8, and the beef and dairy portion of that industry as the 
subject for New or Revised Rule #9. Under the decree, as modified, the 
Administrator was required to sign a proposed rule for both portions of 
the feedlots industry on or before December 15, 2000, and must take 
final action on that proposal no later than December 15, 2002. As part 
of EPA's negotiations with the plaintiffs regarding the deadlines for 
this rulemaking, EPA entered into a settlement agreement dated December 
6, 1999, under which EPA agreed, by December 15, 2000, to also propose 
to revise the existing NPDES permitting regulations under 40 C.F.R. 
part 122 for CAFOs. EPA also agreed to perform certain evaluations, 
analyses or assessments and to develop certain preliminary options in 
connection with the proposed CAFO rules. (The Settlement Agreement 
expressly provides that nothing in the Agreement requires EPA to select 
any of these options as the basis for its proposed rule.)
    The existing regulation defines facilities with 1,000 animal units 
(``AU'') or more as CAFOs. The regulation also states that facilities 
with 300-1000 AU are CAFOs if they meet certain conditions. The term AU 
is a measurement established in the 1970 regulations that attempted to 
equalize the characteristics of the wastes among different animal 
types.
    Today's proposals presents two alternatives for how to structure 
the revised NPDES program for CAFOs. The first alternative is a ``two-
tier structure'' that simplifies the definition of CAFOs by 
establishing a single threshold for each animal sector. This 
alternative would establish a single threshold at the equivalent of 500 
AU above which operations would be defined as CAFOs and below which 
facilities would become CAFOs only if designated by the permit 
authority. The 500 AU equivalent for each animal sector would be as 
follows.

500 cattle excluding mature dairy or veal cattle
500 veal cattle
350 mature dairy cattle (whether milked or dry)
1,250 mature swine weighing over 55 pounds
5,000 immature swine weighing 55 pounds or less
50,000 chickens
27,500 turkeys
2,500 ducks
250 horses
5,000 sheep or lambs

    The second proposal would retain the ``three-tier structure'' of 
the existing regulation. Under this alternative, all operations with 
1,000 AU or more would be defined as CAFOs; those with 300 AU to 1,000 
AU would be CAFOs only if they meet certain conditions or if designated 
by the permit authority; and those with fewer than 300 AU would only be 
CAFOs if designated by the permit authority. These conditions are 
detailed in section VII of this preamble and differ from those in the 
current rule. Facilities with 300 AU to 1,000 AU would certify that 
they do not meet the conditions for being defined as a CAFO or apply 
for a permit. The 300 AU and 1,000 AU equivalent number of animals for 
each sector would be as follows:

------------------------------------------------------------------------
                                             1,000 AU         300 AU
                                            equivalent      equivalent
               Animal type                    (no. of         (no. of
                                             animals)        animals)
------------------------------------------------------------------------
Cattle excluding mature dairy or veal              1,000             300
 cattle.................................
Veal....................................           1,000             300
Mature Dairy Cattle.....................             700             200
Swine weighing more than 55 pounds......           2,500             750
Swine weighing 55 pounds or less........          10,000           3,000
Chickens................................         100,000          30,000
Turkeys.................................          55,000          16,500
Ducks...................................           5,000           1,500
Horses..................................             500             150
Sheep or Lambs..........................          10,000           3,000
------------------------------------------------------------------------


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    The Agency is also taking comment on two other alternatives that 
the Agency is considering and may pursue after evaluating comments.
    Today's proposal would also expand the regulatory definition of 
CAFOs to include all types of poultry operations regardless of the type 
of manure handling system or watering system they use, and also would 
include standalone immature swine and heifer operations.
    Under the two-tier proposal, EPA is proposing to simplify the 
criteria for being designated as a CAFO by eliminating two specific 
criteria that have proven difficult to implement, the ``direct 
contact'' criterion and the ``man made device'' criterion. Under the 
three-tier proposal, EPA is proposing to retain those criteria for 
designating operations which have less than 300 AU. Both proposals 
retain the existing requirement for the permit authority to consider a 
number of factors to determine whether the facility is a significant 
contributor of pollution to waters of the U.S., and the requirement for 
an on-site inspection prior to designation. EPA is also proposing to 
clarify that EPA has the authority to designate CAFOs both in states 
where EPA is the permit authority and in States with NPDES authorized 
programs.
    EPA is proposing to eliminate the 25-year, 24-hour storm event 
permit exclusion and to impose a broader, more explicit duty for all 
CAFOs to apply for a permit (with one exception as described below). 
Under the current regulations, facilities are excluded from being 
defined as, and thus subject to permitting as, CAFOs if they discharge 
only in the event of a 25-year, 24-hour storm. This exclusion has 
proven to be problematic in practice, as described below, and 
ultimately unnecessary. There are many operations that currently may be 
avoiding permitting by an inappropriate reliance on this exclusion. The 
Agency believes there is no reason to retain this exclusion from the 
definition of a CAFO. However, EPA is proposing to retain the 25-year, 
24-hour storm standard as a design standard in the effluent guidelines 
for certain sectors (specifically, the beef and dairy sectors). CAFOs 
in those sectors would need to obtain permits, but the permits would 
allow certain discharges as long as the facility met the 25-year, 24-
hour storm design standard.
    In sum, under today's proposal, all operations that meet the 
definition of a CAFO under either of the two alternative structures (as 
well as all operations that are designated as CAFOs) would be required 
to apply for a permit. There would, however, be one exception to this 
requirement, as described in more detail below: If the operator could 
demonstrate to the permitting authority that the facility has ``no 
potential to discharge,'' then a permit application and a permit would 
not be required.
    Under the two-tier structure, the net effect of the revisions for 
determining which facilities are CAFOs is to require approximately 
26,000 operations to apply for a NPDES permit. Under the three-tier 
structure, EPA estimates that approximately 13,000 operations would be 
required to apply for a permit, and an additional 26,000 operations 
could either certify that they are not a CAFO or apply for a permit. 
Under the existing regulation, EPA estimates that about 12,000 
facilities should be permitted but only 2,530 have actually applied for 
a permit.
    Today's proposal would clarify the definition of a CAFO as 
including both the production areas (animal confinement areas, manure 
storage areas, raw materials storage areas and waste containment areas) 
and the land application areas that are under the control of the CAFO 
owner or operator. As the industry trend is to larger, more specialized 
feedlots with less cropland needing the manure for fertilizer, EPA is 
concerned that manure is being land applied in excess of agricultural 
uses and, therefore, being managed as a waste product, and that this 
practice is causing runoff or leaching to waters of the U.S. The permit 
would address practices at the production area as well as the land 
application area, and would impose record keeping and other 
requirements with regard to transfer of manure off-site.
    EPA is further proposing to clarify that entities that exercise 
``substantial operational control'' over the CAFO are ``operators'' of 
the CAFO and thus would need to obtain a permit along with the CAFO 
owner or operator. The trend toward specialized animal production under 
contract with processors, packers and other integrators has 
increasingly resulted in concentrations of excess manure beyond 
agricultural needs in certain geographic areas. Especially in the 
poultry and swine sector, the processor provides the animals, feed, 
medication and/or specifies growing practices. EPA believes that 
clarifying that both parties are liable for compliance with the terms 
of the permit as well as responsible for the excess manure generated by 
CAFOs will lead to better management of manure.
    The proposed effluent guidelines revisions would apply only to 
beef, dairy, swine, poultry and veal operations that are defined or 
designated as CAFOs under either of the two alternative structures and 
that are above the threshold for the effluent guideline. For those 
CAFOs below the threshold for being subject to the effluent guidelines, 
the permit writer would use best professional judgment (BPJ) to develop 
the site-specific permit conditions.
    Today's proposed effluent guidelines revisions would not alter the 
existing effluent guideline regulations for horses, ducks, sheep or 
lambs. In these sectors, only facilities with 1,000 AU or more are 
subject to the effluent guidelines. Permits for operations in these 
subcategories with fewer than 1,000 AU would continue to be developed 
based on the best professional judgement of the permit writer.
    The proposed effluent guidelines regulations for beef, dairy, 
swine, poultry and veal operations will establish the Best Practicable 
Control Technology (BPT), Best Conventional Pollutant Control 
Technology (BCT), and the Best Available Technology (BAT) limitations 
as well as New Source Performance Standards, including specific best 
management practices which ensure that manure storage and handling 
systems are inspected and maintained adequately. A description of these 
requirements is in Section III.
    Under the BPT requirements for all of the subcategories, EPA is 
proposing to require zero discharge from the production area except 
that an overflow due to catastrophic or chronic storms would be allowed 
if the CAFO met a certain design standard for its containment 
structures. If a CAFO uses a liquid manure handling system, the storage 
structure or lagoon would be required to be designed, constructed and 
maintained to capture all process wastewater and manure, plus all the 
storm water runoff from the 25-year, 24-hour storm.
    The proposed BPT limitations also include specific requirements on 
the application of manure and wastewater to land that is owned or under 
the operational control of the CAFO. EPA is proposing to require that 
CAFOs apply their manure at a rate calculated to meet the requirements 
of the crop for either nitrogen or phosphorus (depending on the soil 
conditions for phosphorus). Livestock manure tends to be phosphorus 
rich, meaning that if manure is applied to meet the nitrogen 
requirements of a crop, then phosphorus is being applied at rates 
higher than needed by the crop. Repeated application of manure on a 
nitrogen basis may build up phosphorus levels in

[[Page 2964]]

the soil, and potentially result in saturation, thus contributing to 
the contamination of surface waters through erosion, snow melt and 
rainfall events. Therefore, EPA is also proposing that manure must be 
applied to cropland at rates not to exceed the crop requirements for 
nutrients and the ability of the soil to absorb any excess phosphorus. 
BPT establishes specific record keeping requirements associated with 
ensuring the achievement of the zero discharge limitation for the 
production area and that the application of manure and wastewater is 
done in accordance with land application requirements. EPA also 
proposes to require the CAFO operator to maintain records of any excess 
manure that is transported off-site.
    BAT limitations for the beef and dairy subcategories would include 
all of the BPT limitations described above and, in addition, would 
require CAFOs to achieve zero discharge to ground water beneath the 
production area that has a direct hydrologic connection to surface 
water. In addition, the proposed BAT requirements for the swine, veal 
and poultry subcategories would eliminate the provision for overflow in 
the event of a chronic or catastrophic storm. CAFOs in the swine, veal 
and poultry subcategories typically house their animals under roof 
instead of in open areas, thus avoiding or minimizing the runoff of 
contaminated storm water and the need to contain storm water.
    EPA is also proposing to revise New Source Performance Standards 
(NSPS) based on the same technology requirements as BAT for the beef 
and dairy subcategories. For the swine, veal and poultry subcategories, 
EPA proposes revised NSPS based on the same technology as BAT with the 
additional requirement that there be no discharge of pollutants through 
ground water beneath the production area that has a direct hydrological 
connection to surface waters. Both the BAT and NSPS requirements have 
the same land application and record keeping requirements as proposed 
for BPT.
    Today's proposal would make several other changes to the existing 
regulation, which would:
     require the CAFO operator to develop a Permit Nutrient 
Plan for managing manure and wastewater at both the production area and 
the land application area;
     require certain record keeping, reporting, and monitoring;
     revise the definition of an animal feeding operation (AFO) 
to more clearly exclude areas such as pastures and rangeland that 
sustain crops or forage during the entire time that animals are 
present;
     eliminate the mixed-animal type calculation for 
determining which AFOs are CAFOs; and
     require permit authorities to include the following 
conditions in permits to:
    (1) require retention of a permit until proper facility closure; 
(2) establish the method for operators to calculate the allowable 
manure application rate; (3) specify restrictions on timing and methods 
of application of manure and wastewater to assure use for an 
agricultural purpose (e.g., certain applications to frozen, snow 
covered or saturated land) to prevent impairment of water quality; (4) 
address risk of contamination via groundwater with a direct 
hydrological connection to surface water; (5) address the risk of 
improper manure application off-site by either requiring that the CAFO 
operator obtain from off-site recipients a certification that they are 
land applying CAFO manure according to proper agricultural practices or 
requiring the CAFO to provide information to manure recipients and keep 
appropriate records of off-site transfers, or both; and (6) establish 
design standards to account for chronic storm events.
    Today's proposal would also:
     clarify EPA's interpretation of the agricultural storm 
water exemption and its implications for land application of manure 
both at the CAFO and off-site; and
     clarify application of the CWA to dry weather discharges 
at AFOs.
    EPA is seeking comment on the entire proposal. Throughout the 
preamble, EPA identifies specific components of the proposed rule on 
which comment is particularly sought.

III. Background

A. The Clean Water Act

    Congress passed the Federal Water Pollution Control Act (1972), 
also known as the Clean Water Act (CWA), to ``restore and maintain the 
chemical, physical, and biological integrity of the nation's waters.'' 
(33 U.S.C. Sec. 1251(a)). The CWA establishes a comprehensive program 
for protecting our nation's waters. Among its core provisions, the CWA 
prohibits the discharge of pollutants from a point source to waters of 
the U.S. except as authorized by a National Pollutant Discharge 
Elimination System (NPDES) permit. The CWA establishes the NPDES permit 
program to authorize and regulate the discharges of pollutants to 
waters of the U.S. EPA has issued comprehensive regulations that 
implement the NPDES program at 40 CFR Part 122. The CWA also provides 
for the development of technology-based and water quality-based 
effluent limitations that are imposed through NPDES permits to control 
discharges of pollutants.
1. The National Pollutant Discharge Elimination System (NPDES) Permit 
Program
    Under the NPDES permit program, all point sources that directly 
discharge pollutants to waters of the U.S. must apply for a NPDES 
permit and may only discharge pollutants in compliance with the terms 
of that permit. Such permits must include any nationally established, 
technology based effluent discharge limitations (i.e., effluent 
guidelines) (discussed below, in subsection III.A.2). In the absence of 
national effluent limitations, NPDES permit writers must establish 
technology based limitations and standards on a case-by-case basis, 
based on their ``best professional judgement (BPJ).''
    Water quality-based effluent limits also are included in a permit 
where technology-based limits are not sufficient to ensure compliance 
with State water quality standards that apply to the receiving water or 
where required to implement a Total Maximum Daily Load (TMDL). Permits 
may also include specific best management practices to achieve effluent 
limitations and standards, typically included as special conditions. In 
addition, NPDES permits normally include monitoring and reporting 
requirements, and standard conditions (i.e., conditions that apply to 
all NPDES permits, such as the duty to properly operate and maintain 
equipment and treatment systems).
    NPDES permits may be issued by EPA or a State, Territory, or Tribe 
authorized by EPA to implement the NPDES program. Currently, 43 States 
and the Virgin Islands are authorized to administer the base NPDES 
program (the base program includes the federal requirements applicable 
to AFOs and CAFOs). Alaska, Arizona, the District of Columbia, Idaho, 
Maine, Massachusetts, New Hampshire, and New Mexico are not currently 
authorized to implement the NPDES program. In addition, Oklahoma, while 
authorized to administer the NPDES program, does not have CAFO 
regulatory authority. No tribe is currently authorized.
    A NPDES permit may be either an individual permit tailored for a 
single facility or a general permit applicable to multiple facilities 
within a specific category. Prior to the issuance of an individual 
permit, the owner or operator submits a permit application with 
facility-specific information to the

[[Page 2965]]

permit authority, who reviews the information and prepares a draft 
permit. The permit authority prepares a fact sheet explaining the draft 
permit, and publishes the draft permit and fact sheet for public review 
and comment. Following consideration of public comments by the permit 
authority, a final permit is issued. Specific procedural requirements 
apply to the modification, revocation and reissuance, and termination 
of a NPDES permit. NPDES permits are subject to a maximum 5-year term.
    General NPDES permits are available to address a category of 
discharges that involve similar operations with similar wastes. General 
permits are not developed based on facility-specific information. 
Instead, they are developed based on data that characterize the type of 
operations being addressed and the pollutants being discharged. Once a 
general permit is drafted, it is published for public review and 
comment accompanied by a fact sheet that explains the permit. Following 
EPA or State permit authority consideration of public comments, a final 
general permit is issued. The general permit specifies the type or 
category of facilities that may obtain coverage under the permit. Those 
facilities that fall within this category then must submit a ``notice 
of intent'' (NOI) to be covered under the general permit to gain permit 
coverage. [Under 40 CFR 122.28(b)(2)(vi), the permit authority also may 
notify a discharger that it is covered under a general permit even 
where that discharger has not submitted a notice of intent to be 
covered by the permit.] EPA anticipates that the Agency and authorized 
States will use general NPDES permits to a greater extent than 
individual permits to address CAFOs.
2. Effluent Limitation Guidelines and Standards
    Effluent limitation guidelines and standards (which we also refer 
to today as ``effluent guidelines'' or ``ELG'') are national 
regulations that establish limitations on the discharge of pollutants 
by industrial category and subcategory. These limitations are 
subsequently incorporated into NPDES permits. The effluent guidelines 
are based on the degree of control that can be achieved using various 
levels of pollution control technology, as outlined below. The effluent 
guidelines may also include non-numeric effluent limitations in the 
form of best management practices requirements or directly impose best 
management practices as appropriate.
    a. Best Practicable Control Technology Currently Available (BPT)--
Section 304(b)(1) of the CWA. In the guidelines for an industry 
category, EPA defines BPT effluent limits for conventional, toxic, and 
non-conventional pollutants. In specifying BPT, EPA looks at a number 
of factors. EPA first considers the cost of achieving effluent 
reductions in relation to the effluent reduction benefits. The Agency 
also considers the age of the equipment and facilities, the processes 
employed and any required process changes, engineering aspects of the 
control technologies, non-water quality environmental impacts 
(including energy requirements), and such other factors as the Agency 
deems appropriate (CWA 304(b)(1)(B)). Traditionally, EPA establishes 
BPT effluent limitations based on the average of the best performances 
of facilities within the industry of various ages, sizes, processes or 
other common characteristics. Where existing performance is uniformly 
inadequate, EPA may require higher levels of control than currently in 
place in an industrial category if the Agency determines that the 
technology can be practically applied.
    b. Best Available Technology Economically Achievable (BAT)--Section 
304(b)(2) of the CWA. In general, BAT effluent limitations represent 
the best existing economically achievable performance of direct 
discharging plants in the industrial subcategory or category. The 
factors considered in assessing BAT include the cost of achieving BAT 
effluent reductions, the age of equipment and facilities involved, the 
processes employed, engineering aspects of the control technology, 
potential process changes, non-water quality environmental impacts 
(including energy requirements), and such factors as the Administrator 
deems appropriate. The Agency retains considerable discretion in 
assigning the weight to be accorded to these factors. An additional 
statutory factor considered in setting BAT is economic achievability. 
Generally, the achievability is determined on the basis of the total 
cost to the industrial subcategory and the overall effect of the rule 
on the industry's financial health. BAT limitations may be based on 
effluent reductions attainable through changes in a facility's 
processes and operations. As with BPT, where existing performance is 
uniformly inadequate, BAT may be based on technology transferred from a 
different subcategory within an industry or from another industrial 
category. BAT may be based on process changes or internal controls, 
even when these technologies are not common industry practice.
    c. Best Conventional Pollutant Control Technology (BCT)--Section 
304(b)(4) of the CWA. The 1977 amendments to the CWA required EPA to 
identify effluent reduction levels for conventional pollutants 
associated with BCT technology for discharges from existing industrial 
point sources. BCT is not an additional limitation, but replaces Best 
Available Technology (BAT) for control of conventional pollutants. In 
addition to other factors specified in Section 304(b)(4)(B), the CWA 
requires that EPA establish BCT limitations after consideration of a 
two part ``cost-reasonableness'' test. EPA explained its methodology 
for the development of BCT limitations in July 1986 (51 FR 24974). 
Section 304(a)(4) designates the following as conventional pollutants: 
biochemical oxygen demand (BOD5), total suspended solids 
(TSS), fecal coliform, pH, and any additional pollutants defined by the 
Administrator as conventional. The Administrator designated oil and 
grease as an additional conventional pollutant on July 30, 1979 (44 FR 
44501).
    d. New Source Performance Standards (NSPS)--Section 306 of the CWA. 
NSPS reflect effluent reductions that are achievable based on the best 
available demonstrated control technology. New facilities have the 
opportunity to install the best and most efficient production processes 
and wastewater treatment technologies. As a result, NSPS should 
represent the greatest degree of effluent reduction attainable through 
the application of the best available demonstrated control technology 
for all pollutants (i.e., conventional, non-conventional, and priority 
pollutants). In establishing NSPS, EPA is directed to take into 
consideration the cost of achieving the effluent reduction and any non-
water quality environmental impacts and energy requirements.

B. History of EPA Actions to Address CAFOs

    EPA's regulation of wastewater and manure from CAFOs dates to the 
1970s. The existing NPDES CAFO regulations were issued on March 18, 
1976 (41 FR 11458). The existing national effluent limitations 
guideline and standards for feedlots were issued on February 14, 1974 
(39 FR 5704).
    By 1992, it became apparent that the regulation and permitting of 
CAFOs needed review due to changes in the livestock industry, 
specifically the consolidation of the industry into fewer, but larger 
operations. In 1992, the Agency established a workgroup

[[Page 2966]]

composed of representatives of State agencies, EPA regional staff and 
EPA headquarters staff to address issues related to CAFOs. The 
workgroup issued The Report of the EPA/State Feedlot Workgroup in 1993. 
One of the workgroup's recommendations was that the Agency should 
provide additional guidance on how CAFOs are regulated under the NPDES 
permit program. The Agency issued such guidance, entitled Guide Manual 
On NPDES Regulations For Concentrated Animal Feeding Operations, in 
December 1995.
    Massive spills of hog manure (see Section V.B.1.c) and Pfiesteria 
outbreaks (see Section V.C.1.a.), continued industry consolidation, and 
increased public awareness of the potential environmental and public 
health impacts of animal feeding operations resulted in EPA taking more 
comprehensive actions to improve existing regulatory and voluntary 
programs. In 1997, dialogues were initiated between EPA and the poultry 
and pork livestock sectors. On December 12, 1997, the Pork Dialogue 
participants, including representatives from the National Pork 
Producers Council (NPPC) and officials from EPA, U.S. Department of 
Agriculture (USDA), and several States, issued a Comprehensive 
Environmental Framework for Pork Production Operations. Continued 
discussions between EPA and the NPPC led to development of a Compliance 
Audit Program Agreement (CAP Agreement) that is available to any pork 
producer who participates in NPPC's environmental assessment program. 
The CAP Agreement for pork producers was issued by the Agency on 
November 24, 1998. Under the agreement, pork producers that voluntarily 
have their facilities inspected are eligible for reduced penalties for 
any CWA violations discovered and corrected. The Poultry Dialogue 
produced a report in December 1998 that established a voluntary program 
focused on promoting protection of the environment and water quality 
through implementation of litter management plans and other actions: 
Environmental Framework and Implementation Strategy: A Voluntary 
Program Developed and adopted by the Poultry Industry, Adopted at the 
December 8-9, 1998 meeting of the Poultry Industry Environmental 
Dialogue (U.S. Poultry and Egg Association).
    President Clinton and Vice President Gore announced the Clean Water 
Action Plan (CWAP) on February 19, 1998. The CWAP describes the key 
water quality problems our nation faces today and suggests both a broad 
plan and specific actions for addressing these problems. The CWAP 
indicated that polluted runoff is the greatest source of water quality 
problems in the United States today and that stronger polluted runoff 
controls are needed. The CWAP goes on to state that one important 
aspect of such controls is the expansion of CWA permit controls, 
including those applicable to large facilities such as CAFOs.
    The CWAP included two key action items that address animal feeding 
operations (AFOs). First, it stated that EPA should publish and, upon 
considering public comments, implement an AFO strategy for important 
and necessary EPA actions on standards and permits. EPA published a 
Draft Strategy for Addressing Environmental and Public Health Impacts 
from Animal Feeding Operations in March 1998 (draft AFO Strategy). In 
accordance with EPA's draft AFO Strategy, EPA's Office of Enforcement 
and Compliance Assurance (OECA) also issued the Compliance Assurance 
Implementation Plan for Animal Feeding Operations in March 1998. This 
plan describes compliance and enforcement efforts being undertaken to 
ensure that CAFOs comply with existing CWA regulations. Second, the 
CWAP stated that EPA and USDA should jointly develop a unified national 
strategy to minimize the water quality and public health impacts of 
AFOs. EPA and USDA jointly published a draft Unified National Strategy 
for Animal Feeding Operations (hereinafter Unified National AFO 
Strategy) on September 21, 1998 and, after sponsoring and participating 
in 11 public listening sessions and considering public comments on the 
draft strategy, published a final Unified National AFO Strategy on 
March 9, 1999. This joint strategy was generally consistent with and 
superceded EPA's draft AFO Strategy.
    The Unified National AFO Strategy establishes national goals and 
performance expectations for all AFOs. The general goal is for AFO 
owners and operators to take actions to minimize water pollution from 
confinement facilities and land where manure is applied. To accomplish 
this goal, the AFO Strategy established a national performance 
expectation that all AFOs should develop and implement technically 
sound, economically feasible, and site-specific comprehensive nutrient 
management plans (CNMPs) to minimize impacts on water quality and 
public health.
    The Unified National AFO Strategy identified seven strategic issues 
that should be addressed to better resolve concerns associated with 
AFOs. These include: (1) fostering CNMP development and implementation; 
(2) accelerating voluntary, incentive-based programs; (3) implementing 
and improving the existing regulatory program; (4) coordinating 
research, technical innovation, compliance assistance, and technology 
transfer; (5) encouraging industry leadership; (6) increasing data 
coordination; and (7) establishing better performance measures and 
greater accountability. Today's proposed rule primarily addresses 
strategic issue three: implementing and improving the existing AFO 
regulatory program.
    The Unified National AFO Strategy observed that, for the majority 
of AFOs (estimated in the AFO Strategy as 95 percent), voluntary 
efforts founded on locally led conservation, education, and technical 
and financial assistance would be the principal approach for assisting 
owners and operators in developing and implementing site-specific CNMPs 
and reducing water pollution and public health risks. Future regulatory 
programs would focus permitting and enforcement priorities on high risk 
operations, which were expected to constitute the remaining 5 percent. 
EPA estimates that today's proposal would result in permit coverage for 
approximately 7 percent of AFOs under the two-tier structure, and 
between 4.5 percent and 8.5 percent of AFOs under the three-tier 
structure.
    Following publication of the Unified National AFO Strategy, EPA 
issued on August 6, 1999 the Draft Guidance Manual and Example NPDES 
Permit for CAFOs for a 90-day public comment period. EPA undertook 
development of this new guidance manual in order to provide permit 
writers with improved guidance on applying the existing regulations to 
a changing industry. While the guidance manual has not been finalized, 
many of the issues discussed in the draft guidance manual are also 
addresses in today's preamble. EPA expects to issue final, revised 
permitting guidance to reflect the revised CAFO regulations when they 
are published in final form.

C. What Requirements Apply to CAFOs?

    The discussion below provides an overview of the scope and 
requirements imposed under the existing NPDES CAFO regulations and 
feedlot effluent limitations guidelines. It also explains the 
relationship of these two regulations, and summarizes other federal and 
State regulations that potentially affect AFOs.

[[Page 2967]]

1. What are the Scope and Requirements of the Existing NPDES 
Regulations for CAFOs?
    Under existing 40 CFR 122.23, an operation must be defined as an 
animal feeding operation (AFO) before it can be defined as a 
concentrated animal feeding operation (CAFO). The term ``animal feeding 
operation'' is defined in EPA regulations as a ``lot or facility'' 
where animals ``have been, are, or will be stabled or confined and fed 
or maintained for a total of 45 days or more in any 12 month period and 
crops, vegetation[,] forage growth, or post-harvest residues are not 
sustained in the normal growing season over any portion of the lot or 
facility.'' This definition is intended to enable the NPDES authorized 
permitting authority to regulate facilities where animals are stabled 
or confined and waste is generated.
    Once a facility meets the AFO definition, its size, based upon the 
total numbers of animals confined, is a key factor in determining 
whether it is a CAFO. To define these various livestock sectors, EPA 
established the concept of an ``animal unit'' (AU), which varies 
according to animal type. Each livestock type, except poultry, is 
assigned a multiplication factor to facilitate determining the total 
number of AU at a facility with more than one animal type. These 
multiplication factors are as follows: Slaughter and feeder cattle--
1.0, Mature dairy cattle--1.4, Swine weighing over 25 kilograms 
(approximately 55 pounds)--0.4, Sheep--0.1, Horses--2.0. There are 
currently no animal unit conversions for poultry operations. The 
regulations, however, define the total number of animals (subject to 
waste handling technology restrictions) for specific poultry types that 
make these operations subject to the regulation. (40 CFR Part 122, 
Appendix B).
    Under the existing regulations, an animal feeding operation is a 
concentrated animal feeding operation if it meets the regulatory CAFO 
definition or if it is designated as a CAFO. The regulations 
automatically define an AFO to be a CAFO if either more than 1,000 AU 
are confined at the facility, or more than 300 AU are confined at the 
facility and: (1) pollutants are discharged into navigable waters 
through a manmade ditch, flushing system, or other similar man-made 
device; or (2) pollutants are discharged directly into waters that 
originate outside of and pass over, across, or through the facility or 
come into direct contact with the confined animals. However, no animal 
feeding operation is defined as a CAFO if it discharges only in the 
event of a 25-year, 24-hour storm event (although it sill may be 
designated as a CAFO). Although they are not automatically defined as a 
CAFO, facilities still may be designated as a CAFO even if they 
discharge only in a 25-year, 24-hour storm event.
    An AFO can also become a CAFO through designation. The NPDES 
permitting authority may, on a case-by-case basis, after conducting an 
on-site inspection, designate any AFO as a CAFO based on a finding that 
the facility ``is a significant contributor of pollution to the waters 
of the United States.'' (40 CFR 122.23(c)). Pursuant to 40 CFR 
122.23(c)(1)(i)-(v) the permitting authority shall consider several 
factors making this determination, including: (1) the size of the 
operation, and amount of waste reaching waters of the U.S.; (2) the 
location of the operation relative to waters of the U.S.; (3) the means 
of conveyance of animal waste and process waste waters into waters of 
the U.S.; and (4) the slope, vegetation, rainfall and other factors 
affecting frequency of discharge. A facility with 300 animal units or 
less, however, may not be designated as a CAFO unless pollutants are 
discharged into waters of the U.S. through a man-made ditch, flushing 
system, or other similar man-made device, or are discharged directly 
into waters of the U.S. which originate outside of the facility and 
pass over, across or through the facility or otherwise come into direct 
contact with the animals confined in the operation.
    Once defined or designated as a CAFO, the operation is subject to 
NPDES permitting. As described above, a permit contains the specific 
technology-based effluent limitations (whether based on the effluent 
guidelines or BPJ); water quality-based limits if applicable; specific 
best management practices; monitoring and reporting requirements; and 
other standard NPDES conditions.
2. What are the Scope and Requirements of the Existing Feedlot Effluent 
Guidelines?
    In 1974, EPA promulgated effluent limitations guidelines applicable 
to CAFOs (40 CFR Part 412) and established in those regulations the 
technology-based effluent discharge standards for the facilities 
covered by the guidelines. The effluent guidelines for the feedlots 
point source category have two subparts: Subpart B for ducks, and 
Subpart A for all other feedlot animals. Under the existing regulation, 
Subpart A covers: beef cattle; dairy cattle; swine; poultry; sheep; and 
horses. Further, the effluent guidelines apply only to facilities with 
1,000 AU or greater. Today's revisions to the effluent guidelines 
affect only the guidelines for the beef, dairy, swine, poultry and veal 
subcategories, while the NPDES revisions are applicable to all confined 
animal types.
    The current feedlot effluent guidelines based on BAT prohibit 
discharges of process wastewater pollutants to waters of the U.S. 
except when chronic or catastrophic storm events cause an overflow from 
a facility designed, constructed, and operated to hold process-
generated wastewater plus runoff from a 25-year, 24-hours storm event. 
Animal wastes and other wastewater that must be controlled include: (1) 
spillage or overflow from animal or poultry watering systems, washing, 
cleaning, or flushing pens, barns, manure pits, or other feedlot 
facilities, direct contact swimming, washing, or spray cooling of 
animals, and dust control; and (2) precipitation (rain or snow) which 
comes into contact with any manure, litter, or bedding, or any other 
raw material or intermediate or final material or product used in or 
resulting from the production of animals or poultry or direct products 
(e.g., milk or eggs). 40 CFR 412.11.
    As described above, in those cases where the feedlot effluent 
guidelines do not apply to a CAFO (i.e., the operation confines fewer 
than 1,000 animal units), the permit writer must develop, for inclusion 
in the NPDES permit, technology-based limitations based on best 
professional judgement (BPJ).
3. What Requirements May be Imposed on AFOs Under the Coastal Zone Act 
Reauthorization Amendments of 1990 (CZARA)?
    In the Coastal Zone Act Reauthorization Amendments of 1990 (CZARA), 
Congress required States with federally-approved coastal zone 
management programs to develop and implement coastal nonpoint pollution 
control programs. Thirty-three (33) States and Territories currently 
have federally approved Coastal Zone Management programs. Section 
6217(g) of CZARA called for EPA, in consultation with other federal 
agencies, to develop guidance on ``management measures'' for sources of 
nonpoint source pollution in coastal waters. In January 1993, EPA 
issued its Guidance Specifying Management Measures for Sources of 
Nonpoint Pollution in Coastal Waters which addresses five major source 
categories of nonpoint pollution: urban runoff, agriculture runoff, 
forestry runoff, marinas and recreational boating, and 
hydromodification.

[[Page 2968]]

    Within the agriculture runoff nonpoint source category, the EPA 
guidance specifically included management measures applicable to all 
new and existing ``confined animal facilities.'' The guidance 
identifies which facilities constitute large and small confined animal 
facilities based solely on the number of animals or animal units 
confined (the manner of discharge is not considered). Under the CZARA 
guidance: a large beef feedlot contains 300 head or more, a small 
feedlot between 50-299 head; a large dairy contains 70 head or more, a 
small dairy between 20-69 head; a large layer or broiler contains 
15,000 head or more, a small layer or broiler between 5,000-14,999 
head; a large turkey facility contains 13,750 head or more, a small 
turkey facility between 5,000-13,749 head; and a large swine facility 
contains 200 head or more, a small swine facility between 100-199 head.
    The thresholds in the CZARA guidance for identifying large and 
small confined animal facilities are lower than those established for 
defining CAFOs under the current NPDES regulations. Thus, in coastal 
States the CZARA management measures potentially apply to a greater 
number of small facilities than the existing CAFO definition. Despite 
the fact that both the CZARA management measures for confined animal 
facilities and the NPDES CAFO regulations address similar operations, 
these programs do not overlap or conflict with each other. Any CAFO 
facility, defined by 40 CFR Part 122, Appendix B, that has a NPDES CAFO 
permit is exempt from the CZARA program. If a facility subject to CZARA 
management measures is later designated a CAFO by a NPDES permitting 
authority, the facility is no longer subject to CZARA. Thus, an AFO 
cannot be subject to CZARA and NPDES permit requirements at the same 
time.
    EPA's CZARA guidance provides that new confined animal facilities 
and existing large confined animal facilities should limit the 
discharge of facility wastewater and runoff to surface waters by 
storing such wastewater and runoff during storms up to and including 
discharge caused by a 25-year, 24-hour frequency storm. Storage 
structures should have an earthen or plastic lining, be constructed 
with concrete, or constitute a tank. All existing small facilities 
should design and implement systems that will collect solids, reduce 
contaminant concentrations, and reduce runoff to minimize the discharge 
of contaminants in both facility wastewater and in runoff caused by 
storms up to and including a 25-year, 24-hour frequency storm. Existing 
small facilities should substantially reduce pollutant loadings to 
ground water. Both large and small facilities should also manage 
accumulated solids in an appropriate waste utilization system. Approved 
State CZARA programs have management measures in conformity with this 
guidance and enforceable policies and mechanisms as necessary to assure 
their implementation.
    In addition to the confined animal facility management measures, 
the CZARA guidance also includes a nutrient management measure that is 
intended to be applied by States to activities associated with the 
application of nutrients to agricultural lands (including the 
application of manure). The goal of this management measure is to 
minimize edge of field delivery of nutrients and minimize the leaching 
of nutrients from the root zone.
    The nutrient management measures provide for the development, 
implementation, and periodic updating of a nutrient management plan. 
Such plans should address: application of nutrients at rates necessary 
to achieve realistic crop yields; improved timing of nutrient 
application; and the use of agronomic crop production technology to 
increase nutrient use efficiency. Under this management measure, 
nutrient management plans include the following core components: farm 
and field maps showing acreage, crops, and soils; realistic yield 
expectations for the crops to be grown; a summary of the nutrient 
resources available to the producer; an evaluation of field limitations 
based on environmental hazards or concerns; use of the limiting 
nutrient concept to establish the mix of nutrient sources and 
requirements for the crop based on realistic crop expectations; 
identification of timing and application methods for nutrients; and 
provisions for proper calibration and operation of nutrient application 
equipment.
4. How Are CAFOs Regulated By States?
    NPDES permits may be issued by EPA or a State authorized by EPA to 
implement the NPDES program. Currently, 43 States and the Virgin 
Islands are authorized to administer the NPDES program. Oklahoma, 
however, has not been authorized to administer the NPDES program for 
CAFOs.
    To become an authorized NPDES state, the State's requirements must, 
at a minimum, be as stringent as the requirements imposed under the 
federal NPDES program. States, however, may impose requirements that 
are broader in scope or more stringent than the requirements imposed at 
the federal level. In States not authorized to implement the NPDES 
program, the appropriate EPA Regional office is responsible for 
implementing the program.
    State efforts to control pollution from CAFOs have been 
inconsistent to date for a variety of reasons. Many States have only 
recently focused attention on the environmental challenges posed by the 
emergence of increasing consolidation of CAFOs into larger and larger 
operations. Others have traditionally viewed AFOs as agriculture, and 
the reluctance to regulate agriculture has prevented programs from 
keeping pace with a changing industry. Many states have limited 
resources for identifying which facilities are CAFOs, or which may be 
inappropriately claiming the 25-year, 24-hour storm permit exclusion. 
Some states with a large number of broiler and laying operations do not 
aggressively try to permit these facilities under NPDES because the 
technology requirements for these operations in the existing regulation 
are outdated.
    Another reason States may not have issued NPDES permits to CAFOs is 
the concern over potentially causing operations to lose cost-share 
money available under EPA's Section 319 Nonpoint Source Program and 
other assistance under USDA's Environmental Quality Incentive Program 
(EQIP). Once a facility is considered a point source under NPDES, the 
operation is not eligible for cost sharing under the Section 319 
nonpoint source program. The USDA EQIP program, however, is available 
to most facilities, and being a permitted CAFO is not a reason for 
exclusion from the EQIP program. Although EQIP funds may not be used to 
pay for construction of storage facilities at operations with greater 
than 1,000 USDA animal units (USDA uses a different definition of 
animal units than EPA); EQIP is available to these facilities for 
technical assistance and financial assistance for other practices.
    To gather information on State activities concerning AFOs, EPA 
assembled information into a report entitled, ``State Compendium: 
Programs and Regulatory Activities Related to Animal Feeding 
Operations, Final Report,'' dated December 1999, and continues to 
update information concerning state operations (see ``Profile of NPDES 
Permits and CNMP Permit Requirements for CAFOs,'' updated 
periodically). The following discussion draws on information from these 
reports.
    EPA estimates that, under the existing EPA regulations, 
approximately 9,000 operations with more than 1,000 AU are CAFOs and 
should be permitted, and

[[Page 2969]]

approximately 4,000 operations with 300 AU to 1,000 AU should be 
permitted. However, only an estimated 2,520 CAFOs are currently covered 
under either a general permit or an individual permit. The 43 states 
authorized to implement the NPDES program for CAFOs have issued 
coverage for approximately 2,270 facilities, of which about 1,150 
facilities are under general permits and about 1,120 facilities are 
under individual permits. Of these states, 32 states administer their 
NPDES CAFO program in combination with some other State permit, 
license, or authorization program. Often, this additional State 
authorization is a construction or operating permit. Eight of the 
states regulate CAFOs exclusively under their State NPDES authority, 
while three others have chosen to regulate CAFOs solely under State 
non-NPDES programs. EPA information indicates that, as of December, 
1999, seventeen of the 43 states authorized to administer the NPDES 
program for CAFOs have never issued an NPDES permit to a CAFO.
    Of the seven states not authorized to administer the NPDES program, 
four rely solely on federal NPDES permits to address CAFOs. As of 
December 1998, EPA has issued coverage for approximately 250 facilities 
under general NPDES permits.
    Virtually all NPDES authorized states use the federal CAFO 
definition in their State NPDES CAFO program. Most states also use the 
federal definition for State non-NPDES CAFO programs. Five States, 
however, have developed unique definitions for their non-NPDES 
livestock regulatory programs that do not follow the federal 
definition. These five States typically base their definition on the 
number of animals confined, weight of animals and design capacity of 
waste control system, or gross income of agricultural operation. For 
example, Alabama's new general State NPDES permit covers all operations 
with at least 250 animal units. Similarly, Minnesota issues State (non-
NPDES) feedlot permits to facilities with more than 10 animal units. 
Minnesota also issues individual NPDES permits to CAFOs as defined 
under the existing federal regulations.
    The regulation of CAFOs is challenging, in part, because of the 
large number of facilities across the country. There are approximately 
376,000 AFOs. Regulating, for example, 5 percent of AFOs would result 
in some 18,800 permittees. One way of reducing the administrative 
burden associated with permitting such large numbers of facilities is 
through the use of general permits. NPDES regulations provide that 
general permits may be issued to cover a category of dischargers that 
involves similar operations with similar wastes. Operations subject to 
the same effluent limitations and operating conditions, and requiring 
similar monitoring are the types of facilities most appropriately 
regulated under a general permit. EPA and some authorized States are 
using general permits to regulate CAFOs, and this trend appears to be 
increasing.
    As mentioned, seventeen of the 43 States authorized to issue NPDES 
CAFO permits have never issued an NPDES permit to a CAFO, although many 
regulate CAFOs under non-NPDES programs. Under current regulations, an 
animal feeding operation that discharges only in the event of a 25-
year, 24-hour storm event is not considered to meet the definition of a 
CAFO (although it may still be designated as a CAFO). EPA believes that 
many of these facilities have in fact discharged in circumstance other 
than the 25-year/24-hour storm and should be required to obtain a 
permit.
    The number of non-NPDES permits issued to AFOs greatly exceeds the 
number of NPDES permits issued. Although the information may be 
incomplete on the number of state permits issued, more than 45,000 non-
NPDES permits or formal authorizations are known to have been issued 
through state AFO programs. The non-NPDES State authorizations often 
are only operating permits or approvals required for construction of 
waste disposal systems. While some impose terms and conditions on 
discharges from the CAFO, EPA believes that many would not meet the 
standards for approval as NPDES permits. Because these are not NPDES 
permits, none meet the requirement for federal enforceability.
    Minnesota alone has issued nearly 25,000 State feedlot permits. 
Kansas has issued more than 2,400 State permits, of which 1,500 have 
been to facilities with more than 300 animal units. Indiana has issued 
more than 4,000 letters of approval to AFOs within the State. South 
Carolina has issued 2,000 construction permits.
    With regard to the discharge standards included in permits, 28 
NPDES authorized States have adopted the federal feedlot effluent 
guidelines, while five authorized States use a more stringent limit. 
These more stringent limits partially or totally prohibit discharges 
related to storm events. For example, Arkansas regulations prohibit 
discharges from liquid waste management systems, including those 
resulting from periods of precipitation greater than the 25-year, 24-
hour storm event. In addition, California and North Carolina rules 
provide for no discharge from new waste control structures even during 
100 year storms. Numerous State CAFO permit programs also impose 
requirements that are broader in scope than the existing federal CAFO 
regulations.
    Twenty-two States have adopted laws that their environmental 
regulations cannot be more restrictive than the specific requirements 
in the federal regulations. Should any of these states experience 
environmental problems with CAFOs, they must rely on appropriate state 
regulations no more stringent than the federal rules.
    Thirty-four States explicitly impose at least some requirements 
that address land application of manure and wastewater as part of 
either their NPDES or non-NPDES program. The most common requirements 
among these States is that CAFO manure and wastewater, when managed 
through land application, be land applied in accordance with agronomic 
rates and that the operator develop and use a waste management plan. 
Although some States do not address how agronomic rates should be 
determined, many base it on the nitrogen needs of crops, while some 
require consideration of phosphorus as well. The complexity of waste 
management plans also varies between states. Some states have very 
detailed requirements for content of waste management plans, while 
others do not. Generally, CAFO operators are asked to address estimates 
of annual nutrient value of waste, schedules for emptying and applying 
wastes, rates and locations for applying wastes, provisions for 
determining agronomic rates, and provisions for conducting required 
monitoring and reporting.
    Although data was not available for all States, State agency staff 
dedicated to AFOs has increased over the last five years. In general, 
State staff dedicated to AFOs is relatively small, with average staff 
numbers being below four full-time employees. Several States do not 
have any staff specifically assigned to manage water quality impacts 
from AFOs. However, States such as Arkansas, Minnesota, Wisconsin, and 
Nebraska doubled their staff commitment to AFOs within the last five 
years. The most notable increases in State staff assigned to address 
AFOs were in Iowa and North Carolina. Kansas, Minnesota, and North 
Carolina have the largest AFO staffs in the country, with each having 
more than 20 full time employees.
    One indication that States have an increasing interest in expanding 
their efforts to control water quality impacts from AFOs is the 
promulgation of new

[[Page 2970]]

State AFO regulations and program initiatives. At least twelve states 
have developed new regulations related to AFOs since 1996. (AL, IN, KS, 
KY, MD, MS, NC, OK, PA, VT, WA, WY). Kansas, Kentucky, North Carolina, 
and Wyoming passed legislation regarding swine facilities, with 
Kentucky and North Carolina imposing moratoriums on the expansion of 
hog AFOs until State management/regulatory plans could be developed. 
Similarly, Mississippi also has imposed a 2-year moratorium on any new 
CAFOs. Alabama's recent efforts include developing an NPDES general 
permitting rule and a Memorandum of Agreement with EPA outlining State 
agency responsibilities as they relate to CAFOs. Washington's Dairy Law 
subjects all dairy farms with more than 300 animal units to permitting 
and requires each facility to develop nutrient management plans 
approved by the National Conservation Resource Service. Indiana's 
Confined Feeding Control Law also requires AFOs to develop waste 
management plans and receive State approval for operating AFOs.
    In conclusion, the implementation of CAFO programs varies from 
state-to-state, as does the implementation of NPDES programs for CAFOs 
by NPDES authorized states. As animal production continues to become 
more industrialized nationwide, a coherent and systematic approach to 
implementing minimum standards is needed to ensure consistent 
protection of water quality. Today's proposal will continue to promote 
a systematic approach to establishing industry standards that are 
protective of human health and the environment.

D. How Do Today's Proposed Revisions Compare to the Unified National 
AFO Strategy?

    As described in section III.B, on March 9, 1999, EPA and the U.S. 
Department of Agriculture jointly issued the Unified National Strategy 
for Animal Feeding Operations (Unified AFO Strategy), which outlined 
USDA and EPA's plans for achieving better control of pollution from 
animal agriculture under existing regulations. The following is a 
comparison chart that illustrates how the proposed rule compares to the 
Unified AFO Strategy. Table 3-1 compares the proposed CAFO rule 
requirements with the Unified AFO Strategy and identifies whether the 
proposed requirements are consistent with or not addressed by the 
Unified AFO Strategy. The table further shows that, overall, the 
proposed rule meets the intent of the Unified AFO Strategy.

                       Table 3-1.--Proposed Rule/Unified National AFO Strategy Comparison
----------------------------------------------------------------------------------------------------------------
                                                                  Not
                                                Consistent     addressed
           Summary of proposed rule            with Unified   in Unified                  Comment
                                                    AFO           AFO
                                                 Strategy      Strategy
----------------------------------------------------------------------------------------------------------------
                                     Proposed Revisions to NPDES Regulations
----------------------------------------------------------------------------------------------------------------
Definition of AFO (122.23(a)(2))--AFO                        The Unified AFO Strategy states CNMPs
 includes land application area; Clarifies                                  should address land application of
 crop language.                                                             manure. (Sec. 3.1 and 3.2)
                                                                           Crop language not explicitly
                                                                            addressed in Unified AFO Strategy.
Definition of CAFO (122.23(a)(3))--Change      ............         Alternative thresholds not explicitly
 1,000 animal unit threshold to 500.                                        addressed in Unified AFO Strategy,
                                                                            although Strategy does state EPA
                                                                            will explore alternative ways of
                                                                            defining CAFOs. (Sec. 5, Issue 3,
                                                                            Item 2.B.).
                                                                           The Unified AFO Strategy states that
                                                                            regulatory revisions will consider
                                                                            risk, burden, statutory
                                                                            requirements, enforceability, and
                                                                            ease of implementation (i.e.,
                                                                            clarity of requirements). (Sec. 5,
                                                                            Issue 3, Item 2).
                                                                           The Unified AFO Strategy states that
                                                                            5 percent of the AFOs will be
                                                                            subject to the regulatory program,
                                                                            however, this estimate is provided
                                                                            for the existing regulatory program
                                                                            (see Figure 2). No specific
                                                                            percentage is specified in the
                                                                            Strategy for the revised
                                                                            regulations.
Definition of CAFO (122.23(a)(3))--Include            ............  The Unified AFO Strategy states that
 dry poultry operations.                                                    in revising regulations EPA intends
                                                                            to consider defining ``...large
                                                                            poultry operations, consistent with
                                                                            the size for other animal sectors,
                                                                            as CAFOs, regardless of the type of
                                                                            watering or manure handling
                                                                            system.'' (Sec. 5, Issue 3, Item
                                                                            2.B.).
Definition of CAFO (122.23(a)(3))--Include     ............         Immature animals not explicitly
 immature animals.                                                          addressed in Unified AFO Strategy.
Definition of CAFO (122.23)--Removes 25 year/         ............  The Unified AFO Strategy states EPA
 24-hour storm provision from definition of                                 will consider ``requiring CAFOs to
 CAFO.                                                                      have an NPDES permit even if they
                                                                            only discharge during a 25-year, 24-
                                                                            hour or larger storm event.'' (Sec.
                                                                            5, Issue 3, Item 2.B.).
Definition of Operation (122.23(a)(5))--              ............  The Unified AFO Strategy states EPA
 Includes a person who exercises substantial                                will ``explore alternative
 operational control over a CAFO.                                           approaches to ensuring that
                                                                            corporate entities support the
                                                                            efforts of individual CAFOs to
                                                                            comply with permits and develop and
                                                                            implement CNMPs.'' (Sec. 5, Issue 3,
                                                                            Item 2.B.).
Designation as a CAFO (122.23(b))--In                 ............  The Unified AFO Strategy states EPA
 authorized States EPA may designate an AFO                                 will consider ``who may designate
 as a CAFO. No inspection required a                                        and the criteria for designating
 designate facility that was previously                                     certain AFOs as CAFOs.'' (Sec. 5,
 defined or designated as a CAFO.                                           Issue 3, Item 2.B.).
Who must apply for an NPDES permit                    ............  The Unified AFO Strategy states ``the
 (122.23(c))--CAFOs must either apply for a                                 NPDES authority will issue a permit
 permit or seek a determination of no                                       unless it determines that the
 potential to discharge.                                                    facility does not have a potential
                                                                            to discharge. (Sec. 4.2).

[[Page 2971]]

 
Co-Permitting (122.23(c)(3))--Operators,              ............  The Unified AFO Strategy states EPA
 including any person who exercises                                         will ``explore alternative
 substantial operational control over a CAFO,                               approaches to ensuring that
 must either apply for a permit or seek a                                   corporate entities support the
 determination of no potential to discharge.                                efforts of individual CAFOs to
                                                                            comply with permits and develop and
                                                                            implement CNMPs.'' (Sec. 5, Issue 3,
                                                                            Item 2.B.).
Issuance of permit (122.23(d))--Director must         ............  The Unified AFO Strategy states ``the
 issue permit unless s/he determines no                                     NPDES authority will issue a permit
 potential to discharge.                                                    unless it determines that the
                                                                            facility does not have a potential
                                                                            to discharge. (Sec. 4.2.).
No potential to discharge (122.23(e))--               ............  The Unified AFO Strategy establishes
 Determination must consider discharge from                                 a national performance expectation
 production area, land application area, and                                that all AFOs should develop and
 via ground waters that have a direct                                       implement CNMPs, and that such CNMPs
 hydrologic connection to surface waters.                                   should address land application of
                                                                            manure. (Sec. 3.1 and 3.2).
                                                                           The Unified AFO Strategy states ``EPA
                                                                            believes that pollution of
                                                                            groundwater may be a concern around
                                                                            CAFOs. EPA has noted in other
                                                                            documents that a discharge via
                                                                            hydrologically connected groundwater
                                                                            to surface waters may be subject to
                                                                            NPDES requirements.'' (Sec. 4.2.).
                                                                           The Unified AFO Strategy states EPA
                                                                            will consider protecting ``sensitive
                                                                            or highly valuable water bodies such
                                                                            as Outstanding Natural Resources,
                                                                            sole source aquifers, wetlands,
                                                                            ground water recharge areas, zones
                                                                            of significant ground/surface water
                                                                            interaction, and other areas.''
                                                                            (Sec. 5, Issue 3, Item 2.B.).
AFOs not defined or designated (122.23(g))--   ............         The Unified AFO Strategy states EPA
 AFOs subject to NPDES permitting                                           will consider ``clarifying whether
 requirements if they have a discrete                                       and under what conditions AFOs may
 conveyance (i.e., point source) discharge                                  be subject to NPDES requirements.''
 from production or land application that is                                (Sec. 5, Issue 3, Item 2.B.).
 not entirely storm water.
Non-AFO land application (122.23(h))--Land            ............  The Unified AFO Strategy states EPA
 application inconsistent with practices in                                 will consider ``clarifying
 412.31(b) and that result in point source                                  requirements for effective
 discharge of pollutants to Waters of the US                                management of manure and wastewater
 may be designated under 122.26(a)(1)(v).                                   from CAFOs whether they are handled
                                                                            on-site or off-site.'' (Sec. 5,
                                                                            Issue 3, Item 2. B.).
Agricultural Storm Water Exemption--                  ............  The Unified AFO Strategy states EPA
 Discharges from land application area if                                   has in the past and will in the
 manure is not applied in quantities that                                   future assume that discharges from
 exceed the land application rates calculated                               the majority of agricultural
 using one of the methods specified in 40 CFR                               operations are exempt, but that the
 412.31(b)(1)(iv).                                                          agricultural storm water exemption
                                                                            would not apply where the discharge
                                                                            is associated with the land disposal
                                                                            of manure or wastewater from a CAFO
                                                                            and the discharge is not the result
                                                                            of proper agricultural practices.
                                                                            (Sec. 4.4).
CAFO permit requirement (122.23(i)(2))--CAFOs         ............  The Unified AFO Strategy states the
 subject to effluent guidelines if applicable.                              effluent guidelines revisions will
                                                                            be closely coordinated with any
                                                                            charges to the NPDES permitting
                                                                            regulations. (Sec. 5, Issue 3, Item
                                                                            2. A.).
CAFO permit requirement (122.23(j))--                 ............  The Unified AFO Strategy provides
 Prohibits land application of manure that                                  that all AFOs should develop and
 would not serve agricultural purpose and                                   implement CNMPs, and that such CNMPs
 would likely result in pollutant discharge                                 should address land application of
 to waters of the U.S.                                                      manure to minimize impacts on water
                                                                            quality and public health. (Sec. 3.1
                                                                            and 3.2).
CAFO permit requirement (122.23(j)(4))--       ............         The Unified AFO Strategy states EPA
 Permittee must either provide information to                               will consider ``clarifying
 recipient or, under one co-proposal option,                                requirements for effective
 obtain certification that recipient will                                   management of manure and wastewater
 land apply per Permit Nutrient Plan (PNP),                                 from CAFOs whether they are handled
 obtain permit, use for other purpose, or                                   on-site or off-site.'' (Sec. 5,
 transfer to 3rd party.                                                     Issue 3, Item 2. B.).
CAFO permit requirement (122.23(j)(5))--       ............         The Unified AFO Strategy states EPA
 Permit must require specified recordkeeping.                               will consider ``establishing
                                                                            specific monitoring and reporting
                                                                            requirements for permitted
                                                                            facilities.'' (Sec. 5, Issue 3, Item
                                                                            2. B.).
                                                                           The Unified AFO Strategy provides
                                                                            records should be kept when manure
                                                                            leaves the CAFO. (Sec.3.3).
Closure (122.23(i)(3))--AFO must maintain      ............         Not explicitly addressed in Unified
 permit until it no longer has wastes                                       AFO Strategy.
 generated while it was a CAFO.

[[Page 2972]]

 
Public access (122.23(l)--Requires public      ............         Not explicitly addressed in Unified
 access to list of NOIs, list of CAFOs that                                 AFO Strategy.
 have prepared PNPs, and access to executive
 summary of PNP upon request.
General Permits (122.28)--Notice of Intent                   NOI requirements not explicitly
 must include topographic map and statement                                 addressed in Unified AFO Strategy.
 re PNP; additional criteria specified for                                 The Unified AFO Strategy states EPA
 when individual permits may be required.                                   will consider ``requiring individual
                                                                            permits for CAFOs in some
                                                                            situations.'' (Sec. 5, Issue 3, Item
                                                                            2. B.).
----------------------------------------------------------------------------------------------------------------
                          Proposed Revisions to Feedlot Effluent Guidelines Regulations
----------------------------------------------------------------------------------------------------------------
Production Area--Beef/Dairy (412.33(a): No                   The Unified AFO Strategy indicates
 discharge except when designed for 25 year,                                the existing effluent guidelines is
 24-hour storm, also inspect/ correct/ pump-                                no discharge when designed for 25
 out, manage mortalities. Swine/Poultry                                     year, 24-hour storm. (Sec. 5, Issue
 (412.43(a)): No discharge.                                                 3, Item 2. A).
                                                                           Strategy states that in developing
                                                                            the revised effluent guidelines EPA
                                                                            is to assess different management
                                                                            practices that minimize the
                                                                            discharge of pollutants. (Sec. 5,
                                                                            Issue 3, Item 2. A).
Land Application (412.33(b) and 412.43(b))--          ............  PNP has been identified as a specific
 Develop and Implement PNP covering the land                                subset of a CNMP applicable to AFOs
 application areas under the control of the                                 subject to the regulation. In this
 CAFO. Also include Best Management Practices.                              manner it is consistent with the
                                                                            Strategy. It also reinforces that
                                                                            the CNMP is applicable to all AFOs
                                                                            (regulatory/voluntary) while the PNP
                                                                            is only applicable to those that
                                                                            fall under the regulatory program.
                                                                            It makes a clear distinction between
                                                                            the regulatory and voluntary
                                                                            programs addressed in the Strategy.
Land Application (412.31(b)(1)(ii))--PNP              ............  The PNP is a subset of the CNMP. The
 Approved by Certified Specialist.                                          Strategy identified that CNMPs
                                                                            ``developed to meet the requirements
                                                                            of the NPDES program in general must
                                                                            be developed by a certified
                                                                            specialist, ....''. (Sec. 4.6).
New Source Performance Standards (412.35/45):         ............  Strategy states that in developing
 Various additional requirements.                                           the revised effluent guidelines EPA
                                                                            is to evaluate the need for
                                                                            different requirements for new or
                                                                            expanding operations. (Sec. 5, Issue
                                                                            3, Item 2. A).
Additional Measures (412.37)--Inspect/                ............  Strategy states that in developing
 correct/ pump-out, manage mortalities; Land                                the revised effluent guidelines EPA
 application BMPs, sampling, training,                                      is to assess different management
 recordkeeping.                                                             practices that minimize the
                                                                            discharge of pollutants. (Sec. 5,
                                                                            Issue 3, Item 2. A).
                                                                           Strategy states that the regulatory
                                                                            revision process will include the
                                                                            establishment of specific monitoring
                                                                            and reporting requirements for
                                                                            permitted facilities.
----------------------------------------------------------------------------------------------------------------

IV. Why is EPA Changing the Effluent Guidelines for Feedlots and 
the NPDES CAFO Regulations?

A. Main Reasons For Revising the Existing Regulations

    Despite more than twenty years of regulation, there are persistent 
reports of discharge and runoff of manure and manure nutrients from 
livestock and poultry operations. While this is partly due to 
inadequate compliance with existing regulations, EPA believes that the 
regulations themselves also need revision. Today's proposed revisions 
to the existing effluent guidelines and NPDES regulations for CAFOs are 
expected to mitigate future water quality impairment and the associated 
human health and ecological risks by reducing pollutant discharges from 
the animal production industry.
    EPA's proposed revisions also address the changes that have 
occurred in the animal production industries in the United States since 
the development of the existing regulations. The continued trend toward 
fewer but larger operations, coupled with greater emphasis on more 
intensive production methods and specialization, is concentrating more 
manure nutrients and other animal waste constituents within some 
geographic areas. This trend has coincided with increased reports of 
large-scale discharges from these facilities, and continued runoff that 
is contributing to the significant increase in nutrients and resulting 
impairment of many U.S. waterways.
    EPA's proposed revisions of the existing regulations will make the 
regulations more effective for the purpose of protecting or restoring 
water quality. The revisions will also make the regulations easier to 
understand and better clarify the conditions under which an AFO is a 
CAFO and, therefore, subject to the regulatory requirements of today's 
proposed regulations.

B. Water Quality Impairment Associated with Manure Discharge and Runoff

    EPA has made significant progress in implementing CWA programs and 
in reducing water pollution. Despite such progress, however, serious 
water quality problems persist throughout the country. Agricultural 
operations, including CAFOs, are considered a significant source of 
water pollution in the United States. The recently released National 
Water Quality Inventory: 1998 Report to Congress was prepared under 
Section 305(b) of the Clean Water Act. Under this section of the Act, 
States report their impaired water bodies to EPA, including the 
suspected sources of those impairments. The most recent report 
indicates that the agricultural sector (including crop production, 
pasture and range grazing, concentrated and confined animal feeding 
operations, and aquaculture) is the leading contributor to identified 
water quality impairments in the nation's rivers and

[[Page 2973]]

streams, and also the leading contributor in the nation's lakes, ponds, 
and reservoirs. Agriculture is also identified as the fifth leading 
contributor to identified water quality impairments in the nation's 
estuaries. 1998 National Water Quality Inventory results are 
illustrated in table 4-1 below.

   Table 4-1.--Five Leading Sources of Water Quality Impairment in the
                              United States
------------------------------------------------------------------------
      Rank             Rivers             Lakes            Estuaries
------------------------------------------------------------------------
1..............  Agriculture (59%)  Agriculture (31%)  Municipal Point
                                                        Sources (28%)
2..............  Hydro              Hydro              Urban Runoff /
                  modification       modification       Storm Sewers
                  (20%).             (15%).             (28%)
3..............  Urban Runoff /     Urban Runoff/      Atmospheric
                  Storm Sewers       Storm Sewers       Deposition (23%)
                  (11%).             (12%).
4..............  Municipal Point    Municipal Point    Industrial
                  Sources (10%).     Sources (11%).     Discharges (15%)
5..............  Resource           Atmospheric        Agriculture (15%)
                  Extraction (9%).   Deposition (8%).
------------------------------------------------------------------------
Source: National Water Quality Inventory: 1998 Report to Congress,
  USEPA, 2000. Percentage of impairment attributed to each source is
  shown in parentheses. For example, agriculture is listed as a source
  of impairment in 59 percent of impaired river miles. The portion of
  'agricultural'' impairment attributable to animal waste (as compared
  to crop production, pasture grazing, range grazing, and aquaculture)
  is not specified in this value. Figure totals exceed 100 percent
  because water bodies may be impaired by more than one source.

    Table 4-2 presents additional summary statistics of the 1998 
National Water Quality Inventory. These figures indicate that the 
agricultural sector contributes to the impairment of at least 170,000 
river miles, 2.4 million lake acres, and almost 2,000 estuarine square 
miles. Twenty-eight states and tribes identified specific agricultural 
sector activities contributing to water quality impacts on rivers and 
streams, and 16 states and tribes identified specific agricultural 
sector activities contributing to water quality impacts on lakes, 
ponds, and reservoirs. CAFOs are a subset of the agriculture category. 
For rivers and streams, estimates from these states indicate that 16 
percent of the total reported agricultural sector impairment is from 
the animal feeding operation industry (including feedlots, animal 
holding areas, and other animal operations), and 17 percent of the 
agricultural sector impairment is from both range and pasture grazing. 
For lakes, ponds, and reservoirs, estimates from these states indicate 
that 4 percent of the total reported agricultural sector impairment is 
from the animal feeding operation industry, and 39 percent of the 
agricultural sector impairment is from both range and pasture grazing. 
Impairment due specifically to land application of manure was not 
reported.

                           Table 4-2.--Summary of U.S. Water Quality Impairment Survey
----------------------------------------------------------------------------------------------------------------
                                                                  Quantity impaired by     Quantity impaired by
        Total quantity in U.S.             Waters assessed            all sources             agriculture a
----------------------------------------------------------------------------------------------------------------
Rivers...............................  23% of total             35% of assessed          59% of impaired.
3,662,255 miles                        840,402 miles            291,263 miles            170,750 miles.
----------------------------------------------------------------------------------------------------------------
Lakes, Ponds, and Reservoirs           42% of total             45% of assessed          31% of impaired.
41.6 million acres                     17.4 million acres       7.9 million acres        2,417,801 acres.
----------------------------------------------------------------------------------------------------------------
Estuaries                              32% of total             44% of assessed          15% of impaired.
90,465 square miles                    28,687 square miles      12,482 square miles      1,827 square miles.
----------------------------------------------------------------------------------------------------------------
Source: National Water Quality Inventory: 1998 Report to Congress, USEPA, 2000.
aCAFOs are a subset of the agriculture category.

    Table 4-3 below lists the leading pollutants impairing surface 
water quality in the United States as identified in the 1998 National 
Water Quality Inventory. The animal production industry is a potential 
source of all of these, but is most commonly associated with nutrients, 
pathogens, oxygen-depleting substances, and solids (siltation). Animal 
production facilities are also a potential source of the other leading 
causes of water quality impairment, such as metals and pesticides, and 
can contribute to the growth of noxious aquatic plants due to the 
discharge of excess nutrients. Animal production facilities may also 
contribute loadings of priority toxic organic chemicals and oil and 
grease, but to a lesser extent than other pollutants.

   Table 4-3.--Five Leading Causes of Water Quality Impairment in the
                              United States
------------------------------------------------------------------------
      Rank             Rivers             Lakes            Estuaries
------------------------------------------------------------------------
1..............  Siltation (38%)..  Nutrients (44%)..  Pathogens (47%)
2..............  Pathogens (36%)..  Metals (27%).....  Oxygen-Depleting
                                                        Substances (42%)
3..............  Nutrients (29%)..  Siltation (15%)..  Metals (27%)
4..............  Oxygen-Depleting   Oxygen-Depleting   Nutrients (23%)
                  Substances (23%).  Substances (14%).
5..............  Metals (21%).....  Suspended Solids   Thermal
                                     (10%).             Modifications
                                                        (18%)
------------------------------------------------------------------------
 Source: National Water Quality Inventory: 1998 Report to Congress,
  USEPA, 2000. Percent impairment attributed to each pollutant is shown
  in parentheses. For example, siltation is listed as a cause of
  impairment in 51 percent of impaired river miles. All of these
  pollutants except thermal modifications are commonly associated with
  animal feeding operations to varying degrees, though they are also
  attributable to other sources. Figure totals exceed 100 percent
  because water bodies may be impaired by more than one source.


[[Page 2974]]

    Pollutants associated with animal production can also originate 
from a variety of other sources, such as cropland, municipal and 
industrial wastewater discharges, urban runoff, and septic systems. The 
national analyses described in Section V of this preamble are useful in 
assessing the significance of animal waste as a potential or actual 
contributor to water quality degradation across the United States. 
Section V also discusses the environmental impacts and human health 
effects associated with the pollutants found in animal manure.

C. Recent Changes in the Livestock and Poultry Industry

    EPA's proposed revisions of the existing effluent guidelines and 
NPDES regulations take into account the major structural changes that 
have occurred in the livestock and poultry industries since the 1970s 
when the regulatory controls for CAFOs were first instituted. These 
changes include:
     Increased number of animals produced annually;
     Fewer animal feeding operations and an increase in the 
share of larger operations that concentrate more animals, manure and 
wastewater in a single location;
     Geographical shifts in where animals are produced; and
     Increased coordination between animal feeding operations 
and processing firms.
1. Increased Livestock and Poultry Production
    Since the 1970s, total consumer demand for meat, eggs, milk and 
dairy products has continued to increase. To meet this demand, U.S. 
livestock and poultry production have risen sharply, resulting in an 
increase in the number of animals produced and the amount of manure and 
wastewater generated annually.
    Increased sales from U.S. farms is particularly dramatic in the 
poultry sectors, as reported in the Census of Agriculture (various 
years). In 1997, turkey sales totaled 299 million birds. In comparison, 
141 million turkeys were sold for slaughter in 1978. Broiler sales 
totaled 6.4 billion chickens in 1997, up from 2.5 billion chickens sold 
in 1974. The existing CAFO regulations effectively do not cover broiler 
operations because they exclude operations that use dry manure 
management systems. Red meat production also rose during the 1974-1997 
period. The number of hogs and pigs sold increased from 79.9 million 
hogs in 1974 to 142.6 million hogs in 1997. Sales data for fed cattle 
(i.e., USDA's data category on ``cattle fattened on grain and 
concentrates'') for 1975 show that 20.5 million head were marketed. By 
1997, fed cattle marketings totaled 22.8 million head. The total number 
of egg laying hens rose from 0.3 million birds in 1974 to 0.4 million 
birds in 1997. The number of dairy cows on U.S. farms, however, dropped 
from more than 10.7 million cows to 9.1 million cows over the same 
period.
    Not only are more animals produced and sold each year, but the 
animals are also larger in size. Efficiency gains have raised animal 
yields in terms of higher average slaughter weight. Likewise, 
production efficiency gains at egg laying and dairy operations have 
resulted in higher per-animal yields of eggs and milk. USDA reports 
that the average number of eggs produced per egg laying hen was 218 
eggs per bird in 1970 compared to 255 eggs per bird in 1997. The 
National Milk Producers Federation reports that average annual milk 
production rose from under 10,000 pounds per cow in 1970 to more than 
16,000 pounds per cow in 1997. In the case of milk production, these 
efficiency gains have allowed farmers to maintain or increase 
production levels with fewer animals. Although animal inventories at 
dairy farms may be lower, however, this may not necessarily translate 
to reduced manure volumes generated because higher yields are largely 
attributable to improved and often more intensive feeding strategies 
that may exceed the animal's ability for uptake. This excess is not 
always incorporated by the animal and may be excreted.
2. Increasing Share of Larger, More Industrialized Operations
    The number of U.S. livestock and poultry operations is declining 
due to ongoing consolidation in the animal production industry. 
Increasingly, larger, more industrialized, highly specialized 
operations account for a greater share of all animal production. This 
has the effect of concentrating more animals, and thus more manure and 
wastewater, in a single location, and raising the potential for 
significant environmental damages unless manure is properly stored and 
handled.
    USDA reports that there were 1.1 million livestock and poultry 
farms in the United States in 1997, about 40 percent fewer than the 1.7 
million farms reported in 1974. Farms are closing, especially smaller 
operations that cannot compete with large-scale, highly specialized, 
often lower cost, producers. Consequently, the livestock and poultry 
industries are increasingly dominated by larger operations. At the same 
time, cost and efficiency considerations are pushing farms to become 
more specialized and intensive. Steep gains in production efficiency 
have allowed farmers to produce more with fewer animals because of 
higher per-animal yields and quicker turnover of animals between farm 
production and consumer market. As a result, annual production and 
sales have increased, even though the number of animals on farms at any 
one time has declined (i.e., an increase in the number of marketing 
cycles over the course of the year allows operators to maintain 
production levels with fewer animals at any given time, although the 
total number of animals produced by the facility over the year may be 
greater).
    The increase in animal densities at operations is evident by 
comparing the average number of animals per operation between 1974 and 
1997, as derived from Census of Agriculture data. In the poultry 
sectors, the average number of birds across all operations is four to 
five times greater in 1997 than in 1974. In 1997, the number of 
broilers per operation averaged 281,700 birds, up from 73,300 birds in 
1974. Over the same period, the average number of egg laying hens per 
operation rose from 1,100 layers to 5,100 layers per farm, and the 
average number of turkeys per operation rose from 2,100 turkeys to 
8,600 turkeys. The average number of hogs raised per operation rose 
from under 100 hogs to more than 500 hogs between 1974 and 1997. The 
average number of fed cattle and dairy cows per operation more than 
doubled during the period, rising to nearly 250 fed cattle and 80 
milking cows by 1997.
    This trend toward fewer, larger, and more industrialized operations 
has contributed to large amounts of manure being produced at a single 
geographic location. The greatest potential risk is from the largest 
operations with the most animals given the sheer volume of manure 
generated at these facilities. Larger, specialized facilities often do 
not have an adequate land base for manure disposal through land 
application. A USDA analysis of 1997 Census data shows that animal 
operations with more than 1,000 AU account for more than 42 percent of 
all confined animals but only 3 percent of cropland held by livestock 
and poultry operations. As a result, large facilities need to store 
significant volumes of manure and wastewater which have the potential, 
if not properly handled, to cause significant water quality impacts. By 
comparison, smaller operations manage fewer animals and tend to 
concentrate less manure at a single farming location. Smaller 
operations also tend to be more diversified, engaging in both animal 
and

[[Page 2975]]

crop production. These operations often have sufficient cropland and 
fertilizer needs to land apply manure generated by the farm's livestock 
or poultry business, without exceeding that land's nutrient 
requirements.
    Another recent analysis from USDA confirms that as animal 
production operations have become larger and more specialized 
operations, the opportunity to jointly manage animal waste and crop 
nutrients has decreased. Larger operations typically have inadequate 
land available for utilizing manure nutrients. USDA estimates that the 
amount of nitrogen from manure produced by confinement operations 
increased about 20 percent between 1982 and 1997, while average acreage 
on livestock and poultry farms declined. Overall, USDA estimates that 
cropland controlled by operations with confined animals has the 
assimilative capacity to absorb about 40 percent of the calculated 
manure nitrogen generated by these operations. EPA expects this excess 
will need to be transported offsite.
3. Geographic Shifts in Where Animals are Raised
    During the 1970s, the majority of farming operations were 
concentrated in rural, agricultural areas and manure nutrients 
generated by animal feeding operations were readily incorporated as a 
fertilizer for crop production. In an effort to reduce transportation 
costs and streamline distribution between the animal production and 
food processing sectors, livestock and poultry operations have tended 
to cluster near slaughtering and manufacturing plants as well as near 
end-consumer markets. Ongoing structural and technological change in 
these industries also influences where facilities operate and 
contributes to locational shifts from the more traditional farm 
production regions to the more emergent regions.
    Operations in more traditional producing states tend to grow both 
livestock and crops and tend to have adequate cropland for land 
application of manure. Operations in these regions also tend to be 
smaller in size. In contrast, confinement operations in more emergent 
areas, such as hog operations in North Carolina or dairy operations in 
the Southwest, tend to be larger in size and more intensive types of 
operations. These operations tend to be more specialized and often do 
not have adequate land for application of manure nutrients. Production 
is growing rapidly in these regions due to competitive pressures from 
more specialized producers who face lower per-unit costs of production. 
This may be shifting the flow of manure nutrients away from more 
traditional agricultural areas, often to areas where these nutrients 
cannot be easily absorbed.
    As reported by Census data, shifts in where animals are grown is 
especially pronounced in the pork sector. Traditionally, Iowa has been 
the top ranked pork producing state. Between 1982 and 1997, however, 
the number of hogs raised in that state remained relatively constant 
with a year-end inventory average of about 14.2 million pigs. In 
comparison, year-end hog inventories in North Carolina increased from 
2.0 million pigs in 1982 to 9.6 million pigs in 1997. This locational 
shift has coincided with reported nutrient enrichment of the waters of 
the Pamlico Sound in North Carolina. Growth in hog production also 
occurred in other emergent areas, including South Dakota, Oklahoma, 
Wyoming, Colorado, Arizona, and Utah. Meanwhile, production dropped in 
Illinois, Indiana, Wisconsin, and Ohio.
    The dairy industry has seen similar shifts in where milk is 
produced, moving from the more traditional Midwest and Northeast states 
to the Pacific and Southwestern states. Between 1982 and 1997, the 
number of milk cows in Wisconsin dropped from 1.9 million to 1.3 
million. Milk cow inventories have also declined in other traditional 
states, including Illinois, Indiana, Iowa, Minnesota, Missouri, New 
York, Pennsylvania, Ohio, Connecticut, Maryland, and Vermont. During 
the same period, milk cow inventories in California rose from 0.9 
million in 1982 to 1.4 million in 1997. In 1994, California replaced 
Wisconsin as the top milk producing state. Milk cow inventories have 
also increased in Texas, Idaho, Washington, Oregon, Colorado, Arizona, 
Nevada, and Utah. These locational shifts have coincided with reported 
nutrient enrichment of waters, including the Puget Sound and Tillamook 
Bay in the northwest, the Everglades in Florida, and Erath County in 
Texas, and also elevated salinity levels due to excess manure near milk 
production areas in southern California's Chino Basin.
4. Increased Linkages between Animal Production Facility and Food 
Processors
    Over the past few decades, closer ties have been forged between 
growers and various industry middlemen, including packers, processors, 
and cooperatives. Increased integration and coordination is being 
driven by the competitive nature of agricultural production and the 
dynamics of the food marketing system, in general, as well as seasonal 
fluctuations of production, perishability of farm products, and the 
inability to store and handle raw farm output. Closer ties between the 
animal production facility and processing firms--either through 
contractual agreement or through corporate ownership of CAFOs--raises 
questions of who is responsible for ensuring proper manure disposal and 
management at the animal feeding site. This is especially true given 
the current trend toward larger animal confinement operations and the 
resultant need for increased animal waste management. As operations 
become larger and more specialized, they may contract out some phases 
of the production process.
    Farmers and ranchers have long used contracts to market 
agricultural commodities. However, increased use of production 
contracts is changing the organizational structure of the individual 
industries. Under a production contract, a business other than the 
feedlot where the animals are raised and housed, such as a processing 
firm, feed mill, or animal feeding operation, may own the animals and 
may exercise further substantial operational control over the 
operations of the feedlot. In some cases, the processor may specify in 
detail the production inputs used, including the genetic material of 
the animals, the types of feed used, and the production facilities 
where the animals are raised. The processor may also influence the 
number of animals produced at a site. In general, these contracts do 
not deal with management of manure and waste disposal. Recently, 
however, some processors have become increasingly involved in how 
manure and waste is managed at the animal production site.
    The use of production contracts in the livestock and poultry 
industries varies by commodity group. Information from USDA indicates 
that production contracts are widely used in the poultry industry and 
dominate broiler production. Production contracting is becoming 
increasingly common in the hog sector, particularly for the finishing 
stage of production in regions outside the Corn Belt.
    Production contracting has played a critical role in the growth of 
integrators in the poultry sectors. Vertical integration has progressed 
to the point where large, multifunction producer-packer-processor-
distributor firms are the dominant force in poultry and egg production 
and marketing. Data from USDA on animal ownership at U.S. farms 
illustrates the use of production contracts in these sectors. In 1997, 
USDA reported that 97 percent of all broilers raised on U.S. farms were 
not owned by the farmer. In the turkey and

[[Page 2976]]

egg laying sectors, use of production contracts is less extensive since 
70 percent and 43 percent of all birds in these sectors, respectively, 
were not owned by the farmer. In the hog sector, data from USDA 
indicate that production contracting may account for 66 percent of hog 
production among larger producers in the Southern and Mid-Atlantic 
states. This differs from the Midwest, where production contracting 
accounted for 18 percent of hog production in 1997.
    By comparison, production contracts are not widely used in the beef 
and dairy sectors. Data from USDA indicate that less than 4 percent of 
all beef cattle and 1 percent of all milking cows were not owned by the 
farmer in 1997. However, production contracts are used in these 
industries that specialize in a single stage of livestock production, 
such as to ``finish'' cattle prior to slaughter or to produce 
replacement breeding stock. However, this use constitutes a small share 
of overall production across all producers.
    To further examine the linkages between the animal production 
facility and the food processing firms, and to evaluate the 
geographical implications of this affiliation, EPA conducted an 
analysis that shows a relationship between areas of the country with an 
excess of manure nutrients from animal production operations and areas 
with a large number of meat packing and poultry slaughtering 
facilities. This manure--if land applied--would be in excess of crop 
uptake needs and result in over application and enrichment of 
nutrients. Across the pork and poultry sectors, this relationship is 
strongest in northwest Arkansas, where EPA estimates a high 
concentration of excess manure nutrients and a large number of poultry 
and hog processing facilities. By sector, EPA's analysis shows that 
there is excess poultry manure nutrients and a large number of poultry 
processing plants in the Delmarva Peninsula in the mid-Atlantic, North 
Carolina, northern Alabama, and also northern Georgia. In the hog 
sector, the analysis shows excess manure nutrients and a large number 
of meat packing plants in Iowa, Nebraska and Alabama. The analysis also 
shows excess manure nutrients from hogs in North Carolina, but 
relatively fewer meat packing facilities, which is likely explained by 
continuing processing plant closure and consolidation in that state. 
More information on this analysis is provided in the rulemaking record.

D. Improve Effectiveness of Regulations

    As noted in Section IV.B, reports of continued discharges and 
runoff from animal production facilities have persisted in spite of 
regulatory controls that were first instituted in the 1970s. EPA is 
proposing to revise the effluent guidelines and NPDES regulations to 
improve their effectiveness by making the regulations simpler and 
easier to understand and implement. Another change intended to improve 
the effectiveness of the regulations is clarification of the conditions 
under which an AFO is a CAFO and is, therefore, subject to the NPDES 
regulatory requirements. In addition, EPA is revising the existing 
regulation to remove certain provisions that are no longer appropriate.
    The existing regulations were designed to prohibit the release of 
wastewater from the feedlot site, but did not specifically address 
discharges that may occur when wastewater or solid manure mixtures are 
applied to crop, pasture, or hayland. The proposed regulations address 
the environmental risks associated with manure management. The proposed 
revisions also are more reflective of current farm production practices 
and waste management controls.
    Today's proposed revised regulations also seek to improve the 
effectiveness of the existing regulations by focusing on those 
operations that produce the majority of the animal manure and 
wastewater generated annually. EPA estimates that the proposed 
regulations will regulate, as CAFOs, about 7 to 10 percent of all 
animal confinement operations nationwide, and will capture between 64 
percent and 70 percent of the total amount of manure generated at CAFOs 
annually, depending on the proposed regulatory alternative (discussed 
in more detail in Section VI.A). Under the existing regulations, few 
operations have obtained NPDES permits. Presently, EPA and authorized 
States have issued approximately 2,500 NPDES permits. This is less than 
1 percent of the estimated 376,000 animal confinement operations in the 
United States. EPA's proposed revisions are intended to ensure that all 
CAFOs, as defined under the proposed regulations, will apply for and 
obtain a permit.

V. What Environmental and Human Health Impacts Are Potentially 
Caused by CAFOs?

    The 1998 National Water Quality Inventory, prepared under Section 
305(b) of the Clean Water Act, presents information on impaired water 
bodies based on reports from the States. This recent report indicates 
that the agricultural sector (which includes concentrated and confined 
animal feeding operations, along with aquaculture, crop production, 
pasture grazing, and range grazing) is the leading contributor to 
identified water quality impairments in the nation's rivers and lakes, 
and the fifth leading contributor in the nation's estuaries. The 
leading pollutants or stressors of rivers and streams include (in order 
of rank) siltation, pathogens (bacteria), nutrients, and oxygen 
depleting substances. For lakes, ponds, and reservoirs, the leading 
pollutants or stressors include nutrients (ranked first), siltation 
(ranked third), oxygen depleting substances (ranked fourth), and 
suspended solids (ranked fifth). For estuaries, the leading pollutants 
or stressors include pathogens (bacteria) as the leading cause, oxygen 
depleting substances (ranked second), and nutrients (ranked fourth).
    The sections which follow present the pollutants associated with 
livestock and poultry operators, of which CAFOs are a subset, the 
pathways by which the pollutants reach surface water, and their impacts 
on the environment and human health. Detailed information can be found 
in the Environmental Assessment of the Proposed Revisions to the 
National Pollutant Discharge Elimination System Regulation and Effluent 
Guidelines for Concentrated Animal Feeding Operations. The 
Environmental Assessment and the supporting references mentioned here 
are included in Section 8.1 of the Record for this proposal.

A. Which Pollutants Do CAFOs Have the Potential to Discharge and Why 
Are They of Concern?

    The primary pollutants associated with animal waste are nutrients 
(particularly nitrogen and phosphorus), organic matter, solids, 
pathogens, and odorous/volatile compounds. Animal waste is also a 
source of salts and trace elements, and to a lesser extent, 
antibiotics, pesticides, and hormones. Each of these types of 
pollutants is discussed in the sections which follow. The actual 
composition of manure depends on the animal species, size, maturity, 
and health, as well as on the composition (e.g., protein content) of 
animal feed.
1. Nutrients (Nitrogen, Phosphorus, and Potassium)
    The 1998 National Water Quality Inventory indicates that nutrients 
are the leading stressor in impaired lakes, ponds, and reservoirs. They 
are the third most frequent stressor in impaired rivers and streams, 
and the fourth greatest stressor in impaired estuaries. The three 
primary nutrients in manure are nitrogen, phosphorus, and

[[Page 2977]]

potassium. (Potassium also contributes to salinity.)
    Nitrogen in fresh manure exists in both organic forms (including 
urea) and inorganic forms (including ammonium, ammonia, nitrate, and 
nitrite). In fresh manure, 60 to 90 percent of total nitrogen is 
present in organic forms. Organic nitrogen is transformed via microbial 
processes to inorganic forms, which are bioavailable and therefore have 
fertilizer value. As an example of the quantities of nutrients 
discharged from AFOs, EPA estimates that hog operations in eastern 
North Carolina generated 135 million pounds of nitrogen per year as of 
1995.
    Phosphorus exists in solid and dissolved phases, in both organic 
and inorganic forms. Over 70 percent of the phosphorus in animal manure 
is in the organic form. As the waste ages, phosphorus mineralizes to 
inorganic phosphate compounds which are available to plants. Organic 
phosphorus compounds are generally water soluble and may leach through 
soil to groundwater and run off into surface waters. Inorganic 
phosphorus tends to adhere to soils and is less likely to leach into 
groundwater. Animal wastes typically have lower nitrogen:phosphorus 
ratios than crop requirements. The application of manure at a nitrogen-
based agronomic rate can, therefore, result in application of 
phosphorus at several times the agronomic rate. Soil test data in the 
United States confirm that many soils in areas dominated by animal-
based agriculture have elevated levels of phosphorus.
    Potassium contributes to the salinity of animal manure which may in 
turn contribute salinity to surface water polluted by manure. Actual or 
anticipated levels of potassium in surface water and groundwater are 
unlikely to pose hazards to human health or aquatic life. However, 
applications of high salinity manure are likely to decrease the 
fertility of the soil.
    In 1998, USDA studied the amount of manure nitrogen and phosphorus 
production for confined animals relative to crop uptake potential. USDA 
evaluated the quantity of nutrients available from recoverable 
livestock manure relative to crop growth requirements, by county, based 
on data from the 1997 Census of Agriculture. The analyses were intended 
to determine the amount of manure that can be recovered and used. The 
analyses did not consider manure from grazing animals in pasture, 
excluded manure lost to the environment, and also excluded manure lost 
in dry storage and treatment. It is not currently possible to 
completely recover all manure.
    Losses to the environment can occur through runoff, erosion, 
leaching to groundwater, and volatilization (especially for nitrogen in 
the form of ammonia). These losses can be significant. Considering 
typical management systems, the 1998 USDA study reported that average 
manure nitrogen losses range from 31 to 50 percent for poultry, 60 to 
70 percent for cattle (including the beef and dairy categories), and 75 
percent for swine. The typical phosphorus loss is 15 percent.
    The USDA study also looked at the potential for available manure 
nitrogen and phosphorus generated in a county to meet or exceed plant 
uptake and removal in each of the 3,141 mainland counties. Based on 
this analysis of 1992 conditions, available manure nitrogen exceeds 
crop system needs in 266 counties, and available manure phosphorus 
exceeds crop system needs in 485 counties. The relative excess of 
phosphorus compared to nitrogen is not surprising, since manure is 
typically nitrogen-deficient relative to crop needs. Therefore, when 
manure is applied to meet a crop's nitrogen requirement, phosphorus is 
typically over-applied.
    USDA's analyses do not evaluate environmental transport of applied 
manure nutrients. Therefore, an excess of nutrients in a particular 
county does not necessarily indicate that a water quality problem 
exists. Likewise, a lack of excess nutrients does not imply the absence 
of water quality problems. Nevertheless, the analyses provide a general 
indicator of excess nutrients on a broad basis.
2. Organic Matter
    Livestock manures contain many carbon-based, biodegradable 
compounds. Once these compounds reach surface water, they are 
decomposed by aquatic bacteria and other microorganisms. During this 
process dissolved oxygen is consumed, which in turn reduces the amount 
of oxygen available for aquatic animals. The 1998 National Water 
Quality Inventory indicates that oxygen-depleting substances are the 
second leading stressor in estuaries. They are the fourth greatest 
stressor both in impaired rivers and streams, and in impaired lakes, 
ponds, and reservoirs. Biochemical oxygen demand (BOD) is an indirect 
measure of the concentration of biodegradable substances present in an 
aqueous solution.
3. Solids
    The 1998 National Water Quality Inventory indicates that suspended 
solids are the fifth leading stressor in lakes, ponds, and reservoirs. 
Solids are measured as total suspended solids, or TSS. (Solids can also 
be measured as total dissolved solids, or TDS.) Solids from animal 
manure include the manure itself and any other elements that have been 
mixed with it. These elements can include spilled feed, bedding and 
litter materials, hair, feathers, and corpses. In general, the impacts 
of solids include increasing the turbidity of surface waters, 
physically hindering the functioning of aquatic plants and animals, and 
providing a protected environment for pathogens.
4. Pathogens
    Pathogens are disease-causing organisms including bacteria, 
viruses, protozoa, fungi, and algae. The 1998 National Water Quality 
Inventory indicates that pathogens (specifically bacteria) are the 
leading stressor in impaired estuaries and the second most prevalent 
stressor in impaired rivers and streams. Livestock manure contains 
countless microorganisms, including bacteria, viruses, protozoa, and 
parasites. Multiple species of pathogens may be transmitted directly 
from a host animal's manure to surface water, and pathogens already in 
surface water may increase in number due to loadings of animal manure 
nutrients and organic matter. In 1998, the Centers for Disease Control 
and Prevention reported on an Iowa investigation of chemical and 
microbial contamination near large scale swine operations. The 
investigation demonstrated the presence of pathogens not only in manure 
lagoons used to store swine waste before it is land applied, but also 
in drainage ditches, agricultural drainage wells, tile line inlets and 
outlets, and an adjacent river.
    Over 150 pathogens found in livestock manure are associated with 
risks to humans. The protozoa Cryptosporidium parvum and Giardia 
species are frequently found in animal manure and relatively low doses 
can cause infection in humans. Bacteria such as Escherichia coli 
O157:H7 and Salmonella species are also often found in livestock manure 
and have also been associated with waterborne disease. A recent study 
by USDA revealed that about half the cattle at the nation's feedlots 
carry E. coli. The bacteria Listeria monocytogenes is ubiquitous in 
nature, and is commonly found in the intestines of wild and domestic 
animals without causing illness. L. monocytogenes is commonly 
associated

[[Page 2978]]

with foodborne disease. The pathogens C. parvum, Giardia, E. coli 
O157:H7, and L. monocytogenes are able to survive and remain infectious 
in the environment for long periods of time.
    Although the pathogen Pfiesteria piscicida is not found in manure, 
researchers have documented stimulation of Pfiesteria growth by swine 
effluent discharges, and have strong field evidence that the same is 
true for poultry waste. Research has also shown that this organism's 
growth can be highly stimulated by both inorganic and organic nitrogen 
and phosphorus enrichments. Discussions of Pfiesteria impacts on the 
environment and on human health are presented later in this section.
5. Salts
    The salinity of animal manure is directly related to the presence 
of dissolved mineral salts. In particular, significant concentrations 
of soluble salts containing sodium and potassium remain from undigested 
feed that passes unabsorbed through animals. Other major cations 
contributing to manure salinity are calcium and magnesium; the major 
anions are chloride, sulfate, bicarbonate, carbonate, and nitrate. 
Salinity tends to increase as the volume of manure decreases during 
decomposition and evaporation. Salt buildup deteriorates soil 
structure, reduces permeability, contaminates groundwater, and reduces 
crop yields.
    In fresh waters, increasing salinity can disrupt the balance of the 
ecosystem, making it difficult for resident species to remain. In 
laboratory settings, drinking water high in salt content has inhibited 
growth and slowed molting of mallard ducklings. Salts also contribute 
to degradation of drinking water supplies.
6. Trace Elements
    The 1998 National Water Quality Inventory indicates that metals are 
the fifth leading stressor in impaired rivers, the second leading 
stressor in impaired lakes, and the third leading stressor in impaired 
estuaries. Trace elements in manure that are of environmental concern 
include arsenic, copper, selenium, zinc, cadmium, molybdenum, nickel, 
lead, iron, manganese, aluminum, and boron. Of these, arsenic, copper, 
selenium, and zinc are often added to animal feed as growth stimulants 
or biocides. Trace elements may also end up in manure through use of 
pesticides, which are applied to livestock to suppress houseflies and 
other pests. Trace elements have been found in manure lagoons used to 
store swine waste before it is land applied, and in drainage ditches, 
agricultural drainage wells, and tile line inlets and outlets. They 
have also been found in rivers adjacent to hog and cattle operations.
    Several of the trace elements in manure are regulated in treated 
municipal sewage sludge (but not manure) by the Standards for the Use 
or Disposal of Sewage Sludge, promulgated under the Clean Water Act and 
published in 40 C.F.R. Part 503. These include arsenic, cadmium, 
chromium, copper, lead, mercury, molybdenum, nickel, selenium, and 
zinc. Total concentrations of trace elements in animal manures have 
been reported as comparable to those in some municipal sludges, with 
typical values well below the maximum concentrations allowed by Part 
503 for land-applied sewage sludge. Based on this information, trace 
elements in agronomically applied manures should pose little risk to 
human health and the environment. However, repeated application of 
manures above agronomic rates could result in exceedances of the 
cumulative metal loading rates established in Part 503, thereby 
potentially impacting human health and the environment. There is some 
evidence that this is happening. For example, in 1995, zinc and copper 
were found building to potentially harmful levels on the fields of a 
hog farm in North Carolina.
7. Odorous/Volatile Compounds
    Sources of odor and volatile compounds include animal confinement 
buildings, manure piles, waste lagoons, and land application sites. As 
animal wastes are degraded by microorganisms, a variety of gases are 
produced. The four main gases generated are carbon dioxide, methane, 
hydrogen sulfide, and ammonia. Over 150 other odorous compounds have 
also been identified with animal manure. Aerobic conditions yield 
mainly carbon dioxide, while anaerobic conditions generate both methane 
(60 percent to 70 percent) and carbon dioxide (30 percent). Anaerobic 
conditions, which dominate in typical, unaerated animal waste lagoons, 
are also associated with the generation of hydrogen sulfide and about 
40 other odorous compounds, including volatile fatty acids, phenols, 
mercaptans, aromatics, sulfides, and various esters, carbonyls, and 
amines. Once airborne, these volatile pollutants have the potential to 
be deposited onto nearby streams, rivers, and lakes.
    Up to 50 percent or more of the nitrogen in fresh manure may be in 
ammonia form or converted to ammonia relatively quickly once manure is 
excreted. Ammonia is volatile and ammonia losses from animal feeding 
operations can be considerable. A study of atmospheric nitrogen 
published in 1998 reported that, in North Carolina, animal agriculture 
is responsible for over 90 percent of all ammonia emissions. Ammonia 
from manure comprises more than 40 percent of the total estimated 
nitrogen emissions from all sources.
8. Antibiotics
    Antibiotics are used in animal feeding operations and can be 
expected to appear in animal wastes. The practice of feeding 
antibiotics to poultry, swine, and cattle evolved from the 1949 
discovery that very low levels usually improved growth. Antibiotics are 
used both to treat illness and as feed additives to promote growth or 
to improve feed conversion efficiency. In 1991, an estimated 19 million 
pounds of antibiotics were used for disease prevention and growth 
promotion in animals. Between 60 and 80 percent of all livestock and 
poultry receive antibiotics during their productive lifespan. The 
primary mechanisms of elimination are in urine and bile. Essentially 
all of an antibiotic administered is eventually excreted, whether 
unchanged or in metabolite form. Little information is available 
regarding the concentrations of antibiotics in animal wastes, or on 
their fate and transport in the environment.
    Of greater concern than the presence of antibiotics in animal 
manure is the development of antibiotic resistant pathogens. Use of 
antibiotics in raising animals, especially broad spectrum antibiotics, 
is increasing. As a result, more strains of antibiotic resistant 
pathogens are emerging, along with strains that are growing more 
resistant. Normally, about 2 percent of a bacterial population are 
resistant to a given antibiotic; however, up to 10 percent of bacterial 
populations from animals regularly exposed to antibiotics have been 
found to be resistant. In a study of poultry litter suitable for land 
application, about 80 to 100 percent of bacterial populations isolated 
from the litter were found to be resistant to multiple antibiotics. 
Antibiotic-resistant forms of Salmonella, Campylobacter, E. coli, and 
Listeria are known or suspected to exist. An antibiotic-resistant 
strain of the bacteria Clostridium perfringens was detected in the 
groundwater below plots of land treated with pig manure, while it was 
nearly absent beneath unmanured plots.
9. Pesticides and Hormones
    Pesticides and hormones are compounds which are used in animal 
feeding operations and can be expected

[[Page 2979]]

to appear in animal wastes. Both of these types of pollutants have been 
linked with endocrine disruption.
    Pesticides are applied to livestock to suppress houseflies and 
other pests. There has been very little research on losses of 
pesticides in runoff from manured lands. A 1994 study showed that 
losses of cyromazine (used to control flies in poultry litter) in 
runoff increased with the rate of poultry manure applied and the 
intensity of rainfall.
    Specific hormones are used to increase productivity in the beef and 
dairy industries. Several studies have shown hormones are present in 
animal manures. Poultry manure has been shown to contain both estrogen 
and testosterone. Runoff from fields with land-applied manure has been 
reported to contain estrogens, estradiol, progesterone, and 
testosterone, as well as their synthetic counterparts. In 1995, an 
irrigation pond and three streams in the Conestoga River watershed near 
the Chesapeake Bay had both estrogen and testosterone present. All of 
these sites were affected by fields receiving poultry litter.

B. How Do These Pollutants Reach Surface Waters?

    Pollutants found in animal manures can reach surface water by 
several mechanisms. These can be categorized as either surface 
discharges or other discharges. Surface discharges can occur as the 
result of runoff, erosion, spills, and dry-weather discharges. In 
surface discharges, the pollutant travels overland or through drain 
tiles with surface inlets to a nearby stream, river, or lake. Direct 
contact between confined animals and surface waters is another means of 
surface discharge. For other types of discharges, the pollutant travels 
via another environmental medium (groundwater or air) to surface water.
1. Surface Discharges
    a. Runoff. Water that falls on man-made surfaces or soil and fails 
to be absorbed will flow across the surface and is called runoff. 
Surface discharges of manure pollutants can originate from feedlots and 
from overland runoff at land application sites. Runoff is especially 
likely at open-air feedlots if rainfall occurs soon after application, 
or if manure is over-applied, or misapplied. For example, experiments 
by Edwards and Daniels in the early 1990s show that, for all animal 
wastes, the application rate had a significant effect on the runoff 
concentration. In addition, manure applied to water-saturated or frozen 
soils is more likely to run off the soil surface. Other factors that 
promote runoff to surface waters are steep land slope, high rainfall, 
low soil porosity or permeability, and close proximity to surface 
waters. Runoff of pollutants dissolved into rainwater is a significant 
transport mechanism for water soluble pollutants, which includes 
nitrate, nitrite, and organic forms of phosphorus.
    Runoff of manure pollutants has been identified by states, 
citizen's groups, and the media as a factor in a number of documented 
impacts from AFOs, including hog, cattle, and chicken operations. For 
example, in 1994, multiple runoff problems were cited for a hog 
operation in Minnesota, and in 1996 runoff from manure spread on land 
was identified at hog and chicken operations in Ohio. In 1997, runoff 
problems were identified for several cattle operations in numerous 
counties in Minnesota. More discussion of runoff and its impacts on the 
environment and human health is provided later in this section.
    b. Erosion. In addition to runoff, surface discharges can occur by 
erosion, in which the soil surface is worn away by the action of water 
or wind. Erosion is a significant transport mechanism for land-applied 
pollutants that are strongly sorbed to soils, of which phosphorus is 
one example. A 1999 report by the Agricultural Research Service (ARS) 
noted that phosphorus bound to eroded sediment particles makes up 60 to 
90 percent of phosphorus transported in surface runoff from cultivated 
land. For this reason, most agricultural phosphorus control measures 
have focused on soil erosion control to limit transport of particulate 
phosphorus. However, soils do not have infinite adsorption capacity for 
phosphate or any other adsorbing pollutant, and dissolved pollutants 
including phosphates can still enter waterways via runoff and leachate 
even if soil erosion is controlled.
    In 1998, the USDA Natural Resources Conservation Service (NRCS) 
reviewed the manure production of a watershed in South Carolina. 
Agricultural activities in the project area are a major influence on 
the streams and ponds in the watershed, and contribute to nutrient-
related water quality problems in the headwaters of Lake Murray. NRCS 
found that bacteria, nutrients, and sediment from soil erosion are the 
primary contaminants affecting these resources. The NRCS has calculated 
that soil erosion, occurring on over 13,000 acres of cropland in the 
watershed, ranges from 9.6 to 41.5 tons per acre per year.
    c. Spills and Dry-Weather Discharges. Surface discharges can occur 
through spills or other discharges from lagoons. Some causes of spills 
include malfunctions such as pump failures, manure irrigation gun 
malfunctions, and pipes or retaining walls breaking. Manure entering 
tile drains has a direct route to surface water. (Tile drains are a 
network of pipes buried in fields below the root zone of plants to 
remove subsurface drainage water from the root zone to a stream, 
drainage ditch, or evaporation pond. EPA does not regulate most tile 
fields.) In 1997, the Ohio Department of Natural Resources documented 
chicken manure traveling through tile drains into a nearby stream. In 
addition, spills can occur as a result of lagoon overflows and washouts 
from floodwaters when lagoons are sited on floodplains. There are also 
indications that discharges from siphoning lagoons occur deliberately 
as a means to reduce the volume in overfull lagoons. Acute discharges 
of this kind frequently result in dramatic fish kills. In 1997, an 
independent review of Indiana Department of Environmental Management 
records indicated that the most common causes of waste releases in that 
state were intentional discharge and lack of operator knowledge, rather 
than spills due to severe rainfall conditions.
    Numerous such dry-weather discharges have been identified. For 
example, in 1995, two separate discharges of 25 million gallons of 
manure from hog farms in North Carolina were documented, and both 
resulted in fish kills. Subsequent discharges of hundreds of thousands 
of gallons of manure were documented from hog operations in Iowa 
(1996), Illinois (1997), and Minnesota (1997). Fish kills were also 
reported as a result of two of these discharges. Discharges of over 8 
million gallons of manure from a poultry operation in North Carolina in 
1995 likewise resulted in a fish kill. Between 1994 and 1996, half a 
dozen discharges from poultry operations in Ohio resulted when manure 
entered field tiles. In 1998, 125,000 gallons of manure were discharged 
from a dairy feedlot in Minnesota.
    d. Direct Contact between Confined Animals and Surface Water. 
Finally, surface discharges can occur as a result of direct contact 
between confined animals and the rivers or ponds that are located 
within their reach. Historically, farms were located near waterways for 
both water access for animals and discharge of wastes. This practice is 
now restricted for CAFOs; however, despite this restriction, 
enforcement actions are the primary means for reducing direct access.

[[Page 2980]]

    In the more traditional farm production regions of the Midwest and 
Northeast, dairy barns and feedlots are often in close proximity to 
streams or other water sources. This close proximity to streams was 
necessary in order to provide drinking water for the dairy cows, direct 
access to cool the animals in hot weather, and to cool the milk prior 
to the wide-spread use of refrigeration. For CAFO-size facilities this 
practice is now replaced with more efficient means of providing 
drinking water for the dairy herd. In addition, the use of freestall 
barns and modern milking centers minimizes the exposure of dairy cows 
to the environment. For example, in New York direct access is more of a 
problem for the smaller traditional dairy farms that use older methods 
of housing animals.
    In the arid west, feedlots are typically located near waterbodies 
to allow for cheap and easy stock watering. Many existing lots were 
configured to allow the animals direct access to the water. Certain 
animals, particularly cattle, will wade into the water, linger to 
drink, and will often urinate and defecate there as well. This direct 
deposition of manure and urine contributes greatly to water quality 
problems. Environmental problems associated with allowing farm animals 
access to waters that are adjacent to the production area are well 
documented in the literature. EPA Region X staff have documented 
dramatically elevated levels of Escherichia coli in rivers downstream 
of AFOs (including CAFOs) with direct access to surface water. Recent 
enforcement actions against direct access facilities have resulted in 
the assessment of tens of thousands of dollars in civil penalties.
2. Other Discharges to Surface Waters
    a. Leaching to Groundwater. Leaching of land-applied pollutants 
such as nitrate dissolved into rainwater is a significant transport 
mechanism for water soluble pollutants. In addition, leaking lagoons 
are a source of manure pollutants to ground water. Although manure 
solids purportedly ``self-seal'' lagoons to prevent groundwater 
contamination, some studies have shown otherwise. A study for the Iowa 
legislature published in 1999 indicates that leaking is part of design 
standards for earthen lagoons and that all lagoons should be expected 
to leak. A 1995 survey of hog and poultry lagoons in the Carolinas 
found that nearly two-thirds of the 36 lagoons sampled had leaked into 
the groundwater. Even clay-lined lagoons have the potential to leak, 
since they can crack or break as they age, and can be susceptible to 
burrowing worms. In a three-year study (1988-1990) of clay-lined swine 
lagoons on the Delmarva Peninsula, researchers found that leachate from 
lagoons located in well-drained loamy sand had a severe impact on 
groundwater quality.
    Pollutant transport to groundwater is also greater in areas with 
high soil permeability and shallow water tables. Percolating water can 
transport pollutants to groundwater, as well as to surface waters via 
interflow. Contaminated groundwater can deliver pollutants to surface 
waters through hydrologic connections. Nationally, about 40 percent of 
the average annual stream flow is from groundwater. In the Chesapeake 
Bay watershed, the U.S. Geological Survey (USGS) estimates that about 
half of the nitrogen loads from all sources to nontidal streams and 
rivers originate from groundwater.
    b. Discharge to the Air and Subsequent Deposition. Discharges to 
air can occur as a result of volatilization of both pollutants already 
present in the manure and pollutants generated as the manure 
decomposes. Ammonia is very volatile, and can have significant impacts 
on water quality through atmospheric deposition. Other ways that manure 
pollutants can enter the air is from spray application methods for land 
applying manure and as particulates wind-borne in dust. Once airborne, 
these pollutants can find their way into nearby streams, rivers, and 
lakes. The 1998 National Water Quality Inventory indicates that 
atmospheric deposition is the third greatest cause of water quality 
impairment for estuaries, and the fifth greatest cause of water quality 
impairment for lakes, ponds, and reservoirs.
    The degree of volatilization of manure pollutants is dependent on 
the manure management system. For example, losses are greater when 
manure remains on the land surface rather than being incorporated into 
the soil, and are particularly high when spray application is 
performed. Environmental conditions such as soil acidity and moisture 
content also affect the extent of volatilization. Losses are reduced by 
the presence of growing plants. Ammonia also readily volatilizes from 
lagoons.
    Particulate emissions from AFOs may include dried manure, feed, 
epithelial cells, hair, and feathers. The airborne particles make up an 
organic dust, which includes endotoxin (the toxic protoplasm liberated 
when a microorganism dies and disintegrates), adsorbed gases, and 
possibly steroids. At least 50 percent of dust emissions from swine 
operations are believed to be respirable (small enough to be inhaled 
deeply into the lungs).
3. A National Study of Nitrogen Sources to Watersheds
    In 1994, the USGS analyzed nitrogen sources to 107 watersheds. 
Potential sources included manure (both point and nonpoint sources), 
fertilizers, point sources, and atmospheric deposition. The ``manure'' 
source estimates include waste from both confined and unconfined 
animals. As may be expected, the USGS found that proportions of 
nitrogen originating from various sources differ according to climate, 
hydrologic conditions, land use, population, and physical geography. 
Results of the analysis for selected watersheds for the 1987 base year 
show that in some instances, manure nitrogen is a large portion of the 
total nitrogen added to the watershed. The study showed that, for 
following nine watersheds, more than 25 percent of nitrogen originates 
from manure: Trinity River, Texas; White River, Arkansas; Apalachicola 
River, Florida; Altamaha River, Georgia; Potomac River, Washington, 
D.C.; Susquehanna River, Pennsylvania; Platte River, Nebraska; Snake 
River, Idaho; and San Joaquin River, California. Of these, California, 
Texas, Florida, Arkansas, and Idaho have large populations of confined 
animals.
4. State Level Studies of Feedlot Pollutants Reaching Surface Waters
    There are many studies demonstrating surface water impacts from 
animal feeding operations. These impacts have been documented for at 
least the past decade. For example, in 1991, the U.S. Fish and Wildlife 
Service (FWS) reported on suspected impacts from a large number of 
cattle feedlots on Tierra Blanca Creek, upstream of the Buffalo Lake 
National Wildlife Refuge in the Texas Panhandle. FWS found elevated 
aqueous concentrations of ammonia, chemical oxygen demand, coliform 
bacteria, chloride, nitrogen, and volatile suspended solids; they also 
found elevated concentrations of the feed additives copper and zinc in 
the creek sediment.
    According to Arkansas' 1996 Water Quality Inventory Report, a 
publication of the Arkansas Department of Environmental Protection, 
water in the Grand Neosho basin only partially supports aquatic life. 
Land uses there, primarily confined animal feeding operations including 
poultry production and pasture management, are major sources of 
nutrients and chronic high turbidity. Pathogens sampled in the Muddy 
Fork Hydrologic Unit Area, in

[[Page 2981]]

the Arkansas River basin, also exceed acceptable limits for primary 
contact recreation (swimming). This problem was reported in the 1994 
water quality inventory, and it, too, was traced to extensive poultry, 
swine, and dairy operations in the Moore's Creek basin. Essentially, 
all parts of the subwatershed are impacted by these activities. 
Currently, the Muddy Fork Hydrologic Unit Area Project is a USDA 
agricultural assistance, technology transfer, and demonstration 
project. A section 319 water quality monitoring operation is also 
ongoing in the hydrologic unit area.
    In 1997, the Hoosier Environmental Council documented the reduction 
in biodiversity due to AFOs in a study of three Indiana stream systems. 
That study found that waters downstream of animal feedlots (mainly hog 
and dairy operations) contained fewer fish and a limited number of 
species of fish in comparison with reference sites. It also found 
excessive algal growth, altered oxygen content, and increased levels of 
ammonia, turbidity, pH, and total dissolved solids.

C. What Are the Potential and Observed Impacts?

    Pollutants in animal manures can impair surface waters. Such 
impairments have resulted in fish kills; eutrophication and algal 
blooms; contamination of shellfish, and subsequent toxin and pathogen 
transmission up the food chain; increased turbidity and negative 
impacts to benthic organisms; and reduced biodiversity when rivers and 
streams become uninhabitable by resident species. These manure 
pollutants can also deteriorate soil quality and make it toxic to 
plants. In addition to these ecological impacts, pollutants in animal 
manures can present a range of risks to human health when they 
contaminate drinking water or shellfish, and when they are present in 
recreational waters.
1. Ecological Impacts
    a. Fish Kills and Other Fishery Impacts. Fish kills are one of the 
most dramatic impacts associated with manure reaching surface water. 
Spills, dry-weather discharges, and runoff can carry pollutants in 
manure to rivers and streams and can result in serious fish kills. 
During the years 1987 through 1997, at least 47 incidents of fish kills 
have been associated with hog manure. Another 8 fish kills were 
attributed to poultry waste, and 2 with beef/dairy manure. An 
additional 20 fish kills were associated with animal manure for which 
one specific animal type was not identified. These incidents were 
reported by the Iowa Department of Natural Resources, the Maryland 
Department of the Environment, the Natural Resources Defense Council, 
several citizen's groups, and numerous newspapers. These incidents are 
not reflective of all states. In Illinois alone, records indicate that 
171 fish kills attributable to manure discharges were investigated by 
Illinois Environmental Protection Agency personnel between 1979 and 
1998. Thousands of fish are typically killed by one of these events.
    Ammonia is highly toxic to aquatic life and is a leading cause of 
fish kills. In a May 1997 incident in Wabasha County, Minnesota, 
ammonia in a dairy cattle manure discharge killed 16,500 minnows and 
white suckers. Ammonia and other pollutants in manure exert a direct 
biochemical oxygen demand (BOD) on the receiving water. As ammonia is 
oxidized, dissolved oxygen is consumed. Moderate depressions of 
dissolved oxygen are associated with reduced species diversity, while 
more severe depressions can produce fish kills.
    Nitrites pose additional risks to aquatic life: if sediments are 
enriched with nutrients, the concentrations of nitrites on the 
overlying water may be raised enough to cause nitrite poisoning or 
``brown blood disease'' in fish.
    Excess nutrients result in eutrophication (see section V.C.1.b, 
which follows). Eutrophication is associated with blooms of a variety 
of organisms that are toxic to both fish and humans. This includes the 
estuarine dinoflagellate Pfiesteria piscicida, which is implicated in 
several fish kills and fish disease events. Pfiesteria has been 
implicated as the primary causative agent of many major fish kills and 
fish disease events in North Carolina estuaries and coastal areas, as 
well as in Maryland and Virginia tributaries to the Chesapeake Bay. In 
1997, hog operations were identified as a potential cause of a 
Pfiesteria outbreak in North Carolina rivers that resulted in 450,000 
fish killed. Also that same year, poultry operations were linked to 
Pfiesteria outbreaks in the Pokomoke River and Kings Creek (both in 
Maryland) and in the Chesapeake Bay, in which tens of thousands of fish 
were killed.
    The presence of estrogen and estrogen-like compounds in surface 
water has caused much concern. These hormones have been found in animal 
manures and runoff from fields where manure has been applied. The 
ultimate fate of hormones in the environment is unknown, although early 
studies indicate that common soil or fecal bacteria cannot metabolize 
estrogen. When present in high enough concentrations in the 
environment, hormones and other endocrine disruptors including 
pesticides are linked to reduced fertility, mutations, and the death of 
fish. Estrogen hormones have been implicated in widespread reproductive 
disorders in a variety of wildlife. There is evidence that fish in some 
streams are experiencing endocrine disruption and that contaminants 
including pesticides may be the cause, though there is no evidence 
linking these effects to CAFOs.
    b. Eutrophication and Algal Growth. Eutrophication is the process 
in which phosphorus and nitrogen over-enrich water bodies and disrupt 
the balance of life in that water body. As a result, the excess 
nutrients cause fast-growing algae blooms. The 1998 National Water 
Quality Inventory indicates that excess algal growth is the seventh 
leading stressor in lakes, ponds, and reservoirs. Rapid growth of algae 
can lower the dissolved oxygen content of a water body to levels 
insufficient to support fish and invertebrates. Eutrophication can also 
affect phytoplankton and zooplankton population diversity, abundance, 
and biomass, and increase the mortality rates of aquatic species. 
Floating algal mats can reduce the penetration of sunlight in the water 
column and thereby limit growth of seagrass beds and other submerged 
vegetation. This in turn reduces fish and shellfish habitat. This 
reduction in submerged aquatic vegetation adversely affects both fish 
and shellfish populations.
    Increased algal growth can also raise the pH of waterbodies, as 
algae consume dissolved carbon dioxide to support photosynthesis. This 
elevated pH can harm the gill epithelium of aquatic organisms. The pH 
may then drop rapidly at night, when algal photosynthesis stops. In 
extreme cases, such pH fluctuations can severely stress aquatic 
organisms.
    Eutrophication is also a factor in the growth of toxic 
microorganisms, such as cyanobacteria (a toxic algae) and Pfiesteria 
piscicida, which can affect human health as well. Decay of algal blooms 
and night-time respiration can further depress dissolved oxygen levels, 
potentially leading to fish kills and reduced biodiversity. In 
addition, toxic algae such as cyanobacteria release toxins as they die, 
which can severely impact wildlife as well as humans. Researchers have 
documented stimulation of Pfiesteria growth by swine effluent 
discharges, and have shown that the organism's growth can be highly 
stimulated by both inorganic

[[Page 2982]]

and organic nitrogen and phosphorus enrichments.
    c. Wildlife Impacts. As noted earlier, reduction in submerged 
aquatic vegetation due to algal blooms is the leading cause of 
biological decline in Chesapeake Bay, adversely affecting both fish and 
shellfish populations. In marine ecosystems, blooms known as red or 
brown tides have caused significant mortality in marine mammals. In 
freshwater, cyanobacterial toxins have caused many incidents of 
poisoning of wild and domestic animals that have consumed impacted 
waters.
    Even with no visible signs of the algae blooms, shellfish such as 
oysters, clams and mussels can carry the toxins produced by some types 
of algae in their tissue. Shellfish are filter feeders which pass large 
volumes of water over their gills. As a result, they can concentrate a 
broad range of microorganisms in their tissues. Concentration of toxins 
in shellfish provides a pathway for pathogen transmission to higher 
trophic organisms. Information is becoming available to assess the 
health effects of contaminated shellfish on wildlife receptors. Earlier 
this year, the death of over 400 California sea lions was linked to 
ingestion of mussels contaminated by a bloom of toxic algae. Previous 
incidents associated the deaths of manatees and whales with toxic and 
harmful algae blooms.
    In August 1997, the National Oceanic and Atmospheric Administration 
(NOAA) released The 1995 National Shellfish Register of Classified 
Growing Waters. The register characterizes the status of 4,230 
shellfish-growing water areas in 21 coastal states, reflecting an 
assessment of nearly 25 million acres of estuarine and non-estuarine 
waters. NOAA found that 3,404 shellfish areas had some level of 
impairment. Of these, 110 (3 percent) were impaired to varying degrees 
by feedlots, and 280 (8 percent) were impaired by ``other agriculture'' 
which could include land where manure is applied.
    Avian botulism and avian cholera have killed hundreds of thousands 
of migratory waterfowl in the past. Although outbreaks of avian 
botulism have occurred since the beginning of the century, most 
occurrences have been reported in the past twenty years, which 
coincides with the trend toward fewer and larger AFOs. The connection 
between nutrient runoff, fish kills, and subsequent outbreaks of avian 
botulism was made in 1999 at California's Salton Sea, when almost 8 
million fish died in one day. The fish kill was associated with runoff 
from surrounding farms, which carried nutrients and salts into the 
Salton Sea. Those nutrients caused algae blooms which in turn lead to 
large and sudden fish kills. Since the 1999 die off, the number of 
endangered brown pelicans infected with avian botulism increased to 
about 35 birds a day. In addition, bottom feeding birds can be quite 
susceptible to metal toxicity, because they are attracted to shallow 
feedlot wastewater ponds and waters adjacent to feedlots. Metals can 
remain in aquatic ecosystems for long periods of time because of 
adsorption to suspended or bed sediments or uptake by aquatic biota.
    Reduction in biodiversity due to AFOs has been documented in a 1997 
study of three Indiana stream systems. That study shows that waters 
downstream of animal feedlots (mainly hog and dairy operations) 
contained fewer fish and a limited number of species of fish in 
comparison with reference sites. The study also found excessive algal 
growth, altered oxygen content, and increased levels of ammonia, 
turbidity, pH, and total dissolved solids. Multi-generation animal 
studies have found decreases in birth weight, post-natal growth, and 
organ weights among mammals prenatally exposed to nitrite. Finally, 
hormones and pesticides have been implicated in widespread reproductive 
disorders in a variety of wildlife.
    d. Other Aquatic Ecosystem Imbalances. Changes to the pH balance of 
surface water also threaten the survival of the fish and other aquatic 
organisms. Data from Sampson County, North Carolina show that ``ammonia 
rain'' has increased as the hog industry has grown, with ammonia levels 
in rain more than doubling between 1985 and 1995. In addition, excess 
nitrogen can contribute to water quality decline by increasing the 
acidity of surface waters.
    In fresh waters, increasing salinity can also disrupt the balance 
of the ecosystem, making it difficult for resident species to remain. 
Salts also contribute to the degradation of drinking water supplies.
    Trace elements (e.g., arsenic, copper, selenium, and zinc) may also 
present ecological risks. Antibiotics, pesticides, and hormones may 
have low-level, long-term ecosystem effects.
2. Drinking Water Impacts
    Nitrogen in manure is easily transformed into nitrate form, which 
can be transported to drinking water sources and present a range of 
health risks. In 1990, PA found that nitrate is the most widespread 
agricultural contaminant in drinking water wells, and estimated that 
4.5 million people are exposed to elevated nitrate levels from wells. 
In 1995, several private wells in North Carolina were found to be 
contaminated with nitrates at levels 10 times higher than the State's 
health standard; this contamination was linked with a nearby hog 
operation. The national primary drinking water standard (Maximum 
Contaminant Level, or MCL) for nitrogen (nitrate, nitrite) is 10 
milligrams per liter (mg/L). In 1982, nitrate levels greater than 10 
mg/L were found in 32 percent of the wells in Sussex County, Delaware; 
these levels were associated with local poultry operations. In 
southeastern Delaware and the Eastern Shore of Maryland, where poultry 
production is prominent, over 20 percent of wells were found to have 
nitrate levels exceeding 10 mg/L. Nitrate is not removed by 
conventional drinking water treatment processes. Its removal requires 
additional, relatively expensive treatment units.
    Algae blooms triggered by nutrient pollution can affect drinking 
water by clogging treatment plant intakes, producing objectionable 
tastes and odors, and increasing production of harmful chlorinated 
byproducts (e.g., trihalomethanes) by reacting with chlorine used to 
disinfect drinking water. As aquatic bacteria and other microorganisms 
degrade the organic matter in manure, they consume dissolved oxygen. 
This can lead to foul odors and reduce the water's value as a source of 
drinking water. Increased organic matter in drinking water sources can 
also lead to excessive production of harmful chlorinated byproducts, 
resulting in higher drinking water treatment costs.
    Pathogens can also threaten drinking water sources. Surface waters 
are typically expected to be more prone than groundwater to 
contamination by pathogens such as Escherichia coli and Cryptosporidium 
parvum. However, groundwater in areas of sandy soils, limestone 
formations, or sinkholes are particularly vulnerable. In a 1997 survey 
of drinking water standard violations in six states over a four-year 
period, the U.S. General Accounting Office noted in its 1997 report 
Drinking Water: Information on the Quality of Water Found at Community 
Water Systems and Private Wells that bacterial standard violations 
occurred in up to 6 percent of community water systems each year and in 
up to 42 percent of private wells. (Private wells are more prone than 
public wells to contamination, since they tend to be shallower and 
therefore more susceptible to contaminants leaching from the surface.) 
In cow pasture areas of Door County, Wisconsin, where a thin topsoil 
layer is underlain by fractured limestone bedrock, groundwater wells 
have

[[Page 2983]]

commonly been shut down due to high bacteria levels.
    Each of these impacts can result in increased drinking water 
treatment costs. For example, California's Chino Basin estimates a cost 
of over $1 million per year to remove the nitrates from drinking water 
due to loadings from local dairies. Salt load into the Chino Basin from 
local dairies is over 1,500 tons per year, and the cost to remove that 
salt by the drinking water treatment system ranges from $320 to $690 
for every ton. In Iowa, Des Moines Water Works planned to spend 
approximately $5 million in the early 1990's to install a treatment 
system to remove nitrates from their main sources of drinking water, 
the Raccoon and Des Moines Rivers. Agriculture was cited as a major 
source of the nitrate contamination, although the portion attributable 
to animal waste is unknown. In Wisconsin, the City of Oshkosh has spent 
an extra $30,000 per year on copper sulfate to kill the algae in the 
water it draws from Lake Winnebago. The thick mats of algae in the lake 
have been attributed to excess nutrients from manure, commercial 
fertilizers, and soil. In Tulsa, Oklahoma, excessive algal growth in 
Lake Eucha is associated with poultry farming. The city spends $100,000 
per year to address taste and odor problems in the drinking water.
3. Human Health Impacts
    Human and animal health impacts are primarily associated with 
drinking contaminated water, contact with contaminated water, and 
consuming contaminated shellfish.
    a. Nutrients. The main hazard to human health from nutrients is 
elevated nitrate levels in drinking water. In particular, infants are 
at risk from nitrate poisoning (also referred to as methemoglobinemia 
or ``blue baby syndrome''), which results in oxygen starvation and is 
potentially fatal. Nitrate toxicity is due to its metabolite nitrite, 
which is formed in the environment, in foods, and in the human 
digestive system. In addition to blue baby syndrome, low blood oxygen 
due to methemoglobinemia has also been linked to birth defects, 
miscarriages, and poor health in humans and animals. These effects are 
exacerbated by concurrent exposure to many species of bacteria in 
water.
    Studies in Australia compiled in a 1993 review by Bruning-Fann and 
Kaneene showed an increased risk of congenital malformations with 
consumption of high-nitrate groundwater. Multi-generation animal 
studies have found decreases in birth weight and post-natal growth and 
organ weights associated with nitrite exposure among prenatally exposed 
mammals. Nitrate-and nitrite-containing compounds also have the ability 
to cause hypotension or circulatory collapse. Nitrate metabolites such 
as N-nitroso compounds (especially nitrosamines) have been linked to 
severe human health effects such as gastric cancer.
    Eutrophication can also affect human health by enhancing growth of 
harmful algal blooms that release toxins as they die. In marine 
ecosystems, harmful algal blooms such as red tides can result in human 
health impacts via shellfish poisoning and recreational contact. In 
freshwater, blooms of cyanobacteria (blue-green algae) may pose a 
serious health hazard to humans via water consumption. When 
cyanobacterial blooms die or are ingested, they release water-soluble 
compounds that are toxic to the nervous system and liver. Algal blooms 
can also increase production of harmful chlorinated byproducts (e.g., 
trihalomethanes) by reacting with chlorine used to disinfect drinking 
water. These substances can result in increased health risks.
    b. Pathogens. Livestock manure has been identified as a potential 
source of pathogens by public health officials. Humans may be exposed 
to pathogens via consumption of contaminated drinking water and 
shellfish, or by contact and incidental ingestion during recreation in 
contaminated waters. Relatively few microbial agents are responsible 
for the majority of human disease outbreaks from water-based exposure 
routes. Intestinal infections are the most common type of waterborne 
infection, and affect the most people. A May, 2000 outbreak of 
Escherichia coli O157:H7 in Walkerton, Ontario resulted in at least 
seven deaths and 1,000 cases of intestinal problems; public health 
officials theorize that flood waters washed manure contaminated with E. 
coli into the town's drinking water well.
    A study for the period 1989 to 1996 revealed that infections caused 
by the protozoa Giardia sp. and Cryptosporidium parvum were the leading 
cause of infectious water-borne disease outbreaks in which an agent was 
identified. C. parvum is particularly associated with cows, and can 
produce gastrointestinal illness, with symptoms such as severe 
diarrhea. Healthy people typically recover relatively quickly from 
gastrointestinal illnesses such as cryptosporidiosis, but such diseases 
can be fatal in people with weakened immune systems. This subpopulation 
includes children, the elderly, people with HIV infection, chemotherapy 
patients, and those taking medications that suppress the immune system. 
In Milwaukee, Wisconsin in 1993, C. parvum contamination of a public 
water supply caused more than 100 deaths and an estimated 403,000 
illnesses. The source was not identified, but possible sources include 
runoff from cow manure application sites.
    In 1999, an E. coli outbreak occurred at the Washington County Fair 
in New York State. This outbreak, possibly the largest waterborne 
outbreak of E. coli O157:H7 in U.S. history, took the lives of two fair 
attendees and sent 71 others to the hospital. An investigation 
identified 781 persons with confirmed or suspected illness related to 
this outbreak. The outbreak is thought to have been caused by 
contamination of the Fair's Well 6 by either a dormitory septic system 
or manure runoff from the nearby Youth Cattle Barn.
    Contact with pathogens during recreational activities in surface 
water can also result in infections of the skin, eye, ear, nose, and 
throat. In 1989, ear and skin infections and intestinal illnesses were 
reported in swimmers as a result of discharges from a dairy operation 
in Wisconsin.
    As discussed in the previous section, excess nutrients result in 
eutrophication, which is associated with the growth of a variety of 
organisms that are toxic to humans either through ingestion or contact. 
This includes the estuarine dinoflagellate Pfiesteria piscicida. While 
Pfiesteria is primarily associated with fish kills and fish disease 
events, the organism has also been linked with human health impacts 
through dermal exposure. Researchers working with dilute toxic cultures 
of Pfiesteria exhibited symptoms such as skin sores, severe headaches, 
blurred vision, nausea/vomiting, sustained difficulty breathing, kidney 
and liver dysfunction, acute short-term memory loss, and severe 
cognitive impairment. People with heavy environmental exposure have 
exhibited symptoms as well. In a 1998 study, such environmental 
exposure was definitively linked with cognitive impairment, and less 
consistently linked with physical symptoms.
    Even with no visible signs of the algae blooms, shellfish such as 
oysters, clams and mussels can carry the toxins produced by some types 
of algae in their tissue. These can then affect people who eat the 
contaminated shellfish. The 1995 National Shellfish Register of 
Classified Growing Waters published by the National Oceanic and 
Atmospheric Administration (NOAA) identifies over 100 shellfish bed 
impairments (shellfish not approved for harvest) due to feedlots.

[[Page 2984]]

    c. Trace Elements. Some of the trace elements in manure are 
essential nutrients for human physiology; however, they can induce 
toxicity at elevated concentrations. These elements include the feed 
additives zinc, arsenic, copper, and selenium. Although these elements 
are typically present in relatively low concentrations in manure, they 
are of concern because of their ability to persist in the environment 
and to bioconcentrate in plant and animal tissues. These elements could 
pose a hazard if manure is overapplied to land.
    Trace elements are associated with a variety of illnesses. For 
example, arsenic is carcinogenic to humans, based on evidence from 
human studies; some of these studies have found increased skin cancer 
and mortality from multiple internal organ cancers in populations who 
consumed drinking water with high levels of inorganic arsenic. Arsenic 
is also linked with noncancer effects, including hyperpigmentation and 
possible vascular complications. Selenium is associated with liver 
dysfunction and loss of hair and nails, and zinc can result in changes 
in copper and iron balances, particularly copper deficiency anemia.
    d. Odors. Odor is a significant concern because of its documented 
effect on moods, such as increased tension, depression, and fatigue. 
Odor also has the potential for vector attraction, and has been 
associated with a negative impact on property values. Additionally, 
many of the odor-causing compounds in manure can cause physical health 
impacts. For example, hydrogen sulfide is toxic, and ammonia gas is a 
nasal and respiratory irritant.
4. Recreational Impacts
    As discussed above, CAFO pollutants contribute to the increase in 
turbidity, increase in eutrophication and algal blooms, and reduction 
of aquatic populations in rivers, lakes, and estuaries. Impaired 
conditions interfere with recreational activities and aesthetic 
enjoyment of these water bodies. Recreational activities include 
fishing, swimming, and boating. Fishing is reduced when fish 
populations decrease. Swimming is limited by increased risk of 
infection when pathogens are present. Boating and aesthetic enjoyment 
decline with the decreased aesthetic appeal caused by loss of water 
clarity and water surfaces clogged by algae. These impacts are more 
fully discussed in Section XI of this preamble.

VI. What Are Key Characteristics of the Livestock and Poultry 
Industries?

A. Introduction and Overview

1. Total Number and Size of Animal Confinement Operations
    USDA reports that there were 1.1 million livestock and poultry 
farms in the United States in 1997. This number includes all operations 
that raise beef, dairy, pork, broilers, egg layers, and turkeys, and 
includes both confinement and non-confinement (grazing and rangefed) 
production. Only operations that raise animals in confinement will be 
subject to today's proposed regulations.
    For many of the animal sectors, it is not possible to precisely 
determine what proportion of the total livestock operations are 
confinement operations and what proportion are grazing operations only. 
Data on the number of beef and hog operations that raise animals in 
confinement are available from USDA. Since most large dairies have 
milking parlors, EPA assumes that all dairy operations are potentially 
confinement operations. In the poultry sectors, there are few small 
non-confinement operations and EPA assumes that all poultry operations 
confine animals. EPA's analysis focuses on the largest facilities in 
these sectors only.
    Using available 1997 data from USDA, EPA estimates that there are 
about 376,000 AFOs that raise or house animals in confinement, as 
defined by the existing regulations (Table 6-1). Table 6-1 presents the 
estimated number of AFOs and the corresponding animal inventories for 
1997 across select size groupings. These estimates are based on the 
number of ``animal units'' (AU) as defined in the existing regulations 
at 40 CFR 122, with the addition of the revisions that are being 
proposed for immature animals and chickens. Data shown in Table 6-1 are 
grouped by operations with more than 1,000 AU and operations with fewer 
than 300 AU.
    As shown in Table 6-1, there were an estimated 12,660 AFOs with 
more that 1,000 AU in 1997 that accounted for about 3 percent of all 
confinement operation. In most sectors, these larger-sized operations 
account for the majority of animal production. For example, in the 
beef, turkey and egg laying sectors, operations with more than 1,000 AU 
accounted for more than 70 percent of all animal inventories in 1997; 
operations with more than 1,000 AU accounted for more than 50 percent 
of all hog, broiler, and heifer operations (Table 6-1). In contrast, 
operations with fewer than 300 AU accounted for 90 percent of all 
operations, but a relatively smaller share of animal production.
    USDA personnel have reviewed the data and assumptions used to 
derive EPA's estimates of the number of confinement operations. 
Detailed information on how EPA estimated the number of AFOs that may 
be subject to today's proposed regulations can be found in the 
Development Document for the Proposed Revisions to the National 
Pollutant Discharge Elimination System Regulation and the Effluent 
Guidelines for Concentrated Animal Feeding Operations (referred to as 
the ``Development Document'').

                       Table 6-1.--Number of AFOs and Animal On-Site, by Size Group, 1997
----------------------------------------------------------------------------------------------------------------
                                                       >1000 AU
          Sector/Size category            Total AFOs      \1\       300 AU       Total     >1000 AU     300 AU
----------------------------------------------------------------------------------------------------------------
                                                 (Number of operations)
                                              (Number of animals, 1000's)
----------------------------------------------------------------------------------------------------------------
Cattle..................................     106,080       2,080     102,000      26,840      22,790       2,420
Veal....................................         850          10         640         270          10         210
Heifers.................................       1,250         300         200         850         450          80
Dairy...................................     116,870       1,450     109,740       9,100       2.050       5,000
Hogs: GF \2\............................      53,620       1,670      48,700      18,000       9,500       2,700
Hogs: FF \2\............................      64,260       2,420      54,810      38,740      21,460       5,810
Broilers................................      34,860       3,940      20,720   1,905,070   1,143,040     476,270
Layers: wet \3\.........................       3,110          50       2,750     392,940     275,060      58,940
Layers: dry \3\.........................      72,060         590      70,370     392,940     275,060      58,940
Turkeys.................................      13,720         370      12,020     112,800      95,880       2,260
                                         -----------------------------------------------------------------------

[[Page 2985]]

 
    Total \4\...........................     375,700      12,660     336,590          NA          NA         NA
----------------------------------------------------------------------------------------------------------------
Source: Derived by USDA from published USDA/NASS data, including 1997 Census of Agriculture. In some cases,
  available data are used to interpolate data for some AU size categories (see EPA's Development Document). Data
  for veal and heifer operations are estimated by USDA. Totals may not add due to rounding.
\1\ As defined for the proposed CAFO regulations, one AU is equivalent to: one slaughter or feeder cattle, calf
  or heifer; 0.7 mature dairy cattle; 2.5 hogs (over 55 pounds) or 5 nursery pigs; 55 turkeys; and 100 chickens
  regardless of the animal waste system used.
\2\ ``Hogs: FF'' are farrow-finish (includes breeder and nursery pigs); ``Hogs: GF'' are grower-finish only.
\3\ ``Layers: wet'' are operations with liquid manure systems; ``Layers: dry'' are operations with dry systems.
\4\ ``Total AFOs'' eliminates double counting of operations with mixed animal types. Based on survey level
  Census data for 1992, operations with mixed animal types account for roughly 25 percent of total AFOs.

2. Total Number of CAFOs Subject to the Proposed Regulations
    Table 6-2 presents the estimated number of operations that would be 
defined as a CAFO under each of the two regulatory alternatives being 
proposed. The ``two-tier structure'' would define as CAFOs all animal 
feeding operations with more than 500 AU. The ``three-tier structure'' 
would define as CAFOs all animal feeding operations with more than 
1,000 AU and any operation with more than 300 AU, if they meet certain 
``risk-based'' conditions, as defined in Section VII. Table 6-2 
presents the estimated number of CAFOs in terms of number of operations 
with more than 1,000 AU and operations for each co-proposed middle 
category (operations with between 500 and 1,000 AU and between 300 and 
1,000 AU, respectively).
    Based on available USDA data for 1997, EPA estimates that both 
proposed alternative structures would regulate about 12,660 operations 
with more than 1,000 AU. This estimate adjusts for operations with more 
than a single animal type. The two alternatives differ in the manner in 
which operations with less than 1,000 AU would be defined as CAFOs and, 
therefore, subject to regulation, as described in Section VII. As shown 
in Table 6-2, in addition to the 12,660 facilities with more than 1,000 
AU, the two-tier structure at 500 AU threshold would regulate an 
additional 12,880 operations with between 500 and 1,000 AU. Including 
operations with more than 1,000 AU, the two-tier structure regulates a 
total of 25,540 AFOs that would be subject to the proposed regulations 
(7 percent of all AFOs).
    Under the three-tier structure, an estimated 39,330 operations 
would be subject to the proposed regulations (10 percent of all AFOs), 
estimated as the total number of animal confinement operations with 
more than 300 AU. See Table 6-1. Of these, EPA estimates that a total 
of 31,930 AFOs would be defined as CAFOs (9 percent of all AFOs) and 
would need to obtain a permit (Table 6-2), while an estimated 7,400 
operations would certify that they do not need to obtain a permit. 
Among those operations needing a permit, an estimated 19,270 operations 
have between 300 to 1,000 AU. For more information, see the Economic 
Analysis.

                                       Table 6-2. Number of Potential CAFOs by Select Regulatory Alternative, 1997
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                            ``Two-tier''                             ``Three-
                      Sector/Size category                       ------------------------------------------------------------------   Tier''
                                                                   >300 AU    >500 AU    >750 AU    >300 AU    >500 AU     >750AU    >300 AU
----------------------------------------------------------------------------------------------------------------------------------------------
                                                                           (#Operations)
                                                                              (%Total)                (#)      (%Total)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cattle..........................................................      4,080      3,080      2,480          4          3          2      3,210          3
Veal............................................................        210         90         40         25         10          4        140         16
Heifers.........................................................      1,050        800        420         84         64         34        980         78
Dairy...........................................................      7,140      3,760      2,260          6          3          2      6,480          6
Hogs: GF \1\....................................................      4,920      2,690      2,300          9          5          4      2,650          5
Hogs: FF \1\....................................................      9,450      5,860      3,460         15          9          5      5,700          9
Broilers........................................................     14,140      9,780      7,780         41         28         22     13,740         39
Layers: wet \2\.................................................        360        360        210         12         12          7        360         12
Layers: dry \2\.................................................      1,690      1,280      1,250          2          2          2      1,650          2
Turkeys.........................................................      2,100      1,280        740         15          9          5      2,060         15
    Total \3\...................................................     39,320     25,540     19,100       10.5        6.8        5.1     31,930       8.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: See Table 6-1.
\1\FF =farrow-finish (includes breeder and nursery pigs); GF=grower finish.
\2\ ``Layers: wet'' are operations with liquid manure systems. ``Layers: dry'' are operations with dry systems.
\3\ ``Total'' eliminates double counting of operations with mixed animal types (see Table 6-1).

    EPA estimated the number of operations that may be defined as CAFOs 
under the three-tier structure using available information and compiled 
data from USDA, State Extension experts, and agricultural 
professionals. These estimates rely on information about the percentage 
of operations in each sector that would be impacted by the ``risk-
based'' criteria described in Section VII. In some cases, this 
information is available on a state or regional basis only and is 
extrapolated to all operations nationwide. EPA's estimates reflect 
information from a majority of professional experts in the field. 
Greater weight is given to information obtained by State Extension 
agents, since they have broader knowledge of the industry in their 
state. More detailed information on how EPA estimated the number of 
operations that may be affected by the proposed regulations under the 
three-

[[Page 2986]]

tier structure is available in the rulemaking record and in the 
Development Document.
    EPA is also requesting comment on two additional options for the 
scope of the rule. One of these is an alternative two-tier structure 
with a threshold of 750 AU. Under this option, an estimated 19,100 
operations, adjusting for operations with more than a single animal 
type, would be defined as CAFOs. This represents about 5 percent of all 
CAFOs, and would affect an estimated 2,930 beef, veal, and heifer 
operations, 2,260 dairies, and 5,750 swine and 9,980 poultry operations 
(including mixed operations). Under the other alternative, a variation 
of the three-tier structure being co-proposed today, the same 39,320 
operations with 300 AU or greater would potentially be defined as 
CAFOs. However, the certification conditions for being defined as a 
CAFO would be different for operations with 300 to 1,000 AU (as 
described later in Section VII). EPA has not estimated how many 
operations would be defined as CAFOs under this alternative three-tier 
approach, although EPA expects that it would be fewer than the 31,930 
estimated for the three-tier approach being proposed today. If after 
considering comments, EPA decides to further explore this approach, it 
will conduct a full analysis of the number of potentially affected 
operations.
    EPA does not anticipate that many AFOs with less than 500 AU (two-
tier structure) or 300 AU (three-tier structure) will be subject to the 
proposed requirements. In the past 20 years, EPA is aware of very few 
AFOs that have been designated as CAFOs. Based on available USDA 
analyses that measure excessive nutrient application on cropland in 
some production areas and other farm level data by sector, facility 
size and region, EPA estimates that designation may bring an additional 
50 operations under the proposed two-tier structure each year 
nationwide. EPA assumed this estimate to be cumulative such that over a 
10-year period approximately 500 AFOs may become designated as CAFOs 
and therefore subject to the proposed regulations. EPA expects these 
operations to consist of beef, dairy, farrow-finish hog, broiler and 
egg laying operations that are determined to be significant 
contributors to water quality impairment. Under the three-tier 
structure, EPA estimates that fewer operations would be designated as 
CAFOs, with 10 dairy and hog operations may be designated each year, or 
100 operations over a 10-year period. Additional information is 
provided in the Economic Analysis.
    EPA expects that today's proposed regulations would mainly affect 
livestock and poultry operations that confine animals. In addition to 
CAFOs, however, the proposed regulations would also affect businesses 
that contract out the raising or finishing production phase to a CAFO 
but exercise ``substantial operational control'' over the CAFO (as 
described in Section VII.C.6).
    EPA expects that affected businesses may include packing plants and 
slaughtering facilities that enter into a production contract with a 
CAFO. Under a production contract, a contractor (such as a processing 
firm, feed mill, or other animal feeding operation) may either own the 
animals and/or may maintain control over the type of production 
practices used by the CAFO. Processor firms that enter into a marketing 
contract with a CAFO are not expected to be subject to co-permitting 
requirements since the mechanism for ``substantial operational 
control'' generally do not exist. Given the types of contract 
arrangements that are common in the hog and poultry industries, EPA 
expects that packers/slaughterers in these sectors may be subject to 
the proposed co-permitting requirements.
    As discussed later in Sections VI.D.1 and VI.E.1, EPA estimates 
that 94 meat packing plants that slaughter hogs and 270 poultry 
processing facilities may be subject to the proposed co-permitting 
requirements. Other types of processing firms, such as further 
processors, food manufacturers, dairy cooperatives, and renderers, are 
not expected to be affected by the co-permitting requirements since 
these operations are further up the marketing chain and do not likely 
contract with CAFOs to raise animals. Fully vertically integrated 
companies (e.g., where the packer owns the CAFO) are not expected to 
require a co-permit since the firm as the owner of the CAFO would 
require only a single permit. EPA solicits comment on these assumptions 
as part of today's rulemaking proposal. EPA also expects that non-CAFO, 
crop farmers who receive manure from CAFOs would be affected under one 
of the two co-proposed options relating to offsite management of manure 
(see Section VII).
    Additional information is provided in the Economic Impact Analysis 
of Proposed Effluent Limitations Guidelines and National Pollutant 
Discharge Elimination System for Concentrated Animal Feeding Operations 
(referred to as ``Economic Impact Analysis'').
3. Manure and Manure Nutrients Generated Annually at AFOs
    USDA's National Resources Conservation Service (NRCS) estimates 
that 128.2 billion pounds of manure are ``available for land 
application from confined AU'' from the major livestock and poultry 
sectors. EPA believes these estimates equate to the amount of manure 
that is generated at animal feeding operations since USDA's methodology 
accounts for all manure generated at confinement facilities. USDA 
reports that manure nutrients available for land application totaled 
2.6 billion pounds of nitrogen and 1.4 billion pounds of phosphorus in 
1997 (Table 6-3). USDA's estimates do not include manure generated from 
other animal agricultural operations, such as sheep and lamb, goats, 
horses, and other farm animal species.

                 Table 6-3. Manure and Manure Nutrients ``Available for Land Application'', 1997
----------------------------------------------------------------------------------------------------------------
                                     USDA estimates: ``available for      EPA estimates: Percentage share by
                                    application'' from confined AU''             facility size group b
                                                    a                -------------------------------------------
              Sector               ----------------------------------
                                      Total      Total       Total     >1000 AU   >750 AU    >500 AU     >300AU
                                      manure    nitrogen  phosphorus
----------------------------------------------------------------------------------------------------------------
                                      (bill.
                                       lbs)       (Million pounds)
                                    (Percent of total manure nutrients applied)
----------------------------------------------------------------------------------------------------------------
Cattle c..........................       32.9        521         362         83         85         86         90
Dairy.............................       45.5        636         244         23         31         37         43
Hogs..............................       16.3        274         277         55         63         69         78
All Poultry.......................       33.5      1,153         554         49         66         77         90

[[Page 2987]]

 
    Total.........................      128.2      2,583       1,437         49         58         64        72
----------------------------------------------------------------------------------------------------------------
 Source:
a Manure and nutrients are from USDA/NRCS using 1997 Census of Agriculture and procedures documented developed
  by USDA. Numbers are ``dry state'' and reflect the amount of manure nutrient ``available for application from
  confined AU'' and are assumed by EPA to coincide with manure generated at confined operations.
b Percentage shares are based on the share of animals within each facility size group for each sector (shown in
  Table 6-1) across three facility size groups.
c ``Cattle'' is the sum of USDA's estimate for livestock operations ``with fattened cattle'' and ``with cattle
  other than fattened cattle and milk cows.''

    The contribution of manure and manure nutrients varies by animal 
type. Table 6-3 shows that the poultry industry was the largest 
producer of manure nutrients in 1997, accounting for 45 percent (1.2 
billion pounds) of all nitrogen and 39 percent (0.6 billion pounds) of 
all phosphorus available for land application that year. Among the 
poultry sectors, EPA estimates that approximately 55 percent of all 
poultry manure was generated by broilers, while layers generated 20 
percent and turkeys generated 25 percent. The dairy industry was the 
second largest producer of manure nutrients, generating 25 percent (0.6 
billion pounds) of all nitrogen and 17 percent (0.2 billion pounds) of 
all phosphorus (Table 6-3). Together, the hog and beef sectors 
accounted for about one-fourth of all nitrogen and nearly 40 percent of 
all phosphorus from manure.
    Table 6-3 shows EPA's estimate of the relative contribution of 
manure generated by select major facility size groupings, including 
coverage for all operations with more than 1,000 AU, all operations 
with more than 750 AU or 500 AU (two-tier structure), and all 
operations with more than 300 AU (three-tier structure). EPA estimated 
these shares based on the share of animals within each facility size 
group for each sector, as shown in Table 6-1. Given the number of AFOs 
that may be defined as CAFOs and subject to the proposed regulations 
(Table 6-1), EPA estimates that the proposed effluent guidelines and 
NPDES regulations will regulate 5 to 7 percent (two-tier structure) to 
10 percent (three-tier structure) percent of AFOs nationwide. Coverage 
in terms of manure nutrients generated will vary by the proposed 
regulatory approach. As shown in Table 6-3, under the 500 AU two-tier 
structure, EPA estimates that the proposed requirements will capture 64 
percent of all CAFO manure; under the 750 AU two-tier structure, EPA 
estimates that the proposed requirements will capture 58 percent of all 
CAFO manure. Under the three-tier structure, EPA estimates that the 
proposed requirements will capture 72 percent of all CAFO manure 
generated annually (Table 6-3). The majority of this coverage (49 
percent) is attributable to regulation of operations with more than 
1,000 AU.
    Additional information on the constituents found in livestock and 
poultry manure and wastewater is described in Section V. Information on 
USDA's estimates of nutrients available for land application and on the 
relative consistency of manure for the main animal types is provided in 
the Development Document.

B. Beef Subcategory

1. General Industry Characteristics
    Cattle feedlots are identified under NAICS 112112 (SIC 0211, beef 
cattle feedlots) and NAICS 112111, beef cattle ranching and farming 
(SIC 0212, beef cattle, except feedlots). This sector comprises 
establishments primarily engaged in feeding cattle and calves for 
fattening, including beef cattle feedlots and feed yards (except 
stockyards for transportation).
    The beef cattle industry can be divided into four separate producer 
segments:
     Feedlot operations fatten or ``finish'' feeder cattle 
prior to slaughter and constitute the final phase of fed cattle 
production. Calves usually begin the finishing stage after 6 months of 
age or after reaching at least 400 pounds. Cattle are typically held 
for 150 to 180 days and weigh between 1,150 to 1,250 pounds (for 
steers) or 1,050 to 1,150 pounds (for heifers) at slaughter.
     Veal operations raise male dairy calves for slaughter. The 
majority of calves are ``special fed'' or raised on a low-fiber diet 
until about 16 to 20 weeks of age, when they weigh about 450 pounds.
     Stocker or backgrounding operations coordinate the flow of 
animals from breeding operations to feedlots by feeding calves after 
weaning and before they enter a feedlot. Calves are kept between 60 
days to 6 months or until they reach a weight of about 400 pounds.
     Cow-calf producers typically maintain a herd of mature 
cows, some replacement heifers, and a few bulls, and breed and raise 
calves to prepare them for fattening at a feedlot. Calves typically 
reach maturity on pasture and hay and are usually sold at weaning. Cow-
calf operators may also retain the calves and continue to raise them on 
pasture until they reach 600 to 800 pounds and are ready for the 
feedlot.
    Animal feeding operations in this sector that may be affected by 
today's proposed regulations include facilities that confine animals. 
Information on the types of facilities in this sector that may be 
covered by the proposed regulations is provided in Section VII.
    USDA reports that there were more than 106,000 beef feedlots in 
1997, with a total inventory of 26.8 million cattle (Table 6.1). Due to 
ongoing consolidation in the beef sector, the total number of 
operations has dropped by more than one-half since 1982, when there 
were 240,000 operations raising fed cattle. EPA also estimates that 
there were 850 veal operations raising 0.3 million head and 1,250 
stand-alone heifer operations raising 0.9 million head in 1997. Only a 
portion of these operations would be subject to the proposed 
regulations.
    As shown in Table 6-2, under the two-tier structure, EPA estimates 
that there are 3,080 beef feedlots with more than 500 head (500 AU of 
beef cattle). EPA also estimates that there are about 90 veal 
operations and 800 heifer operations that may be subject to the 
proposed regulations. Under the three-tier structure, EPA estimates 
that 3,210 beef feedlots, 140 veal and 980 heifer

[[Page 2988]]

operations with more than 300 head (300 AU) would meet the ``risk-
based'' conditions described in Section VII and thus require a permit.
    EPA expects that few operations that confine fewer than 500 AU of 
beef, veal, or heifers, would be designated by the permit authority. 
For the purpose of estimating costs, EPA assumes that no beef, veal, or 
heifer operations would be designated as CAFOs and subject to the 
proposed regulations under the three-tier structure. Under the two-tier 
structure, EPA assumes that about four beef feedlots located in the 
Midwest would be designated annually, or 40 beef feedlots projected 
over a 10-year period.
    The cattle feeding industry is concentrated in the Great Plains and 
Midwestern states. The majority of feedlots are located in the Midwest. 
However, the majority of large feedlots (i.e., operations with more 
than 1,000 head) are located in four Great Plains states--Texas, 
Kansas, Nebraska, and Colorado--accounting for nearly 80 percent of 
annual fed cattle marketings. Table 6-1 shows that, although the 
majority of beef feedlots (over 98 percent) have capacity below 1,000 
head, larger feedlots with more than 1,000 head accounted for the 
majority of animal production. In 1997, feedlots with more than 1,000 
head accounted for 85 percent of the nation's fed cattle inventory and 
sales. Cattle feeding has become increasingly concentrated over the 
last few decades. Feedlots have decreased in number, but increased in 
capacity. The decline in the number of operations is mostly among 
feedlots with less than 1,000 head.
    The majority of cattle and calves are sold through private 
arrangements and spot market agreements. Production contracting is not 
common in the beef sector. Most beef sector contracts are marketing 
based where operations agree to sell packers a certain amount of cattle 
on a predetermined schedule. Production contracts are uncommon, but may 
be used to specialize in a single stage of livestock production. For 
example, custom feeding operations provide finish feeding under 
contract. Backgrounding or stocker operations raise cattle under 
contract from the time the calves are weaned until they are on a 
finishing ration in a feedlot. As shown by 1997 USDA data of animal 
ownership, production contracts account for a relatively small share (4 
percent) of beef production. These same data show that production 
contracts are used to grow replacement breeding stock.
    Despite the limited use of contracts for the finishing and raising 
phase of production, EPA expects that no businesses, other than the 
CAFO where the animals are raised, will be subject to the proposed co-
permitting requirements. Reasons for this assumption are based on data 
from USDA on the use of production contracts and on animal ownership at 
operations in this sector. Additional information is provided in 
Section 2 of the Economic Analysis. EPA is seeking comment on this 
assumption as part of today's notice.
2. Farm Production and Waste Management Practices
    Beef cattle may be kept on unpaved, partly paved, or totally paved 
lots. The majority of beef feedlots use unpaved open feedlots. In open 
feedlots, protection from the weather is often limited to a windbreak 
near the fence in the winter and/or sunshade in the summer; however, 
treatment facilities for the cattle and the hospital area are usually 
covered. Confinement feeding barns with concrete floors are also 
sometimes used at feedlots in cold or high rainfall areas, but account 
for only 1 to 2 percent of all operations. Smaller beef feedlots with 
less than 1,000 head, especially in areas with severe winter weather 
and high rainfall, may use open-front barns, slotted floor housing, or 
housing with sloped gutters.
    Wastes produced from beef operations include manure, bedding, and 
contaminated runoff. Paved lots generally produce more runoff than 
unpaved lots. Unroofed confinement areas typically have a system for 
collecting and confining contaminated runoff. Excessively wet lots 
result in decreased animal mobility and performance. For this reason, 
manure is often stacked into mounds for improved drainage and drying, 
as well as providing dry areas for the animals. If the barn has slotted 
floors, the manure is collected beneath slotted floors, and is scraped 
or flushed to the end of the barn where it flows or is pumped to a 
storage area for later application via irrigation or transported in a 
tank wagon. Waste may also be collected using flushing systems.
    Waste from a beef feedlot may be handled as a solid or liquid. 
Solid manure storage can range from simply constructed mounds within 
the pens to large stockpiles. In some areas, beef feedlot operations 
may use a settling basin to remove bulk solids from the pen runoff, 
reducing the volume of solids prior to entering a storage pond, 
therefore increasing storage capacity. A storage pond is typically 
designed to hold the volume of manure and wastewater accumulated during 
the storage period, including additional storage volume for normal 
precipitation, minus evaporation, and storage volume to contain a 25-
year, 24-hour storm event. An additional safety volume termed 
``freeboard'' is also typically built into the storage pond design.
    Veal are raised almost exclusively in confinement housing, 
generally using individual stalls or pens. Veal calves are raised on a 
liquid diet and their manure is highly liquid. Manure is typically 
removed from housing facilities by scraping or flushing from collection 
channels and then flushing or pumping into liquid waste storage 
structures, ponds, or lagoons.
    Waste collected from the feedlot may be transported within the site 
to storage, treatment, and use or disposal areas. Solids and semisolids 
are typically transported using mechanical conveyance equipment, 
pushing the waste down alleys, and transporting the waste in solid 
manure spreaders. Flail-type spreaders, dump trucks, or earth movers 
may also be used to transport these wastes. Liquids and slurries are 
transferred through open channels, pipes, or in a portable liquid tank. 
The most common form of utilization is land application. However, the 
amount of cropland and pastureland that is available for manure 
application varies at each operation. Cattle waste may also be used as 
a bedding for livestock, marketed as compost, or used as an energy 
source.
    Additional information on the types of farm production and waste 
management practices is provided in the Development Document.

C. Dairy Subcategory

1. General Industry Characteristics
    Operations that produce milk are identified under NAICS 11212, 
dairy cattle and milk production (SIC 0241, dairy farms).
    A dairy operation may have several types of animal groups present, 
including:
     Calves (0-5 months);
     Heifers (6-24 months);
     Lactating dairy cows (i.e., currently producing milk); 
and;
     Cows close to calving and dry cows (i.e., not currently 
producing milk); and
     Bulls.
    Animal feeding operations in this sector that may be affected by 
today's proposed regulations include facilities that confine animals. 
Information on the types of facilities in this sector that may be 
covered by the proposed regulations is provided in Section VII.
    In 1997, there were 116,900 dairy operations with a year-end 
inventory of

[[Page 2989]]

9.1 million milk cows that produced 156.1 billion pounds of milk (Table 
6.1). Only a portion of these operations would be subject to the 
proposed regulations. As shown in Table 6.2, under the two-tier 
structure, EPA estimates that there are 3,760 dairy operations that 
confine more than 350 milk cows (i.e., 500 AU equivalent). Under the 
three-tier structure, EPA estimates that 6,480 dairy operations with 
more than 200 head (i.e., 300 AU equivalent) would meet the ``risk-
based'' conditions described in Section VII and thus require a permit.
    Table 6-1 shows that dairies with fewer than 200 head account for 
the majority (95 percent) of milking operations and account for 55 
percent of the nation's milk cow herd. EPA expects that under the two-
tier structure designation of dairies with fewer than 350 milk cows 
would be limited to about 22 operations annually, or 220 dairies 
projected over a 10-year time period. Under the three-tier structure, 
EPA expects annual designation of dairies with fewer than 200 milk cows 
would be limited to about 5 operations, or 50 operations over a 10-year 
period. EPA expects that designated facilities will be located in more 
traditional farming regions.
    More than one-half of all milk produced nationally is concentrated 
among the top five producing states: California, Wisconsin, New York, 
Pennsylvania, and Minnesota. Other major producing states include 
Texas, Michigan, Washington, Idaho, and Ohio. Combined, these ten 
states accounted for nearly 70 percent of milk production in 1997. Milk 
production has been shifting from traditional to nontraditional milk 
producing states. Operations in the more traditional milk producing 
regions of the Midwest and Mid-Atlantic tend to be smaller and less 
industrialized. Milk production at larger operations using newer 
technologies and production methods is emerging in California, Texas, 
Arizona, New Mexico, and Idaho. Milk production in these states is 
among the fastest-growing in the nation, relying on economies of scale 
and a specialization in milk production to lower per-unit production 
costs. (Additional data on these trends are provided in Section IV.C).
    Over the past few decades, the number of dairy operations and milk 
cow inventories has dropped, while overall milk production has been 
increasing. USDA reports that while the number of dairy operations 
dropped by more than one-half from 277,800 in 1982 to 116,900 in 1997, 
the amount of milk produced annually at these operations rose from 
135.5 billion pounds to 156.1 billion pounds. These figures signal 
trends toward increased consolidation, large gains in per-cow output, 
and increases in average herd size per facility. From 1982 to 1997, the 
average number of dairy cows per facility doubled from 40 cows to 80 
cows per facility.
    Although milk and dairy food production has become increasingly 
specialized, it has not experienced vertical integration in the same 
way as other livestock industries. The use of production contracts is 
uncommon in milk production. In part, this is attributable to the large 
role of farmer-owned, farmer-controlled dairy cooperatives, which 
handle about 80 percent of the milk delivered to plants and dealers. 
Milk is generally produced under marketing-type contracts through 
verbal agreement with their buyer or cooperative. Data from USDA 
indicate that little more than 1 percent of milk was produced under a 
production contract in 1997. Use of production contracts in the dairy 
sector is mostly limited to contracts between two animal feeding 
operations to raise replacement heifers.
    Despite the limited use of contracts between operations to raise 
replacement herd, EPA expects that no businesses other than the CAFO 
where the animals are raised will be subject to the proposed co-
permitting requirements. Reasons for this assumption are based on data 
from USDA on the use of production contracts and on animal ownership at 
operations in this sector. Additional information is provided in 
Section 2 of the Economic Analysis. EPA is seeking comment on this 
assumption as part of today's notice of the proposed rulemaking.
2. Farm Production and Waste Management Practices
    Animals at dairy operations may be confined in free-stalls, 
drylots, tie-stalls, or loose housing. Some may be allowed access to 
exercise yards or open pasture. The holding area confines cows that are 
ready for milking. Usually, this area is enclosed and is part of the 
milking center, which in turn may be connected to the barn or located 
in the immediate vicinity of the cow housing. Milking parlors are 
separate facilities where the cows are milked and are typically cleaned 
several times each day to remove manure and dirt. Large dairies tend to 
have automatic flush systems, while smaller dairies simply hose down 
the area. Larger dairies in the northern states, however, may be more 
likely to use continuous mechanical scraping of alleys in barns. Cows 
that are kept in tie-stalls may be milked directly from their stalls.
    Waste associated with dairy production includes manure, 
contaminated runoff, milking house waste, bedding, spilled feed and 
cooling water. Dairies may either scrape or flush manure, depending on 
the solids content in manure and wastewater. Scraping systems utilize 
manual, mechanical, or tractor-mounted equipment to collect and 
transport manure from the production area. Flushing systems use fresh 
or recycled lagoon water to move manure. Dairy manure as excreted has a 
solids content of about 12 percent and tends to act as a slurry; 
however, it can be handled as a semisolid or a solid if bedding is 
added. Semisolid manure has a solids content ranging from 10 to 16 
percent. Dilution water may be added to the manure to create a slurry 
with a solids content of 4 to 10 percent. If enough dilution water is 
added to the manure to reduce the solids content below 4 percent, the 
waste is considered to be a liquid.
    Manure in a solid or semisolid state minimizes the volume of manure 
that is handled. In a dry system, the manure is collected on a regular 
basis and covered to prevent exposure to rain and runoff; sources of 
liquid waste, such as milking center waste, are typically handled 
separately. In a liquid or slurry system, the manure is typically mixed 
with flushing system water from lagoons; the milking center effluent is 
usually mixed in with the animal manure in the lagoon or in the manure 
transfer system to ease pumping. Liquid systems are usually favored by 
large dairies because they have lower labor cost and because the 
dairies tend to use automatic flushing systems.
    Methods used at dairy operations to collect waste include 
mechanical/tractor scraper, flushing systems, gutter cleaner/gravity 
gutters, and slotted floors. Manure is typically stored as a slurry or 
liquid in a waste storage pond or in structural tanks. Milking house 
waste and contaminated runoff must be stored as liquid in a waste 
storage pond or structure. One common practice for the treatment of 
waste at dairies includes solids separation. Another common practice 
for the treatment of liquid waste at dairies includes anaerobic 
lagoons. The transfer of dairy waste depends on its consistency: liquid 
and slurry wastes can be transferred through open channels, pumps, 
pipes, or in a portable tank; solid and semi-solid waste can be 
transferred by mechanical conveyance, solid manure spreaders, or by 
being pushed down curbed concrete alleys. The majority of

[[Page 2990]]

dairy operations dispose of their waste through land application. The 
amount of crop and pastureland available for land application of manure 
varies by operation.
    Additional information on the types of farm production and waste 
management practices is provided in the Development Document.

D. Hog Subcategory

1. General Industry Characteristics
    Hog operations that raise or feed hogs and pigs either 
independently or on a contract basis are identified under NAICS 11221, 
hog and pig farming (SIC 0213, hogs).
    Hog operations may be categorized by six facility types based on 
the life stage of the animal in which they specialize:
     Farrow-to-wean operations that breed pigs and ship 10- to 
15-pound pigs to nursery operations.
     Farrowing-nursery operations that breed pigs and ship 40- 
to 60-pound ``feeder'' pigs to growing-finishing operations.
     Nursery operations that manage weaned pigs (more than 10 
to 15 pounds) and ship 40- to 60-pound ``feeder'' pigs to growing-
finishing operations.
     Growing-finishing or feeder-to-finish operations that 
handle 40- to 60-pound pigs and ``finish'' these to market weights of 
about 255 pounds.
     Farrow-to-finish operations that handle all stages of 
production from breeding through finishing.
     Wean-to-finish operations that handle all stages of 
production, except breeding, from weaning (10- to 15-pound pigs) 
through finishing.
    Animal feeding operations in this sector that may be affected by 
today's proposed regulations include facilities that confine animals. 
Information on the types of facilities in this sector that may be 
covered by the proposed regulations is provided in Section VII.
    In 1997, USDA reports that there were 117,880 hog operations with 
56.7 million market and breeding hogs (Table 6-1). Not all of these 
operations would be subject to the proposed regulations. As shown in 
Table 6-2, under the two-tier structure, EPA estimates that there are 
5,860 farrow-finish feedlots (including breeder and nursery operations) 
and 2,690 grower-finish feedlots with more than 1,250 head (i.e., 500 
AU equivalent). Under the three-tier structure, EPA estimates that 
5,700 farrow-finish feedlots (including breeder and nursery operations) 
and 2,650 grower-finish feedlots with more than 750 head (i.e., 300 AU 
equivalent) would meet the ``risk-based'' conditions described in 
Section VII and thus require a permit.
    Table 6-1 shows that the majority of hog operations (93 percent) 
have fewer than 1,250 head, accounting for about one-third of overall 
inventories. Nearly half the inventories are concentrated among the 3 
percent of operations with more than 2,500 head. Under the two-tier 
structure EPA expects that designation of hog operations with fewer 
than 1,250 head will be limited to about 20 confinement operations 
annually, or 200 operations over a 10-year time period. Under the 
three-tier structure, EPA expects that about 5 hog operations with 
fewer than 750 head would be designated annually, or 50 operations over 
a 10-year time period. EPA expects that designated facilities will be 
located in more traditional farming regions.
    Hog production is concentrated among the top five producing states, 
including Iowa, North Carolina, Minnesota, Illinois, and Missouri. 
Together these states supply 60 percent of annual pork supplies. The 
majority of operations are located in the Midwest; however, the 
Southeast has seen rapid growth in hog production in the past decade. 
Recent growth in this region is due to increased vertical integration, 
proximity to growing consumer markets, and the mild climate, which 
offers lower energy costs and improved feed efficiency. (Additional 
data on these trends are provided in Section IV.C).
    The hog sector is undergoing rapid consolidation and becoming 
increasingly specialized. USDA reports that while the number of hog 
operations dropped by nearly two-thirds between 1982 and 1997 (from 
329,800 to 109,800 operations), the number of feeder pigs sold has 
risen from 20.0 million to 35.0 million marketed head over the same 
period. As in other livestock sectors, increasing production from fewer 
operations is attributable to expansion at remaining operations. Data 
from USDA indicate that the average number of hogs per facility 
increased from 170 pigs in 1982 to 560 pigs in 1997. Increasing 
production is also attributable to substantial gains in production 
efficiency and more rapid turnover, which has allowed hog farmers to 
produce as much output with fewer animals.
    The hog sector is rapidly evolving from an industry of small, 
independent firms linked by spot markets to an industry of larger firms 
that are specialized and vertically coordinated through production 
contracting. This is particularly true of large-scale hog production in 
rapidly growing hog production states such as North Carolina. 
Production contracting is less common in the Midwest where coordination 
efforts are more diversified.
    Information from USDA on animal ownership at U.S. farms provides an 
indication of the potential degree of processor control in this sector. 
Data from USDA indicate the use of production contracts accounted for 
66 percent of hog production in the Southern and Mid-Atlantic states in 
1997, especially among the larger producers. This indicates that a 
large share of hog production may be under the ownership or control of 
processing firms that are affiliated with hog operations in this 
region. This compares to the Midwest, where production contracting 
accounted for 18 percent of hog production. Production contracting in 
the hog sector differs from that in the beef and dairy sectors since it 
is becoming increasingly focused on the finishing stage of production, 
with the farmer (``grower'') entering into an agreement with a meat 
packing or processing firm (``integrator''). Production contracts are 
also used between two independent animal feeding operations to raise 
immature hogs.
    Businesses that contract out the growing or finishing phase of 
production to an AFO may also be affected by the proposed co-permitting 
requirements. Affected businesses may include other animal feeding 
operations as well as processing sector firms. By NAICS code, meat 
packing plants are classified as NAICS 311611, animal slaughtering (SIC 
2011, meat packing plants). The Department of Commerce reports that 
there were a total of 1,393 red meat slaughtering facilities that 
slaughter hogs as well as other animals, including cattle and calves, 
sheep, and lamb. Of these, Department of Commerce's 1997 product class 
specialization identifies 83 establishments that process fresh and 
frozen pork and 11 establishments that process or cure pork. These data 
generally account for larger processing facilities that have more than 
20 employees. EPA believes that processing firms that may be affected 
by the proposed co-permitting requirements will mostly be larger 
facilities that have the administrative and production capacity to take 
advantage of various contract mechanisms. This assumption is supported 
by information from USDA that indicates that production contracts in 
the hog sector are generally associated with the largest producers and 
processors. Section 2 of the Economic Analysis provides additional 
information on the basis for EPA's

[[Page 2991]]

estimate of potential co-permittees. EPA is seeking comment on this 
assumption as part of today's notice of the proposed rulemaking.
    Using these Department of Commerce data, EPA estimates that 94 
companies engaged in pork processing may be subject to the proposed co-
permitting requirements. This estimate does not include other 
processors under NAICS 311611, including sausage makers and facilities 
that ``further process'' hog hides and other by-products because these 
operations are considered to be further up the marketing chain and 
likely do not contract out to CAFOs.
2. Farm Production and Waste Management Practices
    Many operations continue to have the traditional full range of pork 
production phases at one facility, known as farrow-to-finish 
operations. More frequently at new facilities, operations are 
specialized and linked into a chain of production and marketing. The 
evolution in farm structures has resulted in three distinct production 
systems to create pork products: (1) farrow-to-finish; (2) farrowing, 
nursery, and grow-finish operations; and (3) farrow-to-wean and wean-
finish operations. Most nursery and farrowing operations, as well as 
practically all large operations of any type, raise pigs in pens or 
stalls in environmentally controlled confinement housing. These houses 
commonly use slatted floors to separate manure and wastes from the 
animal. Open buildings with or without outside access are relatively 
uncommon at large operations, but can be used in all phases of pork 
production. Smaller operations, particularly in the Midwest, may 
utilize open lots or pasture to raise pigs.
    Hog waste includes manure and contaminated runoff. Most confinement 
hog operations use one of three waste handling systems: flush under 
slats, pit recharge, or deep underhouse pits. Flush housing uses fresh 
water or recycled lagoon water to remove manure from sloped floor 
gutters or shallow pits. The flushed manure is stored in lagoons or 
tanks along with any precipitation or runoff that may come into contact 
with the manure. Flushing occurs several times a day. Pit recharge 
systems are shallow pits under slatted floors with 6 to 8 inches of 
pre-charge water. The liquid manure is pumped or gravity fed to a 
lagoon approximately once a week. Deep pit systems start with several 
inches of water, and the manure is stored under the house until it is 
pumped out for field application on the order of twice a year. Most 
large operations have 90 to 365 days storage. The deep pit system uses 
less water, creating a slurry that has higher nutrient concentrations 
than the liquid manure systems. Slurry systems are more common in the 
Midwest and the cooler climates.
    Dry manure handling systems include those used at open buildings 
and lots, scraped lots, hoop houses, deep bedded systems, and high rise 
hog houses. These systems produce a more solid manure material that is 
readily handled with a tractor or front end loader. The solids are 
stored in stacks or covered until used as fertilizer. In some cases, 
solids are composted.
    Storage lagoons are used to provide anaerobic bacterial 
decomposition of organic materials. When only the top liquid is removed 
for irrigation or some other use, a limited amount of phosphorus-rich 
sludge accumulates in the lagoon, which requires periodic removal. 
Vigorous lagoon mixing with an agitator or a chopper prior to 
irrigation is sometimes done to minimize the sludge accumulation. In 
certain climates, a settling and evaporation pond is used to remove 
solids, which are dried in a separate storage area. Some lagoons and 
tanks are covered with a synthetic material that reduces ammonia 
volatilization. Covers also prevent rainfall from entering the system 
and, therefore, reduce disposal costs.
    Land application is the most common form of utilization. To 
mitigate odor problems and volatization of ammonia, liquid waste can be 
injected below the soil surface. Waste may also be distributed through 
an irrigation process. Waste management systems for hogs often 
incorporate odor control measures, where possible.
    Additional information on the types of farm production and waste 
management practices is provided in the Development Document.

E. Poultry Subcategory

1. General Industry Characteristics
    Poultry operations can be classified into three individual sectors 
based on the type of commodity in which they specialize. These sectors 
include operations that breed and/or raise:
     Broilers or young meat chickens that are raised to a live 
weight of 4 to 4.5 pounds and other meat-type chickens, including 
roasters that are raised to 8 to 9 pounds. Classification: NAICS 11232, 
broilers and other meat-type chickens (SIC 0251, broiler, fryer and 
roaster chickens).
     Turkeys and turkey hens, including whole turkey hens that 
range from 8 to 15 pounds at slaughter, depending on market, and also 
turkey ``canners and cut-ups'' that range from 22 to 40 pounds. 
Classification: NAICS 11233, turkey production (SIC 0253, turkey and 
turkey eggs).
     Hens that lay shell eggs, including eggs that are sold for 
human consumption and eggs that are produced for hatching purposes. 
Classification: NAICS 11231, Chicken egg production (SIC 0252, chicken 
eggs) and NAICS 11234, poultry hatcheries (SIC 0254, poultry 
hatcheries).
    Animal feeding operations in this sector that may be affected by 
today's proposed regulations include facilities that confine animals. 
Information on the types of facilities in this sector that may be 
covered by the proposed regulations is provided in Section VII.
    In 1997, the USDA reports that there were 34,860 broiler operations 
that raised a total of 1.9 billion broilers during the year. There were 
also 13,720 turkey operations raising a total 112.8 million turkeys. 
Operations with egg layers and pullets totaled 75,170 with an average 
annual inventory of 393 million egg layers on-site. (See Table 6-1). 
Not all of these operations would be subject to the proposed 
regulations.
    Under the two-tier structure, EPA estimates that there are 9,780 
broiler operations, 1,280 turkey operations and 1,640 egg laying and 
pullet operations that have more than 500 AU (i.e., operations with 
more than 50,000 chickens and more than 27,500 turkeys). Under the 
three-tier structure, EPA estimates that 13,740 broiler operations, 
2,060 turkey operations and 2,010 egg laying operations with more than 
300 AU (i.e., operations with more than 30,000 chickens and more than 
16,500 turkeys) would meet the ``risk-based'' conditions described in 
Section VII and thus require a permit.
    EPA expects few, if any, poultry AFOs with fewer than 500 AU will 
be subject to the revised requirements. As shown in Table 6-1, most 
poultry operations have fewer than 500 AU. Under the two-tier 
structure, EPA expects that designation of broiler operations with 
fewer than 50,000 chickens will be limited to two broiler and two egg 
operations being designated annually, or a total of 40 poultry 
operations over a 10-year period. EPA expects that no turkey operations 
would be designated as CAFOs and subject to the proposed regulations. 
EPA expects that no confinement poultry operations will be designated 
as CAFOs under the proposed requirements under the three-tier 
structure.
    Overall, most poultry production is concentrated in the Southeast 
and in key Midwestern states. As in the pork sector, the Southeast 
offers advantages

[[Page 2992]]

such as lower labor, land, and energy costs; proximity to end markets; 
and milder weather, which contributes to greater feed efficiency. 
Nearly 60 percent of all broiler production is concentrated among the 
top five producing states, including Georgia, Arkansas, Alabama, 
Mississippi, and North Carolina. The top five turkey producing states 
also account for about 60 percent of all turkeys sold commercially. 
These include North Carolina, Minnesota, Virginia, Arkansas, and 
California. Missouri and Texas are also major broiler and turkey 
producing states. The top five states for egg production account for 
more than 40 percent of all egg production, including Ohio, California, 
Pennsylvania, Indiana, and Iowa. Other major egg producing states 
include Georgia, Texas, Arkansas, and North Carolina.
    The number of operations in each of the poultry sectors has been 
declining while production has continued to rise. USDA reports that 
while the number of both turkey and broiler operations decreased by 
about 10,000 operations between 1982 and 1997, the number of animals 
sold for slaughter rose nearly twofold: the number of broilers sold 
rose from 3.5 billion to 6.7 billion and the number of turkeys sold 
rose from 167.5 million to 299.5 million. During the same period, the 
number of egg operations dropped nearly two-thirds (from 215,800 
operations in 1982), while the number of eggs produced annually has 
increased from 5.8 billion dozen to 6.2 billion dozen. Increased 
production from fewer operations is due to expanded production from the 
remaining operations. This is attributable to increases in the average 
number of animals raised at these operations as well as substantial 
gains in production efficiency and more rapid turnover, which has 
allowed operators to produce more with fewer animals. Data from USDA 
indicate that average inventory size on poultry operations increased 
twofold on broiler operations and rose threefold at layer and turkey 
operations between 1982 and 1997. (Additional data on these trends are 
provided in Section IV.C). As in other sectors, larger operations 
control most animal inventories and sales.
    The poultry industry is characterized by increasing integration and 
coordination between the animal production facility and the processing 
sector. Vertical integration has progressed to the point where large 
multifunction producer-packer-processor-distributor firms are the 
dominant force in poultry meat and egg production and marketing. 
Coordination through production contracting now dominates the poultry 
industry. Today's integrators are subsidiaries of feed companies, 
independent processors, cooperatives, meat packers, or retailers, or 
affiliates of conglomerate corporations. These firms may own and/or 
direct the entire process from the production of hatching eggs to the 
merchandising of ready-to-eat-sized poultry portions to restaurants.
    Production contracting in the poultry sector differs from that in 
the other livestock sectors since it is dominated by near vertical 
integration between a farmer (``grower'') and a processing firm 
(``integrator''). Information from USDA on animal ownership at U.S. 
farms provides an indication of the potential degree of processor 
control in this sector. Data from USDA indicate production contracting 
accounted for virtually all (98 percent) of U.S. broiler production in 
1997. This indicates that nearly all broiler production may be under 
the ownership or control of processing firms that are affiliated with 
broiler operations. Production contracting accounts for a relatively 
smaller share of turkey and egg production, accounting for 70 percent 
and 37 percent, respectively.
    Businesses that contract out the growing or finishing phase of 
production to an AFO may also be affected by the proposed co-permitting 
requirements. Affected businesses may include other animal feeding 
operations as well as processing sector firms. Poultry processing 
facilities are classified under NAICS 311615, poultry processing, and 
NAICS 311999, all other miscellaneous (SIC 2015, poultry slaughtering 
facilities). The Department of Commerce reports that there were a total 
of 558 poultry and egg slaughtering and processing facilities in 1997. 
Of these, Department of Commerce's 1997 product class specialization 
for poultry identifies 212 establishments that process young chickens, 
15 that process hens or fowl, and 39 that process turkeys (rounded to 
the nearest ten). These data generally account for larger processing 
facilities that have more than 20 employees. EPA believes that 
processing firms that may be affected by the proposed co-permitting 
requirements will mostly be larger facilities that have the 
administrative and production capacity to take advantage of various 
contract mechanisms. Section 2 of the Economic Analysis provides 
additional information on the basis for EPA's estimate of potential co-
permittees. EPA is seeking comment on this assumption as part of 
today's notice of the proposed rulemaking.
    Using these Department of Commerce data, EPA estimates that about 
270 companies engaged in poultry slaughtering may be subject to the 
proposed co-permitting requirements. This estimate does not include egg 
processors under NAICS 311999 because these operations are considered 
to be further up the marketing chain and likely do not contract out to 
CAFOs.
2. Farm Production and Waste Management Practices
    There are two types of basic poultry confinement facilities--those 
that are used to raise turkeys and broilers for meat and those that are 
used to house layers. Broilers and young turkeys are grown on floors on 
beds of litter shavings, sawdust, or peanut hulls; layers are confined 
to cages. Broilers are reared in houses where an absorbent bedding 
material such as wood shavings or peanut hulls are placed on the floor 
at a depth of several inches. Breeder houses contain additional rows of 
slats for birds to roost. Broilers may also be provided supplementary 
heat during the early phases of growth. Turkeys as well as some pullets 
and layers are produced in a similar fashion. Pullets or chickens that 
are not yet of egg laying age are raised in houses on litter, or in 
cages. Most commercial layer facilities employ cages to house the 
birds, although smaller laying facilities and facilities dedicated to 
specialty eggs such as brown eggs or free range eggs may use pastures 
or houses with bedded floors. Layer cages are suspended over a bottom 
story in a high-rise house, or over a belt or scrape gutter. The gutter 
may be a shallow sloped pit, in which case water is used to flush the 
wastes to a lagoon. Flush systems are more likely to be found at 
smaller facilities in the South.
    Poultry waste includes manure, poultry mortalities, litter, spilt 
water, waste feed, egg wash water, and also flush water at operations 
with liquid manure systems. Manure from broiler, breeder, some pullet 
operations, and turkey operations is allowed to accumulate on the floor 
where it is mixed with the litter. In the chicken houses, litter close 
to drinking water access forms a cake that is removed between flocks. 
The rest of the litter pack generally has low moisture content and is 
removed every 6 months to 2 years, or between flocks to prevent 
disease. This whole house clean-out may also require storage, depending 
on the time of year it occurs. The litter is stored in temporary field 
stacks, in covered piles, or in stacks within a roofed facility to help 
keep it dry. Commonly, treatment of broiler and

[[Page 2993]]

turkey litter includes composting which stabilizes the litter into a 
relatively odorless material and which increases the market value of 
the litter. Proper composting raises the temperature within the litter 
such that pathogens are reduced, allowing reuse of the litter in the 
poultry house.
    The majority of egg laying operations also use dry manure handling. 
Laying hens are kept in cages and the manure drops below the cages in 
both dry and liquid manure handling systems. Most of the dry manure 
laying operations are constructed as high rise houses where the birds 
are kept on the second floor and the manure drops to the first floor 
sometimes referred to as the pit. Ventilation flows through the house 
from the roof down over the birds and into the pit over the manure 
before it is forced out through the sides of the house. The ventilation 
drys the manure as it piles up into cones. Manure can be stored in high 
rise houses for up to a year before requiring removal. In dry layer 
houses with belts, the manure that drops below the cage collects on 
belts and is transported to a separate covered storage area. Layer 
houses with liquid systems use either a shallow pit or alleyway located 
beneath the cages for flushing. Flushed wastes are pumped to a lagoon.
    Because of the large number of routine mortalities associated with 
large poultry operations, the disposal of dead birds is occasionally a 
resource concern. Poultry facilities must have adequate means for 
disposal of dead birds in a sanitary manner. To prevent the spread of 
disease, dead birds are usually collected daily. Disposal alternatives 
include incineration, rendering, composting, and in-ground burial or 
burial in disposal tanks. Much of the waste from poultry facilities is 
land applied.
    Additional information on the types of farm production and waste 
management practices is provided in the Development Document.

VII. What Changes to the NPDES CAFO Regulations Are Being Proposed?

A. Summary of Proposed NPDES Regulations

    EPA is co-proposing, for public comment, two alternative ways to 
structure the NPDES regulation for defining which AFOs are CAFOs. Both 
structures represent significant improvements to the existing 
regulation and offer increased environmental protection. The first 
alternative proposal is a ``two-tier structure,'' and the second is a 
``three-tier structure.'' Owners or operators of all facilities that 
are defined as CAFOs in today's proposal, under either alternative, 
would be required to apply for an NPDES permit.
    In the first co-proposed alternative, EPA is proposing to replace 
the current three-tier structure in 40 CFR 122.23 with a two-tier 
structure. See proposed Sec. 122.23(a)(3) for the two-tier structure, 
included at the end of this preamble. All AFOs with 500 or more animal 
units would be defined as CAFOs, and those with fewer than 500 animal 
units would be CAFOs only if they are designated as such by EPA or the 
State NPDES permit authority.
    In the second co-proposed alternative, EPA is proposing to retain 
the current three-tier structure. All AFOs with 1,000 or more animal 
units would be defined as CAFOs, and those with less than 300 animals 
units would be CAFOs only if they are designated by EPA or the State 
NPDES permit authority. Those with 300 to 1,000 animal units would be 
CAFOs if they meet one or more of several specific conditions, and 
today's proposal would revise the existing conditions. These facilities 
could also be designated as CAFOs if they are found to be significant 
contributors of pollutants to waters of the United States. Further, all 
AFOs between 300 and 1,000 animal units would be required to certify to 
the permit authority that they do not meet any of the conditions. Those 
facilities unable to certify would be required to apply for a permit.
    These regulatory alternatives are two of six different approaches 
that the Agency considered. Two of the approaches are also being 
seriously considered, but are not being proposed in today's action 
because they have not been fully analyzed. However, EPA is soliciting 
public comment on these two alternatives. One of the alternatives is a 
two-tier structure, similar to what is being proposed today, but would 
establish a threshold at the equivalent of 750 AU. The other 
alternative under consideration is a three-tier structure, with 
different certification and permitting requirements for facilities in 
the 300 AU to 1,000 AU tier. These alternatives are described in more 
detail in Section VII.B.5. After reviewing public comment, EPA may 
decide to pursue either of these alternatives.
    In addition, EPA considered two other alternative approaches that 
are not being proposed. One would retain the existing three-tier 
structure for determining which AFOs are CAFOs, and would retain the 
existing conditions for determining which of the middle tier facilities 
are CAFOs while incorporating all other proposed changes to the CAFO 
regulations (e.g., the definition of CAFO, the duty to apply, etc.). 
The sixth approach that was not proposed which is similar to today's 
second alternative proposal, would retain the three-tiered structure 
and would revise the conditions for determining which of the middle 
tier facilities are CAFOs in the same manner as today's proposal. In 
contrast with today's proposal, it would not require all AFOs in the 
middle tier to certify they are not CAFOs.
    EPA is soliciting comment on all six scenarios for structuring how 
to determine which facilities are CAFOs.

  Table 7-1.--Proposed Revision to the Structure of the CAFO Regulation
------------------------------------------------------------------------
                 Proposed revision                         Section
------------------------------------------------------------------------
Historical Record.................................  B.1
Two-Tier Structure................................  B.2
Three-Tier Structure..............................  B.3
Comparative Analysis..............................  B.4
Alternative Scenarios Considered but not Proposed.  B.5
------------------------------------------------------------------------

    Besides changing the structure of the regulation, under both of 
today's proposals, EPA is also proposing changes to clarify, simplify, 
and strengthen the NPDES regulation, including to: clarify the 
definition of an AFO; discontinue the use of the term ``animal unit'' 
and eliminate the mixed animal type multiplier when calculating numbers 
of animals; eliminate the 25-year, 24-hour storm permit exemption; and 
impose a clearer and more broad duty to apply for a permit on all 
operations defined or designated as a CAFO.
    EPA is also proposing several changes that determine whether a 
facility is an AFO or whether it is a CAFO and

[[Page 2994]]

therefore must apply for an NPDES permit on that basis. Specifically, 
EPA is proposing to formally define a CAFO to: include both the animal 
production area and the land application area; broaden coverage in the 
poultry sector to include all chicken operations, both wet and dry; add 
coverage for stand-alone immature swine and heifer operations; lower 
the NPDES threshold that defines which facilities are CAFOs for other 
animal sectors, including horses, sheep, lambs and ducks; and require 
facilities that are no longer active CAFOs to remain permitted until 
their manure and storage facilities are properly closed and they have 
no potential to discharge CAFO manure or wastewater. This section also 
discusses the concept of ``direct hydrologic connection'' between 
ground water and surface water and its application to CAFOs. 
Considerations for providing regulatory relief to small businesses are 
also discussed.
    EPA is also proposing changes that clarify the scope of NPDES 
regulation of CAFO manure and process wastewater. Today's proposal 
modifies the criteria for designation of AFOs as CAFOs on a case-by-
case basis and explicitly describes EPA's authority to designate 
facilities as CAFOs in States with approved NPDES programs. EPA is also 
proposing that the permit authority must require entities that have 
``substantial operational control'' over a CAFO to be co-permitted, and 
is requesting comment on an option for States to waive this requirement 
if they provide another means of ensuring that excess manure 
transported from CAFOs to off-site recipients is properly land applied. 
EPA also is clarifying Clean Water Act requirements concerning point 
source discharges at non-CAFOs.
    These changes are summarized in Table 7-2 and described in the 
noted sections.

  Table 7-2.--Proposed Revisions for Defining CAFOs Other Point Sources
------------------------------------------------------------------------
                 Proposed revision                         Section
------------------------------------------------------------------------
Clarify the vegetation language in the definition   C.1
 of an AFO.
Discontinue use of the term animal unit...........  C.2.a
Eliminate the mixed animal type multiplier........  C.2.b
Remove the 25-year, 24-hour storm event exemption   C.2.c
 from the definition of a CAFO.
Clarify the duty to apply, that all CAFOs must      C.2.d
 apply for an NPDES permit.
Definition of a CAFO includes both production area  C.2.e
 and land application area.
Include dry poultry operations....................  C.2.f
Include stand-alone immature swine and heifer       C.2.g
 operations.
Coverage of other sectors besides beef, dairy,      C.2.h
 swine and poultry.
Require facilities that are no longer CAFOs to      C.2.i
 remain permitted until proper closure.
Applicability of direct hydrological connection to  C.2.j
 surface water.
Regulatory relief for small businesses............  C.2.k
Designation criteria..............................  C.3
Designation of CAFOs by EPA in States with NPDES    C.4
 authorized programs.
Co-permitting of entities that exert substantial    C.5
 operational control over a CAFO.
Point source discharges at AFOs that are not CAFOs  C.6
------------------------------------------------------------------------

    We also extensively discuss matters associated with the land 
application of CAFO-generated manure and wastewater, including how the 
agricultural storm water exemption applies to the application of CAFO-
generated manure both on land under the control of the CAFO operator 
and off-site. EPA is proposing to require CAFO owners or operators to 
land apply manure in accordance with proper agricultural practices, as 
defined in today's regulation. EPA is also co-proposing two different 
means of addressing the off-site transfer of CAFO-generated manure. In 
one proposal, CAFO owners or operators would be allowed to transfer 
manure off-site only to recipients who certify to land apply according 
to proper agricultural practices; to maintain records of all off-site 
transfers; and to provide adequate information to off-site manure 
recipients to facilitate proper application. Alternately, the 
certification would not be required, and CAFOs owners or operators 
would simply be required to maintain records and provide the required 
information to recipients. See Table 7-3 for references.

  Table 7-3.--Land Application of CAFO-Generated Manure and Wastewater
------------------------------------------------------------------------
                 Proposed revision                         Section
------------------------------------------------------------------------
Why is EPA Regulating Land Application of CAFO      D.1
 Waste?.
How is EPA Interpreting the Agricultural Storm      D.2
 Water Exemption with Respect to Land Application
 of CAFO-generated Manure?.
How is EPA Proposing to Regulate Discharges from    D.3
 Land Application of CAFO-generated Manure by
 CAFOs?.
How is EPA Proposing to Regulate Land Application   D.3
 of Manure and Wastewater by non-CAFOs?.
------------------------------------------------------------------------

    EPA is proposing several revisions to requirements contained in 
CAFO permits. The requirement that CAFO owners or operators develop and 
implement a ``Permit Nutrient Plan,'' or ``PNP,'' is discussed 
extensively, including clarifying that a PNP is the EPA-enforceable 
subset of a Comprehensive Nutrient Management Plan, or ``CNMP.''
    EPA is also proposing to apply revised Effluent Limitation 
Guidelines and standards (and hereafter referred to as effluent 
guidelines or ELG) to beef, dairy, swine, poultry and veal operations 
that are CAFOs by definition in either of the two proposed structures, 
or that have 300 AU to 1,000 AU in the three-tier structure and are 
designated. NPDES permits issued to small operations that are CAFOs by 
designation (those with fewer than 500 AU in the two tier structure, 
and those with fewer than 300 AU in the three tier structure) would 
continue to be based on Best Professional Judgment (BPJ) of

[[Page 2995]]

the permit authority. Similarly, CAFOs in other sectors (i.e., horse, 
sheep, lambs, and ducks) that have greater than 1,000 AU will continue 
to be subject to the existing effluent guidelines and standards (as 
they are in the existing regulation), while those with 1,000 AU or 
fewer would be issued permits based on BPJ, as today's proposed 
effluent guidelines does not include revisions to sectors other than 
beef, dairy, swine, poultry and veal.
    Today's NPDES proposal includes monitoring, reporting and record 
keeping requirements that are consistent with those required by today's 
proposed effluent guidelines (discussed in section VIII). In addition, 
EPA is proposing to require all individual permit applicants, as well 
as new facilities applying for coverage under general NPDES permits, to 
submit a copy of the cover sheed and Executive Summary of their draft 
Permit Nutrient Plan (PNP) to the permit authority along with the 
permit application or Notice of Intent (NOI). EPA is proposing to 
require all CAFOs to submit a notification to the permit authority, 
within three months of obtaining permit coverage, that their Permit 
Nutrient Plans (PNPs) have been developed, along with a fact sheet 
summarizing the PNP. Further, EPA is proposing to require permittees to 
submit a notification to the permit authority whenever the PNP has been 
modified.
    EPA is also proposing to require that the permit authority include 
certain conditions in its general and individual permits that specify: 
(1) Requirements for land application of manure and wastewater, 
including methods for developing the allowable manure application rate; 
(2) restrictions on timing of land application if determined to be 
necessary, including restrictions with regard to frozen, saturated or 
snow covered ground; (3) requirements for the facility to be permitted 
until manure storage facilities are properly closed and therefore the 
facility has no potential to discharge; (4) conditions for facilities 
in certain types of topographical regions to prevent discharges to 
ground water with a direct hydrological connection to surface water; 
and (5) under one co-proposed option, requirements that the CAFO owner 
or operator obtain a signed certification from off-site recipients of 
more than twelve tons annually, that manure will be land applied 
according to proper agricultural practices (co-proposed with omitting 
such a requirement). Comments are also requested on whether EPA should 
include erosion controls in the NPDES permit, and whether EPA should 
establish an additional design standard that would address chronic 
rainfall. Table 7-4 summarizes the proposed revisions that address 
minimum permit conditions, as well as issues for which comment are 
being sought.

         Table 7-4.--Proposed Revisions for Permit Requirements
------------------------------------------------------------------------
                 Proposed revision                         Section
------------------------------------------------------------------------
Permit Nutrient Plan..............................  E.1
Effluent Limitations..............................  E.2
Monitoring and reporting..........................  E.3
Record keeping....................................  E.4
Special Conditions and Standard Conditions........  E.5
    Determining allowable manure application rate.  E.5.a
    Timing of land application of manure..........  E.5.b
    Maintaining permit until proper closure.......  E.5.c
    Discharge to ground water with a direct         E.5.d
     hydrological connection to surface water.
    Obtain certification from off-site recipients   E.5.e
     of manure of appropriate land application.
    Erosion control...............................  E.5.f
    Solicitation of comment on defining chronic     E.5.g
     rainfall.
------------------------------------------------------------------------

    Finally, EPA is proposing to amend certain aspects of the general 
and individual permit process to improve public access and public 
involvement in permitting CAFOs. While the NPDES regulations already 
provide a process for public involvement in issuing individual NPDES 
permits, today EPA is proposing to require the permit authority to 
issue quarterly public notices of all Notices of Intent (NOIs) received 
for coverage under general NPDES permits for CAFOs, as well as of 
notices from CAFOs that their Permit Nutrient Plans have been developed 
or amended. Today's proposal discusses public availability of NOIs, 
Permit Nutrient Plans and PNP notifications. EPA is proposing several 
new criteria for which CAFOs may be ineligible for general permits, and 
would require the permit authority to conduct a public process for 
determining, in light of those criteria, when individual permits would 
be required.
    Owners or operators of all facilities that are defined as CAFOs in 
today's proposed regulation would be required to apply for an NPDES 
permit. However, EPA also is proposing that they may, instead, seek to 
obtain from the permit authority a determination of ``no potential to 
discharge'' in lieu of submitting a permit application. (EPA notes 
that, because of the stringency of demonstrating that a facility has no 
potential to discharge, EPA expects that few facilities will receive 
such determinations.) Finally, EPA is proposing to amend the CAFO 
individual permit application requirements and corresponding Form 2B. 
See Table 7-5.

            Table 7-5.--Proposed Revisions to Permit Process
------------------------------------------------------------------------
                 Proposed revision                         Section
------------------------------------------------------------------------
General Permit and NOI provisions.................  F.1
Individual permits................................  F.2
Requests not to have a permit issued by             F.3
 demonstrating ``no potential to discharge''.
Amendments to NPDES Permit Application For CAFOs    F.4
 Form 2B.
------------------------------------------------------------------------


[[Page 2996]]

B. What Size AFOs Would be Considered CAFOs?

    EPA is proposing two alternative structures for establishing which 
AFOs would be regulated as CAFOs. Each proposal reflects the Agency's 
efforts to balance the goals of ease of implementation and effectively 
addressing the sources of water quality impairments. The two-tier 
structure is designed to give both regulators and animal feeding 
facility operators a clear, straightforward means of determining 
whether or not an NPDES permit is required for a facility. On the other 
hand, the three-tier structure, while less straightforward in 
determining which facilities are required to have NPDES permits, may 
allow the permit authority to focus its permitting resources on 
facilities which are more likely to be significant sources of water 
quality impairments. The Agency believes both the two-tier and three-
tier approaches are reasonable and is requesting comment on how best to 
strike a balance between simplicity and flexibility while achieving the 
goals of the Clean Water Act. EPA may decide to choose either or both 
alternatives in the final rule, and requests comments on both. EPA is 
also requesting comment on a variation of the two-tier structure and a 
variation of the three-tier structure and, after considering public 
comment, may decide to pursue either or both of these variations for 
the final rule.
    EPA is not proposing to define animal types on the basis of age, 
size or species in order to avoid complicating the implementation of 
this proposal. Throughout today's preamble, each of the subcategories, 
under today's proposed effluent guidelines, is described as follows:
     ``Cattle, excluding mature dairy or veal'' (referred in 
today's preamble as the beef sector) includes any age animal confined 
at a beef operation, including heifers when confined apart from the 
dairy. This subcategory also includes stand-alone heifer operations, 
also referred to as heifer operations.
     ``Mature dairy cattle'' (referred in today's preamble as 
the dairy sector) indicates that only the mature cows, whether milking 
or dry, are counted to identify whether the dairy is a CAFO.
     ``Veal'' is distinguished by the type of operation. Veal 
cattle are confined and manure is managed differently than beef cattle. 
EPA is not proposing to define veal by size or age. Note that the 
current regulation includes veal under the beef subcategory, but in 
today's proposal a new veal subcategory would be established.
     ``Swine weighing over 25 kilograms or 55 pounds'' also 
indicates that only mature swine are counted to determine whether the 
facility is a CAFO. Once defined as a CAFO, all animals in confinement 
at the facility would be subject to the proposed requirements.
     ``Immature Swine weighing less than 25 kilograms or 25 
pounds'' indicates that immature swine are counted only when confined 
at a stand-alone nursery. Today's preamble uses the terms ``swine 
sector'' to indicate both mature and immature swine, but permit 
provisions are separately applied to them.
     ``Chicken'' and ``Turkeys'' are listed as separate 
subcategories and are counted separately in order to determine whether 
the facility is a CAFO. However, they are subject to the same effluent 
limitations, and are collectively referred to as the ``poultry 
sector.''
     ``Ducks,'' ``Horses,'' and ``Sheep or Lambs'' are separate 
subcategories under the existing NPDES and effluent limitation 
regulations. Part 412 effluent limitations are not being revised in 
today's proposal; however, some of the proposed revisions to the NPDES 
program will affect these subcategories.
1. Historical Record
    In 1973, when EPA proposed regulations for CAFOs, the Agency 
determined the thresholds above which AFOs would be subject to NPDES 
permitting requirements ``on the basis of information and statistics 
received, pollution potential, and administrative manageability.'' 38 
FR 10961, 10961 (May 3, 1973). In 1975, the Agency, after litigation, 
again proposed regulations for CAFOs which established a threshold 
number of animals above which an AFO would be determined to be a CAFO. 
40 FR 54182 (Nov. 20, 1975). The Agency noted that it might be possible 
to establish a precise regulatory formula to determine which AFOs are 
CAFO point sources based on factors such as the proximity of the 
operation to surface waters, the numbers and types of animals confined, 
the slope of the land, and other factors relative to the likelihood or 
frequency of discharge of pollutants into navigable waters. 40 FR at 
54183.
    The Agency decided, however, that even if such a formula could be 
constructed, it would be so complex that both permitting authorities 
and feedlot operators would find it difficult to apply. Then, as now, 
EPA concluded that the clearest and most efficient means of regulating 
concentrated animal feeding operations was to establish a definitive 
threshold number of confined animals above which a facility is defined 
as a CAFO, below which a permitting authority could designate a 
facility as a CAFO, after consideration of the various relevant 
factors. The threshold numbers initially established by the Agency were 
based generally on a statement by Senator Muskie when the Clean Water 
Act was enacted. Senator Muskie, floor manager of the legislation, 
stated that: ``Guidance with respect to the identification of `point 
sources' and `nonpoint sources,' especially with respect to 
agriculture, will be provided in regulations and guidelines of the 
Administrator.'' 2 Legislative History of the Water Pollution Control 
Act Amendments of 1972 at 1299, 93d Cong, 1st Sess. (January 1973). 
Senator Muskie then identified the existing policy with respect to 
identification of agricultural point sources was generally that 
``runoff from confined livestock and poultry operations are not 
considered a `point source' unless the following concentrations of 
animals are exceeded: 1000 beef cattle; 700 dairy cows; 290,000 broiler 
chickens; 180,000 laying hens; 55,000 turkeys; 4,500 slaughter hogs; 
35,000 feeder pigs; 12,000 sheep or lambs; 145,000 ducks.'' Id. In the 
final rule, the Agency and commenters agreed that while Senator 
Muskie's statement provided useful general guidance, particularly in 
support of the idea of defining CAFOs based on specified numbers of 
animals present, it was not a definitive statement of the criteria for 
defining a CAFO. 41 FR 11458 (Mar. 18, 1976). The Agency, thus, looked 
to data with respect to both the amount of manure generated by 
facilities above the threshold and the number of facilities captured by 
the regulation.
    EPA has again looked to those factors and, with 25 years of 
regulatory experience, focused particularly on the amount of manure 
captured by the threshold, ease of implementation for both regulators 
and the regulated community, as well as on matters of administrative 
convenience and manageability of the permitting program. Based on these 
considerations, EPA is proposing two alternative structures. EPA notes 
that the NPDES threshold is generally synchronized with the effluent 
guidelines applicability threshold, and information on the cost per 
pound of pollutants removed, and affordability of the various options 
is available in Section X.
2. Two-Tier Structure
    The first alternative that EPA is proposing is a two-tier structure 
that establishes which operations are

[[Page 2997]]

defined as CAFOs based on size alone. See proposed Sec. 122.23(a)(3). 
In this alternative, EPA is proposing that the threshold for defining 
operations as CAFOs be equivalent to 500 animal units (AU). All 
operations with 500 or more animal units would be defined as CAFOs 
(Sec. 122.23(a)(3)(i)). Operations with fewer than 500 animal units 
would be CAFOs only if designated by EPA or the State permit authority 
(Sec. 122.23(a)(3)(ii)). Table 7-6 describes the number of animals that 
are equivalent to the proposed 500 AU threshold, as well as three other 
two-tier thresholds that are discussed in this section.
    The proposed two-tier structure would eliminate the 300 AU to 1,000 
AU tier of the existing regulation, under which facilities were either 
defined as a CAFO if they met certain conditions or were subject to 
designation on a case-by-case basis by the permit authority according 
to the criteria in the regulations. EPA is proposing to eliminate this 
middle category primarily because it has resulted in general confusion 
about which facilities should be covered by an NPDES permit, which, in 
turn, has led to few facilities being permitted under the existing 
regulation. The two-tier structure offers simplicity and clarity for 
the regulated community and enforcement authorities for knowing when a 
facility is a CAFO and when it is not, thereby improving both 
compliance and enforcement.

Table 7-6.--Number of Animals Covered by Alternative Two-Tier Approaches
------------------------------------------------------------------------
                                   Number of animals equivalent to:
         Animal type         -------------------------------------------
                                300 AU     500 AU     750 AU    1,000 AU
------------------------------------------------------------------------
Cattle and Heifers..........        300        500        750      1,000
Veal........................        300        500        750      1,000
Mature Dairy Cattle.........        200        350        525        700
Swine weighing over 25              750      1,250      1,875      2,500
 kilograms--or 55 pounds....
Immature Swine weighing less      3,000      5,000      7,500     10,000
 than 25 kilograms, or 55
 pounds.....................
Chickens....................     30,000     50,000     75,000    100,000
Turkeys.....................     16,500     27,500     41,250     55,000
Ducks.......................      1,500      2,500      3,750      5,000
Horses......................        150        250        375        500
Sheep or Lambs..............      3,000      5,000      7,500     10,000
------------------------------------------------------------------------

    Operations with fewer animals than the number listed for the 
selected threshold in Table 7-6 would only become CAFOs through case-
by-case designation.
    In order to determine the appropriate threshold for this two-tier 
approach, EPA analyzed information on numbers of operations, including 
percent of manure generated, potential to reduce nutrient loadings, and 
administrative burden. EPA considered current industry trends and 
production practices, including the trend toward fewer numbers of AFOs, 
and toward larger facilities that tend to be more specialized and 
industrialized in practice, as compared to more traditional 
agricultural operations. EPA also considered other thresholds, 
including 300 AU, 750 AU, or retaining the existing 1,000 AU threshold. 
After considering each of these alternatives, EPA is proposing 500 AU 
as the appropriate threshold for a two-tier structure, but is also 
requesting comment on a threshold of 750 AU.
    EPA is proposing 500 AU as the appropriate threshold for a two-tier 
structure because it regulates larger operations and exempts more 
traditional--and oftentimes more sustainable--farm production systems 
where farm operators grow both livestock and crops and land apply 
manure nutrients. Consistent with the objectives under the USDA-EPA 
Unified National Strategy for Animal Feeding Operations (March 9, 
1999), the proposed regulations cover more of the largest operations 
since these pose the greatest potential risk to water quality and 
public health, given the sheer volume of manure generated at these 
operations. Larger operations that handle larger herds or flocks often 
do not have an adequate land base for manure disposal through land 
application. As a result, large facilities need to store large volumes 
of manure and wastewater, which have the potential, if not properly 
handled, to cause significant water quality impacts. By comparison, 
smaller farms manage fewer animals and tend to concentrate less manure 
nutrients at a single farming location. Smaller farms tend to be less 
specialized and are more diversified, engaging in both animal and crop 
production. These farms often have sufficient cropland and fertilizer 
needs to appropriately land apply manure nutrients generated at a 
farm's livestock or poultry business. More information on the 
characteristics of larger-scale animal production practices is provided 
in sections IV and VI of this document, as well as noted in the 
analysis of impacts to small businesses (section X.I).
    EPA is proposing the 500 AU threshold because operations of this 
size account for the majority of all manure and manure nutrients 
produced annually. The proposed two-tier structure would cover an 
estimated 25,540 animal production operations, or approximately seven 
percent of all operations, which account for 64 percent of all AFO 
manure generated annually. The USDA-EPA Unified National Strategy had a 
goal of regulating roughly five percent of all operations.
    EPA is specifically seeking comment on an alternative threshold of 
750 AU, which would encompass five percent of AFOs. There are an 
estimated 19,100 operations with 750 AU or more (13,000 of which have 
more than 1,000 AU), and account for 58 percent of all manure and 
manure nutrients produced annually by AFOs. Regulating five percent of 
AFOs may be viewed by some as being consistent with the USDA-EPA 
Unified National Strategy.
    A 750 AU threshold has the benefits cited for the 500 AU threshold. 
The two-tier structure is simple and clear, and it would focus 
regulation on even larger operations, thereby relieving smaller 
operations from the burden of being automatically regulated, and 
moderating the administrative burden to permit authorities. Permit 
authorities could use state programs to focus on operations below 750 
AU, and could use the designation process as needed.
    In some sectors, a 750 AU threshold may not be sufficiently 
protective of the environment. For example, in the Pacific Northwest, 
dairies tend to be smaller, but also tend to be a significant concern. 
In the mid-Atlantic, where

[[Page 2998]]

poultry operations have been shown to be a source of environmental 
degradation, a 750 AU threshold would exempt many broiler operations 
from regulatory requirements. EPA is concerned that a 750 AU threshold 
would disable permit authorities from effectively addressing regional 
concerns.
    EPA also considered adopting the 1,000 AU threshold, which would 
have regulated three percent of all operations and 49 percent of all 
manure generated annually. A threshold of 300 AU was also considered, 
which would have addressed an additional 8 percent of all manure 
generated annually, but would have brought into regulation 50 percent 
more operations than the 500 AU threshold (thus regulating a total of 
10 percent of all AFOs which account for 72 percent of AFO manure).
    Raising the NPDES threshold to 500 AU, 750 AU or 1,000 AU raises a 
policy question for facilities below the selected threshold but with 
more than 300 AU. Facilities with 300 to 1,000 AU are currently subject 
to NPDES regulation under some conditions, though in practice few 
operations in this size range have actually been permitted to date. To 
rely entirely on designation for these operations could be viewed by 
some as deregulatory, because the designation process is a time 
consuming and resource intensive process that makes it difficult to 
redress violations. It also results in the inability for permit 
authorities to take enforcement actions against initial discharges, 
(unless they are from an independent point source at the facility); 
instead such discharges could only result in requiring a permit. Unless 
the designation process can be streamlined in some way to enable permit 
authorities to more efficiently address those who are significant 
contributors of pollutants, raising the threshold too high may also not 
be sufficiently protective of the environment. Please see Section 
VII.C.3 and VII.C.4 for a discussion of the designation process.
    More information on how data for these alternatives were estimated 
is provided in section VI of this preamble.
    EPA is soliciting comment on the two-tier structure, and what the 
appropriate threshold should be. In addition, EPA is soliciting comment 
on other measures this rule, when final, might include to ensure that 
facilities below the regulatory threshold meet environmental 
requirements, such as by streamlining the designation process or some 
other means.
3. Three-Tier Structure
    The second alternative that EPA is proposing is a three-tier 
structure that retains the existing tiers but amends the conditions 
under which AFOs with 300 AU to 1,000 AU, or ``middle tier'' 
facilities, would be defined as CAFOs. Further, EPA would require all 
middle tier AFOs to either apply for an NPDES permit or to certify to 
the permit authority that they do not meet any of the conditions which 
would require them to obtain a permit.
    EPA is proposing this alternative because it presents a ``risk 
based'' approach to determining which operations pose the greatest 
concern and have the greatest potential to discharge. The particular 
conditions being proposed would have the effect of ensuring that manure 
at all facilities with 300 AU or more is properly managed, and thus may 
be more environmentally protective than the two-tier structure. 
Further, even though this alternative would impose some degree of 
burden on all AFOs with 300 AU or more, it would provide a way for 
facilities to avoid being permitted, and could reduce the 
administrative burden associated with permitting.
    The three-tier alternative would affect all 26,665 facilities 
between 300 AU and 1,000 AU in addition to the 12,660 facilities with 
greater than 1,000 AU, and thus would affect 10 percent of all AFOs 
while addressing 72 percent of all AFO manure. However, because owners 
or operators of middle tier facilities would be able to certify that 
their operations are not CAFOs, EPA estimates that between 4,000 to 
19,000 mid-size facilities would need to apply for and obtain a permit.
    Of the approximately 26,000 AFOs with 300 AU to 1,000 AU, EPA 
estimates that owners or operations of approximately 7,000 facilities 
would have to, at a minimum, implement a Permit Nutrient Plan (as 
discussed further below) and would be able to certify to the permit 
authority that they are not a CAFO based on existing practices. 
Operators of some 19,000 facilities of these middle tier facilities 
would be required to adopt certain practices in addition to 
implementing a PNP, in order to be able to certify they are not a CAFO 
to avoid being permitted.
    See the EPA NPDES CAFO Rulemaking Support Document, included in the 
Record, for detailed descriptions of the number of facilities affected 
by this and the other alternative scenarios considered.
    EPA is also proposing the three-tier structure because it provides 
flexibility for State programs. A State with an effective non-NPDES 
program could succeed in helping many of their middle tier operations 
avoid permits by ensuring they do not meet any of the conditions that 
would define them as CAFOs. This important factor would enable States 
to tailor their programs while minimizing the changes State programs 
might need to make to accommodate today's proposed rulemaking.
    The three-tier structure would affect the facilities shown in Table 
7-7.

                            Table 7-7.--Number of Animals in the Three-tier Approach
                                                   [By sector]
----------------------------------------------------------------------------------------------------------------
                                                              >1000 AU          300-1000AU           300 AU
                                                             equivalent         equivalent         equivalent
                      Animal Type                            (Number of         (Number of         (Number of
                                                              animals)           animals)           animals)
----------------------------------------------------------------------------------------------------------------
Cattle, Excluding Mature Dairy and Veal................              1,000          300-1,000                300
Veal...................................................              1,000          300-1,000                300
Mature Dairy Cattle....................................                700            200-700                200
Swine, weighing over 25 kilograms or 55 pounds.........              2,500          750-2,500                750
*Immature Swine, weighing less than 25 kilograms or 55              10,000       3,000-10,000              3,000
 pounds................................................
*Chickens..............................................            100,000     30,000-100,000             30,000
Turkeys................................................             55,000      16,500-55,000             16,500
Ducks..................................................              5,000        1,500-5,000              1,500
Horses.................................................                500            150-500                150

[[Page 2999]]

 
Sheep or Lambs.........................................             10,000       3,000-10,000             3,000
----------------------------------------------------------------------------------------------------------------
*Immature swine, heifers and dry chicken operations are not included in the existing regulation but are included
  in today's proposed rulemaking.

    Revised Conditions. EPA examined the conditions under the existing 
regulation and determined that the conditions needed to be modified in 
order to improve its efficacy. Under the existing regulation, an AFO 
with 300 AU to 1,000 AU is not defined as a CAFO unless it meets one of 
the two criteria governing the method of discharge: (1) Pollutants are 
discharged through a man-made ditch, flushing system, or other similar 
man-made device; or (2) pollutants are discharged directly into waters 
of the United States that originate outside of the facility and pass 
over, across, or through the facility or otherwise come into direct 
contact with the confined animals. Under the two-tier structure, these 
conditions would be eliminated because a facility would simply be 
defined as a CAFO if it had more than 500 AU. Under the three-tier 
structure, EPA is proposing to eliminate the existing conditions and 
add several others designed to identify facilities which pose the 
greatest risk to water quality.
    The three-tier proposal would, for the middle tier, eliminate both 
criteria in the existing regulation because these conditions have 
proven to be difficult to interpret and implement for AFOs in the 300 
AU to 1,000 AU size category, and thus have not facilitated compliance 
or enforcement, and the scenario does not meet the goal of today's 
proposal to simplify the NPDES regulation for CAFOs. The two criteria 
governing method of discharge, e.g., ``man-made device'' and ``stream 
running through the CAFO,'' are subject to interpretation, and thus 
difficult for AFO operators in this size range to determine whether or 
not the permit authority would consider them to be a CAFO. EPA does not 
believe it is necessary to retain these criteria because all discharges 
of pollutants from facilities of this size should be considered point 
source discharges. By replacing these terms with a list of conditions, 
EPA intends to clarify that all discharges from CAFOs must be covered 
by an NPDES permit, whether or not they are from a manmade conveyance. 
EPA notes that under this proposal, the Agency would not eliminate the 
two conditions as criteria for designation of AFOs with less than 300 
AU as CAFOs. See the discussion of designation in Section VII.C.3.
    The revised conditions for the middle tier would require the owner 
or operator to apply for an NPDES permit if the operation meets any of 
the following conditions and is therefore a CAFO: (1) There is direct 
contact of animals with waters of the U.S. at the facility; (2) there 
is insufficient storage and containment at the production area to 
prevent discharges from reaching waters of the U.S.; (3) there is 
evidence of a discharge from the production area in the last five 
years; (4) the production area is located within 100 feet of waters of 
the U.S.; (5) the operator does not have, or is not implementing, a 
Permit Nutrient Plan that meets EPA's minimum requirements; or (6) more 
than twelve tons of manure is transported off-site to a single 
recipient annually, unless the recipient has complied with the 
requirements for off-site shipment of manure.
    The EPA NPDES CAFO Rulemaking Support Document, dated September 26, 
2000 (available in the rulemaking Record), describes the assumptions 
used to estimate the number of facilities that would be affected by 
each condition, which EPA developed in consultation with state 
regulatory agency personnel, representatives of livestock trade 
associations, and extension specialists.
    Each of these proposed conditions is described further below.
    Direct contact of animals with waters of the U.S. The condition for 
``direct contact of animals with waters of the U.S.'' covers situations 
such as dairy or beef cattle walking or standing in a stream or other 
such water that runs through the production area. This condition 
ensures that facilities which allow such direct contact have NPDES 
permits to minimize the water quality problems that such contact can 
cause.
    Insufficient Storage. The condition for ``insufficient storage and 
containment at the production area to prevent discharge to waters of 
the U.S.'' is intended to address discharges through any means, 
including sheet runoff from the production area, whereby rain or other 
waters might come into contact with manure and other raw materials or 
wastes and then run off to waters of the U.S. or leach to ground water 
that has a direct hydrologic connection to waters of the U.S. This is 
to ensure that all mid-sized facilities prevent discharges from 
inadequate storage and containment of manure, process wastewater, storm 
water, and other water coming in contact with manure.
    Sufficient storage would be defined as facilities that have been 
designed and constructed to standards equivalent to today's proposed 
effluent guidelines. Thus, beef and dairy operations would be designed 
and constructed to prevent discharge in a 25-year, 24-hour storm event, 
while swine and poultry would be required to meet a zero discharge 
standard. See Section VIIIC.6.
    Past or Current Discharge. Operations that meet the condition for 
``evidence of discharge from the production areas within the past five 
years'' would be considered CAFOs under this proposal. A discharge 
would include all discharges from the production area including, for 
example, a discharge from a facility designed to contain a 25-year, 24-
hour storm. Evidence of discharge would include: citation by the permit 
authority; discharge verified by the permit authority whether cited or 
not; or other verifiable evidence that the permit authority determines 
to be adequate to indicate a discharge has occurred.
    Under this approach, there would be no allowance in the 
certification process for facilities in the beef and dairy sectors 
designed to contain runoff from a 25-year, 24-hour storm that had a 
discharge anyway during an extreme storm event. Thus, in this respect, 
the requirements for certification would be more stringent than those 
that would apply to a permitted facility. EPA is thus proposing that a 
facility that chooses not to be covered by an NPDES permit would not 
get the benefits of NPDES coverage such as the 25-year, 24-hour storm 
standard for beef and dairy operations, and upset and bypass defense. 
Alternatively, EPA is soliciting

[[Page 3000]]

comment on the definition of a ``past or current discharge,'' including 
whether to define it as a discharge from a facility that has not been 
designed and constructed in accordance with today's proposed effluent 
guidelines. This would make the certification requirements consistent 
with those for permitted facilities.
    Proximity to Waters of the U.S. Operations with production areas 
that are located within 100 feet of waters of the U.S. are of 
particular concern to EPA, since their proximity increases the chance 
of discharge to waters and is a compelling factor that would indicate 
the potential to discharge. Research has shown that the amount of 
pollutants in runoff over land can be mitigated by buffers and 
setbacks. (See Environmental Impact Assessment; Development of 
Pollutant Loading Reductions from the Implementation of Nutrient 
Management and Best Management Practices; both available in the 
rulemaking Record.) Any operation located at a distance less than the 
minimum setback poses a particular risk that contaminants will 
discharge to receiving waters. EPA estimates that approximately 4,000 
operations between 300 AU and 1,000 AU in size have production areas 
that are within 100 feet of waters of the U.S.
    Permit Nutrient Plan for Land Application of Manure and Wastewater. 
For facilities that land apply manure, another condition indicative of 
risk to water impairment is whether or not the facility has developed 
and is implementing a Permit Nutrient Plan for manure and/or wastewater 
that is applied to land that is owned or controlled by the AFO 
operator. Contamination of water from excessive application of manure 
and wastewater to fields and cropland presents a substantial risk to 
the environment and public health because nutrients from agriculture 
are one of the leading sources of water contamination in the United 
States. While CAFOs are not the only source of contamination, they are 
a significant source, and CAFO operators should apply manure properly 
to minimize environmental impacts. Thus, EPA would require any facility 
with 300 AU to 1,000 AU that does not have a PNP that conforms to 
today's proposed effluent guidelines for land application to apply for 
an NPDES permit. (As described in Section VII.E.1, the PNP is the 
effluent guideline subset of elements in a CNMP. Section VIII.C.6 of 
today's proposal describes the effluent guideline requirements in a 
PNP.)
    Certification for Off-site Transfer of CAFO-generated Manure. The 
final condition for avoiding a permit concerns the transfer of CAFO-
generated manure and wastewater to off-site recipients. EPA is co-
proposing two ways to address manure transferred off-site, which are 
discussed in detail in Section VII.D.2, as well as in VII.e.5.e. In 
this condition, a facility would be considered a CAFO if more than 12 
tons of manure is transported off-site to a single recipient annually, 
unless the AFO owner or operator is complying with the requirements for 
off-site transfer of manure, or is complying with the requirements of a 
State program that are equivalent to the requirements of 40 CFR part 
412.
    Under one co-proposed option, the AFO owner or operator would be 
required to obtain certifications from recipients that the manure will 
be properly managed; to maintain records of the recipients and the 
quantities transferred; and to provide information to the recipient on 
proper manure management and test results on nutrient content of the 
manure. Under the alternative option, CAFOs would not be required to 
obtain certifications, but would still maintain the records of 
transfers and provide the information to the recipients.
    Under the first option, the CAFO owner or operator would obtain a 
certification from recipients (other than waste haulers that do not 
land apply the waste) that the manure: (1) Will be land applied in 
accordance with proper agricultural practices as defined in today's 
proposal; (2) will be applied in accordance with an NPDES permit; or 
(3) will be used for alternative uses, such as for pelletizing or 
distribution to other markets. If transferring manure and wastewater to 
a waste hauler, the CAFO owner or operator would be required to obtain 
the name and location of the recipients of the waste, if known, and 
provide the hauler with an analysis of the content of the manure and a 
brochure describing responsibilities for appropriate manure management, 
which would be provided, in turn, to the recipient. These provisions 
are discussed in more detail in Sections VII.D.4 and VII.E.4.
    Excess Manure Alternative Considered. As an alternative to the two 
conditions addressing land application of CAFO-generated manure, EPA 
also considered a condition that would simply require the CAFO operator 
to determine whether it generates more manure than the land under his 
or her control could accommodate at allowable manure application rates, 
and if so, it would be a CAFO, required to land apply according to a 
PNP. Further, this condition would create a voluntary option for off-
site transfer of CAFO-generated manure whereby, if the manure was 
transferred to someone certifying they had a certified CNMP and were 
implementing it, the facility would not be a CAFO on the basis of 
having excess manure.
    EPA considered this criterion to identify which CAFOs were likely 
to pose a risk of discharge and impacts to human health and the 
environment based on generation of excess manure (e.g., more manure 
than can be properly applied to land under his or her operational 
control). Requiring such CAFOs to apply for an NPDES permit would allow 
EPA to require these operations to maintain records documenting the 
fate of the manure (e.g., whether it was land applied on-site or 
transferred to a third party). EPA is interested in monitoring the fate 
of the large quantities of manure generated by CAFOs, and in educating 
recipients regarding proper agricultural practices. CAFO operators able 
to certify there is sufficient cropland under their operational control 
to accommodate the proper application of manure generated at their 
facility would not be defined as CAFOs and thus would not need to apply 
for an NPDES permit on that basis.
    To identify facilities that generate excess manure, EPA considered 
a screening tool originally developed by USDA, known as Manure Master. 
The tool allows AFO operators to compare the nutrient content in the 
animal manure produced by an AFO with the quantity of nutrients used 
and removed from the field on which that manure is applied. This tool 
would help assess the relative potential for the nutrients contained in 
the animal manure to meet or exceed the crop uptake and utilization 
requirements for those crops that receive applications of manure. The 
screening tool calculates a balance between the nitrogen, phosphorus, 
and potassium content in the manure and the quantity of these nutrients 
used by particular crops. This balance can be calculated based upon 
recommended fertilizer application rates, when known, or upon estimated 
plant nutrient content, when recommended fertilizer application rates 
are not known. For nitrogen, the balance is calculated taking into 
account expected losses from leaching, denitrification, and 
volatilization.
    The manure screening tool would be available as either an Internet-
based program or as a computer software program that allows for direct 
input of data and generation of reports. AFO operators would enter the 
average number of confined animals by animal

[[Page 3001]]

type, the number of acres for each crop, and the expected yield for 
each crop for which the operator expects to apply manure. The operator 
would also specify whether the manure is incorporated into the soil or 
surface applied. The software also allows, but does not require, entry 
of soil test or other crop nutrient recommendations. The screening tool 
produces a report that includes the balance (i.e., pounds needed or 
pounds excess, per acre) for nitrogen, phosphorus, and potassium for an 
AFO operator's fields. The balance will advise the operator whether the 
quantity of nutrients in his or her animal manure exceeds the quantity 
removed in harvested plants or the quantity of nutrients recommended.
    There are many assumptions in this screening tool that make it too 
general to use for detailed nutrient management planning, although it 
would be useful as a rough means of determining whether a facility is 
generating manure in excess of crop needs. The factors used to 
calculate manure nutrient content are developed from estimates that 
account for nutrient losses due to collection, storage, treatment, and 
handling. When manure is not incorporated, an additional nitrogen loss 
is included for volatilization. When the nutrients exceed nutrient 
utilization, there is increased potential for nutrients to leach or 
runoff from fields and become pollutants of ground or surface water. 
This software is intended to be used as a decision support screening 
tool to allow AFO operators to make a quick evaluation as to whether 
the quantity of nutrients applied to the land on which manure is spread 
exceeds the quantity of nutrients used by crops. EPA believes it could 
be a valuable tool to determine, at a screening level, whether 
available nutrients exceed crop needs and, thus, whether a facility has 
a greater likelihood for generating the runoff of nutrients that could 
impact water quality. EPA is not proposing this option as there are 
concerns that simply having enough land may not provide assurance that 
the manure would be applied in ways that avoided impairing water 
quality. However, EPA is requesting comment below on an alternative 
three-tier approach that would include such a screening tool as one of 
the criteria for certifying that an AFO in the 300 to 1,000 AU size 
category is not a CAFO.
    Certifying That a Middle Tier AFO is not a CAFO. Under the three-
tier structure, EPA is proposing to allow AFOs with between 300 AU and 
1,000 AU to certify to the permit authority that they do not meet any 
of the risk-based conditions and thus are not CAFOs. The certification 
would be a check-off form that would also request some basic 
information about the facility, including name and address of the owner 
and operators; facility name and address and contact person; physical 
location and longitude and latitude information for the production 
area; type and number of animals at the AFO; and signature of owner, 
operator or authorized representative. The draft sample certification 
form is included here for public comment.

Form for Certifying Out of the Concentrated Animal Feeding Operation 
Provisions of the National Pollutant Discharge Elimination System

    This checklist is to assist you in determining whether your 
animal feeding operation (AFO) is, or is not, a concentrated animal 
feeding operation (CAFO) subject to certain regulatory provisions. 
For clarification, please see the attached fact sheet.

Section 1. First Determine Whether or not Your Facility Is an AFO

    A facility that houses animals is an animal feeding operation 
if:
     Animals (other than aquatic animals) have been, are, or 
will be stabled or confined and fed or maintained for a total of 45 
days or more in any 12-month period.
     Animals are not considered to be stabled or confined 
when they are in areas such as pastures or rangeland that sustain 
crops or forage growth during the entire time that animals are 
present.
    Yes, my facility is an AFO. PROCEED TO SECTION 2.
    No, my facility is not an AFO. STOP. YOU DO NOT NEED TO SUBMIT 
THIS FORM

Section 2. Determine the Size Range of Your AFO

    If your facility is an AFO, and the number of animals is in the 
size range for any animal type listed below, then you may 
potentially be a concentrated animal feeding operation.

200-700 mature dairy cattle (whether milked or dry)
300-1000 head of cattle other than mature dairy cattle
750-2,500 swine each weighing over 25 kilograms (55 pounds)
3,000-10,000 swine each weighing under 25 kilograms (55 pounds)
30,000-100,000 chickens
16,500-55,000 turkeys
150-500 horses
3,000-10,000 sheep or lambs
1,500-5,000 ducks

    My AFO is within this size range. PROCEED TO SECTION 3.
    My AFO has fewer than the lower threshold number for any animal 
type so I am not a CAFO under this description. STOP.
    My AFO has more than the upper threshold number of animals for 
any animal type. STOP. PLEASE CONTACT YOUR PERMIT AUTHORITY FOR 
INFORMATION ON HOW TO APPLY FOR AN NPDES PERMIT.

Section 3. Minimum Requirements

    Check all boxes that apply to your operation. If all of the 
following boxes are checked, PROCEED TO SECTION 4.
    My production area is not located within 100 feet of waters of 
the U.S.
    There is no direct contact of animals with waters of the U.S. in 
the production area.
    I am currently maintaining properly engineered manure and 
wastewater storage and containment structures designed to prevent 
discharge in either a 25-year, 24-hour storm (for beef and dairy 
facilities) or all circumstances (for all other facilities), in 
accordance with the effluent guidelines (40 CFR Part 412).
    There are no discharges from the production area and there have 
been no discharges in the past 5 years.
    I have not been notified by my State permit authority or EPA 
that my facility needs an NPDES permit
    If any box in this section is not checked, you may not use this 
certification and you must apply for an NPDES permit. STOP. PLEASE 
CONTACT YOUR PERMIT AUTHORITY FOR MORE INFORMATION.

Section 4. Land Application

    A. If all of the boxes in Section 3 are checked, you may be able 
to certify that you are not a CAFO on the basis of ensuring proper 
agricultural practices for land application of CAFO manure:
    I either do not land apply manure or, if land applying manure, I 
have, and am implementing, a certified Permit Nutrient Plan (PNP). I 
maintain a copy of my PNP at my facility, including records of 
implementation and monitoring; and
    B. Check One:
    My State has a program for excess manure in which I participate. 
OR
    [Alternative 1: I do not transfer more than 12 tons of manure to 
any off-site recipients unless they have signed a certification form 
assuring me that they are either 1) applying manure according to 
proper agricultural practices; 2) obtaining an NPDES permit for 
discharges; or 3) transferring manure to other non-land application 
uses; and] [For Alternative 2, this box is not needed]
    I maintain records of recipients, receiving greater than 12 tons 
of manure annually, and the quantity and dates transferred, and I 
provide recipients an analysis of the content of the manure as well 
as information describing the recipients responsibilities for 
appropriate manure management. If I transfer manure or wastewater to 
a manure hauler, I also obtain the name and location of the 
recipients of the manure, if known;
    If a box is checked in both subsection A and subsection B above, 
you may certify that you are not a CAFO. PROCEED TO SECTION 5.
    If a box is not checked in both subsection A and subsection B 
above, you may not use this certification form. STOP. YOU MUST APPLY 
FOR AN NPDES PERMIT.

Section 5. Certification

    I certify that I own or operate the animal feeding operation 
described herein, and have legal authority to make management 
decisions about said operation. I certify that

[[Page 3002]]

the information provided is true and correct to the best of my 
knowledge.
    I understand that in the event of a discharge to waters of the 
U.S. from my AFO, I must report the discharge to the Permit 
Authority and apply for a permit. I will report the discharge by 
phone within 24 hours, submit a written report within 7 calendar 
days, and make arrangements to correct the conditions that caused 
the discharge.
    In the event any of these conditions can no longer be met, I 
understand that my facility is a CAFO and I must immediately apply 
for a permit. I also understand that I am liable for any unpermitted 
discharges. This certification must be renewed every 5 years.
    I certify under penalty of law that this document either was 
prepared by me or was prepared under my direction or supervision. 
Based on my inquiry of the person or persons who gathered the 
information, the information provided is, to the best of my 
knowledge and belief, true, accurate and complete. I am aware that 
there are penalties for submitting false information, including the 
possibility of fine and imprisonment for knowing violations.

Facility Name----------------------------------------------------------
Name of Certifier------------------------------------------------------
Signature--------------------------------------------------------------
Date____________________

Check one: {time}  owner       {time}  operator

Name & Address of other entity that exercises substantial operational 
control of this CAFO:--------------------------------------------------
----------------------------------------------------------------------

Address of animal feeding operation:
County:
State:
Latitude/Longitude:
Phone:
Email:
Name of Closest Waters of the U.S.:
Distance to Waters:
Description of closest waters: (e.g. intermittent stream, perennial 
stream; ground water aquifer):-----------------------------------------
----------------------------------------------------------------------
    Where an operation in the 300-1000 AU size range has certified that 
it meets all of the required conditions to be excluded from the CAFO 
definition, if at any future point the operation fails to meet one or 
more of these conditions, it would immediately become defined as a 
CAFO. Any discharges from the operation at that point would be illegal 
until the operation obtains a permit. For example, if an operation has 
certified that it meets all of the conditions for being excluded from 
the CAFO definition, but then has an actual discharge to the waters 
(which would be inconsistent with the certification that there is no 
``current discharge''), that discharge would be considered to be an 
unpermitted discharge from a CAFO. Similarly, if an operation at any 
point no longer has sufficient storage and containment to prevent 
discharges, it would immediately become a CAFO and be required to apply 
for a permit (regardless of whether it had any actual discharges).
    Constructing the regulations in this way would do two things. 
First, it would make clear that there is no shield from liability for 
any operation that falsely certified that it met the conditions to be 
excluded from regulation. Second, it would make clear that even in 
cases where an operation has certified to all the required conditions 
in good faith, there is no protection from the regulatory and 
permitting requirements if at any point the operation no longer meets 
those conditions. Operations would be on notice that if they had any 
doubts about their continued ability to meet the conditions for 
exclusion, they should decline to ``certify out'' and should apply for 
a permit.
    Alternative Three-tier Structure: Simplified Certification. EPA is 
requesting comment on a variation of the three-tier structure being co-
proposed today. Under this alternative, operations with > 1,000 AU 
would be subject to the same requirements as under both of today's co-
proposed options, and operations between 300 and 1,000 animal units 
would be defined as CAFOs, required to obtain an NPDES permit, unless 
they can certify that they do not meet the conditions for definition as 
a CAFO. However, the conditions for making this certification would be 
different than those under the proposed three-tier approach, and the 
substantive permit requirements for operations between 300 and 1,000 AU 
that do not certify would also be different.
    Under this approach, operations between 300 and 1,000 AU, that are 
not likely to be significant contributors of pollutants, could avoid 
definition as a CAFO by certifying to a more limited range of factors. 
The check list would indicate, for example, adequate facility design to 
contain manure and runoff in up to a 25-year, 24-hour storm, use of 
appropriate BMPs, and application of manure at agronomic rates. Under 
this variation, the check list would be designed to minimize both the 
required information and the substantive operational requirements for 
these middle tier facilities on the grounds that, because they are 
smaller size operations, they are less likely to be the type of 
concentrated, industrial operations that Congress intended to include 
as CAFOs. So, for example, the check list could allow several 
alternatives for appropriate manure storage, including cost-effective 
BMPs such as stacking manure in certain locations or in certain ways to 
avoid discharge, in lieu of expanded structural storage capacity. 
Similarly, the indication that manure is applied at agronomic rates 
could be based on a simple ratio of animals to crop land, or on the use 
of a more sophisticated screening tool, such as the USDA developed tool 
described above, but would not necessarily require preparation of a 
full CNMP by a certified planner. The check list might also include an 
assurance by the operator that recipients of off-site manure are 
provided nutrient test results and information on appropriate manure 
management.
    AFOs in this size category that are not able to certify, according 
to the check list criteria, that they are not likely to be significant 
contributors of pollutants to waters of the US would be defined as 
CAFOs and thus required to obtain an NPDES permit. However, the 
conditions in the permit would not necessarily be the same as those in 
permits for operations with > 1,000 AU. In particular, the effluent 
guidelines described in today's proposal would not be applicable to 
these facilities. Rather, CAFOs in this size category would be required 
to operate in accordance with BAT, as determined by the best 
professional judgement (BPJ) of the permit writer. This is the same as 
the existing requirement for CAFOs in this size category. Or, EPA might 
promulgate an alternate set of national effluent guidelines for CAFOs 
in this subcategory. Such effluent guidelines might include zero 
discharge from the production area in up to a 25-year, 24-hour storm, 
implementation of a PNP, appropriate BMPs, and appropriate management 
of manure shipped off-site.
    Under this approach, all 26,665 operations between 300 and 1,000 AU 
would be affected by the rule, just as under the three-tier approach 
being proposed today. However, EPA expects that a larger number of 
facilities would be able to avoid definition as a CAFO and the 
requirement to obtain a permit than under today's proposed approach. 
EPA has not estimated the number of operations that would be defined as 
CAFOs under this alternative three-tier approach, but expects that it 
would be more than 16,420 but fewer than 31,930 (of which some 13,000 
would have over 1,000 AU). For those facilities that did receive a 
permit, compliance would generally be less expensive. This approach was 
presented to small entity representatives (SERs) during the SBREFA 
outreach conducted for this rule, and discussed in detail by the Small 
Business Advocacy Review Panel that conducted the outreach. While some 
concerns were expressed, the approach was generally received

[[Page 3003]]

favorably by both the SERs and the Panel. See the Panel Report (2000) 
for a complete discussion of the Panel's consideration of this option.
    EPA requests comment on this alternative three tier approach. In 
particular, EPA requests comment on which items should be included in 
the certification check list, and whether substantive permit 
requirements for CAFOs in this size category should be left completely 
up to the BPJ of the permit authority, or based on an alternate set of 
effluent guidelines, as discussed above. After evaluating public 
comments, EPA may decide to further explore this option. At that time, 
EPA would develop and make available for public comment as appropriate 
a more detailed description of the specific requirements of such an 
approach, as well as a full analysis of its costs, benefits, and 
economic impacts. In particular, EPA would add an analysis to the 
public record of why it would be appropriate to promulgate different 
effluent guideline requirements, or no effluent guideline requirements, 
for CAFOs that have between 300 and 1,000 AU as compared to the 
effluent guidelines for operations with greater than 1,000 AU. This 
would include an evaluation of whether the available technologies and 
economic impacts are different for the smaller versus the larger CAFOs.
4. Comparative Analysis
    EPA is proposing both the two- and three-tier structures for public 
comment as they both offer desirable qualities. On the one hand, the 
two-tier structure is simple and clear, focuses on the larger 
operations, and provides regulatory relief to smaller businesses. 
However, it requires permits of all facilities meeting the size 
threshold. On the other hand, the three-tier structure offers 
flexibility to States for addressing environmental impacts of AFOs 
through non-NPDES programs or non-regulatory programs, while focusing 
the regulation on facilities demonstrating certain risk 
characteristics. It imposes, however, some degree of burden to all 
facilities more than 300 AU.
    The costs of each of the six alternatives considered by EPA are 
discussed in Section X of today's proposal, and benefits are discussed 
in Section XI. Key findings from EPA's analysis are summarized in Table 
7-8 for quick reference. See Sections X and XI for full discussions and 
explanations.
    EPA solicits comment on both of today's alternative proposed 
structures, as well as on the two alternatives discussed above.
    EPA is also soliciting comment on whether or not to adopt both the 
two-tier and the three-tier structures, and to provide a mechanism to 
allow States to select which of the two alternative proposed structures 
to adopt in their State NPDES program. Under this option, a State could 
adopt the structure that best fits with the administrative structure of 
their program, and that best serves the character of the industries 
located in their State and the associated environmental problems. This 
option is viable only if the Agency is able to determine that the two 
structures provide substantially similar environmental benefits by 
regulating equivalent numbers of facilities and amounts of manure. 
Otherwise, States would be in a position to choose a less stringent 
regulation, contrary to the requirements of the Clean Water Act.
    EPA's preliminary assessment is that there appear to be significant 
differences in the scope of the structures, such that the two-tier 
structure could be considered less stringent than the three-tier 
structure, depending upon which structures, criteria and thresholds are 
selected in the final proposal. As table 7-8 indicates, for example, 
the co-proposed two-tier structure with a 500 AU threshold would 
regulated 25,540 operations, whereas the co-proposed three-tier 
structure would regulate up to 39,320 operations. A two-tier structure 
with 750 AU would regulate 19,100 operations, whereas the alternative, 
less stringent, three-tier structure would regulate as few as 16,000 
and as many as 32,000. The range of manure covered under these various 
alternatives ranges from as little as 49% to as much as 72% of all AFO 
manure. Further, how each animal sector is affected varies with each 
alternative, with some alternatives being significantly less protective 
in certain sectors than other alternatives. Section VI of today's 
preamble provides more information on the affects on each animal sector 
of various alternatives.
    EPA is not able to conclude that the stringency of the two options 
is equivalent, due to the lack of data and EPA's uncertainty over 
exactly how many facilities may be subject to regulation under each 
alternative. Therefore, EPA is not proposing this option. However, EPA 
seeks comment on the option to allow States to select which of two 
structures to implement, and requests information on establishing 
whether two options provide equivalent environmental protection.

                     Table 7-8.--Comparison of Regulatory Alternatives for Select Criteria a
----------------------------------------------------------------------------------------------------------------
                                               Baseline        2-Tier alternatives          3-Tier alternatives
                  Criteria                   -------------------------------------------------------------------
                                               >1000 AU   >750 AU    >500 AU    >300 AU    Proposed  Alternative
----------------------------------------------------------------------------------------------------------------
Number Operations that will be Required to       12,660     19,100     25,540     39,320  \1\ 31,93  \2\ >16,420
 Obtain a Permit............................                                                      0
Percentage of Affected Operations Required            3          5          7         11          9          10
 to Obtain a Permit.........................
Estimated Compliance Costs to CAFOs                 605        721        831        980        930        >680
 ($million/year, pre-tax)...................
Percentage Manure Covered by Proposed                49         58         64         72         72     \3\ ND
 Regulations................................
----------------------------------------------------------------------------------------------------------------
\1\ Three-tier Proposed: Number of affected facilities up to 39,320. Number of permitted facilities between
  16,000 and 32,000, rounded.
\2\ Three-tier Alternative: Number of affected facilities and industry costs are expected to be greater than
  that estimated for NPDES Scenario 1 (``Status Quo'').
\3\ ND = Not Determined.

5. Additional Scenarios Considered But Not Proposed
    EPA also considered two other scenarios, which would retain the 
existing three-tier approach.
    a. Scenario 1: Retain Existing Structure. One of the alternative 
regulatory scenarios would incorporate all of today's proposed 
revisions except those related to the tiered structure for defining 
which AFOs are CAFOs. In other words, the existing three-tier structure 
(greater than 1,000 AU; 300 AU to 1,000 AU; fewer than 300 AU) would 
remain in place, and the conditions for defining the middle tier 
operations would not change. Thus, as under the existing regulation, 
mid-sized AFOs (300 AU to 1,000 AU) would be defined as CAFOs only if, 
in addition to the number of animals confined, they

[[Page 3004]]

also meet one of the two specific criteria governing the method of 
discharge: (1) Pollutants are discharged through a man-made ditch, 
flushing system, or other similar man-made device; or (2) pollutants 
are discharged directly into waters of the United States that originate 
outside of the facility and pass over, across, or through the facility 
or otherwise come into direct contact with the confined animals.
    EPA is not proposing this scenario because these conditions have 
proven to be difficult to interpret and implement for AFOs in the 300 
to 1,000 AU size category, and thus have not facilitated compliance or 
enforcement, and the scenario does not meet the goal of today's 
proposal to simplify the NPDES regulation for CAFOs. The two criteria 
governing method of discharge, e.g., ``man-made device'' and ``stream 
running through the CAFO,'' are subject to interpretation, and thus 
difficult for AFO operators in this size range to determine whether or 
not the permit authority would consider them to be a CAFO. EPA does not 
believe it is necessary to retain these criteria because all discharges 
of pollutants from facilities of this size should be considered point 
source discharges. While the other proposed changes go a long way to 
improve the effectiveness of the NPDES program for CAFOs, EPA believes 
the definition criteria for facilities in this size range also need to 
be amended to make the regulation effective, simple, and enforceable.
    b. Scenario 2: Revised Conditions Without Certification. The second 
scenario EPA considered would also retain the existing three-tier 
structure, and would modify the conditions for defining the middle tier 
AFOs as CAFOs in the same way that today's proposed three-tier 
structure does. That is, any AFO that meets the size condition (300 AU 
to 1,000 AU) would be defined as a CAFO if it met one or more of the 
following risk-based conditions: (1) Direct contact of animals with 
waters of the U.S.; (2) insufficient storage and containment at the 
production area to prevent discharge from reaching waters of the U.S.; 
(3) evidence of discharge in the last five years; (4) the production 
area is located within 100 feet of waters of the U.S.; (5) the operator 
does not have, or is not implementing, a Permit Nutrient Plan; and (6) 
any manure transported off-site is transferred to recipients of more 
than twelve tons annually without following proper off-site manure 
management, described above in the discussion of the three-tier 
structure (co-proposed with omitting this requirement).
    In this scenario, owners or operators of AFOs in the middle tier 
would not be required to certify to the permit authority that the 
facility is not a CAFO. However, all facilities that do meet one or 
more of the conditions would have a duty to apply for an NPDES permit. 
This scenario is not being proposed because of concerns that there 
would be no way for the permit authority to know which operations were 
taking the exemption and which should, in fact, be applying for a 
permit. The certification scenario provides a measure of assurance to 
the public, the permit authority, and the facilities' owners or 
operators, that CAFOs and AFOs are implementing necessary practices to 
protect water quality.

C. Changes to the NPDES Regulations

    In addition to changing the threshold for determining which 
facilities are CAFOs, EPA is proposing a number of other changes that 
address how the permitting authority determines whether a facility is 
an AFO or a CAFO that, therefore, must apply for an NPDES permit. These 
proposed revisions are discussed in this section and in section D.
1. Change the AFO Definition to Clearly Distinguish Pasture Land
    EPA is proposing to clarify the regulatory language that defines 
the term ``animal feeding operations,'' or AFO, in order to remove 
ambiguity. See proposed Sec. 122.23(a)(2). The proposed rule language 
would clarify that animals are not considered to be ``stabled or 
confined'' when they are in areas such as pastures or rangeland that 
sustain crops or forage during the entire time animals are present. 
Other proposed changes to the definition of AFO are discussed below in 
section 3.e.
    To be considered a CAFO, a facility must first meet the AFO 
definition. AFOs are enterprises where animals are kept and raised in 
confined situations. AFOs concentrate animals, feed, manure and urine, 
dead animals, and production operations on a small land area. Feed is 
brought to the animals rather than the animals grazing or otherwise 
seeking feed in pastures, fields, or on rangeland. The current 
regulation [40 CFR 122.23(b)(1)] defines an AFO as a ``lot or facility 
where animals have been, are, or will be stabled or confined and fed or 
maintained for a total of 45 days or more in any 12 month period; and 
where crops, vegetation[,] forage growth, or post-harvest residues are 
not sustained over any portion of the lot or facility in the normal 
growing season'' [emphasis added].
    The definition states that animals must be kept on the lot or 
facility for a minimum of 45 days, in a 12-month period. If an animal 
is at a facility for any portion of a day, it is considered to be at 
the facility for a full day. However, this does not mean that the same 
animals must remain on the lot for 45 consecutive days or more; only 
that some animals are fed or maintained on the lot or at the facility 
45 days out of any 12-month period. The 45 days do not have to be 
consecutive, and the 12-month period does not have to correspond to the 
calendar year. For example, June 1 to the following May 31 would 
constitute a 12-month period.
    The definition has proven to be difficult to implement and has led 
to some confusion. Some CAFO operators have asserted that they are not 
AFOs under this definition where incidental growth occurs on small 
portions of the confinement area. In the case of certain wintering 
operations, animals confined during winter months quickly denude the 
feedlot of growth that grew during the summer months. The definition 
was not intended to exclude, from the definition of an AFO, those 
confinement areas that have growth over only a small portion of the 
facility or that have growth only a portion of the time that the 
animals are present. The definition is intended to exclude pastures and 
rangeland that are largely covered with vegetation that can absorb 
nutrients in the manure. It is intended to include as AFOs areas where 
animals are confined in such a density that significant vegetation 
cannot be sustained over most of the confinement area.
    As indicated in the original CAFO rulemaking in the 1970s, the 
reference to vegetation in the definition is intended to distinguish 
feedlots (whether outdoor confinement areas or indoor covered areas 
with constructed floors) from pasture or grazing land. If a facility 
maintains animals in an area without vegetation, including dirt lots or 
constructed floors, the facility meets this part of the definition. 
Dirt lots with nominal vegetative growth while animals are present are 
also considered by EPA to meet the second part of the AFO definition, 
even if substantial growth of vegetation occurs during months when 
animals are kept elsewhere. Thus, in the case of a wintering operation, 
EPA considers the facility an AFO potentially subject to NPDES 
regulations as a CAFO. It is not EPA's intention, however, to include 
within the AFO definition pasture or rangeland that has a small, bare 
patch of land, in an otherwise vegetated area, that is caused by 
animals frequently

[[Page 3005]]

congregating if the animals are not confined to the area.
    The following examples are presented to further clarify EPA's 
intent. (1) When animals are restricted to vegetated areas as in the 
case of rotational grazing, they would not be considered to be confined 
in an AFO if they are rotated out of the area while the ground is still 
covered with vegetation. (2) If a small portion of a pasture is barren 
because, e.g., animals congregate near the feed trough in that portion 
of the pasture, that area is not considered an AFO because animals are 
not confined to the barren area. (3) If an area has vegetation when 
animals are initially confined there, but the animals remove the 
vegetation during their confinement, that area would be considered an 
AFO. This may occur, for instance, at some wintering operations.
    Thus, to address the ambiguities noted above, EPA is proposing to 
clarify the regulatory language that defines the term ``animal feeding 
operation'' as follows: ``An animal feeding operation or AFO is a 
facility where animals (other than aquatic animals) have been, are, or 
will be stabled or confined and fed or maintained for a total of 45 
days or more in any 12-month period. Animals are not considered to be 
stabled or confined when they are in areas such as pastures or 
rangeland that sustain crops or forage growth during the entire time 
that animals are present. Animal feeding operations include both the 
production area and land application area as defined below.'' EPA is 
interested in receiving comments regarding whether the proposed 
revision to the AFO definition clearly distinguishes confinement areas 
from pasture land.
2. Proposed Changes to the NPDES Permitting Regulation for Determining 
Which AFOs are CAFOs
    To improve the effectiveness and clarity of the NPDES regulation 
for CAFOs, EPA is proposing to revise the regulation as discussed in 
the following sections.
    a. Eliminate the Term ``Animal Unit''. To remove confusion for the 
regulated community concerning the definition of the term ``animal 
unit'' or ``AU,'' EPA is proposing to eliminate the use of the term in 
the revised regulation. Instead of referring to facilities as having 
greater or fewer than 500 animal units, for example, EPA will use the 
term ``CAFO'' to refer to those facilities that are either defined or 
designated, and all others as ``AFOs.'' However, in the text of today's 
preamble, the term AU will be used in order to help the reader 
understand the differences between the existing regulation and today's 
proposal. If this revision is adopted, the term AU will not be used in 
the final regulation. Section VII.B, above, lists the numbers of 
animals in each sector that would be used to define a facility as a 
CAFO.
    EPA received comment on the concept of animal units during the AFO 
Strategy listening sessions, the small business outreach process, and 
on comments submitted for the draft CAFO NPDES Permit Guidance and 
Example Permit. EPA's decision to move away from the concept of 
``animal units'' is supported by the inconsistent use of this concept 
across a number of federal programs, which has resulted in confusion in 
the regulated community. A common thread across all of the federal 
programs is the need to normalize numbers of animals across animal 
types. Animal units have been established based upon a number of 
different values that include live weight, forage requirements, or 
nutrient excretion.
    USDA and EPA have different ``animal unit'' values for the 
livestock sectors. Animal unit values used by USDA are live-weight 
based, and account for all sizes and breeds of animals at a given 
operation. This is particularly confusing as USDA's animal unit 
descriptions result in different values in each sector and at each 
operation.
    The United States Department of Interior (Bureau of Land Management 
and National Park Service) also references the concept of ``animal 
unit'' in a number of programs. These programs are responsible for the 
collection of grazing fees for federal lands. The animal unit values 
used in these programs are based upon forage requirements. For Federal 
lands an animal unit represents one mature cow, bull, steer, heifer, 
horse, mule, or five sheep, or five goats, all over six months of age. 
An animal unit month is based on the amount of forage needed to sustain 
one animal unit for one month. Grazing fees for Federal lands are 
charged by animal unit months.
    In summary, using the total number of head that defines an 
operation as a CAFO will minimize confusion with animal unit 
definitions established by other programs. See tables 7-6 and 7-7 
above.
    b. How Will Operations With Mixed Animal Types be Counted? EPA is 
proposing to eliminate the existing mixed animal provision, which 
currently requires an operator to add the number of animal units from 
all animal sectors at the facility when determining whether it is a 
CAFO. (Poultry is currently excluded from this mixed animal type 
calculation). While the mixed calculation would be eliminated, once the 
number of animals from one sector (e.g. beef, dairy, poultry, swine, 
veal) of one type cause an operation to be defined as a CAFO, manure 
from all confined animal types at the facility would be covered by the 
permit conditions. In the event that waste streams from multiple 
livestock species are commingled, and the regulatory requirements for 
each species are not equivalent, the permit must apply the more 
stringent requirements.
    In the existing regulation, a facility with 1,000 animal units or 
the cumulative number of mixed animal types which exceeds 1,000, is 
defined as a CAFO. Animal unit means a unit of measurement for any 
animal feeding operation calculated by adding the following numbers: 
the number of slaughter and feeder cattle multiplied by 1.0, plus the 
number of mature dairy cattle multiplied by 1.4, plus the number of 
swine weighing over 25 kilograms (approximately 55 pounds) multiplied 
by 0.4, plus the number of sheep multiplied by 0.1, plus the number of 
horses multiplied by 2.0. As mentioned, poultry operations are excluded 
from this mixed unit calculation as the current regulation simply 
stipulates the number of birds that define the operation as a CAFO, and 
assigns no multiplier.
    Because simplicity is one objective of these proposed regulatory 
revisions, the Agency believes that either all animal types, including 
poultry, covered by the effluent guidelines and NPDES regulation should 
be included in the formula for mixed facilities, or EPA should 
eliminate the facility multipliers from the revised rule. Today's 
rulemaking proposes changes that would have to be factored in to a 
revised mixed animal calculation which would make the regulation more 
complicated to implement. For example, EPA is proposing to cover 
additional animal types (dry chicken operations, immature swine and 
heifer operations). Thus, EPA is proposing to eliminate the mixed 
operation calculation rather than revise it and create a more 
complicated regulation to implement that would potentially bring 
smaller farms into regulation.
    EPA believes that the effect of this proposed change would be 
sufficiently protective of the environment while maintaining a 
consistently enforceable regulation. EPA estimates 25 percent of AFOs 
with less than 1,000 AU have multiple animal types present 
simultaneously at one location, and only a small fraction of these AFOs 
would be CAFOs exceeding either 300 AU or 500 AU when all animal types 
are

[[Page 3006]]

counted. EPA also believes that few large AFOs possess mixed animals 
due to the increasingly specialized nature of livestock and poultry 
production. Therefore, EPA believes that a rule which required mixed 
animal types to be part of the threshold calculation to determine if a 
facility is a CAFO would result in few additional operations meeting 
the definition of a CAFO. In addition, most facilities with mixed 
animal types tend to be much smaller, and tend to have more 
traditional, oftentimes more sustainable, production systems. These 
farms tend to be less specialized, engaging in both animal and crop 
production. They often have sufficient cropland and fertilizer needs to 
land apply manure nutrients generated at the farm's livestock or 
poultry business. Nevertheless, should such an AFO be found to be a 
significant contributor of pollution to waters of the U.S., it could be 
designated a CAFO by the permit authority.
    EPA is, therefore, proposing to eliminate the mixed animal 
calculation in determining which AFOs are CAFOs. Once an operation is a 
CAFO for any reason, manure from all confined animal types at the 
facility is subject to the permit requirements. EPA is requesting 
comment on the number of operations that could potentially have the 
equivalent of 500 AU using the mixed calculation that would be excluded 
from regulation under this proposal.
    c. Is an AFO Considered a CAFO if it Only Discharges During a 25-
Year, 24-Hour Storm? EPA is proposing to eliminate the 25-year, 24-hour 
storm event exemption from the CAFO definition (40 CFR 122.23, Appendix 
B), thereby requiring any operation that meets the definition of a CAFO 
either to apply for a permit or to establish that it has no potential 
to discharge. Under the proposed three-tier structure an operation with 
300 AU to 1,000 AU may certify that it is not a CAFO if it is designed, 
constructed, and maintained in accordance with today's effluent 
guidelines and it does not meet any of the risk-based conditions. See 
Section VII.B.2.
    The existing NPDES definition of a CAFO provides that ``no animal 
feeding operation is a concentrated animal feeding operation * * * as 
defined above * * * if such animal feeding operation discharges only as 
the result of a 25-year, 24-hour storm event'' (40 CFR Sec. 122.23, 
Appendix B). This provision applies to AFOs with 300 AU or more that 
are defined as CAFOs under the existing regulation. (Facilities of any 
size that are CAFOs by virtue of designation are not eligible for this 
exemption because, by the terms of designation, it does not apply to 
them. Moreover, they have been determined by the permit authority to be 
a significant contributor of pollution to waters of the U.S.)
    The 25-year, 24-hour standard is an engineering standard used for 
construction of storm water detention structures. The term ``25-year, 
24-hour storm event'' means the maximum 24-hour precipitation event 
with a probable recurrence of once in 25 years, as defined by the 
National Weather Service (NWS) in Technical Paper Number 40 (TP40), 
``Rainfall Frequency Atlas of the United States,'' May 1961, and 
subsequent amendments, or by equivalent regional or State rainfall 
probability information developed therefrom. [40 CFR Part 412.11(e)]. 
(Note that the NWS is updating some of the Precipitation Frequency 
Publications, including part of the TP40. In 1973, the National 
Atmospheric and Oceanic Administration (NOAA) issued the NOAA Atlas 2, 
Precipitation Frequency Atlas of the Western United States. The Atlas 
is published in a separate volume for each of the eleven western 
states. An update for four of the State volumes is currently being 
conducted. In addition, the NWS is updating TP40 for the Ohio River 
Basin which covers a significant portion of the eastern U.S. The 
updates will reflect more than 30 years of additional data and will 
benefit from NWS enhanced computer capabilities since the original 
documents were generated almost 40 years ago.) As discussed further in 
section VIII, the 25-year, 24-hour storm event also is used as a 
standard in the effluent limitation guideline.
    The circularity of the 25-year, 24-hour storm event exemption in 
the existing CAFO definition has created confusion that has led to 
difficulties in implementing the NPDES regulation. The effluent 
guidelines regulation, which is applicable to permitted CAFOs, requires 
that CAFOs be designed and constructed to contain such an event. 
However, the NPDES regulations allows facilities that discharge only as 
a result of such an event to avoid obtaining a permit. This exemption 
has resulted in very few operations actually obtaining NPDES permits, 
which has hampered implementation of the NPDES program. While there are 
an estimated 12,000 AFOs likely to meet the current definition of a 
CAFO, only about 2,500 such facilities have obtained an NPDES permit. 
Many of these unpermitted facilities may incorrectly believe they 
qualify for the 25-year, 24-hour storm permitting exemption. These 
unpermitted facilities operate outside the current NPDES program, and 
State and EPA NPDES permit authorities lack the basic information 
needed to determine whether or not the exemption has been applied 
correctly and whether or not the CAFO operation is in compliance with 
NPDES program requirements.
    EPA does not believe that the definition as a CAFO should hinge on 
whether an AFO only discharges pollutants due to a 25-year, 24-hour 
storm event. Congress clearly intended for concentrated animal feeding 
operations to be subject to NPDES permits by explicitly naming CAFOs as 
point sources in the Clean Water Act Section 502(14). Further, Section 
101(a) of the Act specifically states that elimination of discharges 
down to zero is to be achieved where possible, and EPA does not believe 
that facilities should avoid the regulatory program altogether by 
merely claiming that they meet the 25-year, 24-hour criterion. This 
issue is discussed further below in section VII.C.2(c).
    The public has expressed widespread concern regarding whether some 
of these currently unpermitted facilities are, in fact, entitled to 
this exemption. Based on comments EPA has received in a variety of 
forums, including during the AFO Strategy listening sessions and on the 
draft CAFO permit guidance, EPA believes there is a strong likelihood 
that many of these facilities are discharging pollutants to waters of 
the U.S. EPA is concerned that, in applying the 25-year, 24-hour storm 
exemption, operations are not now taking into consideration runoff from 
their production areas, or are improperly interpreting which discharges 
are the result of 25-year 24-hour storms and chronic rainfall which may 
result in breaches and overflows of storage systems, all of which cause 
pollution to enter waters of the U.S. Additionally, facilities may not 
be considering discharges from improper land application of manure and 
wastewater.
    EPA is today proposing to eliminate the 25-year, 24-hour storm 
exemption from the CAFO definition (40 CFR 122.23, Appendix B) in order 
to: (a) Ensure that all CAFOs with a potential to discharge are 
appropriately permitted; (b) ensure through permitting that facilities 
are, in fact, properly designed, constructed, and maintained to contain 
a 25-year, 24-hour storm event, or to meet a zero discharge 
requirement, as the case may be; (c) improve the ability of EPA and 
State permit authorities to monitor compliance; (d) ensure that 
facilities do

[[Page 3007]]

not discharge pollutants from their production areas or from excessive 
land application of manure and wastewater; (e) make the NPDES 
permitting provision consistent with today's proposal to eliminate the 
25-year, 24-hour storm design standard from the effluent guidelines for 
swine, veal and poultry; and (f) achieve EPA's goals of simplifying the 
regulation, providing clarity to the regulated community, and improving 
the consistency of implementation.
    Under the proposed two-tier structure, any facility that is defined 
as a CAFO would be a CAFO even if it only discharges in the event of a 
25-year, 24-hour storm. Further, the CAFO operator would be required to 
apply for an NPDES permit, as discussed below regarding the duty to 
apply for a NPDES permit. (If the operator believes the facility never 
discharges, the operator could request a determination of no potential 
to discharge, as discussed below.) Under the three-tier structure a 
facility with 300 AU to 1,000 AU would be required to either certify it 
is not a CAFO, to apply for a permit, or demonstrate it has no 
potential to discharge. Today's effluent guidelines proposal would 
retain the design specification for beef or dairy facilities, which 
would allow a permitted facility to discharge due to a 25-year, 24-hour 
event, as long as the facility's containment system is designed, 
constructed and operated to handle manure and wastewater plus 
precipitation from a 25-year, 24-hour storm event (unless a permit 
writer imposed a more stringent, water quality-based effluent 
limitation). However, a facility that meets the definition of CAFO and 
discharges during a 25-year, 24-hour storm event, but has failed to 
apply for an NPDES permit (or to certify in the three-tier structure), 
would be subject to enforcement for violating the CWA. Swine, veal and 
poultry CAFOs would be required to achieve a zero discharge standard at 
all times.
    EPA considered limiting this change to the very largest CAFOs 
(e.g., operations with 1,000 or more animal units), and retaining the 
exemption for smaller facilities. However, EPA is concerned that this 
could allow significant discharges resulting from excessive land 
application of manure and wastewater to remain beyond the scope of the 
NPDES permitting program, thereby resulting in ongoing discharge of 
CAFO-generated pollutants into waters of the U.S. Moreover, EPA 
believes that retaining the exemption for certain operations adds 
unnecessary complexity to the CAFO definition.
    The Small Business Advocacy Review Panel also considered the idea 
of removing the 25-year, 24-hour exemption. While the Panel agreed that 
this was generally appropriate for operations above the 1,000 AU 
threshold, it was divided on whether it would also be appropriate to 
remove the exemption for facilities below this threshold. The Panel 
noted that for some such facilities, removing the exemption would not 
expand the scope of the current regulation, but rather ensure coverage 
for facilities that should already have obtained a permit. However, the 
Panel also recognized that eliminating the exemption would require 
facilities that do properly quality for it--e.g., because they do have 
sufficient manure management and containment in place, or for some 
other reason, do not discharge except in a 25-year, 24-hour storm--to 
obtain a permit or certify that none is needed. The Panel recommended 
that EPA carefully weigh the costs and benefits of removing the 
exemption for small entities and that it fully analyze the incremental 
costs associated with permit applications for those facilities not 
presently permitted that can demonstrate that they do not discharge in 
less than a 25-year, 24-hour storm event, as well as any costs 
associated with additional conditions related to land application, 
nutrient management, or adoption of BMPs that the permit might contain. 
The Panel further recommended that EPA consider reduced application 
requirements for small operators affected by the removal of the 
exemption. The Agency requests comment on whether to retain this 
exemption for small entities and at what animal unit threshold would be 
appropriate for doing so.
    d. Who Must Apply for and Obtain an NPDES Permit? EPA is proposing 
today to adopt regulations that would expressly require all CAFO owners 
or operators to apply for an NPDES permit. See proposed Sec. 122.23(c). 
That is, owners or operators of all facilities defined or designated as 
CAFOs would be required to apply for an NPDES permit. The existing 
regulations contain a general duty to apply for a permit, which EPA 
believes applies to virtually all CAFOs. The majority of CAFO owner or 
operators, however, have not applied for an NPDES permit. Today's 
proposed revisions would clarify that all CAFOs owners or operators 
must apply for an NPDES permit; however, if he or she believes the CAFO 
does not have a potential to discharge pollutants to waters of the U.S. 
from either its production area or its land application area(s), he or 
she could make a no potential discharge demonstration to the permit 
authority in lieu of submitting a full permit application. If the 
permit authority agrees that the CAFO does not have a potential to 
discharge, the permit authority would not need to issue a permit. 
However, if the unpermitted CAFO does indeed discharge, it would be 
violating the CWA prohibition against discharging without a permit and 
would be subject to civil and criminal penalties. Thus, an unpermitted 
CAFO does not get the benefit of the 25-year, 24-hour storm standard 
established by the effluent guidelines for beef and dairy, nor does it 
have the benefit of the upset and bypass affirmative defenses.
    The duty to apply for a permit under existing regulations. EPA 
believes that virtually all facilities defined as CAFOs already have a 
duty to apply for a permit under the current NPDES regulations, because 
of their past or current discharges or potential for future discharge. 
Under NPDES regulations at 40 CFR Part 122.21(a), any person who 
discharges or proposes to discharge pollutants to the waters of the 
United States from a point source is required to apply for an NPDES 
permit. CAFOs are point sources by definition, under Sec. 502 of the 
CWA and 40 CFR 122.2. Thus, any CAFO that ``discharges or proposes to 
discharge'' pollutants must apply for a permit.
    Large CAFOs with greater than 1,000 AU pose a risk of discharge in 
a number of different ways. For example, a discharge of pollutants to 
surface waters can occur through a spill from the waste handling 
facilities, from a breach or overflow of those facilities, or through 
runoff from the feedlot area. A discharge can also occur through runoff 
of pollutants from application of manure and associated wastewaters to 
the land or through seepage from the production area to ground water 
where there is a direct hydrologic connection between ground water and 
surface water. Given the large volume of manure these facilities 
generate and the variety of ways they may discharge, and based on EPA's 
and the States' own experience in the field, EPA believes that all or 
virtually all large CAFOs have had a discharge in the past, have a 
current discharge, or have the potential to discharge in the future. A 
CAFO that meets any one of these three criteria would be a facility 
that ``discharges or proposes to discharge'' pollutants and would 
therefore need to apply for a permit under the current regulations.
    Where CAFO has not discharged in the past, does not now discharge 
pollutants, and does not expect to discharge pollutants in the future, 
EPA

[[Page 3008]]

believes that the owner or operator of that facility should demonstrate 
during the NPDES permit application process that it is, in fact, a ``no 
discharge'' facility. See proposed Sec. 122.23(e). EPA anticipates that 
very few large CAFOs will be able to successfully demonstrate that they 
do not discharge pollutants and do not have a reasonable potential to 
discharge in the future, and furthermore, that very few large CAFOs 
will wish to forego the protections of an NPDES permit. For instance, 
only those beef and dairy CAFOs with an NPDES permit will be authorized 
to discharge in a 25-year, 24-hour storm.
    EPA also believes that a CAFO owner or operator's current 
obligation to apply for an NPDES permit is based not only on discharges 
from the feedlot area but also on discharges from the land application 
areas under the control of the CAFO operator. More specifically, 
discharges of CAFO-generated manure and/or wastewater from such land 
application areas should be viewed as discharges from the CAFO itself 
for the purpose of determining whether it has a potential to discharge. 
EPA recognizes, however, that it has not previously defined CAFOs to 
include the land application area. EPA is proposing to explicitly 
include the land application area in the definition of a CAFO in 
today's action.
    The need for a clarified, broadly applicable duty to apply. EPA 
believes that virtually all large CAFOs have had a past or current 
discharge or have the potential to discharge in the future, and that 
meeting any one of these criteria would trigger a duty to apply for a 
permit. Today, EPA is proposing to revise the regulations by finding 
that, as a rebuttable presumption, all CAFOs do have a potential to 
discharge and, therefore, are required to apply for and to obtain an 
NPDES permit unless they can demonstrate that they will not discharge. 
See proposed Sec. 122.23(c). (See section VII(F)3 for a fuller 
discussion on demonstrating ``no potential to discharge.'')
    EPA has not previously sought to categorically adopt a duty to 
apply for an NPDES permit for all facilities within a particular 
industrial sector. The Agency is proposing today to do so for CAFOs for 
reasons that involve the unique characteristics of CAFOs and the zero 
discharge regulatory approach that applies to them.
    First, as noted, since the inception of the NPDES permitting 
program in the 1970s, a relatively small number of larger CAFOs has 
actually sought permits. Information from State permit authorities and 
EPA's own regional offices indicates that, currently, approximately 
2,500 CAFOs have NPDES permits out of approximately 12,000 CAFOs with 
greater than 1,000 AU.
    EPA believes there are a number of reasons why so few CAFOs have 
sought NPDES permits over the years. The primary reason appears to be 
that the definition of a CAFO in the current regulations (as echoed in 
the regulations of some State programs) excludes animal feeding 
operations that do not discharge at all or discharge only in the event 
of a 25-year, 24-hour storm. [40 CFR 122.23, Appendix B]. Based on the 
existing regulation, many animal feeding operations that claim to be 
``zero dischargers'' believe that they are not subject to NPDES 
permitting because they are excluded from the CAFO definition and thus 
are not CAFO point sources.
    EPA believes that many of the facilities that have relied on this 
exclusion from the CAFO definition may have misinterpreted this 
provision. It excludes facilities from the CAFO definition only when 
they neither discharge pollutants nor have the potential to discharge 
pollutants in a 25-year, 24-hour storm. In fact, as explained above, a 
facility that has at least a potential to discharge pollutants (and 
otherwise meets the CAFO definition) not only is defined as a CAFO but 
also has a duty to apply for an NPDES permit, regardless of whether it 
actually discharges. (40 CFR 122.21(a)). Thus, many facilities that 
have at least a potential to discharge manure and wastewaters may have 
avoided permitting based on an incorrect reliance on this definitional 
exclusion.
    To compound the confusion under the current regulations, EPA 
believes, there has been misinterpretation surrounding the issue of 
discharges from a CAFO's land application areas. As EPA has explained 
in section VII.D of today's notice, runoff from land application of 
CAFO manure is viewed as a discharge from the CAFO point source itself. 
Certain operations may have claimed to be ``zero dischargers'' when in 
fact they were not, and are not, zero dischargers when runoff from 
their land application areas is taken into account.
    Another category of operations that may have improperly avoided 
permitting are those that have had a past discharge of pollutants, and 
are not designed and operated to achieve zero discharge except in a 25-
year, 24-hour storm event. Many of these facilities may have decided 
not to seek a permit because they believe they will not have any future 
discharges. However, as explained above, an operation that has had a 
past discharge of pollutants is covered by the NPDES permitting 
regulations in the same way as operations that have a ``potential'' to 
discharge--i.e., it is not only defined as a CAFO (where it meets the 
other elements of the definition) but is required to apply for a permit 
[Carr v. Alta Verde Industries, Inc., 931 F.2d 1055 (5th Cir. 1991)]. 
Facilities that have had a past discharge meet the criteria of 
Sec. 122.21(a), in EPA's view, both as ``dischargers'' and as 
operations that have the potential for further discharge. Accordingly, 
they are required to apply for an NPDES permit. Misinterpretation 
regarding the need to apply for a permit may also have occurred in 
cases where the past discharges were from land application runoff, as 
explained above.
    Finally, the nature of these operations is that any discharges from 
manure storage structures to waters of the U.S. are usually only 
intermittent, either due to accidental releases from equipment failures 
or storm events or, in some cases, deliberate releases such as pumping 
out lagoons or pits. The intermittent nature of these discharges, 
combined with the large numbers of animal feeding operations 
nationwide, makes it very difficult for EPA and State regulatory 
agencies to know where discharges have occurred (or in many cases, 
where animal feeding operations are even located), given the limited 
resources for conducting inspections. In this sense, CAFOs are distinct 
from typical industrial point sources subject to the NPDES program, 
such as manufacturing plants, where a facility's existence and location 
and the fact that it is discharging wastewaters at all is usually not 
in question. Accordingly, it is much easier for CAFOs to avoid the 
permitting system by not reporting their discharges, and there is 
evidence that such avoidances have taken place.
    In sum, EPA believes it is very important in these regulatory 
revisions to ensure that all CAFOs have a duty to apply for an NPDES 
permit, including those facilities that currently have a duty to apply 
because they meet the definition of CAFO under the existing regulations 
and those facilities which would meet the proposed revised definition 
of CAFO. Two of the revisions that EPA is proposing today to other 
parts of the CAFO regulations would themselves significantly address 
this matter. First, EPA is proposing to eliminate the 25-year, 24-hour 
storm exemption from the definition of a CAFO. Operations would no 
longer be able to avoid being defined as CAFO point sources subject to 
permitting on

[[Page 3009]]

the basis that they do not discharge or discharge only in the event of 
a 25-year, 24-hour storm. Second, EPA is proposing to clarify that land 
application areas are part of the CAFO and any associated discharge 
from these areas is subject to permitting.
    While these two proposed changes would help address the ``duty to 
apply'' issue, EPA does not believe they would go far enough. Even with 
eliminating the 25-year, 24-hour storm exemption from the CAFO 
definition, EPA is concerned that operations would still seek to avoid 
permitting by claiming they are ``zero dischargers.'' Specifically, EPA 
has encountered a further zero discharge conundrum: A facility claims 
that by controlling its discharge down to zero--the very level that a 
permit would require--it has effectively removed itself from CWA 
jurisdiction, because the CWA simply prohibits discharging without a 
permit, so a facility that does not discharge does not need a permit. 
EPA believes this would be an incorrect reading of the CWA and would 
not be a basis for claiming an exemption from permitting (as explained 
directly below). Therefore, it is important to clarify in the 
regulations that even CAFOs that claim to be zero dischargers must 
apply for a permit.
    To round out the basis for this proposed revision, EPA is proposing 
a regulatory presumption in the regulations that all CAFOs have a 
potential to discharge to the waters such that they should be required 
to apply for a permit. EPA believes this would be a reasonable 
presumption on two grounds. First, the Agency believes this is 
reasonable from a factual standpoint, as is fully discussed in section 
V of today's preamble.
    This factual finding would become even more compelling under 
today's proposals to eliminate the 25-year, 24-hour storm exemption 
from the CAFO definition and to clarify that discharges from on-site 
land application areas, are considered CAFO point source discharges. If 
these two proposals were put in place, EPA believes, many fewer 
operations would be claiming that they do not discharge.
    Second, a presumption that all CAFOs have a potential to discharge 
would be reasonable because of the need for clarity on the issues 
described above and the historical inability under the current 
regulations to effectuate CAFO permitting. Under today's proposal, the 
duty would be for each CAFO to apply for a permit, not necessarily to 
obtain one. A CAFO that believes it does not have a potential to 
discharge could seek to demonstrate as much to the permitting authority 
in lieu of submitting a full permit application. (To avoid submitting a 
completed permit application, a facility would need to receive a ``no 
potential to discharge'' determination from the permit authority prior 
to the deadline for applying for a permit. See section VII.F.3 below.) 
If the demonstration were successful, the permitting authority would 
not issue a permit. Therefore, the duty to apply would be based on a 
rebuttable presumption that each facility has a potential to discharge. 
Without this rebuttable presumption, EPA believes it could not 
effectuate proper permitting of CAFOs because of operations that would 
claim to be excluded from the CWA because they do not discharge.
    CWA authority for a duty to apply. In pre-proposal discussions, 
some stakeholders have questioned EPA's authority under the Clean Water 
Act to impose a duty for all CAFOs to apply for a permit. EPA believes 
that the CWA does provide such authority, for the following reasons.
    Section 301(a) of the CWA says that no person may discharge without 
an NPDES permit. The Act is silent, however, on the requirement for 
permit applications. It does not explicitly require anyone to apply for 
a permit, as some stakeholders have pointed out. But neither does the 
Act expressly prohibit EPA from requiring certain facilities to submit 
an NPDES permit application or from issuing an NPDES permit without 
one. Section 402(a) of the Act says simply that the Agency may issue an 
NPDES permit after an opportunity for public hearing.
    Indeed, finding that EPA could not require permitting of CAFOs 
would upset the legislative scheme and render certain provisions of the 
Act meaningless. Section 301(b)(2)(A), which sets BAT requirements for 
existing sources and thus is at the heart of the statutory scheme, 
states that EPA shall establish BAT standards that ``require the 
elimination of discharges of all pollutants if the Administrator finds 
* * * that such elimination is technologically and economically 
achievable.* * *'' In other words, Congress contemplated that EPA could 
set effluent standards going down to zero discharge where appropriate. 
Section 306, concerning new sources, contains similar language 
indicating that zero discharge may be an appropriate standard for some 
new sources. Section 402 puts these standards into effect by requiring 
EPA to issue NPDES permits that apply these standards and ensure 
compliance with them. Thus, the Act contemplates the issuance of NPDES 
permits that require zero discharge. These provisions are underscored 
by Section 101(a) of the Act, which sets a national goal of not just 
reducing but eliminating the discharge of pollutants to the waters.
    This statutory scheme would be negated if facilities were allowed 
to avoid permitting by claiming that they already meet a zero discharge 
standard that is established in the CAFO regulations and that a permit 
would require. Issuing a zero discharge standard would be an act of 
futility because it could not be implemented through a permit. Under a 
contrary interpretation, a CAFO could repeatedly discharge and yet 
avoid permitting by claiming that it does not intend to discharge 
further. EPA does not believe that Congress intended to tie the 
Agency's hands in this manner. To be sure, in no other area of the 
NPDES program are industrial operations allowed to avoid permitting by 
claiming that they already meet the limits that a permit would require. 
That would be a plainly wrong view of the Act; Section 301(a) states 
unequivocally that no person may discharge at all without a permit. The 
Act does not contemplate a different system for facilities that are 
subject to a zero discharge standard, and it is the unique nature of 
the zero discharge standard that makes it appropriate for EPA to 
require CAFOs to apply for permits.
    EPA also finds authority to require NPDES permit applications from 
CAFOs in Section 308 of the Act. Under Section 308, the Administrator 
may require point sources to provide information ``whenever required to 
carry out the objective of this chapter,'' for purposes, among other 
things, of determining whether any person is in violation of effluent 
limitations, or to carry out Section 402 and other provisions. Because 
EPA proposes a presumption that all CAFOs have a potential to discharge 
pollutants, it is important, and within EPA's authority, to collect 
information from CAFOs in order to determine if they are in violation 
of the Act or otherwise need a permit.
    EPA solicits comment on the proposed duty to apply.
    e. The Definitions of AFO and CAFO Would Include the Land Areas 
Under the Control of the Operator on Which Manure is Applied. In 
today's proposal, EPA defines an AFO to include both the animal 
production areas of the operation and the land areas, if any, under the 
control of the owner or operator, on which manure and associated waste 
waters are applied. See proposed Sec. 122.23(a)(1). The definition of a 
CAFO is based on the AFO definition and thus would include the

[[Page 3010]]

land application areas as well. Accordingly, a CAFO's permit would 
include requirements to control not only discharges from the production 
areas but also those discharges from the land application areas. Under 
the existing regulations, discharges from a CAFO's land application 
areas that result from improper agricultural practices are already 
considered to be discharges from the CAFO and therefore, are subject to 
the NPDES permitting program. However, EPA believes it would be helpful 
to clarify the regulations on this point.
    By the term ``production area,'' EPA means the animal confinement 
areas, the manure storage areas (e.g. lagoon, shed, pile), the feed 
storage areas (e.g., silo, silage bunker), and the waste containment 
areas (e.g., berms, diversions). The land application areas include any 
land to which a CAFO's manure and wastewater is applied (e.g., crop 
fields, fields, pasture) that is under the control of the CAFO owner or 
operator, whether through ownership or a lease or contract. The land 
application areas do not include areas that are not under the CAFO 
owner's or operator's control. For example, where a nearby farm is 
owned and operated by someone other than the CAFO owner or operator and 
the nearby farm acquires the CAFO's manure or wastewater, by contract 
or otherwise, and applies those wastes to its own crop fields, those 
crop fields are not part of the CAFO.
    The definition of an AFO under the existing regulations refers to a 
``lot or facility'' that meets certain conditions, including that 
``[c]rops, vegetation[,] forage growth, or post-harvest residues are 
not sustained in the normal growing season over any portion of the lot 
or facility.'' 40 CFR 122.23(b)(1). In addition, the regulations define 
``discharge of a pollutant'' as the addition of any pollutant to waters 
of the United States from any point source. 40 CFR 122.2. EPA 
interprets the current regulations to include discharges of CAFO-
generated manure and wastewaters from improper land application to 
areas under the control of the CAFO as discharges from the CAFO itself. 
Otherwise, a CAFO could simply move its wastes outside the area of 
confinement, and over apply or otherwise improperly apply those wastes, 
which would render the CWA prohibition on unpermitted discharges of 
pollutants from CAFOs meaningless. Moreover, the pipes and other 
manure-spreading equipment that convey CAFO manure and wastewaters to 
land application areas under the control of the CAFO are an integral 
part of the CAFO. Under the existing regulations, this equipment should 
be considered part of the CAFO, and discharges from this equipment that 
reach the waters of the United States as a result of improper land 
application should be considered discharges from the CAFO for this 
reason as well. In recent litigation brought by citizens against a 
dairy farm, a federal court reached a similar conclusion. See CARE v. 
Sid Koopman Dairy, et al., 54 F. Supp. 2d 976 (E.D. Wash., 1999).
    One of the goals of revising the existing CAFO regulations is to 
make the regulations clearer and more understandable to the regulated 
community and easier for permitting authorities to implement. EPA 
believes that amending the definition of an AFO (and, by extension, 
CAFO) to expressly include land application areas will help achieve 
this clarity and will enable permitting authorities to both more 
effectively implement the proposed effluent guidelines and to more 
effectively enforce the CWA's prohibition on discharging without a 
permit. It would be clear under this revision that the term ``CAFO'' 
means the entire facility, including land application fields and other 
areas under the CAFO's control to which it applies its manure and 
wastewater. By proposing to include land application areas in the 
definition of an AFO, and therefore, a CAFO, discharges from those 
areas would, by definition, be discharges from a point source--i.e., 
the CAFO. There would not need to be a separate showing of a 
discernible, confined, and discrete conveyance such as a ditch.
    While the CWA includes CAFOs within the definition of a point 
source, it does not elaborate on what the term CAFO means. EPA has 
broad discretion to define the term CAFO. Land application areas are 
integral parts of many or most CAFO operations. Land application is 
typically the end point in the cycle of manure management at CAFOs. 
Significant discharges to the waters in the past have been attributed 
to the land application of CAFO-generated manure and wastewater. EPA 
does not believe that Congress could have intended to exclude the 
discharges from a CAFO's land application areas from coverage as 
discharges from the CAFO point source. Moreover, defining CAFOs in this 
way is consistent with EPA's effluent limitations guidelines for other 
industries, which consider on-site waste treatment systems to be part 
of the production facilities in that the regulations restrict 
discharges from the total operation. Thus, it is reasonable for EPA to 
revise the regulations by including land application areas in the 
definition of an AFO and CAFO.
    While the proposal would include the land application areas as part 
of the AFO and CAFO, it would continue to count only those animals that 
are confined in the production area when determining whether a facility 
is a CAFO.
    EPA is also considering today whether it is reasonable to interpret 
the agricultural storm water exemption as not applicable to any 
discharges from CAFOs. See section VII.D.2. If EPA were to adopt that 
interpretation, all discharges from a CAFO's land application areas 
would be subject to NPDES requirements, regardless of the rate or 
manner in which the manure has been applied to the land.
    Please refer to section VII.D for a full discussion of land 
application, including EPA's proposal with regard to land application 
of CAFO manure by non-CAFOs.
    EPA is requesting comment on this approach.
    f. What Types of Poultry Operations are CAFOs? EPA is proposing to 
revise the CAFO regulations to include all poultry operations with the 
potential to discharge, and to establish the threshold for AFOs to be 
defined as CAFOs at 50,000 chickens and 27,500 turkeys. See proposed 
Sec. 122.23(a)(3)(i)(H) and (I). The proposed revision would remove the 
limitation on the type of manure handling or watering system employed 
at laying hen and broiler operations and would, therefore, address all 
poultry operations equally. This approach would be consistent with 
EPA's objective of better addressing the issue of water quality impacts 
associated with both storage of manure at the production area and land 
application of manure while simultaneously simplifying the regulation. 
The following discussion focuses on the revisions to the threshold for 
chickens under each of the co-proposed regulatory alternatives.
    The existing NPDES CAFO definition is written such that the 
regulations only apply to laying hen or broiler operations that have 
continuous overflow watering or liquid manure handling systems 
(i.e.,``wet'' systems). (40 CFR Part 122, Appendix B.) EPA has 
interpreted this language to include poultry operations in which dry 
litter is removed from pens and stacked in areas exposed to rainfall, 
or piles adjacent to a watercourse. These operations may be considered 
to have established a crude liquid manure system (see 1995 NPDES 
Permitting Guidance for CAFOs). The existing CAFO regulations also 
specify different thresholds for determining which AFOs

[[Page 3011]]

are CAFOs depending on which of these two types of systems the facility 
uses (e.g., 100,000 laying hens or broilers if the facility has 
continuous overflow watering; 30,000 laying hens or boilers if the 
facility has a liquid manure system). When the NPDES CAFO regulations 
were promulgated, EPA selected these thresholds because the Agency 
believed that most commercial operations used wet systems (38 FR 18001, 
1973).
    In the 25 years since the CAFO regulations were promulgated, the 
poultry industry has changed many of its production practices. Many 
changes to the layer production process have been instituted to keep 
manure as dry as possible. Consequently, the existing effluent 
guidelines do not apply to many broiler and laying hen operations, 
despite the fact that chicken production poses risks to surface water 
and ground water quality from improper storage of dry manure, and 
improper land application. It is EPA's understanding that continuous 
overflow watering has been largely discontinued in lieu of more 
efficient watering methods (i.e., on demand watering), and that liquid 
manure handling systems represent perhaps 15 percent of layer 
operations overall, although in the South approximately 40 percent of 
operations still have wet manure systems.
    Despite the CAFO regulations, nutrients from large poultry 
operations continue to contaminate surface water and ground water due 
to rainfall coming in contact with dry manure that is stacked in 
exposed areas, accidental spills, etc. In addition, land application 
remains the primary management method for significant quantities of 
poultry litter (including manure generated from facilities using 
``dry'' systems). Many poultry operations are located on smaller 
parcels of land in comparison to other livestock sectors, oftentimes 
owning no significant cropland or pasture, placing increased importance 
on the proper management of the potentially large amounts of manure 
that they generate. EPA also believes that all types of livestock 
operations should be treated equitably under the revised regulation.
    As documented in the Environmental Impact Assessment, available in 
the rulemaking Record, poultry production in concentrated areas such as 
in the Southeast, the Delmarva Peninsula in the mid-Atlantic, and in 
key Midwestern States has been shown to cause serious water quality 
impairments. For example, the Chesapeake Bay watershed's most serious 
water quality problem is caused by the overabundance of nutrients (e.g. 
nitrogen and phosphorus). EPA's Chesapeake Bay Program Office estimates 
that poultry manure is the largest source of excess nitrogen and 
phosphorous reaching the Chesapeake Bay from the lower Eastern Shore of 
Maryland and Virginia, sending more than four times as much nitrogen 
into the Bay as leaky septic tanks and runoff from developed areas, and 
more than three times as much phosphorus as sewage treatment plants. 
These discharges of nutrients result from an over-abundance of manure 
relative to land available for application, as well as the management 
practices required to deal with the excess manure. The State of 
Maryland has identified instances where piles of chicken litter have 
been stored near ditches and creeks that feed tributaries of the Bay. 
Soil data also suggest that in some Maryland counties with poultry 
production the soils already contain 90 percent or more of the 
phosphorus needed by crops. The State of Maryland has surveyed the 
Pocomoke, Transquaking, and Manokin river systems and has concluded 
that 70-87 percent of all nutrients reaching those waters came from 
farms (though not all from AFOs). Based on EPA data, phosphorus 
concentrations in the Pocomoke Sound have increased more than 25 
percent since 1985, suffocating sea grasses that serve as vital habitat 
for fish and crabs. In 1997, poultry operations were found to be a 
contributing cause of Pfiesteria outbreaks in the Pokomoke River and 
Kings Creek (both in Maryland) and in the Chesapeake Bay, in which tens 
of thousands of fish were killed. Other examples of impacts from 
poultry manure are discussed in section V of today's proposal.
    Dry manure handling is the predominant practice in the broiler and 
other meat type chicken industries. Birds are housed on dirt or 
concrete floors that have been covered with a bedding material such as 
wood shavings. Manure becomes mixed with this bedding to form a litter, 
which is removed from the house in two ways. After each flock of birds 
is removed from the house a portion of litter, referred to as cake, is 
removed. Cake is litter that has become clumped, usually below the 
watering system, although it can also be formed by a concentration of 
manure. In addition, the operator also removes all of the litter from 
the house periodically. The frequency of the ``whole house'' clean-out 
varies but commonly occurs once each year, unless a breach of 
biosecurity is suspected.
    Broiler operations generally house between five and six flocks of 
birds each year, which means there are between five or six ``cake-
outs'' each year. Roasters have fewer flocks, and small fryers have 
more flocks, but the volume of ``cake-out'' removed in a year is 
comparable. ``Cake-outs'' will sometimes occur during periods when it 
is not possible to land apply the litter (e.g. in the middle of the 
growing season or during the winter when field conditions may not be 
conducive to land application). Consequently, it is usually necessary 
to store the dry litter after removal until it can be land applied.
    Depending on the time of year it occurs, ``whole house'' clean-out 
may also require the operator to store the dry manure until it can be 
land applied. If the manure is stored in open stockpiles over long 
periods of time, usually greater than a few weeks, runoff from the 
stockpile may contribute pollutants to surface water and/or ground 
water that is hydrologically connected to surface water.
    The majority of egg laying operations use dry manure handling, 
although there are operations with liquid manure handling systems. 
Laying hens are kept in cages and manure drops below the cages in both 
dry and liquid manure handling systems. Most of the dry manure 
operations are constructed as high rise houses where the birds are kept 
on the second floor and the manure drops to the first floor, which is 
sometimes referred to as the pit. Ventilation flows through the house 
from the roof down over the birds and into the pit over the manure 
before it is forced out through the sides of the house. The ventilation 
dries the manure as it piles up into cones. Manure can usually be 
stored in high rise houses for up to a year before requiring removal.
    Problems can occur with dry manure storage in a high rise house 
when drinking water systems are not properly designed or maintained. 
For example, improper design or maintenance of the water system can 
result in excess water spilling into the pit below, which raises the 
moisture content of the manure, resulting in the potential for spills 
and releases of manure from the building.
    Concerns with inadequate storage or improper design and maintenance 
contribute to concerns over dry manure systems for laying hens. As with 
broiler operations, open stockpiles of litter stored over long periods 
of time (e.g., greater than a few weeks) may contribute to pollutant 
discharge from contaminated runoff and leachate leaving the stockpile. 
Laying hens operations may also use a liquid manure handling system. 
The system is similar to the dry manure system except that

[[Page 3012]]

the manure drops below the cages into a channel or shallow pit and 
water is used to flush this manure to a lagoon.
    The existing regulation already applies to laying hen and broiler 
operations with 100,000 birds when a continuous flow watering system is 
used, and to 30,000 birds when a liquid manure handling system is used. 
In revising the threshold for poultry operations, EPA evaluated several 
methods for equating poultry to the existing definition of an animal 
unit. EPA considered laying hens, pullets, broilers, and roasters 
separately to reflect the differences in size, age, production, feeding 
practices, housing, waste management, manure generation, and nutrient 
content of the manure. Manure generation and pollutant parameters 
considered include: nitrogen, phosphorus, BOD5, volatile solids, and 
COD. Analysis of these parameters consistently results in a threshold 
of 70,000 to 140,000 birds as being equivalent to 1,000 animal units. 
EPA also considered a liveweight basis for defining poultry. The 
liveweight definition of animal unit as used by USDA defines 455,000 
broilers and pullets and 250,000 layers as being representative of 
1,000 animal units. EPA data indicates that using a liveweight basis at 
1,000 AU would exclude virtually all broiler operations from the 
regulation.
    Consultations with industry indicated EPA should evaluate the 
different sizes (ages) and purposes (eggs versus meat) of chickens 
separately. However, when evaluating broilers, roasters, and other 
meat-type chickens, EPA concluded that a given number of birds capacity 
represented the same net annual production of litter and nutrients. For 
example, a farm producing primarily broilers would raise birds for 6-8 
weeks with a final weight of 3 to 5 pounds, a farm producing roasters 
would raise birds for 9-11 weeks with a final weight of 6 to 8 pounds, 
whereas a farm producing game hens may only keep birds for 4-6 weeks 
and at a final weight of less than 2 pounds. The housing, production 
practices, waste management, and manure nutrients and process wastes 
generated in each case is essentially the same. Layers are typically 
fed less than broilers of equivalent size, and are generally maintained 
as a smaller chicken. However, a laying hen is likely to be kept for a 
year of egg production. The layer is then sold or molted for several 
weeks, followed by a second period of egg production. Pullets are 
housed until laying age of approximately 18 to 22 weeks. In all cases 
manure nutrients and litter generated results in a threshold of 80,000 
to 130,000 birds as being the equivalent of 1,000 animal units.
    Today's proposed NPDES and effluent guidelines requirements for 
poultry eliminate the distinction between how manure is handled and the 
type of watering system that is used. EPA is proposing this change 
because it believes there is a need to control poultry operations 
regardless of the manure handling or watering system. EPA believes that 
improper storage as well as land application rates which exceed 
agricultural use have contributed to water quality problems, especially 
in areas with large concentrations of poultry production. Inclusion of 
poultry operations in the proposed NPDES regulation is intended to be 
consistent with the proposed effluent guidelines regulation, discussed 
in section VIII of today's preamble. EPA is proposing that 100,000 
laying hens or broilers be considered the equivalent of 1,000 animal 
units.
    Consequently EPA proposes to establish the threshold under the two-
tier alternative structure that defines which operations are CAFOs at 
500 animal units as equivalent to 50,000 birds. Facilities that are 
subject to designation are those with fewer than 50,000 birds. This 
threshold would address approximately 10 percent of all chicken AFOs 
nationally and more than 70 percent of all manure generated by 
chickens. On a sector specific basis, this threshold would address 
approximately 28 percent of all broiler operations (including all meat-
type chickens) while addressing more than 70 percent of manure 
generated by broiler operations. For layers (including pullets) the 
threshold would address less than 5 percent of layer operations while 
addressing nearly 80 percent of manure generated by layer operations. 
EPA believes this threshold is consistent with the threshold 
established for the other livestock sectors.
    Under this two-tier structure, today's proposed changes exclude 
poultry operations with liquid manure handling systems if they have 
between 30,000 and 49,999 birds. EPA estimates this to be few if any 
operations nationally and believes these are relatively small 
operations. EPA does not believe these few operations pose a 
significant threat to water quality even in aggregation. EPA also notes 
that the trend in laying hen operations (where liquid systems may 
occur) has been to build new operations to house large numbers of 
animals (e.g., usually in excess of 100,000 birds per house), which 
frequently employ dry manure handling systems. Given the limited number 
of existing operations with liquid manure handling systems and the 
continuing trend toward larger operations, EPA believes the proposed 
uniform threshold of 50,000 birds is appropriate.
    Under the proposed alternative three-tier structure, any operation 
with more than 100,000 chickens is automatically defined as a CAFO. 
This upper tier reflects 4 percent of all chicken operations. 
Additionally those poultry operations with 30,000 to 100,000 chickens 
are defined as CAFOs if they meet the unacceptable conditions presented 
in section VII.C. This middle tier would address an additional 10 
percent of poultry facilities. By sector this middle tier would 
potentially cover an additional 45 percent of broiler manure and 22 
percent layer manure. In aggregate this scenario would address 14 
percent of chicken operations and 86 percent of manure. See VI.A.2 for 
the additional information regarding scope of the two proposed 
regulatory alternatives.
    EPA acknowledges that this threshold pulls in a substantial number 
of chicken operations under the definition of a CAFO. Geographic 
regions with high density of poultry production have experienced water 
quality problems related to an overabundance of nutrients, to which the 
poultry industry has contributed. For example northwestern Arkansas and 
the Delmarva peninsula in the Mid-Atlantic tend to have smaller poultry 
farms as compared to other regions. The chicken and turkey sectors also 
have higher percentages of operations with insufficient or no land 
under the control of the AFO on which to apply manure. Thus EPA 
believes this threshold is appropriate to adequately control the 
potential for discharges from poultry CAFOs.
    g. How Would Immature Animals in the Swine and Dairy Sectors be 
Counted? EPA is proposing to include immature swine and heifer 
operations under the CAFO definition. See proposed 
Sec. 122.23(a)(3)(i)(C) and (E). In the proposed two-tier structure, 
EPA would establish the 500 AU threshold equivalent for defining which 
operations are CAFOs as operations with 5000 or more swine weighing 55 
pounds or less, and those with fewer than 5000 swine under 55 pounds 
are AFOs which may be designated as CAFOs. Immature dairy cows, or 
heifers, would be counted equivalent to beef cattle; that is, the 500 
AU threshold equivalent for defining CAFOs would be operations with 500 
or more heifers, and those with fewer than 500 could be designated as 
CAFOs.
    In the proposed three-tier structure, the 300 AU and 1,000 AU 
equivalents,

[[Page 3013]]

respectively for each animal type would be: 3,000 head and 10,000 head 
for immature swine; and 300 head and 1,000 head for heifers.
    Only swine over 55 pounds and mature dairy cows are specifically 
included in the current definition (although manure and wastewater 
generated by immature animals confined at the same operation with 
mature animals are subject to the existing requirements). Immature 
animals were not a concern in the past because they were generally part 
of operations that included mature animals and, therefore, their manure 
was included in the permit requirements of the CAFO. However, in recent 
years, these livestock industries have become increasingly specialized 
with the emergence of increasing numbers of large stand-alone 
nurseries. Further, manure from immature animals tends to have higher 
concentrations of pathogens and hormones and thus poses greater risks 
to the environment and human health.
    Since the 1970s, the animal feeding industry has become more 
specialized, especially at larger operations. When the CAFO regulations 
were issued, it was typical to house swine from birth to slaughter 
together at the same operation known as a farrow to finish operation. 
Although more than half of swine production continues to occur at 
farrow-to-finish operations, today it is common for swine to be raised 
in phased production systems. As described in section VI, specialized 
operations that only house sows and piglets until weaned represent the 
first phase, called farrowing. The weaned piglets are transferred to a 
nursery, either at a separate building or at a location remote from the 
farrowing operation for biosecurity concerns. The nursery houses the 
piglets until they reach about 55 to 60 pounds, at which time they are 
transferred to another site, the grow-finish facility.
    The proposed thresholds for swine are established on the basis of 
the average phosphorus excreted from immature swine in comparison to 
the average phosphorus excreted from swine over 55 pounds. A similar 
threshold would be obtained when evaluating live-weight manure 
generation, nitrogen, COD and volatile solids (VS). See the Technical 
Development Document for more details.
    Dairies often remove immature heifers to a separate location until 
they reach maturity. These off-site operations may confine the heifers 
in a manner that is very similar to a beef feedlot or the heifers may 
be placed on pasture. The existing CAFO definition does not address 
operations that only confine immature heifers. EPA acknowledges that 
dairies may keep heifers and calves and a few bulls on site. EPA data 
indicates some of these animals are in confinement, some are pastured, 
and some moved back and forth between confinement, open lots, and 
pasture. The current CAFO definition considers only the mature milking 
cows. This has raised some concerns that many dairies with significant 
numbers of immature animals could be excluded from the regulatory 
definition even though they may generate as much manure as a dairy with 
a milking herd large enough to be a CAFO. The proportion of immature 
animals maintained at dairies can vary significantly with a high being 
a one to one ratio. Industry-wide there are 0.6 immature animals for 
every milking cow.
    EPA considered options for dairies that would take into account all 
animals maintained in confinement, including calves, bulls and heifers 
when determining whether a dairy is a CAFO or not. EPA examined two 
approaches for this option, one that would count all animals equally 
and another based on the proportion of heifers, calves, and bulls 
likely to be present at the dairy. EPA is not proposing to adopt either 
of these options.
    The milking herd is usually a constant at a dairy, but the 
proportion of immature animals can vary substantially among dairies and 
even at a given dairy over time. Some operations maintain their 
immature animals on-site, but keep them on pasture most of the time. 
Some operations keep immature animals on-site, and maintain them in 
confinement all or most of the time. Some operations may also have one 
or two bulls on-site, which can also be kept either in confinement or 
on pasture, while many keep none on-site. Some operations do not keep 
their immature animals on-site at all, instead they place them offsite, 
usually in a stand-alone heifer operation. Because of the variety of 
practices at dairies, it becomes very difficult to estimate how many 
operations have immature animals on-site in confinement. EPA believes 
that basing the applicability on the numbers of immature animals and 
bulls would make implementing the regulation more difficult for the 
permit authority and the CAFO operator. However, EPA requests comment 
on this as a possible approach.
    EPA also requests comments on using only mature milking cows as the 
means for determining applicability of the size thresholds. Under the 
two-tier structure, EPA's proposed requirements for dairies would apply 
to 3 percent of the dairies nationally and will control 37 percent of 
the CAFO manure generated by all dairies nationally. This is 
proportionally lower than other livestock sectors, largely due to the 
dominance of very small farms in the dairy industry. There are similar 
trends in the dairy industry as in the other livestock sectors, 
indicating that the number of large operations is increasing while the 
number of small farms continues to decline. Under the three-tier 
structure, EPA's proposed requirements would apply to 6 percent of the 
dairies nationally, and will control 43 percent of all manure generated 
at dairy CAFOs annually. See Section VI.A.1.
    Inclusion in the proposed NPDES definition of immature swine and 
heifers is intended to be consistent with the proposed effluent 
guidelines regulation, described in section VIII of today's preamble.
    P. What Other Animal Sectors Does Today's Proposal Affect? EPA is 
proposing to lower the threshold for defining which AFOs are CAFOs to 
the equivalent of 500 AU in the horse, sheep, lamb and duck sectors 
under the two-tier structure. See proposed Sec. 122.23(a)(3)(i). This 
action is being taken to be consistent with the NPDES proposed 
revisions for beef, dairy, swine and poultry. Under the three-tier 
structure, the existing thresholds would remain as they are under the 
existing regulation.
    The animal types covered by the NPDES program are defined in the 
current regulation (Part 122 Appendix B). The beef, dairy, swine, 
poultry and veal sectors are being addressed by both today's effluent 
guidelines proposal and today's NPDES proposal. However, today's 
proposal would not revise the effluent guidelines for any animal sector 
other than beef, dairy, swine, poultry and veal. Therefore, under 
today's proposal, any facility in the horse, sheep, lamb and duck 
sectors with 500 to 1,000 AU that is defined as a CAFO, and any 
facility in any sector below 500 AU that is designated as a CAFO, will 
not be subject to the effluent guidelines, but will have NPDES permits 
developed on a best professional judgment (BPJ) basis.
    Table 7-6 identifies those meeting the proposed 500 AU threshold in 
the two-tier structure. Table 7-7 identifies the numbers of animals 
meeting the 300 AU, 300 AU to 1,000 AU, and the 1,000 AU thresholds in 
the three-tier structure.
    A facility confining any other animal type that is not explicitly 
mentioned in the NPDES and effluent guidelines regulations is still 
subject to NPDES permitting requirements if it meets the definition of 
an AFO and if the permit

[[Page 3014]]

authority designates it as a CAFO on the basis that it is a significant 
contributor of pollution to waters of the U.S. Refer to VII.C.4 in 
today's proposal for a discussion of designation for AFOs.
    The economic analysis for the NPDES rule does not cover animal 
types other than beef, dairy, swine and poultry. EPA chose to analyze 
those animal types that produce the greatest amount of manure and 
wastewater in the aggregate while in confinement. EPA believes that 
most horses, sheep, and lambs operations are not confined and therefore 
will not be subject to permitting, thus, the Agency expects the impacts 
in these sectors to be minimal. However, most duck operations probably 
are confined. EPA requests comments on the effect of this proposal on 
the horse, sheep, lamb and duck sectors.
    i. How Does EPA Propose to Control Manure at Operations that Cease 
to be CAFOs? EPA is proposing to require operators of permitted CAFOs 
that cease operations to retain NPDES permits until the facilities are 
properly closed, i.e., no longer have the potential to discharge. See 
Sec. 122.23(i)(3). Similarly, today's proposal would clarify that, if a 
facility ceases to be an active CAFO (e.g., it decreases the number of 
animals below the threshold that defined it as a CAFO, or ceases to 
operate), the CAFO must remain permitted until all wastes at the 
facility that were generated while the facility was a CAFO no longer 
have the potential to reach waters of the United States.
    These requirements mean that if a permit is about to expire and the 
manure storage facility has not yet been properly closed, the facility 
would be required to apply for a permit renewal because the facility 
has the potential to discharge to waters of the U.S. until it is 
properly closed. Proper facility closure includes removal of water from 
lagoons and stockpiles, and proper disposal of wastes, which may 
include land application of manure and wastewater in accordance with 
NPDES permit requirements, to prevent or minimize discharge of 
pollutants to receiving waters.
    The existing regulations do not explicitly address whether a permit 
should be allowed to expire when an owner or operator ceases 
operations. However, the public has expressed concerns about facilities 
that go out of business leaving behind lagoons, stockpiles and other 
contaminants unattended and unmanaged. Moreover, there are a number of 
documented instances of spills and breaches at CAFOs that have ceased 
operations, leaving behind environmental problems that became a public 
burden to resolve (see, for example, report of the North Carolina DENR, 
1999).
    EPA considered five options for NPDES permit requirements to ensure 
that CAFO operators provide assurances for proper closure of their 
facilities (especially manure management systems such as lagoons) in 
the event of financial failure or other business curtailment. EPA 
examined the costs to the industry and the complexity of administering 
such a program for all options. The analyses of these options are 
detailed in the EPA NPDES CAFO Rulemaking Support Document, September 
26, 2000.
    Closure Option 1 would require a closure plan. The CAFO operator 
would be required to have a written closure plan detailing how the 
facility plans to dispose of animal waste from manure management 
facilities. The plan would be submitted with the permit application and 
be approved with the permit application. The plan would identify the 
steps necessary to perform final closure of the facility, including at 
least:
     A description of how each major component of the manure 
management facility (e.g., lagoons, settlement basins, storage sheds) 
will be closed;
     An estimate of the maximum inventory of animal waste ever 
on-site, accompanied with a description of how the waste will be 
removed, transported, land applied or otherwise disposed; and
     A closure schedule for each component of the facility 
along with a description of other activities necessary during closure 
(e.g., control run-off/run-on, ground water monitoring if necessary).
    EPA also investigated several options that would provide financial 
assurances in the event the CAFO went out of business, such as 
contribution to a sinking fund, commercial insurance, surety bond, and 
other common commercial mechanisms. Under Closure Option 2, permittees 
would have to contribute to a sinking fund to cover closure costs of 
facilities which abandon their manure management systems. The 
contribution could be on a per-head basis, and could be levied on the 
permitting cycle (every five years), or annually. The sinking fund 
would be available to cleanup any abandoned facility (including those 
which are not permitted). Data on lagoon closures in North Carolina 
(Harrison, 1999) indicate that the average cost of lagoon closure for 
which data are available is approximately $42,000. Assuming a levy of 
$0.10 per animal, the sinking fund would cover the cost of 
approximately 50 abandonments nationally per year, not accounting for 
any administrative costs associated with operating the funding program.
    Closure Option 3 would require permittees to provide financial 
assurance by one of several generally accepted mechanisms. Financial 
assurance options could include the following common mechanisms: a) 
Commercial insurance; (b) Financial test; (c) Guarantee; (d) 
Certificate of Deposit or designated savings account; (e) Letter of 
credit; or (f) Surety bond. The actual cost to the permittee would 
depend upon which financial assurance option was available and 
implemented. The financial test would likely be the least expensive for 
some operations, entailing documentation that the net worth of the CAFO 
operator is sufficient such that it is unlikely that the facility will 
be abandoned for financial reasons. The guarantee would also be 
inexpensive, consisting of a legal guarantee from a parent corporation 
or other party (integrator) that has sufficient levels of net worth. 
The surety bond would likely be the most expensive, typically requiring 
an annual premium of 0.5 to 3.0 percent of the value of the bond; this 
mechanism would likely be a last resort for facilities that could not 
meet the requirement of the other mechanisms.
    Option 4 is a combination of Options 2 and 3. Permittees would have 
to provide financial assurance by one of several generally accepted 
mechanisms, or by participating in a sinking fund. CAFO operators could 
meet closure requirements through the most economical means available 
for their operation.
    Option 5, the preferred option in today's proposal, simply requires 
CAFOs to maintain NPDES permit coverage until proper closure. Under 
this option, facilities would be required to maintain their NPDES 
permits, even upon curtailment of the animal feeding operation, for as 
long as the facility has the potential to discharge. The costs for this 
option would be those costs associated with maintaining a permit.
    Today, EPA is proposing to require NPDES permits to include a 
condition that imposes a duty to reapply for a permit unless an owner 
or operator has closed the facility such that there is no potential for 
discharges. The NPDES program offers legal and financial sanctions that 
are sufficient, in EPA's view, to ensure that operators comply with 
this requirement. EPA believes that this option would accomplish its 
objectives and would be generally easy and effective to implement. 
However, there are concerns that it would not be effective for 
abandoned facilities because, unlike some of the other

[[Page 3015]]

options, no financial assurance mechanism would be in place. EPA is 
requesting comment on the practical means of addressing the problem of 
unmanaged waste from closed or abandoned CAFOs, and what authorities 
EPA could use under the CWA or other statutes to address this problem.
    See Section VII.E.5.c of today's proposal, which further discusses 
the requirement for permit authorities to include facility closure in 
NPDES permit special conditions.
    While EPA is today proposing to only require ongoing permit 
coverage of the former CAFO, permit authorities are encouraged to 
consider including other conditions such as those discussed above.
    j. Applicability of the Regulations to Operations That Have a 
Direct Hydrologic Connection to Ground Water. Because of its relevance 
to today's proposal, EPA is restating that the Agency interprets the 
Clean Water Act to apply to discharges of pollutants from a point 
source via ground water that has a direct hydrologic connection to 
surface water. See proposed Sec. 122.23(e). Specifically, the Agency is 
proposing that all CAFOs, including those that discharge or have the 
potential to discharge CAFO wastes to navigable waters via ground water 
with a direct hydrologic connection must apply for an NPDES permit. In 
addition, the proposed effluent guidelines will require some CAFOs to 
achieve zero discharge from their production areas including via ground 
water which has a direct hydrologic connection to surface water. 
Further, for CAFOs not subject to such an effluent guideline, permit 
writers would in some circumstances be required to establish special 
conditions to address such discharges. In all cases, a permittee would 
have the opportunity to provide a hydrologist's report to rebut the 
presumption that there is likely to be a discharge from the production 
area to surface waters via ground water with a direct hydrologic 
connection.
    For CAFOs that would be subject to an effluent guideline that 
includes requirements for zero discharge from the production area to 
surface water via ground water (all existing and new beef and dairy 
operations, and new swine and poultry operations, see proposed 
Sec. 412.33(a), 412.35(a), and 412.45(a)), the proposed regulations 
would presume that there is a direct hydrologic connection to surface 
water. The permittee would be required to either achieve zero discharge 
from the production area via ground water and perform the required 
ground water monitoring or provide a hydrologist's statement that there 
is no direct connection of ground water to surface water at the 
facility. See 40 CFR 412.33(a)(3), 412.35(a)(3), and 412.45(a)(3).
    For CAFOs that would be subject to the proposed effluent guideline 
at 412.43 (existing swine, poultry and veal facilities) which does not 
include ground water requirements, if the permit writer determines that 
the facility is in an area with topographical characteristics that 
indicate the presence of ground water that is likely to have a direct 
hydrologic connection to surface water and if the permit writer 
determines that pollutants may be discharged at a level which may cause 
or contribute to an excursion above any State water quality standard, 
the permit writer would be required to include special conditions to 
address potential discharges via ground water. EPA is proposing that 
the permittee must either comply with those conditions or provide a 
hydrologist's statement that the facility does not have a direct 
hydrologic connection to surface water. 40 CFR 122.23(j)(6) and (k)(5).
    If a CAFO is not subject to the Part 412 Subparts C or D effluent 
guideline (e.g., because it has been designated as a CAFO and is below 
the threshold for applicability of those subparts; or is a CAFO in a 
sector other than beef, dairy, swine, poultry or veal and thus is 
subject to subparts A or B), then the permit writer would be required 
to decide on a case-by-case basis whether effluent limitations 
(technology-based and water quality-based, as necessary) should be 
established to address potential discharges to surface water via 
hydrologically connected ground water. Again, the permittee could avoid 
or satisfy such requirements by providing a hydrologist's statement 
that there is no direct hydrologic connection 40 CFR 122.23(k)(5).
    Legal Basis. The Clean Water Act does not directly answer the 
question of whether a discharge to surface waters via hydrologically 
connected ground water is unlawful. However, given the broad 
construction of the terms of the CWA by the federal courts and the 
goals and purposes of the Act, the Agency believes that while Congress 
has not spoken directly to the issue, the Act is best interpreted to 
cover such discharges. The statutory terms certainly do not prohibit 
the Agency's determination that a discharge to surface waters via 
hydrologically-connected ground waters can be governed by the Act, 
while the terms do clearly indicate Congress' broad concern for the 
integrity of the Nation's waters. Section 301(a) of the CWA provides 
that ``the discharge of any pollutant [from a point source] by any 
person shall be unlawful'' without an NPDES permit. The term 
``discharge of a pollutant'' is defined as ``any addition of a 
pollutant to navigable waters from any point source.'' 33 U.S.C. 
Sec. 1362(12). In turn, ``navigable waters'' are defined as ``the 
waters of the United States, including the territorial seas.'' 33 
U.S.C. Sec. 1362(7). None of these terms specifically includes or 
excludes regulation of a discharge to surface waters via hydrologically 
connected ground waters. Thus, EPA interprets the relevant terms and 
definitions in the Clean Water Act to subject the addition of manure to 
nearby surface waters from a CAFO via hydrologically connected ground 
waters to regulation.
    Some sections of the CWA do directly apply to ground water. Section 
102 of the CWA, for example, requires the Administrator to ``develop 
comprehensive programs for preventing, reducing, or eliminating the 
pollution of the navigable waters and ground waters and improving the 
sanitary conditions of surface and underground waters.'' 33 U.S.C. 
Sec. 1252. Such references, however, are not significant to the 
analysis of whether Congress has spoken directly on the issue of 
regulating discharges via ground water which directly affect surface 
waters. Specific references to ground water in other sections of the 
Act may shed light on the question of whether Congress intended the 
NPDES program to regulate ground water quality. That question, however, 
is not the same question as whether Congress intended to protect 
surface water from discharges which occur via ground water. Thus, the 
language of the CWA is ambiguous with respect to the specific question, 
but does not bar such regulation. Moreover, the Supreme Court has 
recognized Congress' intent to protect aquatic ecosystems through the 
broad federal authority to control pollution embodied in the Federal 
Water Pollution Control Act Amendments of 1972. Section 101 of the Act 
clearly states the purpose of the Act ``to restore and maintain the 
chemical, physical, and biological integrity of the Nations' waters.'' 
33 U.S.C. Sec. 1251(a)(1). The Supreme Court found that ``[t]his 
objective incorporated a broad, systemic view of the goal of 
maintaining and improving water quality: as the House Report on the 
legislation put it, ``the word ``integrity'' * * * refers to a 
condition in which the natural structure and function of aquatic 
ecosystems [are] maintained.'' United States v. Riverside Bayview 
Homes, 474 U.S. 121, 132 (1985). An interpretation of the CWA which 
excludes regulation

[[Page 3016]]

of point source discharges to the waters of the U.S. which occur via 
ground water would, therefore, be inconsistent with the overall 
Congressional goals expressed in the statute.
    Federal courts have construed the terms of the CWA broadly (Sierra 
Club v. Colorado Refining Co., 838 F. Supp. 1428, 1431 (D.Colo. 1993) 
(citing Quivera Mining Co. v. EPA, 765 F.2d 126, 129 (10th Cir. 1985)), 
but have found the language ambiguous with regard to ground water and 
generally examine the legislative history of the Act. See e.g., Exxon 
v. Train, 554 F.2d 1310, 1326-1329 (reviewing legislative history). 
However, a review of the legislative history also is inconclusive. 
Thus, courts addressing the issue have reached conflicting conclusions.
    Since the language of the CWA itself does not directly address the 
issue of discharges to ground water which affect surface water, it is 
proper to examine the statute's legislative history. Faced with the 
problem of defining the bounds of its regulatory authority, ``an agency 
may appropriately look to the legislative history and underlying 
policies of its statutory grants of authority.'' Riverside Bayview 
Homes, 474 U.S. at 132. However, the legislative history also does not 
address this specific issue. See Colorado Refining Co., 838 F. Supp. at 
1434 n.4 (noting legislative history inconclusive).
    In the House, Representative Les Aspin proposed an amendment with 
explicit ground water protections by adding to the definition of 
``discharge of a pollutant'' the phrase ``any pollutant to ground 
waters from any point source.'' Legislative History of the Water 
Pollution Control Act Amendments of 1972, 93d Cong., 1st. Sess. at 589 
(1972) (hereinafter ``Legislative History''). While the Aspin amendment 
was defeated, that rejection does not necessarily signal an explicit 
decision by Congress to exclude even ground water per se from the scope 
of the permit program. Commentators have suggested that provisions in 
the amendment which would have deleted exemptions for oil and gas well 
injections were the more likely cause of the amendment's defeat. Mary 
Christina Wood, Regulating Discharges into Groundwater: The Crucial 
Link in Pollution Control Under the Clean Water Act, 12 Harv. Envtl. L. 
Rev. 569, 614 (1988); see also Legislative History at 590-597 (during 
debate on the amendment, members in support and members in opposition 
focused on the repeal of the exemption for oil and gas injection 
wells).
    At the least, there is no evidence that in rejecting the explicit 
extension of the NPDES program to all ground water Congress intended to 
create a ground water loophole through which the discharges of 
pollutants could flow, unregulated, to surface water. Instead, Congress 
expressed an understanding of the hydrologic cycle and an intent to 
place liability on those responsible for discharges which entered the 
``navigable waters.'' The Senate Report stated that ``[w]ater moves in 
hydrologic cycles and it is essential that discharge of pollutants be 
controlled at the source.'' Legislative History at 1495. The Agency has 
determined that discharges via hydrologically connected ground water 
impact surface waters and, therefore, should be controlled at the 
source.
    Most of the courts which have addressed the question of whether the 
CWA subjects discharges to surface waters via hydrologically connected 
ground waters to regulation have found the statute ambiguous on this 
specific question. They have then looked to the legislative history for 
guidance. McClellan Ecological Seepage Situation v. Weinberger, 707 F. 
Supp. 1182, 1194 (E.D. Cal. 1988), vacated (on other grounds), 47 F.3d 
325 (9th Cir. 1995), cert. denied, 116 S.Ct. 51 (1995); Kelley v. 
United States, 618 F.Supp. 1103, 1105-06 (D.C.Mich. 1985). Even those 
courts which have not found jurisdiction have acknowledged that it is a 
close question. Village of Oconomowoc Lake v. Dayton Hudson Corp., 24 
F.3d 962, 966 (7th Cir. 1994), cert. denied, 513 U.S. 930 (1994). As 
one court noted, ``the inclusion of groundwater with a hydrological 
connection to surface waters has troubled courts and generated a 
torrent of conflicting commentary.'' Potter v. ASARCO, Civ. No. 
S:56CV555, slip op. at 19 (D.Neb. Mar. 3, 1998). The fact that courts 
have reached differing conclusions when examining whether the CWA 
regulates such discharges is itself evidence that the statute is 
ambiguous.
    EPA does not argue that the CWA directly regulates ground water 
quality. In the Agency's view, however, the CWA does regulate 
discharges to surface water which occur via ground water because of a 
direct hydrologic connection between the contaminated ground water and 
nearby surface water. EPA repeatedly has taken the position that the 
CWA can regulate discharges to surface water via ground water that is 
hydrologically connected to surface waters.
    For example, in issuing the general NPDES permit for concentrated 
animal feeding operations (``CAFOs'') in Idaho, EPA stated:
    ``EPA agrees that groundwater contamination is a concern around 
CAFO facilities. However, the Clean Water Act does not give EPA the 
authority to regulate groundwater quality through NPDES permits.
    ``The only situation in which groundwater may be affected by the 
NPDES program is when a discharge of pollutants to surface waters can 
be proven to be via groundwater.'' 62 FR 20177, 20178 (April 25, 1997). 
In response to a comment that the CAFO general permit should not cover 
ground water, the Agency stated:
    ``EPA agrees that the Clean Water Act does not give EPA the 
authority to regulate groundwater quality through NPDES permits. 
However, the permit requirements * * * are not intended to regulate 
groundwater. Rather, they are intended to protect surface waters which 
are contaminated via a groundwater (subsurface) connection.'' Id.
    EPA has made consistent statements on at least five other 
occasions. In the Preamble to the final NPDES Permit Application 
Regulations for Storm Water Discharges, the Agency stated: ``this 
rulemaking only addresses discharges to waters of the United States, 
consequently discharges to ground waters are not covered by this 
rulemaking (unless there is a hydrological connection between the 
ground water and a nearby surface water body.'') 55 FR 47990, 47997 
(Nov. 16, 1990)(emphasis added)). See also 60 FR 44489, 44493 (August 
28, 1995) (in promulgating proposed draft CAFO permit, EPA stated: 
``[D]ischarges that enter surface waters indirectly through groundwater 
are prohibited''); EPA, ``Guide Manual On NPDES Regulations For 
Concentrated Animal Feeding Operations'' at 3 (December 1995) (``Many 
discharges of pollutants from a point source to surface water through 
groundwater (that constitutes a direct hydrologic connection) also may 
be a point source discharge to waters of the United States.'').
    In promulgating regulations authorizing the development of water 
quality standards under the CWA by Indian Tribes for their 
Reservations, EPA stated:
    Notwithstanding the strong language in the legislative history of 
the Clean Water Act to the effect that the Act does not grant EPA 
authority to regulate pollution of ground waters, EPA and most courts 
addressing the issue have recognized that * * * the Act requires NPDES 
permits for discharges to groundwater where there is a direct 
hydrological connection between groundwater and surface waters. In

[[Page 3017]]

these situations, the affected ground waters are not considered 
``waters of the United States'' but discharges to them are regulated 
because such discharges are effectively discharges to the directly 
connected surface waters. Amendments to the Water Quality Standards 
Regulations that Pertain to Standards on Indian Reservations, Final 
Rule, 56 FR 64876, 64892 (Dec. 12, 1991)(emphasis added).
    While some courts have not been persuaded that the Agency's 
pronouncements on the regulation of discharges to surface water via 
ground water represent a consistent Agency position, others have found 
EPA's position to be clear. The Hecla Mining court noted that ``The 
court in Oconomowoc Lake dismissed the EPA statements as a collateral 
reference to a problem. It appears to this court, however, that the 
preamble explains EPA's policy to require NPDES permits for discharges 
which may enter surface water via groundwater, as well as those that 
enter directly.'' Washington Wilderness Coalition v. Hecla Mining Co., 
870 F. Supp. 983, 990-91 (E.D. Wash. 1994), dismissed on other grounds, 
(lack of standing) per unpublished decision (E.D. Wash. May 7, 1997) 
(citing Preamble, NPDES Permit Regulations for Storm Water Discharges, 
55 FR 47990, 47997 (Nov. 16, 1990)).
    As a legal and factual matter, EPA has made a determination that, 
in general, collected or channeled pollutants conveyed to surface 
waters via ground water can constitute a discharge subject to the Clean 
Water Act. The determination of whether a particular discharge to 
surface waters via ground water which has a direct hydrologic 
connection is a discharge which is prohibited without an NPDES permit 
is a factual inquiry, like all point source determinations. The time 
and distance by which a point source discharge is connected to surface 
waters via hydrologically connected surface waters will be affected by 
many site specific factors, such as geology, flow, and slope. 
Therefore, EPA is not proposing to establish any specific criteria 
beyond confining the scope of the regulation to discharges to surface 
water via a ``direct'' hydrologic connection. Thus, EPA is proposing to 
make clear that a general hydrologic connection between all waters is 
not sufficient to subject the owner or operator of a point source to 
liability under the Clean Water Act. Instead, consistent with the case 
law, there must be information indicating that there is a ``direct'' 
hydrologic connection to the surface water at issue. Hecla Mining, 870 
F.Supp. at 990 (``Plaintiffs must still demonstrate that pollutants 
from a point source affect surface waters of the United States. It is 
not sufficient to allege groundwater pollution, and then to assert a 
general hydrological connection between all waters. Rather, pollutants 
must be traced from their source to surface waters, in order to come 
within the purview of the CWA.'')
    The reasonableness of the Agency's interpretation is supported by 
the fact that the majority of courts have determined that CWA 
jurisdiction may extend to surface water discharges via hydrologic 
connections.\1\ As the court in Potter v. ASARCO, Inc. declared, ``in 
light of judicial precedent, Congress'' remedial purpose, the absence 
of any specific legislative intent pertaining to hydrologically 
connected ground water and the informal pronouncements of EPA, any 
pollutants that enter navigable waters, whether directly or indirectly 
through a specific hydrological connection, are subject to regulation 
by the CWA.'' Slip op. at 26.
---------------------------------------------------------------------------

    \1\ See e.g., Williams PipeLine Co. v. Bayer Corp., 964 F.Supp. 
1300, 1319-20 (S.D.Iowa 1997) (``Because the CWA's goal is to 
protect the quality of surface waters, the NPDES permit system 
regulates any pollutants that enter such waters either directly or 
through groundwater.''); Washington Wilderness Coalition v. Hecla 
Mining Co., 870 F. Supp. 983, 989-90 (E.D. Wash. 1994), dismissed on 
other grounds, (lack of standing) per unpublished decision (E.D. 
Wash. May 7, 1997) (finding CWA jurisdiction where pollution 
discharged from manmade ponds via seeps into soil and ground water 
and, thereafter, surface waters; and holding that, although CWA does 
not regulate isolated ground water, CWA does regulate pollutants 
entering navigable waters via tributary ground waters); Friends of 
the Coast Fork v. Co. of Lane, OR, Civ. No. 95-6105-TC (D. OR. 
January 31, 1997) (reaching same conclusion as court in Washington 
Wilderness Coalition v. Hecla Mining Co., and finding 
hydrologically-connected ground waters are covered by the CWA); 
McClellan Ecological Seepage Situation, 763 F. Supp. 431, 438 (E.D. 
Cal. 1989), cacated (on other grounds), 47 F.3d 325 (9th Cir. 1995), 
cert. denied, 116 S.Ct. 51 (1995) (allowing plaintiff to attempt to 
prove at trial that pollutants discharged to ground water are 
subsequently discharged to surface water); and McClellan Ecological 
Seepage Situation v. Weinberger, 707 F. Supp. 1182, 1195-96 (E.D. 
Cal. 1988), vacated (on other grounds), 47 F.3d 325 (9th Cir. 1995), 
cert. denied, 116 S.Ct.51 (1995) (although NPDES permit not required 
for discharges to isolated ground water, Congress' intent to protect 
surface water may require NPDES permits for discharges to ground 
water with direct hydrological connection to surface waters); 
Friends of Sante Fe Co. v. LAC Minerals, Inc., 892 F. Supp. 1333, 
1357-58 (D.N.M. 1995) (although CWA does not cover discharges to 
isolated, nontributary groundwater, Quivira and decisions within 
Tenth Circuit demonstrating expansive construction of CWA's 
jurisdictional reach foreclose arguments that CWA does not regulate 
discharges to hydrologically-connected groundwater); Sierra club v. 
Colorado Refining Co., 838 F. Supp. at 1434 (``navigable waters'' 
encompasses tributary groundwater and, therefore, allegations that 
defendant violated CWA by discharging pollutants into soils and 
groundwater, and that pollutants infiltrated creek via groundwater 
and seeps in creek bank, stated cause of action); and Quivira Mining 
Co. v. United States EPA, 765 F.2d 126, 130 (10th Cir. 1985), cert. 
denied, 474 U.S. 1055 (1986) (affirming EPA's determination that CWA 
permit required for discharges of pollutants into surface arroyos 
that, during storms, channeled rainwater both directly to streams 
and into underground aquifers that connected with such streams); 
Martin v. Kansas Board of Regents, 1991 U.S.Dist. LEXIS 2779 (D.Kan. 
1991) (``Groundwater . . . that is naturally connected to surface 
waters constitute `navigable waters' under the Act.''); see also 
Inland Steel Co. v. EPA, 901 F.2d 1419, 1422-23 (7th Cir. 1990) 
(''the legal concept of navigable waters might include ground waters 
connected to surface waters--though whether it does or not is an 
unresolved question. * * * [A] well that ended in such connected 
ground waters might be within the scope of the [CWA]'').
---------------------------------------------------------------------------

    The decisions which did not find authority to regulate such 
discharges under the CWA may, for the most part, be distinguished. In 
Village of Oconomowoc Lake v. Dayton Hudson Corp., the Seventh Circuit 
held that the CWA does not regulate ground water per se. 24 F.3d 962 
(7th Cir. 1994), cert. denied, 513 U.S. 930 (1994). In Oconomowoc, 
however, the plaintiff only alluded to a ``possibility'' of a 
hydrologic connection. 24 F.3d at 965. In Kelley v. United States, the 
district court held that enforcement authority under the CWA did not 
include ground water contamination. 618 F. Supp. 1103 (W.D. Mich. 
1985). The decision is not well-reasoned, as the Kelley court merely 
states--without further elaboration--that the opinion in Exxon v. 
Train, which specifically ``expressed no opinion'' on whether the CWA 
regulated hydrologically connected ground waters, and the legislative 
history ``demonstrate that Congress did not intend the Clean Water Act 
to extend federal regulatory enforcement authority over groundwater 
contamination.'' Kelley, 618 F. Supp. at 1107 (emphasis added). In 
Umatilla, the court concluded that the NPDES program did not apply to 
even hydrologically connected ground water. 962 F.Supp. at 1318. The 
court reviewed the legislative history and existing precedent on the 
issue, but failed to distinguish between the regulation of ground water 
per se and the regulation of discharges into waters of the United 
States which happen to occur via ground water. Moreover, the court 
failed to give deference to the Agency's interpretation of the CWA. Id. 
at 1319 (finding that the Agency interpretations cited by the 
plaintiffs failed to articulate clear regulatory boundaries and were 
not sufficiently ``comprehensive, definitive or formal'' to deserve 
deference, but acknowledging that ``neither the statute nor the 
legislative history absolutely prohibits an interpretation that the 
NPDES requirement applies to discharges of

[[Page 3018]]

pollutants to hydrologically-connected groundwater''). Today's proposal 
should provide the type of formal Agency interpretation that court 
sought. Two other decisions have simply adopted the reasoning of the 
Umatilla court. United States v. ConAgra, Inc., Case No. CV 96-0134-S-
LMB (D. Idaho 1997); Allegheny Environmental Action Coalition v. 
Westinghouse, 1998 U.S. Dist. LEXIS 1838 (W.D.Pa. 1998).
    The Agency has utilized its expertise in environmental science and 
policy to determine the proper scope of the CWA. The determination of 
whether the CWA regulates discharges to ground waters connected to 
surface waters, like the determination of wetlands jurisdiction, 
``ultimately involves an ecological judgment about the relationship 
between surface waters and ground waters, it should be left in the 
first instance to the discretion of the EPA and the Corps.'' Town of 
Norfolk v. U.S. Army Corps of Engineers, 968 F.2d 1438, 1451 (1st Cir. 
1992) (citing United States v. Riverside Bayview Homes, Inc., 474 U.S. 
at 134). The Supreme Court, too, has acknowledged the difficulty of 
determining precisely where Clean Water Act jurisdiction lies and has 
held that an agency's scientific judgment can support a legal 
jurisdictional judgment. United States v. Riverside Bayview Homes, 
Inc., 474 U.S. 121, 134 (1985) (``In view of the breadth of federal 
regulatory authority contemplated by the [Clean Water] Act itself and 
the inherent difficulties of defining precise bounds to regulable 
waters, the Corps' ecological judgment about the relationship between 
waters and their adjacent wetlands provides an adequate basis for a 
legal judgment that adjacent wetlands may be defined as waters under 
the Act.'').
    The Agency has made clear the rationale for its construction: ``the 
Act requires NPDES permits for discharges to groundwater where there is 
a direct hydrological connection between groundwater and surface 
waters. In these situations, the affected ground waters are not 
considered `waters of the United States' but discharges to them are 
regulated because such discharges are effectively discharges to the 
directly connected surface waters.'' Amendments to the Water Quality 
Standards Regulations that Pertain to Standards on Indian Reservations, 
Final Rule, 56 FR 64,876, 64892 (Dec. 12, 1991) (emphasis added). The 
Agency has taken this position because ground water and surface water 
are highly interdependent components of the hydrologic cycle. The 
hydrologic cycle refers to ``the circulation of water among soil, 
ground water, surface water, and the atmosphere.'' U.S. Environmental 
Protection Agency, ``A Review of Methods for Assessing Nonpoint Source 
Contaminated Ground-Water Discharge to Surface Water'' at 3 (April 
1991). Thus, a hydrologic connection has been defined as ``the 
interflow and exchange between surface impoundments and surface water 
through an underground corridor or groundwater.'' NPDES General Permit 
and Reporting Requirements for Discharges from Concentrated Animal 
Feeding Operations, EPA Region 6 Public Notice of Final Permitting 
Decision, 58 FR 7610, 7635-36 (Feb. 8, 1993). The determination of 
whether a discharge to ground water in a specific case constitutes an 
illegal discharge to waters of the U.S. if unpermitted is a fact 
specific one. The general jurisdictional determination by EPA that such 
discharges can be subject to regulation under the CWA is a 
determination that involves an ecological judgment about the 
relationship between surface waters and ground waters.
    Finally, the Supreme Court has explicitly acknowledged that 
resolution of ambiguities in agency-administered statutes involves 
policymaking: ``As Chevron itself illustrates the resolution of 
ambiguity in a statutory text is often more a question of policy than 
of law. * * * When Congress, through express delegation or the 
introduction of an interpretive gap in the statutory structure, has 
delegated policymaking to an administrative agency, the extent of 
judicial review of the agency's policy determinations is limited.'' 
Pauly v. Bethenergy Mines, Inc., 116 S.Ct. 2524, 2534 (1991). Congress 
established a goal for the CWA ``to restore and maintain the chemical, 
physical and biological integrity of the nation's waters and to 
eliminate the discharge of pollutants into the navigable waters.'' 33 
U.S.C. Sec. 1251(a)(1). Congress also established some parameters for 
reaching that goal, but left gaps in the statutory structure. One of 
those gaps is the issue of discharges of pollutants from point sources 
which harm navigable waters but which happen to occur via ground water. 
The Agency has chosen to fill that gap by construing the statute to 
regulate such discharges as point source discharges. Given the Agency's 
knowledge of the hydrologic cycle and aquatic ecosystems, the Agency 
has determined that when it is reasonably likely that such discharges 
will reach surface waters, the goals of the CWA can only be fulfilled 
if those discharges are regulated.
    Determining Direct Hydrologic Connection. In recent rulemakings, 
EPA has used various lithologic settings to describe areas of 
vulnerability to contamination of ground water. This information can 
serve as a guide for permit writers to make the initial determination 
whether or not it is necessary to establish special conditions in a 
CAFO permit to prevent the discharge of CAFO waste to surface water via 
ground water with a direct hydrologic connection to surface water.
    During the rulemaking processes for the development of the Ground 
Water Rule and the Underground Injection Control Class V under the Safe 
Drinking Water Act, significant stakeholder and Federal Advisory 
Committee Act (FACA), input was used to define lithologic settings that 
are likely to indicate ground water areas sensitive to contamination. 
Areas likely to have such a connection are those that have ground water 
sensitive to contamination and that have a likely connection to surface 
water. The Ground Water Proposed Rule includes language that describes 
certain types of lithologic settings (karst, fractured bedrock, and 
gravel) as sensitive to contamination and, therefore, subject to 
requirements under the rule to mitigate threats to human health from 
microbial pathogens. [See National Primary Drinking Water Regulations: 
Ground Water Rule, 65 FR 30193 (2000) (to be codified at 40 CFR Parts 
141 and 142) (proposed May 10, 2000). See also Underground Injection 
Control Regulations for Class V Injection Wells, Revision; Final Rule, 
64 FR 68546 (Dec. 7, 1999) (to be codified at 40 CFR Parts 9, 144, 145, 
and 146). See also Executive Summary, NDWAC UIC/Source Water Program 
Integration Working Group Meeting (March 25-26, 1999). All are 
available in the rulemaking Record.]
    Under the Class V rule, a facility must comply with the mandates of 
the regulation if the facility has a motor vehicle waste disposal well 
(a type of Class V well) that is in an area that has been determined to 
be sensitive. (See Technical Assistance Document (TAD) for Delineating 
``Other Sensitive Ground Water Areas'', EPA #816-R-00-016--to be 
published.) States that are responsible for implementing the Class V 
Rule, or in the case of Direct Implementation Programs, the EPA 
Regional Office, are given flexibility to make determinations of ground 
water sensitivity within certain guidelines.
    40 CFR 145.23(f)(12) provides items that States are expected to 
consider in developing their other sensitive ground water area plan, 
including:
     Geologic and hydrogeologic settings,
     Ground water flow and occurrence,

[[Page 3019]]

     Topographic and geographic features,
     Depth to ground water,
     *Significance as a drinking water source,
     *Prevailing land use practices, and
     *Any other existing information relating to the 
susceptibility of ground water to contamination from Class V injection 
wells.

    *The last three factors are not relevant to this rulemaking but 
are specific to mandates under the Safe Drinking Water Act to 
protect current and future sources of drinking water.

    Geologic and hydrogeologic settings considered sensitive under the 
Class V Rule include areas such as karst, fractured bedrock or other 
shallow/unconsolidated aquifers. The Class V Rule lists karst, 
fractured volcanics and unconsolidated sedimentary aquifers, such as 
glacial outwash deposits and eolian sands, as examples of aquifer 
types. Under the Class V Rule, EPA urges States to consider all aquifer 
types that, based on their inherent characteristics, are likely to be 
moderately to highly sensitive. Such aquifer types are those that 
potentially have high permeability, such as: all fractured aquifers; 
all porous media aquifers with a grain size of sand or larger, 
including not only unconsolidated aquifers, but sandstone as well; and 
karst aquifers.
    For more information at the regional level, information can be 
found in the document ``Regional Assessment of Aquifer Vulnerability 
and Sensitivity in the Coterminous United States'' [EPA/600/2-91/043] 
for state maps showing aquifers and portions of aquifers whose 
transmissivity makes them sensitive/vulnerable. This document may be 
helpful in identifying areas where existing contaminants are most 
likely to spread laterally. State and federal geological surveys have 
numerous geological maps and technical reports that can be helpful in 
the identification of areas of sensitive aquifers. University geology 
and earth science departments and consulting company reports may also 
have helpful information.
    Data sources to assist permit writers in making sensitivity 
determinations can be acquired through many sources as listed above and 
include federal, state, and local data. For example, USGS maps and 
databases such as the principal aquifers map, state maps, other 
programs where such assessments may have been completed, such as State 
Source Water Assessment Programs (SWAP), state Class V, or Ground Water 
Rule sensitivity determinations.
    Another potential approach to defining areas of ground water 
sensitivity would be to define a set of characteristics which a 
facility could determine whether it met by using a set of national, 
regional and/or local maps. For instance, overburden, that is, soil 
depth and type, along with depth to water table, hydrogeologic 
characteristics of the surficial aquifer, and proximity to surface 
water could be factors used to define sensitive areas for likely ground 
water/surface water connections. For example, while there is no 
consistent definition or agreement as to what could be considered 
``shallow,'' a depth to the water table less than, say, six feet with 
sandy soils or other permeable soil type might indicate ground water 
vulnerability. Data of this nature could be obtained from USDA's 
Natural Resource Conservation Service (NRCS) national soils maps, 
available from the NRCS web site (www.nhq.nrcs.usda.gov/land/index/soils.html) or from the EPA web site (www.epa.gov/ostwater/BASINS/metadata/statsgo.htm).
    Once it is determined that the CAFO is in a ground water sensitive 
area, proximity to a surface water would indicate a potential for the 
CAFO to discharge to surface water via a direct hydrological connection 
with ground water. Proximity to surface water would be considered when 
there is a short distance from the boundary of the CAFO to the closest 
downstream surface water body. Again, information of this type could be 
obtained from USGS topographic maps or state maps.
    USGS Hydrologic Landscape Regions. Another approach for determining 
whether CAFOs in a region are generally located in areas where surface 
water is likely to have hydrological connections with ground water is 
by using a set of maps under development by the U.S. Geological Survey 
(USGS). USGS is developing a national map of Hydrologic Landscape 
Regions that describe watersheds based on their physical 
characteristics, such as topography and lithology. These maps will, 
among other things, help to identify physical features in the landscape 
that are important to water quality such as areas across the country 
where the geohydrology is favorable for ground water interactions with 
surface water.
    The regions in this map will be delineated based on hydrologic unit 
codes (HUCs) nationwide and do not provide information at local scales; 
however, the maps can provide supplemental information that describes 
physical features within watersheds where interactions between ground 
water and surface water are found. These areas are the most likely 
places where ground water underlying CAFO's could be discharged to 
nearby surface water bodies. While EPA has not fully assessed how this 
tool might be used to determine a CAFO's potential to discharge an 
excerpt of the pre-print report is provided here for purposes of 
discussion. The report describing this tool is anticipated to be 
published in Spring 2001 (Wolock, Winter, and McMahon, in review).
    The concept of hydrologic landscapes is based on the idea that a 
single, simple physical feature is the basic building block of all 
landscapes. This feature is termed a fundamental landscape unit and is 
defined as an upland adjacent to a lowland separated by an intervening 
steeper slope. Some examples of hydrologic landscapes are as follows:
     A landscape consisting of narrow lowlands and uplands 
separated by high and steep valley sides, characteristic of mountainous 
terrain;
     A landscape consisting of very wide lowlands separated 
from much narrower uplands by steep valley sides, characteristic of 
basin and range physiography and basins of interior drainage; or
     A landscape consisting of narrow lowlands separated from 
very broad uplands by valley sides of various slopes and heights, 
characteristic of plateaus and high plains.
    The hydrologic system of a fundamental landscape unit consists of 
the movement of surface water, ground water, and atmospheric-water 
exchange. Surface water movement is controlled by land-surface slope 
and surficial permeability; ground-water flow is a function of 
gravitational gradients and the hydraulic characteristics of the 
geologic framework; and atmospheric-water exchange primarily is 
determined by climate (Winter, in review). The same physical and 
climate characteristics control the movement of water over the surface 
and through the subsurface regardless of the geographic location of the 
landscapes. For example, if a landscape has gentle slopes and low-
permeability soils, then surface runoff will be slow and recharge to 
ground water will be limited. In contrast, if the soils are permeable 
in a region of gentle slopes, then surface runoff may be limited but 
ground-water recharge will be high.
    The critical features used to describe hydrologic landscapes are 
land-surface form, geologic texture, and climate. Land-surface form can 
be used to quantify land-surface slopes and relief. Geologic texture 
provides estimates of surficial and deep subsurface permeability which 
control infiltration, the production of overland flow, and

[[Page 3020]]

ground-water flow rates. Climate characteristics can be used to 
approximate available water to surface and ground-water systems. The 
variables used to identify hydrologic settings were averaged within 
each of the 2,244 hydrologic cataloging units defined by the USGS. This 
degree of spatial averaging was coarse enough to smooth the underlying 
data but fine enough to separate regions from each other.
    For example, two Hydrological Landscape Regions (HLR) that are 
likely to have characteristics of ground water and surface water 
interactions with direct relevance to this proposed rulemaking would be 
``HLR1'' and ``HLR9''. HLR1 areas are characterized by variably wet 
plains having highly permeable surface and highly permeable subsurface. 
This landscape is 92 percent flat land, with 56 percent of the flat 
land in the lowlands and 37 percent in the uplands. Land surface and 
bedrock are highly permeable. Because of the flat sandy land surface, 
this geologic framework should result in little surface runoff, and 
recharge to both local and regional ground-water flow systems should be 
high. Therefore, ground water is likely to be the dominant component of 
the hydrologic system in this landscape. The water table is likely to 
be shallow in the lowlands, resulting in extensive wetlands in this 
part of the landscape.
    Major water issues in this hydrologic setting probably would be 
related to contamination of ground water. In the uplands, the 
contamination could affect regional ground-water flow systems. In the 
lowlands, the thin unsaturated zone and the close interaction of ground 
water and surface water could result in contamination of surface water. 
Flooding probably would not be a problem in the uplands, but it could 
be a serious problem in the lowlands because of the flat landscape and 
shallow water table.
    HLR9 areas are characterized by wet plateaus having poorly 
permeable surface and highly permeable subsurface. This landscape is 42 
percent flat land, with 24 percent in lowlands and 17 percent in 
uplands. Land surface is poorly permeable and bedrock is highly 
permeable. Because of the flat poorly permeable land surface, this 
geologic framework should result in considerable surface runoff and 
limited recharge to ground water. However, the bedrock is largely 
karstic carbonate rock, which probably would result in a considerable 
amount of surface runoff entering the deep aquifer through sinkholes. 
This water could readily move through regional ground-water flow 
systems. Surface runoff and recharge through sinkholes are likely to be 
the dominant component of the hydrologic system in this landscape. The 
water table is likely to be shallow in the lowlands, resulting in 
extensive wetlands in this part of the landscape. Major water issues in 
this hydrologic setting probably would be related to contamination of 
surface water from direct surface runoff, and extensive contamination 
of ground water (and ultimately surface water) because of the ease of 
movement through the bedrock. The capacity of these carbonate rocks to 
mediate contaminants is limited. Flooding could be a problem in the 
lowlands.
    EPA is requesting comment on how a permit writer might identify 
CAFOs at risk of discharging to surface water via ground water. EPA is 
also requesting comment on its cost estimates for the permittee to have 
a hydrologist make such a determination. EPA estimates that for a 
typical CAFO, the full cost of determining whether ground water beneath 
the facility has a direct hydrologic connection to surface water would 
be approximately $3,000. See Section X for more information on cost 
estimates.
    Permit requirements for facilities with groundwater that has a 
direct hydrologic connection with surface water are discussed in 
Section VII.E.5.d below.
    k. What Regulatory Relief is Provided by Today's Proposed 
Rulemaking? Two-tier vs. Three-tier Structure. Each of EPA's proposals 
effect small livestock and poultry businesses in different ways, posing 
important trade-offs when selecting ways to mitigate economic impacts. 
First, by proposing to establish a two-tier structure with a 500 AU 
threshold, EPA is proposing not to automatically impose the effluent 
guidelines requirements on operations with 300 to 500 AU. By 
eliminating this size category, EPA estimates that about 10,000 smaller 
AFOs are relieved from being defined as CAFOs, and instead would only 
be subject to permitting if designated by the permit authority due to 
being a significant contributor of pollutants.
    A three-tier structure, by contrast, only automatically defines all 
operations over 1,000 AU as CAFOs, instead of 500 AU. However, while 
all of the 26,000 AFOs between 300 and 1,000 AU wouldn't be required to 
apply for an NPDES permit, all those operations would be required to 
either apply for a permit or to certify to the permit authority that 
they do not meet any of the conditions for being a CAFO. EPA estimates 
that approximately 19,000 of these operations would have to change some 
aspect of their operation in order to avoid being permitted, and all 
26,000 would be required to develop and implement a PNP. Thus, while in 
theory fewer operations could be permitted, in fact more small 
enterprises would incur costs under a three-tier scenario. Section 
X.J.4 provides a summary of the difference in costs associated with 
these two options; more detailed information is provided in Section 9 
of the Economic Analysis.
    The three-tier structure allows States more flexibility to develop 
more effective non-NPDES programs to assist middle tier operations. The 
two-tier structure with a 500 AU threshold might limit access to 
federal funds, such as Section 319 nonpoint source program funds, for 
operations in the 500 to 1,000 AU range. The detailed conditions in the 
three-tier structure, however, do not meet the goal of today's proposal 
to simplify the NPDES regulation for CAFOs because it leaves in place 
the need for the regulated community and enforcement authorities to 
interpret a complicated set of conditions.
    Chicken Threshold. During deliberations to select a threshold for 
dry chicken operations, EPA considered various options for relieving 
small business impacts. Under the two-tier structure, EPA examined a 
100,000 bird threshold as well as a 50,000 bird threshold. Although the 
50,000 bird threshold effects many more small chicken operations, 
analysis showed that setting the threshold at 100,000 birds would not 
be sufficiently environmentally protective in parts of the country that 
have experienced water quality degradation from the chicken industry. 
Section VII.C.2.f describes the relative benefits of each of these 
options. Nonetheless, because wet layer operations are currently 
regulated at 30,000 birds, raising the threshold to 50,000 birds will 
relieve some small businesses in this sector.
    Elimination of the mixed animal calculation. EPA's is further 
proposing to mitigate the effects of today's proposal on small 
businesses by eliminating the mixed animal calculation for determining 
which AFOs are CAFOs. Thus, operations with mixed animal types that do 
not meet the size threshold for any single livestock category would not 
be defined as a CAFO. EPA expects that there are few AFOs with more 
than a single animal type that would be defined as CAFOs, since most 
mixed operations tend to be smaller in size. The Agency determined that 
the inclusion of mixed operations would disproportionately burden small 
businesses while resulting in little additional environmental benefit. 
Since

[[Page 3021]]

most mixed operations tend to be smaller in size, this exclusion 
represents important accommodations for small business. EPA's decision 
not to include smaller mixed operations is consistent with its 
objective to focus on the largest operations since these pose the 
greatest potential risk to water quality and public health given the 
sheer volume of manure generated at these operations.
    Operations that handle larger herds or flocks take on the 
characteristics of being more industrial in nature, rather than having 
the characteristics typically associated with farming. These facilities 
typically specialize in a particular animal sector rather than having 
mixed animal types, and often do not have an adequate land base for 
agricultural use of manure. As a result, large facilities need to 
dispose of significant volumes of manure and wastewater which have the 
potential, if not properly handled, to cause significant water quality 
impacts. By comparison, smaller farms manage fewer animals and tend to 
concentrate less manure nutrients at a single farming location. Smaller 
farms tend to be less specialized and are more diversified, engaging in 
both animal and crop production. These farms often have sufficient 
cropland and fertilizer needs to land apply manure nutrients generated 
at a farm's livestock or poultry business for agricultural purposes.
    For operations not defined as a CAFO, the Permit Authority would 
designate any facility determined to be a significant contributor of 
pollution to waters of the U.S. as a CAFO, and would consequently 
develop a permit based on best professional judgement (BPJ).
    The estimated cost savings from eliminating the mixed animal 
calculation is indeterminate due to limited information about 
operations of this size and also varying cost requirements. EPA's 
decision is also expected to simplify compliance and be more 
administratively efficient, since the mixed operation multiplier was 
confusing to the regulated community and to enforcement personnel, and 
did not cover all animal types (because poultry did not have an AU 
equivalent).
    Site-specific PNPs Rather than Mandated BMPs. In addition, while 
facilities that are defined or designated as CAFOs would be subject to 
specific performance standards contained with the permit conditions, 
EPA's proposed revisions also provide flexibility to small businesses. 
In particular, the revised effluent guidelines and NPDES standards and 
conditions are not specific requirements for design, equipment, or work 
practices, but rather allow the CAFO operator to write site-specific 
Permit Nutrient Plans that implement the permit requirements in a 
manner appropriate and manageable for that business. This will reduce 
impacts to all facilities, regardless of size, by allowing operators to 
choose the least costly mix of process changes and new control 
equipment that would meet the limitations.
    Demonstration of No Potential to Discharge. Finally, in both 
proposals, operations that must apply for a permit would have the 
additional opportunity to demonstrate to the permit authority that 
pollutants have not been discharged and have no potential to discharge 
into waters of the U.S. These operations would not be issued a permit 
if they can successfully demonstrate no potential to discharge. See 
section VII.D.3 for a discussion of demonstrating ``no potential to 
discharge.''
    Measures Not Being Proposed. During the development of the CAFO 
rulemaking, EPA considered regulatory relief measures under the NPDES 
permit program that are not being proposed, including: (1) A ``Good 
Faith Incentive,'' and (2) an ``Early Exit'' provision. These options 
are summarized below. More detail is provided in the SBREFA Panel 
Report (2000).
    Under the ``Good Faith Incentive,'' EPA considered incorporating an 
incentive for small CAFO businesses (i.e., AFOs with a number of 
animals below the regulatory threshold) to take early voluntary actions 
in good faith to manage manure and wastewater in accordance with the 
requirements of a nutrient management plan. In the event that such 
smaller AFOs have a discharge that would otherwise cause them to be 
designated as CAFOs, the CAFO regulations would provide an opportunity 
for these smaller AFOs to address the cause of the one-time discharge 
and avoid being designated as CAFOs.
    Under the ``Early Exit'' provision, EPA considered a regulatory 
provision that would explicitly allow CAFOs with fewer animals than the 
regulatory threshold for large CAFOs to exit the regulatory program 
after five years of good performance. The regulations could allow such 
a smaller CAFO to exit the regulatory program if it demonstrates that 
it had successfully addressed the conditions that caused it to either 
be defined or designated as a CAFO.
    EPA decided not to include either of these provisions in the 
proposed regulations following the SBAR Panel consultation process. 
Neither small businesses, SBA, OMB, nor EPA enforcement personnel 
expressed support for either of these provisions. Also, the Early Exit 
provision was not deemed to provide additional regulatory relief over 
the current program, since an operation that has been defined or 
designated as a CAFO can already make changes at the operation whereby, 
after complying with the permit for the permit's five year term, the 
operation would no longer meet the definition of a CAFO and therefore 
would no longer be required to be permitted.
    Both the regulatory relief measures selected and those considered 
but not selected are discussed in detail in Chapter 9 of the Economic 
Analysis, included in the Record for today's proposed rulemaking. EPA 
requests comment on the regulatory relief measures considered but not 
included in today's proposal.
3. How Does the Proposed Rule Change the Existing Designation Criteria 
and Procedure?
    In the existing regulation, an operation in the middle tier, those 
with 300 AU to 1,000 AU, may either be defined as a CAFO or designated 
by the permit authority; those in the smallest category, with fewer 
than 300 AU, may only be designated a CAFO if the facility discharges: 
(1) into waters of the United States through a man-made ditch, flushing 
system, or other similar man-made device; or (2) directly into waters 
of the United States that originate outside of the facility and pass 
over, across, or through the facility or otherwise come into direct 
contact with the confined animals. The permit authority must conduct an 
on-site inspection to determine whether the AFO is a significant 
contributor of pollutants. The two discharge criteria have proved 
difficult to interpret and enforce, making it difficult to take 
enforcement action against dischargers. Very few facilities have been 
designated in the past 25 years despite environmental concerns.
    EPA's proposals on how, and whether, to amend these criteria vary 
with the alternative structure. Under a two-tier structure, EPA is 
proposing to eliminate these two criteria; under a three-tier 
structure, EPA is proposing to retain these two criteria.
    Under the proposed two-tier structure with a 500 AU threshold, or 
under any other alternative two-tier structure such as with a 750 AU 
threshold, EPA is proposing to eliminate the two discharge criteria. 
Raising the NPDES threshold to 500 AU, 750 AU or 1,000 AU raises a 
policy question for facilities below the selected threshold but with 
more than 300 AU. Facilities with 300 to 1,000 AU are currently subject 
to

[[Page 3022]]

NPDES regulation (if certain criteria are met). To rely entirely on 
designation for these operations could be viewed by some as 
deregulatory, because the designation process is a time consuming and 
resource intensive process that makes it difficult to redress 
violations. It could also result in the inability of permit authorities 
to take enforcement actions against initial discharges unless they are 
from an independent point source at the facility. Otherwise, the 
initial discharge can only result in initiation of the designation 
process itself; enforcement could only take place upon a subsequent 
discharge. Unless the designation process can be streamlined in some 
way to enable permit authorities to more efficiently address those who 
are significant contributors of pollutants, raising the threshold too 
high may also not be sufficiently protective of the environment. While 
EPA could have proposed to retain the two criteria for those with fewer 
than 300 AU, and eliminate it only for those with greater than 300 AU 
but below the regulatory threshold, EPA believes that this would 
introduce unnecessary complexity into this regulation.
    While eliminating the two discharge criteria, this proposal would 
retain the provision in the existing regulation that any AFO may be 
designated as a CAFO on a case-by-case basis if the NPDES permit 
authority determines that the facility is a significant contributor of 
pollutants to waters of the U.S. Today's proposal would not change the 
factors that the regulation lists as relevant to whether a facility is 
a significant contributor--see proposed Sec. 122.23(b)(1) (listing 
factors such as: the size of the operation; the amount of wastewater 
discharged; the location of any potential receiving waters; means of 
conveyance of animal manure and process wastewater into waters of the 
U.S.; slope, vegetation, rainfall and other factors affecting the 
likelihood or frequency of discharge to receiving waters).
    This proposal also retains the existing requirement that the permit 
authority conduct an on-site inspection before making a designation. No 
inspection would be required, however, to designate a facility that was 
previously defined or designated as a CAFO, although the permit 
authority may chose to do one.
    Under a three-tier structure, EPA is proposing to retain the two 
discharge criteria used to designate an AFO with fewer than 300 AU as a 
CAFO. In this approach, facilities in the 300 AU to 1,000 AU size range 
must meet certain conditions for being considered a CAFO, and EPA 
considers this to be sufficiently protective of the environment.
    EPA is requesting comment on these two proposals, and also requests 
comment on three other alternatives. EPA could: (1) retain the two 
criteria even under a two-tier structure for all operations below the 
regulatory threshold; (2) retain the two criteria under a two-tier 
structure for only for those with fewer than 300 AU and eliminate the 
two criteria for those below the regulatory threshold but with greater 
than 300 AU; or (3) eliminate the criteria in the three-tier structure 
for those with fewer than 300 AU.
    Significant concern was raised over the issue of designation during 
the SBREFA Panel process. At the time of the Panel, EPA was not 
considering eliminating these two criteria, and SERs and Panel members 
strongly endorsed this position. At that time, EPA's was focusing on a 
three-tier structure with revised conditions as the preferred option, 
and retaining the criteria was consistent with the revisions being 
considered. Since then, however, EPA's analysis has resulted in a 
strong option for a two-tier approach that would be simpler to 
implement and would focus on the largest operations. Once this scenario 
became a strong candidate, reconsideration of the two designation 
criteria was introduced. EPA realizes that this proposal has raised 
some concern in the small business community. However, EPA does not 
believe that eliminating these criteria will result in significantly 
more small operations being designated. Rather, it will enable the 
permit authority to ensure that the most egregious discharges of 
significant quantities of pollutants are addressed.
    It is likely that few AFOs with less than 300 AU are significant 
contributors of pollutants, and permit authorities may be appropriately 
focusing scarce resources on larger facilities. Further, some also 
believe that it may be appropriate under a two-tier structure to retain 
the two criteria as well as the on-site inspection criterion to AFOs 
under the regulatory threshold, e.g. with fewer than 500 AU or 750 AU. 
SERs during the SBREFA process indicated that family farmers operating 
AFOs with fewer than 1,000 AU tend to have a direct interest in 
environmental stewardship, since their livelihood (e.g., soil quality 
and drinking water) often depends on it. They also argued that EPA 
should not divert resources away from AFOs with the greatest potential 
to discharge--those with 1,000 AU or more. EPA is soliciting comment on 
whether to retain the designation criteria for all AFOs below the 
regulatory threshold in a two-tier structure, and whether this option 
will be protective of the environment.
    While permit authorities have indicated that the requirement for an 
on-site inspection makes the designation process resource intensive, 
recommendations resulting from the SBREFA small business consultation 
process encouraged EPA not to remove the on-site inspection 
requirement. Some were concerned that EPA might do widespread blanket 
designations of large numbers of operations, especially in watersheds 
that have been listed under the CWA 303(d), Total Maximum Daily Load 
(TMDL) process. Thus, EPA is soliciting comment on whether to eliminate 
the requirement that the inspection be ``on-site,'' perhaps by 
allowing, in lieu of on-site inspections, other forms of site-specific 
information gathering, such as use of monitoring data, fly-overs, 
satellite imagery, etc. Other parts of the NPDES program allow such 
information gathering and do not require inspections to be ``on-site.''
    If the on-site requirement were eliminated, the permit authority 
would still need to make a determination that the facility is a 
significant contributor of pollution, which might necessitate an on-
site inspection in many cases. On the other hand, in watersheds that 
are not meeting water quality standards for nutrients, the permit 
authority could designate all AFOs as CAFOs without conducting 
individual on-site inspections. Even in 303(d) listed watersheds, 
however, an operator of an individual facility might be able to 
demonstrate in the NPDES permit application that it has no potential to 
discharge, and request that it be exempted from NPDES requirements.
    Due to the significant concerns of the small business community, 
EPA is not proposing at this time to eliminate the on-site inspection 
requirements, but, rather, EPA is soliciting comment on whether or not 
to eliminate this provision or to revise it to allow other forms of 
site-specific data gathering.
    Finally, EPA is proposing a technical correction to the designation 
regulatory language. The existing CAFO NPDES regulations provide for 
designation of an AFO as a CAFO upon determining that it is a 
significant contributor of ``pollution'' to the waters of the U.S. 40 
CFR 122.23(c). EPA is today proposing to change the term to 
``pollutants.'' Elsewhere in the NPDES regulations, EPA uses the phrase 
``significant contributor of pollutants'' for designation purposes. 40 
CFR 122.26(a)(1)(v). EPA is not aware of any reason the Agency would 
have used different terms for similar designation

[[Page 3023]]

standards, and is seeking consistency in this proposal. The Agency 
believes the term ``pollutant'' is the correct term. The Clean Water 
Act provides definitions for both ``pollutant and ``pollution'' in 
Section 502, but the NPDES program of Section 402 focuses specifically 
on permits ``for the discharge of any pollutant, or combination of 
pollutants.'' Therefore, EPA believes it is appropriate to establish a 
designation standard for purposes of permitting CAFOs based on whether 
a facility is a significant contributor of ``pollutants.''
4. Designation of CAFOs by EPA in Approved States
    Today's proposal would explicitly allow the EPA Regional 
Administrator to designate an AFO as a CAFO if it meets the designation 
criteria in the regulations, even in States with approved NPDES 
programs. See proposed Sec. 122.23(b). As described in the preceding 
section, VII.C.4, AFOs that have not been defined as CAFOs may be 
designated as CAFOs on a case-by-case basis upon determination that 
such sources are significant contributors of pollution to waters of the 
United States. EPA's authority to designate AFOs as CAFOs would be 
subject to the same criteria and limitations to which State designation 
authority is subject.
    The existing regulatory language is not explicit as to whether EPA 
has the authority to designate AFOs as CAFOs in States with approved 
NPDES programs. The current regulations state that ``the Director'' may 
designate AFOs as CAFOs. 40 CFR 122.23(c)(1). The existing definition 
of ``Director'' states: ``When there is an approved State program, 
`Director' normally means the State Director. In some circumstances, 
however, EPA retains the authority to take certain actions even where 
there is an approved State program.'' 40 CFR 122.2. Today's proposal 
would give EPA the explicit authority to designate an AFO as a CAFO in 
States with approved programs.
    EPA does not propose to assume authority or jurisdiction to issue 
permits to the CAFOs that the Agency designates in approved NPDES 
States. That authority would remain with the approved State.
    EPA believes that CWA Section 501(a) provides the Agency with the 
authority to designate point sources subject to regulation under the 
NPDES program, even in States approved to administer the NPDES permit 
program. This interpretive authority to define point sources and 
nonpoint sources was recognized by the D.C. Circuit in NRDC v. Costle, 
568 F.2d 1369, 1377 (D.C. Cir. 1977). The interpretive authority arises 
from CWA Section 501(a) when EPA interprets the term ``point source'' 
at CWA Section 502(14). EPA's proposal would ensure that EPA has the 
same authority to designate AFOs as CAFOs that need a permit as the 
Agency has to designate other storm water point sources as needing a 
permit. See 40 CFR 122.26(a)(2)(v).
    EPA recognizes that many State agencies have limited resources to 
implement their NPDES programs. States may be hesitant to designate 
CAFOs because of concerns that regulating the CAFOs will require 
additional resources that could be used for competing priorities. In 
light of the increased reliance and success in control of point sources 
under general permits, however, the Agency believes that there will be 
only an incremental increase in regulatory burden due to the designated 
sources.
    On August 23, 1999, the Agency proposed to provide explicit 
authority for EPA to designate CAFOs in approved States, but would have 
limited such authority to the designation of AFOs where pollutants are 
discharged into waters for which EPA establishes a total maximum daily 
load or ``TMDL'' and designation is necessary to ensure that the TMDL 
is achieved. 64 FR 46058, 46088 (August 23, 1999). EPA received 
comments both supporting and opposing the proposal. In promulgating the 
final TMDL rule, however, the Agency did not take final action on the 
proposed changes applicable to CAFOs, 65 FR 43586, 43648 (July 13, 
2000), deciding instead to take action in this proposed rulemaking.
    Today's proposal is intended to help ensure nationally consistent 
application of the provisions for designating CAFOs and is not focusing 
specifically at AFOs in impaired watersheds. Implementation of the 
current rule in States with NPDES authorized programs has varied 
greatly from State to State, with several States choosing to implement 
non-NPDES State programs rather than a federally enforceable NPDES 
program. Public concerns have also been raised about lack of access to 
State non-NPDES CAFO programs. While several of today's proposed 
revisions would help to correct these disparities, EPA is concerned 
that there may be instances of significant discharges from AFOs that 
may not be addressed by State programs, and that are not being required 
to comply with the same standards and requirements expected of all 
AFOs. As part of their approved programs, States should designate AFOs 
that are significant sources of pollutants. EPA would have the 
authority to designate AFOs as CAFOs, should that be necessary.
    The Agency invites comment on this proposal.
5. Co-permitting Entities That Exert Substantial Operational Control 
Over a CAFO
    EPA is proposing that permit authorities co-permit entities that 
exercise substantial operational control over CAFOs along with the 
owner/operator of the facility. See proposed Sec. 122.23(a)(5) and 
(i)(4). While the permit authority currently may deem such entities to 
be ``operators'' under the Clean Water Act and require them to be 
permitted under existing legal requirements, today's proposal includes 
changes to the regulations to identify the circumstances under which 
co-permitting is required and how permit authorities are expected to 
implement the requirements. Because the existing definition of 
``operator'' in 122.2 generally already encompasses operators who 
exercise substantial operational control, the Agency is seeking comment 
on whether this additional definition [or provision] is necessary.
    For other categories of discharges, EPA's regulations states that 
contributors to a discharge ``may'' be co-permittees. See 40 CFR 
Sec. 122.44(m). Sec. 122.44(m) addresses the situation in which the co-
permittees operate distinct sources and a privately owned treatment 
works is the owner of the ultimate point source discharge. In that 
context, EPA deemed it appropriate to give the permit writer the 
discretion to permit only the privately owned treatment works or the 
distinct sources, or both, depending on the level of control each 
exercises over the pollutants. In the context of CAFOs, however, the 
co-permittees both control some aspects of operations at the point 
source. Therefore, EPA is proposing that they must either be co-
permittees or each must hold a separate permit.
    Processor/Producer Relationship. As discussed below, proposed 
Sec. 122.23(a)(5) is intended, at a minimum, to require permit 
authorities to hold certain entities that exercise substantial 
operational control over other entities jointly responsible for the 
proper disposition of manure generated at the CAFO. While under today's 
proposal a permit authority could require an entity that has 
substantial operational control over a CAFO to be jointly responsible 
for all of the CAFO's NPDES permit requirements, the proposal would 
allow the permit authority to allocate individual responsibility for 
various activities to any of the co-permittees. The proposed

[[Page 3024]]

rule would specify, however, that the proper disposition of manure must 
remain the joint responsibility of all the entities covered by the 
permit.
    As discussed in more detail in section IV.C. of this preamble, 
among the major trends in livestock and poultry production are closer 
linkages between animal feeding operations and processing firms. 
Increasingly, businesses such as slaughtering facilities and meat 
packing plants and some integrated food manufacturing facilities are 
contracting out the raising or finishing production phase to a CAFO. 
Oftentimes, production contracts are used in which a contractor (such 
as a processing firm, feed mill, or other animal feeding operation) 
retains ownership of the animals and/or exercises substantial 
operational control over the type of production practices used at the 
CAFO. More information on the trends in animal agriculture and the 
evolving contractual relationships between producer and processors is 
presented in section IV.C of this preamble.
    Use of production contracts varies by sector. Production 
contracting dominates U.S. broiler and turkey production, accounting 
for 98 percent of annual broiler production and 70 percent of turkey 
production. About 40 percent of all eggs produced annually are under a 
production contract arrangement. Production contracting in the hog 
sector still accounts for a relatively small share of production (about 
30 percent of hog production in 1997), but use is rising, especially in 
some regions. Production contracts are uncommon at beef and dairy 
operations, although they are used by some operations to raise 
replacement herd or to finish animals prior to slaughter. Additional 
detail on the use of production contracts in these sectors is provided 
in section VI.
    Although farmers and ranchers have long used contracts to market 
agricultural commodities, increased use of production contracts is 
changing the organizational structure of agriculture and is raising 
policy concerns regarding who is responsible for ensuring that manure 
and wastewater is contained on-site and who should pay for 
environmental improvements at a production facility. As a practical 
matter, however, regulatory authorities have limited ability to 
influence who pays for environmental compliance, since the division of 
costs and operational responsibilities is determined by private 
contracts, not regulation.
    In addition, there is also evidence that the role of the producer-
processor relationship may influence where animal production facilities 
become concentrated, since animal feeding operations tend to locate in 
close proximity to feed and meat packing plants. This trend may be 
increasing the potential that excess manure nutrients beyond the need 
for crop fertilizer are becoming concentrated in particular geographic 
areas, thus raising the potential for increased environmental pressure 
in those areas. To further examine this possibility, EPA conducted an 
analysis of the correlation between areas of the country where there is 
a concentration of excess manure generated by animal production 
operations and a concentration of meat packing and poultry slaughtering 
facilities. This analysis concludes that in some areas of the country 
there is a strong correlation between areas of excess manure 
concentrations and areas where there is a large number of processing 
plants. More information on this analysis is provided in section IV.C.4 
of this preamble.
    Substantial Operational Control as Basis for Co-Permitting. Today's 
proposal would clarify that all entities that exercise substantial 
operational control over a CAFO are subject to NPDES permitting 
requirements as an ``operator'' of the facility. EPA's regulations 
define an owner or operator as ``the owner or operator of any `facility 
or activity' subject to regulation under the NPDES program.'' 40 CFR 
Sec. 122.2. This definition does not provide further detail to 
interpret the term, and the Agency looks for guidance in the 
definitions of the term in other sections of the statute: ``The term 
`owner or operator' means any person who owns, leases, operates, 
controls, or supervises a source.'' CWA Sec. 306(a)(4) (emphasis 
added).
    Case law defining the term ``operator'' is sparse, but courts 
generally have concluded that through the inclusion of the terms owner 
and operator: ``Liability under the CWA is predicated on either (1) 
performance of the work, or (2) responsibility for or control over the 
work.'' U.S. v. Sargent County Water Resources Dist., 876 F.Supp 1081, 
1088 (N.D. 1992). See also, U.S. v. Lambert, 915 F.Supp. 797, 802 
(S.D.WVa. 1996) (``The Clean Water Act imposes liability both on the 
party who actually performed the work and on the party with 
responsibility for or control over performance of the work.''); U.S. v. 
Board of Trustees of Fla. Keys Community College, 531 F.Supp. 267, 274 
(S.D.Fla. 1981). Thus, under the existing regulation and existing case 
law, integrators which are responsible for or control the performance 
of the work at individual CAFOs may be subject to the CWA as an 
operator of the CAFO. With today's proposal, EPA is identifying some 
factors which the Agency believes indicate that the integrator has 
sufficient operational control over the CAFO to be considered an 
``operator'' for purposes of the CWA.
    Whether an entity exercises substantial operational control over 
the facility would depend on the circumstances in each case. The 
proposed regulation lists factors relevant to ``substantial operational 
control,'' which would include (but not be limited to) whether the 
entity: (1) Directs the activity of persons working at the CAFO either 
through a contract or direct supervision of, or on-site participation 
in, activities at the facility; (2) owns the animals; or (3) specifies 
how the animals are grown, fed, or medicated. EPA is aware that many 
integrator contracts may not provide for direct integrator 
responsibility for manure management and disposal. EPA believes, 
however, that the proposed factors will identify integrators who 
exercise such pervasive control over a facility that they are, for CWA 
purposes, co-operators of the CAFO.
    This is a representative list of factors that should be considered 
in determining whether a co-permit is appropriate, but States should 
develop additional factors as needed to address their specific needs 
and circumstances. The greater the degree to which one or more of these 
or other factors is present, the more likely that the entity is 
exercising substantial operational control and, thus, the more 
important it becomes to co-permit the entity. For example, the fact 
that a processor required its contract grower to purchase and feed its 
animals feed from a specific source could be relevant for evaluating 
operational control. EPA will be available to assist NPDES permit 
authorities in making case-specific determinations of whether an entity 
is exerting control such that it should be co-permitted. EPA is also 
taking comment on whether there are additional factors which should be 
included in the regulation. EPA also requests comment on whether degree 
of participation in decisions affecting manure management and disposal 
is one of the factors which should be considered.
    EPA is soliciting comment on whether, alternatively, the fact that 
an entity owns the animals that are being raised in a CAFO should be 
sufficient to require the entity to be a joint permittee as a owner. 
EPA believes that ownership of the animals establishes an ownership 
interest in the pollutant generating

[[Page 3025]]

activity at the CAFO that is sufficient to hold the owner of the 
animals responsible for the discharge of pollutants from the CAFO.
    In non-CAFO parts of the NPDES regulations, the operator rather 
than the owner is generally the NPDES permit holder. One reason an 
owner is not required to get a permit is illustrated by an owner who 
has leased a factory. When an owner leases a factory to the lessee-
operator, the owner gives up its control over the pollution-producing 
activities. The owner of animals at a feedlot, on the other hand, 
maintains all current interests in the animal and is merely paying the 
contract grower to raise the animals for the owner. It is the owner's 
animals that generate most of the manure and wastewater that is created 
at a CAFO. Therefore, EPA believes that ownership of the animals may be 
sufficient to create responsibility for ensuring that their wastes are 
properly disposed of. This may be particularly true where manure must 
be sent off-site from the CAFO in order to be properly disposed of.
    EPA has previously identified situations where the owner should be 
the NPDES permittee rather than, or in addition to, the contract 
operator. In the context of municipal wastewater treatment plants, EPA 
has recognized that the municipal owner rather than the contract 
operator may be the proper NPDES permittee where the owner maintains 
some control over the plant.
    If EPA selects this option, it might also clarify that ownership 
could be determined by factors other than outright title to the 
animals. This would prevent integrators from modifying their contracts 
so that they do not own the animals outright. EPA could develop factors 
for determining ownership such as the existence of an agreement to 
purchase the animals at a fixed price together with the integrator 
accepting the risk of loss of the animals prior to sale. EPA solicits 
comments on whether such criteria are necessary and, if so, what 
appropriate criteria would be.
    Implementation of Co-Permitting. All permittees would be held 
jointly responsible for ensuring that manure production in excess of 
what can be properly managed on-site is handled in an environmentally 
appropriate manner. The effluent guidelines proposes to require a 
number of land application practices that will limit the amount of CAFO 
manure that can be applied to a CAFO's land application areas. If the 
CAFO has generated manure in excess of the amount which can be applied 
consistent with its NPDES permit, the proposed NPDES regulations impose 
a number of requirements on co-permittees, described in VII.D.4. See 
proposed Sec. 122.23(j)(4). The co-permittees could also transfer their 
excess manure to a facility to package it is as commercial fertilizer, 
to an incinerator or other centralized treatment, to be transformed 
into a value-added product, or to any other operation that would not 
land apply the manure. EPA is proposing that manure that must leave the 
CAFO in order to be properly managed not be considered within the 
unique control of any of the entities with substantial operational 
control over the CAFO. In fact, an integrator that owns the animals at 
a number of CAFOs in an area which are producing manure in such volumes 
that it cannot be properly land applied may be in a unique position to 
be able to develop innovative means of compliance with the permit 
limits. Today's proposal would specify that the disposition of excess 
manure would remain the joint responsibility of all permit holders. See 
proposed Sec. 122.23(i)(9). Integrators would thereby be encouraged to 
ensure compliance with NPDES permits in a number of ways, including: 
(a) establishing a corporate environmental program that ensures that 
contracts have sound environmental requirements for the CAFOs; (b) 
ensuring that contractors have the necessary infrastructure in place to 
properly manage manure; and (c) developing and implementing a program 
that ensures proper management and/or disposal of excess manure. The 
proposed requirement will give integrators a strong incentive to ensure 
that their contract producers comply with permit requirements and 
subject them to potential liability if they do not. Integrators could 
also establish facilities to which CAFOs in the area could transfer 
their excess manure. EPA is further proposing to require co-permitted 
entities to assume responsibility for manure generated at their 
contract operations when the manure is transferred off-site.
    EPA believes that integrators will want to make good faith efforts 
to take appropriate steps to address the adverse environmental impacts 
associated with their business. EPA is soliciting comments on how to 
structure the co-permitting provisions of this rulemaking to achieve 
the intended environmental outcome without causing negative impacts on 
growers.
    EPA also believes the proposal contains sufficient flexibility for 
permit authorities to develop creative, and streamlined, approaches to 
co-permitting. For example, a State might want to develop an NPDES 
general permit in collaboration with a single integrator or, 
alternatively, with all integrators in a geographic region (e.g., 
statewide, watershed, etc.). Such a general permit might require 
integrators to assume responsibility for ensuring that their 
contractors engage in proper management practices for excess manure. As 
a condition of the NPDES general permit, the integrator could be 
obligated to fulfill its commitment or to assume responsibility for 
violations by its growers.
    The proposed regulations would provide that a person is an 
``operator'' when ``the Director determines'' that the person exercises 
substantial operational control over the CAFO. EPA also considered 
whether to delete the reference to a determination by the Director, so 
that any person who exercised such control over a CAFO would be an 
operator without the need for a determination by the Director. If EPA 
were to eliminate the need for a determination before such a person may 
be an ``operator,'' persons who may meet this definition would be less 
certain in some cases as to whether they do in fact meet it. On the 
other hand, if EPA retains the need for a determination by the 
Director, then because of resource shortages or for other reasons, EPA 
or the State might not be able to make these determinations in a timely 
way, or might not make them at all in some cases. These persons would 
therefore inappropriately be able to avoid liability even though they 
are exercising substantial operational control of a CAFO. Accordingly, 
EPA requests comments on whether the final rule should retain the need 
for a determination by the Director of substantial operational control. 
Finally, EPA solicits comment on whether to provide that, in authorized 
States, either the Director or EPA may make the determination of 
substantial operational control.
    Additional Issues Associated With Co-Permitting. The option of co-
permitting integrators was discussed extensively by small entity 
representatives (SERs) and by the Small Business Advocacy Review Panel 
during the SBREFA outreach process. The SERs included both independent 
and contract producers. A majority of SERs expressed opposition to such 
an approach. They were concerned that co-permitting could decrease the 
operator's leverage in contract negotiations with the corporate entity, 
increase corporate pressure on operators to indemnify corporate 
entities against potential liability for non-compliance on the part of 
the operator, encourage corporate entities to interfere in the 
operational management

[[Page 3026]]

of the feedlot in order to protect against such liability, provide an 
additional pretext for corporate entities to terminate a contract when 
it was to their financial advantage to do so, restrict the freedom of 
operators to change integrators, and generally decrease the profits of 
the operator. These SERs were not convinced that co-permitting would 
result in any benefit to the environment, given that the operator 
generally controls those aspects of a feedlot's operations related to 
discharge, nor were they convinced that such an approach would result 
in additional corporate resources being directed toward environmental 
compliance, given the integrator's ability to pass on any additional 
costs it might incur as a result of co-permitting to the operator. A 
few SERs, who were not themselves involved in a contractual 
relationship with a larger corporate entity, favored co-permitting as a 
way of either leveling the playing field between contact and 
independent operators, or extracting additional compliance resources 
from corporate entities. Despite general concern over co-permitting due 
to the economic implications for the contractor, several SERs voiced 
their support for placing shared responsibility for the manure on the 
integrators, especially in the swine sector.
    The Panel did not reach consensus on the issue of co-permitting. On 
the one hand, the Panel shared the SER's concern that co-permitting not 
serve as a vehicle through which the bargaining power and profits of 
small contract growers are further constrained with little 
environmental benefit. On the other, the Panel believed that there is a 
potential for environmental benefits from co-permitting. For example, 
the Panel noted (as discussed above), that co-permitted integrators may 
be able to coordinate manure management for growers in a given 
geographic area by providing centralized treatment, storage, and 
distribution facilities, though the Panel also pointed out that this 
could happen anyway through market mechanisms without co-permitting if 
it resulted in overall cost savings. In fact, the Agency is aware of 
situations where integrators do currently provide such services through 
their production contracts. The Panel also noted that co-permitting 
could motivate corporate entities to oversee environmental compliance 
of their contract growers, in order to protect themselves from 
potential liability, thus providing an additional layer of 
environmental oversight.
    The Panel also expressed concern that any co-permitting 
requirements may entail additional costs, and that co-permitting can 
not prevent these costs from being passed on to small operators, to the 
extent that corporate entities enjoy a bargaining advantage during 
contract negotiations. The Panel thus recommended that EPA carefully 
consider whether the potential benefits from co-permitting warrant the 
costs, particularly in light of the potential shifting of these costs 
from corporate entities to contract growers. The Panel further 
recommended that if EPA does propose any form of co-permitting, it 
address in the preamble both the environmental benefits and any 
economic impacts on small entities that may result and request comment 
on its approach.
    As discussed in Section VI, EPA estimates that 94 meat packing 
plants that slaughter hogs and 270 poultry processing facilities may be 
subject to the proposed co-permitting requirements. EPA expects that no 
meat packing or processing facilities in the cattle and dairy sectors 
will be subject to the proposed co-permitting requirements. Reasons for 
this assumption are summarized in Section VI of this preamble. 
Additional information is provided in Section 2 of the Economic 
Analysis. EPA is seeking comment on this assumption as part of today's 
notice.
    EPA did not precisely estimate the costs and impacts that would 
accrue to individual co-permittees. Information on contractual 
relationships between contract growers and processing firms is 
proprietary and EPA does not have the necessary market information and 
data to conduct such an analysis. Market information is not available 
on the number and location of firms that contract out the raising of 
animals to CAFOs and the number and location of contract growers, and 
the share of production, that raise animals under a production 
contract. EPA also does not have data on the exact terms of the 
contractual agreements between processors and CAFOs to assess when a 
processor would be subject to the proposed co-permitting requirements, 
nor does EPA have financial data for processing firms or contract 
growers that utilize production contracts.
    EPA, however, believes that the framework used to estimate costs to 
CAFO does provide a means to evaluate the possible upper bound of costs 
that could accrue to processing facilities in those industries where 
production contracts are more widely utilized and where EPA believes 
the proposed co-permitting requirements may affect processors. The 
details of this analysis are provided in Section X..F.2. Based on the 
results of this analysis, EPA estimates that the range of potential 
annual costs to hog processors is $135 million to $306 million ($1999, 
pre-tax). EPA estimates that the range of potential annual costs to 
broiler processors as $34 million to $117 million. EPA is soliciting 
comment on this approach.
    This approach does not assume any addition to the total costs of 
the rule as a result of co-permitting, yet it does not assume that 
there will be a cost savings to contract growers as result of a 
contractual arrangement with a processing firm. This approach merely 
attempts to quantify the potential magnitude of costs that could accrue 
to processors that may be affected by the co-permitting requirements. 
Due to lack of information and data, EPA has not analyzed the effect of 
relative market power between the contract grower and the integrator on 
the distribution of costs, nor the potential for additional costs to be 
imposed by the integrator's need to take steps to protect itself 
against liability and perhaps to indemnify itself against such 
liability through its production contracts. EPA has also not 
specifically analyzed the environmental effects of co-permitting.
    EPA recognizes that some industry representatives do not support 
assumptions of cost passthrough from contract producers to integrators, 
as also noted by many small entity representatives during the SBREFA 
outreach process as well as by members of the SBAR Panel. These 
commenters have noted that integrators have a bargaining advantage in 
negotiating contracts, which may ultimately allow them to force 
producers to incur all compliance costs as well as allow them to pass 
any additional costs down to growers that may be incurred by the 
processing firm. EPA has conducted an extensive review of the 
agricultural literature on market power in each of the livestock and 
poultry sectors and concluded that there is little evidence to suggest 
that increased production costs would be prevented from being passed on 
through the market levels. This information is provided in the docket.
    EPA requests comments on its cost passthrough assumptions in 
general and as they relate to the analysis of processor level impacts 
under the proposed co-permitting requirements. EPA will give full 
consideration to all comments as it decides whether to include the 
proposed requirement for co-permitting of integrators in the final 
rule, or alternately whether to continue to allow this decision to be 
made on a case-by-case basis by local permit writers. Several other 
alternatives to co-permitting are discussed below. EPA

[[Page 3027]]

also requests comment on how to structure the co-permitting provisions 
of the rule making to achieve the intended environmental outcome 
without causing negative impacts on growers, should it decide to 
finalize them.
    Alternatives to Co-Permitting. EPA also considered alternative 
approaches under which EPA would waive the co-permitting requirement 
for States and processors that implement effective programs for 
managing excess manure and nutrients. One such approach would require 
the disposition of manure that is transported off-site to remain the 
joint responsibility of the processor and other permit holders, unless 
an enforceable state program controls the off-site land application of 
manure. For example, if the State program addressed the off-site land 
application of manure with PNP development and implementation 
requirements that are equivalent to the requirements in 40 CFR 
412.13(b)(b) and 122.23(j)(2), it would not be necessary to permit the 
processor in order to ensure the implementation of those requirements.
    Another approach would be based on whether the processor has 
developed an approved Environmental Management System (EMS) that is 
implemented by all of its contract producers and regularly audited by 
an independent third party. EPA anticipates that the alternative 
program would be designed to achieve superior environmental and public 
health outcomes by addressing factors beyond those required in this 
proposed regulation, such as odor, pests, etc. The following section 
describes the principles of such a system.
    Environmental Management System as Alternative to Co-Permitting. An 
increasing number of organizations, in both the private and public 
sector, are using environmental management systems (EMS) as a tool to 
help them not only comply with environmental legal requirements, but 
also address a full range of significant environmental impacts, many of 
which are not regulated. Environmental management systems include a 
series of formal procedures, practices, and policies that allow an 
organization to continually assess its impacts on the environment and 
take steps to reduce these impacts over time, providing an opportunity 
and mechanism for continuous improvement. EMSs do not replace the need 
for regulatory requirements, but can complement them and help 
organizations improve their overall environmental performance. EPA 
supports the adoption of EMSs that can help organizations improve their 
compliance and overall performance and is working with a number of 
industries to help them adopt industry-wide EMS programs.
    Under this alternative, EPA would not require a processor to be co-
permitted with their producers if the processor has developed, in 
conjunction with its contract producers, an EMS program that is 
approved by the permit authority and EPA, including opportunities for 
review and comment by EPA and the public. The EMS would identify the 
environmental planning and oversight systems, and critical management 
practices expected to be implemented by all of the processors' contract 
growers. Independent third-party auditors annually would verify 
effective implementation of the EMS to the permit authority and 
integrator. If a processor agreed to implement such a program, and then 
one or more of its contract producers failed to meet these 
requirements, the processor would remove animals from the contract 
producers farm, in a time and manner as defined in the approved EMS, 
and not supply additional animals until the contract producer is 
certified as being in compliance with the EMS by the third party 
auditor. Once the animals have been removed, processors would not 
continue contractual relationships with producers not capable or 
willing to meet the minimum requirements of the EMS. Processors who 
fail the independent audit would be required to apply for an NPDES 
permit or be included as a co-permittee on contract producers' permits.
    Each permitted facility's EMS would also require that programs be 
in place to ensure that it remained in compliance with its NPDES permit 
(if a permitted facility). For all contractors, the EMS would address 
all activities that could have a significant impact on the environment, 
including activities not subject to this proposed regulations. These 
best management practices could be adapted to meet the particular needs 
of individual States, as appropriate.
    To ensure consistency, contract growers and the processor would be 
required to be annually audited by an independent third party. The 
permit authority would be expected to develop criteria for the audit, 
including what constitutes acceptable implementation of the EMS by both 
contract producers and the processor. Such an EMS would require 
contract producers to comply with their NPDES permit (if a permitted 
facility) and to implement the terms of the EMS that address manure 
management as well as other unregulated impacts like odor, pests, etc. 
Contract producers would need to employ specific Best Management 
Practices (BMPs) when addressing unregulated impacts and maintain 
specific records on their use. BMPs could be adapted to meet the needs 
of a particular state or region.
    The EMS would be required to be consistent with guidance developed 
by the processor and approved by the permit authority and EPA. 
Processors would assume responsibility for developing, in conjunction 
with contract producers, the proposed EMS as well as the proposed third 
party auditing guidance, which would be subject to approval by the 
permit authority and EPA. Further, the processors would facilitate 
implementation by their producers through training and technical 
assistance.
    Each facility's EMS would be required to successfully complete an 
audit conducted by an independent third party organization approved by 
the permit authority. Facilities would also be subject to annual follow 
up audits designed to determine if the EMS was in place and being 
adequately implemented. Contractors would not continue contractual 
relationships with producers that did not remain in compliance and did 
not continue to adequately implement their EMSs, as determined by 
annual third party follow-up audits.
    Each processor would be required to seek input from local 
stakeholders as it developed and implemented its EMS. Further, 
information about EMS implementation, including audit results, would be 
publicly available.
    Because geographic areas tend to be dominated by few processors, 
contract growers tend to have limited choice in selecting with whom to 
have a production contract. Thus, EPA expects that processors would 
provide economic and technical assistance to help contract producers 
implement the EMS.
    EPA sees potential benefits to this type of approach. Besides 
giving processors an incentive to develop regional approaches to 
managing excess manure nutrients from CAFO generated manure, it would 
involve the processors in ensuring that permittees meet their permit 
requirements, thus relieving burden on the resources of permit 
authorities and EPA. Further, an EMS goes beyond what NPDES requires, 
in that it addresses issues beyond the scope of this rulemaking, such 
as odor, pests, etc., and, most important, it will address manure 
generated by all CAFOs as well as all AFOs under contract with the 
processors. Finally, this approach will provide local stakeholders with 
important information about the operations of producers and give these

[[Page 3028]]

stakeholders meaningful opportunities to provide input to the facility 
on its operations throughout the permitting and EMS development 
process.
    On the other hand, an EMS approach could be more difficult to 
administer and enforce. Some also question whether it would be 
appropriate to impose the requirements of an EMS on independent growers 
or AFO operators who trade with the processors, but who are not subject 
to this regulation. Further, it could be a concern that a producer 
might, seemingly arbitrarily, refuse resources to assist with 
implementing the EMS, and then subsequently withholding animals from 
the grower and effectively terminating the contract.
    EPA solicits comment on whether EPA should provide an option for 
States to develop an alternative program for addressing excess manure 
in lieu of requiring co-permitting. EPA also requests comment on the 
EMS concept described in detail in this proposal.
6. How Does EPA Propose To Regulate Point Source Discharges at AFOs 
That Are Not CAFOs?
    EPA is proposing to clarify in today's proposed rulemaking that all 
point source discharges from AFOs are covered by the NPDES regulations 
even if the facility is not a CAFO (except for certain discharges 
composed entirely of storm water, as discussed below). See proposed 
Sec. 122.23(g).
    The definition of point source in the CWA and regulations lists 
both discrete conveyances (such as pipes and ditches) and CAFOs. CWA 
Sec. 502(14); 40 CFR 122.2. EPA wants to confirm as explicitly as 
possible that the NPDES regulatory program applies to both types of 
discharges. Thus, where an AFO is not a CAFO (either because it has not 
met the definition criteria or has not been designated) discharges from 
the AFO are still regulated as point source discharges under the NPDES 
program if the discharge is through a discrete conveyance that would 
qualify itself as a point source. An AFO is not excluded from the NPDES 
regulatory program altogether simply because it is not a CAFO. That is, 
if an AFO has a point source discharge through a pipe, ditch, or any 
other type of discernible, confined and discrete conveyance, it is 
subject to NPDES requirements just the same as any other facility that 
has a similar point source discharge and that is not an AFO.
    Today's proposal would clarify that, even though an AFO is not a 
CAFO, an AFO may nevertheless require an NPDES permit due to discharges 
from a point source at the facility. See proposed Sec. 122.23(g). More 
specifically, under existing regulation and today's proposal, an AFO 
may be subject to regulation under the Clean Water Act in any of the 
following ways:
    (1) Non-storm water discharges. A non-storm water discharge of 
pollutants from a point source, such as a ditch, at the production area 
or land application area of an AFO, into waters of the U.S. is a 
violation of the CWA unless the owner or operator of the facility has 
an NPDES permit for the discharge from that point source (as discussed 
further below); or
    (2) Storm water discharges. A discharge from a point source, such 
as a ditch, at the land application area of an AFO that does not 
qualify for the agricultural storm water discharge exemption may be 
designated as a regulated storm water point source under 
Sec. 122.26(a)(1)(v), and, therefore, require an NPDES permit. The 
agricultural storm water exemption is discussed further in the 
following section D; or
    (3) Discharge as a CAFO. An AFO may be designated as a CAFO and, 
therefore, require an NPDES permit on that basis (as discussed in the 
section on designation).
    In addition to listing ``physical'' conveyances (such as pipes and 
ditches), the definition of point source in the CWA and EPA's 
regulations identifies CAFOs as a point source. CWA Sec. 502(14); 40 
CFR 122.2. Because all CAFOs are point sources, even surface run off 
from a CAFO that is not channelized in a discrete conveyance is 
considered a point source discharge that is subject to NPDES permit 
requirements. AFOs, on the other hand, are not defined as point 
sources. Because of that, under today's proposal, AFOs will be subject 
to NPDES permitting requirements if they have a point source discharge 
including under the circumstances described above.
    First, today's proposal states clearly that an AFO which has a 
discharge of pollutants through a point source, such as a pipe or 
ditch, at either the production area or the land application area, to 
the waters of the United States which is not the direct result of 
precipitation is in violation of the Clean Water Act. See proposed 
Sec. 122.23(g). The existing regulations are silent and some AFO 
operators have argued that none of their discharges can be considered 
point source discharges unless their AFO is defined or designated as a 
CAFO under 40 CFR 122.23. Today's proposal would make it clear that 
certain discharges at AFOs are subject to NPDES requirements and no 
designation by the permitting authority is required. For example, if 
the operator of an AFO with less than 500 animal units (in the two-tier 
structure) or less than 300 animal units (in the three-tier structure) 
empties its lagoon via a pipe directly into a stream without an NPDES 
permit, that would be a violation of the Clean Water Act.
    Second, today's proposal clarifies that a storm water discharge 
composed entirely of storm water from a point source at the land 
application area of an AFO into waters of the U.S. requires an NPDES 
permit if: (1) the discharge does not quality for the agricultural 
storm water discharge exemption, discussed below; and (2) it is 
designated as a regulated storm water point source. Generally, all 
point source discharges are prohibited unless authorized by an NPDES 
permit. Section 402(p) of the Clean Water Act exempts certain storm 
water discharges from that general prohibition. Section 402(p)(2)(E) 
and the EPA regulations that implement Section 402(p)(6) provide for 
regulation of unregulated point sources on a case by case basis upon 
designation by EPA or the State permitting authority (40 CFR 
122.26(a)(1)(v)).
    EPA considered proposing that only 40 CFR 122.23 may be used to 
designate an AFO based on discharges from its land application area. 
Designation as a CAFO, however, could unnecessarily subject the AFO's 
production area to NPDES permit requirements. Also, because the land 
application area of third party applicators of manure may be designated 
using 122.26(a)(1)(v), EPA is proposing that AFO controlled land 
application areas could also be designated under that section, even if 
the AFO has not been designated as a CAFO. AFOs may be required to get 
a permit based on storm water discharges from their production areas 
only if they have been designated as a CAFO under Sec. 122.23.
    An AFO operator is not required to obtain a permit for a point 
source discharge at the land application area which consists entirely 
of storm water, and which does not qualify for the agricultural storm 
water discharge exemption, unless the point source has been designated 
under 40 CFR 122.26(a)(1)(v). A discharge consists entirely of storm 
water if it is due entirely to precipitation. It may include incidental 
pollutants that the storm water picks up while crossing the facility. 
The discharge would not consist entirely of storm water if, for 
example, a non-storm water (e.g., process waste water) discharge occurs 
during the storm and is mixed with the storm water. Once a permit 
authority has determined that a point source

[[Page 3029]]

discharge from the land application area of an AFO is not composed 
entirely of storm water and does not qualify for the agricultural storm 
water discharge exemption, the permit authority may designate that 
point source as a regulated storm water point source if the permit 
authority further determines under 40 CFR 122.26(a)(1)(v) that the 
discharge contributes to a violation of a water quality standard or is 
a significant contributor of pollutants to waters of the U.S.
    Designation under Sec. 122.26 is separate from the designation of 
an operation as a CAFO. The criteria for designation as a CAFO based on 
discharges from either the land application or the production area are 
discussed above in C.4.

D. Land Application of CAFO-generated Manure

1. Why Is EPA Regulating Land Application of CAFO-generated Manure?
    As discussed in Section IV.B of this preamble, agricultural 
operations, including animal production facilities, are considered a 
significant source of water pollution in the United States. The 
recently released National Water Quality Inventory indicates that 
agriculture is the leading contributor of identified water quality 
impairments in the nation's rivers and streams, as well as in lakes, 
ponds, and reservoirs. Agriculture is also identified as a major 
contributor to identified water quality impairments in the nation's 
estuaries.
    Pollutant discharges from CAFOs arise from two principal routes. 
The first route of discharges from CAFOs is from manure storage or 
treatment structures, especially catastrophic failures, which cause 
significant volumes of often untreated manure and wastewater to enter 
waters of the U.S. resulting in fish kills. The second route of 
pollutant discharges is from the application of manure to land, usually 
for its fertilizer value or as a means of disposal. Additional 
information on how pollutants from CAFOs reach surface waters is 
provided in Section V.B of this document and in the rulemaking record.
    The proposed regulation seeks to improve control of discharges that 
occur from land applied manure and wastewater. Analysis conducted by 
USDA indicates that, in some regions, the amount of nutrients present 
in land applied manure has the potential to exceed the nutrient needs 
of the crops grown in those regions. Actual soil sample information 
compiled by researchers at various land grant universities provides an 
indication of areas where there is widespread phosphorus saturation. 
Other research by USDA documents the runoff potential of land applied 
manure under normal and peak precipitation. Furthermore, research from 
a variety of sources indicates that there is a high correlation between 
areas with impaired lakes, streams and rivers due to nutrient 
enrichment and areas where there is dense livestock and poultry 
production. This information is documented in the Technical Development 
Document. Additional information is available in the Environmental 
Assessment of the Proposed Effluent Limitations Guidelines for 
Concentrated Animal Feeding Operations and other documents that support 
today's rulemaking.
2. How Is EPA Interpreting the Agricultural Storm Water Exemption With 
Respect to Land Application of CAFO-generated Manure?
    Today, EPA is proposing to define the term ``agricultural 
stormwater discharge'' with respect to land application of manure and 
wastewater from animal feeding operations. Section 502(14) of the Clean 
Water Act excludes ``agricultural stormwater discharges'' from the 
definition of the term point source. The Clean Water Act does not 
further define the term, and the Agency has not formally interpreted 
it. Under today's proposal, an ``agricultural stormwater discharge'' 
would be defined as ``a discharge composed entirely of storm water, as 
defined in 40 CFR 122.26(a)(13), from a land area upon which manure 
and/or wastewater from an animal feeding operation or concentrated 
animal feeding operation has been applied in accordance with proper 
agricultural practices, including land application of manure or 
wastewater in accordance with either a nitrogen-based or, as required, 
a phosphorus-based manure application rate.'' Sec. 122.23(a)(1).
    The CWA defines a point source as: ``any discernible, confined and 
discrete conveyance, including but not limited to any pipe, ditch, 
channel, tunnel, conduit, well, discrete fissure, container, rolling 
stock, concentrated animal feeding operation, or vessel or other 
floating craft, from which pollutants are or may be discharged. The 
term does not include agricultural stormwater discharges and return 
flows from irrigated agriculture.'' 33 U.S.C. Sec. 1362(14).
    Congress added the exemption from the definition of point source 
for ``agricultural stormwater discharges'' in the Water Quality Act of 
1987. There is limited legislative history for this provision; Congress 
simply stated that the ``provision expands the existing exemption for 
return flows from irrigated agriculture to include agricultural 
stormwater discharges.'' Legislative History of the Water Quality Act 
of 1987, 100th Cong., 2d. Sess. at 538 (1988).
    The courts have found that the EPA Administrator has the discretion 
to define point and nonpoint sources. NRDC v. Costle, 568 F.2d 1369, 
1382 (D.C. Cir. 1977). EPA is proposing to exercise that discretion by 
defining the exemption for ``agricultural stormwater discharges'' to 
include only those discharges that (1) are composed entirely of storm 
water; and, (2) occur only after the implementation of proper 
agricultural practices.
    EPA believes the first component is clear on the face of the 
statute. Only discharges that result from precipitation can qualify for 
an agricultural storm water discharge exemption. Therefore, the 
addition of pollutants as a result of a discharge from a point source 
to waters of the United States that is not due to precipitation is a 
violation of the Clean Water Act (except in compliance with an NPDES 
permit). For example, the application of CAFO manure onto a field in 
quantities that are so great that gravity conveys the manure through a 
ditch even in dry weather into a nearby river would not be eligible for 
the exemption for agricultural storm water discharges. Furthermore, it 
is possible for a discharge to occur during a precipitation event yet 
not be considered to be ``composed entirely of stormwater.'' As the 
Second Circuit found, a discharge during a storm could be ``primarily 
caused by the over-saturation of the fields rather than the rain and * 
* * sufficient quantities of manure were present so that the run-off 
could not be classified as ``stormwater'.'' CARE v. Southview Farms, 34 
f. 3d 114,121 (Sept. 2, 1994).
    Second, EPA is proposing that to be eligible for the exemption for 
agricultural storm water, any addition of manure and/or wastewater to 
navigable waters must occur despite the use of proper agricultural 
practices. EPA interprets the statute to reflect Congress' intent not 
to regulate additions of manure or wastewater that are truly 
agricultural because they occur despite the use of proper agricultural 
practices. Application of manure or wastewater that is not consistent 
with proper rates and practices such that there are adverse impacts on 
water quality would be considered waste disposal rather than 
agricultural usage. In today's action, EPA is proposing to interpret 
the term ``proper agricultural practices'' to incorporate the concept 
of protecting

[[Page 3030]]

water quality. This is consistent with USDA's Technical Guidance for 
Developing Comprehensive Nutrient Management Plans, which states that: 
``[t]he objective of a CNMP is to provide AFO owners/operators with a 
plan to manage generated nutrients and by-products by combining 
conservation practices and management activities into a system that, 
when implemented, will protect or improve water quality.'' EPA believes 
that proper agricultural practices do encompass the need to protect 
water quality. While EPA recognizes that there may be legitimate 
agricultural needs that conflict with protecting water quality in some 
instances, EPA believes that its proposed definition of proper 
agricultural practices strikes the proper balance between these 
objectives. Since one focus of agricultural management practices, 
whether through guidance or regulation, at the state or federal level, 
is the minimization of water quality impacts, and since this is of 
particular concern to EPA, the Agency is proposing a definition of 
``agriculture'' for Clean Water Act purposes which would be flexible 
enough so that an assessment of the actual impacts of a discharge of 
animal waste on a specific waterbody could be factored in. Today's 
proposal identifies the proper agricultural practices which land 
appliers seeking to qualify for the agricultural storm water discharge 
exemption would need to implement. In addition, if a permit authority 
determined that despite the implementation of the practices identified 
in today's proposal, discharges from the land application area of a 
CAFO were having an impact on water quality, the permit writer would 
need to impose additional agricultural practice requirements to 
mitigate such impacts. Only discharges that occur despite the 
implementation of all these proper agricultural practices would be 
considered ``agricultural stormwater discharges'' and be eligible for 
the exemption. EPA requests comment on this interpretation of the 
agricultural storm water exemption and on the proposal to define proper 
agricultural practice.
    For CAFOs which land apply their manure, the Agency is proposing to 
require that owners or operators implement specific agricultural 
practices, including land application of manure and wastewater at a 
specified rate, development and implementation of a Permit Nutrient 
Plan, a prohibition on the application of CAFO manure or wastewater 
within 100 feet of surface water, and, as determined to be necessary by 
the permit authority, restrictions on application of manure to frozen, 
snow covered or saturated ground. See proposed Secs. 412.31(b) and 
412.37; Sec. 122.21(j). The Agency is proposing to require these 
specific agricultural practices under its CWA authority both to define 
the scope of the agricultural storm water discharge exemption and to 
establish the best available technology for specific industrial 
sectors. Given the history of improper disposal of CAFO waste and 
Congress' identification of CAFO's as point sources, the Agency 
believes it should clearly define the agricultural practices which must 
be implemented at CAFOs.
    EPA considered limiting the scope of the proper agricultural 
practices necessary to qualify for the agricultural storm water 
discharge exemption to those specified in the effluent guideline and 
NPDES regulations with no flexibility for the permit authority to 
consider additional measures necessary to mitigate water quality 
impacts. EPA chose not to propose this option because EPA was concerned 
that permit authorities would then be unable to include any additional 
permit conditions necessary to implement Total Maximum Daily Loads in 
impaired watersheds. EPA seeks comment on this option and other ways to 
address this concern.
    The Agency is proposing to allow AFO owners or operators who land 
apply manure (either from their own operations or obtained from CAFOs) 
and more traditional, row crop farmers who land apply manure obtained 
from CAFOs to qualify for the agricultural storm water exemption as 
long as they are applying manure and wastewater at proper rates. As 
discussed in VII.B, under one of today's co-proposed options, CAFOs 
that transfer manure to such recipients would be required to obtain a 
letter of certification from the recipient land applier that the 
recipient intends to determine the nutrient needs of its crops based on 
realistic crop yields for its area, sample its soil at least once every 
three years to determine existing nutrient content, and not apply the 
manure in quantities that exceed the land application rates calculated 
using either the Phosphorus Index, Phosphorus Threshold, or Soil Test 
Phosphorus method as specified in 40 CFR 412.13(b)(1)(iv). For purposes 
of the CAFO's permit, recipient land appliers need not implement all of 
the proper agricultural practices identified above which CAFOs would be 
required to implement at their own land application areas. EPA believes 
that this proposal enables the Agency to implement Congress' intent to 
both exclude truly agricultural discharges due to storm water and 
regulate the disposition of the vast quantities of manure and 
wastewater generated by CAFOs.
    EPA considered defining the agricultural storm water discharge 
exemption for non-CAFO land appliers to apply only to those discharges 
which occurred despite the implementation of all the practices required 
by today's proposal at CAFO land application areas. EPA could require a 
more comprehensive set of practices for land appliers of CAFO manure 
and wastewater to qualify for the agricultural storm water discharge 
exemption. Under any definition of proper agricultural practices, a 
recipient who failed to implement the required practices and had a 
discharge through a point source into waters of the U.S. could be 
designated as a regulated storm water point source. However, that 
recipient would not be vulnerable to enforcement under the Clean Water 
Act for discharges prior to designation, and could only be designated 
as a point source if the permitting authority (or EPA in authorized 
States) found that the conditions of 40 CFR 122.26(a)(1)(v) were met. 
See discussion below. EPA is requesting comment on this option.
    Whether a discharger (who would otherwise be ineligible for the 
agricultural storm water discharge exemption) is subject to the Clean 
Water Act permitting requirements varies, because of the complex 
interaction among the agricultural storm water discharge exemption, the 
definition of ``point source,'' and other storm water discharge 
provisions. The next sections clarify EPA's intentions with regard to 
such regulation.
3. How is EPA Proposing To Regulate Discharges From Land Application of 
CAFO-generated Manure by CAFOs?
    In today's action, EPA is proposing that the entire CAFO operation 
(e.g. the feedlot/production area and the land application areas under 
the operational control of a CAFO owner or operator) is subject to the 
revised effluent limitations guideline and the revised NPDES permitting 
regulation. See proposed Sec. 122.23(a)(2). Also, as discussed above, 
EPA is proposing to interpret the CWA to allow CAFO land application 
areas to be eligible for the agricultural storm water discharge 
exemption. However, unless the CAFO could demonstrate that it has 
absolutely no potential to discharge from the production area and the 
land application area, the facility would be required to apply for an 
NPDES permit.

[[Page 3031]]

See proposed Sec. 122.23(e). While EPA is proposing to interpret the 
terms of the statute such that CAFOs may qualify for the agricultural 
storm water exemption, EPA is also proposing that such CAFOs must apply 
for a permit even if the CAFO's only discharges may potentially qualify 
for the agricultural storm water discharge exemption. EPA is proposing 
such a requirement because it has the authority to regulate point 
source discharges and any discharge from the land application area of a 
CAFO which is not agricultural storm water is subject to the Clean 
Water Act. EPA believes that the only way to ensure that all 
nonagricultural, and therefore point source, discharges from CAFOs are 
permitted is to require that CAFOs apply for NPDES permits which will 
establish effluent limitations based on proper agricultural practices.
    As noted above, the CWA explicitly defines the term ``point 
source'' to include CAFOs, and explicitly excludes agricultural storm 
water discharges. In today's action, EPA is attempting to interpret 
both provisions in a way that establishes meaningful controls over a 
significant source of pollution in our Nation's waters. EPA is 
proposing to interpret the definition of ``point source'' such that the 
exclusion of ``agricultural stormwater discharges'' may be an exclusion 
from any and all of the conveyances listed in the definition of ``point 
source,'' including ``concentrated animal feeding operations.'' The 
production area of the CAFO would continue to be ineligible for the 
agricultural storm water discharge exemption because it involves the 
type of industrial activity that originally led Congress to single out 
concentrated animal feeding operations as point sources. However, the 
land application areas under the operational control of the CAFO, where 
CAFO manure or wastewater is appropriately used as a fertilizer for 
crop production, appear to have the kind of agricultural activity that 
Congress intended to exempt. Consequently, EPA proposes to interpret 
the CWA so that its authority to regulate discharges of CAFO manure due 
to precipitation from land application areas is used in a way that 
ensures that any discharge is the result of agricultural practices. Any 
such discharges would be from the CAFO and, therefore, no separate, 
confined and discrete conveyance need be present.
    Under today's proposal, permit writers would establish effluent 
limits for land application areas in the form of rates and practices 
that constitute proper agricultural practices to the extent necessary 
to fulfill the requirements of the effluent guidelines or based on BPJ, 
as well as to the extent necessary to ensure that a CAFO's practices 
are agricultural in that they minimize the operation's impact on water 
quality.
    As noted above, EPA believes the statute does not directly address 
the interaction between the specific listing of ``concentrated animal 
feeding operations'' and the specific exemption of ``agricultural 
stormwater discharges'' in the definition of ``point source.'' While 
EPA is proposing to interpret the Act to allow the land application 
areas of CAFOs to be eligible for the agricultural storm water 
discharge exemption, EPA is considering an interpretation of the Act 
under which all additions of pollutants associated with CAFOs could be 
regulated as ``point source'' discharges, and, thus, the agricultural 
storm water exemption would never apply to discharges from a CAFO. By 
singling out ``concentrated animal feeding operations,'' a far more 
specific conveyance reference compared to the other, more general, 
terms in the definition of ``point source'' (such as ``ditch,'' 
``channel,'' and ``conduit''), Congress may have intended the addition 
of pollutants to waters of the United States from these facilities to 
be considered ``industrial'' and not ``agricultural'' discharges. As 
such, the tremendous amount of manure and wastewater generated by CAFOs 
could be considered industrial waste. Thus, any discharge, even if 
caused by storm water after land application of the manure could be 
considered a discharge ``associated with industrial activity'' under 
the statute's storm water discharge provisions.
    EPA is soliciting comments on four additional approaches under 
which the agricultural storm water exemption would not apply to CAFOs. 
Each of these approaches would require that all CAFO permits restrict 
discharges from land application sites to the extent necessary to 
prevent them from causing or contributing to a water quality 
impairment.
    First, EPA is soliciting comment on an alternate approach that 
would regulate CAFO waste as ``process waste'' that is not eligible for 
the agricultural storm water exemption, when it is applied on land that 
is owned or controlled by the CAFO owner or operator, because it is 
industrial process waste and therefore not agricultural. Any storm 
water associated discharges would be regulated under the existing storm 
water statutory provisions and EPA's implementing regulations. Under 
that approach, in addition to the requirements in the proposed effluent 
limitation guideline, the NPDES permit issued to the CAFO operator 
would include any additional limitations necessary to protect water 
quality.
    Second, EPA solicits comment on classifying discharges from land 
application sites as discharges regulated under ``Phase I'' of the 
NPDES storm water program (CWA Section 402(p)(2)(B)). EPA's existing 
storm water regulations already identify discharges from land 
application sites that receive industrial wastes as a ``storm water 
discharge associated with industrial activity.'' 40 CFR 
122.26(b)(14)(v). Under the storm water regulation, EPA does not 
currently interpret that category (i.e., storm water discharge 
associated with industrial activity) to include land application of 
CAFO manure because the Agency did not assess the cost of such 
regulation when it promulgated the rule. With today's proposal, 
however, EPA has calculated the cost of proper land application of 
CAFO-generated manure and wastewater and could clarify that 
precipitation-induced discharges from land application areas are 
subject to the storm water discharge regulations. If EPA finalizes a 
definition of CAFO which includes the land application area, then EPA 
could also regulate any storm water discharges from CAFOs under its 
existing regulations as a storm water discharge associated with 
industrial activity because facilities subject to storm water effluent 
guidelines are considered to be engaging in ``industrial activity.'' 40 
CFR 122.26 (b)(14)(i). EPA would have to conclude that no discharges 
from CAFO land application areas qualify for the agricultural storm 
water discharge exemption, even discharges which occur despite 
implementation of proper agricultural practices.
    Third, EPA could consider discharges from the CAFO's land 
application area to be discharges of ``process wastewater,'' and, 
therefore, not ``composed entirely of stormwater,'' rendering the 
statutory storm water provisions entirely inapplicable. Under this 
alternate interpretation of the statutory terms, NPDES permit 
provisions for the CAFO, including both the production area and the 
land application area, could include both technology-based limits and 
any necessary water quality-based effluent limits.
    Fourth, EPA could clarify that once a facility is required to be 
permitted because it is a CAFO, the agricultural storm water discharge 
exemption no longer applies to the land application area subject to the 
permit. Thus, all permit conditions, including a water

[[Page 3032]]

quality-based effluent limitation, could be required on both the 
production area and the land application area.
    EPA is also requesting comment on whether the land application 
practices established under the effluent guidelines will be sufficient 
to ensure that there will be little or no discharge due to 
precipitation from CAFO land application areas. If there were no such 
discharges, then EPA wouldn't need to adopt any of the four alternative 
approaches described above, because the effluent guidelines 
requirements would protect water quality. If there would be significant 
run-off even when manure is applied in accordance with agricultural 
practices, EPA is requesting comment on the extent and the potential 
adverse water quality impacts from that increment.
4. How is EPA Proposing to Regulate Land Application of Manure and 
Wastewater by non-CAFOs?
    In some instances, CAFO owners or operators transport their manure 
and/or wastewater off-site. If off-site recipients land apply the CAFO-
generated manure, they may be subject to regulation under the Clean 
Water Act. In addition, AFOs may land apply their own manure and 
wastewater, and they too may be subject to regulation under the Clean 
Water Act. A land applier could be subject to regulation if: (1) its 
field has a point source, as defined under the Act, through which (2) a 
discharge occurs that is not eligible for the agricultural storm water 
exemption, and (3) the land applier is designated on a case-by-case 
basis as a regulated point source of storm water. 40 CFR 
Sec. 122.26(a)(1)(v). EPA notes that under the three-tier structure, an 
AFO with between 300 AU and 1,000 AU which has submitted a 
certification that it does not meet any of the conditions for being 
CAFO, and therefore does not receive an NPDES permit, would be 
immediately subject to enforcement and regulation under the Clean Water 
Act if it has a discharge which is not subject to the agricultural 
storm water discharge exemption; EPA and the State do not need to 
designate such a facility as either a CAFO or as a regulated storm 
water point source.
    With this proposal, EPA intends to give effect to both the 
agricultural storm water discharge exemption and the other storm water 
provisions of the Clean Water Act by subjecting to regulation a non-
CAFO land applier of AFO and/or CAFO-generated manure and wastewater 
only if: (1) the discharge is not eligible for the agricultural storm 
water discharge exemption (which, as discussed above, for AFOs and 
other non-CAFO land appliers primarily consists of applying the manure 
in accordance with proper agricultural practice, including soil test, P 
threshold, or Phosphorus Index methods); and (2) a conveyance at the 
land applier's operation has been designated as a regulated storm water 
point source. EPA emphasizes again that this regulatory approach is 
relevant only to discharges which are composed entirely of storm water. 
If it is not due to precipitation, a discharge of manure or wastewater 
through a point source, such as a ditch, into the waters of the U.S. 
need not be designated to be subject to enforcement and regulation 
under the Clean Water Act, as discussed in Section VII.C.6 of today's 
proposal.
    In addition, the Director (or Regional Administrator) could 
exercise his or her authority to designate such dischargers within a 
geographic area as significant contributors of pollution to waters of 
the United States. 40 CFR 122.26(a)(9)(i)(D). The geographic area of 
concern could be a watershed which is impaired for the pollutants of 
concern in CAFO waste. To do so, the Director (or Regional 
Administrator) would need to identify the point source at each land 
application area or provide a record for presuming that the land 
application areas in that watershed have point sources, and the 
designation would only apply to those that do.
    As noted above, case-by-case designation of point sources at land 
application areas which are not under the control of a CAFO owner or 
operator can already occur under existing regulations. Under section 
122.26(a)(1)(v), either the permitting authority or EPA may designate a 
discharge which he or she determines contributes to a violation of a 
water quality standard or is a significant contributor of pollutants to 
waters of the U.S. EPA is soliciting comment on whether to clarify the 
term ``significant contributor of pollutants'' for the purposes of 
designating a discharge of manure and/or wastewater. If a land applier 
is applying manure and/or wastewater such that he or she is not 
eligible for the agricultural storm water discharge exemption and if 
the receiving waterbody (into which there are storm water discharges 
associated with manure and/or wastewater) is not meeting water quality 
standards for a pollutant in the waste (such as phosphorus, nitrogen, 
dissolved oxygen or fecal coliform), then EPA could propose that, by 
regulation, such a discharge constitutes a ``significant contributor of 
pollutants.'' For example, if a land applier is applying manure and/or 
wastewater at a rate above the rate which qualifies the recipient for 
the agricultural storm water discharge exemption, and if, due to 
precipitation, waste runs off the land application area through a ditch 
into a navigable water that is impaired due to nutrients, then the 
permit authority may designate that point source as a regulated storm 
water point source. The designee would then need to apply for an NPDES 
permit or risk being subject to enforcement for unpermitted discharges.
    EPA solicits comment on the proposed means of ensuring that manure 
and wastewater from AFOs and CAFOs is used in an environmentally 
appropriate manner, whether on-site at the CAFO or AFO or off-site 
outside of the control of the CAFO operator.

E. What are the Terms of an NPDES Permit?

    EPA is proposing to include several new requirements in the NPDES 
permit for CAFOs. See proposed Sec. 122.23(i). As discussed in section 
VIII on the proposed effluent guidelines, EPA is proposing to require 
all CAFO operators to develop and implement a Permit Nutrient Plan, 
which is a site-specific plan for complying with the effluent 
limitations requirements contained in the NPDES permit. EPA is 
proposing to require permit authorities to develop special conditions 
for each individual or general NPDES permit that address: (1) 
development of the allowable manure application rate; and (2) timing 
and method for land applying manure. Permits would also include a 
special condition that clarifies the duty to maintain permit coverage 
until the facility is properly closed.
    NPDES permits are comprised of seven sections: cover page; effluent 
limitations; monitoring and reporting requirements; record keeping 
requirements; special conditions; and standard conditions, discussed 
below.
1. What is a Permit Nutrient Plan (PNP) and What is the difference 
between USDA's CNMP and EPA's PNP?
    EPA is proposing to require all CAFO operators to develop and 
implement a Permit Nutrient Plan, or PNP. See proposed 
Sec. 412.31(b)(1)(i)(iv) and Sec. 122.23(k)(4). The PNP is a site-
specific plan that describes how the operator intends to meet the 
effluent discharge limitations and other requirements of the NPDES 
permit. Because it is the primary planning document for determining 
appropriate practices at the CAFO, EPA is also proposing to require 
that it be developed, or reviewed and modified, by a certified planner. 
The PNP must be developed within three months of submitting either a 
notice of intent for coverage under an NPDES

[[Page 3033]]

general permit, or an application for an NPDES individual permit.
    EPA is proposing to include a permit requirement for the CAFO to 
develop and implement a PNP and modify it when necessary. EPA believes 
this approach will maintain flexibility for modifications as the 
agricultural practices of the CAFO change. PNPs are intended to be 
living documents that are updated as circumstances change. Formal 
permit modification procedures would not have to be followed every time 
the PNP was modified.
    As described in section VIII of today's proposed revisions to the 
effluent guidelines, CAFO operators would be required to prepare a PNP 
that establishes the allowable manure application rate for land 
applying manure and wastewater, and that documents how the rate was 
derived. The plan would also address other site-specific conditions 
that could affect manure and wastewater application. It would also 
describe sampling techniques to be used in sampling manure and soils, 
as well as the calibration of manure application equipment, and would 
describe operational procedures for equipment at the production area.
    EPA is proposing to use the term ``Permit Nutrient Plan'' in 
today's proposed regulation in order to have a separate and distinct 
term that applies solely to the subset of activities in a CNMP that are 
directly connected with the effluent guideline and NPDES permit 
requirements, which are related to the best available technology 
currently available. EPA expects that many CAFOs will satisfy the 
requirement to develop a PNP by developing a Comprehensive Nutrient 
Management Plan (CNMP). EPA recognizes that creating a new term has the 
potential to create some initial confusion, and cause concern about 
overlapping or duplicative requirements. However, EPA believes the term 
PNP more clearly articulates to the regulated community the important 
distinctions between the broad requirements of a CNMP and the more 
specific effluent guideline requirements for a PNP.
    EPA invites comment on today's proposal to define PNPs as the 
subset of elements in the CNMP that are written to meet the effluent 
guideline requirements. EPA is especially interested in knowing whether 
PNP is the best term to use to refer to the regulatory components of 
the CNMP, and whether EPA's explanation of both the differences and 
relationship between these two terms (PNP and CNMP) is clear and 
unambiguous.
    In the Unified National Strategy for Animal Feeding Operations, EPA 
and USDA agreed that the development and implementation of CNMPs was 
the best way to minimize water quality impairment from confinement 
facilities and land application of manure and wastewater. The Strategy 
also articulated the expectation that all AFOs would develop and 
implement CNMPs, although certain facilities (CAFOs) would be required 
to do so while others (AFOs) would do so on a voluntary basis.
    In December 2000, USDA published its Comprehensive Nutrient 
Management Planning Technical Guidance (referred to here as the ``CNMP 
Guidance''). Federal Register: December 8, 2000 (Volume 65, Number 237) 
Page 76984-76985. The CNMP Guidance is intended for use by NRCS, 
consultants, landowners/operators, and others that will either be 
developing or assisting in the development of CNMPs. USDA published the 
CNMP Guidance to serve only as a technical guidance document, and it 
does not establish regulatory requirements for local, tribal, State, or 
Federal programs. Rather, it is intended as a tool to support the 
conservation planning process, as contained in the NRCS National 
Planning Procedures Handbook. The objective of the CNMP technical 
guidance is to identify management activities and conservation 
practices that will minimize the adverse impacts of animal feeding 
operations on water quality. The CNMP Guidance provides a list of 
elements that USDA believes should be considered when developing a 
CNMP. The strength of the CNMP Guidance is the breadth of conservation 
practices and management activities that it recommends AFO operators 
should consider.
    Initially, it was EPA's expectation to simply adopt USDA's 
voluntary program into its NPDES permitting program. However, by 
intentionally avoiding establishing regulatory requirements and 
limiting its role to that of technical guidance only, USDA's CNMP 
Guidance lacks many of the details EPA believes are necessary to ensure 
discharges of manure and other process wastewater are adequately 
controlled and nutrients applied to agricultural land in an acceptable 
manner. In addition, the CNMP Guidance addresses certain elements that 
address aspects of CAFO operations that EPA will not include as a part 
of the effluent guidelines and standards.
    Nonetheless, it is important to ensure that the regulatory program 
that would be established by the effluent guidelines and standards and 
NPDES permit regulations proposed today is complementary to and 
leverages the technical expertise of USDA with its CNMP Guidance, 
rather than present CAFO operators with programs that they might 
perceive as contradictory. EPA believes this goal will be accomplished 
by the requirements being proposed today. EPA is proposing that CAFOs, 
covered by the effluent guideline, develop and implement a PNP that is 
narrower in scope than USDA's CNMP Guidance, but that establishes 
specific actions and regulatory requirements.
    One of the key differences between the effluent guideline PNP and 
USDA's CNMP is the scope of elements included in each plan. USDA's CNMP 
includes certain aspects that EPA does not require CAFO operators to 
address within the regulatory program. For example, element 4.2.2.1 of 
USDA's CNMP Guidance (``Animal Outputs--Manure and Wastewater 
Collection, Handling, Storage, Treatment, and Transfer'') tells 
operators that the CNMP should include insect control activities, 
disposal of animal medical wastes, and visual improvement 
considerations. Additionally, Element 4.2.2.1 of the CNMP Guidance 
(``Evaluation and Treatment of Sites Proposed for Land Application'') 
states the CNMP should identify conservation practices and management 
activities needed for erosion control and water management. The 
regulations (and PNP) being proposed today include no such requirement. 
EPA is not including conservation practices which control erosion as 
part of a PNP because erosion control is not needed on all CAFO 
operations and because the costs associated with controlling erosion 
would add $150 million dollars to the cost of this proposal. These 
elements of a CNMP are, however, key components to protect water 
quality from excessive nutrients and sediments. EPA solicits comment 
and data on the costs and benefits of controlling erosion and whether 
erosion control should be a required component of PNPs.
    There are a number of elements that are addressed by both the CNMP 
and PNP. Examples of common elements include soil and manure analyses 
to determine nutrient content; calibration of application equipment; 
developing nutrient budgets; and records of Plan implementation. 
However, USDA's CNMP Guidance is indeed presented only as technical 
guidance. The CNMP Guidance identifies a number of elements that AFOs 
should consider, but there is no avenue for ensuring that AFOs 
implement any management practices or achieve a particular performance 
standard. In contrast,

[[Page 3034]]

EPA's proposed PNP would establish requirements for CAFOs that are 
consistent with the technical guidance published by USDA experts, but 
that go beyond that guidance by identifying specific management 
practices that must be implemented.
    For example, EPA is proposing the effluent guidelines to require 
CAFOs to analyze soil samples at least once every three years, and 
manure and lagoon samples at least annually. 40 CFR 412.37(a)(4)(ii). 
The CNMP Guidance addresses such analyses, but imposes no mandatory 
duty to perform such analyses, nor to conform to a particular 
monitoring frequency. Given the degree to which overflows and 
catastrophic failures of lagoons have been due to poor operation or 
maintenance of manure storage structures, EPA is proposing to establish 
specific requirements under Sections 308 and 402 that would: (1) More 
precisely monitor lagoon levels to prevent overflows that could be 
reasonably avoided; (2) require operators to periodically inspect the 
structural integrity of manure handling and storage structures, and 
expeditiously take corrective action when warranted; and (3) maintain 
records to ensure the proper operation and maintenance of manure 
handling and storage structures. USDA's CNMP Guidance establishes no 
such requirements.
    The regulations proposed today would also require permit 
authorities to establish more specific requirements for application of 
manure and wastewater to land, where appropriate, including: how the 
CAFO operator is to calculate the allowable manure application rate; 
when it is appropriate to apply manure to frozen, snow covered or 
saturated land; and facility closure.
    a. How are PNPs Developed and What is the Role of Certified 
Specialists? Under today's proposed rule, CAFO owners and operators 
would be required to seek qualified technical assistance for developing 
PNPs to meet their effluent guidelines and NPDES permit requirements. 
EPA is proposing that PNPs be developed, or reviewed and modified, by 
certified planners. See proposed Sec. 412.31(b)(1)(ii).
    Since PNPs are a defined subset of activities covered in CNMPs, as 
described above, owners and operators are expected to take advantage of 
the same technical assistance that is available for CNMP development, 
including appropriate Federal agencies, such as the NRCS, State and 
Tribal agricultural and conservation agency staff, Cooperative 
Extension Service agents and specialists, Soil and Water Conservation 
Districts, and Land Grant Universities. In addition, there are a 
growing number of non-governmental sources of qualified technical 
assistance, including integrators, industry associations, and private 
consultants who are certified to develop CNMPs, as well as the defined 
subset of activities covered in PNPs. In addition to the help of these 
experts, a growing number of computer-based tools are either available 
or under development to facilitate development and implementation of 
CNMPs, and should be equally useful for PNPs.
    Although CAFO owners and operators are ultimately responsible for 
developing and implementing effective PNPs, EPA is today proposing that 
PNPs be developed and/or reviewed and approved by a certified 
specialist. A certified PNP specialist is a person who has a 
demonstrated capability to develop CNMPs in accordance with applicable 
USDA and State standards, as well as PNPs that meet the EPA effluent 
guideline, and is certified by USDA or a USDA-sanctioned organization. 
Certified specialists include qualified persons who have received 
certifications through a State or local agency, personnel from NRCS, 
certification programs recognized as third party vendors of technical 
assistance, or other programs recognized by States. In addition, USDA 
is now developing agreements with third-party vendors similar to the 
1998 agreement with the Certified Crop Advisors (CCAs) and consistent 
with NRCS standards and specifications (or State standards if more 
restrictive). CCAs are expected to be available to provide technical 
assistance to producers in nutrient management, pest management, and 
residue management.
    The purpose of using certified specialists is to ensure that 
effective PNPs are developed and/or reviewed and modified by persons 
who have the requisite knowledge and expertise to ensure that plans 
fully and effectively address the need for PNPs that meet the minimum 
effluent guideline requirements in the NPDES permit, and that plans are 
appropriately tailored to the site-specific needs and conditions at 
each CAFO.
    EPA recognizes that some States already have certification programs 
in place for nutrient management planning, and expects that the USDA 
and EPA guidance for AFOs and CAFOs will provide additional impetus for 
new and improved State certification programs. These programs provide 
an excellent foundation for producing qualified certified specialists 
for CNMPs, and can be modified relatively easily to include a special 
module on how to develop an effective PNP as a defined subset of 
activities in the CNMP. EPA expects that, as a result of experience 
gained in the initial round of CAFO permitting under the existing 
regulations (2000--2005), certification programs will be well equipped 
to deal with both CNMPs and PNPs by the time today's regulations go 
into effect and States begin issuing the next round of CAFO permits 
that reflect these regulations. Thus, PNPs won't be expected to be 
developed before 2005.
    The issue of CNMP preparer requirements was also discussed by the 
SERs and SBAR Panel during the SBREFA outreach process. (Note that at 
that time, EPA was still using the term CNMP to apply to regulatory as 
well as voluntary nutrient management plans.) Several SERs were 
concerned that requiring the use of a certified planner could 
significantly increase the cost of plan development, as well as limit 
the operator's influence over the final product. These SERs felt that, 
with adequate financial and technical assistance, they could write 
their own plans and suggested that EPA work to facilitate such an 
option through expanded training and certification of farmers and 
provision of a user-friendly computer program to aid in plan 
development.
    The Panel recognized the need for plan preparers to have adequate 
training to write environmentally sound plans, particularly for large 
operations. However, the Panel also recognized the potential burden on 
small entities of having to use certified planners, especially 
considering the large number of AFOs and the limited number of 
certified planners currently available. The Panel recommended that EPA 
work with USDA to explore ways for small entities to minimize costs 
when developing CNMPs, and indicated that EPA should continue to 
coordinate with other Federal, State and local agencies in the 
provision of low-cost CNMP development services and should facilitate 
operator preparation of plans by providing training, guidance and tools 
(e.g., computer programs). EPA indicated in the Panel Report that it 
expected that many operations could become certified through USDA or 
land grant universities to prepare their own CNMPs.
    EPA is requesting comment on the proposal to require that PNPs be 
developed, or reviewed and modified, by certified planners, and on ways 
to structure this requirement in order to minimize costs to small 
operators.
    b. Submittal of Permit Nutrient Plan to the Permit Authority.--EPA 
is proposing to require that applicants for

[[Page 3035]]

individual permits and operators of new facilities submitting notices 
of intent for coverage under a general permit submit a copy of the 
cover sheed and executive summary of their draft PNP to the permit 
authority at the time of application or NOI submittal. 
Sec. 122.21(i)(1)(iv) and 122.28(b)(2)(ii). Operators of existing 
facilities seeking coverage under a general permit must submit a notice 
of final PNP development within 90 days of seeking coverage, but are 
not required to provide a copy of the PNP to the Permit Authority 
unless requested. The reporting requirements, including the notice of 
PNP development and notice of PNP amendment, are discussed in more 
detail in section VII.E.3 below.
    Initial installation of manure control technologies are 
significantly less costly compared to retrofitting existing facilities, 
and early development of a PNP will help to ensure that, when a new 
facility is being designed, the operator is considering optimal control 
technologies. In addition, in situations where individual permits are 
warranted, the public interest demands early review of the PNP, rather 
than waiting for its availability after the permit has been in effect 
for some time.
    EPA is requesting comment on the proposal to require new facilities 
seeking coverage under a general permit, as well as applicants for 
individual permits, to submit a copy of the cover sheet and executive 
summary of their PNP to the permit authority along with the NOI or 
permit application. EPA is further requesting comment on whether the 
entire draft PNP should be submitted along with the NOI or permit 
application.
    EPA is further requesting comment on whether, for individual 
permits, the PNP, in part or in its entirety, should be part of the 
public notice and comment process along with the permit.
    c. Availability of the Permit Nutrient Plan Information to the 
Public.--EPA is proposing to require the operator of a permitted CAFO 
to make a copy of the PNP cover sheet and executive summary available 
to the public for review. The CAFO operator could choose to make this 
information directly available to the public in any of several ways, 
such as: (1) maintaining a copy of these documents at the facility and 
making them available to the permit authority as publicly viewable 
documents upon request; (2) maintaining a copy of these documents at 
the facility and making them available directly to the requestor; (3) 
placing a copy of them at a publicly accessible site, such as at a 
public library; or (4) submitting a copy of them to the permit 
authority. EPA is proposing that, if the operator has not made the 
information available by other means, the permit authority would be 
required, upon request from the public, to obtain a copy of the PNP 
cover sheet and executive summary and make them available. It is 
important to ensure that the public has access to this information, 
which is needed to determine whether a CAFO is complying with its 
permit, including the land application provisions.
    EPA is also considering adding a provision in the final rule that 
would state that all information in the PNP, not just the cover sheet 
and executive summary, must be publicly available and cannot be claimed 
as confidential business information. Some stakeholders have claimed 
that all or a portion of the PNPs should be entitled to protection as 
confidential business information (CBI). EPA does not believe that the 
PNP cover sheet or executive summary would ever contain confidential 
business information. The information in these two sections of the plan 
is simply too general ever to be considered as CBI. However, EPA is 
sensitive to the concerns of CAFOs that there may be information in the 
remaining, more detailed portions of the PNP that is legitimately 
proprietary to the CAFOs' businesses and that the permit authorities 
should therefore protect. We therefore request comments on whether the 
final rule should require the entire PNP to be publicly available, or 
alternatively, whether the CAFO should be able to make a 
confidentiality claim as to the remaining information in the PNP. Any 
such claim of confidentiality would be governed by EPA's regulations at 
40 CFR, Part 2 and relevant statutes.
    There would be two bases on which EPA could base a determination 
that no portion of the Permit Nutrient Plans would be entitled to CBI 
status. First, CWA Section 402(j) states that ``[a] copy of each permit 
application and each permit issued under this section shall be 
available to the public.'' It may be that the PNPs that would be 
required by today's proposal are properly viewed as a part of the 
CAFO's NPDES permit. The permits would require each CAFO to develop and 
carry out a PNP, as specified in the proposed Part 122 regulations. In 
addition, today's proposed effluent limitations guidelines would 
specify detailed requirements that PNPs must meet. Failure to develop 
and properly carry out a PNP would be enforceable under each permit as 
a permit violation. Therefore, for purposes of Section 402(j), EPA may 
conclude that PNPs are properly viewed as a part of the permit or 
permit application and, accordingly, must be available to the public.
    EPA issued a ``Class Determination'' in 1978 that addresses this 
issue. See ``Class Determination 1-78'' (March 22, 1978) (a copy of 
which is in the public record for today's proposal). This Class 
Determination addressed how to reconcile Section 402(j) of the Clean 
Water Act with Section 308 of the Act. Section 308, which authorizes 
EPA to collect information, states that information obtained under that 
section shall be available to the public, except upon a showing 
satisfactory to the Administrator that the information, if made public, 
would divulge methods or processes entitled to protection as trade 
secrets. Upon such a showing, the Administrator shall protect that 
information as confidential. Section 308 makes an exception for 
``effluent data,'' which is not entitled to such protection.
    This Class Determination concludes that information contained in 
NPDES permits and permit applications is not entitled to confidential 
treatment because Section 402(j) mandates disclosure of this 
information to the public, notwithstanding the fact that it might be 
trade secrets or commercial or financial information. Referring to the 
legislative history of the CWA, the Class Determination notes that 
Congress sought to treat the information in permits and permit 
applications differently from information obtained under Section 308. 
It concludes that Congress intended Section 402(j) to be a disclosure 
mandate in contrast to the basic approach of Section 308, which 
provides protection for trade secret information. (Class Determination 
at pp. 2-4.) Therefore, consistent with the Class Determination, if EPA 
were to conclude that the PNPs are a part of the permit, the entire PNP 
would be a public document that would not be entitled to 
confidentiality protection.
    A second basis for finding that PNPs must be available to the 
public would be that, even apart from Section 402(j), the information 
in PNPs may be ``effluent data'' and if so, also would not be entitled 
to protection under Section 308. EPA's regulations define the term 
``effluent data,'' among other things, as ``[i]nformation necessary to 
determine the identity, amount, frequency, concentration, temperature, 
or other characteristics (to the extent related to water quality) of 
any pollutant which has been discharged by the source (or of any 
pollutant resulting from any discharge from the source), or any 
combination of the foregoing.'' 40 CFR 2.302(a)(2)(i). There is a 
limited exception for information that is related to research and 
development activities.

[[Page 3036]]

EPA believes that the information in PNPs may fit this definition of 
``effluent data.'' The information in PNPs has direct bearing on the 
amount of pollutants that may be discharged by a CAFO and on 
characteristics of the pollutants that may be discharged (such as the 
identity and presence of nutrients) that would be related to water 
quality.
    On the other hand, the Agency could conclude that the information 
in the PNP is not part of the CAFO's permit. Each permit would indeed 
require the CAFO to develop and carry out a PNP that is approved by a 
certified specialist. Nevertheless, the CAFO will be developing the 
terms of the final PNP, as well as periodic modifications to the PNP, 
outside of the permitting process. It may be appropriate not to 
consider the PNP to be part of the permit for purposes of section 
402(j). If 402(j)--which states that all information in the permit must 
be publicly available--is therefore not a relevant provision, then 
whether PNPs could be protected as confidential would be determined 
under section 308.
    Section 308, as noted above, allows information to be protected as 
CBI where the submitter can demonstrate the trade secret nature of the 
information to the satisfaction of the Administrator, except that 
``effluent data'' is never confidential. EPA could find that the 
information in PNPs is not ``effluent data.'' That is, EPA could 
conclude that the information in PNPs primarily concerns operational 
practices at the facility and does not have enough of a bearing on the 
characteristics of pollutants in the effluent to be considered 
``effluent data.'' Because it would not be ``effluent data,'' the PNP 
information would not be categorically excluded from being treated as 
confidential. EPA's regulations at 40 CFR Part 2 specify the procedures 
for parties to make case-specific claims that information they submit 
to EPA is confidential and for EPA to evaluate those claims. Consistent 
with these regulations, each CAFO could claim that the information in 
its PNP is confidential (except for the cover sheet and executive 
summary). EPA would evaluate these claims and determine in each case 
whether the CAFO's CBI claim should be approved or denied. In sum, EPA 
could adopt final regulations that would require a CAFO's CBI claims 
for the more detailed information in the remaining parts of the PNP to 
be decided in each case.
    The Agency notes that EPA itself would, of course, always be able 
to request and review the CAFO's full PNP. The issues raised in this 
discussion concern only the availability of these plans to outside 
parties.
    EPA requests comments on all aspects of this proposal, including 
whether it would be proper to determine that the full PNP must be 
publicly available under CWA Section 402(j) and under CWA Section 308 
as ``effluent data.'' EPA also requests comments on whether the cover 
sheet and executive summary should always be made available to the 
public, as proposed, or whether there are elements of the cover sheet 
or executive summary that might appropriately be claimed as CBI, and 
not considered to be either part of the permit or ``effluent data.''
    The PNP would be narrower than the CNMP and would contain only 
requirements that are necessary for purposes of the effluent guideline. 
A CNMP may contain other elements that go beyond the effluent 
guideline. EPA is not proposing any separate requirements for CNMPs 
themselves to be made publicly available and is not proposing any 
findings as to whether information in a CNMP may be confidential.
2. What are the Effluent Limitations in the Permit?
    The effluent limitations section in the permit serves as the 
primary mechanism for controlling discharges of pollutants to receiving 
waters. This section describes the specific narrative or numeric 
limitations that apply to the facility and to land application. It can 
contain either technology-based effluent limits or water quality-based 
effluent limits, or both, and can contain additional best management 
practices, as needed.
    a. What Technology Based Effluent Limitations Would be in the 
Permit? Under the two-tier structure, for CAFOs with 500 AU or more, 
the effluent guidelines and standards regulations [40 CFR 412] would 
establish the technology-based effluent limitations to be applied in 
NPDES permits. Under the three-tier structure, any operation defined as 
a CAFO would be subject to the revised effluent guidelines. The 
proposal to revise the effluent guidelines and standards regulation is 
described in section VIII of today's proposed rule.
    Operations with fewer than 500 AU under the two-tier structure, or 
fewer than 300 AU under the three-tier structure, which have been 
designated as CAFOs by the permit authority would not be subject to the 
effluent guidelines and standards. For these CAFOs, the permit writer 
would use ``Best Professional Judgement,'' or BPJ, to establish, on a 
case-by-case basis, the appropriate technology-based requirements. 
Often, permit writers adopt requirements similar to, or the same as the 
effluent guidelines requirements.
    b. What Water Quality-based Effluent Limitations Would be in the 
Permit? Section 301(b)(1)(C) of the Clean Water Act requires there to 
be achieved ``any more stringent limitation, including those necessary 
to meet water quality standards.'' Therefore, where technology-based 
effluent limitations are not sufficient to meet water quality 
standards, the permit writer must develop more stringent water quality-
based effluent limits. Under today's proposal, the permit writer must 
include any more stringent effluent limitations for the waste stream 
from the production area as necessary to meet water quality standards. 
If necessary to meet water quality standards, permit writers may 
consider requiring more stringent BMPs (e.g., liners for lagoons to 
address a direct hydrologic connection to surface waters; covers for 
lagoons to prevent rainwater from causing overflows; allowing 
discharges only from catastrophic storms and not from chronic storms; 
pollutant limits in the overflow; particular treatments, such as 
grassed waterways for the overflows discharged; etc.).
    If EPA chose to promulgate one of the options discussed in section 
VII.D.2 above under which the agricultural storm water discharge 
exemption did not apply to land application areas under the operational 
control of a permitted CAFO, then the permit writer would be required 
to establish water quality-based effluent limits where necessary to 
meet water quality standards. If EPA chose to promulgate the option 
described in section VII.D.2 above, under which the appropriate rates 
and practices identified in the effluent guidelines and the NPDES 
regulations established the scope of the term ``agriculture'' without 
additional consideration of water quality impacts or water quality 
standards, only the limitations and practices required by the effluent 
guidelines and the NPDES regulations could be required by the permit 
authority for land application discharges.
    c. What Additional Best Management Practices Would be in the 
Permit? Under Sec. 122.44(k)(4) of the existing NPDES regulations, 
permit writers may include in permits best management practices ``that 
are reasonably necessary to achieve effluent limitations and standards 
or to carry out the purposes and intent of the CWA.'' Under today's 
proposal, the permit writer may include BMPs for land application areas 
in

[[Page 3037]]

addition to those required by the effluent guidelines, as necessary to 
prevent adverse impacts on water quality. As discussed in section 
VII.D.2 above, EPA is today defining proper agricultural practices 
required to qualify for the agricultural storm water discharge 
exemption to include practices necessary to minimize adverse water 
quality impacts. Therefore, if a permit writer determines that despite 
the implementation of the BMPs required by the effluent guidelines 
discharges from a CAFO will have adverse water quality impacts, the 
permit writer should impose additional BMPS designed to minimize such 
impacts.
    3. What Monitoring and Reporting Requirements are Included in the 
Permit?
    The section of the NPDES permit on monitoring and reporting 
requirements identifies the specific conditions related to the types of 
monitoring to be performed, the frequencies for collecting samples or 
data, and how to record, maintain, and transmit the data and 
information to the permit authority. This information allows the NPDES 
permit authority to determine compliance with the permit requirements.
    As described in section VIII, today's proposed revisions to the 
effluent guidelines would require the operator to conduct periodic 
visual inspection and to maintain all manure storage and handling 
equipment and structures as well as all runoff management devices. See 
proposed Sec. 412.33(c). The NPDES permit would also require the 
permittee to: (1) test and calibrate all manure application equipment 
annually to ensure that manure is land applied in accordance with the 
proper application rates established in the NPDES permit; (2) sample 
manure for nutrient content at least once annually, and up to twice 
annually if manure is applied more than once or removed to be sent off-
site more than once per year; and (3) sample soils for phosphorus once 
every three years. Today's proposed effluent guidelines would also 
require the operator to review the PNP annually and amend it if 
practices change either at the production area or at the land 
application area, and submit notification to the permit authority. 
Examples of changes in practice necessitating a PNP amendment include: 
a substantial increase in animal numbers ( e.g., more than 20 percent) 
which would significantly increase the volume of manure and nutrients 
produced on the CAFO; a change in the cropping program which would 
significantly alter land application of animal manure and wastewater; 
elimination or addition of fields receiving animal waste application; 
or changes in animal waste collection, storage facilities, treatment, 
or land application method.
    As discussed in section VII.E.1.c above, CAFO operators would be 
required to submit their PNPs, as well as any information necessary to 
determine compliance with their PNPs and other permit requirements, to 
the permit authority upon request. The CAFO operator could make a copy 
of the cover sheet and executive summary of the PNP available to the 
public in any of several ways. Operators of new facilities seeking 
coverage under a general permit and applicants for individual permits 
would be required to submit a copy of their draft PNP to the permit 
authority at the time of NOI submittal or application.
    EPA is also proposing to require operators to submit a written 
notification to the permit authority, signed by the certified planner, 
that the PNP has been developed or amended, and is being implemented, 
accompanied by a fact sheet summarizing certain elements of the PNP. 
See Sec. 412.31(b)(1)(ii). This written notice of PNP availability 
would serve an important role in verifying that the permittee is 
complying with one of the requirements of the NPDES permit. EPA is 
proposing that the PNP notification and fact sheet contain the 
following information:
 The number and type of animals covered by the plan
 The number of acres to which manure and wastewaters will be 
applied
 The phosphorus conditions for those fields receiving the 
manure
 Nutrient content of the manure
 Application schedule and rate
 The quantity to be transferred off-site
 Date PNP completed or amended
 Key implementation milestones
4. What are the Record Keeping Requirements?
    The record keeping requirements section of the permit specifies the 
types of records to be kept on-site at the permitted facility.
    Operation and Maintenance of the CAFO. As described in section VIII 
of today's proposal, EPA is proposing to require operators to maintain 
records at the facility that document: (1) the visual inspections, 
findings, and preventive maintenance; (2) the date, rate, location and 
methods used to apply manure and wastewater to land under the control 
of the CAFO operators; (3) the transfer of the CAFO-generated manure 
off-site; (4) the results of annual manure and wastewater sampling and 
analyses to determine the nutrient content; and (5) the results of 
representative soil sampling and analyses conducted at least every 
three years to determine nutrient content.
    Transfer to Off-site Recipients of CAFO Manure. As described in 
Chapter IV.B and V.B, inappropriate land application of CAFO-generated 
manure poses a significant risk to water quality. Further, EPA 
estimates that the majority of CAFO-generated manure is in excess of 
CAFO's crop needs, and will very likely be transferred off-site. The 
ultimate success of the CAFO program depends on whether recipients 
handle manure appropriately, and in a manner that prevents discharge to 
waters. As discussed fully in section VII.D.4, EPA is not proposing to 
regulate off-site recipients through CAFO permit requirements, however, 
EPA believes that the certification and record-keeping requirements 
described here will help to ensure responsible handling of manure. 
Thus, EPA is co-proposing additional record keeping requirements under 
the NPDES program.
    Under one co-proposed option, EPA would require that owners or 
operators of CAFOs obtain from off-site land appliers a certification 
that, if land applying CAFO-generated manure, they are doing so at 
proper agricultural rates. In addition, the CAFO owner or operator 
would be required to maintain records of transfer, including the name 
of the recipient and quantity transferred, and would be required to 
provide the recipient with an analysis of the contents of the manure 
and a brochure describing the recipient's responsibilities for proper 
management of the manure.. Under another co-proposed option, EPA would 
not require the certification, but would require the CAFO owner or 
operator to keep records and provide information.
    Certification Option. Under one option, EPA is proposing that CAFOs 
obtain a certification and that recipients of CAFO-generated manure so 
certify, pursuant to Sec. 308 of the CWA. Under Sec. 308, EPA has the 
authority to require the owner or operator of a point source to 
establish and maintain records and provide any information the Agency 
reasonably requires. The Agency has documented historic problems 
associated with over application of CAFO manure and wastewater by both 
CAFO operators and recipients of CAFO manure and wastewater. Today's 
proposal would establish effluent limitations designed to prevent 
discharges due to over application. In order to determine whether or 
not CAFOs are meeting the effluent

[[Page 3038]]

limitations which would be established under today's proposals, EPA 
believes it is necessary for the Agency to have access to information 
concerning where a CAFO's excess manure is sent. Furthermore, in order 
to determine whether or not the recipients of CAFO manure should be 
permitted (which may be required if they do not land apply the CAFO 
manure in accordance with proper agricultural practices and they 
discharge from a point source, see section VII.D.2), EPA has determined 
that it will be necessary for such recipients to provide information 
about their land application methods. Recipients who certify that they 
are applying manure in accordance with proper agricultural practices as 
detailed in section VII.D.2 are responding to a request under Section 
308 of the CWA. Therefore, a recipient who falsely certifies is subject 
to all applicable civil and criminal penalties under Section 309 of the 
CWA.
    In some cases, CAFOs give or sell manure to many different 
recipients, including those taking small quantities, and this 
requirement could result in an unreasonable burden. EPA is primarily 
concerned with recipients who receive and dispose of large quantities, 
presuming that recipients of small quantities pose less risk of 
inappropriate disposal or over-application. To relieve the paperwork 
burden, EPA is proposing that CAFOs not be required to obtain 
certifications from recipients that receive less than twelve tons of 
manure per year from the CAFO. The CAFO would, however, be required to 
keep records of transfers to such recipients, as described below.
    The Agency believes that it would be reasonable to exempt from the 
PNP certification requirements recipients who receive small amounts of 
manure from CAFOs. EPA considered exempting amounts such as a single a 
truckload per day or a single truckload per year. EPA decided that an 
appropriate exemption would be based on an amount that would be 
typically used for personal, rather than commercial, use. The exemption 
in today's proposal regulation is based on the amount of manure that 
would be appropriately applied to five acres of land, since five acres 
is at the low end of the amount of land that can be profitably farmed. 
See, e.g., ``The New Organic Grower,'' Eliott Coleman (1995).
    To determine the maximum amount of manure that could be 
appropriately applied to five acres of land, an average nutrient 
requirement per acre of cropland and pasture land was computed. Based 
on typical crops and national average yields, 160 pounds of nitrogen 
and 14.8 pounds of phosphorous are required annually per acre. See 
``Manure Nutrient Relative to the Capacity of Cropland and Pastureland 
to Assimilate Nutrients,'' Kellogg et al (USDA, July, 25, 2000). The 
nutrient content of manure was based on USDA's online software, Manure 
Master, available on the world wide web at http://www2.ftw.nrcs.usda.gov/ManureMaster/MM21.html.
    The nitrogen content of manure at the time of land application 
ranges from 1.82 pounds per ton for heifers and dairy calves to 18.46 
pounds per ton for hens and pullets. Using the low end rate of 1.82 
pounds of nitrogen per ton, 87.4 tons of manure would be needed for a 
typical acre or 439 tons of manure for five acres in order to achieve 
the 160 pounds per acre rate. Using the high end rate of 18.46 pounds 
of nitrogen per ton, 8.66 tons of manure would be needed for a typical 
acre or 43.3 tons of manure for five acres in order to achieve the 160 
pounds per acre rate. Thus, the quantity of manure needed to meet the 
nitrogen requirements of a five acre plot would range from 43.3 tons to 
439 tons, depending on the animal type.
    The phosphate content of manure at the time of land application 
ranges from 1.10 pounds per ton for heifers and dairy calves to 11.23 
pounds per ton for turkeys for breeding. Using the high end 11.23 pound 
per ton rate for phosphorous, only about 1.3 tons would be needed for 
an average acre, or 6.5 tons for five acres in order to meet the 14.8 
pounds of phosphorous required annually for a typical acre of crops. 
Using the low end 1.1 pound per ton rate for phosphorous, about 13.2 
tons would be needed for an average acre, or 66 tons for five acres. 
Using the phosphate content for broilers of 6.61 pounds per ton is more 
typical of the phosphate content of manure and would result in 2.23 
tons per acre being needed for an average acre, or 11.2 tons for five 
acres.
    Clearly, exempting the high end amount of manure based on nitrogen 
content could lead to excess application of phosphorous. Regulating 
based on the most restrictive phosphate requirement could lead to 
manure not being available for personal use.
    The exemption is only an exemption from the requirement that the 
CAFO obtain a certification. The recipient would remain subject to any 
requirements of State or federal law to prevent discharge of pollution 
to waters of the U.S.
    EPA is proposing to set the threshold at 12 tons per recipient per 
year. This is rounding the amount based on typical phosphate content. 
It also allows one one-ton pick up load per month, which is consistent 
with one of the alternative approaches EPA considered. Recipients that 
receive more than 12 tons would have to certify that it will be 
properly managed. EPA is interested in comments on alternative 
thresholds for exempting small quantity transfers by the CAFO from the 
requirement that CAFOs receive certifications from the recipients.
    For CAFO owners or operators who transfer CAFO-generated manure and 
wastewater to manure haulers who do not land apply the waste, EPA is 
proposing that the CAFO owner or operator must: (1) obtain the name and 
address of the recipients, if known; (2) provide the manure hauler with 
an analysis of the nutrient content of the manure, to be provided to 
the recipients; and (3) provide the manure hauler with a brochure to be 
given to the recipients describing the recipient's responsibility to 
properly manage the land application of the manure to prevent discharge 
of pollutants to waters of the U.S. The certification form would 
include the statement,

``I understand that the information is being collected on behalf of 
the U.S. Environmental Protection Agency or State and that there are 
penalties for falsely certifying. The permittee is not liable if the 
recipient violates its certification.''

    Concern has been expressed that many potential recipients of CAFO 
manure will choose to forego CAFO manure, and buy commercial 
fertilizers instead, in order to avoid signing such a certification and 
being brought under EPA regulation. The result could be that CAFO 
owners and operators might be unable to find a market for proper 
disposal, thereby turning the manure into a waste rather than a 
valuable commodity. EPA requests comment on this concern.
    This alternative is potentially protective of the environment 
because non-CAFO land appliers would be liable for being designated as 
a point source in the event that there is a discharge from improper 
land application. EPA's proposed requirements for what constitutes 
proper agricultural practices, described in VII.D.2 above, would ensure 
that CAFO-generated manure is properly managed.
    No Certification Option. In the second alternative proposal for 
ensuring proper management of manure that is transferred off-site, EPA 
is not proposing to require CAFO owners or operators to obtain the 
certification described above. Rather, CAFO owners or operators would 
be required to maintain records of transfer, described in the following 
section.

[[Page 3039]]

    Concern has been expressed that many potential recipients of CAFO 
manure will choose to forego CAFO manure, and buy commercial 
fertilizers instead, in order to avoid signing such a certification and 
being brought under EPA regulation. The result could be that CAFO 
owners and operators might be unable to find a market for proper 
disposal, thereby turning the manure into a waste rather than a 
valuable commodity.
    This alternative is potentially protective of the environment 
because non-CAFO land appliers would be liable for being designated as 
a point source in the event that there is a discharge from improper 
land application. EPA's proposed requirements for what constitutes 
proper agricultural practices, described in VII.D.2 above, would ensure 
that CAFO-generated manure is properly managed.
    Records of Transfer of Manure Off-site. In both alternative 
proposals for whether or not to require CAFO owners or operators to 
obtain certifications from off-site recipients, EPA is proposing to 
require CAFO operators to maintain records of the off-site transfer of 
the CAFO-generated manure and wastewater, e.g., when manure is sold or 
given away for land application on land not under their operational 
control, to ensure the environmentally acceptable use of the CAFO-
generated manure. See Sec. 122.23(i)(5). When CAFO-generated manure is 
sold or given away to be used for land application, the specific manner 
of land application does not need to be addressed in the CAFO's PNP. 
However, to help ensure the environmentally acceptable use of the CAFO-
generated manure, the CAFO operator would be required to do the 
following: See Sec. 122.23(j)(4) and (5).
     Maintain records showing the amount of manure and/or 
wastewater that leaves the operation;
     Record the name and address of the recipient(s), including 
the intended recipient(s) of manure and/or wastewater transferred to 
contract haulers, if known;
     Provide the recipient(s) with representative information 
on the nutrient content of the manure to be used in determining the 
appropriate land application rates; and
     Provide the recipient with information provided by the 
permit authority of his/her responsibility to properly manage the land 
application of the manure to prevent discharge of pollutants to waters 
of the U.S.
     [Under one co-proposed option, obtain and retain on-site a 
certification from each recipient of the CAFO-generated manure and 
wastewater that they will do one of the following: (a) land apply in 
accordance proper agricultural practices as defined in today's 
proposal; (b) obtain an NPDES permit for discharges resulting from non-
agricultural spreading; (c) or utilize it for other than land 
application purposes.]
    EPA proposes to require these records to be retained on-site at the 
CAFO, and to be submitted to the permit authority upon request.
5. What are the Special Conditions and Standard Conditions in an NPDES 
Permit?
    Standard conditions in an NPDES permit list pre-established 
conditions that apply to all NPDES permits, as specified in 40 CFR 
122.41.
    The special conditions in an NPDES permit are used primarily to 
supplement effluent limitations and ensure compliance with the CWA. EPA 
is proposing at 40 CFR 122.23(i) to (k) to require permit authorities 
to develop special conditions that: (a) specify how the permittee is to 
calculate the allowable manure application rate; (b) specify timing 
restrictions, if necessary, on land application of manure and 
wastewater to frozen, snow covered or saturated ground; (c) establish 
requirements for facility closure; (d) specifying conditions for 
groundwater with a direct hydrological connection to surface water; (e) 
require certification for off-site transfer of manure and wastewater 
(co-proposed with omitting this requirement). Finally, EPA is 
soliciting comment on whether a special condition should be included 
regarding erosion control.
    a. Determining Allowable Manure Application Rate. EPA is proposing 
that the permit authority be required to include a term in the NPDES 
permit that establishes the method to be used for determining the 
allowable manure application rate for applying manure to land under the 
control of the CAFO operator. See proposed Sec. 122.23(j)(1).
    As described in detail in section VIII, three methods are available 
which may be used to determine the allowable manure application rate 
for a CAFO. These three methods are: (1) the Phosphorus Index; (2) the 
Soil Phosphorus Threshold Level; and (3) the Soil Test Phosphorus 
Level.
    EPA is proposing to adopt these three methods from USDA Natural 
Resource Conservation Service's (NRCS) nutrient management standard 
(Standard 590). State Departments of Agriculture are developing State 
nutrient standards which incorporate one of these three methods. EPA is 
proposing to require that each authorized permit authority adopt one or 
more of these three methods as part of the State NPDES program, in 
consultation with the State Conservationist. The permit would require 
the permittee to develop the appropriate land application rates in the 
site-specific PNP based upon the State's adopted method. EPA solicits 
comment on whether the special conditions in an NPDES permit should 
require permit authorities to adopt the USDA Natural Resource 
Conservation Service's (NRCS) Nutrient Management Standard (Standard 
590) in its entirety rather than just the portion that applies to 
determining the allowable manure application rate.
    b. Would Timing Restrictions on Land Application of CAFO-generated 
Manure be Required? EPA is proposing to require that the permit writer 
include in the CAFO's NPDES permit regionally appropriate prohibitions 
or restrictions on the timing and methods of land application of manure 
where necessary. See proposed Sec. 122.23(i)(3). The permit writer 
would develop the restrictions based on a consideration of local crop 
needs, climate, soil types, slope and other factors.
    The permit would prohibit practices that would not serve an 
agricultural purpose and would have the potential to result in 
pollutant discharges to waters of the United States. A practice would 
be considered not to be agricultural if significant quantities of the 
nutrients in the manure would be unavailable to crops because they 
would leach, run off or be lost due to erosion before they can be taken 
up by plants.
    EPA considered establishing a national prohibition on applying 
CAFO-generated manure to frozen, snow covered or saturated ground in 
today's proposed effluent guidelines. Disposal of manure or wastewater 
to frozen, snow covered or saturated ground is generally not a 
beneficial use for agricultural purposes. While such conditions can 
occur anywhere in the United States, pollutant runoff associated with 
such practice is a site specific consideration and is dependent on a 
number of variables, including climate and topographic variability, 
distance to surface water, and slope of the land. Such variability 
makes it difficult to develop a national technology-based standard that 
is consistently reasonable, and does not impose unnecessary cost on 
CAFO operators.
    While EPA believes that many permit writers will find a prohibition 
on applying CAFO-generated manure to frozen, snow covered or saturated 
ground to be reasonably necessary to achieve the effluent limitations 
and to carry out the purposes and intent of the

[[Page 3040]]

CWA, EPA is aware that there are areas where these practices might be 
allowed provided they are restricted. Application on frozen ground, for 
example, may be appropriate in some areas provided there are 
restrictions on the slope of the ground and proximity to surface water. 
Many States have already developed such restrictions.
    While the proposed regulations would not establish a national 
technology-based limitation or BMP, EPA is proposing at 
Sec. 122.23(j)(2) that permit writers consider the need for these 
limits. Permit authorities would be expected to develop restrictions on 
timing and method of application that reflect regional considerations, 
which restrict applications that are not an appropriate agricultural 
practice and have the potential to result in pollutant discharges to 
waters of the United States. It is likely that the operators would need 
to consider means of ensuring adequate storage to hold manure and 
wastewater for the period which manure may not be applied. EPA 
estimates that storage periods might range from 45 to 270 days, 
depending on the region and the proximity to surface water, and to 
ground water with a direct hydrological connection to surface water. 
Permit authorities are expected to work with State agricultural 
departments, USDA's Natural Resource Conservation Service, the EPA 
Regional office, and other local interests to determine the appropriate 
standard, and include the standard consistently in all NPDES permits 
for CAFOs.
    EPA's estimate that storage periods would range from 45 days to 270 
days is derived using published freeze/frost data from the National 
Oceanic and Atmospheric Administration, National Center for Disease 
Control. For the purpose of estimating storage requirements to prevent 
application to frozen ground, EPA assumed CAFOs could only apply manure 
between the last spring frost and the first fall frost, called the 
``freeze free period''. With a 90 percent probability, EPA could also 
use a 28 degree temperature threshold to determine the storage time 
required, rounded to the nearest 45 day increment. This calculation 
results in 45 days of storage in the South; 225 days in parts of the 
Midwest and the Mid-Atlantic; and as high as 270 days storage in the 
Central region.
    EPA is soliciting comment on alternate approaches of prohibiting 
land application at certain times or using certain methods. For 
example, EPA might develop a nationally applicable prohibition against 
applying manure on frozen land that is greater than a certain slope 
such as 15 percent. EPA is also interested in whether to prohibit 
application to saturated soils.
    c. Closure. EPA is proposing to require permit authorities to 
require the CAFO operator to maintain permit coverage (e.g., after the 
facility ceases operation as a CAFO or drops below the size for being 
defined as a CAFO) until all CAFO-generated manure and wastewater is 
properly disposed and, therefore, the facility no longer has the 
potential to discharge. See proposed Sec. 122.23(i)(3). Specifically, 
the permit writer would need to impose a permit condition requiring the 
owner or operator to reapply for a permit unless and until the owner or 
operator can demonstrate that the facility has no potential to 
discharge wastes generated by the CAFO. This requirement would be 
included as a special condition in the NPDES permits.
    EPA considered several options for ensuring that manure and 
wastewater from CAFOs is properly disposed after the operation 
terminates or ceases being a CAFO. Section VII.C.2.g above discusses 
the options in detail. In this proposal, EPA is also proposing to 
ensure that permits explicitly address closure requirements. While EPA 
is today proposing to only require ongoing permit coverage of the 
former CAFO, permit authorities are encouraged to consider including 
other conditions such as those discussed in Section VII.C.2.g above.
    EPA is soliciting comment on these proposed provisions.
    d. Discharge to Surface Water via a Direct Hydrological Connection 
with Ground Water. EPA is proposing requirements to address the serious 
environmental harms caused by discharges from CAFOs to surface waters 
via direct hydrologic connection with ground water. As described in 
section V.B.2.a, studies in Iowa, the Carolinas, and the Delmarva 
Peninsula have shown that CAFO lagoons do leak, and that leaks from 
lagoons contaminate ground water and the surface water to which that 
ground water is hydrologically connected, often severely. EPA believes 
that it is reasonable to include a requirement to ensure that 
discharges to surface water via a direct hydrologic connection with 
ground water do not occur from CAFOs, either by requiring the permit 
applicant to implement appropriate controls or to provide evidence that 
no such connection exists at the facility.
    Section VII.C.2.J of today's preamble discusses the legal and 
technical basis for the proposed ground water controls, and provides 
information on tools and resources available to permit writers to make 
determinations as to whether the production area of a CAFO may 
potentially discharge to surface waters via direct hydrologic 
connection with ground water.
    EPA requests comment on the following proposals.
    CAFOs Subject to Effluent Guideline Requirements for Ground water. 
EPA is proposing that, for all CAFOs that are subject to an effluent 
guideline that includes requirements for zero discharge from the 
production area to surface water via direct hydrologic connection to 
ground water (all beef and dairy operations, as well as new swine, 
poultry and veal operations), the permit would require the appropriate 
controls and monitoring. See proposed 40 CFR 412.33(a)(3), 412.35(a)(3) 
and 412.45(a)(3). The permittee would be able to avoid the requirements 
by submitting a hydrologist's report demonstrating, to the satisfaction 
of the permit authority, that the ground water beneath the production 
area is not connected to surface water through a direct hydrologic 
connection.
    EPA is also requesting comment on other options for determining 
which CAFOs must implement appropriate monitoring and controls to 
prevent discharges from the production area to hydrologically connected 
groundwater. One option would be for EPA to narrow the rebuttable 
presumption to areas with topographical characteristics that indicate 
the presence of ground water that is likely to have a direct hydrologic 
connection to surface water. For example, the final rule could specify 
that only CAFOs located in certain areas, such as an area with certain 
types of lithologic settings (e.g., karst, fractured bedrock, or 
gravel); or an area defined by the USGS as a HLR1 or HLR9; or an area 
with a shallow water table; would need to either comply with the 
groundwater monitoring requirements and appropriate controls in the 
effluent guideline or provide a hydrologist's statement demonstrating 
that there is no direct hydrologic connection to surface waters. 
Another option would be to require States, through a public process, to 
identify the areas of the State in which there is the potential for 
such discharges. In those areas, CAFOs subject to an effluent guideline 
that includes requirements to prevent discharges to surface water via 
hydrologically connected ground water would again need to either comply 
with the monitoring requirements and appropriate controls in the 
guideline or provide a hydrologist's statement demonstrating that there 
is no hydrologic connection to surface waters.
    Requirements for CAFOs Not Subject to Effluent Guidelines Ground 
Water

[[Page 3041]]

Provisions. Certain facilities are not subject to today's revised 
effluent guideline (412 Subpart C and D) that includes requirements to 
prevent discharges to surface water via hydrologically connected ground 
water. Such CAFOs include: (1) Facilities below the effluent guideline 
applicability threshold that are designated as CAFOs; (2) existing 
swine, poultry and veal operations; and (3) CAFOs in sectors other than 
beef, dairy, poultry, swine and veal. For such CAFOs not subject to an 
effluent guideline that includes ground water requirements, EPA is 
proposing that the permit writer must assess whether the facility is in 
an area with topographical characteristics that indicate the presence 
of ground water that is likely to have a direct hydrologic connection 
to surface water. For instance, if the facility is in an area with 
topographical characteristics that indicate the presence of ground 
water that is likely to have a hydrologic connection to surface water, 
as discussed above, the permit writer is likely to determine that there 
is the potential for a discharge to surface water via ground water with 
a direct hydrologic connection.
    For existing swine, poultry, and veal operations, if the permit 
writer determines that pollutants may be discharged at a level which 
may cause or contribute to an excursion above any State water quality 
standard, the permit writer would be required to decide on a case-by-
case basis whether effluent limitations (technology-based and water 
quality-based, as necessary) should be established to address potential 
discharges to surface water via hydrologically connected ground water. 
EPA is proposing that a permittee for whom the permit authority has 
made the above determinations would be required to comply with those 
conditions, or could avoid having those conditions imposed by providing 
a hydrologist's statement that the facility does not have a direct 
hydrologic connection to surface water. 40 CFR 122.23(j)(6) and (k)(5).
    For CAFOs not subject to today's revised effluent guidelines, if 
the permit writer determines that there is likely to be a discharge 
from the CAFO to surface waters via a direct hydrologic connection, the 
permit writer must impose technology-based or water quality-based, or 
both, effluent limitations, as necessary. Again, EPA is proposing that 
a permittee for whom the permit authority has made the above 
determinations would be required to comply with those conditions, or 
could avoid having those conditions imposed by providing a 
hydrologist's statement that the facility does not have a direct 
hydrologic connection to surface water. 40 CFR 122.23(j)(6) and (k)(5).
    EPA is soliciting comments on the alternative provisions discussed 
here. EPA is also requesting comment on the proposal to place the 
burden on the permittee to establish to the satisfaction of the 
permitting authority that the ground water beneath the production area 
is not connected to surface waters through a direct hydrologic 
connection.
    e. Certification for Off-site Recipients of CAFO Manure. EPA is co-
proposing either to include the following requirement or to omit it. In 
the inclusionary proposal, EPA would require permit writers to include 
a special condition in each permit that requires CAFO owners or 
operators to transfer manure off-site only to recipients who can 
certify that they will either: (1) Land apply manure according to 
proper agricultural practices, as defined for off-site land appliers in 
today's proposed rule; (2) obtain an NPDES permit for potential 
discharges; or (3) use the manure for purposes other than land 
application. EPA proposes to define the term ``proper agriculture 
practice'' to mean that the recipient shall determine the nutrient 
needs of its crops based on realistic crop yields for its area, sample 
its soil at least once every three years to determine existing nutrient 
content, and not apply the manure in quantities that exceed the land 
application rates calculated using either the Phosphorus Index, 
Phosphorus Threshold, or Soil Test Phosphorus method as specified in 40 
CFR 412.13(b)(1)(iv).
    EPA is also proposing to allow States to waive this requirement if 
the recipient is complying with the requirements of a State program 
that are equivalent to proposed 40 CFR 412.13(b).
    f. Erosion Control. EPA is not proposing to specify erosion 
controls as a necessary element of the PNP, but permit writers should 
consider whether to add special conditions on a case-by-case basis as 
appropriate.
    As described in previous sections, EPA recognizes that sediment 
eroding from cropland can have a significant negative impact on surface 
waters. While EPA realizes that it is not possible to completely 
prevent all erosion, erosion can be reduced to tolerable rates. In 
general terms, tolerable soil loss is the maximum rate of soil erosion 
that will permit indefinite maintenance of soil productivity, i.e., 
erosion less than or equal to the rate of soil development. The USDA-
NRCS uses five levels of erosion tolerance (``T'') based on factors 
such as soil depth and texture, parent material, productivity, and 
previous erosion rates. These T levels are equivalent to annual losses 
of about 1-5 tons/acre/year (2-11 mt/ha/year), with minimum rates for 
shallow soils with unfavorable subsoils and maximum rates for deep, 
well-drained productive soils (from Ag Management Measures).
    Options for controlling erosion are: (1) Implementation of one of 
the three NRCS Conservation Practices Standards for Residue Management: 
No-Till and Strip Till (329A), Mulch Till (329B), or Ridge Till (329C) 
in the state Field Office Technical Guide; (2) requiring a minimum 30 
percent residue cover; (3) achieving soil loss tolerance or ``T''; or 
(4) following the Erosion and Sediment Control Management Measure as 
found in EPA's draft National Management Measures to Control Nonpoint 
Source Pollution from Agriculture which is substantially the same as 
EPA's 1993 Guidance Specifying Management Measure for Sources of 
Nonpoint Pollution in Coastal Waters.
    EPA is requesting public comment on the suitability of requiring 
erosion control as a special condition of an NPDES permit to protect 
water quality from sediment eroding from fields where CAFO manure is 
applied to crops. If erosion control is desirable, EPA is soliciting 
comment as to which method would be the most cost-efficient.
    g. Design Standards for Chronic Rainfall. In this section, EPA is 
soliciting comments on whether additional regulatory language is needed 
to clarify when a discharge is considered to be caused by ``chronic 
rainfall.'' EPA also solicits comment on whether design standards to 
prevent discharges due to chronic rainfall should be specified in the 
effluent limitations or as a special condition in the NPDES permit.
    CAFOs in the beef and dairy sub-category [412-subpart C] are 
prohibited from discharging except during a ``25-year, 24-hour rainfall 
event or chronic rainfall'' and then only if they meet the criteria in 
Sec. 412.13(a)(2). Section 412.13(a)(2)(i) allows a discharge caused by 
such rainfall events only if ``(i) The production area is designed and 
constructed to contain all process wastewaters including the runoff 
from a 25-year, 24-hour rainfall event; and (ii) the production area is 
operated in accordance with the requirements of Sec. 412.37(a).''
    The term ``25-year, 24-hour rainfall event'' is clearly defined in 
40 CFR 412.01(b). In addition, proposed Sec. 412.37(c)(1)(iv) would 
require all surface impoundments to have a depth

[[Page 3042]]

marker which indicates the design volume and clearly indicates the 
minimum freeboard necessary to allow for the 25-year, 24-hour rainfall 
event. A discharge may be caused by a 25-year, 24-hour storm when it 
occurs despite the fact that the CAFO operator maintained adequate 
freeboard.
    The term ``chronic rainfall'' has not been specifically defined. 
Generally, a chronic rainfall event is one that lasts longer than 24 
hours and causes a discharge from a system that has been designed, 
constructed, maintained and operated to contain all process wastewaters 
plus the runoff from a 25-year, 24-hour rainfall event. Persistent 
rainfall over a period longer than 24 hours may overwhelm a system 
designed for the 25-year, 24-hour rainfall event even though such 
persistent rainfalls may be expected to occur more frequently than 
every 25 years.
    In order for a discharge to be ``caused'' by chronic rainfall, it 
would need to be contemporaneous with the rainfall. The discharge could 
not continue after the event any longer than is necessary. For example, 
once a flooded lagoon has been drawn down to the level necessary to 
protect the integrity of the lagoon (which in no case should be below 
the level of the freeboard necessary for a 25/24-hour storm), the 
discharge should cease. If the lagoon could not then accept additional 
waste from the CAFO, no animals that would contribute waste to the 
lagoon should be brought to the facility until additional capacity can 
be generated by properly land applying the waste or shipping the waste 
off-site.
    A discharge also would not be considered to be ``caused'' by the 
chronic storm if the operator should have foreseen the event in time to 
properly land apply the waste and thereby have avoided an overflow or 
the need to apply wastes to saturated grounds. Similarly, a discharge 
is not considered to be caused by the chronic storm if the operator 
should have foreseen the event and maintained adequate facilities for 
managing the waste. Although (in the absence of more specific 
regulatory requirements) operators would be responsible for foreseeing 
and planning for chronic rainfall events, they would be liable for 
discharges during chronic events only where they were not reasonable in 
their decision regarding what would be adequate capacity.
    An approach that would provide more certainty to the operator but 
place a greater burden on permitting authorities would be for EPA to 
require permit authorities to specify regionally-specific minimum free 
board requirements necessary to contain runoff from foreseeable chronic 
events. For example, it may be known that, in a given area, the free 
board necessary to contain the runoff from a 25-year, 24-hour storm 
will not be sufficient to contain the run off that typically 
accumulates during the region's rainy season, especially when it would 
not be appropriate to draw down the lagoon by land applying wastes 
during that time. In that case, it may be necessary for the permit 
writer to specify a greater freeboard requirement that would apply to 
the CAFO at the beginning of that season. For example, Nebraska 
requires CAFOs to be able to capture the average rainfall for the three 
summer months. EPA notes that such additional permit conditions are 
already required where they are necessary to eliminate potential 
discharges that would cause or contribute to violations of state water 
quality standards.
    Another approach would be to require the operator to notify the 
permitting authority as soon as it knows that a discharge will occur or 
is occurring and to come to an agreement on how long the discharge will 
occur. This approach has several disadvantages. Because many facilities 
located in the same area may be experiencing the same problem, 
permitting authorities may not have the resources to address several 
simultaneous requests. It is not clear how a disagreement between the 
operator and permit authority would be resolved. Perhaps most 
importantly, this approach also does not address the need to foresee 
and prepare for such events in advance of the event.
    EPA solicits comment on all of these approaches for clarifying when 
a discharge is considered to be caused by ``chronic rainfall,'' and 
whether technology guidelines are necessary in either section 412 or 
122 to address discharges due to chronic rainfall.

F. What Type of NPDES Permit is Appropriate for CAFOs?

    NPDES permit authorities can exercise one of two NPDES permitting 
options for CAFOs: general permits or individual permits. A general 
NPDES permit is written to cover a category of point sources with 
similar characteristics for a defined geographic area.
1. What Changes Are Being Made to the General Permit and NOI 
Provisions?
    The majority of CAFOs may appropriately be covered under an NPDES 
general permit because CAFOs generally involve similar types of 
operations, require the same kinds of effluent limitations and permit 
conditions, and discharge the same types of pollutants. In the past, 
about 70 percent of permitted CAFOs have been permitted under an NPDES 
general permit, and EPA expects this trend to continue. General permits 
offer a cost-effective approach for NPDES permit authorities because 
they can cover a large number of facilities under a single permit. The 
geographic scope of a general permit is flexible and can correspond to 
political or other boundaries, such as watersheds. At the same time, 
the general permit can also provide the flexibility for the permittee 
to develop and implement pollution control measures that are tailored 
to the site-specific circumstances of the permittee. The public has an 
opportunity for input during key steps in the permit development and 
implementation process.
    EPA is proposing to clarify that CAFOs may obtain permit coverage 
under a general permit. See proposed Sec. 122.28(a)(2)(iii). Although 
section 122.28 currently authorizes CAFOs to be regulated using a 
general permit, some stakeholders have questioned whether CAFOs fall 
within the current language of that section. Today's proposal would 
clarify that permit writers may use a general permit to regulate a 
category of CAFOs that are appropriately regulated under the terms of 
the general permit.
    A complete and timely NOI indicates the operator's intent to abide 
by all the conditions of the permit, and the NOI fulfills the 
requirements for an NPDES permit application. The contents of the NOI 
are specified in the general permit.
    The current regulation requires NOIs to include legal name and 
address of the owner and operator; facility name and address; type of 
facility or discharges; and the receiving stream(s). EPA is proposing 
to amend Sec. 122.28(b)(2)(ii) to require, in addition:
     Type and number of animals at the CAFO
     Physical location, including latitude and longitude of the 
production area
     Acreage available for agricultural use of manure and 
wastewater;
     Estimated amount of manure and wastewater to be 
transferred off-site
     Name and address of any other entity with substantial 
operational control of facility
     If a new facility, provide a copy of the draft PNP
     If an existing facility, the status of the development of 
the PNP
     If an area is determined to have vulnerable ground water 
(karst, sandy soil, shallow water table, or in a hydrological landscape 
region 1 (HLR1), submit a hydrologist's statement that the

[[Page 3043]]

ground water under the production area of the facility is not 
hydrologically connected to surface water, if the applicant asserts as 
such
     Provide a topographic map as described in 40 CFR 
122.21(f)(7), showing any ground water aquifers and depth to ground 
water that may be hydrologically connected to surface water

    Sec. 122.21(f) requires the applicant to submit a topographic map 
extending one mile beyond the facility's boundary that shows potential 
discharge points and surface water bodies in the area. EPA is proposing 
to include a requirement that the operator also identify on the 
topographic map any ground water aquifers that may be hydrologically 
connected to surface water, as well as the depth to ground water.
    EPA is proposing to require permit authorities to make the NOI and 
the notification of PNP development or amendment available to the 
public and other interested parties in a timely manner, updated on a 
quarterly basis. See proposed Sec. 122.23(j)(2). EPA encourages States 
to develop and use Internet-based sites as a supplemental means to 
provide ready public access to CAFO NPDES general permits, facility 
NOIs, and other information.
    EPA will explore ways to adapt the Permit Compliance System, EPA's 
national wastewater database, so that permit authorities may use it to 
track CAFO compliance information. This information might include: 
NPDES permit number; facility name; facility location; latitude and 
longitude of the production of area; animal type(s); number of animals; 
the name and address of the contract holder (for contract operations); 
PNP date of adoption or, where a PNP has not yet been developed, the 
schedule for developing and implementing the PNP, including interim 
milestones.
    EPA is proposing to clarify that CAFOs may obtain permit coverage 
under a general permit. See proposed Sec. 122.28(a)(2)(iii), which 
would expressly add ``concentrated animal feeding operations'' to the 
list of sources that are eligible for general permits. In fact, CAFOs 
are already eligible for general permits under the existing regulations 
at Sec. 122.28(a)(2), both because they are storm water point sources 
(see subsection (a)(2)(i)) and because they are a category of point 
sources that involve the same or substantially similar types of 
operations, may be more appropriately controlled under a general permit 
than under individual permits, and otherwise meet the criteria of 
subsection (a)(2)(ii). Some stakeholders, however, have questioned 
whether CAFOs meet these existing criteria for general permit 
eligibility. Therefore, to remove any such questions among 
stakeholders, EPA is proposing to expressly add CAFOs to the list of 
sources that are eligible for general permits. In sum, this proposed 
change would be for purposes of clarity only; it would effect no 
substantive change to the regulations.
2. Which CAFOs May Be Subject to Individual Permits?
    Although EPA is not proposing to require NPDES individual permits 
in particular circumstances, the Agency is proposing additional 
criteria for when general permits may be inappropriate for CAFOs. See 
proposed Sec. 122.28(b)(3)(i)(G). Under the existing regulation, the 
public may petition the permit authority when it believes that, based 
on the criteria in section 122.28(b)(3)(i), that coverage under a 
general permit is inappropriate. Finally, EPA is proposing to require 
the permit authority to conduct a public process for determining which 
criteria, if any, would require a CAFO owner or operator to apply for 
an individual permit. See proposed Sec. 122.28(b)(3)(i)(G). Permit 
authorities would be required to conduct this public process and set 
forth its policy prior to issuing any general permit for CAFOs. Permit 
authorities would have flexibility as to how to conduct this public 
process.
    Besides requiring a public process to develop criteria for 
requiring individual permits, the proposed regulation would also add 
the following CAFO-specific criteria for when the Director may require 
an individual permit: (1) CAFOs located in an environmentally or 
ecologically sensitive area; (2) CAFOs with a history of operational or 
compliance problems; (3) CAFOs that are exceptionally large operations 
as determined by the permit authority; and (4) significantly expanding 
CAFOs. See proposed Sec. 122.28(b)(3)(i)(G)(i)-(iv). Any interested 
member of the public may petition the Director to require an individual 
permit for a facility covered by a general permit. Section 
122.28(b)(3).
    EPA believes these criteria on the availability of general permits 
for CAFOs are desirable because of keen public interest in 
participating in the process of issuing permits to CAFOs. The public 
may participate in notice and comment during the development of general 
permits, but once issued, public participation regarding facilities 
submitting notices of intent is limited. On the other hand, the public 
does have access to notice and comment participation with regard to 
individual permits.
    EPA considered requiring all CAFOs, or all new CAFOs, to obtain an 
individual permit, but considered this potentially burdensome to permit 
authorities. Using general permits to cover classes of facilities by 
type of operation, by jurisdiction, or by geographic boundary such as a 
watershed, offers positive environmental as well as administrative 
benefits.
    EPA also considered identifying a threshold to establish when 
exceptionally large facilities would be required to apply for an 
individual permit, such as 5,000 AU or 10,000 AU, or by defining such a 
threshold as the largest ten percent or 25 percent of CAFOs within each 
sector. EPA did not propose this approach because, as shown in table 7-
9, it was difficult to establish a consistent basis across sectors for 
making this determination. While EPA's cost models assume that 30% of 
operations might obtain individual permits, and thus such thresholds 
are taken into account in the cost analyses for this proposed 
regulation, EPA did not believe particular thresholds would be 
appropriate across all sectors or all states. EPA is interested in 
comments on whether it should establish a size threshold above which 
individual permits would be required, recommendations of what the 
threshold should be, and data to support such recommendations.

                      Table 7-9. Potential Definition of ``Exceptionally Large'' Facilities
----------------------------------------------------------------------------------------------------------------
                                         5,000 AU    10,000 AU      Top 10% (Est.)           Top 25% (Est.)
                                       -------------------------------------------------------------------------
             Animal sector                 Head        Head
                                        equivalent  equivalent     Head         AU         Head          AU
----------------------------------------------------------------------------------------------------------------
Beef/Heifer...........................       5,000      10,000      11,000      11,000       3,500         3,500

[[Page 3044]]

 
Dairy.................................       3,500       7,000       3,800       5,440       2,170         3,100
Veal..................................       5,000      10,000       1,500       1,500         950           950
Swine.................................      12,500      25,000       9,000       3,600       5,000         2,000
Broiler...............................     500,000   1,000,000     150,000       1,500     110,000         1,100
Layer.................................     500,000   1,000,000     500,000       5,000     180,000         1,800
Turkey................................     275,000     550,000     100,000       1,820      55,000        1,000
----------------------------------------------------------------------------------------------------------------
Note: Except for beef, these values are interpolations based on best professional judgement.

    EPA also considered whether operations that significantly expand 
should be required to reapply for a permit. Public concern has been 
expressed as to whether operations that significantly expand should be 
required to undergo a public process to determine whether new limits 
are necessitated by the expansion. EPA believes, however, that if the 
general permit covers operations similar to the newly expanded 
operation, there would be no basis for requiring an individual permit. 
In section VIII above, EPA also has explained why it would not be 
appropriate to classify facilities that expand their production 
capacities as new sources. If a member of the public believes that the 
requirements of a proposed general permit are not adequate for CAFOs 
above a certain size, it should raise that issue when the permit 
authority proposes the general permit and request that it be limited to 
certain size operations. As is discussed above, the public could also 
petition the permit authority if it believes that a specific facility 
should be covered by an individual permit.
    Under existing regulations the permit authority may modify a permit 
if there are material and substantial alterations to the permitted 
facility or activity that occur after the permit is issued and justify 
different permit conditions. 40 CFR 122.62(a)(1). The public would be 
able to participate in the permit modification process to incorporate 
the new standards. 40 CFR 123.5(c).
    EPA is interested in comment on whether the above procedures are 
adequate to ensure public participation or whether individual permits 
should be required for any of the categories of facilities discussed 
above. Specifically, EPA is interested in comments on whether 
individual permits should be required for (a) facilities over a certain 
size threshold, (b) new facilities; (c) facilities that are 
significantly expanding; (d) facilities that have historical compliance 
problems; or (e) operations that are located in areas with significant 
environmental concerns.
3. Demonstrating No Potential to Discharge
    As described in section VII.C.2.d above, today's proposal would 
require all CAFO owners or operators to apply for an NPDES permit, 
based on a presumption that all CAFOs have a potential to discharge 
pollutants to waters of the U.S. There would, however, be one exception 
to this requirement: A CAFO owner or operator would not need to apply 
for a permit if it received a determination by the permit authority 
that the CAFO does not have a potential to discharge. It would be the 
CAFO owner's or operator's burden to ask for a ``no potential to 
discharge'' determination and to support the request with appropriate 
data and information. See proposed Sec. 122.23(c) and (e).
    The term ``no potential to discharge'' means that there is no 
potential for any CAFO manure or wastewaters to be added to waters of 
the United States from the operation's production or land application 
areas, without qualification. For example, if a CAFO land applies its 
manure according to a permit nutrient plan, it may not claim ``no 
potential to discharge'' status on the basis that it would have runoff, 
but any runoff would be exempt as agricultural storm water. CAFOs 
owners or operators should not be able to avoid permitting by claiming 
that they already meet the land application requirements that would be 
in a permit--in this case, the requirement of zero discharge from land 
application areas except for runoff from properly applied manure and 
wastewater (see today's proposed effluent limitation guidelines). 
Moreover, today's proposed effluent limitation guidelines would include 
not only restrictions on the rate of land application but also a set of 
best management practices to further protect against inadvertent 
discharges from land applied manure and wastewater (for example, the 
requirement for 100 foot setbacks, consideration of timing of 
application, etc.). EPA's intention would be to require a permit that 
imposes both types of requirements unless an operation has clearly 
established the absence of a potential to discharge. A CAFO's claim 
that it already meets the restrictions on the rate of land application 
would not ensure, as a permit would, that the CAFO has employed and is 
continuing to employ these additional management practices.
    Instead, EPA proposes to allow ``no potential to discharge'' status 
in order to provide relief where there truly is no potential for a 
CAFO's wastes to reach the waters. This would include, for example, 
CAFOs that are far from any water body, or those that have closed cycle 
systems for managing their wastes and that do not land apply their 
wastes. In particular, EPA believes that the act of land applying its 
manure and wastewater would, in many cases, be enough by itself to 
indicate that a CAFO does have a potential to discharge. It would be 
very difficult, in general, for CAFOs that land apply their wastes to 
demonstrate that they have no potential to discharge (although 
conceivably such a showing could be made if the physical features of 
the site, including lack of proximity to the waters, slope, etc. 
warrant it).
    It is only where there is no potential for a CAFO's wastes to reach 
the waters that EPA believes it is appropriate not to require a permit. 
Indeed, where a CAFO has demonstrated that it has no potential to 
discharge, it no longer qualifies as a point source under the Act (see 
Section 502(14), which defines ``point source'' to include conveyances 
such as CAFOs from which pollutants ``are or may be'' discharged).
    Under today's proposal, the burden of proof to show that there is 
no potential to discharge would be with the CAFO owner or operator, not 
the permitting authority. There would be a presumption that the CAFO 
does have the potential to discharge unless the CAFO owner or operator 
has rebutted this presumption by showing, to the satisfaction of the 
permit authority, that it does not.

[[Page 3045]]

    It is not EPA's intention to allow a broad interpretation of this 
provision but, rather, to establish that ``no potential to discharge'' 
is to be narrowly interpreted and applied by permit authorities. This 
provision is intended to be a high bar that provides an exemption only 
to those facilities that can demonstrate to a degree of certainty that 
they have no potential to discharge to the waters of the U.S.
    Today's proposal would specify that an operation that has had a 
discharge within the past five years cannot receive a determination 
that it has no potential to discharge. The Agency is not proposing to 
specify further the exact conditions that would indicate that a 
facility has no potential to discharge. However, any such demonstration 
would need to account for all manure generated at the facility, 
specifying how the design of the animal confinement areas, storage 
areas, manure and wastewater containment areas, and land application 
areas eliminates any possibility of discharge to surface waters or to 
groundwater with a direct hydrological connection to surface water. 
Further, the CAFO operator must be able to provide assurance that all 
CAFO-generated manure and wastewater that is transported off-site are 
transferred to a recipient that provides for environmentally 
appropriate handling, such as by: (1) land applying according to proper 
agricultural practices as defined in this regulation; (2) obtaining an 
NPDES permit for discharges resulting from land application; or (3) 
having other non-land application uses.
    If an owner or operator is able to demonstrate no potential to 
discharge at the production area, but cannot demonstrate an assurance 
that manure transported off-site is being appropriately disposed of, 
the facility would be required to apply for a zero discharge permit 
that includes the record keeping requirements described in section 
VII.E. of today's proposal.
    EPA requests comment on whether it should include additional 
specific criteria for determining whether a CAFO has ``no potential to 
discharge,'' and what those criteria should be. The Agency is concerned 
that without more specific criteria, this provision could be subject to 
abuse. Therefore, EPA is seeking comment on whether safeguards are 
necessary to ensure that only those CAFOs which truly pose no risk to 
the environment are able to avoid permitting requirements.
    The fact that a CAFO owner or operator submits a request for a 
determination that the facility has no potential to discharge would not 
change the deadline to apply for a permit. The CAFO owner or operator 
would need to apply for a permit according to the date specified in 
Sec. 122.23(f) unless it receives a no potential to discharge 
determination before that date. It would be inappropriate, in EPA's 
view, to allow otherwise--i.e., to postpone the deadline to apply for a 
permit if the CAFO has not yet received a determination on its ``no 
potential to discharge'' request. Under that approach, even CAFOs 
owners or operators who could not make a serious claim of ``no 
potential to discharge'' could apply for such a determination simply as 
a way of delaying the permitting process, and the process could in fact 
be delayed if permitting authorities are faced with large numbers of 
such requests. We recognize that under the approach we are proposing, 
some CAFOs who really do have no potential to discharge will be forced 
to file a complete permit application if their permitting authority has 
not ruled on their request prior to the deadline for the permit 
application. However, EPA expects there to be few such cases, since we 
expect relatively few CAFOs to be able to demonstrate no potential to 
discharge; and in light of the problems of the alternative approach, 
EPA's proposed approach seems preferable.
    It is important to recognize that if a CAFO receives a ``no 
potential to discharge'' determination but subsequently does have a 
discharge, that operation would be in violation of the Clean Water Act 
for discharging without a permit. The ``no potential to discharge'' 
determination would not identify an operation as forever a non-point 
source. To the contrary, there would be no basis for excluding an 
operation from the requirements for point sources if it meets the 
criteria for being a CAFO and has an actual discharge of pollutants to 
the waters. The operation, upon discharging, would immediately revert 
to status as a point source.
    EPA is requesting comment on whether the Director's ``no potential 
to discharge'' determination should be subject to the same types of 
administrative procedures that are required for the Director's decision 
to issue or deny a permit. That is, EPA is considering a requirement 
that, before EPA or the State could issue a final determination that 
there is no potential to discharge, the public would have the formal 
right to comment on, and EPA would have the opportunity to object to 
(in authorized States), the Director's draft determination. These 
procedures may be appropriate, for example, in light of anticipated 
public interest in the Director's determination. Alternatively, EPA 
requests comment on not requiring the Director to follow these 
procedures for public and EPA input into the Director's decision. EPA 
could conclude that the types of procedures that apply to permitting 
decisions are not appropriate here (since the ``no potential to 
discharge'' determination is neither the issuance nor denial of a 
permit), but that the environment is sufficiently protected by the fact 
that any actual discharge from either the production or land 
application areas would be a violation of the Clean Water Act. Under 
this latter interpretation, EPA would not itself follow the types of 
procedures that apply to permit decisions (such as providing the public 
with the formal opportunity to submit public comments on the Director's 
draft decision) and would not require States to follow those 
procedures; however, States could make those procedures available if 
they chose, since they would be more stringent than the procedures 
required by EPA. EPA requests comment on which of these two alternative 
approaches to adopt in the final rule.
    It should be noted that under the three-tier proposal, in some 
cases owners of operations in the middle tier (300 AU to 1,000 AU) 
would not need to demonstrate ``no potential to discharge'' to avoid a 
permit because they would not be defined as CAFOs in the first 
instance. That is, if they do not meet any of the conditions under that 
regulatory option for being defined as a CAFO (insufficient storage and 
containment to prevent discharge, production area located within 100 
feet of waters, evidence of discharge in the last five years, land 
applying without a PNP, or transporting manure to an off-site recipient 
without appropriate certification) then they would not be subject to 
permitting as CAFOs. (They could, however, still be subject to NPDES 
permitting as other, non-CAFO types of point sources, as discussed 
elsewhere in this preamble.)
4. NPDES Permit Application Form 2B
    EPA is proposing to amend the NPDES permit application form 2B for 
CAFOs and Aquatic Animal Production Facilities in order to reflect the 
revisions included in today's proposed rulemaking, and in order to 
facilitate consideration of the permit application. EPA is proposing to 
require applicants for individual CAFO permits to submit the following 
information:
     acreage available for agricultural use of manure and 
wastewater;
     estimated amount of manure and wastewater to be 
transferred off-site.

[[Page 3046]]

     name and address of any person or entity that owns animals 
to be raised at the facility, directs the activity of persons working 
at the CAFO, specifies how the animals are grown, fed, or medicated; or 
otherwise exercises control over the operations of the facility, in 
other words, that may exercise substantial operational control.
     provide a copy of the draft PNP.
     whether buffers, setbacks or conservation tillage are 
implemented to protect water quality.
     On the topographic map required by Form 1, identify 
latitude and longitude of the production area, and identify depth to 
ground water that may be hydrologically connected to surface water, if 
any.
    See proposed Sec. 122.21(i)(1).
    The existing Form 2B currently only requires: whether the 
application is for a proposed or existing facility; type and number of 
animals in confinement (open confinement or housed under roof); number 
of acres for confinement feeding; if there is open confinement, whether 
a runoff diversion and control system has been constructed and, if so, 
indicate whether the design basis is for a 10-year, 24-hour storm, a 
25-year, 24-hour storm, or other, including inches; number of acres 
contributing to drainage; design safety factor; name and official 
title, phone number, and signature. In addition, Sec. 122.21(f) of the 
current NPDES regulation requires applicants to submit a topographic 
map extending one mile beyond the facility's boundary that shows 
discharge points and surface water bodies in the area.
    EPA is proposing to update form 2B and requests comment on what 
information should be required of applicants for individual permits.

BILLING CODE 6560-50-P

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BILLING CODE 6560-50-C
    It is anticipated that as a result of the requirement that all 
CAFOs have a duty to apply, there will be a large number of CAFOs 
applying for NPDES permits. Some of these operations represent a 
greater risk to water quality than others. In order for the permit 
writer to prioritize NPDES permit writing activities based on the risk 
to water quality, Section G is being proposed to add to Form 2B as a 
screening mechanism. Those facilities without

[[Page 3050]]

buffers, setbacks, or conservation tillage potentially pose a greater 
risk to water quality; therefore the permit writer could use this 
information to develop and issue NPDES permits to these facilities on 
an expedited basis.

VIII. What Changes to the Feedlot Effluent Limitations Guidelines 
Are Being Proposed?

A. Expedited Guidelines Approach

    EPA has developed today's proposed regulation using an expedited 
rulemaking process which relies on communication between EPA, the 
regulated community, and other stakeholders, rather than formal data 
and information gathering mechanisms. At various stages of information 
gathering, USDA personnel, representatives of industry and the national 
trade associations, university researchers, Agricultural Extension 
agencies, States, and various EPA offices and other stakeholders have 
presented their ideas, identified advantages and disadvantages to 
various approaches, and discussed their preferred options.
    EPA encourages full public participation in commenting on these 
proposals.

B. Changes to Effluent Guidelines Applicability

1. Who is Regulated by the Effluent Guidelines?
    The existing effluent guidelines regulations for feedlots apply to 
operations with 1,000 AU and greater. EPA is proposing to establish 
effluent guidelines requirements for the beef, dairy, swine, chicken 
and turkey subcategories that would apply to any operations in these 
subcategories that are defined as a CAFO under either the two-tier or 
three-tier structure. Also as discussed in detail in Section VII.B.3, 
EPA is also requesting comment on an option under which the effluent 
guidelines proposed today would not be applicable to facilities under 
1,000 AU. Under this approach, AFOs below this threshold would be 
permitted based on an alternate set of effluent guidelines, or the best 
professional judgment of the permit writer. After evaluating public 
comments EPA may decide to consider this option. At that time EPA would 
develop and make available for comment an analysis of why it is 
appropriate to promulgate different effluent guidelines requirements or 
no effluent guidelines for CAFOs that have between 300 and 1,000 AU as 
compared to the effluent guidelines for operations with greater than 
1,000 AU.
    EPA also proposes to establish a new subcategory that applies to 
the production of veal cattle. Veal production is included in the beef 
subcategory in the existing regulation. However, veal production 
practices and wastewater and manure handling are very different from 
the practices used at beef feedlots; therefore, EPA proposes to 
establish a separate subcategory for veal.
    Under the three-tier structure the proposed effluent guidelines 
requirements for the beef, dairy, swine, veal and poultry subcategories 
will apply to all operations defined as CAFOs by today's proposal 
having at least as many animals as listed below.

200 mature dairy cattle (whether milked or dry);
300 veal;
300 cattle other than mature dairy cattle or veal;
750 swine weighing over 55 pounds;
3,000 swine weighing 55 pounds or less;
16,500 turkeys; or
30,000 chickens.

    Under the two-tier structure, the proposed requirements for the 
beef, dairy, swine, veal and poultry subcategories will apply to all 
operations defined as CAFOs by today's proposal having at least as many 
animals as listed below.

350 mature dairy cattle (whether milked or dry);
500 veal;
500 cattle other than mature dairy cattle or veal;
1,250 swine weighing over 55 pounds;
5,000 swine weighing 55 pounds or less;
27,500 turkeys; or
50,000 chickens.

    EPA is proposing to apply the Effluent guidelines requirements for 
the beef, dairy, veal, swine, chicken and turkey subcategories, to all 
operations in these subcategories that are defined as CAFOs under 
either of today's proposed permitting scenarios. Operations designated 
as CAFOs are not subject to the proposed effluent guidelines.
    EPA is proposing to rename the Effluent Guidelines Regulations, 
which is entitled Feedlots Point Source Category. Today's proposal 
changes the name to the Effluent Guidelines Regulation for the CAFOs 
Point Source Category. EPA is proposing this change for consistency and 
to avoid confusion between who is defined as a CAFO under Part 122 and 
whether the Effluent guidelines apply to the operation.
    EPA is not proposing to revise the Effluent guidelines requirements 
or the applicability for the horses, sheep and lambs and ducks 
subcategories even though the definition of CAFO for these 
subcategories is changing as described previously in Section VII. These 
sectors have not undergone the same level of growth and consolidation 
that the other livestock sectors have experienced in the past 25 years. 
In 1992, an estimated 260 farms in these sectors were potentially CAFOs 
based on size, and relatively few of these operations were expected to 
maintain horses or sheep in confinement. Finally, the CAFOs in these 
sectors have not been identified as significant contributors of 
wastewater pollutants that result in water quality impairment.
    EPA has evaluated the technology options described in this section 
and evaluated the economic achievability for these technologies for all 
operations with at least as many animals listed above for both the two-
tier and three-tier NPDES structures. The technology requirements for 
operations defined as CAFOs under the two-tier structure are the same 
requirements for operations defined as CAFOs under the three-tier 
structure. Therefore for the purpose of simplifying this discussion and 
emphasizing the differences in technology requirements for the various 
technology options, the following discussion will not distinguish 
between the two CAFO definition scenarios. For more discussion of the 
costs and differences in costs between the different CAFO definition 
scenarios, refer to Section X of this preamble or the EA. For 
discussion of the benefits achieved for the different technology 
options and scenarios, refer to Section XI of this preamble.
    EPA proposes to make the Effluent guidelines and standards 
applicable to those operations that are defined as CAFOs as described 
previously under Section VII. EPA is not proposing to apply the 
Effluent guidelines to those operations that fall below the proposed 
thresholds but are still designated as CAFOs. As described in Section 
VII, EPA anticipates that few AFOs will be designated as CAFOs and that 
these operations will generally be designated due to site-specific 
conditions. Examples of these conditions could include, not capturing 
barnyard runoff which runs directly into the stream, or siting open 
stockpiles of manure inappropriately. EPA believes that establishing 
national technology based requirements for designated CAFOs is not 
efficient or appropriate because historically a small number of 
facilities has been designated and facilities which are designated in 
the future will be designated for a wide variety of reasons. EPA 
believes that a permit will best control pollutant discharges from 
those operations if it is based on the permit writer's best 
professional judgment and is tailored to address the specific

[[Page 3051]]

problems which caused the facility to be designated.
    EPA is proposing to make substantial changes to the applicability 
for chickens, mixed animal operations and immature animals as described 
below.
    Chickens. The current regulations apply to chicken operations with 
liquid manure handling systems or continuous flow watering systems. 
Unlimited continuous flow watering systems have been replaced by more 
efficient systems for providing drinking water to the birds. 
Consequently, many state permitting authorities and members of the 
regulated community contend that the existing effluent guidelines do 
not apply to most broiler and laying hen operations, despite the fact 
that chicken production poses risks to surface water and groundwater 
quality from improper storage of dry manure, and improper land 
application. EPA is proposing to clarify the effluent guidelines to 
ensure coverage of broiler and laying hen operations with dry manure 
handling. The proposed applicability is identical to the definition of 
chicken CAFOs described in Section VII.C.2.f. EPA is thus proposing to 
establish effluent guidelines for chicken operations that use dry 
manure handling systems regardless of the type of watering system or 
manure handling system used. EPA is using the term chicken in the 
regulation to include laying hens, pullets, broilers and other meat 
type chickens. See Section VII for more details on the proposed 
applicability threshold for chickens.
    Mixed Animal Types. Consistent with the proposed changes to the 
definition of CAFO as described in Section VII.C.2.b, EPA is proposing 
to eliminate the calculation in the existing regulation that apply to 
mixed animals operations.
    Immature Animals. EPA is proposing to apply technology based 
standards to swine nurseries and to operations that confine immature 
dairy cows or heifers apart from the dairy. EPA currently applies 
technology based standards to operations based on numbers of swine each 
weighing over 55 pounds. Modern swine production has a phase of 
production called a nursery that only confines swine weighing under 55 
pounds. These types of operations are currently excluded from the 
technology based standards, but are increasing in both number and size. 
Therefore, EPA proposes to establish technology based standards to 
operations confining immature pigs. Under the two-tier structure EPA 
proposes to establish a threshold of 5,000 immature pigs or pigs 
weighing 55 pounds or less. Under the proposed three-tier structure 
operations that confine between 3,000 and 10,000 immature pigs could be 
defined as CAFOs and all operations with more than 10,000 immature pigs 
would be CAFOs. EPA also proposes to establish requirements for 
immature heifers when they are confined apart from the dairy, at either 
stand alone heifer operations similar in management to beef feedlots, 
or at cattle feedlots. Therefore EPA proposes to include heifer 
confinement off-site from the dairy under the beef feedlot subcategory, 
and today's proposed technology standards for beef feedlots would apply 
to those stand alone heifer operations defined as CAFOs. Also any 
feedlot that confines heifers along with cattle for slaughter is 
subject to the beef feedlot requirements.
    EPA is proposing to establish a new subcategory for the effluent 
guidelines regulations which applies to veal operations. The existing 
regulation includes veal production in the beef cattle subcategory. EPA 
is proposing to create a distinct subcategory for veal operations 
because these operations use different production practices than other 
operations in the beef subcategory however, we are proposing to retain 
the sized threshold that pertained to veal while included in the beef 
subcategory. Veal operations maintain their animals in confinement 
housing as opposed to open outdoor lots as most beef feedlots operate. 
They also manage their manure very differently than typical operations 
in the beef cattle subcategory. Due in large part to the diet the 
animals are fed, the manure has a lower solids content and is handled 
through liquid manure handling systems, such as lagoons, whereas beef 
feedlots use dry manure handling systems and only collect stormwater 
runoff in retention ponds. EPA is proposing to define a veal CAFO as 
any veal operation which confines 300 veal calves or greater under the 
three-tier structure, or 500 veal calves or greater under two-tier 
structure.

C. Changes to Effluent Limitations and Standards

    EPA is today proposing to revise BAT and new source performance 
standards for the beef, dairy, veal, swine and poultry subcategories. 
EPA is proposing to establish technology-based limitations on land 
application of manure to lands owned or operated by the CAFO, maintain 
the zero discharge standard and establish management practices at the 
production area.
1. Current Requirements
    The existing regulations, which apply to operations with 1,000 AU 
or greater, require zero discharge of wastewater pollutants from the 
production area except when rainfall events, either chronic or 
catastrophic cause an overflow of process wastewater from a facility 
designed, constructed and operated to contain all process generated 
wastewaters plus runoff from a 10-year, 24-hour event under the BPT 
requirements and a 25-year, 24-hour event under the BAT and NSPS 
requirements. In other words, wastewater and wastewater pollutants are 
allowed to be discharged as the result of a chronic or catastrophic 
rainfall event so long as the operation has designed, constructed and 
operated a manure storage and/or runoff collection system to contain 
all process generated wastewater, including the runoff from a specific 
rainfall event. The effluent guidelines do not set discharge 
limitations on the pollutants in the overflow.
2. Authority to Establish Requirements Based on Best Management 
Practices
    The regulations proposed today establish a zero discharge 
limitation and include provisions requiring CAFOs to implement best 
management practices (BMPs) to prevent or otherwise contain CAFO waste 
to meet that limitation at the production area. The regulations also 
establish non-numeric effluent limitations in the form of other BMPs 
when CAFO waste is applied to land under the control of the CAFO owner 
or operator. For toxic pollutants of concern in CAFO waste, 
specifically cadmium, copper, lead, nickel, zinc and arsenic, EPA is 
authorized to establish BMPs for those pollutants under CWA section 
304(e). EPA also expects reductions in conventional and nonconventional 
water pollutants as a result of BMPs. To the extent these pollutants 
are in the waste streams subject to 304(e), EPA has authority under 
that section to regulate them. EPA also has independent authority under 
CWA sections 402(a) and 501(a) and 40 CFR 122.44(k) to require CAFOs to 
implement BMPs for pollutants not subject to section 304(e). In 
addition, EPA has authority to establish non-numeric effluent 
limitations guidelines, such as the BMPs proposed today, when it is 
infeasible to establish numeric effluent limits. Finally, EPA is 
authorized to impose the BMP monitoring requirements under section 
308(a).
    Production Area. EPA has determined that the BMPs for the 
production area are necessary because the requirement of zero discharge 
has historically not been attained. As described in Section V, of this 
preamble, there are numerous reports of discharges from CAFOs that are 
unrelated to storm events which would be less likely to occur if the

[[Page 3052]]

proposed BMPs described below were required.
    Section 304(e) provides that ``[t]he Administrator, after 
consultation with appropriate Federal and State agencies and other 
interested persons, may publish regulations, supplemental to any 
effluent limitations specified under (b) and (c) of this section for a 
class or category of point sources, for any specific pollutant which 
the Administrator is charged with a duty to regulate as a toxic or 
hazardous pollutant under section 1317(a)(1) or 1321 of this title, to 
control plant site runoff, spillage or leaks, sludge or waste disposal, 
and drainage from raw material storage which the Administrator 
determines are associated with or ancillary to industrial manufacturing 
or treatment process within such class or category of point sources and 
may contribute significant amounts of such pollutants to navigable 
waters.'' Sec. 304(e). There are studies showing the presence of a 
number of listed metals in animal manure. Numerous sources such as the 
American Society of Agricultural Engineers, and Universities such as 
North Carolina State University have acknowledged the presence of 
metals in manure. Metals are present in the manure because they are 
added or present in the animal feed. EPA has estimated metal loadings 
being applied to land before and after this regulation would take 
effect. Although the concentration of metals present in untreated 
manure are less than the limits for metals established in EPA's 
biosolids regulations (40 CFR Part 503), EPA still anticipates that 
there would be a substantial reduction in pollutant loadings reaching 
the edge of the field through use of the land application practices 
included in today's proposal. See the Development Document for more 
discussion.
    EPA's authority to require these BMPs does not require a 
determination that the toxics present in CAFO waste are significant. 
The federal courts have held that EPA has extensive authority to carry 
out its duties under the Clean Water Act:
    EPA is not limited by statute to the task of establishing effluent 
standards and issuing permits, but is empowered by section 501(a) of 
the Act to prescribe regulations necessary to carry out its functions 
under the Act. 33 U.S.C. Sec. 1361(a). It is also clear that 
permissible conditions set forth in NPDES permits are not limited to 
establishing limits on effluent discharge. To the contrary, Congress 
has seen fit to empower EPA to prescribe as wide a range of permit 
conditions as the agency deems appropriate in order to assure 
compliance with applicable effluent limits. 33 U.S.C. Sec. 1342(a)(2); 
see also id. Sec. 1314(e). NRDC v. EPA, 822 F.2d 104, 122 (D.C. Cir. 
1987).
    This authority operates independent of section 304(e). EPA's 
authority under section 402(a)(2) to establish NPDES permit conditions, 
including BMPs, for any pollutant when such conditions are necessary to 
carry out the provisions of the statute has been further implemented 
through regulations at 40 CFR 122.44(k). Although a requirement to 
establish and implement BMPs of the type proposed in this regulation 
could be imposed on a case-by-case basis, EPA has decided to promulgate 
this requirement on a categorical basis for those facilities which are 
CAFOs by definition. In light of the more than twenty years of 
experience with the regulation of CAFOs and their failure to achieve 
the zero discharge limit originally promulgated, EPA has determined 
that certain management practices are necessary to ensure that the zero 
discharge limit is actually met. The stated goal of the Clean Water Act 
is to eliminate the discharge of pollutants into the Nation's waters. 
CWA section 101(a)(1). EPA has determined that these BMPs, by 
preventing or controlling overflows, leaks or intentional diversions, 
are an important step toward that goal.
    Finally, EPA has authority to impose monitoring and recordkeeping 
requirements under section 308 of the Act. As described below EPA is 
proposing to require that CAFOs periodically sample their manure and 
soils to analyze for nutrient content. This is necessary to both 
determine what is the appropriate rate to land apply manure and to 
ensure that the application rate is appropriate. The proposed rule 
would also require CAFOs to conduct routine inspections around the 
production area to ensure that automated watering lines are functioning 
properly, and to ensure that the manure level for liquid systems is not 
threatening a potential discharge. The CAFO would also maintain records 
that document manure application, including equipment calibration, 
volume or amount of manure applied, acreage receiving manure, 
application rate, weather conditions and timing of manure application, 
application method, crops grown and crop yields. These records will 
provide documentation that the manure was applied in accordance with 
the PNP and has not resulted in a discharge of pollutants in excess of 
the agricultural use. EPA has determined that these practices are 
necessary in order to determine whether an owner or operator of a CAFO 
is complying with the effluent limitation. Establishment and 
maintenance of records, reporting, and the installation, use and 
maintenance of monitoring equipment are all requirements EPA has the 
authority to impose. 33 U.S.C. Sec. 1318(a).
    Land Application Areas. For the land application areas of a CAFO, 
EPA is proposing a nonnumeric effluent limitation consisting of best 
management practices. The D.C. Circuit has concluded that ``[w]hen 
numerical effluent limitations are infeasible, EPA may issue permits 
with conditions designed to reduce the level of effluent discharges to 
acceptable levels.'' NRDC v. Costle, 568 F.2d 1369, 1380 (D.C. Cir. 
1977); 40 CFR 122.44(k)(3). EPA has determined that it is infeasible to 
establish a numeric effluent limitation for discharges of land applied 
CAFO waste and has also determined that the proposed BMPs are the 
appropriate ones to reduce the level of discharge from land application 
areas.
    The proposed BMPs constitute the effluent limitation for one 
wastestream from CAFOs. The statutory and regulatory definition of 
``effluent limitation'' is very broad--``any restriction'' imposed by 
the permitting authority on quantities, discharge rates and 
concentrations of a pollutant discharged into a water of the United 
States. Clean Water Act Sec. 502(11), 40 CFR 122.2. Neither definition 
requires an effluent limitation to be expressed as a numeric limit. 
Moreover, nowhere in the CWA does the term ``numeric effluent 
limitation'' even appear and the courts have upheld non-numeric 
restrictions promulgated by EPA as effluent limitations. See NRDC v. 
EPA, 656 F.2d 768, 776 (D.C. Cir. 1981) (holding that a regulation 
which allows municipalities to apply for a variance from the normal 
requirements of secondary sewage treatment is an ``effluent 
limitation'' for purposes of review under Sec. 509(b): ``[W]hile the 
regulations do not contain specific number limitations in all cases, 
their purpose is to prescribe in technical terms what the Agency will 
require of section 1311(h) permit applicants.''). Thus, the statutory 
definition of ``effluent limitation'' is not limited to a single type 
of restriction, but rather contemplates a range of restrictions that 
may be used as appropriate. Likewise, the legislative history does not 
indicate that Congress envisioned a single specific type of effluent 
limitation to be applied in all circumstances. Therefore, EPA has a 
large degree of discretion in interpreting the term ``effluent 
limitation,'' and determining whether an effluent limitation must be 
expressed

[[Page 3053]]

as a numeric standard. EPA has defined BMPs as ``schedules of 
activities, prohibitions of practices, maintenance procedures, and 
other management practices to prevent or reduce the pollution of waters 
of the United States.'' 40 CFR 122.2. A BMP may take any number of 
forms, depending upon the problem to be addressed. Because a BMP must, 
by definition, ``prevent or reduce the pollution of waters of the 
United States,'' the practices and prohibitions a BMP embodies 
represent restrictions consistent with the definition of an effluent 
limitation set out in CWA Sec. 502(11).
    Effluent limitations in the form of BMPs are particularly suited to 
the regulation of CAFOs. The regulation of CAFOs often consists of the 
regulation of discharges associated with storm water. Storm water 
discharges can be highly intermittent, are usually characterized by 
very high flows occurring over relatively short time intervals, and 
carry a variety of pollutants whose nature and extent varies according 
to geography and local land use. Water quality impacts, in turn, also 
depend on a wide range of factors, including the magnitude and duration 
of rainfall events, the time period between events, soil conditions, 
the fraction of land that is impervious to rainfall, other land use 
activities, and the ratio of storm water discharge to receiving water 
flow. CAFOs would be required to apply their manure and wastewater to 
land in a manner and rate that represents agricultural use. The manure 
provides nutrients, organic matter and micronutrients which are very 
beneficial to crop production when applied appropriately. The amount or 
rate at which manure can be applied to provide the nutrient benefits 
without causing excessive pollutant discharge will vary based on site 
specific factors at the CAFO. These factors include the crop being 
grown, the expected crop yield, the soil types, and soil concentration 
of nutrients (especially phosphorus), and the amount of other nutrient 
sources to be applied. For these reasons, EPA has determined that 
establishing a numeric effluent limitation guideline is infeasible.
    EPA has determined that the various BMPs specified in today's 
proposed regulation represent the minimum elements of an effective BMP 
program. By codifying them into a regulation of general applicability, 
EPA intends to promote expeditious implementation of a BMP program and 
to ensure uniform and fair application of the baseline requirements. 
EPA is proposing only those BMPs which are appropriate on a nationwide 
basis, while giving both States and permittees the flexibility to 
determine the appropriate practices at a local level to achieve the 
effluent limitations. The BMP's (described below) that are included in 
the proposed technology options are necessary to ensure that manure and 
wastewater are utilized for their nutrient content in accordance with 
agricultural requirements for producing crops or pastures. EPA also 
believes that the proposed regulations represent an appropriate and 
efficient use of its technical expertise and resources that, when 
exercised at the national level, relieves state permit writers of the 
burden of implementing this aspect of the Clean Water Act on a case-by-
case basis.
3. Best Practicable Control Technology Limitations Currently Available 
(BPT)
    EPA is proposing to establish BPT limitations for the beef, dairy, 
swine, veal chicken and turkey subcategories. There are BPT limitations 
in the existing regulations which apply to CAFOs with 1,000 AU or more 
in the beef, dairy swine and turkey subcategories. BPT requires that 
these operations achieve zero discharge of process wastewater from the 
production area except in the event of a 10-year, 24-hour storm event. 
EPA is proposing to revise this BPT requirement and to expand the 
applicability of BPT to all operations defined as CAFOs in these 
subcategories including CAFOs with fewer than 1,000 AU.
    The Clean Water Act requires that BPT limitations reflect the 
consideration of the total cost of application of technology in 
relation to the effluent reduction benefits to be achieved from such 
applications. EPA considered two options as the basis for BPT 
limitations.
    Option 1. This option would require zero discharge from a facility 
designed, maintained and operated to hold the waste and wastewater, 
including storm water, from runoff plus the 25-year 24-hour storm 
event. Both this option and Option 2 would add record keeping 
requirements and practices that ensure this zero discharge standard is 
met. As described in Section V there are numerous reports of operations 
discharging pollutants from the production area during dry weather. The 
reason for these discharges varies from intentional discharge to poor 
maintenance of the manure storage area or confinement area. EPA's cost 
models reflect the different precipitation and climatic factors that 
affect an operations ability to meet this requirement; see Section X 
and the Development Document for further details.
    Option 1 would require weekly inspection to ensure that any storm 
water diversions at the animal confinement and manure storage areas are 
free from debris, and daily inspections of the automated systems 
providing water to the animals to ensure they are not leaking or 
spilling. The manure storage or treatment facility would have to be 
inspected weekly to ensure structural integrity. For liquid 
impoundments, the berms would need to be inspected for leaking, 
seepage, erosion and other signs of structural weakness. The proposal 
requires that records of these inspections would be maintained on-site, 
as well as records documenting any problems noted and corrective 
actions taken. EPA believes these inspections are necessary to ensure 
proper maintenance of the production area and prevent discharges apart 
from those associated with a storm event from a catastrophic or chronic 
storm.
    Liquid impoundments (e.g., lagoons, ponds and tanks) that are open 
and capture precipitation would be required to have depth markers 
installed. The depth marker indicates the maximum volume that should be 
maintained under normal operating conditions allowing for the volume 
necessary to contain the 25-year, 24-hour storm event. The depth of the 
impoundment would have to be noted during each week's inspection and 
when the depth of manure and wastewater in the impoundment exceeds this 
maximum depth, the operation would be required to notify the Permit 
Authority and inform him or her of the action will be taken to address 
this exceedance. Closed or covered liquid impoundments must also have 
depth markers installed, with the depth of the impoundment noted during 
each week's inspection. In all cases, this liquid may be land applied 
only if done in accordance with the permit nutrient plan (PNP) 
described below. Without such a depth marker, a CAFO operator may fill 
the lagoons such that even a storm less than a 25-year, 24-hour storm 
causes the lagoon to overflow, contrary to the discharge limit proposed 
by the BPT requirements.
    An alternative technology for monitoring lagoon and impound meat 
levels is remote sensors which monitor liquid levels in lagoons or 
impoundments. This sensor technology can be used to monitor changes in 
liquid levels, either rising or dropping levels, when the level is 
changing rapidly can trigger an alarm. These sensors can also trigger 
an alarm when the liquid level has reached a critical level. The alarm 
can transmit to a wireless receiver to alert the CAFO

[[Page 3054]]

owner or operator and can also alert the permit authority. The 
advantages of this type of system is the real time warning it can 
provide the CAFO owner or operator that his lagoon or impoundment is in 
danger of overflowing. It can provide the CAFO operator an opportunity 
to better manage their operations and prevent catastrophic failures. 
These sensors are more expensive than depth markers; however, the added 
assurance they provide in preventing catastrophic failures may make 
them attractive to some operations.
    Option 1 would require operations to handle dead animals in ways 
that prevent contributing pollutants to waters of the U.S. EPA proposes 
to prohibit any disposal of dead animals in any liquid impoundments or 
lagoons. The majority of operations have mortality handling practices 
that prevent contamination of surface water. These practices include 
transferring mortality to a rendering facility, burial in properly 
sited lined pits, and composting.
    Option 1 also would establish requirements to ensure the proper 
land application of manure and other process wastes and wastewaters. 
Under Option 1 land application of manure and wastewater to land owned 
or operated by the CAFO would have to be performed in accordance with a 
PNP that establishes application rates for manure and wastewater based 
on the nitrogen requirements for the crop. EPA believes that 
application of manure and wastewater in excess of the crop's nitrogen 
requirements would increase the pollutant runoff from fields, because 
the crop would not need this nitrogen, increasing the likelihood of it 
being released to the environment.
    In addition, Option 1 includes a requirement that manure be sampled 
at least once per year and analyzed for its nutrient content including 
nitrogen, phosphorus and potassium. EPA believes that annual sampling 
of manure is the minimum frequency to provide the necessary nutrient 
content on which to establish the appropriate rate. If the CAFO applies 
its manure more frequently than once per year, it may choose to sample 
the manure more frequently. Sampling the manure as close to the time of 
application as practical provides the CAFO with a better measure of the 
nitrogen content of the manure. Generally, nitrogen content decreases 
through volatilization during manure storage when the manure is exposed 
to air.
    The manure application rate established in the PNP would have to be 
based on the following factors: (1) the nitrogen requirement of the 
crop to be grown based on the agricultural extension or land grant 
university recommendation for the operation's soil type and crop; and 
(2) realistic crop yields that reflect the yields obtained for the 
given field in prior years or, if not available, from yields obtained 
for same crop at nearby farms or county records. Once the nitrogen 
requirement for the crop is established the manure application rate 
would be determined by subtracting any other sources of nitrogen 
available to the crop from the crop's nitrogen requirement. These other 
sources of nitrogen can include residual nitrogen in the soil from 
previous applications of organic nitrogen, nitrogen credits from 
previous crops of legumes, and crop residues, or applications of 
commercial fertilizer, irrigation water and biosolids. Application 
rates would be based on the nitrogen content in the manure and should 
also account for application methods, such as incorporation, and other 
site specific practices.
    The CAFO would have to maintain the PNP on-site, along with records 
of the application of manure and wastewater including: (1) the amount 
of manure applied to each field; (2) the nutrient content of manure; 
(3) the amount and type of commercial fertilizer and other nutrient 
sources applied; and (4) crop yields obtained. Records must also 
indicate when manure was applied, application method and weather 
conditions at the time of application.
    While Option 1 would require manure to be sampled annually, it 
would not require soil sampling and analysis for the nitrogen content 
in the soil. Nitrogen is present in the soil in different forms and 
depending on the form the nitrogen will have different potential to 
move from the field. Nitrogen is present in an organic form from to the 
decay of proteins and urea, or from other organic compounds that result 
from decaying plant material or organic fertilizers such as manure or 
biosolids. These organic compounds are broken down by soil bacteria to 
inorganic forms of nitrogen such as nitrate and ammonia. Inorganic 
nitrogen or urea may be applied to crop or pasture land as commercial 
fertilizer. Inorganic nitrogen is the form taken up by the plant. It is 
also more soluble and readily volatile, and can leave the field through 
runoff or emissions. Nitrogen can also be added to the soil primarily 
through cultivation of legumes which will ``fix'' nitrogen in the soil. 
At all times nitrogen is cycling through the soil, water, and air, and 
does not become adsorbed or built up in the soil in the way that 
phosphorus does, as discussed under Option 2. Thus, EPA is not 
proposing to require soil sampling for nitrogen. EPA would, however, 
require that, in developing the appropriate application rate for 
nitrogen, any soil residue of nitrogen resulting from previous 
contributions by organic fertilizers, crop residue or legume crops 
should be taken into account when determining the appropriate nitrogen 
application rate. State Agricultural Departments and Land Grant 
Universities have developed methods for accounting for residual 
nitrogen contributed from legume crops, crop residue and organic 
fertilizers.
    Option 1 would also prohibit application of manure and wastewater 
within 100 feet of surface waters, tile drain inlets, sinkholes and 
agricultural drainage wells. EPA strongly encourages CAFOs to construct 
vegetated buffers, however, Option 1 only prohibits applying manure 
within 100 feet of surface water and would not require CAFOs to take 
crop land out of production to construct vegetated buffers. CAFOs may 
continue to use land within 100 feet of surface water to grow crops. 
Under Option 1, EPA included costs for facilities to construct minimal 
storage, typically three to six months, to comply with the manure 
application rates developed in the PNP. EPA included these costs 
because data indicate pathogen concentrations in surface waters 
adjacent to land receiving manure are often not significantly different 
from pathogen levels in surface waters near lands not receiving manure 
when the manure has been stored and aged prior to land application. EPA 
believes the 100 foot setback, in conjunction with proper manure 
application, will minimize the potential runoff of pathogens, hormones 
such as estrogen, and metals and reduce the nutrient and sediment 
runoff.
    EPA is aware of concerns that the presence of tile drain inlets, 
sinkholes and agricultural drainage wells may be widespread in some 
parts of the country. This could effectively preclude manure based 
fertilization of large areas of crop land. EPA requests comment on the 
presence of such features in crop land and the extent to which a 100 
foot setback around such features would interfere with land application 
of manure. EPA also requests comment on how it might revise the setback 
requirement to address such concerns and still adequately protect water 
quality.
    EPA analysis shows application rates are the single most effective 
means of reducing runoff. Nevertheless, no combination of best 
management

[[Page 3055]]

practices can prevent pollutants from land application from reaching 
surface waters in all instances; vegetated buffers provide an extra 
level of protection. Buffers are not designed to reduce pollutants on 
their own; proper land application and buffers work in tandem to reduce 
pollutants from reaching surface waters. Data on the effectiveness of 
vegetated buffers indicate that a 35 to 66 foot vegetated buffer 
(depending primarily on slope) achieves the most cost-effective removal 
of sediment and pollutants from surface runoff. However, EPA chose not 
to propose requiring operations to take land out of production and 
construct a vegetated buffer because a buffer may not be the most cost-
effective application to control erosion in all cases. There are a 
variety of field practices that should be considered for the control of 
erosion. EPA encourages CAFOs to obtain and implement a conservation 
management plan to minimize soil losses, and also to reduce losses of 
pollutant bound to the soils.
    Today's proposal requires a greater setback distance than the 
optimum vegetated buffer distance. Since EPA is not requiring the 
construction of a vegetated buffer, the additional setback distance 
will compensate for the loss of pollutant reductions in the surface 
runoff leaving the field that would have been achieved with a vegetated 
buffer without requiring CAFOs to remove this land from production.
    EPA solicits comment on additional options to control erosion which 
would, in turn, reduce the amount of pollutants reaching waters of the 
U.S. The options for controlling erosion include: (1) implementing one 
of the three NRCS Conservation Practice Standards for Residue 
Management: No-Till and Strip Till (329A), Mulch Till (329B), or Ridge 
Till (329C) in the state Field Office Technical Guide; (2) requiring a 
minimum 30% residue cover; (3) achieving soil loss tolerance or ``T'; 
or (4) implementing of the Erosion and Sediment Control Management 
Measure as found in EPA's draft National Management Measures to Control 
Nonpoint Source Pollution from Agriculture. This measure is 
substantially the same as EPA's 1993 Guidance Specifying Management 
Measure for Sources of Nonpoint Pollution in Coastal Waters which says 
to:

    ``* * * Apply the erosion control component of a Resource 
Management System (RMS) as defined in the 1993 Field Office 
Technical Guide of the U.S. Department of AgricultureBNational 
Resources Conservation Service to minimize delivery of sediment from 
agricultural lands to surface waters, or design and install a 
combination of management and physical practices to settle the 
settleable solids and associated pollutants in runoff delivered from 
the contributing area for storms of up to and including a 10-year, 
24-hour frequency.''

    Farmers entering stream buffers in the Conservation Reserve 
Program's (CRP) Continuous Sign-Up receive bonus payments, as an added 
incentive to enroll, include a 20 percent rental bonus, a $100 per acre 
payment up-front (at the time they sign up), and another bonus at the 
time they plant a cover. These bonus payments more than cover costs 
associated with enrolling stream buffers, (i.e., rents forgone for the 
duration of their 10 or 15 year CRP contracts, and costs such as seed, 
fuel, machinery and labor for planting a cover crop). The bonuses 
provide a considerable incentive to enroll stream buffers because the 
farmers receive payments from USDA well in excess of what they could 
earn by renting the land for crop production. Farmers can enter buffers 
into the CRP program at any time.
    EPA may also consider providing CAFOs the option of prohibiting 
manure application within 100 feet or constructing a 35 foot vegetated 
buffer. EPA solicits comment on any and all of these options.
    Option 2. Option 2 retains all the same requirements for the 
feedlot and manure storage areas described under Option 1 with one 
exception: Option 2 would impose a BMP that requires manure application 
rates be phosphorus based where necessary, depending on the specific 
soil conditions at the CAFO.
    Manure is phosphorus rich, so application of manure based on a 
nitrogen rate may result in application of phosphorus in excess of crop 
uptake requirements. Traditionally, this has not been a cause for 
concern, because the excess phosphorus does not usually cause harm to 
the plant and can be adsorbed by the soil where it was thought to be 
strongly bound and thus environmentally benign. However, the capacity 
for soil to adsorb phosphorus will vary according to soil type, and 
recent observations have shown that soils can and do become saturated 
with phosphorus. When saturation occurs, continued application of 
phosphorus in excess of what can be used by the crop and adsorbed by 
the soil results in the phosphorus leaving the field with storm water 
via leaching or runoff. Phosphorus bound to soil may also be lost from 
the field through erosion.
    Repeated manure application at a nitrogen rate has now resulted in 
high to excessive soil phosphorus concentrations in some geographic 
locations across the country. Option 2 would require manure application 
be based on the crop removal rate for phosphorus in locations where 
soil concentrations or soil concentrations in combination with other 
factors indicate that there is an increased likelihood that phosphorus 
will leave the field and contribute pollutants to nearby surface water 
and groundwater. Further, when soil concentrations alone or in 
combination with other factors exceed a given threshold for phosphorus, 
the proposed rule would prohibit manure application. EPA included this 
restriction because the addition of more phosphorus under these 
conditions is unnecessary for ensuring optimum crop production.
    Nutrient management under Option 2 includes all the steps described 
under Option 1, plus the requirement that all CAFOs collect and analyze 
soil samples at least once every 3 years from all fields that receive 
manure. EPA would require soil sampling at 3 year intervals because 
this reflects a minimal but common interval used in crop rotations. 
This frequency is also commonly adopted in nutrient management plans 
prepared voluntarily or under state programs. When soil conditions 
allow for manure application on a nitrogen basis, then the PNP and 
record keeping requirements are identical to Option 1. Permit nutrient 
plans would have to be reviewed and updated each year to reflect any 
changes in crops, animal production, or soil measurements and would be 
rewritten and certified at a minimum of once every five years or 
concurrent with each permit renewal. EPA solicits comment on 
conditions, such as no changes to the crops, or herd or flock size, 
under which rewriting the plan would not be necessary and would not 
require the involvement of a certified planner.
    The CAFO's PNP would have to reflect conditions that require manure 
application on a phosphorus crop removal rate. The manure application 
rate based on phosphorus requirements takes into account the amount of 
phosphorus that will be removed from the field when the crop is 
harvested. This defines the amount of phosphorus and the amount of 
manure that may be applied to the field. The PNP must also account for 
the nitrogen requirements of the crop. Application of manure on a 
phosphorus basis will require the addition of commercial fertilizer to 
meet the crop requirements for nitrogen. Under Option 2, EPA believes 
there is an economic incentive to maximize proper handling of manure by 
conserving nitrogen and minimizing the

[[Page 3056]]

expense associated with commercial fertilizer. EPA expects manure 
handling and management practices will change in an effort to conserve 
the nitrogen content of the manure, and encourages such practices since 
they are likely to have the additional benefit of reducing the nitrogen 
losses to the atmosphere.
    EPA believes management practices that promote nitrogen losses 
during storage will result in higher applications of phosphorus because 
in order to meet the crops requirements for nitrogen a larger amount of 
manure must be applied. Nitrogen volatilization exacerbates the 
imbalance in the ratio of nitrogen to phosphorus in the manure as 
compared to the crop's requirement. Thus application of manure to meet 
the nitrogen requirements of the crop will result in over application 
of phosphorus and the ability of the crops and soil to assimilate 
phosphorus will reach a point at which the facility must revise the PNP 
to reflect phosphorus based application rates. EPA solicits comment on 
additional incentives that can be used to discourage those manure 
storage, treatment, and handling practices that result in nitrogen 
volatilization.
    Under both Option 1 (N) and Option 2 (P), the application of 
nitrogen from all sources may not exceed the crop nutrient 
requirements. Since a limited amount of nutrients can be applied to the 
field in a given year, EPA expects facilities will select the site-
specific practices necessary to optimize use of those nutrients. 
Facilities that apply manure at inappropriate times run the risk of 
losing the value of nutrients and will not be permitted to reapply 
nutrients to compensate for this loss. Consequently crop yields may 
suffer, and in subsequent years, the allowable application rates will 
be lower. For these reasons, facilities with no storage are assumed to 
need a minimal storage capacity to allow improved use of nutrients.
    Option 2 provides three methods for determining the manure 
application rate for a CAFO. These three methods are:

 Phosphorus Index
 Soil Phosphorus Threshold Level
 Soil Test Phosphorus Level

    These three methods are adapted from NRCS' nutrient management 
standard (Standard 590), which is being used by States' Departments of 
Agriculture to develop State nutrient standards that incorporate one or 
a combination of these three methods. EPA is proposing to require that 
each authorized state Permit Authority adopt one of these three methods 
in consultation with the State Conservationist. CAFOs would then be 
required to develop their PNP based on the State's method for 
establishing the application rate. In those states where EPA is the 
permitting authority, the EPA Director would adopt one of these three 
methods in consultation with that State's Conservationist.
    Phosphorus Index--This index assesses the risk that phosphorus will 
be transported off the field to surface water and establishes a 
relative value of low, medium, high or very high, as specified in 
Sec. 412.33. Alternatively, it may establish a numeric ranking. At the 
present time there are several versions of the P-Index under 
development. Many states are working on a P-Index for their state in 
response to the NRCS 590 Standard, and NRCS itself developed a P-Index 
template in 1994 and is in the process of updating that template at the 
present time. There are efforts underway in the scientific community to 
standardize a phosphorus index and assign a numeric ranking.
    At a minimum the phosphorus index must consider the following 
factors:

 Soil erosion
 Irrigation erosion
 Runoff class
 Soil P test
 P fertilizer application rate
 P fertilizer application method
 Organic P source application rate
 Organic P source application method

    Other factors could also be included, such as:

 Subsurface drainage
 Leaching potential
 Distance from edge of field to surface water
 Priority of receiving water

    Each of these factors is listed in a matrix with a score assigned 
to each factor. For example, the distance from edge of field to surface 
water assigns a score to different ranges of distance. The greater the 
measured distance, the lower the score. Other factors may not be as 
straightforward. For example, the surface runoff class relates field 
slope and soil permeability in a matrix, and determines a score for 
this element based on the combination of these factors. The same kind 
of approach could also be used for the subsurface drainage class, 
relating soil drainage class with the depth to the seasonal high water 
table. The values for all variables that go into determining a P-Index 
can either be directly measured, such as distance to surface water, or 
can be determined by data available from the state, such as soil 
drainage class that is based on soil types found in the state and 
assigned to all soil types. Finally, each factor is assigned a weight 
depending on its relative importance in the transport of phosphorus.
    When a P-Index is used to determine the potential for phosphorus 
transport in a field and the overall score is high, the operations 
would apply manure on a phosphorus basis (e.g., apply to meet the crop 
removal rate for phosphorus). When a P-Index determines that the 
transport risk is very high, application of manure would be prohibited. 
If the P-Index results in a rating of low or medium, then manure may be 
applied to meet the nitrogen requirements of the crop as described 
under Option 1. However, the CAFO must continue to collect soil samples 
at least every three years. If the phosphorus concentration in the soil 
is sharply increasing, the CAFO may want to consider managing its 
manure differently. This may include changing the feed formulations to 
reduce the amount of phosphorus being fed to the animals, precision 
feeding to account for nutrient needs of different breeds and ages of 
animals. It may also include changing manure storage practices to 
reduce nitrogen losses. There is a great deal of research on feed 
management, including potential effects on milk production when 
phosphorus in rations fed to dairy cows is reduced, and the cost 
savings of split sex and multistage diets and the addition of or adding 
the enzyme phytase to make the phosphorus more digestible by poultry 
and swine. Phytase additions in the feed of monogastrics have proven 
effective at increasing the ability of the animal to assimilate 
phosphorus and can reduce the amount of phosphorus excreted. Phytase 
use is also reported to increase bioavailability of proteins and 
essential minerals, reducing the need for costly supplemental 
phosphorus, and reducing necessary calcium supplements for layers. The 
CAFO may also consider limiting the application of manure. For example, 
the CAFO may apply manure to one field to meet the nitrogen 
requirements for that crop but not return to that field until the crops 
have assimilated the phosphorus that was applied from the manure 
application.
    Phosphorus Threshold--This threshold which would be developed for 
different soil types is a measure of phosphorus in the soil that 
reflects the level of phosphorus at which phosphorus movement in the 
field is acceptable. Scientists are currently using a soluble 
phosphorus concentration of 1 part per million (ppm) as a measure of 
acceptable phosphorus movement. When the soil concentration of 
phosphorus reaches this threshold the concentration of phosphorus in 
the runoff would be expected to be 1 ppm. The 1 ppm value

[[Page 3057]]

has been used as an indicator of acceptable phosphorus concentration 
because it is a concentration that has been applied to POTWs in their 
NPDES permits. An alternative phosphorus discharge value could be the 
water quality concentration for phosphorus in a given receiving stream.
    States which adopt this method in their state nutrient management 
standard would need to establish a phosphorus threshold for all types 
of soils found in their state.
    Use of the phosphorus threshold in developing an application rate 
allows for soils with a phosphorus concentration less than three 
quarters the phosphorus threshold to apply manure on a nitrogen basis. 
When soils have a phosphorus concentration between 3/4 and twice the 
phosphorus threshold then manure must be applied to meet the crop 
removal requirements for phosphorus. For soils which have phosphorus 
concentrations greater than twice the phosphorus threshold, no manure 
may be applied.
    Soil Test Phosphorus--The soil test phosphorus is an agronomic soil 
test that measures for phosphorus. This method is intended to identify 
the point at which the phosphorus concentration in the soil is high 
enough to ensure optimum crop production. Once that concentration range 
(often reported as a ``high'' value from soil testing laboratories) is 
reached, phosphorus is applied at the crop removal rate. If the soil 
test phosphorus level reaches a very high concentration, then no manure 
may be applied. Most soils need to be nearly saturated with phosphorus 
to achieve optimum crop yields. The soil phosphorus concentration 
should take into account the crop response and phosphorus application 
should be restricted when crop yield begins to level off.
    The soil test phosphorus method establishes requirements based on 
low, medium, high and very high soil condition, and applies the same 
restrictions to these measures as are used in the P-Index. States that 
adopt this method must establish the soil concentration ranges for each 
of these risk factors for each soil type and crop in their state.
    EPA anticipates that in most states, the permit authority will 
incorporate the State's nutrient standard (590 Standard) into CAFO 
permits. For example, if the permit authority, in consultation with the 
State Conservationist, adopts a Phosphorus Index, then CAFO permits 
would include the entire P-Index as the permit condition dictating how 
the application rate must be developed. If a permit authority selects 
the Phosphorus Threshold, then the CAFO permits must contain soil 
concentration limitations that reflect phosphorus-based application, as 
well as the level at which manure application is prohibited.
    Each State Conservationist, in consultation with land grant 
university scientists and the state, must develop a Phosphorus Index 
for that state by May 2001. EPA may consider eliminating the use of the 
soil phosphorus threshold level and the soil test phosphorus level as 
methods for determining the manure application rate for a CAFO and 
requiring the use of the state Phosphorus Index. Scientists studying 
phosphorus losses from agricultural lands are supporting the 
development and use of the Phosphorus Index since it combines the 
factors critical in determining risk of phosphorus rate and transport 
to surface waters, including the soil phosphorus threshold level, when 
developed. EPA is soliciting comment on this option.
    Finally, under Option 2 EPA is proposing to require CAFOs that 
transfer manure off-site to provide the recipient of the manure with 
information as to the nutrient content of the manure and provide the 
recipient with information on the correct use of the manure. See 
Section VII.E.4, for a complete discussion of the requirements for off-
site transfer of manure.
    As discussed in Section VI, compliance costs for manure transfer 
assessed to the CAFO include hauling costs and record keeping. If the 
recipient is land applying the manure, the recipient is most likely a 
crop farmer, and the recipient is assumed to already have a nutrient 
management plan that considers typical yields and crop requirements. 
The recipient is also assumed to apply manure and wastes on a nitrogen 
basis, so the application costs are offset by the costs for commercial 
fertilizer purchase and application. EPA assumes the recipient may need 
to sample soils for phosphorus, and costs for sampling identically to 
the CAFO, i.e. every three years. EPA has not accounted for costs that 
would result from limiting the amount or way recipients are currently 
using manure. EPA solicits comment on the impact to recipients who 
currently use manure and may have to change their practices as a result 
of this requirement. In cases where manure is received for alternative 
uses, the recipient is deemed to already maintain the appropriate 
records.
    EPA solicits comments on whether there should be required training 
for persons that will apply manure. There are some states which have 
these requirements. Proper application is critical to controlling 
pollutant discharges from crop fields. Some states have establish 
mandatory training for persons that apply manure. EPA will consult with 
USDA on the possibility of establishing a national training program for 
manure applicators.
    Rotational Grazing. At the request of the environmental community, 
EPA has investigated rotational grazing as an alternative to 
confinement-based livestock production. Any pasture or grazing 
operation is by definition not a form of confinement, therefore use of 
these practices are outside of the scope of these regulations.
    Intensive rotational grazing is known by many terms, including 
intensive grazing management, short duration grazing, savory grazing, 
controlled grazing management, and voisin grazing management. This 
practice involves rotating livestock and poultry among several pasture 
subunits or paddocks, often on a daily basis, to obtain maximum 
efficiency of the pasture land.
    Due to the labor, fencing, water, and land requirements for 
intensive rotational grazing, typically only small dairy operations 
with less than 100 head use this practice. Few beef feedlots practice 
intensive rotational grazing. Poultry on pasture is usually housed in a 
portable building or pen holding up to 100 birds that is moved daily; 
rarely are more than 1,000 birds in total raised in this manner. Swine 
have also been successfully raised on pasture, most frequently as a 
seasonal farrowing operation in combination with seasonal sheep or cow 
grazing. Climate and associated growing seasons make it very difficult 
for operations to use an intensive rotational grazing system throughout 
the entire year. Most dairy operations and beef feedlots that use 
rotational grazing typically operate between 3 and 9 months of the 
year, with 12 months most likely only in the southern states. Poultry 
on pasture are produced for about 6 months, and pigs are typically 
farrowed once per year.
    Grazing systems are not directly comparable to confined feeding 
operations, as one system can not readily switch to the other. 
Intensive rotational grazing systems are reported to have advantages 
over confined feeding operations: reduced housing and feed costs, 
improved animal health, less manure handling, and more economic 
flexibility. Intensive rotational grazing also encourages grass growth 
and development of healthy sod, which in turn reduces erosion. In a 
good rotational system, manure is more evenly distributed and will 
break up and disappear from the surface faster.
    Despite these advantages, studies do not indicate significant 
reductions of

[[Page 3058]]

pathogens or nutrients in runoff to nearby streams as compared to 
manured fields. Rotational grazing systems may still require manure 
maintenance near watering areas and paths to and from the paddock 
areas. There are also limits to the implementation of intensive 
rotational grazing systems, which are highly dependent upon: available 
acreage, herd size, land resources, labor, water availability, 
proximity of pasture area to milking center for dairy operations, and 
feed storage capabilities. Grazing systems usually produce lower animal 
weight gain and milk production levels, provide limited manure handling 
options, and do not provide the level of biosecurity that confinement 
farms can obtain.
    Proposed Basis for BPT Limitations. EPA is not proposing to 
establish BPT requirements for the beef, dairy, swine, veal and poultry 
subcategories on the basis of Option 1, because it does not represent 
the best practicable control technology. In areas that have high to 
very high phosphorus build up in the soils, Option 1 would not require 
that manure application be restricted or eliminated. Thus, the 
potential for phosphorus to be discharged from land owned or controlled 
by the CAFOs would not be controlled by Option 1. Consequently Option 1 
would not adequately control discharges of phosphorus from these areas. 
Option 2 would reduce the discharge of phosphorus in field runoff by 
restricting the amount of phosphorus that may be applied to the amount 
that is appropriate for agricultural purposes or prohibiting the 
application of manure when phosphorus concentrations in the soil are 
very high and additional phosphorus is not needed to meet crop 
requirements.
    EPA is proposing to establish BPT limitations for the beef, dairy, 
swine, veal and poultry subcategories on the basis of Option 2 with the 
exception that it is co-proposing options with and without the 
certification regulations for off-site land application of manure. 
EPA's decision to base BPT limitations on Option 2 treatment reflects 
consideration of the total cost of application of technology in 
relation to the effluent reduction benefits to be achieved from such 
application. Option 2 is expected to cost $549 million under the two-
tier structure and achieve 107 million pounds of pollutant reductions 
for a total cost to pound ratio of $0.57. The three-tier structure is 
estimated to cost $551 for a total cost to pound ratio of $0.51.
    The Option 2 technology is one that is readily applicable to all 
CAFOs. The production area requirements represent the level of control 
achieved by the majority of CAFOs in the beef, dairy, swine, poultry 
and veal subcategories. USDA and the American Society of Agricultural 
Engineers cite the 25-year, 24-hour storm as the standard to which 
storage structures should comply. This has been the standard for many 
years, and most existing lagoons and other open liquid containment 
structures are built to this standard. As described above, the land 
application requirements associated with Option 2 are believed to 
represent proper agricultural practice and to ensure that CAFO manure 
is applied to meet the requirements of the crops grown and not exceed 
the ability of the soil and crop to absorb nutrients.
    EPA believes any of the three methods for determining when manure 
should be applied on a phosphorus basis would represent BPT. Each 
method has distinct advantages which, depending on the circumstances, 
could make one method preferred over another. There has been 
considerable work done in this area within the past few years and this 
work is continuing. EPA believes that this proposed BPT approach 
provides adequate flexibility to allow states to develop an approach 
that works best for the soils and crops being grown within their state. 
Nonetheless, EPA will continue to work with soil scientists and may 
consider standardizing the factors included in the phosphorus index to 
develop a standard rating scale, for the purpose of CAFO requirements. 
EPA also solicits comment on whether there should be some EPA oversight 
or approval of the phosphorus method developed by the states. 
Specifically EPA solicits comment whether of EPA should establish 
standards that must be included in a phosphorus index. These standards 
may include specifying additional criteria which should be considered 
in the index, such as distance to surface water. EPA also seeks comment 
on whether it should establish minimum standards on how these criteria 
must be factored into a Phosphorus Index, such as specifying the weight 
to be assigned to the various criteria included in the Index and 
assigning the values for specific ranges for each criteria. EPA may 
consider establishing a minimum standard for the phosphorus threshold 
method for example requiring that at a minimum the phosphorus threshold 
be based on the soil phosphorus concentration that would result in a 
soluble phosphorus concentration in the runoff of 1 ppm. EPA may also 
consider establishing specific sampling protocols for collecting manure 
and soil samples and analyzing for nutrients.
    CAFOs must also develop and implement a PNP that establishes the 
appropriate manure application rate. EPA believes the land application 
rates established in accordance with one of the three methods described 
in today's proposed regulation, along with the prohibition of manure 
application within 100 feet of surface water, will ensure manure and 
wastewater are applied in a manner consistent with proper agricultural 
use. EPA has included a discussion of how to develop a PNP in section 
VIII.C.6.
    EPA believes that state sampling and analytical protocols are 
effective; however, soil phosphorus levels can vary depending on how 
the soil samples are collected. For example, a CAFO that surface-
applies manure will deposit phosphorus in the surface layer of the soil 
and should collect soil samples from the top layer of soil. If this 
CAFO collects soil samples to a depth of several inches the analysis 
may understate the phosphorus concentrations in the soil. EPA solicits 
comments on the need to establish sampling protocols for soil sampling.
4. Best Control Technology for Conventional Pollutants (BCT)
    In evaluating possible BCT standards, EPA first considered whether 
there are any candidate technologies (i.e., technology options); that 
are technologically feasible and achieve greater conventional pollutant 
reductions than the proposed BPT technologies. (Conventional pollutants 
are defined in the Clean Water Act as including: Total Suspended Solids 
(TSS), Biochemical Oxygen Demand (BOD), pH, oil and grease and fecal 
coliform.) EPA considered the same BAT technology options described 
below and their effectiveness at reducing conventional pollutants. 
EPA's analysis of pollutant reductions has focused primarily on the 
control of nutrients, nitrogen and phosphorus. However, the Agency has 
also analyzed what the technology options can achieve with respect to 
sediments (or TSS), metals, and pathogens. Although livestock waste 
also contains BOD, EPA did not analyze the loadings or loadings 
reductions associated with the technology options for BOD. Thus, the 
only conventional pollutant considered in the BCT analysis is TSS. EPA 
identified no technology option that achieves greater TSS removals than 
the proposed BPT technologies (see the Technical Development Document). 
EPA does not believe that these technology options would substantially

[[Page 3059]]

reduce BOD loads. There are therefore no candidate technologies for 
more stringent BCT limits. If EPA had identified technologies that 
achieve greater TSS reductions than the proposed BPT, EPA would have 
performed the two part BCT cost test. (See 51 FR 24974 for a 
description of the methodology EPA employs when setting BCT standards.) 
EPA solicits comment on the assumptions it used in considering BCT.
    EPA is proposing to establish BCT limits for conventional 
pollutants equivalent to the proposed BPT limits.
5. Best Available Technology Economically Achievable (BAT)
    EPA is considering six technology options to control discharges 
from CAFOs in the beef, veal and poultry subcategories, and seven 
technology options for the dairy and hog subcategories. All of the 
technology options include restrictions on land application of manure, 
best management practices (BMPs), inspections and record keeping for 
the animal confinement areas, and wastewater storage or treatment 
structures. The following table summarizes the requirements for each of 
the seven technology options. Note that a given technology option may 
include a combination of technologies.

                          Table 8-1.--Requirements Considered in the Technology Options
----------------------------------------------------------------------------------------------------------------
                               Option 1    Option 2    Option 3    Option 4    Option 5    Option 6    Option 7
----------------------------------------------------------------------------------------------------------------
Zero Discharge w/overflow             X           X           X           X            Cat..........  ..........
 when a 25-24 Design                                                              Dairy
 Standard is met............
Depth markers for lagoons...          X           X           X           X            Cattle &   X           X
                                                                                  Dairy
Annual Manure Testing.......          X           X           X           X           X           X           X
N-based PNP.................          X   ..........  ..........  ..........  ..........  ..........  ..........
100' LA setback.............          X           X           X           X           X           X           X
P-based PNP (where            ..........          X           X           X           X           X           X
 necessary).................
Soil Test--every 3yrs.......  ..........          X           X           X           X           X           X
Zero discharge without any    ..........  ..........  ..........  ..........    Swine &   ..........  ..........
 allowance for overflow.....                                                    Poultry
Hydrologic Link Assessment &  ..........  ..........          X           X   ..........  ..........  ..........
 Zero Discharge to
 Groundwater beneath
 Production Area............
Ambient Surface Water         ..........  ..........  ..........          X   ..........  ..........  ..........
 Sampling (N,P,TSS).........
Anaerobic Digestion w/power   ..........  ..........  ..........  ..........      Swine     Swine &   ..........
 generation.................                                                                  Dairy
Frozen/snow covered/          ..........  ..........  ..........  ..........  ..........  ..........         X
 saturated application
 prohibitions...............
----------------------------------------------------------------------------------------------------------------
X = All Subcategories.

    Option 1. This option is equivalent to Option 1 described under BPT 
Section VIII.3. Option 1 would require zero discharge from the 
production area and that liquid storage be designed, constructed and 
maintained to handle all process wastewater and storm water runoff from 
the 25-year, 24-hour storm event. In addition, Option 1 requires 
management practices to ensure that the production area (which includes 
manure and wastewater storage) is being adequately maintained.
    Option 1 also would establish a requirement to develop a PNP which 
establishes the proper land application rate for manure and wastewater 
to meet the nitrogen requirements for the crops being grown by the CAFO 
and require a 100 foot setback from surface water, sinkholes, tile 
drain inlets and agricultural drainage wells.
    Option 2. This option is equivalent to Option 2 described under BPT 
(section VII.3). Option 2 includes all of the requirements established 
under Option 1. However, Option 2 would further restrict the amount of 
manure that can be applied to crop land owned or controlled by the 
CAFO. The CAFO would be required to apply manure and wastewater at the 
appropriate rate taking into account the nutrient requirements of the 
crop and soil conditions. Specifically, Option 2 would require that 
manure be applied at crop removal rate for phosphorus if soil 
conditions warrant and, if soils have a very high level phosphorus 
build-up, no manure or wastewater could be applied to the crop land 
owned or controlled by the CAFO.
    Option 3. Option 3 includes all the requirements for Option 2 and 
would require that all operations perform an assessment to determine 
whether the ground water beneath the feedlot and manure storage area 
has a direct hydrological connection to surface water. As described in 
Section VII, EPA has authority to control discharges to surface water 
through ground water that has a direct hydrological connection to 
surface water. A hydrological connection refers to the interflow and 
exchange between surface impoundments and surface water through an 
underground corridor or ground water. EPA is relying on the permitting 
authority to establish the region-specific determination of what 
constitutes a direct hydrological link. Option 3 would require all 
CAFOs to determine whether they have a direct hydrological connection 
between the ground water beneath the production area and surface 
waters. If a link is established, the facility would have to monitor 
ground water up gradient and down gradient of the production area to 
ensure that they are achieving zero discharge to ground water. EPA has 
assumed that CAFOs would comply with the zero discharge requirement by 
installing liners of synthetic material beneath lagoons and ponds, and 
impervious pads below storage of dry manure stockpiles. EPA's costs for 
liners reflect both a synthetic liner and compacted clay to protect the 
liner and prolong its useful life.
    CAFOs with a direct hydrologic link would be required to sample the 
groundwater from the monitoring wells (located up gradient and down 
gradient of the production area) at a minimum frequency of twice per 
year. These samples are necessary to ensure that pollutants are not 
being discharged through groundwater to surface water from the 
production area. The samples shall be monitored for nitrate, ammonia, 
total coliform, fecal coliform, Total Dissolved Solids (TDS) and total 
chloride. Differences in concentration of these pollutants between the 
monitoring

[[Page 3060]]

well(s) located up gradient and down gradient of the production area 
are assumed to represent a discharge of pollutants and must be 
prevented. As noted below, coliforms are not necessarily good 
indicators of livestock discharges. Also, it is difficult to determine 
``concentrations'' of coliforms as they are not necessarily evenly 
distributed in the way chemical contaminants generally are. EPA 
requests comment on technical concerns associated with including total 
and fecal coliforms in the groundwater monitoring and protection 
requirements and on ways to address such concerns.
    Option 4. Option 4 includes all the requirements for Option 3 and 
would require sampling of surface waters adjacent to feedlots and/or 
land under control of the feedlot to which manure is applied. This 
option would require CAFOs to sample surface water both upstream and 
downstream from the feedlot and land application areas following a one 
half inch rain fall (not to exceed 12 sample events per year). The 
samples would be analyzed for concentrations of nitrogen, phosphorus 
and total suspended solids (TSS). EPA selected these pollutants because 
it believes these pollutants provide an adequate indication of whether 
a discharge is occurring from the operation. All sampling results would 
be reported to the permit authority. Any difference in concentration 
between the upstream and downstream samples would be noted. This 
monitoring requirement could provide some indication of discharges from 
the land application or feedlot areas.
    EPA also considered requiring that pathogens and BOD5 be 
analyzed in samples collected. EPA decided that this would not be 
practical, because sampling under Option 4 is linked to storm events 
which limits the ability to plan in advance for analysis of the samples 
and making arrangements for shipping samples to laboratories. Fecal 
coliform and BOD samples all have very short holding times before they 
need to be analyzed. Most CAFOs are located in rural areas with limited 
access to overnight shipping services and are probably not near 
laboratories that can analyze for these pollutants. Further, fecal 
coliform and similar analytes that are typically used as indicators in 
municipal wastewater are not necessarily good indicators of livestock 
discharges. If CAFOs were required to monitor for pathogens which could 
indicate discharges of manure or CAFO wastewater, it would be better to 
require monitoring for fecal enterococci, or even specific pathogens 
such as salmonella, Giardia, and Cryptosporidium. However, the cost for 
analyzing these parameters is very high and the holding times for these 
parameters are also very short.
    Furthermore, EPA determined pathogen analyses are also 
inappropriate because the pathogens in manure are found in areas 
without animal agriculture. For example Enterobacter, Klebsiella, 
Bacillus cereus, Clostridium, and Listeria are all naturally occurring 
soil and plant microorganisms and are found in soils that have never 
received manure. Pathogens may also be deposited onto land from 
wildlife. Thus, EPA concluded that requiring analysis for these 
pollutants was impractical at best and potentially very expensive.
    Option 5. Option 5 includes the requirements established by Option 
2 and would establish a zero discharge requirement from the production 
area that does not allow for an overflow under any circumstances. By 
keeping precipitation from contacting with the animals, raw materials, 
waste handling and storage areas, CAFOs could operate the confinement 
areas and meet zero discharge regardless of rainfall events. Option 5 
includes the same land application requirements as Option 2, which 
would restrict the rate of manure and wastewater application to a crop 
removal rate for phosphorus where necessary depending on the specific 
soil conditions at the CAFO. Additionally, as in Option 2, application 
of manure and wastewater would be prohibited within 100 feet of surface 
water.
    EPA considered Option 5 for the poultry, veal and hog 
subcategories, where it is common to keep the animals in total 
confinement, feed is generally maintained in enclosed hoppers and the 
manure and wastewater storage can be handled so as to prevent it from 
contacting storm water. EPA considered a number of ways a facility 
might meet the requirements of no discharge and no overflow. In 
estimating the costs associated with Option 5, EPA compared the total 
costs and selected the least expensive technology for a given farm 
size, geographic region, and manure management system. Costs also 
depend on whether the facility's PNP indicates land application must be 
based on nitrogen or phosphorus, and how many acres the facility 
controls. The technologies described below were used singularly or in 
combination to meet the requirements of Option 5.
    Many facilities can achieve Option 5 by covering open manure and 
storage areas, and by constructing or modifying berms and diversions to 
control the flow of precipitation. EPA costed broiler and turkey 
operations for storage sheds sufficient to contain six months of 
storage. Some poultry facilities, particularly turkey facilities, 
compost used litter in the storage sheds, allowing recycle and reuse of 
the litter. EPA costed swine, veal, and poultry facilities which use 
lagoons or liquid impoundments for impoundment covers.
    EPA believes that operations which have excess manure nutrients and 
use flush systems to move manure out of the confinement buildings will 
have an incentive to construct a second lagoon cell. A second storage 
or treatment cell should accomplish more decomposition of the waste and 
will allow flush water to be recycled out of the second cell or lagoon, 
thus reducing the addition of fresh water to the system. Reducing the 
total volume of stored waste reduces the risk of a catastrophic failure 
of the storage structure. In the absence of large volumes of water, 
facilities with an excess of manure nutrients will be able to transfer 
the excess manure off-site more economically due to a lower volume of 
waste needing to be hauled. Water reduction also results in a more 
concentrated product which would have a higher value as a fertilizer.
    Covered systems substantially reduce air emissions, and help 
maintain the nutrient value of the manure. Covered systems also may 
benefit facilities by reducing odors emanating from open storage. This 
option also creates a strong incentive for facilities to utilize 
covered lagoon digesters or multistage covered systems for treatment. 
The use of covers will allow smaller and more stable liquid 
impoundments to be constructed. Finally, the use of covered 
impoundments encourages treatment and minimal holding times, resulting 
in pathogen die-off and reduction of BOD and volatile solids.
    Other technologies can be effectively used at some facilities, such 
as conversion of flush systems to scrape systems, or by retrofit of 
slatted floor housing to V-shaped under house pits that facilitate 
solid liquid separation. Solids can be stored or composted in covered 
sheds, while the urine can be stored in small liquid impoundments.
    In the event the facility has insufficient land to handle all 
nutrients generated, EPA evaluated additional nutrient management 
strategies. First, the manure could pass through solid separation, 
resulting in a smaller volume of more concentrated nutrients that is 
more effectively transported offsite. Second, land application could be 
based on the uppermost portion of a covered lagoon containing a more 
dilute concentration of nutrients. Data indicates much of the 
phosphorus

[[Page 3061]]

accumulates in the bottom sludge, which is periodically removed and 
could be transported offsite for proper land application. Though many 
facilities report sludge removal of a properly operating lagoon may 
occur as infrequently as every 20 years, EPA assumed facilities would 
pump out the phosphorus and metals enriched sludge every three years. 
This is consistent with the ANSI/ASAE standards for anaerobic treatment 
lagoons (EP403.3 JUL99) that indicates periodic sludge removal and 
liquid drawdown is necessary to maintain the treatment volume of the 
lagoon. Third, swine and poultry farms can implement a variety of 
feeding strategies, as discussed under Option 2 (see Section VII.C.3). 
Feed management including phytase, multistage diets, split sex feeding, 
and precision feeding have been shown to reduce phosphorus content in 
the manure by up to 50%. This results in less excess nutrients to be 
transported offsite, and allows for more manure to be land applied at 
the CAFO.
    EPA is aware of a small number of swine facilities that are 
potentially CAFOs and use either open lots or some type of building 
with outside access to confine the animals. EPA data indicate these 
types of operations are generally smaller operations that would need to 
implement different technologies than those described above. CAFOs that 
provide outdoor access for the animals need to capture contaminated 
storm water that falls on these open areas. Open hog lots would find it 
difficult to comply with a requirement that does not allow for 
overflows in the event of a large storm. EPA costed these facilities to 
replace the open lots with hoop houses to confine the animals and 
storage sheds to contain the manure. Hoop structures are naturally 
ventilated structures with short wooden or concrete sidewalls and a 
canvas, synthetic, or reflective roof supported by tubes or trusses. 
The floor of the house is covered with straw or similar bedding 
materials. The manure and bedding is periodically removed and stored. 
The drier nature of the manure lends to treatment such as composting as 
well as demonstrating reduced hauling costs as compared to liquid 
manure handling systems.
    EPA considered a variation to Option 5 that would require CAFOs to 
use dry or drier manure handling practices. This variation assumed 
conversion to a completely dry manure handling system for hogs and 
laying hens using liquid manure handling systems. In addition to the 
advantages of reduced water use described above, a completely dry 
system is more likely to minimize leaching to ground water and, where 
directly connected hydrologically to surface water, will also reduce 
loads to surface waters. For the beef and dairy subcategories EPA 
assumes that the liquid stream would be treated to remove the solids 
and the solids would be composted. It is not practical to assume beef 
and dairy operations can avoid the generation of liquid waste because 
operations in both subcategories tend to have animals in open areas 
exposed to precipitation resulting in a contaminated storm water that 
must be captured. Also dairies generate a liquid waste stream from the 
washing of the milking parlor.
    Option 6. Option 6 includes the requirements of Option 2 and 
requires that large hog and dairy operations (hog operations and 
dairies with 2,000 AUs) would install and implement enclosed anaerobic 
digestion to treat their manure and use the captured methane gas for 
energy or heat generation. With proper management, such a system can be 
used to generate additional on-farm revenue. The enclosed system will 
reduce air emissions, especially odor and hydrogen sulfide, and 
potentially reduces nitrogen losses from ammonia volatilization. The 
treated effluent will also have less odor and should be more 
transportable relative to undigested manure, making offsite transfer of 
manure more economical. Anaerobic digestion under thermophilic or 
heated conditions would achieve additional pathogen reductions.
    Option 7. Option 7 includes the requirements of Option 2 and would 
prohibit manure application to frozen, snow covered or saturated 
ground. This prohibition requires that CAFOs have adequate storage to 
hold manure for the period of time during which the ground is frozen or 
saturated. The necessary period of storage ranges from 45 to 270 days 
depending on the region. In practice, this may result in some 
facilities needing storage to hold manure and wastes for 12 months. EPA 
requests comment on whether there are specific conditions which warrant 
a national standard that prohibits application when the ground is 
frozen, snow covered or saturated.
6. Proposed Basis for BAT
    BAT Requirements for the Beef and Dairy Subcategories. EPA is 
proposing to establish BAT requirements for the beef and dairy 
subcategories based on the same technology option. The beef subcategory 
includes stand-alone heifer operations and applies to all confined 
cattle operations except for operations that confine mature dairy 
cattle or veal. Under the two-tier structure, the BAT requirements 
would apply to any beef operation with 500 head of cattle or more. 
Under the three-tier structure, the BAT requirements for beef would 
apply to any operation with more than 1,000 head of cattle and any 
operation with 300 to 1,000 head which meets the conditions identified 
in section VII.B.2 and 3 of this preamble.
    EPA proposes to establish BAT requirements for dairy operations 
which meet the following definitions: under the two-tier structure, all 
dairy with 350 head of mature dairy cows or more would be subject to 
today's proposed BAT requirements. Under the three-tier approach any 
dairy with more than 700 head of mature dairy cows or 250 to 700 head 
of mature dairy cows which meets the conditions identified in section 
VII of this preamble would be subject to today's proposed BAT 
requirements.
    EPA proposes to establish BAT requirements for the beef and dairy 
subcategories based on Option 3. BAT would require all beef and dairy 
CAFOs to monitor the ground water beneath the production area by 
drilling wells up gradient and down gradient to measure for a plume of 
pollutants discharged to ground water at the production area. A beef or 
dairy CAFO can avoid this ground water monitoring by demonstrating, to 
the permit writer's satisfaction, that it does not have a direct 
hydrological connection between the ground water beneath the production 
area and surface waters.
    EPA proposes to require CAFOs in the beef and dairy subcategories 
to monitor their ground water unless they determine that the production 
area is located above ground water which has a direct hydrological 
connection to surface water. CAFOs would have to monitor for ammonia, 
nitrate, fecal coliform, total coliform, total chlorides and TDS. EPA 
selected these pollutants because they may be indicators of livestock 
waste and are pollutants of concern to ground water sources. If the 
down gradient concentrations are higher than the up gradient 
concentration this indicates a discharge which must be controlled. As 
discussed above, EPA requests comment on the inclusion of total and 
fecal coliforms among the required analytes. For operations that do not 
demonstrate that they do not have a direct hydrologic connection, EPA 
based the BAT zero discharge requirement on the installation of liners 
in liquid storage structures such as lagoons and storm water retention 
ponds and concrete pads for the storage of dry manure stockpiles.
    Beef and dairy CAFOs must also develop and implement a PNP that is 
based on application of manure and

[[Page 3062]]

wastewater to crop land either at a crop removal rate for phosphorus 
where soil conditions require it, or on the nitrogen requirements of 
the crop. EPA believes the land application rates established in 
accordance with one of the three methods described in today's proposed 
regulation, along with the prohibition of manure application within 100 
feet of that surface water will ensure manure and wastewater are 
applied in a manner consistent with proper agricultural use. See EPA's 
document entitled ``Managing Manure Nutrients at Concentrated Animal 
Feeding Operations'' for the detailed discussion of how a PNP is 
developed.
    EPA believes that technology option 3 is economically achievable 
and represents the best available technology for the beef and dairy 
subcategories, and is therefore proposing this option as BAT for these 
subcategories. The incremental annual cost of Option 3 relative to 
Option 2 for these subcategories is $170 million pre-tax under the two-
tier structure, and $1205 million pre-tax under the three tier 
structure. EPA estimated annual ground water protection benefits from 
the proposed requirements of $70-80 million. EPA estimates Option 3 for 
the beef and dairy subcategories will reduce loadings to surface waters 
from hydrologically connected ground water by 3 million pounds of 
nitrogen. To determine economic achievability, EPA analyzed how many 
facilities would experience financial stress severe enough to make them 
vulnerable to closure under each regulatory option. As explained in 
more detail in the Economic Analysis, the number of facilities 
experiencing stress may indicate that an option might not be 
economically achievable, subject to additional considerations. Under 
Option 2, no facilities in either the beef or dairy sectors were found 
to experience stress, while under Option 3, the analysis projects 10 
beef and 329 dairy CAFOs would experience stress under the two-tier 
structure, and 40 beef and 610 dairy CAFOs would experience stress 
under the three-tier structure. Of these, EPA has determined that 40 
beef operations are considered small businesses based on size standards 
established by the Small Business Administration. This analysis assumes 
that 76% of affected operations would be able to demonstrate that their 
ground water does not have a hydrological connection to surface water 
and would therefore not be subject to the proposed requirements. EPA 
projects the cost of making this demonstration to the average CAFO 
would be $3,000. EPA is aware that concerns have been raised about 
these cost estimates, and about its estimates of how many facilities 
would be able to avoid the groundwater monitoring and protection 
requirements on this basis. EPA requests comment on this analysis and 
on its proposed determination that Option 3 is economically achievable 
for the beef and dairy sectors.
    EPA is not proposing to base BAT requirements for the beef and 
dairy subcategories on Option 2 because it does not as comprehensively 
control discharges of pollutants through ground water which has a 
direct hydrological connection with surface water. However, EPA is 
requesting comment on Option 2 as a possible basis for BAT in the beef 
and dairy subcategories. EPA notes that even under Option 2, permit 
writers would be required to consider whether a facility is located in 
an area where its hydrogeology makes it likely that the ground water 
underlying the facility is hydrologically connected to surface water 
and whether a discharge to surface water from the facility through such 
hydrologically connected ground water may cause or contribute to a 
violation of State water quality standards. In cases where such a 
determination was made by the permit writer, he or she would impose 
appropriate conditions to prevent discharge via a hydrologic connection 
would be included in the permit. The main difference between Option 2 
and Option 3 is thus that under Option 3, the burden of proof would be 
on the facility to demonstrate that it does not discharge to ground 
water that is hydrologically connected to surface water, while under 
Option 2, ground water protection and monitoring requirements would 
only be included in the permit if there were an affirmative 
determination by the permitting authority that such requirements were 
necessary to prevent a discharge of pollutants to surface waters via 
hydrologically connected ground water that may be sufficient to cause a 
violation of State water quality standards. Under today's proposal, the 
Option 2 approach to preventing discharges via hydrologically connected 
ground water would be used for the veal, swine and poultry 
subcategories. EPA requests comment on applying this approach to the 
beef and dairy subcategories as well.
    EPA is not proposing to establish BAT requirements for the beef and 
dairy subcategories on the basis of Option 4 due to the additional cost 
associated with ambient stream monitoring and because the addition of 
in-stream monitoring does not by itself achieve any better controls on 
the discharges from CAFOs as compared to the other options. In-stream 
monitoring could be an indicator of discharges occurring from the CAFO; 
however, it is equally likely that in-stream monitoring will measure 
discharges that may be occurring from adjacent non-CAFO agricultural 
sources. Through the use of commercial fertilizers these non-CAFO 
sources would likely be contributing the same pollutants being analyzed 
under Option 4. EPA has not identified a better indicator parameter 
which would isolate constituents from CAFO manure and wastewater from 
other possible sources contributing pollutants to a stream. Pathogen 
analysis could be an indicator if adjacent operations do not also have 
livestock or are not using manure or biosolids as fertilizer sources. 
However, as described earlier, EPA has concerns about the ability of 
CAFOs to collect and analyze samples for these pollutants because of 
the holding time constraints associated with the analytical methods for 
these parameters. Accordingly, EPA does not believe that specifying 
these additional in-stream monitoring BMP requirements would be 
appropriate; and would not be useful in ensuring compliance with the 
Clean Water Act. Moreover, in-stream monitoring would be a very costly 
requirement for CAFOs to comply with.
    EPA is not proposing to establish BAT requirements for the beef and 
dairy subcategories on the basis of Option 5. Option 5 would require 
zero discharge with no overflow from the production area. Most beef 
feedlots are open lots which have large areas from which storm water 
must be collected; thus, it is not possible to assume that the 
operation can design a storm water impoundment that will never 
experience an overflow even under the most extreme storm. Stand alone 
heifer operations (other than those that are pasture-based) are 
configured and operated in a manner very similar to beef feedlots. 
Unlike the hog, veal and poultry subcategories, EPA is not aware of any 
beef operations that keep all cattle confined under roof at all times.
    Dairies also frequently keep animals in open areas for some period 
of time, whether it is simply the pathway from the barn to the milk 
house or an open exercise lot. Storm water from these open areas must 
be collected in addition to any storm water that contacts food or 
silage. As is the case for beef feedlots, the runoff volume from the 
exposed areas is a function of the size of the area where the cattle 
are maintained, and the amount of precipation. Since the CAFO operator 
cannot control the amount of precipation, there always remains the 
possibility that an extreme storm event

[[Page 3063]]

can produce enough rainfall that the resulting runoff would exceed the 
capacity of the lagoon.
    EPA did consider a new source option for new dairies that would 
enforce total confinement of all cattle at the dairy. This new source 
option poses a barrier to entry for new sources, therefore, EPA assumes 
that this option if applied to existing sources would be economically 
unachievable. Furthermore, EPA did evaluate a variation of Option 5 
that would apply to existing beef and dairy operations and would 
require the use of technologies which achieve a less wet manure. These 
technologies include solid-liquid separation and composting the solids. 
EPA is not proposing to establish BAT on the use of these technologies, 
but does believe these technologies may result in cost savings at some 
operations. Additionally, composting will achieve pathogen reductions. 
As described in section VIII.C.9., EPA is continuing to examine 
pathogen controls and may promulgate requirements on the discharge of 
pathogens. If EPA set limitations on pathogens, composting technology 
would likely become a basis for achieving BAT limits. EPA invites 
comment on composting and its application to dry beef and dairy manure.
    For any operation that has inadequate crop land on which to apply 
its manure and wastewater, solid-liquid separation and composting could 
benefit the CAFO, as these technologies will make the manure more 
transportable. Drier manure is easier to transport; and therefore, EPA 
believes solid liquid separation and composting will be used in some 
situations to reduce the transportation cost of excess manure. In 
addition, composting is a value-added process that improves the 
physical characteristics (e.g., reduces odor and creates a more 
homogenous product) of the manure. It can also make the manure a more 
marketable product. As a result, a CAFO with excess manure may find it 
easier to give away, or even sell, its excess manure. EPA encourages 
all CAFOs to consider technologies that will reduce the volume of 
manure requiring storage and make the manure easier to transport.
    Option 6, which requires anaerobic digestion treatment with methane 
capture, was not considered for the beef subcategory, but was 
considered for the dairy subcategory for treatment of liquid manure. 
Anaerobic digestion can only be applied to liquid waste. As described 
previously in Section VI, beef feedlots maintain a dry manure, yet they 
capture storm water runoff from the dry lot and manure stockpile. The 
storm water runoff is generally too dilute to apply digestion 
technology.
    Most dairies, however, handle manure as a liquid or slurry which is 
suited to treatment through anaerobic digestion. EPA concluded that 
application of anaerobic digesters at dairies will not necessarily lead 
to significant reductions in the pollutants discharges to surface 
waters from CAFOs. An anaerobic digester does not eliminate the need 
for liquid impoundments to store dairy parlor water and barn flush 
water and to capture storm water runoff from the open areas at the 
dairy. Neither do digesters reduce the nutrients, nitrogen or 
phosphorus. Thus, basing BAT on digester technology would not change 
the performance standard that a production area at a CAFO would achieve 
and would not reduce or eliminate the need for proper land application 
of manure. Digesters were considered because they achieve some degree 
of waste stabilization and more importantly they capture air emissions 
generated during manure storage. The emission of ammonia from manure 
storage structures is a potentially significant contributor of nitrogen 
to surface waters. Covered anaerobic digesters will prevent these 
emissions while the waste is in the digester, but the digester does not 
convert the ammonia into another form of nitrogen, such as nitrate, 
which is not as volatile. Thus as soon as the manure is exposed to air 
the ammonia will be lost. Operations may consider additional management 
strategies for land application such as incorporation in order to 
maintain the nitrogen value as fertilizer and to reduce emissions.
    As mentioned above, the application of ambient temperature or 
mesophilic anaerobic digesters would not change the performance 
standard that a CAFO would achieve. EPA considered anaerobic digestion 
as a means to control pathogens. Thermophilic digestion which applies 
heat to the waste will reduce pathogens. As described in Section 
VIII.C.9. EPA is still evaluating effective controls for pathogens.
    EPA is not proposing to base BAT requirements on Option 7 for the 
beef and dairy subcategories. Option 7 would prohibit manure 
application on saturated, snow covered or frozen ground. Pollutant 
runoff associated with application of manure or wastewater to 
saturated, snow covered or frozen ground is a site specific 
consideration, and depends on a number of site specific variables, 
including distance to surface water and slope of the land. EPA believes 
that establishing a national standard that prohibits manure or 
wastewater application is inappropriate because of the site specific 
nature of these requirements and the regional variability across the 
nation. This is described in Section VII.E.5.b, above. However, Section 
VII also explains that EPA is proposing to revise 40 CFR Part 122 to 
require the permit authority to include, on a case-by-case basis, 
restrictions on the application of CAFO waste to frozen, snow covered 
or saturated ground in CAFO permits. This permit condition should 
account for topographic and climatic conditions found in the state.
    Requirements for the beef and dairy subcategories would still allow 
for an overflow in the event of a chronic or catastrophic storm that 
exceeds the 25-year, 24-hour storm. EPA believes this standard reflects 
the best available technology. Under the proposed revisions to Part 
122, permits will require that any discharge from the feedlot or 
confinement area be reported to the permitting authority within 24 
hours of the discharge event. The CAFO operator must also report the 
amount of rainfall and the approximate duration of the storm event.
    BAT Requirements for the Swine, Veal and Poultry Subcategories. EPA 
is proposing to establish BAT requirements for the swine, veal and 
poultry subcategories based on Option 5. For the purpose of simplifying 
this discussion, the term poultry is used to include chickens and 
turkeys. Option 5 requires zero discharge of manure and process 
wastewater and provides no overflow allowance for manure and wastewater 
storage. Land application requirements for these operations would be 
the same as the requirements under Option 2.
    EPA is proposing Option 5 because swine, veal and poultry 
operations can house the animals under roof and feed is also not 
exposed to the weather. Thus, there is no opportunity for storm water 
contamination. Broiler and turkey operations generate a dry manure 
which can be kept covered either under a shed or with tarps. Laying 
hens with dry manure handling usually store manure below the birds' 
cages and inside the confinement building. Veal and poultry operations 
confine the animals under roof, thus there are no open animal 
confinement areas to generate contaminated storm water. Those 
operations with liquid manure storage can comply with the restrictions 
proposed under this option by diverting uncontaminated storm water away 
from the structure, and covering the lagoons or impoundments.
    The technology basis for the poultry BAT requirements at the 
production

[[Page 3064]]

area are litter sheds for broiler and turkey CAFOs, and underhouse 
storage for laying hens with dry manure handling systems. For laying 
hen CAFOs with liquid manure handling systems, EPA's technology basis 
is solid separation and covered storage for the solids and covered 
lagoons.
    Laying hen farms may also have egg wash water from in-line or off-
line processing areas. Only 10% of laying hen operations with fewer 
than 100,000 birds have on farm egg processing, while 35% of laying hen 
operations with more than 100,000 birds have on farm egg processing. 
The wash water is often passed through a settling system to remove 
calcium, then stored in above ground tanks, below ground tanks, or 
lagoons. Today's proposal is based on covered storage of the egg wash 
water from on-farm processing, to prevent contact with precipitation. 
The ultimate disposal of egg wash water is through land application 
which must be done in accordance with the land application rates 
established in the PNP. EPA believes the low nutrient value of egg 
washwater is unlikely to cause additional incremental costs to laying 
hen facilities to comply with the proposed land application 
requirements.
    EPA assumes large swine operations (e.g., operations with more than 
1,250 hogs weighing 55 pounds or greater) operate using total 
confinement practices. EPA based BAT Option 5 on the same approach 
described above of covering liquid manure storage. CAFOs can operate 
covered lagoons as anaerobic digesters which is an effective technology 
for achieving zero discharge and will provide the added benefits of 
waste stabilization, odor reduction and control of air emissions from 
manure storage structures. Anaerobic digesters also can be operated to 
generate electricity which can be used by the CAFO to offset operating 
costs.
    Although Option 5 is the most expensive option for the hog 
subcategory, as shown on Table X.E.2(a), EPA believes this option 
reflects best available technology economically achievable because it 
prevents discharges resulting from liquid manure overflows that occur 
in open lagoons and pond. Similarly, the technology basis of covered 
treatment lagoons and drier manure storage is believed to reduce the 
likelihood of those catastrophic lagoon failures associated with heavy 
rainfalls. Option 5 also achieves the greatest level of pollutant 
reductions from runoff reaching the edge of the field. Non-water 
quality environmental impacts include reduced emissions and odor, with 
a concurrent increase in nitrogen value of the manure, however as 
mentioned previously, the ammonia concentration is not reduced and once 
the manure is exposed to air the ammonia will volatilize. Water 
conservation and recycling practices associated with Option 5 will 
promote increased nutrient value of the manure, reduced hauling costs 
via reduced water content, and less fresh water use.
    The technology basis of Option 5, solid-liquid separation and 
storage of the solids, has the advantage of creating a solid fraction 
which is more transportable, thus hog CAFOs that have excess manure can 
use this technology to reduce the transportation costs.
    EPA is aware of three open lot hog operations that have more than 
1,250 hogs and there may be a small number of others, but the 
predominant practice is to house the animals in roofed buildings with 
total confinement. For open lot hog CAFOs, EPA is proposing to base BAT 
the application of hoop structures as described above.
    Veal operations use liquid manure management and store manure in 
lagoons. EPA has based BAT on covered manure and feed storage. The 
animals are housed in buildings with no outside access. Thus, by 
covering feed and waste storage the need to capture contaminated storm 
water is avoided.
    In evaluating the economic achievability of Option 5 for the swine, 
veal and poultry subcategories, EPA evaluated the costs and impacts of 
this option relative to Option 2. For these subcategories, the 
incremental annual cost of Option 5 over Option 2 would be $110 million 
pre-tax under the two-tier structure, and $140 million pre-tax under 
the three-tier structure. Almost all of these incremental costs are 
projected to be in the swine sector. Since the majority of the costs 
are borne by the swine subcategory, EPA solicits comment on 
establishing BAT on the basis Option 5 for the only the veal and 
poultry subcategories, and establishing BAT on the basis of Option 2 
that the swine subcategory. EPA projects that there would be no 
additional costs under the two-tier structure, and only very small 
additional costs under the three-tier structure for the veal and 
poultry subcategories to move from Option 2 to Option 5. Under Option 
2, EPA estimates 300 swine operations and 150 broiler operations would 
experience stress under the two-tier structure, and 300 swine 
operations and 330 broiler operations would experience stress under the 
three-tier structure. Under Option 5 an additional 1,120 swine 
operations would experience stress under both the two-tier and three-
tier structures. All affected hog operations have more than 1000 AU. 
None of these affected hog operations are small businesses based on the 
Small Business Administration's size standards. There would be no 
additional broiler operations experiencing stress under Option 5, and 
no veal, layer, or turkey operations are projected to experience stress 
under either Option 2 or Option 5. EPA did not analyze the benefits of 
Option 5 relative to Option 2. Under Option 2 operations are required 
to be designed, constructed and operated to contain all process 
generated waste waters, plus the runoff from a 25-year, 24-hour 
rainfall event for the location of the point source. Thus, the benefit 
of Option 5 over Option 2 would be the value of eliminating discharges 
during chronic or catastrophic rainfall events of a magnitude of the 
25-year, 24-hour rainfall event or greater. Further benefit would be 
realized as a result of increased flexibility on the timing of manure 
application to land. By preventing the rainfall and run-off from mixing 
with wastewater, CAFOs would not need to operate such that land 
application during storm events was necessary.
    EPA is not proposing Option 2 for these sectors. However, EPA notes 
that at the time of the SBREFA outreach process, removing the 25-year, 
24-hour design standard for any sector was not considered largely due 
to concern that a different design standard would lead to larger 
lagoons or impoundments. EPA staff explicitly stated this to the SERs 
and other member of the Panel. Although not extensively discussed, 
since it did not appear at that time to be an issue, retention of this 
standard was supported by both the SERs and the Panel. At that time, 
EPA was not planning to evaluate such an option because of the concern 
that this would encourage larger lagoons. Since the Panel concluded it 
outreach, EPA decided to evaluate, and ultimately propose removing this 
design standard for the veal, swine and poultry subcategories because 
of reports of lagoon failures resulting from rainfall and poor 
management. As mentioned previously, all of these sectors maintain 
their animals under roof eliminating the need to capture contaminated 
storm water from the animal confinement area. In addition, most poultry 
operations generate a dry manure, which when properly stored, under 
some type of cover, eliminates any possibility of an overflow in the 
event of a large storm. Therefore EPA believes that Option 5 technology 
which prevents the introduction of storm water into manure

[[Page 3065]]

storage is achievable and represents Best Available Technology, without 
redesigning the capacity of existing manure storage units. However, EPA 
requests comment on retaining te 25-year, 24-hour storm design standard 
(and thus basing BAT on Option 2) for these sectors, consistent with 
its intention at the time of the SBREFA outreach process.
    EPA is not proposing to base BAT for the swine, poultry and veal 
subcategories on Option 3, because EPA believes Option 5 is more 
protective of the environment. If operators move towards dry manure 
handling technologies and practices to comply with Option 5, there 
should be less opportunity for ground water contamination and surface 
water contamination through a direct hydrological connection. EPA 
strongly encourages any newly constructed lagoons or anaerobic 
digesters to be done in such a manner as to minimize pollutant losses 
to ground water. A treatment lagoon should be lined with clay or 
synthetic liner or both and solid storage should be on a concrete pad 
or preferably a glass-lined steel tank as EPA has included in its 
estimates of BAT costs. Additionally, Option 5 provides the additional 
non-water quality benefit of achieving reductions in air emissions from 
liquid storage systems. EPA estimates that the cost of complying with 
both Option 3 and 5 at existing facilities would be economically 
unachievable.
    EPA believes the proposed technology basis for broilers, turkeys 
and laying hens with dry manure management will avoid discharges to 
ground water since the manure is dry and stored in such a way as to 
prevent storm water from reaching it. Without some liquid to provide a 
transport mechanism, pollutants cannot move through the soil profile 
and reach the ground water and surface water through a direct 
hydrological connection.
    EPA is not proposing to base BAT on Option 4 for the same reasons 
described above for the beef and dairy subcategories.
    EPA is not proposing to base BAT on Option 6, because EPA believes 
that the zero discharge aspect of the selected option will encourage 
operations to consider and install anaerobic digestion in situations 
where it will be cost effective.
    As with beef and dairy, EPA is not proposing to base BAT for swine, 
veal and poultry on Option 7, but believes that permit authorities 
should establish restrictions as necessary in permits issued to CAFOs. 
Swine, veal and poultry operations should take the timing of manure 
application into account when developing the PNP. Any areas that could 
result in pollutant discharge from application of manure to frozen, 
snow covered or saturated ground should be identified in the plan and 
manure or wastewater should not be applied to those areas when there is 
a risk of discharge.
    EPA solicits comment on the use of remote liquid level monitoring 
at livestock operations. As described above in Section VIII.C.3, this 
technology could provide advanced notification that levels are reaching 
a critical point, and corrective actions could then be taken. This 
technology does not prevent precipitation from entering the lagoon and 
does not prevent overflows, therefore EPA chose not to propose this 
technology as BAT for swine or veal operations. However, EPA solicits 
comments on applicability of this technology to livestock operations, 
especially at swine and veal as an alternative to covers on lagoons.

PNP Requirements

    There are a number of elements that are addressed by both USDA's 
``Guidance for Comprehensive Nutrient Management Plans (CNMPs)'' and 
EPA's PNP which would be required by the effluent guidelines and NPDES 
proposed rules and is detailed in the guidance document ``Managing 
Manure Nutrients at Concentrated Animal Feeding Operations.'' EPA's 
proposed PNP would establish requirements for CAFOs that are consistent 
with the technical guidance published by USDA experts, but go beyond 
that guidance by identifying specific management practices that must be 
implemented. What follows is a brief description of what must be 
included in a PNP.
    General Information. The PNP must have a Cover Sheet which contains 
the name and location of the operation, the name and title of the owner 
or operator and the name and title of the person who prepared the plan. 
The date (month, day, year) the plan was developed and amended must be 
clearly indicated on the Cover Sheet. The Executive Summary would 
briefly describe the operation in terms of herd or flock size, total 
animal waste produced annually, crop identity for the full 5 year 
period including a description of the expected crop rotation and, 
realistic yield goal. The Executive Summary must include indication of 
the field conditions for each field unit resulting from the phosphorus 
method used (e.g., phosphorus index), animal waste application rates, 
the total number of acres that will receive manure, nutrient content of 
manure and amount of manure that will be shipped off-site. It should 
also identify the manure collection, handling, storage, and treatment 
practices, for example animals kept on bedding which is stored in a 
shed after removal from confinement house, or animals on slatted floors 
over a shallow pull plug pit that is drained to an outdoor in-ground 
slurry storage inpoundment. Finally, the Executive Summary would have 
to identify the watershed(s) in which the fields receiving manure are 
located or the nearest surface water body. While the General 
Information section of a PNP would give a general overview of the CAFO 
and its nutrient management plan, subsequent sections would provide 
further detail.
    Animal Waste Production. This subsection details types and 
quantities of animal waste produced along with manure nutrient sampling 
techniques and results. Information would be included on the maximum 
number of livestock ever confined and the maximum livestock capacity of 
the CAFO, in addition to the annual livestock production. This section 
would provide an estimate of the amount of animal waste collected each 
year. Each different animal waste source should be sampled annually and 
tested by an accredited laboratory for nitrogen, phosphorous, 
potassium, and pH.
    Animal Waste Handling, Collection, Storage, and Treatment. This 
subsection details best management practices to protect surface and 
groundwater from contamination during the handling, collection, 
storage, and treatment of animal waste. A review would have to be 
conducted of potential water contamination sources from existing animal 
waste handling, collection, storage, and treatment practices. The 
capacity needed for storage would be calculated.
    Feedlot runoff would have to be contained and adequately managed. 
Runoff diversion structures and animal waste storage structures would 
have to be visually inspected for: seepage, erosion, vegetation, animal 
access, reduced freeboard, and functioning rain gauges and irrigation 
equipment, on a weekly basis. Deficiencies based on visual inspections 
would have to be identified and corrected within a reasonable time 
frame. Depth markers would have to be permanently installed in all 
lagoons, ponds, and tanks. Lagoons, ponds, and tanks would have to be 
maintained to retain capacity for the 25-year, 24-hour storm event. 
Dead animals, required to be kept out of lagoons, would have to be 
properly handled and disposed of in a timely

[[Page 3066]]

manner. Finally, an emergency response plan for animal waste spills and 
releases would have to be developed.
    Land Application Sites. This subsection details field 
identification and soil sampling. County(ies) and watershed code(s) 
where feedlot and land receiving animal waste applications are located 
would be identified. Total acres of operation under the control of the 
CAFO (owned and rented) and total acres where animal waste will be 
applied would be included. A detailed farm map or aerial photo, to be 
included, would have to indicate: location and boundaries of the 
operation, individual field boundaries, field identification and 
acreage, soil types and slopes, and the location of nearby surface 
waters and other environmentally sensitive areas (e.g., wetlands, 
sinkholes, agricultural drainage wells, and aboveground tile drain 
intakes) where animal waste application is restricted.
    Separate soil sampling, using an approved method, would have to be 
conducted every 3 years on each field receiving animal waste. The 
samples shall be analyzed at an accredited laboratory for total 
phosphorous. Finally, the phosphorous site rating for each field would 
have to be recorded according to the selected assessment tool.
    Land Application. This subsection details crop production and 
animal waste application to crop production areas. Details of crop 
production would have to include: Identification of all planned crops, 
expected crop yields and the basis for yield estimates, crop planting 
and harvesting dates, crop residue management practices, and nutrient 
requirements of the crops to be grown. Calculations used to develop the 
application rate, including nitrogen credits from legume crops, 
available nutrients from past animal waste applications, and nutrient 
credits from other fertilizer and/or biosolids applications would have 
to be included.
    Animal waste application rates cannot exceed nitrogen requirements 
of the crops. However, animal waste application rates would be limited 
to the agronomic requirements for phosphorous if the soil phosphorous 
tests are rated ``high'', the soil phosphorous tests are equal to \3/
4\, but not greater than twice the soil phosphorous threshold value, or 
the Phosphorous Index rating is ``high.'' Finally, animal waste could 
not be applied to land if the soil phosphorous tests are rated ``very 
high'', the soil phosphorous tests are greater than twice the soil 
phosphorous threshold value, or the Phosphorous Index rating is ``very 
high.'' In some cases, operators may choose to further restrict 
application rates to account for other limiting factors such as 
salinity or pH.
    Animal wastes cannot be applied to wetlands or surface waters, 
within 100 feet of a sinkhole, or within 100 feet of water sources such 
as rivers, streams, lakes, ponds, and intakes to agricultural drainage 
systems (e.g., aboveground tile drain intakes, agricultural drainage 
wells, pipe outlet terraces). EPA requests comment on how serious would 
be the limitations imposed by these requirements. Manure spreader and 
irrigation equipment would have to be calibrated at a minimum once each 
year, but preferably before each application period. Finally, the date 
of animal waste application and calibration application equipment, and 
rainfall amounts 24-hours before and after application would be 
recorded.
    Other Uses/Off-Site Transfer. The final required subsection for a 
PNP details any alternative uses and off-site transport of animal 
wastes. If used, a complete description of alternative uses of animal 
waste would have to be included. If animal wastes are transported off-
site the following would have to be recorded: date (day, month, year), 
quantity, and name and location of the recipient of the animal waste.
    Voluntary Measures. Many voluntary best management practices can be 
included within various subsections of a PNP. These voluntary best 
management plans are referenced in EPA's guidance document for PNP 
``Managing Manure Nutrients at Concentrated Animal Feeding 
Operations.''
    Annual Review and Revision. While a PNP is required to be renewed 
every 5 years (coinciding with NPDES permitting), an annual review of 
the PNP would have to occur and the PNP would be revised or amended as 
necessary.
    The most likely factor which would necessitate an amendment or 
revision to a PNP is a change in the number of animals at the CAFO. A 
substantial increase in animal numbers (for example an increase of 
greater than 20%) would significantly increase the volume of manure and 
total nitrogen and phosphorous produced on the CAFO. Because of this, 
the CAFO will need to re-evaluate animal waste storage facilities to 
ensure adequate capacity, and may need to re-examine the land 
application sites and rates.
    A second reason which would require an amendment or revision to a 
PNP is a change in the cropping program which would significantly alter 
land application of animal waste. Changes in crop rotation or crop 
acreage could significantly alter land application rates for fields 
receiving animal waste. Also the elimination or addition of fields 
receiving animal waste application would require a change in the PNP.
    Changes in animal waste collection, storage facilities, treatment, 
or land application method would require an amendment or revision to a 
PNP. For example, the addition of a solid-liquid separator would change 
the nutrient content of the various animal waste fractions and the 
method of land application thereby necessitating a revision in a PNP. 
Changing from surface application to soil injection would alter ammonia 
volatilization subsequently altering animal waste nutrient composition 
requiring a revision of land application rates.
    When CAFOs Must Have PNPs. EPA proposes to allow two groups of 
CAFOs up to 90 days to obtain a PNP:
    3. Existing CAFOs which are being covered by a NPDES permit for the 
first time; or
    4. Existing CAFOs that are already covered under an existing permit 
which is reissued within 3 years from the date of promulgation of these 
regulations.
    EPA proposes that all other existing CAFOs must have a PNP at the 
time permits are issued or renewed.
7. New Source Performance Standards
    For purposes of applying the new source performance standards 
(NSPS) being proposed today, a source would be a new source if it 
commences construction after the effective date of the forthcoming 
final rule. (EPA expects to take final action on this proposal in 
December 2002, which is more than 120 days after the date of proposal--
see 40 CFR 122.2). Each source that meets this definition would be 
required to achieve any newly promulgated NSPS upon commencing 
discharge.
    In addition, EPA is proposing additional criteria to define ``new 
source'' that would apply specifically to CAFOs under Part 412. EPA 
intends that permit writers will consult the specific ``new source'' 
criteria in Part 412 rather than the more general criteria set forth in 
40 CFR 122.29(b)(1). The other provisions of 40 CFR 122.29 continue to 
apply. EPA proposes to consider an operation as a new source if any of 
the following three criteria apply.
    The definition of new source being proposed for Part 412 states 
three criteria that determine whether a source is a ``new source.''
    First, a facility would be a new source if it is constructed at a 
site at which no other source is located. These new sources have the 
advantage of not

[[Page 3067]]

having to retrofit the operation to comply with BAT requirements, and 
thus can design to comply with more stringent and protective 
requirements.
    The second criterion for defining a new source would be where new 
construction at the facility ``replaces the housing, waste handling 
system, production process, or production equipment that causes the 
discharge or potential to discharge pollutants at an existing source.'' 
Confinement housing and barns are periodically replaced, allowing the 
opportunity to install improved systems that provide increased 
environmental protection. The modern confinement housing used at many 
swine, dairy, veal, and poultry farms allows for waste handling and 
storage in a fashion that generates little or no process water. Such 
systems negate the need for traditional flush systems and storage 
lagoons, reduce the risks of uncontrollable spills, and decrease the 
costs of transporting manure.
    Third, a source would be a new source if construction is begun 
after the date this rule is promulgated and its production area and 
processes are substantially independent of an existing source at the 
same site. Facilities may construct additional production areas that 
are located on one contiguous property, without sharing waste 
management systems or commingling waste streams. Separate production 
areas may also be constructed to help control biosecurity. New 
production areas may also be constructed for entirely different animal 
types, in which case the more stringent NSPS requirements for that 
subcategory would apply to the separate and newly constructed 
production area. In determining whether production and processes are 
substantially independent, the permit authority is directed to consider 
such factors as the extent to which the new production areas are 
integrated with the existing production areas, and the extent to which 
the new operation is engaging in the same general type of activity as 
the existing source.
    EPA also considered whether a certain level of facility expansion, 
measured as an increase in animal production, should cause an operation 
to be subject to new source performance standards. If so, upon facility 
expansion, the CAFO would need to go beyond compliance with BAT 
requirements to meet the more stringent standards represented by NSPS. 
In today's proposal, that increment of additional control, for the 
swine, poultry and veal subcategories, would amount to the need to 
monitor ground water and install liners in lagoons and impoundments to 
prevent discharges to ground water that has a direct hydrological 
connection to surface water; unless the CAFO could demonstrate that no 
such direct hydrological link existed. In the beef and dairy 
subcategories, the NSPS proposed today are the same as the BAT 
standards.
    The Agency, however, decided against proposing to identify facility 
expansion as a trigger for the application of NSPS. Many CAFOs oversize 
or over-engineer their waste handling systems to accommodate future 
increases in production. Thus, in many cases, the actual increases in 
production may not present a new opportunity for the CAFO to install 
the additional NSPS technologies--e.g. liners. To install liners, these 
operations would need to retrofit their facilities the same as existing 
sources would. EPA has explained above that such retrofitting would not 
be economically achievable in these animal sectors. Similarly, the 
costs associated with these requirements would represent a barrier to 
the expansion. Therefore, it would not be appropriate to require these 
operations, upon facility expansion, to meet the additional ground 
water-related requirements that are a part of today's proposed NSPS.
    EPA considered the same seven options for new source performance 
standards (NSPS) as it considered for BAT. EPA also considered an 
additional option for new dairies, which if selected, would prohibit 
dairies from discharging any manure or process wastewater from animal 
confinement and manure storage areas (i.e., eliminating the allowance 
for discharging overflows associated with a storm event). New sources 
have the advantage of not having to retrofit the operation to comply 
with the requirements and thus can design the operation to comply with 
more stringent requirements. In selecting new source performance 
standards, EPA evaluates whether the requirements under consideration 
would impose a barrier to entry to new operations.
    EPA is proposing to select Option 3 as the basis for NSPS for the 
beef and dairy subcategories. Option 3 includes all the requirements 
proposed for existing sources including complying with zero discharge 
from the production area except in the event of a 25-year, 24-hour 
storm and the requirement to develop a PNP which establishes the rate 
at which manure and wastewater can be applied to crop or pasture land 
owned or controlled by the CAFO. The application of manure and 
wastewater would be restricted to a phosphorus based rate where 
necessary depending on the specific soil conditions at the CAFO. 
Additionally, other best management practice requirements would apply, 
including the prohibition of manure and wastewater application within 
100 feet of surface water. The proposed new source standard for the 
beef and dairy subcategories includes a requirement for assessing 
whether the ground water beneath the production area has a direct 
hydrological connection to surface water. If a direct hydrological 
connection exists, the operation must conduct additional monitoring of 
ground water up gradient and down gradient from the production area, 
and implement any necessary controls based on the monitoring results to 
ensure that zero discharge to surface water via the ground water route 
is achieved for manure stockpiles and liquid impoundments or lagoons. 
For the purpose of estimating compliance costs, EPA has assumed that 
operations located in areas with a direct hydrological connection will 
install synthetic material or compacted clay liners beneath any liquid 
manure storage and construct impervious pads for any dry manure storage 
areas. The operator would be required to collect and analyze ground 
water samples twice per year for total dissolved solids, chlorides, 
nitrate, ammonia, total coliforms and fecal coliform. EPA believes that 
Option 3 is economically achievable for existing sources. Since new 
sources are able to install impermeable liners at the time the lagoon 
or impoundment is being constructed, rather than retrofitting 
impoundments at existing source, costs associated with this requirement 
should be less for new sources in comparison to existing sources. EPA 
has concluded that Option 3 requirements will not pose a barrier to 
entry for new sources.
    EPA is proposing to establish NSPS for all swine and poultry 
operations based on Option 5 and Option 3 combined. In addition the BAT 
requirements described in Section VIII.C.6, the proposed new source 
standards would require no discharge via any ground water that has a 
direct hydrological link to surface water. As described above, Option 3 
requires all CAFOs to monitor the ground water and impose appropriate 
controls to ensure compliance with the zero discharge standard, unless 
the CAFO has demonstrated that there is no direct hydrological link 
between the ground water and any surface waters. The proposed new 
source standard also restricts land application of manure and

[[Page 3068]]

wastewater to a phosphorus based rate where necessary depending on the 
specific soil conditions at the CAFO. Additionally, other best 
management practice requirements would apply, including that 
application of manure and wastewater would be prohibited within 100 
feet of surface water.
    EPA encourages new swine and poultry facilities to be constructed 
to use dry manure handling. Dry manure handling is currently the 
standard practice at broiler and turkey operations. As described 
previously, some existing laying hen operations and most hog operations 
use liquid manure handling systems. The proposed new source performance 
standard would not require the use of dry manure handling technologies, 
but EPA believes this is the most efficient technology to comply with 
its requirements.
    EPA has analyzed costs of installing dry manure handling at new 
laying hen and swine operations. Both sectors have operations which 
demonstrate dry manure handling can be used as an effective manure 
management system. The dry manure handling systems considered for both 
sectors require that the housing for the animals be constructed in a 
certain fashion, thus making this practice less practical for existing 
sources. Both sectors have developed a high rise housing system, which 
houses the animals on the second floor of the building allowing the 
manure to drop to the first floor or pit. In the laying hen sector this 
is currently a common practice and with aggressive ventilation, the 
manure can be maintained as a dry product. Hog manure has a lower 
solids content, thus the manure must be mixed with a bedding material 
(e.g., wood chips, rice or peanut hulls and other types of bedding) 
which will absorb the liquid. To further aid in drying the hog manure, 
air is forced up through pipes installed in the concrete floor of the 
pit. With some management on the part of the CAFO operator, involving 
mixing and turning the hog manure in the pit periodically, the manure 
can be composted while it is being stored. The advantages of the high 
rise system for hogs and laying hens include a more transportable 
manure, which, in the case of the hog high rise system, has also 
achieved a fairly thorough decomposition. The air quality inside the 
high rise house is greatly improved, and the potential for leaching 
pollutants into the groundwater is greatly reduced. The design standard 
of these high rise houses include concrete floors and also assume that 
the manure would be retained in the building until it will be land 
applied, thus there is no opportunity for storm water to reach the 
manure storage and virtually no opportunity for pollutants to leach to 
groundwater beneath the confinement house. EPA believes that the cost 
savings associated with ease of manure transportation, as well as 
improved animal health and performance, with the dry manure handling 
system for hogs will off-set the increased cost of operation and 
maintenance associated with the high rise hog system. Thus, EPA 
concludes the high-rise house does not pose a barrier to entry and is 
the basis for NSPS in both the laying hen and hog sectors. Although the 
high rise house is the basis of the new source standards for the swine 
and laying hen sectors, operations are not prevented from constructing 
a liquid manure handling system. If new sources in these sectors choose 
to construct a liquid manure handling system, they would be required to 
line the lagoons if the operation is located in an area that has a 
direct hydrologic connection, but the cost associated with lining a 
lagoon at the time it is being constructed is much less than the cost 
to retrofit lagoon liners.
    EPA proposes to establish new source requirements for the veal 
subcategory on the basis of Option 5 which requires zero discharge with 
no overflow from the production area and Option 3 which requires zero 
discharge of pollutants to groundwater which has a direct hydrological 
connection to surface water, with the ground water monitoring or 
hydrological assessment requirements described above. EPA believes that 
a zero discharge standard without any overflow will promote the use of 
covered lagoons, anaerobic digesters or other types of manure treatment 
systems. Additionally, this will minimize the use of open air manure 
storage systems, thus reducing emission of pollutants from CAFOs.
    New veal CAFOs would not be expected to modify existing housing 
conditions since EPA is not aware of any existing veal operations that 
use dry manure handling systems. New veal CAFOs would be expected to 
also use covered lagoons, or anaerobic digesters to comply with the 
zero discharge standard. New veal CAFOs would be required to line their 
liquid manure treatment or storage structures with either synthetic 
material or compacted clay to prevent the discharge of pollutants to 
ground water which has a direct hydrological connection to surface 
water. In addition, the CAFO would have to monitor the groundwater 
beneath the production area to ensure compliance with the zero 
discharge requirement. The CAFO would not need to install liners or 
monitor ground water if it demonstrates that there is no direct 
hydrologic link between the ground water and any surface waters.
    In addition to the seven options considered for both existing and 
new sources, EPA also investigated a new source option for dairies that 
would prohibit all discharges of manure and process wastewater to 
surface waters, eliminating the current allowance for the discharge of 
the overflow of runoff from the production area. To comply with a zero 
discharge requirement, dairies would need to transform the operation so 
they could have full control over the amount of manure and wastewater, 
including any runoff, entering impoundments. Many dairies have drylot 
areas where calves, heifers, and bulls are confined, as well as similar 
drylot areas where the mature cows are allowed access. EPA estimated 
compliance costs for a zero discharge requirements assuming that the 
following changes would occur at new dairies:
    (1) Freestall barns for mature cows would be constructed with six 
months underpit manure storage, rather than typical flush systems with 
lagoon storage;
    (2) Freestall barns with six months underpit manure storage would 
be constructed to house heifers;
    (3) Calf barns with a scrape system would be constructed with a 
scrape system and six months of adjacent manure storage; and
    (4) New dairies would include covered walkways, exercise areas, 
parlor holding, and handling areas.
    Drylot areas are continually exposed to precipitation. The amount 
of contaminated runoff from such areas that must be captured is 
directly related to the size of the exposed area and the amount of 
precipitation. Under the current regulations, dairies use the 25-year, 
24-hour rainfall event (in addition to other considerations) when 
determining the necessary storage capacity for a facility. Imposing a 
zero discharge requirement that prevents any discharge from 
impoundments would force dairies to reconfigure in a way that provides 
complete control over all sources of wastewater. EPA considered the 
structural changes in dairy design described here to create a facility 
that eliminates the potential for contaminated runoff.
    While EPA believes that confining all mature and immature dairy 
cattle is technically feasible, the costs of zero discharge relative to 
the costs for Option 3 are very high. Capital costs to comply with zero 
discharge increase by two orders of magnitude. EPA estimates

[[Page 3069]]

annual operating and maintenance costs would rise between one to two 
orders of magnitude above the costs for Option 3. These costs may 
create a barrier to entry for new sources. In addition, EPA believes 
selecting this option could have the unintended consequence of 
encouraging dairies to shift calves and heifers offsite to standalone 
heifer raising operations (either on land owned by the dairy or at 
contract operations) to avoid building calf and heifer barns. If these 
offsite calf/heifer operations are of a size that they avoid being 
defined as a CAFO, the manure from the immature animals would not be 
subject to the effluent guidelines.
    EPA is not basing requirements for new dairies on the zero 
discharge option for the reasons discussed above. EPA solicits comment 
on the approach used to estimate the costs for new dairies to comply 
with a zero discharge requirement. Comments are particularly solicited 
on aspects such as: converting from flush systems to underpit manure 
storage; types of housing for calves and heifers; and whether the 
potential for uncontrollable amounts of precipitation runoff have been 
sufficiently eliminated (including from silage). EPA also solicits 
comment on a regulatory scenario that would establish a zero discharge 
requirement for manure and process wastewater from barns (housing 
either mature or immature dairy cattle) and the milking parlor, but 
would maintain the current allowance for overflow of runoff from drylot 
areas.
    As an alternative to underpit manure storage, dairies could achieve 
zero discharge for parlor wastes and barn flush water by constructing 
systems such as anaerobic digesters and covered lagoons. These covered 
systems, if properly operated, can facilitate treatment of the manure 
and offer opportunities to reduce air emissions. The resulting liquid 
and solid wastes would be more stable than untreated manure. EPA 
solicits comment on the usefulness of applying stabilization or 
treatment standards to liquid and slurry manures prior to land 
application. Commenters encouraging the use of such standards should 
recommend appropriate measurement parameters such as volatile solids, 
BOD, COD, and indicator organism reduction(s) to establish stability or 
treatment levels.
    EPA has not identified any basis for rejecting the zero discharge 
option for dairies solely due to animal health reasons. EPA solicits 
comment on the technical feasibility of confining mature and/or 
immature dairy cattle in barns at all times.
    Ten-year protection period. The NSPS that are currently codified in 
part 412 will continue to have force and effect for a limited universe 
of CAFOs. For this reason, EPA is proposing to retain the NSPS 
promulgated in 1974 for part 412. Specifically, following promulgation 
of the final rule that revises part 412, the 1974 NSPS would continue 
to apply for a limited period of time to certain new sources and new 
dischargers. See CWA section 306(d) and 40 CFR 122.29(d). Thus, if EPA 
promulgates revised NSPS for part 412 in December 2002, and those 
regulations take effect in January 2003, qualified new sources and new 
dischargers that commenced discharge after January 1993 but before 
January 2003 would be subject to the currently codified NSPS for ten 
years from the date they commenced discharge or until the end of the 
period of depreciation or amortization of their facility, whichever 
comes first. See CWA section 306(d) and 40 CFR 122.29(d). After that 
ten year period expires, any new or revised BAT limitations would apply 
with respect to toxic and nonconventional pollutants. Limitations on 
conventional pollutants would be based on the1974 NSPS unless EPA 
promulgates revisions to BPT/BCT for conventional pollutants that are 
more stringent than the 1974 NSPS.
    Rather than reproduce the 1974 NSPS in the proposed rule, EPA 
proposes to refer permitting authorities to the NSPS codified in the 
2000 edition of the Code of Federal Regulations for use during the 
applicable ten-year period.
8. Pretreatment Standards for New or Existing Sources (PSES AND PSNS)
    EPA is not proposing to establish Pretreatment Standards for either 
new or existing sources. Further, EPA is withdrawing the existing 
provisions entitled ``Pretreatment standards for existing sources'' at 
Secs. 412.14, 412.16, 412.24, 412.26. Those existing provisions 
establish no limitations. The vast majority of CAFOs are located in 
rural areas that do not have access to municipal treatment systems. EPA 
is not aware of any existing CAFOs that discharge wastewater to POTWs 
at present and does not expect new sources to be constructed in areas 
where POTW access will be available. For those reasons, EPA is not 
establishing national pretreatment standards. However, EPA also wants 
to make it clear that if a CAFO discharged wastewater to a POTW, local 
pretreatment limitations could be established by the Control Authority. 
These local limits are similar to BPJ requirements in an NPDES permit.
9. Effluent Guidelines Controls for Pathogens
    The third most common reason for waterbodies being listed on State 
Sec. 303(d) lists as an impaired watershed is pathogens. Degradation of 
surface waters by excessive levels of pathogens has been attributed to 
several sources, including natural wildlife, faulty septic systems, and 
animal agriculture. As described in Section 5, stream water quality may 
be impacted by animal feeding operations due to feedlot surface runoff, 
spills from liquid impoundments, tile drain effluent, leaching and 
runoff from land receiving manure, and seepage from waste storage. 
Degradation of aquatic and riparian habitat also occurs when animal 
grazing operations are poorly managed.
    In today's notice, EPA is not setting specific requirements for the 
control of pathogens. The proposed BAT is expected to reduce pathogens 
to surface waters through the implementation of the zero discharge 
requirements at the production area, and through the implementation of 
the PNP at the land application area. Even without explicit 
requirements or limits for pathogen controls, EPA expects considerable 
reduction in the discharge of pathogens for reasons described below. 
Runoff simulations and loadings analysis predict a 50% reduction in 
fecal coliforms and a 60% reduction in fecal streptococci under the 
regulatory scenario proposed today. Following this proposal, EPA 
intends to further analyze technologies for the treatment or reduction 
of pathogens in manure, and solicits comment on other approaches to 
control pathogens.
    One mechanism for pathogen discharge to surface waters is 
catastrophic spills, whether caused by intentional discharges or 
through overflow following major storms. EPA expects the requirements 
for no discharge from the production area, as well as routine 
inspection and mandatory management practices for the control of liquid 
impoundment levels, will reduce catastrophic spills. For the swine and 
poultry sectors EPA believes the elimination of the storm event at 
which an overflow is allowed will also reduce discharge of pathogens. 
At the production area, operators would be required to handle animal 
mortalities in a manner so as to prevent contamination of surface 
water. The proper use of manure as a fertilizer, as specified in the 
proposed regulations, may result in increased storage capacity and 
longer retention times of both liquid and solid manure storage, 
allowing

[[Page 3070]]

increased opportunity for natural die-off of pathogens. For example, 
runoff from fields receiving poultry litter that had been stored prior 
to application showed no significant difference in pathogen content in 
runoff from control fields (GEIS, 1999), supporting the conclusion that 
pathogen reductions will occur from increased storage times.
    Application rate has been identified as the single most important 
manure management practice affecting pollution of surface waters from 
fields receiving manure. Other practices affecting pathogen content in 
the runoff include amount of application, incorporation methods, 
tillage, saturation of the receiving field, and elapsed time following 
application before a rainfall. In one case study, swine lagoon effluent 
applied to tile drained fields at 1.1 inches showed no difference in 
runoff quality than the control fields, but application at three times 
the rate showed high levels of fecal coliform in the surface water. 
Fecal bacteria in runoff from land receiving fresh manure may often be 
a significant proportion of the fecal contamination measured in the 
surface waters. Vegetated filter strips are useful in removing 
pollutants from runoff on manured fields, particularly nutrients and 
sediment, but have not been identified as generally effective in 
reducing bacterial concentrations in the runoff. Surface applications 
of manure are more likely to result in fecal coliform transport when 
the soil is saturated, particularly in fine sandy loam soils.
    EPA believes nutrient management practices and rates established in 
the PNP would limit the quantity of nutrients that may be applied to 
fields and will reduce the occurrence of manure application to 
saturated soils, or when a heavy storm event is predicted. Nutrient 
loss to surface water under these conditions would result in reduced 
crop yields and would be reflected in revisions made to the PNP in 
subsequent years translating to a lower manure application rate.
    EPA has collected data on technologies useful in treating manure 
and wastes for pathogens. Anaerobic digesters and even simple manure 
storage for an extended period of time promote pathogen reductions 
through selective growth conditions and natural die-off over time. The 
addition of heat, such as is used in thermophilic digesters, further 
reduces pathogens. Proper composting processes also involve high 
temperatures--achieving temperatures approaching 140 degrees F in the 
pile. Heat treatment over several days is likely to kill protozoans 
such as Giardia and Cryptosporidium. The addition of lime to achieve 
high alkaline conditions, e.g., achieving a pH  12, also is 
effective at killing many pathogens by disrupting the cell membrane or 
disrupting virus viability.
    EPA will continue to analyze the performance and applicability of 
treatments to reduce pathogens in CAFO waste, and will analyze the 
costs of these processes. The processes described above and others used 
to significantly reduce pathogens in biosolids or sewage sludge such as 
heat treatment, drying, thermophilic aerobic digestion, pasteurization, 
disinfection, and extended storage will be analyzed for their 
applicability to animal manures. EPA will give consideration to 
establishing the same performance standards as required for Class A 
sludge in Part 503. If supported by appropriate data, the final rule 
could establish these or other appropriate standards as performance 
standards that the wastes would be required to meet prior to land 
application. The CAFO would need to demonstrate achievement of these 
standards prior to land application because of the impracticability of 
measuring the pollutant loadings in any eventual runoff from the land 
application areas to the waters. EPA solicits comment on this possible 
approach and specifically requests data relating to pathogen treatment 
and reductions that are demonstrated to be effective on CAFO waste. EPA 
also solicits data on management practices that can be applied to the 
land application of manure, which may reduce pathogens in runoff.
10. Antibiotics
    Related to concerns over pathogens in animal manures are concerns 
over antibiotics and other pharmaceuticals that may be present in the 
manure. As discussed in Section V, an estimated 60-80% of all livestock 
receive antibiotics. Some antibiotics are metabolized, and some are 
excreted with the manure. In cases where antimicrobials are 
administered to animals through the feed, spilt feed and wastelage may 
contribute to antibiotic content of the waste storage. The presence of 
antibiotics in manure and the environment has been shown to result in 
antibiotic resistant pathogens. EPA solicits comments on the direct 
effects of antibiotic residues and antimicrobial resistance, 
specifically on how manure management may contribute to the problem of 
antibiotics reaching the environment and contributing to pathogen 
resistance. EPA also solicits data and information on effective 
treatment or practices that may be implemented by CAFOs to reduce these 
releases.

IX. Implementation of Revised Regulations

A. How Do the Proposed Changes Affect State CAFO Programs?

    EPA is proposing a number of changes to the effluent guidelines and 
the NPDES permit regulations for CAFOs in today's proposed rule. Under 
40 CFR 123.25, authorized NPDES State programs must administer their 
permit programs in conformance with NPDES requirements, including the 
requirements that address concentrated animal feeding operations 
(Sec. 122.23) and the incorporation of technology-based effluent 
limitation guidelines and standards in permits (Sec. 122.44). Thus, 
today's proposed rule would require the 43 States [note that State is 
defined in Sec. 122.2] with authorized NPDES permit programs for CAFOs 
to revise their programs as necessary to be consistent with the revised 
federal requirements. Current NPDES regulations note that authorized 
NPDES State permit programs are not required to be identical to the 
federal requirements; however, they must be at least as stringent as 
the federal program. States are not precluded from imposing 
requirements that are more stringent than those required under federal 
regulations.
    Any State with an existing approved NPDES permitting program under 
section 402 must be revised to be consistent with changes to federal 
requirements within one year of the date of promulgation of final 
changes to the federal CAFO regulations [40 CFR 123.62(e)]. In cases 
where a State must amend or enact a statute to conform with the revised 
CAFO requirements, such revisions must take place within two years of 
final changes to the federal CAFO regulations. States that do not have 
an existing approved NPDES permitting program but who seek NPDES 
authorization after these CAFO regulatory provisions are promulgated 
must have authorities that meet or exceed the revised federal CAFO 
regulations at the time authorization is requested.
    In States not authorized to administer the NPDES program, EPA will 
implement the revised requirements. Such States may still participate 
in water quality protection through participation in the CWA section 
401 certification process (for any permits) as well as through other 
means (e.g., development of water quality standards, development of 
TMDLs, and coordination with EPA).

[[Page 3071]]

    EPA is aware that the majority of States authorized to implement 
the NPDES program supplement the NPDES CAFO requirements with 
additional State requirements, and some States currently regulate or 
manage CAFOs predominantly under State non-NPDES programs. It has been 
suggested that EPA provide a mechanism through which State non-NPDES 
CAFO programs can be recognized alternatives that would be authorized 
under the CWA.
    No permit issued by a non-NPDES program will satisfy the NPDES 
permit requirement. Facilities required to be covered by a NPDES permit 
must obtain a permit from an agency authorized to issue a NPDES permit. 
However, EPA believes that the current NPDES program provides a 
reasonable degree of flexibility consistent with CWA requirements, and 
that the proposed CAFO regulation provides opportunities to incorporate 
State programs in several ways.
    It is possible for non-NPDES State programs that currently regulate 
AFOs to gain EPA's approval as NPDES-authorized programs. Such a change 
would require a formal modification of the State's approved NPDES 
program, and the State would have to demonstrate that its program meets 
all of the minimum criteria specified in 40 CFR Part 123, Subpart B for 
substantive and procedural regulations. Among other things, these 
criteria include the restriction that permit terms may not exceed 5 
years, and include provisions on public participation in permit 
development and enforcement, and EPA enforcement authority.
    In addition, today's proposal provides specific flexibility on 
particular issues. First, with regard to the off-site transfer of 
manure, EPA is requiring under one co-proposed option that the CAFO 
operator obtain a certification from recipients that, if they intend to 
land apply the manure, it will be done according to appropriate 
agricultural practices. EPA is proposing to waive this requirement in a 
State that is implementing an effective program for addressing excess 
manure generated by CAFOs. Second, EPA is proposing to require that 
processors be permitted, or co-permitted, along with their contract 
producers. EPA is requesting comment on an option that would waive this 
requirement in certain instances in States with effective programs for 
managing excess manure. EPA is also soliciting comment on one 
particular type of program, an Environmental Management System 
developed by the processor, as sufficient to waive co-permitting 
requirements. EPA is interested in comments on other specific 
requirements of today's proposal that might be satisfied in whole or in 
part by State program requirements. This could include ways to ensure 
that states with unique programs that meet or exceed the provisions of 
the revised regulations and the CWA requirements could utilize their 
own programs that include similar objectives such as enhanced water 
quality protection, public participation and accountability.
    A third possible means of providing flexibility for States would be 
available if the three-tier regulatory structure is adopted in the 
final regulation. In the three-tier structure, all facilities over 
1,000 AU would be considered CAFOs by definition, and those between 300 
AU and 1,000 AU would be CAFOs only if they meet one of several 
conditions, described in detail in Section VII.B.3, or if designated by 
the permit authority as a significant contributor of pollution to 
waters of the U.S. Those with fewer that 300 AU would become CAFOs only 
if designated by the permit authority. A State with an effective non-
NPDES program could succeed in helping many operations avoid permits by 
ensuring they do not meet any of the conditions that would define them 
as CAFOs.
    EPA is also soliciting comment on whether or not to adopt both the 
two-tier and the three-tier structures, and to provide a mechanism to 
allow States to select which of the two alternative proposed structures 
to adopt in their State NPDES program. Under this option, a State could 
adopt the structure that best fits with the administrative structure of 
their program, and that best serves the character of the industries 
located in their State and the associated environmental problems. This 
option is viable only if the Agency is able to determine that the two 
structures provide substantially similar environmental benefits by 
regulating equivalent numbers of facilities and amounts of manure. 
Otherwise, States would be in a position to choose a less stringent 
regulation, contrary to the requirements of the Clean Water Act. A 
discussion of this option can be found in Section VII.B.4.
    The requirements for State NPDES program authorization are 
specified under Sec. 402(b) of the CWA and within the broad NPDES 
regulations (40 CFR Part 123). These provisions set out specific 
requirements for State authorization applicable to the entire NPDES 
program and the Agency does not believe that broad changes to these 
requirements are appropriate in this proposed rulemaking.

B. How Would EPA's Proposal to Designate CAFOs Affect NPDES Authorized 
States?

    Today's proposal would provide explicit authority, even in States 
with approved NPDES programs, for the EPA Regional Administrator to 
designate an AFO as a CAFO if it meets the designation criteria in the 
regulations. EPA's authority to designate AFOs as CAFOs would be 
subject to the same criteria and limitations to which State designation 
authority is subject. However, EPA does not propose to assume authority 
or jurisdiction to issue permits to the CAFOs that the Agency 
designates in approved NPDES States. That authority would remain with 
the approved State. EPA requests comment on this prosed new designation 
authority.

C. How and When Will the Revised Regulations be Implemented?

    EPA anticipates that this these proposed regulations will be 
promulgated as final regulations in December, 2002, and published in 
the Federal Register shortly thereafter (approximately January, 2003). 
As mentioned, authorized States programs will need up to two years 
after that date to revise their programs to reflect the new 
regulations. Following a State's revision of its program and approval 
of the revisions by EPA, we expect many States to want additional time 
to develop new or revised CAFO general permits. EPA believes it is 
reasonable to allow States one additional year to develop these new or 
revised general permits. To summarize, some States will need until 
approximately January 2006--i.e., three years after the final rule is 
published--before they can make CAFO general permits available that 
reflect the new regulations in the State.
    At the same time, once these regulations are finalized, we estimate 
that there will be a large number of operations that will need to apply 
for a permit, described in Section VII.B.4. It is important to take 
into account that some States will not be making CAFO general permits 
available to these facilities until three years after the final rule. 
If EPA were to make the new Part 122 regulations effective shortly 
after we issue the final rule (January 2003), there would be large 
numbers of facilities that would be newly defined as CAFOs at that 
time. They would be required to apply for a permit right away, but 
States would not be able to issue general permits at that time or a 
large number of individual permits all at once. This would leave the 
facilities potentially in

[[Page 3072]]

the detrimental position of being unpermitted dischargers.
    To avoid this situation, EPA proposes that the revisions to the 
CAFO definition in part 122 (including, for example, changes to the 
threshold number of animals to qualify as a CAFO and other changes such 
as the elimination of the 25-year, 24-hour storm exemption) would not 
take effect until three years after publication of the final rules. See 
proposed section 122.23(f). We expect, therefore, that these changes 
would not take effect until approximately January, 2006. Operations 
that are brought within the regulatory definition of a CAFO for the 
first time under these regulatory revisions would not be defined as 
CAFOs under final and effective regulations until that date.
    EPA also considered an alternate approach in which the effective 
date for the part 122 revisions would be different in each State, 
depending on when the State actually adopted and got approval for the 
changes and issued general permits. An advantage of this approach would 
be that the new regulations would potentially be effective at an 
earlier date, i.e., before January 2006, in some States. EPA is not 
proposing this approach, however. We decided that it would be 
preferable to provide one uniform effective date for these particular 
revisions, which would provide necessary clarity and consistency to the 
national NPDES program for CAFOs. EPA does seek comment, however, on 
which approach would be preferable to adopt in the final regulations. 
States, however, are free to implement more stringent requirements, and 
may choose to implement the revised CAFO definition at an earlier date.
    It should be noted that EPA is proposing this delayed effective 
date only for the proposed regulatory changes that affect which 
operations would be defined as CAFOs. There is no need to delay the 
effective date of any of the other revisions EPA is proposing to the 
CAFO regulations at 40 CFR part 122, such as those that specify land 
application requirements and other requirements. These other revisions 
to the part 122 regulations would become effective 60 days after 
publication of the final regulations (January 2003). For any operation 
that is a CAFO according to the current definition and that is being 
permitted after that date, or having its permit renewed, the permit 
would be developed under these new part 122 provisions.
    EPA is proposing that the revised effluent guidelines, once 
promulgated as final regulations, would be effective 60 days after 
promulgation. The 1989 statutory deadline for meeting BAT has long 
passed, and we do not believe there is any reason why permit writers 
could not begin incorporating the revised effluent guidelines into 
permits beginning 60 days after promulgation.
    If a CAFO submits a timely application for a permit renewal, but 
has not received a decision on that application prior to the expiration 
date of the original permit, then the original permit would be 
administratively ``continued'' until there is a decision from the 
permit authority on the new application (in EPA-administered States and 
States with comparable administrative procedure laws). If that 
continuance lasts beyond the date that is the effective date of the 
revised NPDES regulations and effluent guidelines, then the CAFO's new 
permit would reflect both sets of new regulations.
    EPA also proposes to adopt specific timing requirements in the 
permit with respect to the CAFO's development of PNPs. As described in 
Section VIII, EPA proposes to establish BAT as encompassing the 
following timing requirements: (1) for all new permittees and for 
applicants who hold existing individual permits, compliance with the 
PNP would be an immediate requirement of the permit. Therefore, the 
draft PNP must be submitted to the permit authority along with the 
permit application or NOI; the final PNP must be adopted by the 
permittee within 90 days of being permitted; (2) for applicants who are 
authorized under an existing general permit, the permittee must develop 
a Permit Nutrient Plan within 90 days of submittal of the NOI; and (3) 
the PNP for all CAFOs would need to include milestones for 
implementation. This time is necessary because, while operators can 
begin preparing necessary data, it would be difficult to develop a PNP 
before the permit authority issues a final permit that specifies the 
terms and conditions of the permit. (Operators of existing CAFOs with 
individual NPDES permits, who must submit their draft PNP with the 
permit application, are expected to reapply for coverage under the 
revised regulation early enough to provide time to develop its PNP 
without causing a lapse in coverage.) For facilities that have been 
designated as CAFOs, the permit writer will develop the implementation 
schedule in order to provide reasonable time to prepare the PNP.
    Prior to the effective date of the revised regulations, State and 
EPA permit authorities will be issuing permits to facilities that 
currently meet the definition of a CAFO under the existing regulations 
or that have been designated as CAFOs. Consistent with the AFO 
Strategy, discussed in section III.B., during 2000 to 2005 States with 
authorized NPDES programs are to focus on issuing permits to the 
largest CAFOs, those with 1,000 AU or greater. In States where EPA is 
the permit authority, EPA will issue permits to operations defined as 
CAFOs that are over 300 AU. The permits are valid for a maximum of five 
years, at which time these facilities would obtain new permits under 
the revised regulation.
    One of the significant changes to the NPDES and ELG regulation for 
CAFOs will be the requirement to develop and implement Permit Nutrient 
Plans that are developed, or reviewed and approved, by certified 
planners. Concern has been raised about the availability of the 
necessary expertise to develop and certify the plans. EPA believes that 
there will be sufficient lead time before this regulation is 
implemented to expect the market to have developed the CNMP and PNP 
planning expertise and infrastructure because, during this period, 
CNMPs will be developed under both the USDA voluntary program and EPA's 
Round I permitting.
    For facilities subject to the requirements of the revised 
regulation, EPA anticipates that during the period between the time 
this regulation is promulgated and the time it is effective, operators 
will be able to anticipate the status of their facilities, and 
therefore can begin gathering data that will be needed for the Permit 
Nutrient Plan and other requirements, such as soil type, manure 
sampling, cropping information, and other data needed to calculate the 
allowable manure application rate. (Note: States are supposed to have 
adopted their NRCS 590 standard by May 2001.)
    EPA also proposes that CAFOs that are new sources may not receive 
permit coverage until the PNP is developed. In this case, a complete 
application must include the PNP. The owner or operator of a new 
facility is expected to design and construct the new facility in a 
manner that anticipates the ELG and NPDES requirements for manure 
management, rather than incurring the costs of retrofitting an already 
constructed facility.
    EPA recognizes that some practices such as liners and groundwater 
wells for beef and dairy operations may take time to implement. The PNP 
will include a schedule for implementing the provisions of the PNP, 
including milestones with dates.

[[Page 3073]]

    Facilities Constructed After the Proposed Regulation is Published. 
EPA is soliciting comment on whether the revised regulations should 
apply 60 days after publication of the final rule to facilities that 
commence operation after that date, even if they would not be defined 
as a CAFO under the existing rules. Although EPA is proposing to delay 
for three years the effective date of the proposed regulations for 
existing facilities that are not currently defined as CAFOs, it is 
considering whether to require all facilities defined as CAFOs under 
the final rule that commence operation after the final rule is 
published to obtain an NPDES permit and comply with the other 
requirements of the final rule. For example, a dry poultry operation or 
an animal feeding operation of 501 cattle that is constructed during 
the three year period after publication of the final rule might be 
required to comply immediately with the revised regulations rather than 
remaining outside the scope of the NPDES program until three years 
after publication of the final rule.
    Requiring newly constructed facilities to obtain permits does not 
pose the same problem as requiring all existing AFOs which are not 
defined as CAFOs under the current rule to obtain permits immediately 
after promulgation of the final rule. Once a new definition of a CAFO 
becomes effective, a large number of existing facilities would need a 
permit on the same date. EPA expects that most existing facilities will 
seek coverage under a general permit. However, EPA and authorized 
States will need some time after the final rule is promulgated to 
develop those general permits. An existing facility would face the 
dilemma of either ceasing operations or discharging without a permit if 
it was required to obtain a permit but none was available. By contrast, 
new facilities would commence operation over a period of time and 
present less of a burden on permit authorities. If a general permit was 
not available, issuing individual permits to the smaller number of 
newly constructed facilities would present less of a burden. If all 
else fails, a newly constructed facility could not commence operation 
until it had a permit. This approach would be consistent with EPA's 
general approach for regulation of new sources and new dischargers, who 
are required to obtain an NPDES permit (and comply with any applicable 
NSPS) prior to commencing operation. See 40 CFR 122.29, 124.60(a). 
Finally, unlike an existing facility, a newly constructed facility is 
in a better position to plan its facility to comply with the revised 
regulations.
    If EPA did not delay the effective date for facilities that are 
constructed after the final rule is published, the rule would address 
additional sources sooner. On the other hand it would further 
complicate the regulatory structure because it would temporarily create 
another category of facilities. EPA solicits comments on whether all 
provisions of the rule should be effective 60 days after the final rule 
is published for facilities that are constructed after that date.

D. How Many CAFOs are Likely to be Permitted in Each State and EPA 
Region?

    Tables 9-1 and 9-2 delineate the number of facilities, in each 
State and EPA Region, that are expected to be affected by either of 
today's proposed two-tier and three-tier structures, respectively. In 
both proposed structures, all CAFOs with more than 1,000 AU would be 
required to apply for a NPDES permit. The differences lie primarily in 
how the middle-sized operations are affected.

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    As described in today's preamble, the three-tier structure would 
affect more facilities because all AFOs with 300 AU or more would be 
required to do something. However, not all would be required to apply 
for a permit, and, depending on the vigor with which States and AFOs 
seek to avoid the conditions defining these facilities as CAFOs, the 
actual number of permittees could be smaller. EPA projects that a 
minimum of 4,000 middle-sized facilities and a maximum of 19,000 would 
apply for a permit under the three-tier structure. By contrast, the 
proposed two-tier structure would require all 13,000 facilities between 
500 AU and 1,000 AU to apply for a permit.
    Further, the number of small facilities likely to be designated 
differs between the two proposed structures. Under the three-tier 
structure, EPA expects very few AFOs to be designated, potentially 10 
per year nationally. Under the two-tier structure, however, this number 
is likely to rise to 50 per year, given that AFOs from 300 AU to 499 AU 
have the potential to generate significant quantities of manure that, 
if not properly managed, may lead the facility to be a significant 
contributor of pollution to the waters.

E. Funding Issues

    While most CAFO owners and operators are interested in taking 
appropriate measures to protect and preserve the environment, there are 
legitimate concerns over the costs of doing so. While EPA's cost 
analysis indicates that this rule is affordable, some businesses in 
some locales may experience economic stress. (See Section X). Further, 
concern has been expressed as to whether facilities below 1,000 AU that 
become CAFOs due to the changes in this proposed rulemaking may 
potentially cause operations to lose cost-share money available under 
EPA's Section 319 Nonpoint Source Program and USDA's Environmental 
Quality Incentive Program (EQIP). Once a facility is considered a point 
source under NPDES, the operation is not eligible for cost sharing 
under the Section 319 nonpoint source program. However, the USDA EQIP 
program is in fact available to most facilities, and being a permitted 
CAFO is not a reason for exclusion from the EQIP program. EQIP funds 
may not be used to pay for construction of storage facilities at 
operations with greater than 1,000 USDA animal units; however, EQIP is 
available to these facilities for technical assistance and financial 
assistance for other practices. One USDA animal unit equals 1,000 
pounds of live weight of any given livestock species or any combination 
of livestock species. (The approximate number of animal equivalents 
would be: 1,000 head of beef; 741 dairy cows; 5,000 swine, 250,000 
layers; and 500,000 broilers).
    To this end, EPA anticipates that State and Federal Agencies will 
facilitate compliance with this rule by providing technical assistance 
and funding for smaller CAFOs, as available.

F. What Provisions are Made for Upset and Bypass?

    A recurring issue of concern has been whether industry guidelines 
should include provisions authorizing noncompliance with effluent 
limitations during periods of ``upsets'' or ``bypasses''. An upset, 
sometimes called an ``excursion,'' is an unintentional noncompliance 
occurring for reasons beyond the reasonable control of the permittee. 
It has been argued that an upset provision is necessary in EPA's 
effluent limitations because such upsets will inevitably occur even in 
properly operated control equipment. Because technology based 
limitations require only what the technology can achieve, it is claimed 
that liability for such situations is improper. When confronted with 
this issue, courts have disagreed on whether an explicit upset 
exemption is necessary, or whether upset incidents may be handled 
through EPA's exercise of enforcement discretion. Compare Marathon Oil 
Co. v. EPA, 564 F.2d 1253 (9th Cir.1977), with Weyerhaeuser v. Costle, 
594 F.2d 1223 (8th Cir. 1979). See also Sierra Club v. Union Oil Co., 
813 F.2d 1480 (9th Cir. 1987), American Petroleum Institute v. EPA, 540 
F.2d 1023 (10th Cir. 1976), CPC International, Inc. v. Train, 540 F.2d 
1320 (8th Cir. 1976), and FMC Corp. v. Train, 539 F.2d 973 (4th Cir. 
1976).
    A bypass, on the other hand, is an act of intentional noncompliance 
during which waste treatment facilities are circumvented because of an 
emergency situation. EPA has in the past included bypass provisions in 
NPDES permits. EPA has determined that both upset and bypass provisions 
should be included in NPDES permits and has promulgated permit 
regulations that include upset and bypass permit provisions. See 40 CFR 
122.41. The upset provision establishes an upset as an affirmative 
defense to prosecution for violation of, among other requirements, 
technology-based effluent limitations. The bypass provision authorizes 
bypassing to prevent loss of life, personal injury, or severe property 
damage. Consequently, although permittees in the offshore oil and gas 
industry will be entitled to upset and bypass provisions in NPDES 
permits, this regulation does not address these issues.

G. How Would an Applicant Apply for Variances and Modifications to 
Today's Proposed Regulation?

    Once this regulation is in effect, the effluent limitations must be 
applied in all NPDES permits thereafter issued to discharges covered 
under this effluent limitations guideline subcategory. The CWA, 
however, provides certain variances from BAT and BCT limitations. Under 
301(l), the only variance available for discharges from the production 
area is an FDF variance under 301(m). For the land application area, 
301(g) variances don't apply because EPA is not setting BAT effluent 
limitations for the five pollutants to which that provision applies. 
301(c) and FDF variances are available for effluent limitations 
covering the land application area.
    The Fundamentally Different Factors (FDF) variance considers those 
facility specific factors which a permittee may consider to be uniquely 
different from those considered in the formulation of an effluent 
guideline as to make the limitations inapplicable. An FDF variance must 
be based only on information submitted to EPA during the rulemaking 
establishing the effluent limitations from which the variance is being 
requested, or on information the applicant did not have a reasonable 
opportunity to submit during the rulemaking process for these effluent 
limitations guidelines. If fundamentally different factors are 
determined, by the permitting authority (or EPA), to exist, the 
alternative effluent limitations for the petitioner must be no less 
stringent than those justified by the fundamental difference from those 
facilities considered in the formulation of the specific effluent 
limitations guideline of concern. The alternative effluent limitation, 
if deemed appropriate, must not result in non-water quality 
environmental impacts significantly greater than those accepted by EPA 
in the promulgation of the effluent limitations guideline. FDF variance 
requests with all supporting information and data must be received by 
the permitting authority within 180 days of publication of the final 
effluent limitations guideline (Publication date here). The specific 
regulations covering the requirements for and the administration of FDF 
variances are found at 40 CFR 122.21(m)(1), and 40 CFR part 125, 
subpart D.

[[Page 3079]]

X. What Are the Costs and Economic Impacts of the Proposed 
Revisions?

A. Introduction and Overview

    This section presents EPA's estimates of the costs and economic 
impacts that would occur as a result of today's proposed regulations. 
Costs and economic impacts are evaluated for each commodity sector, 
including the beef, veal, heifer, dairy, swine, broiler, turkey and egg 
laying sectors. A description of each of the ELG technology options and 
the NPDES scenarios considered by EPA, and the rationale for selecting 
the proposed BAT Option and NPDES Scenario, are provided in Sections 
VII and VIII of this document. Detailed information on estimated 
compliance costs are provided in the Development Document for the 
Proposed Revisions to the National Pollutant Discharge Elimination 
System Regulation and the Effluent Guidelines for Concentrated Animal 
Feeding Operations (referred to as the ``Development Document''). EPA's 
detailed economic assessment can be found in Economic Analysis of the 
Proposed Revisions to the National Pollutant Discharge Elimination 
System Regulation and the Effluent Guidelines for Concentrated Animal 
Feeding Operations (referred to as ``Economic Analysis''). EPA also 
prepared the Environmental and Economic Benefit Analysis of the 
Proposed Revisions to the National Pollutant Discharge Elimination 
System Regulation and the Effluent Guidelines for Concentrated Animal 
Feeding Operations (``Benefits Analysis'') in support of today's 
proposal. These documents are available at EPA's website at http://www.epa.gov/owm/afo.htm.
    This section presents EPA's estimate of the total annual 
incremental costs and the economic impacts that would be incurred by 
the livestock and poultry industry as a result of today's proposed 
rule. This section also discusses EPA's estimated effects to small 
entities and presents the results of EPA's cost-effectiveness and cost-
benefit analysis. All costs presented in this document are reported in 
1999 pre-tax dollars (unless otherwise indicated).

B. Data Collection Activities

1. Sources of Data To Estimate Compliance Costs
    As part of the expedited approach to this rulemaking, EPA has 
chosen not to conduct an industry-wide survey of all CAFOs using a 
Clean Water Act Section 308 questionnaire. Rather, EPA is relying on 
existing data sources and expertise provided by the U.S. Department of 
Agriculture (USDA), industry, State agriculture extension agencies, and 
several land grant universities. More detailed information on the data 
used for this analysis can be found in the Development Document and 
also the Economic Analysis.
    EPA collected and evaluated data from a variety of sources. These 
sources include information compiled through EPA site visits to over 
100 animal confinement operations and information from industry trade 
associations, government agencies, and other published literature. EPA 
also received information from environmental groups such as the Natural 
Resources Defense Council and the Clean Water Network. The Agency 
contacted university experts, state cooperatives and extension 
services, and state and EPA regional representatives to identify 
facilities for site visits. EPA also attended USDA-sponsored farm tours 
and site visits arranged by other groups, as well as industry, 
academic, and government conferences.
    EPA obtained data and information from several agencies in USDA, 
including the National Agricultural Statistics Service (NASS), Natural 
Resources Conservation Service (NRCS), the Animal and Plant Health 
Inspection Service (APHIS), and the Economic Research Service (ERS). 
The collected data include statistical survey information and published 
reports.
    EPA gathered information from a wide range of published NASS 
reports, including annual data summaries for each commodity group. 
USDA's NASS is responsible for objectively providing important, usable, 
and accurate statistical information and data support services on the 
structure and activities of agricultural production in the United 
States. Each year NASS conducts surveys and prepares reports covering 
virtually every facet of U.S. agricultural production. The primary 
sources of data are animal production facilities in the United States. 
NASS collects voluntary information using mail surveys, telephone and 
in-person interviews, and field observations. NASS is also responsible 
for conducting a Census of Agriculture.
    EPA's main source of primary USDA data containing farm level 
descriptive information is USDA's Census of Agriculture (Census). 
USDA's Census is a complete accounting of United States agricultural 
production and is the only source of uniform, comprehensive 
agricultural data for every county in the nation. The Census is 
conducted every 5 years by NASS. The Census includes all farm 
operations from which $1,000 or more of agricultural products are 
produced and sold. The most recent Census reflects calendar year 1997 
conditions. This database is maintained by USDA. Data used for this 
analysis were compiled with the assistance of staff at USDA's NASS. 
(USDA periodically publishes aggregated data from these databases and 
also compiles customized analyses of the data to members of the public 
and other government agencies. In providing such analyses, USDA 
maintains a sufficient level of aggregation to ensure the 
confidentiality of any individual operation's activities or holdings.)
    USDA's NRCS publishes the Agricultural Waste Management Field 
Handbook, which is an agricultural engineering guidance manual that 
explains general waste management principles and provides detailed 
design information for particular waste management systems. USDA's 
Handbook reports specific design information on a variety of farm 
production and waste management practices at different types of 
feedlots. The Handbook also reports runoff calculations under normal 
and peak precipitation as well as information on manure and bedding 
characteristics. EPA used this information to develop its cost and 
environmental analyses. NRCS personnel also contributed technical 
expertise in the development of EPA's estimates of compliance costs and 
environmental assessment framework by providing EPA with estimates of 
manure generation in excess of expected crop uptake. This information 
is provided in the record that supports this rulemaking.
    NRCS also compiled and performed analyses on Census data that EPA 
used for its analyses. These data identify the number of feedlots, 
their geographical distributions, and the amount of cropland available 
to land apply animal manure generated from their confined feeding 
operations (based on nitrogen and phosphorus availability relative to 
crop need).
    EPA gathered information from several reports on the livestock and 
poultry industries from the National Animal Health Monitoring System 
(NAHMS). USDA's APHIS provides leadership in ensuring the health and 
care of animals and plants, improving agricultural productivity and 
competitiveness, and contributing to the national economy and public 
health. One of its main responsibilities is to enhance the care of 
animals. In 1983, APHIS initiated the NAHMS as an information-gathering 
program to collect, analyze, and disseminate data on animal health, 
management, and productivity. NAHMS conducts national studies to gather 
data and generate

[[Page 3080]]

descriptive statistics and information from data collected by other 
industry sources.
    USDA's ERS provides economic analyses on efficiency, efficacy, and 
equity issues related to agriculture, food, the environment, and rural 
development to improve public and private decision-making. EPA's 
analysis of economic impacts at a model CAFO references a wide range of 
published ERS reports and available farm level statistical models. ERS 
also maintains farm level profiles of cost and returns compiled from 
NASS financial data.
    Databases and reports containing the information and data used by 
EPA in support of this proposed rule are available in the rulemaking 
record.
2. Sources of Data To Estimate Economic Impacts
    To estimate economic impacts, EPA used farm level data from USDA, 
industry, and land grant universities. The major source of primary USDA 
data on farm financial conditions is from the Agricultural Resources 
Management Study (ARMS). ARMS is USDA's primary vehicle for data 
collection on a broad range of issues about agricultural production 
practices and costs. These data provide a national perspective on the 
annual changes in the financial conditions of production agriculture.
    USDA's ARMS data provide aggregate farm financial data, which EPA 
used for its cost impact analysis. The ARMS data provide complete 
income statement and balance sheet information for U.S. farms in each 
of the major commodity sectors, including those affected by the 
proposed regulations. The ARMS financial data span all types of farming 
operations within each sector, including full-time and part-time 
producers, independent owner operations and contract grower operations, 
and confinement and non-confinement production facilities.
    ERS provided aggregated data for select representative farms 
through special tabulations of the ARMS data that differentiate the 
financial conditions among operations by commodity sector, facility 
size (based on number of animals on-site) and by major producing region 
for each sector. The 1997 ARMS data also provide corresponding farm 
level summary information that matches the reported average financial 
data to both the total number of farms and the total number of animals 
for each aggregated data category. As with the Census data, ERS 
aggregated the data provided to EPA to preserve both the statistical 
representativeness and confidentiality of the ARMS survey data. ARMS 
data used for this analysis are presented in the Economic Analysis and 
are available in the rulemaking record.
    EPA obtained additional market data on the U.S. livestock and 
poultry industries as a whole from a wide variety of USDA publications 
and special reports. These include: Financial Performance of U.S. 
Commercial Farms, 1991-1994; USDA Baseline Projections 2000, Food 
Consumption, Prices and Expenditures, 1970-1997; Agricultural Prices 
Annual Summary; annual NASS statistical bulletins for these sectors; 
and data and information reported in Agricultural Outlook and ERS's 
Livestock, Dairy, and Poultry Situation and Outlook reports. Other 
source material is from ERS's cost of production series reports for 
some sectors and trade reports compiled by USDA's Foreign Agricultural 
Service (FAS). Information on the food processing segments of these 
industries is from the U.S. Department of Commerce's Census of 
Manufacturers data series. Industry information is also from USDA's 
Grain Inspection Packers and Stockyards Administration (GIPSA).
    Industry and the associated trade groups also provided information 
for EPA's cost and market analyses. In particular, the National 
Cattlemen's Beef Association (NCBA) conducted a survey of its 
membership to obtain financial statistics specific to cattle feeding 
operations. EPA used these and other data to evaluate how well the ARMS 
data for beef operations represent conditions at cattle feedyards. EPA 
also obtained industry data from the National Milk Producers Federation 
(NMPF) and the National Pork Producers Council (NPPC).
    EPA also used published research by various land grant universities 
and their affiliated research organizations, as well as information 
provided by environmental groups.
    Databases and reports containing the information and data provided 
to and used by EPA in support of this proposed rule are available in 
the rulemaking record.

C. Method for Estimating Compliance Costs

1.Baseline Compliance
    For the purpose of this analysis, EPA assumes that all CAFOs that 
would be subject to the proposed regulations are currently in 
compliance with the existing regulatory program (including the NPDES 
regulations and the effluent limitations guidelines and standards for 
feedlots) and existing state laws and regulations. As a practical 
matter, EPA recognizes that this is not true, since only 2,500 
operations out of an estimated 12,700 CAFOs with more than 1,000 AU 
have actually obtained coverage under an NPDES permit and the remainder 
may in fact experience additional costs to comply with the existing 
requirements. EPA has not estimated these additional costs in the 
analysis that is presented in today's preamble because the Agency did 
not consider these costs part of the incremental costs of complying 
with today's proposed rule.
    To assess the incremental costs attributable to the proposed rules, 
EPA evaluated current federal and state requirements for animal feeding 
operations and calculated compliance costs of the proposed requirements 
that exceed the current requirements. Operations located in states that 
currently have requirements that meet or exceed the proposed regulatory 
changes would already be in compliance with the proposed regulations 
and would not incur any additional cost. These operations are not 
included as part of the cost analysis. A review of current state waste 
management requirements for determining baseline conditions is included 
in the Development Document and also in other sections of the record 
(See State Compendium: Programs and Regulatory Activities Related to 
Animal Feeding Operations compiled by EPA and available at http://www.epa.gov/owm/afo.htm#Compendium).
    EPA also accounted for current structures and practices that are 
assumed to be already in place at operations that may contribute to 
compliance with the proposed regulations. Additional information is 
also provided in the following section (X.C.2(a)). This information is 
also provided in the Development Document.
2. Method for Estimating Incremental CAFO Compliance Costs
    a. Compliance Costs to CAFO Operators. For the purpose of 
estimating total costs and economic impacts, EPA calculated the costs 
of compliance for CAFOs to implement each of the regulatory options 
being considered (described in Section VIII of this preamble). EPA 
estimated costs associated with four broad cost components: nutrient 
management planning, facility upgrades, land application, and 
technologies for balancing on-farm nutrients. Nutrient management 
planning costs include manure and soil testing, record keeping, 
monitoring of surface water and groundwater, and plan development. 
Facility upgrades reflect costs for

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manure storage, mortality handling, storm water and field runoff 
controls, reduction of fresh water use, and additional farm management 
practices. Land application costs address agricultural application of 
nutrients and reflect differences among operations based on cropland 
availability for manure application. Specific information on the 
capital costs, annual operating and maintenance costs, start-up or 
first year costs, and also recurring costs assumed by EPA to estimate 
costs and impacts of the proposed regulations is provided in the 
Development Document.
    EPA evaluated compliance costs using a representative facility 
approach based on more than 170 farm level models that were developed 
to depict conditions and to evaluate compliance costs for select 
representative CAFOs. The major factors used to differentiate 
individual model CAFOs include the commodity sector, the farm 
production region, and the facility size (based on herd or flock size 
or the number of animals on-site). EPA's model CAFOs primarily reflect 
the major animal sector groups, including beef cattle, dairy, hog, 
broiler, turkey, and egg laying operations. Practices at other 
subsector operations are also reflected in the cost models, such as 
replacement heifer operations, veal operations, flushed caged layers, 
and hog grow- and farrow-finish facilities. EPA used model facilities 
with similar waste management and production practices to depict 
operations in regions that were not separately modeled.
    Another key distinguishing factor incorporated into EPA's model 
CAFOs includes information on the availability of crop and pasture land 
for land application of manure nutrients. For this analysis, nitrogen 
and phosphorus rates of land application are evaluated for three 
categories of cropland availability: Category 1 CAFOs are assumed to 
have sufficient cropland for all on-farm nutrients generated, Category 
2 CAFOs are assumed to have insufficient cropland, and Category 3 CAFOs 
are assumed to have no cropland. EPA used 1997 information from USDA to 
determine the number of CAFOs within each category. This information 
takes into account which nutrient (nitrogen or phosphorus) is used as 
the basis to assess land application and nutrient management costs.
    For Category 2 and Category 3 CAFOs, EPA evaluated additional 
technologies that may be necessary to balance nutrients. EPA evaluated 
additional technologies that reduce off-site hauling costs associated 
with excess on-farm nutrients, as well as to address ammonia 
volatization, pathogens, trace metals, and antibiotic residuals. These 
technologies may include Best Management Practices (BMPs) and various 
farm production technologies, such as feed management strategies, 
solid-liquid separation, composting, anaerobic digestion, and other 
retrofits to existing technologies. EPA considered all these 
technologies for identification of ``best available technologies'' 
under the various options for BAT described in Section VIII.
    EPA used soil sample information compiled by researchers at various 
land grant universities to determine areas of phosphorus and nitrogen 
saturation, as described in the Development Document. This information 
provides the basis for EPA's assumptions of which facilities would need 
to apply manure nutrients on a phosphorus- or nitrogen-based standard.
    EPA's cost models also take into account other production factors, 
including climate and farmland geography, land application and waste 
management practices and other major production practices typically 
found in the key producing regions of the country. Model facilities 
reflect major production practices used by larger confined animal 
farms, generally those with more than 300 AU. Therefore, the models do 
not reflect pasture and grazing type farms, nor do they reflect typical 
costs to small farms. EPA's cost models also take into account 
practices required under existing state regulations and reflect cost 
differences within sectors depending on manure composition, bedding 
use, and process water volumes. More information on the development of 
EPA's cost models is provided in the Development Document.
    To estimate aggregate incremental costs to the CAFO industry from 
implementing a particular technology option, EPA first estimated the 
total cost to a model facility to employ a given technology, including 
the full range of necessary capital, annual, start-up, and recurring 
costs. Additional detailed information on the baseline and compliance 
costs attributed to model CAFOs across all sectors and across all the 
technology options considered by EPA is provided in the Development 
Document.
    After estimating the total cost to an individual facility to employ 
a given technology, EPA then weighted the average facility level cost 
to account for current use of the technology or management practice 
nationwide. This is done by multiplying the total cost of a particular 
technology or practice by the percent of operations that are believed 
to use this particular technology or practice in order to derive the 
average expected cost that could be incurred by a model CAFO. EPA 
refers to this adjustment factor as the ``frequency factor'' and has 
developed such a factor for each individual cost (i.e. each technology) 
and cost component (i.e. capital and annual costs) in each of its CAFO 
models. The frequency factor reflects the percentage of facilities that 
are, technically, already in compliance with a given regulatory option 
since they already employ technologies or practices that are protective 
of the environment. The frequency factor also accounts for compliance 
with existing federal and state regulatory requirements as well as the 
extent to which an animal sector has already adopted or established 
management practices to control discharges.
    EPA developed its frequency factors based on data and information 
from USDA's NRCS and NAHMS, state agricultural extension agencies, 
industry trade groups and industry-sponsored surveys, academic 
literature, and EPA's farm site visits. More detailed information on 
how EPA developed and applied these weighting factors is provided in 
the Development Document. To identify where farm level costs may be 
masked by this weighting approach, EPA evaluated costs with and without 
frequency factors. The results of this sensitivity analysis indicate 
that the model CAFO costs used to estimate aggregate costs and impacts, 
as presented in this preamble, are stable across a range of possible 
frequency factor assumptions.
    The data and information used to develop EPA's model CAFOs were 
compiled with the assistance of USDA, in combination with other 
information collected by EPA from extensive literature searches, more 
than 100 farm site visits, and numerous consultations with industry, 
universities, and agricultural extension agencies. Additional detailed 
information on the data and assumptions used to develop EPA's model 
CAFOs that were used to estimate aggregate incremental costs to the 
CAFO industry is provided in the Development Document.
    b. Compliance Costs to Recipients of CAFO Manure. To calculate the 
cost to offsite recipients of CAFO manure under the proposed 
regulations, EPA builds upon the cropland availability information in 
the CAFO models, focusing on the two categories of farms that have 
excess manure nutrients and that need to haul manure offsite for 
alternative use or to be spread as

[[Page 3082]]

fertilizer (i.e., Category 2 and Category 3 CAFOs, where facilities are 
assumed to have insufficient or no available cropland to land apply 
nutrients, respectively). EPA also uses this information to determine 
the number of offsite recipients affected under select regulatory 
alternatives, shown in Tables 10-3 and 10-4.
    USDA defines farm level ``excess'' of manure nutrients on a 
confined livestock farm as manure nutrient production less crop 
assimilative capacity. USDA has estimated manure nutrient production 
using the number of animals by species, standard manure production per 
animal unit, and nutrient composition of each type of manure. 
Recoverable manure is the amount that can be collected and disposed by 
spreading on fields or transporting off the producing farm.
    Depending on the nutrient used to determine the rate of manure 
application (nitrogen or phosphorus), EPA estimates that approximately 
7,500 to 10,000 CAFOs with more than 300 AU are expected to generate 
excess manure. This includes about 2,600 animal feeding operations that 
have no major crop or pasture land. These estimates were derived from a 
USDA analysis of manure nutrients relative to the capacity of cropland 
and pastureland to assimilate nutrients. EPA's estimate does not 
account for excess manure that is already disposed of via alternative 
uses such as pelletizing or incineration.
    For the purpose of this analysis, EPA assumes that affected offsite 
facilities are field crop producers who use CAFO manure as a fertilizer 
substitute. Information on crop producers that currently receive animal 
manure for use as a fertilizer substitute is not available. Instead, 
EPA approximates the number of operations that receive CAFO manure and 
may be subject to the proposed regulations based on the number of acres 
that would be required to land apply manure nutrients generated by 
Category 2 and Category 3 CAFOs. EPA assumes that offsite recipients 
will only accept manure when soil conditions allow for application on a 
nitrogen basis. Therefore, the manure application rate at offsite acres 
in a given region is the nitrogen-based application rate for the 
typical crop rotation and yields obtained in that region. EPA then 
estimates the number of farms that receive CAFO manure by dividing the 
acres needed to assimilate excess manure nitrogen by the national 
average farm size of 487 acres, based on USDA data. The results of this 
analysis indicate that 18,000 to 21,000 offsite recipients would 
receive excess CAFO manure.
    The costs assessed to manure recipients include the costs of soil 
testing and incremental recordkeeping. EPA evaluated these costs using 
the approach described in Section X.C.2(a). Excess manure hauling costs 
are already included in costs assessed to CAFOs with excess manure. For 
the purpose of this analysis, EPA has assumed that crop farmers already 
maintain records documenting crop yields, crop rotations, and 
fertilizer application, and that crop farmers already have some form of 
nutrient management plan for determining crop nutrient requirements. 
EPA estimates, on average, per-farm incremental costs of approximately 
$540 to non-CAFOs for complying with the offsite certification 
requirements. This analysis is provided in the Development Document.
3. Cost Annualization Methodology
    As part of EPA's costing analysis, EPA converts the capital costs 
that are estimated to be incurred by a CAFO to comply with the proposed 
requirements, described in Section X.C.2, to incremental annualized 
costs. Annualized costs better describe the actual compliance costs 
that a model CAFO would incur, allowing for the effects of interest, 
depreciation, and taxes. EPA uses these annualized costs to estimate 
the total annual compliance costs and to assess the economic impacts of 
the proposed requirements to regulated CAFOs that are presented in 
Sections X.E and X.F.
    Additional information on the approach used to annualize the 
incremental compliance costs developed by EPA is provided in Appendix A 
of the Economic Analysis. EPA uses a 10-year recovery period of 
depreciable property based on the Internal Revenue Code's guidance for 
single purpose agricultural or horticultural structures. The Internal 
Revenue Service defines a single purpose agricultural structure as any 
enclosure or structure specifically designed, constructed and used for 
housing, raising, and feeding a particular kind of livestock, including 
structures to contain produce or equipment necessary for housing, 
raising, and feeding of livestock. The method EPA uses to depreciate 
capital investments is the Modified Accelerated Cost Recovery System 
(MACRS).
    EPA assumes a real private discount/interest rate of 7 percent, as 
recommended by the Office of Management and Budget. EPA also assumes 
standard federal and average state tax rates across the broad facility 
size categories to determine an operation's tax benefit or tax shield, 
which is assumed as an allowance to offset taxable income.

D. Method for Estimating Economic Impacts

    To estimate economic impacts under the proposed regulations, EPA 
examined the impacts across three industry segments: regulated CAFOs, 
processors, and national markets.
1. CAFO Analysis
    EPA estimates the economic impacts of today's proposed regulations 
using a representative farm approach. A representative farm approach is 
consistent with past research that USDA and many land grant 
universities have conducted to assess a wide range of policy issues, 
including environmental legislation pertaining to animal agriculture. A 
representative farm approach provides a means to assess average impacts 
across numerous facilities by grouping facilities into broader 
categories to account for the multitude of differences among animal 
confinement operations. Information on how EPA developed its model 
CAFOs is available in the Economic Analysis. Additional information on 
EPA's cost models is provided in the Development Document. At various 
stages in the proposed rulemaking, EPA presented its proposed 
methodological approach to USDA personnel and to researchers at various 
land grant universities for informal review and feedback.
    Using a representative farm approach, EPA constructed a series of 
model facilities that reflect the EPA's estimated compliance costs and 
available financial data. EPA uses these model CAFOs to develop an 
average characterization for a group of operations. EPA's cost models 
were described earlier in Section X.C.2(a). From these models, EPA 
estimates total annualized compliance costs by aggregating the average 
facility costs across all operations that are identified for a 
representative group. EPA's cost models are compared to corresponding 
model CAFOs that characterize financial conditions across differently 
sized, differently managed, and geographically distinct operations. As 
with EPA's cost models, EPA's financial models are grouped according to 
certain distinguishing characteristics for each sector, such as 
facility size and production region, that may be shared across a broad 
range of facilities. Economic impacts under a post-regulatory scenario 
are approximated by extrapolating the average impacts for a given model 
CAFO across the larger

[[Page 3083]]

number of operations that share similar production characteristics and 
are identified by that CAFO model.
    EPA compares its estimated compliance costs at select model CAFOs 
to corresponding financial conditions at these model facilities. For 
this analysis, EPA focuses on three financial measures that are used to 
assess the affordability of the proposed CAFO regulations. These 
include total gross revenue, net cash income, and debt-to-asset ratio. 
Financial data used by EPA to develop its financial models are from the 
1997 ARMS data summaries prepared by ERS and form the basis for the 
financial characterization of the model CAFOs. To account for changes 
in an operation's income under post-compliance conditions, EPA 
estimated the present value of projected facility earnings, measured as 
a future cash flow stream. The present value of cash flow represents 
the value in terms of today's dollars of a series of future receipts. 
EPA calculated baseline cash flow as the present value of a 10-year 
stream of an operation's cash flow. EPA projected future earnings from 
the 1997 baseline using USDA's Agricultural Baseline Projections data. 
Section 4 of the Economic Analysis provides additional information on 
the baseline financial conditions attributed to EPA's model CAFO across 
all sectors as well as information on the data and assumptions used to 
develop these models.
    EPA evaluates the economic achievability of the proposed 
requirements based on changes in representative financial conditions 
for select criteria, as described in Section X.F.1. For some sectors, 
EPA evaluates economic impacts at model CAFOs under varying scenarios 
of cost passthrough between the CAFO and the latter stages in the food 
marketing chain, such as the processing and retail sectors. These three 
scenarios include: zero cost passthrough, full (100 percent) cost 
passthrough, and partial cost passthrough (greater than zero). Partial 
cost passthrough values used for this analysis vary by sector and are 
based on estimates of price elasticity of supply and demand reported in 
the academic literature. This information is available in the docket.
    Table 10-1 lists the range of annualized compliance costs developed 
for EPA's analysis. Annualized costs for each sector are summarized 
across the estimated range of minimum and maximum costs across all 
facility sizes and production regions and are broken out by land use 
category (described in Section X.C.2). In some cases, ``maximum'' costs 
reflect average costs for a representative facility that has a large 
number of animals on-site; EPA's cost models for very large CAFOs are 
intended to approximate the average unit costs at the very largest 
animal feeding operations. More detailed annualized costs broken out by 
production region, land use category, and broad facility size groupings 
are provided in the Economic Analysis.
    Estimated annualized costs shown in Table 10-1 are presented in 
1999 dollars (post-tax). All costs presented in today's preamble have 
been converted using the Construction Cost Index to 1999 dollars from 
the 1997 dollar estimates that are presented throughout the Development 
Document and the Economic Analysis. As shown in the table, costs for 
Category 3 CAFOs may be lower than those for Category 1 CAFOs since 
facilities without any land do not incur any additional incremental 
costs related to hauling. EPA has assumed that these operations are 
already hauling off-site in order to comply with existing requirements. 
More detailed cost estimates for individual technologies are provided 
in the Development Document.
    To assess the impact of the regulations on offsite recipients of 
CAFO manure, EPA compares the estimated cost of this requirement to 
both aggregate and average per farm production costs and revenues (a 
sales test). This analysis uses EPA's estimated compliance costs and 
1997 aggregate farm revenues and production costs reported by USDA. For 
the purpose of this analysis, EPA assumes that these costs will be 
incurred by non-CAFO farming operations (i.e., crop producers) that use 
animal manures as a fertilizer substitute and will not be borne by 
CAFOs.

                 Table 10-1.--Range of Annualized Model CAFO Compliance Costs ($1999, post-tax)
----------------------------------------------------------------------------------------------------------------
                                                   Category 1 \1\        Category 2 \1\        Category 3 \1\
                    Sector                     -----------------------------------------------------------------
                                                 Minimum    Maximum    Minimum    Maximum    Minimum    Maximum
----------------------------------------------------------------------------------------------------------------
                                                       (1999 dollars per model CAFO across all size groups)
----------------------------------------------------------------------------------------------------------------
Beef..........................................      2,100    986,000      8,500  1,219,800      1,000    896,700
Veal..........................................      1,500      8,100      1,100      6,100      1,000      6,000
Heifers.......................................      1,700     16,900      2,000     17,900      1,200     11,700
Dairy.........................................      5,200     44,600     14,700     67,700      4,200     40,300
Hogs: GF \2\..................................        300     52,300      5,500     63,500     11,400     81,500
Hogs: FF \2\..................................        300     82,900      8,800    100,600     10,000    115,500
Broilers......................................      4,800     36,300      4,400     25,800      3,900     21,400
Layers: wet \3\...............................        300     24,800      2,100     29,300      1,500     18,100
Layers: dry \3\...............................      1,500     59,000      1,400     31,700      1,200     27,600
Turkeys.......................................      4,900    111,900      4,800     29,500      3,800    20,800
----------------------------------------------------------------------------------------------------------------
Source: EPA.
\1\ Category 1 CAFOs have sufficient cropland for all on-farm nutrients generated; Category 2 CAFOs have
  insufficient cropland; and Category 3 CAFOs have no cropland.
\2\ ``Hogs: FF'' are farrow-finish (includes breeder and nursery pigs); ``Hogs: GF'' are grower-finish only.
\3\ ``Layers: wet'' are operations with liquid manure systems; ``Layers: dry'' are operations with dry systems.

2. Processor Analysis
    As discussed in Section VI, EPA estimates that 94 meat packing 
plants that slaughter hogs and 270 poultry processing facilities may be 
subject to the proposed co-permitting requirements (Section VI). Given 
the structure of the beef and dairy sectors and the nature of their 
contract relationships, EPA expects that no meat packing or processing 
facilities in these sectors will be subject to the proposed co-
permitting requirements. EPA bases these assumptions on data from the 
Department of Commerce on the number of slaughtering and meat packing 
facilities in these sectors and information from USDA on the degree of

[[Page 3084]]

animal ownership at U.S. farms, as described in Section VI of this 
document. Additional information is provided in Section 2 of the 
Economic Analysis. EPA is seeking comment on this assumption as part of 
today's notice.
    EPA did not conduct a detailed estimate of the costs and impacts 
that would accrue to individual co-permittees. Information on 
contractual relationships between contract growers and processing firms 
is proprietary and EPA does not have the necessary market information 
and data to conduct such an analysis. Market information is not 
available on the number and location of firms that contract out the 
raising of animals to CAFOs or on the number and location of contract 
growers, and the share of production, that raise animals under a 
production contract. In addition, EPA does not have data on the exact 
terms of the contractual agreements between processors and CAFOs to 
assess when a processor would be subject to the proposed co-permitting 
requirements, and EPA does not have financial data for processing firms 
or contract growers that utilize production contracts.
    EPA, however, believes that the framework used to estimate costs to 
CAFOs does provide a means to evaluate the possible upper bound of 
costs that could accrue to processing facilities in those industries 
where production contracts are more widely utilized and where EPA 
believes the proposed co-permitting requirements may affect processors. 
EPA's CAFO level analysis examines the potential share of (pre-tax) 
costs that may be passed on from the CAFO, based on market information 
for each sector. Assuming that a share of the costs that accrue to the 
CAFO are eventually borne by processors, EPA is proposing that this 
amount approximates the magnitude of the costs that may be incurred by 
processing firms in those industries that may be affected by the 
proposed co-permitting requirements. EPA solicits comment on this 
approach.
    To assess the impact of the regulations on processors, EPA compares 
the passed through compliance costs to both aggregate processor costs 
of production and to revenues (a sales test). These analyses use 
estimated compliance costs, cost passthrough estimates, and aggregate 
revenues and production costs by processing sector. National processor 
cost and revenue data are from the U.S. Department of Commerce's Census 
of Manufacturers data series. For some sectors, EPA evaluates the 
impact of the proposed regulations on processors under two scenarios of 
cost passthrough from the animal production sectors (described in 
Section X.D.1), including full cost and partial cost passthrough. More 
detail on this approach is provided in Section 4 of the Economic 
Analysis.
    This suggested approach does not assume any addition to the total 
costs of the rule as a result of co-permitting. This approach also does 
not assume that there will be a cost savings to contract growers as a 
result of a contractual arrangement with a processing firm. This 
approach merely attempts to quantify the potential magnitude of costs 
that could accrue to processors that may be affected by the co-
permitting requirements. Due to lack of information and data, EPA has 
not analyzed the effect of relative market power between the contract 
grower and the integrator on the distribution of costs, nor the 
potential for additional costs to be imposed by the integrator's need 
to take steps to protect itself against liability and perhaps to 
indemnify itself against such liability through its production 
contracts. EPA has also not specifically analyzed the environmental 
effects of co-permitting. EPA has conducted an extensive review of the 
agricultural literature on market power in each of the livestock and 
poultry sectors and concluded that there is little evidence to suggest 
that increased production costs would be prevented from being passed on 
through the market levels. This information is provided in the 
rulemaking record. However, as discussed in Section VII.C.5, EPA 
recognizes that some industry representatives do not support these 
assumptions of cost passthrough from contract producers to integrators 
and requests comments on its cost passthrough assumptions, both in 
general and as they relate to the analysis of processor level impacts 
under the proposed co-permitting requirements.
    EPA's processor analysis does not explicitly account for the few 
large corporate operations that are vertically integrated, to the 
extent that the corporation owns and operates all aspects of the 
operation, from animal production to final consumer product. These 
operations are covered by EPA's CAFO analysis to the extent that they 
are captured by USDA's farm survey and are included among EPA's model 
CAFOs. While the ARMS data may include information on CAFOs that are 
owned by corporate operations, these data cannot be broken out to 
create a model specifically designed to represent these operations. 
Since EPA's analysis uses farm financial data and not corporate data, 
this analysis does not reflect the ability of corporations to absorb 
compliance costs that may be incurred at CAFOs that are owned by that 
entity. EPA expects that its analysis overestimates the impact to 
corporate entities since revenues of corporate entities are, in most 
cases, no less than and are likely to exceed those at a privately-owned 
and operated CAFOs.
3. Market Analysis
    EPA's market analysis evaluates the effects of the proposed 
regulations on national markets. This analysis uses a linear partial 
equilibrium model adapted from the COSTBEN model developed by USDA's 
Economic Research Service. The modified EPA model provides a means to 
conduct a long-run static analysis to measure the market effects of the 
proposed regulations in terms of predicted changes in farm and retail 
prices and product quantities. Market data used as inputs to this model 
are from a wide range of USDA data and land grant university research. 
EPA consulted researchers from USDA and the land grant universities in 
the development of this modeling framework. The details of this model 
are described in Appendix B of the Economic Analysis.
    Once price and quantity changes are predicted by the model, EPA 
uses national multipliers that relate changes in sales to changes in 
total direct and indirect employment and also to national economic 
output. These estimated relationships are based on the Regional Input-
Output Modeling System (RIMS II) from the U.S. Department of Commerce. 
This approach is described in Section 4 of the Economic Analysis.

E. Estimated Annual Costs of the Proposed Regulatory Options/Scenarios

    As discussed in Section VII and VIII, EPA considered various 
technology options and also different scope scenarios as part of the 
development of today's proposed regulations. A summary overview of the 
ELG options and NPDES scenarios is provided in Table 10-2. More detail 
is available in Sections VII and VIII of today's preamble.

[[Page 3085]]



 Table 10-2.--Summary Description of Options/Scenarios Considered by EPA
------------------------------------------------------------------------
 
------------------------------------------------------------------------
                        Technology Options (ELG)
------------------------------------------------------------------------
Option 1..........................  N-based land application controls
                                     and inspection and recordkeeping
                                     requirements for the production
                                     area (described in Section
                                     VIII.C.3).
Option 2..........................  Same as Option 1, but restricts the
                                     rate of manure application to a P-
                                     based rate where necessary
                                     (depending on specific soil
                                     conditions at the CAFO).
Option 3 BAT (Beef/Heifers/Dairy).  Adds to Option 2 by requiring all
                                     operations to determine whether the
                                     groundwater beneath the production
                                     area has a direct hydrologic
                                     connection to surface water; if so,
                                     requires groundwater monitoring and
                                     controls.
Option 4..........................  Adds to Option 3 by requiring
                                     sampling of surface waters adjacent
                                     to production area and/or land
                                     under control of the CAFO to which
                                     manure is applied.
Option 5 BAT (Swine/Poultry/Veal).  Adds to Option 2 by establishing a
                                     zero discharge requirement from the
                                     production area that does not allow
                                     for an overflow under any
                                     circumstances.
Option 6..........................  Adds to Option 2 by requiring that
                                     large hog and dairy operations
                                     install and implement anaerobic
                                     digestion and gas combustion to
                                     treat their manure.
Option 7..........................  Adds to Option 2 by prohibiting
                                     manure application to frozen, snow
                                     covered or saturated ground.
------------------------------------------------------------------------
                    Regulatory Scope Options (NPDES)
------------------------------------------------------------------------
Scenario 1........................  Retains existing 3-tier framework
                                     and establishes additional
                                     requirements (described in Section
                                     VII.C.2).
Scenario 2........................  Same as Scenario 1; operations with
                                     300-1,000 AU would be subject to
                                     the regulations based on certain
                                     ``risk-based'' conditions
                                     (described in VII.C.3.b).
Scenario 3 ``Three-Tier''.........  Same as Scenario 2, but allows
                                     operations with 300-1,000 AU to
                                     either apply for a NPDES permit or
                                     to certify to the permit authority
                                     that they do not meet any of the
                                     conditions and thus are not
                                     required to obtain a permit.
Scenario 4a ``Two-Tier'' (500 AU).  Establishes 2-tier framework and
                                     applies ELG standard to all
                                     operations with more than 500 AU.
Scenario 4b.......................  Establishes 2-tier framework and
                                     applies ELG standard to all
                                     operations with more than 300 AU.
Scenario 5 ``Two-Tier'' (750 AU)..  Establishes 2-tier framework and
                                     applies ELG standard to all
                                     operations with more than 750 AU.
Scenario 6........................  Retains existing 3-tier framework
                                     and establishes a simplified
                                     certification process (described in
                                     Section VII.C.2).
------------------------------------------------------------------------

    The ``BAT Option'' refers to EPA's proposal to require nitrogen-
based and, where necessary, phosphorus-based land application controls 
of all livestock and poultry CAFOs (Option 2), with the additional 
requirement that all cattle and dairy operations must conduct 
groundwater monitoring and implement controls, if the groundwater 
beneath the production area has a direct hydrologic connection to 
surface water (Option 3 BAT), and with the additional requirement that 
all hog, veal, and poultry CAFOs must also achieve zero discharge from 
the animal production area with no exception for storm events (Option 5 
BAT). For reasons outlined in Section VIII, EPA is not proposing that 
beef and dairy CAFOs meet the additional requirements under Option 5 or 
that hog and poultry CAFOs meet the additional requirements under 
Option 3. Section VIII discusses EPA's basis for the selection of these 
technology bases for the affected subcateogries.
    EPA is jointly proposing two NPDES Scenarios that differ in terms 
of the manner in which operations are defined as a CAFO. Scenario 4a is 
to the two-tier alternative that defines as CAFOs all animal feeding 
operations with more than 500 AU (alternatively, Scenario 5 is the two-
tier alternative that defines all animal feeding operations with more 
than 750 AU as CAFOs). Scenario 3 is three-tier structure that defines 
as CAFOs all animal feeding operations with more than 1,000 AU and any 
operation with more than 300 AU, if they meet certain ``risk-based'' 
conditions, as defined in Section VII. Under Scenario 3, EPA would 
require all confinement operations with between 300 and 1,000 AU to 
either apply for a NPDES permit or to certify to the permit authority 
that they do not meet certain conditions and thus are not required to 
obtain a permit.
    For the purpose of this discussion, the ``two-tier structure'' 
refers to the combination of BAT Option 3 (beef and dairy 
subcategories) and BAT Option 5 (swine and poultry subcategories), and 
NPDES Scenario 4a that covers all operations with more than 500 AU. 
Where indicated, the two-tier structure may refer to the alternative 
threshold at 750 AU. The ``three-tier structure'' refers to the 
combination of ELG Option 3 (beef and dairy subcategories) and Option 5 
(swine and poultry subcategories), and NPDES Scenario 3 that covers 
operations down to 300 AU based on certain conditions. More detail of 
the technology options considered by EPA is provided in Section VIII. 
Section VII of this preamble provides additional information on the 
alternative scope scenarios considered by EPA. EPA did not evaluate 
costs and economic impacts under the alternative three-tier structure 
that combines the BAT Option with Scenario 6, as described in Table 10-
2.
    Under the two-tier structure, EPA estimate that 25,540 CAFOs with 
more than 500 AU may be defined as CAFOs and subject to the proposed 
regulations. EPA estimates that 19,100 CAFOs may be defined as CAFOs 
under the alternative two-tier threshold of 750 AU. Under the three-
tier structure, an estimated 31,930 CAFOs would be defined as CAFOs 
(Table 6-2) and an additional 7,400 operations in the 300 to 1,000 AU 
size range would need to certify that they do not need to apply for a 
permit. This total estimate counts operations with more than a single 
animal type only once. EPA's analysis computes total compliance costs 
based on the total number of CAFOs in each sector, including mixed 
operations that have more than 300 or 500 AU of at least one animal 
type. This approach avoids understating costs at operations with more 
than one animal type that may incur costs to comply with the proposed 
requirements for each type of animal that is raised on-site that meets 
the size threshold for a CAFO or is designated as a CAFO by the 
permitting authority. Therefore, EPA's compliance costs estimates 
likely represent the upper bound since costs at facilities with more 
than a single animal type may, in some cases, be lower due to shared 
production technologies and practices across all animal types that are 
produced on-site.

[[Page 3086]]

1. Costs to CAFOs Under the Proposed Regulations
    Tables 10-3 and 10-4 summarize the total annualized compliance 
costs to CAFOs attributed to the proposed two-tier structure and three-
tier structure. The table shows these costs broken out by sector and by 
broad facility size group. EPA calculated all estimated costs using the 
data, methodology and assumptions described in Sections X.B and X.C.
    Under the two-tier structure, EPA estimates that the incremental 
annualized compliance cost to CAFO operators would be approximately 
$831 million annually (Table 10-3). Table 10-5 shows estimated costs 
for the two-tier structure at the 750 AU threshold, estimated by EPA to 
total $721 million annually. Most of this cost (roughly 70 percent) is 
incurred by CAFOs with more than 1,000 AU. Overall, about one-third of 
all estimated compliance costs are incurred within the hog sectors.
    Under the three-tier structure, EPA estimates that the total cost 
to CAFO operators would be $925 million annually (Table 10-4). These 
costs are expressed in terms of pre-tax 1999 dollars. (Post-tax costs 
are estimated at $573 million and $635 million annually, respectively, 
and include tax savings to CAFOs. EPA uses estimated post-tax costs to 
evaluate impacts to regulated facilities, discussed in Section X.F.). 
Estimated total annualized costs for the three-tier structure include 
the cost to permitted CAFOs as well as the estimated cost to operations 
to certify to the permit authority that they do not meet any of the 
conditions and are thus are not required to obtain a permit. EPA 
estimates certification costs at about $80 million annually, which 
covers phosphorus-based PNP costs, facility upgrades, and letters of 
certification from manure recipient. More information on these costs 
and how they are calculated is provided in Section 5 of the Economic 
Analysis.
    Estimated total annualized costs shown in Table 10-3 and 10-4 
include costs to animal confinement operations that may be designated 
as CAFOs. Total annualized costs to designated facilities is estimated 
at less than one million dollars annually (Tables 10-3 and 10-4). As 
discussed in Section VI, EPA assumes that designation may bring an 
additional 50 operations each year under the two-tier structure; under 
the three-tier structure, EPA expects that an additional 10 operations 
may be designated each year. In this analysis, estimated costs to 
designated facilities are expressed on an average annual basis over a 
projected 10-year period. For the purpose of this analysis, EPA assumes 
that operations that may be designated as CAFOs and subject to the 
proposed regulations will consist of beef, dairy, farrow-finish hog, 
broiler and egg laying operations under the two-tier structure. Under 
the three-tier structure, EPA estimates that fewer operations would be 
designated as CAFOs, with 10 dairy and hog operations being designated 
each year, or 100 operations over a 10-year period. Additional 
information is provided in the Economic Analysis.

             Table 10-3.--Annual Pre-tax Cost of Two-Tier Structure (BAT Option/Scenario 4a), $1999
----------------------------------------------------------------------------------------------------------------
                                                       Number of                           500-1000
                       Sector                         operations     Total     >1000 AU       AU      500 AU \1\
----------------------------------------------------------------------------------------------------------------
                                                      (number) \
                                                          2\                ($1999, millions, pre-tax)
----------------------------------------------------------------------------------------------------------------
                                                 Regulated CAFOs
----------------------------------------------------------------------------------------------------------------
Beef................................................       3,080       216.4       191.5        24.7         0.1
Veal................................................          90         0.3        0.03         0.3          NA
Heifer..............................................         800        11.6         3.7         7.9          NA
Dairy...............................................       3,760       177.6       108.6        65.4         3.6
Hog.................................................       8,550       294.0       225.5        67.0         1.5
Broiler.............................................       9,780        97.1        55.4        41.6         0.1
Layer...............................................       1,640        14.2         9.9         4.3          NA
Turkey..............................................       1,280        19.6        10.4         9.2          NA
                                                     -----------------------------------------------------------
    Subtotal........................................      25,540       830.7       605.0       220.2         5.4
----------------------------------------------------------------------------------------------------------------
                                            Other Farming Operations
----------------------------------------------------------------------------------------------------------------
Offsite Recipients..................................      17,923         9.6          NA          NA          NA
    Total...........................................          NA       840.3          NA          NA         NA
----------------------------------------------------------------------------------------------------------------
Source: USEPA. See Economic Analysis. Table 6-2 provides information on affected operations.
Numbers may not add due to rounding. NA = Not Applicable. Option/Scenario definitions provided in Table 10-2.
\1\ Cost estimates shown are for designated CAFOs (see Section VI).
\2\ ``Total'' adjusts for operations with more than a single animal type. The number of CAFOs shown includes
  expected defined CAFOs only and excludes designated facilities.


             Table 10-4.--Annual Pre-tax Cost of Three-Tier Structure (BAT Option/Scenario 3), $1999
----------------------------------------------------------------------------------------------------------------
                                                       Number of                           300-1000
                       Sector                         operations     Total     >1000 AU       AU      300 AU \1\
----------------------------------------------------------------------------------------------------------------
                                                      (number) \
                                                          2\                 ($1999, million, pre-tax)
----------------------------------------------------------------------------------------------------------------
                                                 Regulated CAFOs
----------------------------------------------------------------------------------------------------------------
Beef................................................       3,210       227.7       191.5        36.2         0.0
Veal................................................         140         0.8        0.03         0.8         0.0
Heifer..............................................         980        14.4         3.7        10.7         0.0
Dairy...............................................       6,480       224.6       108.6       115.3         0.7
Hog.................................................       8,350       306.1       225.5        80.4         0.2

[[Page 3087]]

 
Broiler.............................................      13,740       116.6        55.4        61.2         0.0
Layer...............................................       2,010        15.3         9.9         5.4         0.0
Turkey..............................................       2,060        24.9        10.4        14.5         0.0
                                                     -----------------------------------------------------------
    Subtotal........................................      31,930       930.4       605.0       324.5         0.8
----------------------------------------------------------------------------------------------------------------
                                            Other Farming Operations
----------------------------------------------------------------------------------------------------------------
Offsite Recipients..................................      21,155        11.3          NA          NA          NA
                                                     -----------------------------------------------------------
    Total...........................................          NA       936.7          NA          NA         NA
----------------------------------------------------------------------------------------------------------------
Source: USEPA. See Economic Analysis. Table 6-2 provides information on affected operations.
Numbers may not add due to rounding. NA = Not Applicable. Option/Scenario definitions provided in Table 10-2.
\1\ Cost estimates shown are for designated CAFOs (see Section VI).
\2\ ``Total'' adjusts for operations with more than a single animal type. The number of CAFOs shown includes
  expected defined CAFOs only and excludes designated facilities.

2. Costs to CAFOs of Alternative Regulatory Options and Scenarios
    Alternative regulatory options considered by EPA during the 
development of today's proposed regulations include various technology 
options and also different regulatory scope scenarios. Sections VII and 
VIII present the Agency's rationale for each regulatory decision.
    Table 10-5 summarizes the total annualized (pre-tax) costs of 
alternative technology options for each NPDES scenario and ELG 
technology basis considered by EPA. As shown in the table, the total 
estimated costs across these options range from $355 million (Option 1/
Scenario 1) to $1.7 billion annually (Option 5, applicable to all the 
animal sectors, and Scenario 4b). By scenario, this reflects the fact 
that fewer CAFOs would be affected under Scenario 1 (a total of about 
16,400 operations) as compared to Scenario 4b (about 39,300 operations 
affected). As noted in Section X.E, EPA's estimate of the number of 
CAFOs and corresponding compliance costs does not adjust for operations 
with mixed animal types and may be overstated. By technology option, 
with the exception of Options 1 and 4, costs are evaluated incremental 
to Option 2 (see Table 10-2). Compared to Option 2, Option 5 costs are 
greatest. Additional breakout of these costs by sector are provided in 
the Economic Analysis.

           Table 10-5.--Annualized Pre-tax Costs for the Alternative NPDES Scenarios ($1999, million)
----------------------------------------------------------------------------------------------------------------
                                    Scenario 4a     Scenaro 2/3                     Scenario 5      Scenario 4b
         Option/Scenario           ``Two-Tier''   ``Three-Tier''    Scenario 1        >750 AU         >300 AU
----------------------------------------------------------------------------------------------------------------
Number of CAFOs \1\.............          25,540          28,860          16,420          25,770          39,320
Option 1........................          $432.1          $462.8          $354.6          $384.3          $493.6
Option 2........................          $548.8          $582.8          $444.4          $484.0          $633.3
Option 3........................          $746.7          $854.1          $587.0          $649.5          $883.6
Option 4........................          $903.9        $1,088.2          $707.0          $768.0        $1,121.2
Option 5........................        $1,515.9        $1,632.9        $1,340.9        $1,390.4        $1,671.3
Option 6........................          $621.6          $736.9          $501.5          $541.3          $706.6
Option 7........................          $671.3          $781.9          $542.4          $585.1          $756.6
BAT Option......................          $830.7          $925.1          $680.3          $720.8         $979.6
----------------------------------------------------------------------------------------------------------------
Source: USEPA. See Economic Analysis. Cost estimates shown include costs to designated operations.
Numbers may not add due to rounding. NA = Not Applicable. Option/Scenario definitions provided in Table 10-2.
\1\ ``Total'' adjusts for operations with more than a single animal type. The number of CAFOs shown includes
  expected defined CAFOs only and excludes designated facilities.

3. Costs to Offsite Recipients of CAFO Manure Under the Proposed 
Regulations
    As described in Section VII, EPA is proposing that offsite 
recipients of CAFO manure certify to the CAFO that manure will be land 
applied in accordance with proper agriculture practices. As shown in 
Table 10-3, EPA estimates that 18,000 non-CAFO farming operations will 
receive manure and therefore be required to certify proper manure 
utilization under the proposed two-tier structure. Under the 
alternative three-tier structure, up to 3,000 additional farming 
operations may be affected. EPA's analysis assumes that affected CAFO 
manure recipients are mostly field crop producers who use CAFO manure 
as a fertilizer substitute. EPA's analysis does not reflect manure 
hauled offsite for alternative uses such as incineration or 
pelletizing. EPA estimates the annualized cost of this requirement to 
offsite recipients to be $9.6 to $11.3 million across the co-proposed 
alternatives (Tables 10-3 and 10-4). This analysis is provided in the 
Development Document.
    Estimated costs to recipients of CAFO manure include incremental 
recordkeeping and soil tests every 3 years. Conservation Technology 
Information Center (CTIC) Core 4 survey data suggest an average of 46 
percent crop farmers regularly sample their soil. EPA believes crop 
farmers already maintain records pertaining to crop yields, nutrient 
requirements, and fertilizer applications. EPA also assumed that crop 
farmers have a nutrient management plan, though the plan is not 
necessarily a PNP (Permit Nutrient Plan) or CNMP (Comprehensive 
Nutrient Management Plan). EPA has evaluated alternative

[[Page 3088]]

approaches to ensuring that manure is handled properly, but is not 
proposing to establish specific requirements for offsite recipients. 
The costs to offsite recipients do not include the costs of spreading 
manure at the offsite location or any additional payments made to 
brokers or manure recipients in counties with excess manure. These 
costs are likely to be offset by the fertilizer savings and organic 
value associated with manure. EPA's analysis accounts for the costs 
incurred by the CAFO for offsite transfer of excess manure in the 
estimated industry compliance costs, described in Section X.E.1. These 
costs include the cost of soil and manure sampling at the CAFO site, 
training for manure applicators, application equipment calibration, and 
the hauling cost of excess manure generated by the CAFO.
    Under the proposed regulations, CAFOs would be required to apply 
manure on a phosphorus basis where necessary, based on soil conditions, 
and on a nitrogen basis elsewhere. EPA anticipates that offsite 
recipients of CAFO manure will only accept manure when soil conditions 
allow for application on a nitrogen basis. EPA believes this is a 
reasonable assumption because crop farms are less likely to have a 
phosphorus buildup associated with long term application of manure. 
EPA's analysis assumes a nitrogen-based application rate for offsite 
locations that is identical to the rate used by CAFOs in the same 
geographic region. A summary of the data and methodology used by EPA to 
calculate the number of affected offsite recipients and to estimate 
costs is presented in Section X.C.2(b). EPA solicits comment on the 
costs and assumptions pertaining to offsite recipients.

F. Estimated Economic Impacts of the Proposed Regulatory Options/
Scenarios

    This section provides an overview of EPA's estimated economic 
impacts across four industry segments that are included for this 
analysis: CAFOs (both existing and new sources), non-CAFO recipients of 
manure, processors, and consumer markets. More detailed information on 
each of these analyses is available in the Economic Analysis.
1. CAFO Level Analysis
    This section presents EPA's analysis of financial impacts to both 
existing and new CAFOs that will be affected by the proposed 
regulations, as well as impacts to offsite recipients of CAFO manure 
who will also be required to comply with the proposed PNP requirements.
    a. Economic Impacts to Existing CAFOs under the Proposed 
Regulations. As discussed in Section X.C.1, EPA's CAFO level analysis 
examines compliance cost impacts for a representative ``model CAFO.'' 
EPA evaluates the economic achievability of the proposed regulatory 
options at existing animal feeding operations based on changes in 
representative financial conditions across three criteria. These 
criteria are: a comparison of incremental costs to total revenue (sales 
test), projected post-compliance cash flow over a 10-year period, and 
an assessment of an operation's debt-to-asset ratio under a post-
compliance scenario. To evaluate economic impacts to CAFOs in some 
sectors, impacts are evaluated two ways'assuming that a portion of the 
costs may be passed on from the CAFO to the consumer and assuming that 
no costs passthrough so that all costs are absorbed by the CAFO.
    EPA used the financial criteria to divide the impacts of the 
proposed regulations into three impact categories. The first category 
is the affordable category, which means that the regulations have 
little or no financial impact on CAFO operations. The second category 
is the moderate impact category, which means that the regulations will 
have some financial impact on operations at the affected CAFOs, but EPA 
does not consider these operations to be vulnerable to closure as a 
result of compliance. The third category is the financial stress 
category, which means that EPA considers these operations to be 
vulnerable to closure post-compliance. More information on these 
criteria is provided in Section 4 of the Economic Analysis.
    The basis for EPA's economic achievability criteria for this 
rulemaking is as follows. USDA's financial classification of U.S. farms 
identifies an operation with negative income and a debt-asset ratio in 
excess of 40 percent as ``vulnerable.'' An operation with positive 
income and a debt-asset ratio of less than 40 percent is considered 
``favorable.'' EPA adopted this classification scheme as part of its 
economic achievability criteria, using net cash flow to represent 
income. This threshold and cash flow criterion is established by USDA 
and other land grant universities, as further described in Section 4 of 
the Economic Analysis. The threshold values used for the cost-to-sales 
test (3 percent, 5 percent and 10 percent) are those determined by EPA 
to be appropriate for this rulemaking and are consistent with threshold 
levels used by EPA to measure impacts of regulations for other point 
source dischargers (as also documented in the Economic Analysis).
    For this analysis, EPA's determination of economic achievability 
used all three criteria. EPA considered the proposed regulations to be 
economically achievable for a representative model CAFO if the average 
operation has a post-compliance sales test estimate within an 
acceptable range, positive post-compliance cash flow over a 10-year 
period, and a post-compliance debt-to-asset ratio not exceeding 40 
percent. If the sales test shows that compliance costs are less than 3 
percent of sales, or if post-compliance cash flow is positive and the 
post-compliance debt-to-asset ratio does not exceed 40 percent and 
compliance costs are less than 5 percent of sales, EPA considers the 
options to be ``Affordable'' for the representative CAFO group. A sales 
test of greater than 5 percent but less than 10 percent of sales with 
positive cash flow and a debt-to-asset ratio of less than 40 percent is 
considered indicative of some impact at the CAFO level, but at levels 
not as severe as those indicative of financial distress or 
vulnerability to closure. These impacts are labeled ``Moderate'' for 
the representative CAFO group. EPA considers both the ``Affordable'' 
and ``Moderate'' impact categories to be economically achievable by the 
CAFO.
    If (with a sales test of greater than 3 percent) post-compliance 
cash flow is negative or the post-compliance debt-to-asset ratio 
exceeds 40 percent, or if the sales test shows costs equal to or 
exceeding 10 percent of sales, the proposed regulations are estimated 
to be associated with potential financial stress for the entire 
representative CAFO group. In such cases, each of the operations 
represented by that group may be vulnerable to closure. These impacts 
are labeled as ``Stress.'' EPA considers the ``Stress'' impact category 
to indicate that the proposed requirements may not be economically 
achievable by the CAFO, subject to other considerations.
    Tables 10-6 and 10-7 present the estimated CAFO level impacts in 
terms of the number of operations that fall within the affordable, 
moderate, or stress impact categories for each of the co-proposed 
alternatives by sector and facility size group. For some sectors, 
impacts are shown for both the zero and the partial cost passthrough 
assumptions (discussed more fully below). Partial cost passthrough 
values vary by sector, as described in Section X.D.1.
    EPA's costs model analyzes impacts under two sets of conditions for 
ELG Option 3. Option 3A assumes that there is a hydrologic connection 
from groundwater to surface waters at the

[[Page 3089]]

CAFO; Option 3 assumes average costs conditions across all operations--
both operations with and without a hydrologic link. Based on available 
data and information, EPA's analysis assumes 24 percent of the affected 
operations have a hydrologic connection to surface waters. More detail 
on this assumption may be found in the rulemaking record. EPA solicits 
comment on this assumption as part of today's proposed rulemaking.
    Based on results shown in Tables 10-6 and 10-7, EPA proposes that 
the regulatory alternatives are economically achievable for all 
representative model CAFOs in the veal, turkey and egg laying sectors. 
The proposed requirements under the two-tier structure are also 
expected to be economically achievable by all affected heifer 
operations. Furthermore, although operations across most sectors may 
experience moderate impacts, EPA does not expect moderate financial 
impacts to result in closure and considers this level of impact to be 
economically achievable.
    In the beef cattle, heifer, dairy, hog and broiler sectors, 
however, EPA's analysis indicates that the proposed regulations will 
cause some operations to experience financial stress, assuming no cost 
passthrough. These operations may be vulnerable to closure by complying 
with the proposed regulations. Across all sectors, an estimated 1,890 
operations would experience financial stress under the two-tier 
structure and an estimated 2,410 operations would experience stress 
under the three-tier structure. For both tier structures, EPA estimates 
that the percentage of operations that would experience impacts under 
the stress category represent 7 percent of all affected CAFOs or 8 
percent of all affected operations in the sectors where impacts are 
estimated to cause financial stress (cattle, dairy, hog, and broiler 
sectors).
    Tables 10-6 shows results for the two-tier structure at the 500 AU 
threshold. By sector, EPA estimates that 1,420 hog operations (17 
percent of affected hog CAFOs), 320 dairies (9 percent of operations), 
150 broiler operations (2 percent), and 10 beef operations (less than 1 
percent) would experience financial stress. The broiler and hog 
operations with these impacts have more than 1,000 AU on-site (i.e., no 
operations with between 500 and 1,000 AU fall in the stress category). 
The dairy and cattle operations with stress impacts are those that have 
a ground water link to surface water. Although not presented here, the 
results of the two-tier structure at the 750 AU threshold are very 
similar in terms of number of operations affected. The results of this 
analysis are presented in the Economic Analysis.
    Table 10-7 presents results for the three-tier structure, and show 
that 1,420 hog operations (17 percent of affected hog CAFOs under that 
alternative), 610 dairies (9 percent of operations), 330 broiler 
operations (2 percent), and 50 beef and heifer operations (1 percent) 
will be adversely impacted. Hog operations with stress impacts all have 
more than 1,000 AU. Affected broiler facilities include operations with 
more than 1,000 AU, as well as operations with less than 1,000 AU. 
Dairy and cattle operations in the stress category are operations that 
have a hydrologic link from ground water to surface water. Based on 
these results, EPA is proposing that the proposed regulations are 
economically achievable.
    In the hog and broiler sectors, EPA also evaluated financial 
impacts with an assumption of cost passthrough. For the purpose of this 
analysis, EPA assumes that the hog sector could passthrough 46 percent 
of compliance costs and the broiler sector could passthrough 35 percent 
of compliance costs. EPA derived these estimates from price 
elasticities of supply and demand for each sector reported in the 
academic literature. More detailed information is provided in Section 4 
and Appendix C of the Economic Analysis. Assuming these levels of cost 
passthrough in these sectors, the magnitude of the estimated impacts 
decreases to the affordable or moderate impact category. Even in light 
of the uncertainty of cost passthrough (both in terms of whether the 
operations are able to pass cost increases up the marketing chain and 
the amount of any cost passthrough), EPA proposes that the proposed 
regulations will be economically achievable to all hog and broiler 
operations.
    Although EPA's analysis does not consider cost passthrough among 
cattle or dairy operations, EPA does expect that long-run market and 
structural adjustment by producers in this sector will diminish the 
estimated impacts. However, EPA did determine that an evaluation of 
economic impacts to dairy producers would require that EPA assume cost 
passthrough levels in excess of 50 percent before operations in the 
financial stress category would, instead, fall into the affordable or 
moderate impact category. EPA did not conduct a similar evaluation of 
estimated impacts to beef cattle and heifer operations.
    EPA believes that the assumptions of cost passthrough are 
appropriate for the pork and poultry sectors. As discussed in Section 
VI, EPA expects that meat packing plants and slaughtering facilities in 
the pork and poultry industries may be affected by the proposed co-
permitting requirements in today's proposed regulations. Given the 
efficiency of integration and closer producer-processor linkages, the 
processor has an incentive to ensure a continued production by contract 
growers. EPA expects that these operations will be able to pass on a 
portion of all incurred compliance costs and will, thus, more easily 
absorb the costs associated with today's proposed rule. This 
passthrough may be achieved either through higher contract prices or 
through processor-subsidized centralized off-site or on-site waste 
treatment and/or development of marketable uses for manure.
    EPA recognizes, however, that some industry representatives do not 
support assumptions of cost passthrough from contract producers to 
integrators, as also noted by many small entity representatives during 
the SBREFA outreach process as well as by members of the SBAR Panel. 
These commenters have noted that integrators have a bargaining 
advantage in negotiating contracts, which may ultimately allow them to 
force producers to incur all compliance costs as well as allow them to 
pass any additional costs down to growers that may be incurred by the 
processing firm. To examine this issue, EPA conducted an extensive 
review of the agricultural literature on market power in each of the 
livestock and poultry sectors and concluded that there is little 
evidence to suggest that increased production costs would be prevented 
from being passed on through the market levels. This information is 
provided in the rulemaking record. Given the uncertainty of whether 
costs will be passed on, EPA's results are presented assuming some 
degree of cost passthrough and also no cost passthrough (i.e., the 
highest level of impacts projected). EPA requests comment on its cost 
passthrough assumptions. Although EPA does consider the results of both 
of these analyses in making its determination of economic 
achievability, EPA's overall conclusions do not rely on assumptions of 
cost passthrough.
    Finally, EPA believes its estimated impacts may be overstated since 
the analysis does not quantify various cost offsets that are available 
to most operations. One source of potential cost offset is cost share 
and technical assistance available to operators for on-site 
improvements that are available from various state and federal 
programs, such as the Environmental Quality

[[Page 3090]]

Incentives Program (EQIP) administered by USDA. Another source of cost 
offset is revenue from manure sales, particularly of relatively higher 
value dry poultry litter. EPA's analysis does not account for these 
possible sources of cost offsets because the amount of cost offset is 
likely variable among facilities, depending on certain site-specific 
conditions. If EPA were to quantify the potential cost offsets as part 
of its analysis, this would further support EPA's proposed 
determination that the proposed requirements are economically 
achievable to affected operations. This analysis and additional 
supporting documentation is provided in Section 6 of the Economic 
Analysis.
    Appendix D of the Economic Analysis provides results of sensitivity 
analyses, conducted by EPA, to examine the impact under differing model 
assumptions. This analysis examines the change in the modeling results 
from varying the baseline assumptions on gross and net cash income, 
debt-to-asset ratios as well as other variability factors for model 
CAFOs. These sensitivity analyses conclude that the results presented 
here are stable across a range of possible modeling assumptions. EPA 
also conducted sensitivity analysis of the compliance costs developed 
for the purpose of estimating CAFO level impacts, as documented in the 
Development Document.

                                 Table 10-6.--Impacted Operations Under the Two-Tier Structure (BAT Option/Scenario 4a)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                   (Number of affected operations)
                                                                           -----------------------------------------------------------------------------
                          Sector                           Number of CAFOs          Zero cost passthrough                 Partial cost passthrough
                                                                           -----------------------------------------------------------------------------
                                                                             Affordable    Moderate      Stress     Affordable    Moderate      Stress
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fed Cattle...............................................            3,080        2,830          240           10           ND           ND           ND
Veal.....................................................               90           90            0            0           ND           ND           ND
Heifer...................................................              800          680          120            0           ND           ND           ND
Dairy....................................................            3,760        3,240          200          320           ND           ND           ND
Hogs: GF \1\.............................................            2,690        1,710          180          810        2,690            0            0
Hogs: FF \1\.............................................            5,860        5,210           30          610        5,860            0            0
Broilers \4\.............................................            9,780        1,960        7,670          150        8,610        1,170            0
Layers--Wet \2\..........................................              360          360            0            0           ND           ND           ND
Layers--Dry \2\..........................................            1,280        1,280            0            0           ND           ND           ND
Turkeys..................................................            1,280        1,230           50            0           ND           ND           ND
                                                          ----------------------------------------------------------------------------------------------
    Total \3\............................................           28,970      18, 580        8,490        1,890       26,840        1,800         330
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: USEPA. See Economic Analysis. Impact estimates shown include impacts to designated operations.
Numbers may not add due to rounding. ND=Not Determined. Option/Scenario definitions provided in Table 10-2.
Category definitions (``Affordable,'' ``Moderate'' and ``Stress'') are provided in Section X.F.1.
\1\ ``Hogs: FF'' are farrow-finish (includes breeder and nursery pigs); ``Hogs: GF'' are grower-finish only.
\2\ ``Layers: wet'' are operations with liquid manure systems; ``Layers: dry'' are operations with dry systems.
\3\ ``Total'' does not adjust for operations with mixed animal types, for comparison purposes, to avoid understating costs at operations with more than
  one animal type that may incur costs to comply with the proposed requirements for each type of animal that is raised on-site.


                                 Table 10-7.--Impacted Operations Under the Three-Tier Structure (BAT Option/Scenario 3)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                   (Number of affected operations)
                                                                           -----------------------------------------------------------------------------
                          Sector                               Number of            Zero cost passthrough                 Partial cost passthrough
                                                                 CAFOs     -----------------------------------------------------------------------------
                                                                             Affordable    Moderate      Stress     Affordable    Moderate      Stress
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fed Cattle................................................           3,210        2,540          650           20           ND           ND           ND
Veal......................................................             140          140            0            0           ND           ND           ND
Heifer....................................................             980          800          150           30           ND           ND           ND
Dairy.....................................................           6,480        5,300          560          610           ND           ND           ND
Hogs: GF \2\..............................................           2,650        1,660          190          810        2,650            0            0
Hogs: FF \1\..............................................           5,710        5,070           30          610        5,710            0            0
Broilers..................................................          13,740        1,850       11,560          330       12,320        1,440            0
Layers--Wet \2\...........................................             360          360            0            0           ND           ND           ND
Layers--Dry \2\...........................................           1,660        1,660            0            0           ND           ND           ND
Turkeys...................................................           2,060        1,950          110            0           ND           ND           ND
                                                           ---------------------------------------------------------------------------------------------
    Total \3\.............................................          37,000       21,300       13,250        2,410       33,410        2,930         660
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: USEPA. See Economic Analysis. Impact estimates shown include impacts to designated operations.
Numbers may not add due to rounding. ND=Not Determined. Option/Scenario definitions provided in Table 10-2.
Category definitions (``Affordable,'' ``Moderate'' and ``Stress'') are provided in Section X.F.1.
\1\ ``Hogs: FF'' are farrow-finish (includes breeder and nursery pigs); ``Hogs: GF'' are grower-finish only.
\2\ ``Layers: wet'' are operations with liquid manure systems; ``Layers: dry'' are operations with dry systems.
\3\ ``Total'' does not adjust for operations with mixed animal types, for comparison purposes, to avoid understating costs at operations with more than
  one animal type that may incur costs to comply with the proposed requirements for each type of animal that is raised on-site.

    b. Economic Impacts to Existing CAFOs under Alternative Regulatory 
Options and Scenarios. Table 10-8 presents estimated financial stress 
impacts to model CAFOs under alternative option and scenario 
combinations, assuming that no costs passthrough. The results shown are 
aggregated and combine impacts in the cattle sector (including all 
beef, veal and heifer operations), hog sector (including all phases of 
production), and poultry

[[Page 3091]]

sector (including all broiler, egg laying and turkey operations). 
Results are shown for Scenario 4a (two-tier), Scenario 3 (three-tier), 
and Scenario 4b. Results are shown for technology Options 1 through 5. 
Additional information is available in the Economic Analysis that 
supports today's rulemaking.
    As shown in Table 10-8, the number of potential closures range from 
610 operations (Option 1 in combination with all Scenarios) to more 
than 14,000 potential closures (Option 4/Scenario 4b). Among options, 
the number of possible closures are highest under the more stringent 
options, including Options 3A (i.e., requires groundwater controls at 
operations where there is a determined groundwater hydrologic 
connection to surface waters), Option 4 (groundwater controls and 
surface water sampling), and Option 5 (i.e., zero discharge from the 
animal production area with no exception for storm events). Differences 
across scenarios reflects differences in the number of affected 
operations; accordingly, the number of closures is greatest under 
Scenario 4b that would define as CAFOs all confinement operations with 
more than 300 AU.

                                      Table 10-8.--``Stress'' Impacts at CAFOs Under Alternative Options/Scenarios
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                    (Number of operations)
                                                          Number of ------------------------------------------------------------------------------------
                         Sector                             CAFOs                                         Option 3A
                                                                      Option 1    Option 2    Option 3       \1\      Option 4     Option 5   BAT option
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                         BAT Option/NPDES Scenario 4a (>500 AU)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cattle.................................................       3,960           0           0           0          10           0           30          10
Dairy..................................................       3,760           0           0           0         320           0            0         320
Hogs...................................................       8,550         610         300         230         310         570        1,420       1,420
Poultry................................................      12,700           0         150         260         100       6,660          150         150
                                                        ------------------------------------------------------------------------------------------------
  Total \2\............................................      28,970         610         450         490         730       7,230        1,590       1,890
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                         BAT Option/NPDES Scenario 4b (>300 AU)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cattle.................................................       5,330           0           0           0          90          30          180          90
Dairy..................................................       7,140           0           0           0         700           0            0         700
Hogs...................................................      14,370         610         300         230         330         570        1,420       1,420
Poultry................................................      18,300           0         320         470         380      11,030          320         320
                                                        ------------------------------------------------------------------------------------------------
  Total \2\............................................      45,140         610         620         700       1,500      11,630        1,910       2,530
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                BAT Option/NPDES Scenario 3 (>300 AU with certification)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cattle.................................................       4,330           0           0           0          50           0          100          50
Dairy..................................................       6,480           0           0           0         610           0            0         610
Hogs...................................................       8,360         610         300         230         320         570        1,420       1,420
Poultry................................................      17,830           0         330         470         370      10,740          330         330
  Total \2\............................................      37,000         610         630         700       1,350      11,310        1,850      2,410
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: USEPA. See Economic Analysis. Impact estimates shown include impacts to designated operations.
Numbers may not add due to rounding. ND = Not Determined. Option/Scenario definitions provided in Table 10-2.
\1\ Option 3A impacts reflect operations where there is a determined groundwater hydrologic connection to surface waters (assumed at 24 percent of the
  affected operations).
\2\ ``Total'' does not adjust for operations with mixed animal types, for comparison purposes, to avoid understating costs at operations with more than
  one animal type that may incur costs to comply with the proposed requirements for each type of animal that is raised on-site. The number of CAFOs
  shown includes expected defined CAFOs only and excludes designated facilities.

    c. Economic Analysis of New CAFOs from NSPS under the Proposed 
Regulations. For new sources, EPA is proposing that operations meet 
performance standards, as specified by the BAT requirements (Option 3 
NSPS, beef and dairy subcategories, and Option 5 NSPS, swine and 
poultry subcategories), with the additional requirement that all new 
hog and poultry operations also implement groundwater controls where 
there is a hydrologic link to surface water (Option 3 NSPS, swine and 
poultry subcategories). Additional information on new source 
requirements is provided in Section VIII of this document.
    In general, EPA believes that new CAFOs will be able to comply at 
costs that are similar to, or less than, the costs for existing 
sources, because new sources can apply control technologies more 
efficiently than sources that need to retrofit for those technologies. 
New sources will be able to avoid these costs that will be incurred by 
existing sources. Furthermore, EPA believes that new sources can avoid 
the costs associated with ground water protection through careful site 
selection. There is nothing about today's proposal that would give 
existing operators a cost advantage over new feedlot operators; 
therefore, new source standards are not expected to present a barrier 
to entry for new facilities.
    EPA's analysis of the NSPS costs indicate that requiring Option 3 
for new sources in the beef and dairy subcategories and both Option 3 
NSPS and Option 5 NSPS for the swine and poultry subcategories 
(``Option 5+3 NSPS'') would be affordable and would not create any 
barriers to entry into those sectors. The basis for this determination 
is as follows. Option 5+3 NSPS is considered equivalent to Option 5 for 
new sources in terms of cost. EPA is proposing that Option 3 NSPS for 
beef and dairy subcategories and Option 5 NSPS for swine and poultry 
subcategories is economically achievable for existing sources. Since 
the estimated costs for these options are the same as or less expensive 
than costs for these same options for existing sources, no barriers to 
entry are created.
    Under Option 5+3 NSPS, costs for new sources in the swine and 
poultry subcategories would be the same as or

[[Page 3092]]

less than those for equivalent existing sources (BAT under Option 5), 
as long as new sources are not sited in areas where there is a 
hydrologic link to surface water. New operations are not expected to 
incur costs estimated under Option 3A, which includes groundwater 
controls, since they are not likely to establish a new operation where 
there is a hydrologic link to surface waters (and where operating 
expenses would be more costly). Thus EPA assumes that the costs for 
Option 5+3 NSPS are the same as those for Option 5 NSPS, which in turn 
are the same as those for Option 5 BAT. EPA is proposing that Option 5 
BAT is economically achievable for existing sources in the swine and 
poultry subcategories and therefore this same option should be 
affordable to new sources. Furthermore, because costs to new sources 
for meeting Option 5 NSPS are no more expensive than the costs for 
existing sources to meet Option 5 BAT, there should be no barriers to 
entry.
    The estimated costs of Option 3 NSPS for the beef and dairy 
subcategories are the same as or less than the costs for Option 3 BAT, 
which includes retrofitting costs. EPA is proposing that Option 3 BAT 
is economically achievable for existing sources in these sectors. Since 
Option 3 NSPS is no more expensive than Option 3 BAT, this option 
should also be economically achievable for new sources and should not 
create any barriers to entry. In fact, new sources may be able to avoid 
the cost of implementing groundwater controls through careful site 
selection, thus their costs may be substantially lower than similar 
existing sources.
    EPA did not consider an option similar to Option 5+3 NSPS for the 
beef and dairy subcategories (Option 8 NSPS), but found this option to 
be substantially more expensive than Option 3 BAT for the dairy sector 
and could create barriers to entry for this sector. Therefore, EPA 
rejected this option. See Section 5 of the Economic Analysis for more 
details on these analyses.
    d. Economic Impacts to Offsite Recipients of CAFO Manure of the 
Proposed Regulations. As discussed in Section X.D.1, EPA assesses the 
economic impact to offsite recipients of CAFO manure by comparing the 
estimated cost of this requirement to both aggregate and average per-
farm production costs and revenues. For the purpose of this analysis, 
EPA assumes that these regulatory costs will be borne by a non-CAFO 
farming operation that uses animal manures as a fertilizer substitute.
    EPA estimates that 17,900 to 21,200 farming operations will incur 
$9.6 million to $11.3 million in costs associated with requirements for 
the offsite transfer of CAFO manure (Tables 10-3 and Table 10-4). This 
translates to an average cost of roughly $540 per recipient. As 
reported by USDA, farm production expenses in 1997 totaled $150.6 
billion nationwide. Revenue from farm sales totaled $196.9 billion. 
Averaged across the total number of farms, average per-farm costs and 
revenues were $78,800 and $113,000 in 1997, respectively. Using these 
data, the ratio of incremental costs to offsite recipients as a share 
of average operating expenses and average farm revenue is well under 
one percent. Total estimated compliance costs ($9.6 million to $11.3 
million annually) as a share of aggregate farm expenses and sales is 
also under one percent. This analysis is provided in Section 5 of the 
Economic Analysis.
2. Processor Level Analysis
    As discussed in Section X.D.2, EPA did not conduct a detailed 
estimate of the costs and impacts that would accrue to individual co-
permittees due to lack of data and market information. However, EPA 
believes that the framework used to estimate costs to CAFO provides a 
means to evaluate the possible upper bound of costs that could accrue 
to potential co-permittees, based on the potential share of (pre-tax) 
costs that may be passed on from the CAFO (described in Section X.D.2). 
EPA is proposing that this amount approximates the magnitude of the 
costs that may be incurred by processing firms in those industries that 
may be affected by the proposed co-permitting requirements.
    Table 10-9 presents the results of EPA's analysis. This analysis 
focuses on the potential magnitude of costs to co-permittees in the 
pork and poultry sectors only since these are the sectors where the 
proposed co-permitting requirements could affect processing facilities. 
However, EPA did not evaluate the potential magnitude of costs to egg 
and turkey processors because the compliance costs to CAFOs in these 
industries is projected to be easily absorbed by CAFOs (see Section 
X.F.1). The results presented in Table 10-9 are for the pork and 
broiler industries only. EPA also did not evaluate the potential costs 
to cattle and dairy processors because EPA does not expect that the 
proposed co-permitting requirements to affect meat packing and 
processing facilities in these industries, for reasons outlined in 
Section VI.
    The potential magnitude of costs to co-permittees is derived from 
the amount of cost passthrough assumed in the CAFO level analysis, 
described in Section X.F.1. For this analysis, two scenarios of cost 
passthrough to processors are evaluated: partial cost passthrough 
(greater than zero) and also 100 percent cost passthrough. EPA's 
partial cost passthrough scenario assumes that 46 percent of all hog 
compliance costs and that 35 percent of all broiler compliance costs 
are passed on to the food processing sectors. Based on the results of 
this analysis, EPA estimates that the range of potential annual costs 
to hog processors is $135 million (partial cost passthrough) to $306 
million (full cost passthrough). EPA estimates that the range of 
potential annual costs to broiler processors as $34 million (partial 
cost passthrough) to $117 million (full cost passthrough). These 
results are shown in Table 10-9 and are expressed in 1999 pre-tax 
dollars.
    To assess the magnitude of impacts that could accrue to processors 
using this approach, EPA compares the passed through compliance costs 
to both aggregate processor costs of production and to revenues (a 
sales test). The results of this analysis are shown in Table 10-9 and 
are presented in terms of the equivalent 1997 compliance cost as 
compared to 1997 data from the Department of Commerce on the revenue 
and costs among processors in the hog and broiler industries. As shown, 
EPA estimates that, even under full cost passthrough, incremental cost 
changes are less than two percent and passed through compliance costs 
as a share of revenue are estimated at less than one percent. EPA 
solicits comment on this approach. Additional information is provided 
in the Economic Analysis.

[[Page 3093]]



                                  Table 10-9.--Impact of Passed Through Compliance Costs Under Co-proposed Alternatives
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                       Passed through                                 1997 Passed through cost-  Passed through cost-to-
                                                       compliance cost          1997         1997            to-revenues             delivered cost
                     Sector                      --------------------------   revenues    delivered  ---------------------------------------------------
                                                  Partial CPT    100% CPT                    cost     Partial CPT    100% CPT   Partial CPT    100% CPT
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                       ($1999, million)
                                                       ($1997, million)
                                                          (percent, comparing costs in $1997)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                     Hog Processors
--------------------------------------------------------------------------------------------------------------------------------------------------------
Two-Tier........................................          135          294       38,500       15,700         0.3%         0.7%         0.8%         1.8%
Three-Tier......................................          141          306  ...........  ...........         0.4%         0.8%         0.9%         1.9%
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                 Broiler Meat Processors
--------------------------------------------------------------------------------------------------------------------------------------------------------
Two-Tier........................................           34           97       17,700        9,100         0.2%         0.5%         0.4%         1.0%
Three-Tier......................................           41          117  ...........  ...........         0.2%         0.6%         0.4%        1.2%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: USEPA. 1997 processor revenues and costs are from the Department of Commerce. Option/Scenario definitions provided in Table 10-2. Estimated
  compliance costs are pre-tax. CPT = Cost passthrough. Partial CPT assumes 46% CPT for the hog sector and 35% CPT for the broiler sector.

3. Market Level Analysis
    As discussed in Section X.D.3, EPA's market analysis evaluates the 
effects of the proposed regulations on commodity prices and quantities 
at the national level. EPA's market model predicts that the proposed 
regulations will not result in significant industry-level changes in 
production and prices for most sectors. Tables 10-10 and 10-11 show 
predicted farm and retail price changes across the two-tier (500 AU 
threshold) and three-tier structures. For comparison purposes, the 
average annual percentage change in price from 1990 to 1998 is shown. 
Analyses of other technology options and scenarios considered by EPA 
are provided in the record.
    EPA expects that predicted changes in animal production may raise 
producer prices, as the market adjusts to the proposed regulatory 
requirements. For most sectors, EPA estimates that producer price 
changes will rise by less than one percent of the pre-regulation 
baseline price (Table 10-10). The exception is in the hog sector, where 
estimated compliance costs slightly exceed one percent of the baseline 
price. At the retail level, EPA expects that the proposed regulations 
will not have a substantial impact on overall production or consumer 
prices for value-added meat, eggs, and fluid milk and dairy products. 
EPA estimates that retail price increases resulting from the proposed 
regulations will be under one percent of baseline prices in all 
sectors, averaging below the rate of general price inflation for all 
foods (Table 10-11). In terms of retail level price changes, EPA 
estimates that poultry and red meat prices will rise about one cent per 
pound. EPA also estimates that egg prices will rise by about one cent 
per dozen and that milk prices will rise by about one cent per gallon.
    Appendix D of the Economic Analysis provides results of sensitivity 
analyses, conducted by EPA, to examine the impact under differing model 
assumptions. EPA examined variations in the price elasticities and 
prices assumed for these industries, based on information reported in 
the agricultural literature and statistical compendiums. These 
sensitivity analyses demonstrate that the results presented here are 
stable across a range of possible modeling assumptions.

                                   Table 10-10.--Estimated Increases in Farm Prices Under the Co-proposed Alternatives
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                             Broilers     Layers  (cents/ Turkeys (cents/
                     Option/Scenario                       Beef  ($/cwt)  Dairy  ($/cwt)   Hogs  ($/cwt)    (cents/lb)         doz.)            lb)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Pre-reg. Avg Price......................................          $68.65          $13.90          $56.41           38.43           72.51           41.66
Avg. Chg 90-98..........................................            4.6%            8.0%           15.2%            5.7%           11.5%            4.4%
Two-Tier................................................            0.22            0.06            0.61            0.19            0.14            0.13
Three-Tier..............................................            0.24            0.08            0.66            0.23            0.15           0.16
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: USEPA, except historical data that are from USDA. Option/Scenario definitions provided in Table 10-2.


                                  Table 10-11.--Estimated Increases in Retail Prices Under the Co-proposed Alternatives
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                             Broilers     Layers  (cents/     Turkeys
                     Option/Scenario                       Beef  ($/lb)   Dairy  (Index)   Hogs  ($/lb)     (cents/lb)         doz.)        (cents/lb)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Pre-reg. Avg Price......................................           $2.91          145.50           $2.55          156.86          110.11          109.18
Avg. Chg 90-98 (%)......................................            2.3%            2.4%            5.1%            3.0%            7.2%            2.4%
Two-Tier................................................            0.00            0.61            0.01            0.19            0.14            0.13
Three-Tier..............................................            0.00            0.78            0.01            0.23            0.15           0.16
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: USEPA, except historical data that are from USDA. Option/Scenario definitions provided in Table 10-2.

    EPA does not expect that the proposed regulations will result in 
significant changes in aggregate employment or national economic 
output, measured in terms of Gross Domestic Product (GDP). EPA expects, 
however, that there will be losses in employment and economic output 
associated with decreases in animal production due to rising compliance 
costs. These losses are estimated throughout the entire economy, using

[[Page 3094]]

available modeling approaches, and are not attributable to the 
regulated community only. This analysis also does not adjust for 
offsetting increases in other parts of the economy and other sector 
employment that may be stimulated as a result of the proposed 
regulations, such as the construction and farm services sectors.
    Table 10-12 show these predicted changes. Employment losses are 
measured in full-time equivalents (FTEs) per year, including both 
direct and indirect employment. Under the two-tier structure (500 AU 
threshold), EPA estimates that the reduction in aggregate national 
level of employment is 16,600 FTEs. Under the three-tier structure, EPA 
estimates total aggregate job losses at 18,900 FTEs. This projected 
change is modest when compared to total national employment, estimated 
at about 129.6 million jobs in 1997. EPA's estimate of the aggregate 
reductions in national economic output is $1.7 billion under the two-
tier structure. Under the three-tier structure, EPA estimates the loss 
to GDP at $1.9 billion. This projected change is also modest when 
compared to total GDP, estimated at $8.3 trillion in 1997. Additional 
information is available in the Economic Analysis.

                       Table 10-12.--Estimated Decreases in Employment and Economic Output
----------------------------------------------------------------------------------------------------------------
                Option/ Scenario                     Beef        Dairy         Hogs       Poultry       Total
----------------------------------------------------------------------------------------------------------------
                               Estimated Decreases in Employment (Number of FTEs)
----------------------------------------------------------------------------------------------------------------
Two-Tier.......................................        4,600        3,200        6,400        2,400       16,600
Three-Tier.....................................        4,900        4,100        6,900        3,000       18,900
----------------------------------------------------------------------------------------------------------------
                                  Estimated Decreases in Economic Output ($GDP)
----------------------------------------------------------------------------------------------------------------
Two-Tier.......................................         $476         $307         $681         $251       $1,715
Three-Tier.....................................         $510         $396         $734         $306      $1,946
----------------------------------------------------------------------------------------------------------------
Source: USEPA. Option/Scenario definitions provided in Table 10-2. FTE = Full-time equivalent.

G. Additional Impacts

1. Costs to the NPDES Permitting Authority
    Additional costs will be incurred by the NPDES permitting authority 
to alter existing state programs and obtain EPA approval to develop new 
permits, review new permit applications and issue revised permits that 
meet the proposed regulatory requirements. Under the proposed rule, 
NPDES permitting authorities will incur administration costs related to 
the development, issuance, and tracking of general or individual 
permits.
    State and federal administrative costs to issue a general permit 
include costs for permit development, public notice and response to 
comments, and public hearings. States and EPA may also incur costs each 
time a facility operator applies for coverage under a general permit 
due to the expenses associated with a Notice of Intent (NOI). These 
per-facility administrative costs include initial facility inspections 
and annual record keeping expenses associated with tracking NOIs. 
Administrative costs for an individual permit include application 
review by a permit writer, public notice, and response to comments. An 
initial facility inspection may also be necessary. EPA developed its 
unit permit costs assumed for this analysis based on information 
obtained from a state permitting personnel. The cost assumptions used 
to estimate develop, review, and approve permits and inspect facilities 
are presented in the Development Document.
    EPA assumes that, under the two-tier structure, an estimated 25,590 
CAFOs would be permitted. This estimate consists of 24,760 State 
permits (17,340 General and 7,420 Individual permits) and 1,030 Federal 
permits (720 General and 310 Individual permits). Under the three-tier 
structure, an estimated 31,930 CAFOs would be permitted, consisting of 
30,650 State permits (21,460 General and 9,190 Individual permits) and 
1,280 Federal permits (900 General and 380 Individual permits). 
Information on the estimated number of permits required under other 
regulatory alternatives is provided in the Economic Analysis. The basis 
for these estimates is described in the Development Document that 
supports this rulemaking.
    As shown in Table 10-13, under the two-tier structure, EPA 
estimates State and Federal administrative costs to implement the 
permit program to be $6.2 million per year: $5.9 million for states and 
$350,000 for EPA. Under the three-tier structure, EPA estimates State 
and Federal administrative costs to implement the permit program to be 
$7.7 million per year: $7.3 million for states and $416,000 for EPA. 
EPA expects that the bulk (95 percent) of estimated administrative 
costs will be incurred by the state permitting authority. EPA has 
expressed these costs in 1999 dollars, annualized over the 5-year 
permit life using a seven percent discount rate. The range of costs 
across each of the regulatory options is $4.2 million to $9.1 million 
annually (alternatives Scenario 1 and Scenario 4b, respectively). See 
Table 10-13. (EPA did not estimate permit authority costs under 
alternative NPDES Scenarios 5 and 6, described in Table 10-2.) This 
analysis is available in the record and is summarized in Section 10 of 
the Economic Analysis.
    This analysis was conducted to evaluate the costs of the proposed 
rule to governments, as required under the Unfunded Mandates Reform Act 
(UMRA), as discussed in Section XIII.C of this preamble.

                       Table 10-13.--Annual State and Federal Administrative Costs, $1999
----------------------------------------------------------------------------------------------------------------
                       Regulatory scenario                             State          Federal          Total
----------------------------------------------------------------------------------------------------------------
Scenario 1......................................................       3,922,990         268,630       4,191,620
Scenario 2......................................................       7,233,470         413,060       7,646,530
Scenario 3 (``Three-tier'').....................................       7,279,560         415,600       7,695,160
Scenario 4a (``Two-tier'')......................................       5,910,750         351,090       6,224,040

[[Page 3095]]

 
Scenario 4b.....................................................       8,645,520         483,010      9,128,530
----------------------------------------------------------------------------------------------------------------
Source: USEPA. See Economic Analysis. Other supporting documentation is in the Development Document.

2. Community Impacts
    As discussed in Section X.F.3, EPA does not expect that the 
proposed regulations will result in significant increases in retail 
food prices or reductions in national level employment.
    EPA also considered other community level impacts associated with 
this rulemaking. In particular, EPA considered whether the proposed 
rule could have community level and/or regional impacts if it 
substantially altered the competitive position of livestock and poultry 
production across the nation, or led to growth or reductions in farm 
production (in- or out-migration) in different regions and communities. 
Ongoing structural and technological change in these industries has 
influenced where farmers operate and has contributed to locational 
shifts between the more traditional production regions and the more 
emergent, nontraditional regions. Production is growing rapidly in 
these regions due to competitive pressures from more specialized 
producers who face lower per-unit costs of production. This is 
especially true in hog and dairy production.
    To evaluate the potential for differential impacts among farm 
production regions, EPA examined employment impacts by region. EPA 
concluded from this analysis that more traditional agricultural regions 
would not be disproportionately affected by the proposed regulations. 
This analysis is provided in the Economic Analysis.
    EPA does not expect that today's proposed requirements will have a 
significant impact on where animals are raised. On one hand, on-site 
improvements in waste management and disposal, as required by the 
proposed regulations, could accelerate recent shifts in production to 
more nontraditional regions as higher cost producers in some regions 
exit the market to avoid relatively higher retrofitting associated with 
bringing existing facilities into compliance. On the other hand, the 
proposed regulations may favor more traditional production systems 
where operators grow both livestock and crops, since these operations 
tend to have available cropland for land application of manure 
nutrients. These types of operations tend to be more diverse and not as 
specialized and, generally, tend to be smaller in size. Long-standing 
farm services and input supply industries in these areas could likewise 
benefit from the proposed rule, given the need to support on-site 
improvements in manure management and disposal. Local and regional 
governments, as well as other non-agricultural enterprises, would also 
benefit.
3. Foreign Trade Impacts
    Foreign trade impacts are difficult to predict, since agricultural 
exports are determined by economic conditions in foreign markets and 
changes in the international exchange rate for the U.S. dollar. 
However, EPA predicts that foreign trade impacts as a result of the 
proposed regulations will be minor given the relatively small projected 
changes in overall supply and demand for these products and the slight 
increase in market prices, as described in Section X.F.3.
    Despite its position as one of the largest agricultural producers 
in the world, historically the U.S. has not been a major player in 
world markets for red meat (beef and pork) or dairy products. In fact, 
until recently, the U.S. was a net importer of these products. The 
presence of a large domestic market for value-added meat and dairy 
products has limited U.S. reliance on developing export markets for its 
products. As the U.S. has taken steps to expand export markets for red 
meat and dairy products, one major obstacle has been that it remains a 
relatively high cost producer of these products compared to other net 
exporters, such as New Zealand, Australia, and Latin America, as well 
as other more established and government-subsidized exporting 
countries, including the European Union and Canada. Increasingly, 
however, continued efficiency gains and low-cost feed is making the 
U.S. more competitive in world markets for these products, particularly 
for red meat. While today's proposed regulations may raise production 
costs and potentially reduce production quantities that would otherwise 
be available for export, EPA believes that any quantity and price 
changes resulting from the proposed requirements will not significantly 
alter the competitiveness of U.S. export markets for red meat or dairy 
foods.
    In contrast, U.S. poultry products account for a controlling share 
of world trade and exports account for a sizable and growing share of 
annual U.S. production. Given the established presence of the U.S. in 
world poultry markets and the relative strength in export demand for 
these products, EPA does not expect that the predicted quantity and 
price changes resulting from today's proposed regulations will have a 
significant impact on the competitiveness of U.S. poultry exports.
    As part of its market analysis, EPA evaluated the potential for 
changes in traded volumes, such as increases in imports and decreases 
in exports, and concluded that volume trade will not be significantly 
impacts by today's proposed regulations. EPA estimates that imports 
(exports) will increase (decrease) by less than 1 percent compared to 
baseline (pre-regulation) levels in each of the commodity sectors. By 
sector, the potential change in imports compared to baseline trade 
levels ranges from a 0.02 percent increase in broiler imports to a 0.34 
percent increase in dairy product imports. The predicted drop in U.S. 
exports ranges from a 0.01 percent reduction in turkey exports to a 
0.25 percent reduction in hog exports.

H. Cost-Effectiveness Analysis

    As part of the process of developing effluent limitations 
guidelines and standards, EPA typically conducts a cost-effectiveness 
analysis to compare the efficiencies of regulatory options for removing 
pollutants and to compare the proposed BAT option to other regulatory 
alternatives that were considered by EPA. For the purpose of this 
regulatory analysis, EPA defines cost-effectiveness as the incremental 
annualized cost of a technology option per incremental pound of 
pollutant removed annually by that option. The analyses presented in 
this section include a standard cost-effectiveness (C-E) analysis for 
toxic pollutants, but also expand upon EPA's more traditional approach 
to include an analysis of the cost-effectiveness of removing nutrients 
and sediments. This expanded approach is more appropriate for 
evaluating the broad range of pollutants in animal manure and 
wastewater.

[[Page 3096]]

    The American Society of Agricultural Engineers (ASAE) reports that 
the constituents present in livestock and poultry manure include: 
boron, cadmium, calcium, chlorine, copper, iron, lead, magnesium, 
manganese, molybdenum, nickel, potassium, sodium, sulfur, zinc, 
nitrogen and phosphorus species, total suspended solids, and pathogens. 
Of these pollutants, EPA's standard C-E analysis is suitable to analyze 
only the removal of metals and metallic compounds. EPA's standard C-E 
analysis does not adequately address removals of nutrients, total 
suspended solids, and pathogens. To account for the estimated removals 
of nutrients and sediments under the proposed regulations in the 
analysis, the Agency has developed an alternative approach to evaluate 
the pollutant removal effectiveness relative to cost. At this time, EPA 
has not developed an approach that would allow a similar assessment of 
pathogen removals. Section 10 of the Economic Analysis describes the 
methodology, data, and results of this analysis. (EPA did not estimate 
cost-effectiveness for the alternative NPDES Scenarios 5 and 6, 
described in Table 10-2.)
    For this analysis, EPA has estimated the expected reduction of 
select pollutants for each of the regulatory options considered. These 
estimates measure the amount of nutrients, sediments, metals and 
metallic compounds that originate from animal production areas that 
would be removed under a post-regulation scenario (as compared to a 
baseline scenario) and not reach U.S. waters. Additional information on 
EPA's estimated loadings and removals under post-compliance conditions 
is provided in the Development Document and the Benefits Analysis that 
support today's rulemaking.
1. Cost-Effectiveness: Priority Pollutants
    For this rulemaking, EPA identified a subset of metallic compounds 
for use in the C-E
    For this rulemaking, EPA identified a subset of metallic compounds 
for use in the C-E analysis: zinc, copper cadmium, nickel, arsenic, and 
lead. These six compounds are a subset of all the toxic compounds 
reported to be present in farm animal manure (varies by animal 
species). Therefore, if loading reductions of all priority pollutants 
in manure were evaluated, the proposed regulations would likely be even 
more cost-effective (i.e., lower cost per pound-equivalent removal).
    EPA calculates cost-effectiveness as the incremental annual cost of 
a pollution control option per incremental pollutant removal. In C-E 
analyses, EPA measures pollutant removals in toxicity normalized units 
called ``pounds-equivalent,'' where the pounds-equivalent removed for a 
particular pollutant is determined by multiplying the number of pounds 
of a pollutant removed by each option by a toxicity weighting factor. 
The toxic weighting factors account for the differences in toxicity 
among pollutants and are derived using ambient water quality criteria. 
The cost-effectiveness value, therefore, represents the unit cost of 
removing an additional pound-equivalent of pollutants. EPA calculates 
the cost-effectiveness of a regulatory option as the ratio of pre-tax 
annualized costs of an option to the annual pounds-equivalent removed 
by that option, expressed as the average or incremental cost-
effectiveness for that option. EPA typically presents C-E results in 
1981 dollars for comparison purposes with other regulations. EPA uses 
these estimated compliance costs to calculate the cost-effectiveness of 
the proposed regulations, which include total estimated costs to CAFOs 
and offsite recipients of CAFO manure (Section X.E) and costs to the 
permitting authority (Section X.G.1). Additional detail on this 
approach is provided in Appendix E of the Economic Analysis.
    Cost-effectiveness results for select regulatory alternatives are 
presented in Table 10-14. Results shown in Table 10-14 include the BAT 
Option (Option 3 for beef and dairy subcategories and Option 5 for the 
swine and poultry subcategories) and Option 3+5 (both Option 3 and 5 
for all subcategories). Options are shown for four CAFO coverage 
scenarios, including CAFOs with more than 1,000 AU and CAFOs with more 
than 500 AU (two-tier structure), and operations with more than 300 AU, 
both under Scenario 4b and as defined under Scenario 3 (three-tier 
structure). The differences in CAFO coverage provide an upper and lower 
bound of the analysis to roughly depict the alternative NPDES 
scenarios. Both incremental and average C-E values are shown.
    Incremental cost-effectiveness is the appropriate measure for 
comparing one regulatory alternative to another for the same 
subcategory. In general, the lower the incremental C-E value, the more 
cost-efficient the regulatory option is in removing pollutants, taking 
into account their toxicity. For this rulemaking, EPA compares the 
cost-effectiveness across alternative NPDES Scenarios to assess the 
Agency's decision to define as CAFO operations with more than 500 AU 
(two-tier structure) and, alternatively, some operations with more than 
300 AU (two-tier structure).
    As shown in Table 10-14, the BAT Option is the most cost-efficient 
under each of the co-proposed alternatives. Under both the two-tier 
(500 AU) and three-tier structures, EPA estimates an incremental cost-
effectiveness value of about $30 per pounds-equivalent (lbs.-eq.) 
removed. This compares to the alternative Scenario 4b that have a 
higher estimated incremental cost-effectiveness ($76/lbs.-eq., if all 
CAFOs with more than 1,000 AU are regulated). (Since the change in 
removals between Scenario 3 and Scenario 4b is zero, the incremental C-
E value is ``undefined.'') The BAT Option is also more efficient than 
requiring Option 3+5 for all subcategories, which has higher costs but 
results in no additional pollutant removals compared to the BAT Option. 
This is because the ELG options differ mostly in terms of their 
monitoring and sampling requirements but establish no additional 
pollutant controls. (Since the change in removals between the BAT 
Option and Option 3+5 is zero, the incremental C-E value is undefined.)
    The average cost-effectiveness reflects the ``increment'' between 
no regulation and regulatory options shown. For the BAT Option, EPA 
estimates an average value at $55 per lbs.-eq. to $58 per lbs.-eq., 
depending on the proposed tier structure (Table 10-14). These estimated 
average values are low compared to the alternative NPDES scenarios 
since the average cost-effectiveness value is higher ($76/lbs.-eq., if 
all CAFOs with more than 1,000 AU are regulated; $62/lbs.-eq. for all 
CAFOs with more than 300 AU). This average cost is also low compared to 
previous ELG rulemakings, where estimated costs have, in some cases, 
exceeded $100/lbs.-eq. removed. This information is provided in the 
Economic Analysis. In addition, as shown in Table 10-14, average cost-
effectiveness is nearly twice as high under the more stringent Option 
3+5 for all subcategories (estimated at more than $100 per lbs.-eq. 
removed). Costs, but also removals, are lower under the less stringent 
Option 1 (also referred to as the ``nitrogen-based'' option) compared 
to other technology options. As described in Section VIII, EPA 
determined that this option would not represent the best available 
technology and so chose not to propose it. This analysis, along with 
additional results for each subcategory and other regulatory 
alternatives, is provided in Appendix E on the Economic Analysis.

[[Page 3097]]



                   Table 10-14.--Cost-Effectiveness Results by Select Option/Scenario ($1981)
----------------------------------------------------------------------------------------------------------------
                                                     Total annual
                                         ------------------------------------
                 Option                        Pound-                           Average cost-   Incremental cost-
                                             equivalents     Total cost \2\     effectiveness     effectiveness
                                             removed \1\
----------------------------------------------------------------------------------------------------------------
                                          (million pounds)    ($ millions)                ($/lbs.-eq.)
----------------------------------------------------------------------------------------------------------------
                         ``BAT Option'' ELG Option 3 (Beef/Dairy) and 5 (Swine/Poultry)
----------------------------------------------------------------------------------------------------------------
>1000 AU................................               5.3               402                76                76
>500 AU ``Two-tier''....................               8.4               491                58                29
Scenario 3 ``Three-tier''...............               9.4               518                55                28
>300 AU.................................               9.4               579                62                ND
----------------------------------------------------------------------------------------------------------------
                                       ELG Option 3+5 (All Subcategories)
----------------------------------------------------------------------------------------------------------------
>1000 AU................................               5.3             1,047               197               197
>500 AU ``Two-tier''....................               8.4             1,212               144                53
Scenario 3 ``Three-tier''...............               9.4             1,251               133                40
>300 AU.................................               9.4             1,353               144               ND
----------------------------------------------------------------------------------------------------------------
 Source: USEPA. See Economic Analysis. Option/Scenario definitions provided in Table 10-2. ND=Not Determined.
\1\ Pound-equivalent removals are calculated from removals estimated by EPA's loadings analysis, described in
  the Benefits Analysis and the Development Document, adjusting for each pollutants toxic weighting factor (as
  described in the Economic Analysis).
\1\ Costs are pre-tax and indexed to 1981 dollars using the Construction Cost Index.

2. Cost-Effectiveness: Nutrients and Sediments
    In addition to conducting a standard C-E analysis for select toxic 
pollutants (Section X.H.1), EPA also evaluated the cost-effectiveness 
of removing select non-conventional and conventional pollutants, 
including nitrogen, phosphorus, and sediments. For this analysis, 
sediments are used as a proxy for total suspended solids (TSS). This 
analysis does not follow the methodological approach of a standard C-E 
analysis. Instead, this analysis compares the estimated compliance cost 
per pound of pollutant removed to a recognized benchmark, such as EPA's 
benchmark for conventional pollutants or other criteria for existing 
treatment, as reported in available cost-effectiveness studies.
    The research in this area has mostly been conducted at municipal 
facilities, including publicly owned treatment works (POTWs) and 
wastewater treatment plants (WWTPs). Additional information is 
available based on the effectiveness of various nonpoint source 
controls and BMPs (Best Management Practices) and other pollutant 
control technologies that are commonly used to control runoff from 
agricultural lands. A summary of this literature is provided in the 
Economic Analysis. Benchmark estimates are used to evaluate the 
efficiency of regulatory options in removing a range of pollutants and 
to compare the results for each of the co-proposed tier structures to 
other regulatory alternatives. This approach also allows for an 
assessment of the types of management practices that will be 
implemented to comply with the proposed regulations.
    Cost-effectiveness results for select regulatory alternatives are 
presented in Table 10-15. Results shown in Table 10-15 include the BAT 
Option (Option 3 for beef and dairy subcategories and Option 5 for the 
swine and poultry subcategories) and Option 3+5 (both Option 3 and 5 
for all subcategories). Options are shown for four CAFO coverage 
scenarios, including CAFOs with more than 1,000 AU and CAFOs with more 
than 500 AU (two-tier structure), and operations with more than 300 AU, 
both under Scenario 4b and as defined under Scenario 3 (three-tier 
structure). The differences in CAFO coverage provide an upper and lower 
bound of the analysis to roughly depict the alternative NPDES 
scenarios.
    The values in Table 10-15 are average cost-effectiveness values 
that reflect the increment between no regulation and the considered 
regulatory options. All costs are expressed in pre-tax 1999 dollars. 
Estimated compliance costs used to calculate the cost-effectiveness of 
the proposed regulations include total estimated costs to CAFOs and 
offsite recipients of CAFO manure (Section X.E) and costs to the 
permitting authority (Section X.G.1).
    Under the co-proposed tier structures, EPA estimates an average 
cost-effectiveness of nutrient removal at $4.60 per pound (two-tier) to 
$4.30 per pound (three-tier) of nitrogen removed. For phosphorus 
removal, removal costs are estimated at $2.10 to $2.20 per pound of 
phosphorus removed (Table 10-15). For nitrogen, EPA uses a cost-
effectiveness benchmark established by EPA's Chesapeake Bay Program to 
assess the costs to WWTPs to implement BNR (biological nutrient 
removal) retrofits. EPA's average benchmark estimate is about $4 per 
pound of nitrogen removed at WWTPs in four states (MD, VA, PA, and NY), 
based on a range of costs of $0.80 to $5.90 per pound of nitrogen 
removed. Using this benchmark, EPA's estimated cost-effectiveness to 
remove nitrogen under the proposed regulations exceed EPA's average 
benchmark value, but falls within the estimated range of removal costs. 
However, EPA's estimated cost-effectiveness to remove phosphorus is 
lower than benchmark used for phosphorus of roughly $10 per pound, 
reported in the agricultural research as the costs to remove phosphorus 
using various nonpoint source controls and management practices. 
Available data on phosphorus removal costs for industrial point source 
dischargers are much higher (exceed $100 per pound of phosphorus 
removed). Based on these results, EPA concludes that these values are 
cost-effective.
    Costs and removals are nearly twice as high under the more 
stringent Option 3+5 for all subcategories (Table 10-15). Costs and 
removals are lower under the less stringent Option 1, but EPA chose not 
to propose Option 1 because it does not represent the best available 
technology (also described in Section VIII of the preamble).
    EPA estimates that the co-proposed thresholds (two-tier and three-
tier structures) are more cost-effective compared to alternative AU 
thresholds, given slightly lower average cost-effectiveness values 
(Table 10-15). EPA

[[Page 3098]]

estimates that the average cost-effectiveness to remove nitrogen is 
$5.10 per pound of nitrogen removed at a threshold that would regulate 
as CAFOs all operations with more than 1,000 AU; the average cost-
effectiveness is $4.80 per pound of nitrogen removed at the alternative 
300 AU threshold (Table 10-15). EPA estimates that the average cost-
effectiveness to remove phosphorus is $2.50 per pound and $2.30 per 
pound of phosphorus removed at the 1,000 AU and 300 AU threshold. EPA 
also estimates that the co-proposed tier structures are also the most 
cost-efficient, compared to other alternatives considered by EPA. These 
results, based on incremental cost-effectiveness values, are provided 
in the Economic Analysis.
    Table 10-15 also shows that the cost to remove sediments under the 
BAT Option/Scenario is estimated at $0.003 per pound of sediment 
removal (1999 dollars). This estimated per-pound removal cost is low 
compared to EPA's POTW benchmark for conventional pollutants. This 
benchmark measures the potential costs per pound of TSS and BOD 
(biological nutrient demand) removed for an ``average'' POTW (see 51 FR 
24982). Indexed to 1999 dollars, EPA's benchmark costs are about $0.70 
per pound of TSS and BOD removed. The average cost-effectiveness of 
sediment removal under the BAT Option/Scenario is lower than under the 
alternative options. Option 1 results across the range of NPDES 
Scenarios are estimated at about $0.05 per-pound removal of sediments. 
This analysis, along with additional results for each subcategory and 
other regulatory alternatives, is provided in Appendix E on the 
Economic Analysis.

                                        Table 10-5.--Cost-Effectiveness Results by Select Option/Scenario ($1999)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                Total cost
                       Option/Scenario                             \1\       Sediments     Nitrogen    Phosphorus   Sediments     Nitrogen    Phosphorus
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                 ($m 1999)       (million pounds of removals)
                                                                    (average $ per pound removed
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                             ``BAT Option'' ELG Option 3 (Beef/Dairy) and 5 (Swine/Poultry)
--------------------------------------------------------------------------------------------------------------------------------------------------------
>1000 AU.....................................................         $688       209050          136          280       $0.003         $5.1         $2.5
>500 AU ``Two-tier''.........................................          840       299708          182          377        0.003          4.6          2.2
>300 AU ``Three-tier''.......................................          887       335456          206          425        0.003          4.3          2.1
>300 AU......................................................          991       335456          206          425        0.003          4.8          2.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            ELG Option 3+5 (All subcategories
--------------------------------------------------------------------------------------------------------------------------------------------------------
>1000 AU.....................................................        1,791       209050          136          280        0.009         13.2          6.4
>500 AU ``Two-tier''.........................................        2,074       299708          182          377        0.007         11.4          5.5
>300 AU ``Three-tier''.......................................        2,141       335456          206          425        0.006         10.4          5.0
>300 AU......................................................        2,316       335456          206          425        0.007         11.2         5.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: USEPA. See Economic Analysis. Option/Scenario definitions provided in Table 10-2. ND=Not Determined.
\1\ Costs are pre-tax.

I. Cost-Benefit Analysis

    EPA estimated and compared the costs and benefits attributed to the 
proposed regulations. The cost and benefit categories that the Agency 
was able to quantify and monetize for the proposed regulations are 
shown in Table 10-16.
    Total social costs of the proposed regulations range from $847 
million to $949 million annually, depending on the co-proposed approach 
(Table 10-16). These costs include compliance costs to industry, costs 
to recipients of CAFO manure, and administrative costs to States and 
Federal governments.
    Under the two-tier structure, EPA projects that total compliance 
cost to industry is $831 million per year (pre-tax)/$572 million (post-
tax). By comparison, under the three-tier structure, EPA estimates that 
the cost to industry is $930 million per year (pre-tax)/$658 million 
(post-tax). Costs to industry include annualized capital costs, 
operating and maintenance costs, start-up and recurring costs, and also 
recordkeeping costs. Estimated costs cover four broad categories: 
nutrient management planning, facility upgrades, land application, and 
technologies for balancing on-farm nutrients. In addition, under the 
two-tier structure, EPA estimates that the cost to off-site recipients 
of CAFO manure is $10 million per year. The administrative cost to 
State and Federal governments to implement the permit program is $6 
million per year. Under the three-tier structure, the annual cost to 
off-site recipients of manure is $11 million and State and Federal 
administrative costs are $8 million per year.
    EPA estimates that the monetized benefits of the proposed 
regulations range from $146 million to $182 million annually, depending 
on the co-proposed approach (Table 10-16). Annual benefits are 
estimated to range from $146 million to $165 million under the two-tier 
structure; under the three-tier structure, estimated benefits range 
from $163 million to $182 million annually. EPA was only able to 
monetize (i.e., place a dollar value on) a small subset of the range of 
potential benefits that may accrue under the proposed regulations. Data 
and methodological limitations restricted the number of benefits 
categories that EPA was able to reasonably quantify and monetize. The 
proposed regulations benefits are primarily in the areas of reduced 
health risks and improved water quality, as shown in Table 10-16. In 
addition to these monetized benefits, EPA expects that additional 
benefits will accrue under the regulations, including reduced drinking 
water treatment costs, reduced odor and air emissions, improved water 
quality in estuaries, and avoided loss in property value near CAFOs, 
among other benefits. These benefits are described in more detail in 
the Benefits Analysis and other supporting documentation provided in 
the record.

[[Page 3099]]



  Table 10-16.--Total Annual Social Costs and Monetized Benefits, $1999
                        [In millions of dollars]
------------------------------------------------------------------------
                                           ``Two-Tier''
                                             structure      Three-Tier
           Total social costs                 (500 AU        structure
                                            threshold)     (Scenario 3)
------------------------------------------------------------------------
Industry Compliance Costs (pre-tax).....           830.7           930.4
NPDES Permitting Costs..................             6.2             7.7
Offsite Recipients of CAFO Manure.......             9.6            11.3
    Total Social Costs..................           846.5           949.4
------------------------------------------------------------------------
                           Monetized Benefits
------------------------------------------------------------------------
Improved surface water quality..........           108.5           127.1
Reduced shellfish bed closures..........         0.2-2.4         0.2-2.7
Reduced fish kills......................         0.2-0.4         0.2-0.4
Improved water quality in private wells.       36.6-53.9       35.4-52.1
                                         -------------------------------
  Total Monetized Benefits..............     145.5-165.1     163.0-182.3
------------------------------------------------------------------------

J. Initial Regulatory Flexibility Analysis

    Pursuant to Section 603 of the Regulatory Flexibility Act (RFA) as 
amended by the Small Business Regulatory Enforcement Fairness Act of 
1996 (SBREFA), the Agency prepared an Initial Regulatory Flexibility 
Analysis (IRFA) to assess the impacts on small livestock and poultry 
feeding operations. EPA's IRFA and other supplemental economic 
analyses, as required under Section 607 of the RFA, are provided in 
Section 9 of the Economic Analysis. This section summarizes the 
estimated number of small entities to which the rule will apply and 
quantitatively describes the effects of the proposed regulations. Other 
information on EPA's approach for estimating the number of small 
businesses in these sectors is provided in the Final Report of the 
Small Business Advocacy Review Panel on EPA's Planned Proposed Rule on 
National Pollutant Discharge Elimination System (NPDES) and Effluent 
Limitations Guideline (ELG) Regulations for Concentrated Animal Feeding 
Operations (referred to as the ``Panel Report''). The Panel Report is 
available in the rulemaking record, as well as online at http://www.epa.gov/sbrefa. A summary of the Small Business Advocacy Review 
(SBAR) Panel proceedings and recommendations is provided in Section 
XII.G of this preamble. Section XIII.B of this preamble summarizes 
other requirements to comply with the RFA.
1. Definition of Small Business
    The Small Business Administration (SBA) defines a ``small 
business'' in the livestock and poultry sectors in terms of average 
annual receipts (or gross revenue). SBA size standards for these 
industries define a ``small business'' as one with average annual 
revenues over a 3-year period of less than $0.5 million annually for 
dairy, hog, broiler, and turkey operations; $1.5 million for beef 
feedlots; and $9.0 million for egg operations. In today's rule, EPA is 
proposing to define a ``small'' egg laying operation for purposes of 
its regulatory flexibility assessments as an operation that generates 
less than $1.5 million in annual revenue. Because this definition of 
small business is not the definition established under the Regulatory 
Flexibility Act (RFA), EPA is specifically seeking comment on the use 
of this alternative definition as part of today's notice of the 
proposed rulemaking (see Section XIII.B and Section XIV). EPA also has 
consulted with the SBA Chief Counsel for Advocacy on the use of this 
alternative definition. EPA believes this definition better reflects 
the agricultural community's sense of what constitutes a small business 
and more closely aligns with the small business definitions codified by 
SBA for other animal operations. A summary of EPA's rationale and 
supporting analyses pertaining to this alternative definition is 
provided in the record and in the Economic Analysis.
2. Number of Small Businesses Affected under the Proposed Regulations
    Table 10-17 shows EPA's estimates of the number of small businesses 
in the livestock and poultry sectors and the number of small businesses 
that are expected to be affected by the proposed regulations. The 
approach used to derive these estimates is described in more detail in 
Section 9 of the Economic Analysis and also in Sections 4 and 5 of the 
Panel Report. EPA presented this and other alternative approaches 
during the SBAR Panel proceedings, as discussed in Section XII.G.2.a of 
this document. EPA is requesting public comment on this approach.
    EPA uses three steps to determine the number of small businesses 
that may be affected by the proposed regulations. First, EPA identifies 
small businesses in these sectors by equating SBA's annual revenue 
definition with the number of animals at an operation. Second, EPA 
estimates the total number of small businesses in these sectors using 
farm size distribution data from USDA. Third, based on the regulatory 
thresholds being proposed, EPA estimates the number of small businesses 
that would be subject to the proposed requirements. These steps are 
summarized below.
    In the absence of farm or firm level revenue data, EPA identifies 
small businesses in these sectors by equating SBA's annual revenue 
definitions of ``small business'' to the number of animals at these 
operations (step 1). This step produces a threshold based on the number 
of animals that EPA uses to define small livestock and poultry 
operations and reflects the average farm inventory (number of animals) 
that would be expected at an operation with annual revenues that define 
a small business. This initial conversion is necessary because USDA 
collects data by farm size, not by business revenue. With the exception 
of egg laying operations, EPA uses SBA's small business definition to 
equate the revenue threshold with the number of animals raised on-site 
at an equivalent small business in each sector. For egg laying 
operations, EPA uses its alternative revenue definition of small 
business.
    EPA estimates the number of animals at an operation to match SBA's

[[Page 3100]]

definitions using SBA's annual revenue size standard (expressed as 
annual revenue per entity) and USDA-reported farm revenue data that are 
scaled on a per-animal basis (expressed as annual revenue per inventory 
animal for an average facility). Financial data used for this 
calculation are from USDA's 1997 ARMS database. This approach and the 
data used for this calculation are outlined in Section 9 of the 
Economic Analysis. The resultant size threshold represents an average 
animal inventory for a small business. For the purpose of conducting 
its IRFA for this rulemaking, EPA is evaluating ``small business'' for 
these sectors as an operation that houses or confines less than: 1,400 
fed beef cattle; 200 mature dairy cattle; 1,400 market hogs; 25,000 
turkeys; 61,000 layers; or 260,000 broilers (Table 10-17).
    EPA then estimates the total number of small businesses in these 
sectors using facility size distribution data from USDA (step 2). Using 
the threshold sizes identified for small businesses, identified above, 
EPA matches these thresholds with the number of operations associated 
with those size thresholds to estimate the total number of small animal 
confinement operations in these sectors. Finally, based on the 
regulatory thresholds being proposed--e.g., operations with more than 
500 AU are CAFOs--EPA estimates the number of small businesses that 
will be subject to the proposed requirements (step 3). The 1997 Census 
constitutes the primary data source that EPA uses to match the small 
business thresholds (e.g., a small dairy operation has less than 200 
milk cows) to the number of facilities that match that size group 
(e.g., the number of dairies with less than 200 cows, as reported by 
USDA). EPA also used other supplemental data, including other published 
USDA data and information from industry and the state extension 
agencies.

                                  Table 10-17.--Number of Small CAFOs That May Be Affected by the Proposed Regulations
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                           Total annual
                                                            ($million)      Revenue per   No. of animals     Estimated       Two-Tier       Three-Tier
                         Sector                             revenue \1\    head \2\  (b)    (Avg. U.S.)      number of       ``Small''       ``Small''
                                                                (a)                           (c=a/b)       small  AFOs        CAFOs           CAFOs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cattle \3\..............................................             1.5           1,060           1,400         106,450           2,280           2,600
Dairy...................................................             0.5           2,573             200         109,740              50              50
Hogs....................................................             0.5             363           1,400         107,880             300             300
Broilers................................................             0.5               2         260,000          34,530           9,470          13,410
Egg Layers..............................................             9.0              25         365,000              ND              ND              ND
                                                                     1.5  ..............          61,000          73,710             200             590
Turkeys.................................................             0.5              20          25,000          12,320               0             500
All AFOs \4\............................................              NA              NA              NA         355,650          10,550         14,630
--------------------------------------------------------------------------------------------------------------------------------------------------------
NA=Not Applicable. ND = Not Determined. ``AFOs'' have confined animals on-site. ``CAFOs'' are assumed to have more than 500 AU.
\1\ SBA Size Standards by SIC industry (13 CFR Part 121). EPA assumes an alternative definition of $1.5 million in annual revenues for egg layers.
\2\ Average revenue per head across all operations for each sector derived from data obtained from USDA's 1997 ARMS data.
\3\ Includes fed cattle, veal and heifers.
\4\ Total adjusts for operations with mixed animal types and includes designated CAFOs (expressed over a 10-year period). See Section VI.1 of this
  document for estimates of the total number of AFOs (including operations that are not defined as small businesses by SBA).

    EPA estimates that there were approximately 376,000 animal 
confinement facilities in 1997 (Table 6-1). Most of these (95 percent) 
are small businesses, as defined by this approach (Table 10-17). 
However, not all of these operations will be affected by the proposed 
regulations.
    For this analysis, EPA has identified the number of CAFOs that are 
also small businesses that would be subject to today's proposal. Under 
the two-tier structure, EPA estimates that 10,550 operations that will 
be subject to the proposed requirements that are small businesses. 
Under the three-tier structure, an estimated 14,630 affected operations 
are small businesses. See Table 10-17. The difference in the number of 
affected small businesses is among poultry producers, particularly 
broiler operations.
    Under the two-tier structure, EPA estimates that there are 10,050 
operations with more than 500 AU that may be defined as CAFOs that also 
meet the ``small business'' definition. Under the three-tier structure, 
there are 14,530 operations with more than 300 AU that may be defined 
as CAFOs that are small businesses that meet the proposed risk-based 
conditions (described in Section VII). These totals adjusts for the 
number of operations with more than a single animal type. Under both 
co-proposed alternatives, most operations are in the broiler and cattle 
sectors. By broad facility size group, an estimated 4,060 operations 
have more than 1,000 AU, most of which are broiler operations (about 77 
percent) and cattle operations (18 percent), including fed cattle, 
veal, and heifer operations. An estimated 6,490 operations have between 
500 and 1,000 AU. The number of operations that would be regulated with 
between 300 and 1,000 AU is estimated at 10,570 operations (accounting 
for mixed operations).
    Due to continued consolidation and facility closure since 1997, 
EPA's estimates may overstate the actual number of small businesses in 
these sectors. In addition, ongoing trends are causing some existing 
small and medium size operations to expand their inventories to achieve 
scale economies. Some of the CAFOs considered here as small businesses 
may no longer be counted as small businesses because they now have 
higher revenues. Furthermore, some CAFOs may be owned by a larger, 
vertically integrated firm, and may not be a small business. EPA 
expects that there are few such operations, but does not have data or 
information to reliably estimate the number of CAFOs that meet this 
description.
    Under the two-tier structure, EPA estimates also include an 
additional 500 operations with fewer than 500 AU that may be designated 
as CAFOs under the proposed regulations over a 10-year period. See 
Section VI. Of these, 330 operations meet the small business 
definition: 50 dairies, 200 hog, 40 beef, 20 broiler, and 20 egg laying 
operations. Under the three-tier structure, EPA estimates that 100 
operations with fewer than 300 AU may be designated over ten years, 
including 50 dairies and 50 hog operations, all of which are small 
businesses. As these facilities are designated, EPA did not adjust this 
total to reflect possible mixed animal

[[Page 3101]]

operations. Each of these operations are small businesses.
3. Estimated Economic Impacts to Small CAFOs under the Proposed 
Regulations
    EPA conducted a preliminary assessment of the potential impacts to 
small CAFO businesses based on the results of a costs-to-sales test. 
This screen test indicated the need for additional analysis to 
characterize the nature and extent of impacts on small entities. The 
results of this screening test indicate that about 80 percent (about 
9,600) of the estimated number of small businesses directly subject to 
the rule as CAFOs may incur costs in excess of three percent of sales 
(evaluated for all operations with more than 500 AU). Compared to the 
total number of all small animal confinement facilities estimated by 
EPA (356,000 facilities), operations that are estimated to incur costs 
in excess of three percent of sales comprise less than two percent of 
all small businesses in these sectors. The results of this analysis are 
provided in Section 9 of the Economic Analysis.
    Based on the results of this initial assessment, EPA projected that 
it would likely not certify that the proposal, if promulgated, would 
not impose a significant economic impact on a substantial number of 
entities. Therefore, EPA convened a Small Business Advocacy Review 
Panel and prepared an Initial Regulatory Flexibility Analysis (IRFA) 
pursuant to Sections 609(b) and 603 of the RFA, respectively. Section 
XII.G provides more information on EPA's small business outreach and 
the Panel activities during the development of this rulemaking.
    The results of EPA's assessment of the financial impacts of the 
proposed rule on small entities are as follows. To further examine 
small businesses effects, EPA used the same approach as that used to 
evaluate the impact to CAFOs under the proposed regulations described 
in Section X.D.1. Economic achievability is determined by applying the 
proposed criteria described in Section X.F.1. These criteria include a 
sales test and also analysis of post-compliance cash flow and debt-to-
asset ratio for an average model CAFO.
    Accordingly, if an average model facility is determined to incur 
economic impacts under regulation that are regarded as ``Affordable'' 
or ``Moderate,'' then the proposed regulations are considered 
economically achievable. (``Moderate'' impacts are not expected to 
result in closure and are considered to be economically achievable by 
EPA.) If an average operation is determined to incur ``Stress,'' then 
the proposed regulations are not considered to be economically 
achievable. ``Affordable'' and ``Moderate'' impacts are associated with 
positive post-compliance cash flow over a 10-year period and a debt-to-
asset ratio not exceeding 40 percent, in conjunction with a sales test 
result that shows that compliance costs are less than 5 percent of 
sales (``Affordable'') or between 5 and 10 percent (``Moderate''). 
``Stress'' impacts are associated with negative cash flow or if the 
post-compliance debt-to-asset ratio exceeds 40 percent, or sales test 
results that show costs equal to or exceeding 10 percent of sales. More 
detail on this classification scheme is provided in Section X.F.1.
    EPA is proposing that the proposed regulations are economically 
achievable by small businesses in the livestock and poultry sectors. 
The results of this analysis are presented in Tables 10-18 and 10-19. 
As defined for this analysis, EPA's analysis indicates that the 
proposed requirements are economically achievable to all affected small 
businesses in the beef, veal, heifer, dairy, hog, and egg laying 
sectors (``Affordable'' and also ``Moderate''). Moderate impacts may be 
incurred by small businesses in some sectors, but these impacts are not 
associated with operational change at the CAFO. Under the two-tier 
structure, EPA expects that there are no small businesses in the turkey 
sector, as defined for this analysis. Under the three-tier structure, 
EPA expects that there are an estimated 500 small businesses in the 
turkey sector (operations with 16,500 to 25,000 birds) (Table 10-17).
    EPA's IRFA analysis indicates that the proposed requirements will 
not result in financial stress to any affected small businesses in the 
veal, heifer (two-tier only), hog, dairy, egg laying, and turkey 
sectors. In the beef, heifer (three-tier only), and broiler sectors, 
however, EPA's analysis indicates that proposed regulations could 
result in financial stress to some small businesses, making these 
businesses vulnerable to closure. Overall, these operations comprise 
about 2 percent of all affected small CAFO businesses. For the two-tier 
structure, EPA estimates that 10 small beef operations and 150 small 
broiler operations will experience financial stress. For the three-tier 
structure, EPA estimates that 40 small beef and heifer operations and 
280 small broiler operations will experience financial stress. Small 
broiler facilities with stress impacts are larger operations with more 
than 1,000 AU under both tier structures. Small cattle and heifer 
operations with stress impacts are those that have a ground water link 
to surface water. This analysis is conducted assuming that no costs are 
passed through between the CAFO and processor segments of these 
industries. Based on the results of this analysis, EPA is proposing 
that the proposed regulations are economically achievable to small 
businesses in these sectors.
    EPA believes that the small business impacts presented are 
overstated for reasons summarized below. As noted in the Panel Report, 
EPA believes that the number of small broiler operations is 
overestimated. In the absence of business level revenue data, EPA 
estimated the number of ``small businesses'' using the approach 
described in Sections X.J.1 and X.J.2. Using this approach, virtually 
all (>99.9 percent) broiler operations are considered ``small'' 
businesses. This categorization may not accurately portray actual small 
operations in this sector since it classifies a 10-house broiler 
operation with 260,000 birds as a small business. Information from 
industry sources suggests that a two-house broiler operation with 
roughly 50,000 birds is more appropriately characterized as a small 
business in this sector. This information is available in the 
rulemaking record. Therefore, it is likely that the number of small 
broiler operations may reflect a number of medium and large size 
broiler operations being considered as small entities. (During the 
development of the rulemaking, EPA did consult with SBA on the use of 
an alternative definition for small businesses in all affected sectors 
based on animal inventory at an operation. Following discussions with 
SBA, EPA decided not to use this alternative definition. This 
information is provided in the record.)
    EPA believes that the use of a costs-to-sales comparison is a crude 
measure of impacts on small business in sectors where production 
contracting is commonly used, such as in the broiler sector (but also 
in the turkey, egg, and hog sectors, though to a lesser extent). As 
documented in the Economic Analysis, lower reported operating revenues 
in the broiler sector reflect the predominance of contract growers in 
this sector. Contract growers receive a pre-negotiated contract price 
that is lower than the USDA-reported producer price, thus contributing 
to lower gross revenues at these operations. Lower producer prices 
among contract growers is often offset by lower overall production 
costs at these operations since the affiliated processor firm pays for 
a substantial portion of the grower's annual variable cash expenses. 
Inputs supplied by the integrator may include

[[Page 3102]]

feeder pigs or chicks, feed, veterinary services and medicines, 
technical support, and transportation of animals. These variable cash 
costs comprise a large component of annual operating costs, averaging 
more than 70 percent of total variable and fixed costs at livestock and 
poultry operations. The contract grower also faces reduced risk because 
the integrator guarantees the grower a fixed output price. Because 
production costs at a contract grower operation are lower than at an 
independently owned operation, a profit test (costs-to-profit 
comparison) is a more accurate measure of impacts at grower operations. 
However, financial data are not available that differentiate between 
contract grower and independent operations.
    EPA's analysis also does not consider a range of potential cost 
offsets available to most operations. One source of potential cost 
offset is cost share and technical assistance available to operators 
for on-site improvements that are available from various state and 
federal programs, such as the Environmental Quality Incentives Program 
(EQIP) administered by USDA. These programs specifically target smaller 
farming operations. Another potential source of cost offset is manure 
sales, particularly of relatively higher value dry poultry litter. More 
information on how these potential sources of cost offset would reduce 
the economic impacts to small operations is described in Section X.F.1 
in this document and also in the Economic Analysis. EPA's analysis also 
does not account for eventual cost passthrough of estimated compliance 
costs through the marketing chain under longer run market adjustment. 
Finally, this analysis does not take into account certain non-economic 
factors that may influence a CAFO's decision to weather the boom and 
bust cycles that are commonplace in agricultural markets. These other 
industry-specific factors are discussed in more detail throughout the 
Economic Analysis.
    EPA expects that the proposed regulations will benefit the smallest 
businesses in these sectors since it may create a comparative advantage 
for smaller operations (less than 500 AU), especially those operations 
which are not subject to the regulations. Except for the few AFOs which 
are designated as CAFOs, these operations will not incur costs 
associated with the proposed requirements but could benefit from 
eventual higher producer prices as these markets adjust to higher 
production costs in the longer term.
    As detailed in Sections XII.G and XIII.B of this document, EPA 
convened a Small Business Advocacy Review Panel during the development 
of this rule. As described in the Panel Report, EPA considered certain 
regulatory alternatives to provide relief for small businesses. Some of 
these alternatives are discussed in other sections of this document, 
including Section VII and Section VIII. These alternative options are 
summarized in the following section and are described in more detail in 
Section 9 of the Economic Analysis.

                                 Table 10-18.--Results of EPA's Small Business Analysis Under the BAT Option/Scenario 4a
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                        Zero cost passthrough
                                                                           -----------------------------------------------------------------------------
                            Sector                              Number of           (Number of operations                 (% Affected operations)
                                                               small CAFOs -----------------------------------------------------------------------------
                                                                             Affordable    Moderate      Stress     Affordable    Moderate      Stress
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fed Cattle...................................................        1,390        1,130          250           10           81           18            1
Veal.........................................................           90           90            0            0          100            0            0
Heifer.......................................................          800          680          120            0           85           15            0
Dairy........................................................           50           40           10            0           80           20            0
Hogs.........................................................          300          300            0            0          100            0            0
Broilers.....................................................        9,470        1,860        7,460          150           20           79            2
Layers.......................................................          200          200            0            0          100            0            0
Turkeys......................................................            0            0            0            0           NA           NA           NA
                                                              ------------------------------------------------------------------------------------------
    Total....................................................       10,550        4,300        7,840          160           41           74           2
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: USEPA. Impact estimates shown include impacts to designated operations. Option/Scenario definitions provided in Table 10-2. Category definitions
  (``Affordable,'' ``Moderate'' and ``Stress'') are provided in Section X.F.1. Numbers may not add due to rounding. NA = Not Applicable.
\1\ ``Total'' does not adjust for operations with mixed animal types, for comparison purposes, to avoid understating costs at operations with more than
  one animal type that may incur costs to comply with the proposed requirements for each type of animal that is raised on-site. The number of CAFOs
  shown includes expected defined CAFOs only and excludes designated facilities.


                                 Table 10-19.--Results of EPA's Small Business Analysis Under the BAT Option/Scenario 3
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                        Zero cost passthrough
                                                                           -----------------------------------------------------------------------------
                            Sector                              Number of           (Number of operations                 (% Affected operations)
                                                               small CAFOs -----------------------------------------------------------------------------
                                                                             Affordable    Moderate      Stress     Affordable    Moderate      Stress
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fed Cattle...................................................        1,490        1,100          380           10           74           26            1
Veal.........................................................          140          140            0            0          100            0            0
Heifer.......................................................          980          800          150           30           82           15            3
Dairy........................................................           50           40           10            0           80           20            0
Hogs.........................................................          300          300            0            0          100            0            0
Broilers.....................................................       13,410        1,910       11,220          280           14           84            2
Layers.......................................................          590          590            0            0          100            0            0
Turkeys......................................................          500          460           40            0           92            8            0
                                                              ------------------------------------------------------------------------------------------

[[Page 3103]]

 
    Total....................................................       14,630        5,340       11,800          320           37           81           2
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: USEPA. Impact estimates shown include impacts to designated operations. Option/Scenario definitions provided in Table 10-2. Category definitions
  (``Affordable,'' ``Moderate'' and ``Stress'') are provided in Section X.F.1. Numbers may not add due to rounding. NA = Not Applicable.
\1\ ``Total'' does not adjust for operations with mixed animal types, for comparison purposes, to avoid understating costs at operations with more than
  one animal type that may incur costs to comply with the proposed requirements for each type of animal that is raised on-site. The number of CAFOs
  shown includes expected defined CAFOs only and excludes designated facilities.

4. Regulatory Relief to Small Livestock and Poultry Businesses
    EPA proposes to focus the regulatory revisions in this proposal on 
the largest operations, which present the greatest risk of causing 
environmental harm, and in so doing, has minimized the effects of the 
proposed regulations on small livestock and poultry operations. First, 
EPA is proposing to establish a two-tier structure with a 500 AU 
threshold. Unlike the current regulations, under which some operations 
with 300 to 500 AU are defined as CAFOs, operations of this size under 
the revised regulations would be CAFOs only by designation. Second, EPA 
is proposing to eliminate the ``mixed'' animal calculation for 
operations with more than a single animal type for determining which 
AFOs are CAFOs. Third, EPA is proposing to raise the size standard for 
defining egg laying operations as CAFOs.
    EPA estimates that under the co-proposed alternatives, between 64 
percent (two-tier) and 72 percent (three-tier) of all CAFO manure would 
be covered by the regulation. (See Section IV.A of this preamble.) 
Under the two-tier structure, the inclusion of all operations with more 
than 300 AU instead of operations with more than 500 AU, the CAFO 
definition would result in 13,800 additional operations being 
regulated, along with an additional 8 percent of all manure. An 
estimated 80 percent of these additional 13,800 CAFOs are small 
businesses (about 10,870 CAFOs). EPA estimates that by not extending 
the regulatory definition to operations with between 300 and 500 AU, 
these 10,870 small businesses will not be defined as CAFOs and will 
therefore not be subject to the proposed regulations. The additional 
costs of extending the regulations to these small CAFO businesses is 
estimated at almost $150 million across all sectors. The difference in 
costs between the two-tier and the three-tier structures may be 
approximated by comparing the estimated costs for these regulatory 
options, which are shown in Table 10-5. Also, under the two-tier 
structure, EPA is proposing to raise the size standard for defining egg 
laying operations as CAFOs. This alternative would remove from the CAFO 
definition egg operations with between 30,000 and 50,000 laying hens 
(or 75,000 hens) that under the current rules are defined as CAFOs, if 
they utilize a liquid manure management system.
    In addition, under both co-proposed alternatives, EPA is proposing 
to exclude mixed operations with more than a single animal type. The 
Agency determined that the inclusion of these operations would 
disproportionately burden small businesses while resulting in little 
additional environmental benefit. Since most mixed operations tend to 
be smaller in size, this exclusion represents important accommodations 
for small businesses. If certain of these smaller operations are 
determined to be discharging to waters of the U.S., States can later 
designate them as CAFOs and subject them to the regulations.

XI. What are the Environmental Benefits of the Proposed Revisions?

A. Non-Water Quality Environmental Impacts

    The regulatory options developed for this proposed rule are 
intended to ensure the protection of surface water in and around animal 
feeding operations. However, one or more of the requirements included 
in these options may also have an impact on the amount and form of 
compounds released to air, as well as the energy that is required to 
operate the feedlot. Under sections 304(b) and 306 of the CWA, EPA is 
to consider the non-water quality environmental impacts (NWQI) when 
setting effluent limitations guidelines and standards. This section 
describes the methodology EPA used to estimate the NWQI for each of the 
options considered for this proposed rule. These non-water quality 
environmental impacts include:
     Air emissions from the feedlot operation, including animal 
housing and animal waste storage and treatment areas;
     Air emissions from land application activities;
     Air emissions from vehicles, including the off-site 
transport of waste and on-site composting operations; and
     Energy impacts from land application activities and the 
use of digesters.
    For each regulatory option, EPA estimated the potential for new 
water pollution control requirements to cause cross-media pollutant 
transfers. Consistent with the approach used to estimate compliance 
costs, EPA used a model-facility approach to estimate NWQIs and to 
define baseline conditions. Industry-level non-water quality impacts 
for each animal sector (i.e., beef, dairy, swine, and poultry) were 
then estimated by multiplying the model farm impacts by the number of 
facilities represented by that model farm. These results are presented 
in Tables 11-1 through 11-4 for the population of operations defined as 
CAFOs under the two-tier structure (operations with more than 500 AU) 
and Tables 11-5 through 11-8 for the population defined as CAFOs under 
the three tier structure. For details on the derivation of the model 
farms, including definitions of geographic location, method of 
determining model farm populations, and data on waste generation, see 
the Technical Development Document.
1. Sources of Air Emissions
    Animal feeding operations generate various types of animal wastes, 
including manure (feces and urine), waste feed, water, bedding, dust, 
and wastewater. Air emissions are generated from the decomposition of 
these wastes from the point of generation through the management and 
treatment of these wastes on site. The rate of generation of these 
emissions varies based on a number of operational variables (e.g., 
animal species, type of housing, waste

[[Page 3104]]

management system), as well as weather conditions (temperature, 
humidity, wind, time of release). A fraction of the air emissions from 
AFOs are subsequently redeposited on land or in surface waters. This 
atmospheric redeposition in turn can be a source for water quality 
impacts.
    a. Air Emissions from the Feedlot Operation. Animal housing and 
manure management systems can be a significant source of air emissions. 
Little data exist on these releases to allow a complete analysis of all 
possible compounds. For this proposed rule, EPA has focused on the 
release of greenhouse gases (methane, carbon dioxide, and nitrous 
oxide), ammonia, and certain criteria air pollutants (carbon monoxide, 
nitrogen oxides, volatile organic compounds, and particulate matter).
    i. Greenhouse Gas Emissions from Manure Management Systems. Manure 
management systems, including animal housing, produce methane 
(CH4), carbon dioxide (CO2), and nitrous oxide 
(N2O) emissions. Methane and carbon dioxide are produced by 
the anaerobic decomposition of manure. Nitrous oxide is produced as 
part of the agricultural nitrogen cycle through the denitrification of 
the organic nitrogen in livestock manure and urine. Greenhouse gas 
emissions for methane and nitrous oxide were estimated for this 
proposed rule based on methodologies previously used by EPA's Office of 
Air and Radiation. Emission estimates for carbon dioxide are based on 
the relationship of carbon dioxide generation compared to methane 
generation.
    Methane. Methane production is directly related to the quantity of 
waste, the type of waste management system used, and the temperature 
and moisture of the waste. Some of the regulatory options evaluated for 
animal feeding operations are based on the use of different waste 
management systems which may increase or decrease methane emissions 
from animal operations. In general, manure that is handled as a liquid 
or in anaerobic management systems tends to produce more methane, while 
manure that is handled as a solid or in aerobic management systems 
produces little methane. The methane producing capacity of animal waste 
is related to the maximum quantity of methane that can be produced per 
kilogram of volatile solids. Values for the methane producing capacity 
are available from literature and are based on animal diet. EPA 
estimated methane emissions for each type of waste management system 
included in the cost models. These values vary by animal type, 
geographic region (the methane conversion factor is a function of the 
mean ambient temperature), and type of waste management system (e.g., 
anaerobic lagoon, composting, drylot, stacked solids, or runoff storage 
pond).
    Methane is also produced from the digestive processes of ruminant 
livestock due to enteric fermentation. Certain animal populations, such 
as beef cattle on feedlots, tend to produce more methane because of 
higher energy diets that produce manure with a high methane-producing 
capacity. However, since the proposed regulatory options do not impose 
requirements forcing CAFOs to use specific feeding strategies, 
potential impacts on enteric fermentation methane emissions are 
speculative and were not estimated.
    Carbon Dioxide. Carbon dioxide is a naturally occurring greenhouse 
gas and is continually emitted to and removed from the atmosphere. 
Certain human activities, such as fossil fuel burning, cause additional 
quantities of carbon dioxide to be emitted to the atmosphere. In the 
case of feedlot operations, the anaerobic degradation of manure results 
not only in methane emissions, but also carbon dioxide emissions. These 
carbon dioxide emissions due to anaerobic degradation were estimated 
for each regulatory option. In addition, under Option 6, large dairies 
and swine operations would install and operate anaerobic digestion 
systems with energy recovery units. The biogas produced in the digester 
is burned in an engine to recover energy. EPA's emission estimates for 
Option 6 include the carbon dioxide produced during this combustion 
process.
    Nitrous Oxide. The emission of nitrous oxide from manure management 
systems is based on the nitrogen content of the manure, as well as the 
length of time the manure is stored and the specific type of system 
used. In general, manure that is handled as a liquid tends to produce 
less nitrous oxide than manure that is handled as a solid. Some of the 
regulatory options evaluated for animal feeding operations are based on 
the use of waste management systems which may increase nitrous oxide 
emissions from animal operations. Values for total Kjeldahl nitrogen 
(TKN), a measure of organic nitrogen plus ammonia nitrogen, vary by 
animal type and are typically available in the literature for animal 
waste. EPA estimated nitrous oxide emissions by adjusting these 
literature values with an emission factor that accounts for the varying 
degree of nitrous oxide production, based on the type of manure 
management system.
    ii. Ammonia Emissions and Other Nitrogen Losses from Housing and 
Manure Management Systems. Much of the nitrogen emitted from animal 
feeding operations is in the form of ammonia. Ammonia is an important 
component responsible for acidification and overnutrification of the 
environment. The loss of ammonia occurs at both the point of generation 
of manure, typically from urine, as well as during the storage and 
treatment of animal waste. As the pH of a system rises above 7, 
nitrogen in the form of ammonium is transformed into ammonia. A number 
of variables affect the volatilization of ammonia from animal waste, 
including the method in which the waste is stored, transported, and 
treated on site and the environmental conditions present (e.g., 
temperature, pH, wind).
    Animals at the feedlot operation may be housed in a number of 
different ways that have an impact on the type and amount of nitrogen 
emissions that will occur. Some animals are housed in traditional 
confined housing (e.g., tie stall barns, freestall barns), while others 
are housed in outdoor areas (e.g., drylots, paddocks). Studies have 
shown that the type of housing used has a great effect on the emission 
of ammonia. Management of waste within the housing area also affects 
emissions (e.g., litter system, deep pit, freestall).
    Anaerobic lagoons and waste storage ponds are a major component of 
the waste management systems. EPA has estimated volatilization of total 
nitrogen and ammonia from lagoons and ponds based on emission factors 
published in the scientific literature.
    iii. Criteria Air Emissions from Energy Recovery Systems. Option 6 
requires the implementation of anaerobic digestion systems with energy 
recovery for large dairy and swine operations. The operation of the 
digestion system greatly reduces the emission of methane through the 
capture of the biogas. However, the use of the biogas in an energy 
recovery system does generate certain criteria air pollutants when 
burned for fuel. Literature values for emission factors for carbon 
monoxide (CO), oxides of nitrogen ( NOX), and volatile 
organic compounds (VOCs) were used to estimate releases of criteria air 
pollutants.
    b. Air Emissions from Land Application Activities. Animal feeding 
operations generate air emissions from the land application of animal 
waste on cropland. Air emissions are primarily generated from the 
volatilization of ammonia at the point the material is applied to land. 
Additional emissions of nitrous oxide are liberated from

[[Page 3105]]

agricultural soils when nitrogen applied to the soil undergoes 
nitrification and denitrification. Loss through denitrification is 
dependent on the oxygen levels of the soil to which manure is applied. 
Low oxygen levels, resulting from wet, compacted, or warm soil, 
increase the amount of nitrate-nitrogen released to the air as nitrogen 
gas or nitrous oxide. The analysis of air emissions from land 
application activities for this proposed rule focused on the 
volatilization of nitrogen as ammonia because the emission of other 
constituents is expected to be less significant.
    The amount of nitrogen released to the environment from the 
application of animal waste is affected by the rate and method in which 
it is applied, the quantity of material applied, and site-specific 
factors such as air temperature, wind speed, and soil pH. There is 
insufficient data to quantify the effect of site-specific factors.
    Since regulatory options in this proposed rule do not dictate 
particular application methods, EPA assumed that the application 
methods used by animal feeding operations will not significantly change 
from baseline.
    Because EPA expects application methods to remain stable, EPA 
assumed that only the quantity of waste applied to cropland will 
change. On-site nitrogen volatilization will decrease as the quantity 
of waste applied to cropland decreases. The reductions of nitrogen 
volatilization will be the result of reductions in the total amount of 
manure applied on site. However, when both on-site and off-site 
nitrogen volatilization are considered, total nitrogen volatilization 
from manure is expected to remain constant. The movement of waste off-
site changes the location of the nitrogen releases but not the quantity 
released. On-site, however, the volatilization rate will decrease, 
reflecting the decrease in the quantity of applied waste.
    EPA used the same assumptions that were used to estimate compliance 
costs for land application of animal waste in order to estimate the 
change in air emissions from the application of nitrogen under baseline 
conditions and for each regulatory option. The cost methodology defines 
three types of animal feeding operations: Category 1 facilities 
currently have sufficient land to apply all manure on site; Category 2 
facilities currently do not have enough land to apply all manure on 
site; and Category 3 facilities currently apply no manure on site (this 
manure is already being spread offsite). Neither Category 1 nor 
Category 3 facilities will show a change in nitrogen emission rates 
from the land application of animal manure under the proposed 
regulatory options. However, Category 2 facilities will be required to 
apply their waste at the agricultural rate under the regulatory 
options, thus reducing the amount of manure applied on site and 
subsequently reducing air emissions from on-site land application.
    Under a phosphorus-based application scenario, facilities will have 
to apply supplemental nitrogen fertilizer to meet crop nutrient needs. 
The cost model assumes facilities will apply commercial ammonium 
nitrate or urea. The application of commercial fertilizer represents an 
increase in applied nutrients on site. While losses from applied 
commercial nitrogen are expected to be less than those from applied 
manure, data from Ohio State Extension states that both of these 
fertilizers can experience losses through denitrification if placed on 
wet or compacted soils. There is also a possibility that urea will 
volatilize if it is dry for several days after soil application. 
Ammonium nitrate fertilizer (when injected) is less likely to 
volatilize because it quickly converts to nitrate nitrogen which will 
not volatilize.
    EPA estimated a ``worst-case scenario'' for ammonia emissions due 
to commercial fertilizer application based on a 35% loss of applied 
nitrogen.
    c. Air Emissions from Vehicles. i. Off-Site Transportation. All 
options are expected to result in increasing the amount of manure 
hauled off-site, at least for some operations. Consistent with the cost 
model, EPA has grouped operations into three possible transportation 
categories. Category 1 facilities currently land apply all manure on 
site and Category 3 facilities currently transport all manure off site. 
Neither Category 1 nor Category 3 facilities require additional 
transportation of manure and will not have an increase in criteria air 
emissions. Category 2 facilities do not have enough land to apply all 
waste on site and do not currently transport waste. These facilities 
are expected to transport manure off site and therefore will have an 
increase in the amount of criteria air pollutants generated by the 
facility.
    Hauling emissions estimates are based on calculations of the annual 
amount of waste generated, the annual number of miles traveled, and 
truck sizes. The number of trucks, number of trips per truck, the 
amount of waste and transportation distance are all calculated within 
the cost model. Vehicle emissions are calculated based on emission 
factors for diesel-fueled vehicles presented in ``Compilation of Air 
Pollution Emission Factors'' (AP-42). Estimates were calculated for 
volatile organic compounds, nitrogen oxides, particulate matter, and 
carbon monoxide.
    ii. On-Site Composting Activities. Farm equipment used for on-site 
composting activities also affect the generation of air emissions, 
although composting of waste may also result in a reduction in 
transportation air emissions. While composting waste prior to hauling 
offsite can increase the marketability of the manure and may decrease 
hauling costs per ton of waste for some operations, not all operations 
can be expected to realize such benefits. Under Option 5, beef and 
dairy operations would be required to compost their solid manure. The 
criteria air emissions from on-site composting of manure were estimated 
for beef and dairy operations under Option 5. The source of criteria 
air emissions from composting are tractors and associated windrow-
turning equipment.
2. Summary of Air Emission Impacts
    Option 1: Emissions of methane and carbon dioxide from beef and 
dairy operations decrease under Option 1 due to the addition of solids 
separation in the waste management system. The separated solids are 
stockpiled rather than held in waste storage ponds or anaerobic 
lagoons. Anaerobic conditions, and the potential of the volatile solids 
to convert to methane, decrease using this drier method of handling the 
waste. However, this method also results in greater conversion of 
nitrogen to nitrous oxide. An increase in nitrous oxide emissions from 
dairies occurs for this reason. Greenhouse gas emissions from dry 
poultry operations (broilers, turkeys, and dry layers) do not change 
under Option 1 since no change to the waste handling practices are 
expected. These operations are already handling the waste as a dry 
material. Although indoor storage of poultry litter is included in the 
options, it is not expected to significantly alter the air emissions 
from the litter. Emissions of greenhouse gases from swine and wet 
poultry operations also do not change since no change to the waste 
handling practices are expected.
    Ammonia emissions occur primarily from liquid waste storage areas, 
including ponds and lagoons. Under Option 1, all facilities are 
required to contain surface runoff from the feedlot, thereby increasing 
ammonia emissions from smaller beef and dairy CAFOs that do not 
currently have runoff control ponds or lagoons. Ammonia emissions

[[Page 3106]]

for the poultry and swine sectors are not expected to change under 
Option 1.
    Option 1 requires the application of animal waste to cropland at 
agronomic rates for nitrogen. Animal feeding operations that have 
excess nitrogen for their crops will need to transport their waste to 
another location. The generation of criteria pollutants for all animal 
sectors are expected to increase from baseline to Option 1 due to the 
additional transportation of waste off-site.
    Options 2-4 and 7: No change in emissions of methane, carbon 
dioxide, or nitrous oxide occurs for all sectors relative to Option 1 
because no significant changes in waste management are anticipated. 
Likewise, no large changes are expected for ammonia emissions.
    These options require the application of animal waste to cropland 
at agronomic rates for phosphorus. Animal feeding operations that have 
excess phosphorus for their crops will need to transport their waste to 
another location. The generation of criteria pollutants are expected to 
increase from Option 1 to these options because more waste will need to 
be transported off site to meet agronomic rates for phosphorus.
    Option 5A: Option 5A does not apply to the beef and dairy sectors. 
Emissions of greenhouse gases at swine operations significantly 
decrease under Option 5A, due to covering lagoons. The swine operations 
are expected to flare the gas that is generated in the lagoon. The 
methane will be converted, although carbon dioxide emissions will 
increase. In addition, the emissions of NOX and 
SOX increase because of the flaring of biogas collected from 
the covered lagoon.
    On-site ammonia emissions at swine operations will decrease because 
the lagoon cover prevents the ammonia from leaving solution. Ammonia in 
the effluent from the covered lagoon will volatilize, however, soon 
after it is exposed to air.
    Option 5B: Emissions of greenhouse gases from beef and dairy 
operations increase under Option 5B (i.e., mandated technology of 
composting), relative to Options 1 and 2. Compost operations include 
the addition of organic material to the waste pile to aid in the 
decomposition of the waste. This additional material also decomposes 
and contributes to increased methane emissions compared to other 
options. In addition, compost operations liberate more methane than 
stockpiles because the windrows are turned regularly. Stockpiles tend 
to form outer crusts that reduce the potential for air emissions to 
occur.
    Emissions of greenhouse gases for swine operations under Option 5B 
are less than Option 2 due to the conversion of liquid manure handling 
systems (e.g., flush lagoons) to dry manure handling systems. Dry 
manure generates less methane than liquid systems. However, the 
emissions are higher than either Options 5A or 6, which allow liquid 
manure systems, but include destruction of the biogas generated from 
those systems.
    Ammonia emissions at beef and dairy operations are expected to 
increase. During composting operations, the aeration of the compost 
pile liberates nitrogen in the form of ammonia. Ammonia emissions at 
swine operations are expected to decrease compared to Option 2, because 
of liquid manure systems converting to dry operations.
    Option 5B generates the least criteria air pollutants compared to 
any other option for beef operations. Although composting operations 
include the operation of turning equipment which uses fuel and 
generates additional tractor air emissions, the process reduces the 
overall volume of waste to be transported. However, for dairy, 
additional organic material is added to the compost pile, which results 
in slightly higher transportation emissions than Option 2. Option 5B 
emissions of criteria pollutants for poultry operations are equal to 
the emissions for Options 2-4 and 7, since there is no difference in 
the amount of waste transported off site. The emissions from swine 
operations are significantly lower than Option 2 because the conversion 
of flush operations to dry housing significantly decreases the volume 
of waste to be transported off site.
    Option 6: Relative to Option 2, only the dairy and swine sectors 
see any changes in air emissions. Emissions of methane from swine and 
dairy waste under Option 6 significantly decrease due to the addition 
of the anaerobic digester. A significant portion of the methane 
generated is collected as biogas and converted to energy. Drylot areas 
at dairies, however, will continue to generate methane that is 
uncollected. Carbon dioxide emissions significantly increase as methane 
is converted during the combustion process.
    Although waste at large swine and dairy CAFOs will be digested, no 
significant changes to ammonia emissions are expected. The ammonia 
nitrogen, which is highly soluble, remains in solution in the digester. 
When the digester effluent is stored in an open lagoon, the ammonia 
will then be released.
    Emissions of criteria pollutants from swine and dairy operations 
increase due to the addition of anaerobic digestion for large dairy 
operations. The digester collects biogas, which is subsequently 
combusted and converted into VOCs, NOX, and CO. Hydrogen 
sulfide contained in swine waste will be converted to Sox.

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3. Energy Impacts
    The proposed regulatory options may result in increased energy use 
for operations that currently do not capture their runoff or other 
process wastewater. These operations would need to capture the feedlot 
runoff, divert it to a waste management system, and use this wastewater 
for irrigation or dispose of it by some alternative means.
    For the land application areas, the proposed regulatory options 
assume all CAFOs will apply their manure and wastewater using 
agricultural application rates. In many instances this means that 
facilities would have to limit the amount of manure applied to the land 
which may result in decreased energy usage at the CAFO. However, total 
energy requirements for land application increase under all options due 
to the increased transportation of waste off-site. Additional energy is 
also required to operate composting equipment, and at swine CAFOs to 
operate recirculating pumps to reuse lagoon effluent as flush water.
    Option 6 includes the use of anaerobic digesters with energy 
recovery to manage animal waste for large dairy and swine operations. 
Digesters require a continuous input of energy to operate the holding 
tank mixer and an engine to convert captured methane into energy. The 
energy required to continuously operate these devices, as well as the 
amount of energy generated by the system, have been determined from the 
FarmWare model, which was also used for estimating compliance costs. 
Under Option 6, EPA anticipates a net decrease in electricity use due 
to the energy savings from methane recovery.

B. Quantitative and Monetized Benefits

    In addition to costs and impacts, EPA also estimated the 
environmental and human health benefits of today's proposed 
requirements. Benefits identified as a result of this proposed rule are 
associated with improvements in water quality.
    EPA is not currently able to evaluate all human health and 
ecosystem benefits associated with water quality improvements 
quantitatively. EPA is even more limited in its ability to assign 
monetary values to these benefits. The economic benefit values 
described below and in the ``Environmental and Economic Benefits of the 
NPDES/ELG CAFO Rules'' (Benefit Report) should be considered a subset 
of the total benefits of this rule and should be evaluated along with 
descriptive assessments of benefits and the acknowledgment that even 
these may fall short of the real-world benefits that may result from 
this rule. For example, the economic valuation considers the effects of 
nitrogen, phosphorous, pathogens and sediment but does not evaluate the 
economic impacts of metals or hormones which can produce significant 
adverse environmental impacts.
    Within these confines, EPA analyzed the effects of current water 
discharges and assessed the benefits of reductions in these discharges 
resulting from this proposed regulation. The CAFO industry waste 
effluents contain pollutants that, when discharged into freshwater and 
estuarine ecosystems, may alter aquatic habitats, affect aquatic life, 
and adversely affect human health.
    For this proposed rule, EPA conducted four benefit studies to 
estimate the impacts of controlling CAFO manure. The first study is a 
national water quality model (National Water Pollution Control 
Assessment Model) that estimates runoff from land application areas to 
rivers, streams, lakes and impoundments in the U.S. This study 
estimates the value society places in improvements in surface water 
quality associated with the different regulatory scenarios. Another 
study examines the expected improvements in shellfish harvesting as a 
result of CAFO regulation. A third study looks at incidences of fish 
kills that are attributed to animal feeding operations and estimates 
the cost of replacing the lost fish stocks. A fourth study estimates 
the benefits associated with reduced groundwater contamination. Each of 
these studies is described below.
1. Benefit Scenarios
    There are eight benefit scenarios under consideration, four 
scenarios (1, 2/3, 4a and 4b) using a nitrogen application rate and the 
same 4 scenarios using a phosphorus application rate. Scenarios 1 \2/3\ 
have a three-tiered structure similar to the current rule. Tier 1 is 
1,000 AU and greater; Tier 2 is 300--999 AU; Tier 3 is less than 300 
AU. Scenarios 4a and 4b have a two-tiered structure. Under Scenario 4a, 
Tier 1 is 500 AU and greater; Tier 2 is less than 500 AU. Under 
Scenario 4b, Tier 1 is 300 AU and greater; Tier 2 is less than 300 AU. 
EPA is co-proposing a two-tier and a three-tier structure (phosphorus--
Scenario \2/3\ and Phosphorus--Scenario 4a). Table 11-9 summarizes the 
regulatory scenarios considered in the benefits analysis.

  Table 11-9.--Regulatory Scenarios Considered in the Benefits Analysis
------------------------------------------------------------------------
                                                            Effluent
      Regulatory scenario           NPDES revisions        guidelines
                                                            revisions
------------------------------------------------------------------------
Baseline......................  CAFOs include any AFO   Manure
                                 with over 1,000 AUs,    application not
                                 as well as AFOs with    regulated.
                                 300 or more AUs that
                                 meet certain
                                 requirements.
Nitrogen--Scenario 1..........  Baseline scenario plus  Nitrogen-based
                                 dry poultry and         manure
                                 immature swine and      application.
                                 heifer operations.
Nitrogen--Scenario 2/3........  New NPDES conditions    Nitrogen-based
                                 for identifying CAFOs   manure
                                 among AFOs with 300-    application.
                                 1000 AUs, plus dry
                                 poultry and immature
                                 swine and heifer
                                 operations.
Nitrogen--Scenario 4a.........  CAFOs include all AFOs  Nitrogen-based
                                 with 500 or more AUs,   manure
                                 plus dry poultry,       application.
                                 immature swine and
                                 heifer manure
                                 operations.
Nitrogen--Scenario 4b.........  CAFOs include all AFOs  Nitrogen-based
                                 with 300 or more AUs,   manure
                                 plus dry poultry,       application.
                                 immature swine and
                                 heifer operations.
Phosphorus Scenario 1.........  Baseline scenario plus  Phosphorus-based
                                 dry poultry and         manure
                                 immature swine and      application.
                                 heifer operations.
Phosphorus Scenario 2/3*......  New NPDES conditions    Phosphorus-based
                                 for identifying CAFOs   manure
                                 among AFOs with 300-    application.
                                 1000 AUs, plus dry
                                 poultry and immature
                                 swine and heifer
                                 operations.
Phosphorus Scenario 4a*.......  CAFOs include all AFOs  Phosphorus-based
                                 with 500 or more AUs,   manure
                                 plus dry poultry,       application.
                                 immature swine and
                                 heifer operations.

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Phosphorus Scenario 4b........  CAFOs include all AFOs  Phosphorus-based
                                 with 300 or more AUs,   manure
                                 plus dry poultry,       application.
                                 immature swine and
                                 heifer operations.
------------------------------------------------------------------------
* Proposed scenarios.

    EPA has developed a model facility analysis to assess changes in 
pollutant loadings under baseline conditions and proposed regulatory 
scenarios. First, the analysis disaggregates the universe of AFOs 
according to a suite of characteristics directly affecting manure 
generation, manure management, and pollutant loadings. AFOs are then 
grouped into five geographic regions. Within each geographic region, 
EPA defines model facilities by production sector, subsector, and size 
(number of animals).
    EPA then calculates manure production and the associated production 
of pollutants for each model facility. EPA multiplies the number of 
animal units per model facility by the manure production per animal 
unit to determine total manure production. EPA then calculates total 
generation of nutrients based on the typical pollutant concentrations 
per unit of recoverable manure for each animal type.
    The core modeling analysis focuses on land application practices 
for each model facility and the capacity for soil and crop removal of 
nutrients applied to the land.\1\ EPA divides the total nitrogen and 
phosphorus generated in manure by the average total acreage available 
for land application for an operation in the given region, size class, 
and production sector. The ratio of nutrients applied to crop nutrient 
requirements provides a measure of the excess nutrients applied in the 
manure. This in turn forms the foundation for loadings analyses of 
regulatory scenarios that call for adherence to agronomic rates of 
nutrient application.
---------------------------------------------------------------------------

    \1\ In addition to modeling loadings based on manure 
application, EPA develops two complementary analyses to examine 
loadings from storage structures and feedlots.
---------------------------------------------------------------------------

    EPA models ``edge-of-field'' loadings (i.e., pollutant loadings at 
the boundary of the model facility) using the Groundwater Loading 
Effects of Agricultural Management Systems (GLEAMS) model. This field-
scale model simulates hydrologic transport, erosion, and biochemical 
processes such as chemical transformation and plant uptake. The model 
uses information on soil characteristics and climate, along with 
nutrient production data, to model losses of nutrients in surface 
runoff, sediment, and groundwater leachate. Loadings are modeled for 
the pre- and post-regulatory scenarios to estimate changes in loadings 
attributable to the proposed standards.
    Finally, EPA extrapolates from the model facilities to develop 
national estimates of baseline and post-regulatory pollutant loadings 
from AFOs. Using the USDA Census of Agriculture, EPA determines the 
number of operations that raise animals under confinement. Then, EPA 
determines the number of CAFOs based on operations that are defined as 
CAFOs and smaller operations that are designated as CAFOs based on 
site-specific conditions, as established by the permitting authority. 
Finally, AFOs and CAFOs by region are placed into counties (and 
eventually watersheds) using published county level Census data. 
Therefore, the end product of the GLEAMS modeling is a spatial 
distribution of aggregated edge-of-field loadings that can be used in 
the water quality modeling and benefits monetization process described 
below.
    National Surface Water Pollution Study. The National Water 
Pollution Control Assessment Model (NWPCAM) was employed to estimate 
national economic benefits to surface water quality resulting from 
implementation of various scenarios for regulating CAFOs. NWPCAM is a 
national-scale water quality model for simulating the water quality and 
economic benefits that can result from various water pollution control 
policies. NWPCAM is designed to characterize water quality for the 
Nation's network of rivers and streams, and, to a more limited extent, 
its lakes. Using GLEAMS output data, NWPCAM is able to translate 
spatially varying water quality changes resulting from different 
pollution control policies into terms that reflect the value 
individuals place on water quality improvements. In this way, NWPCAM is 
capable of deriving economic benefit estimates for scenarios for 
regulating CAFOs.
    NWPCAM estimates pollutant loadings to the stream (nitrogen, 
phosphorous, metals, pathogens and sediment) for each regulatory 
scenario. These loadings by scenario (NWPCAM output) are used as input 
to the other studies. Thus, all stream loading estimates are derived 
from NWPCAM.
1. NWPCAM Loading reductions
    Table 11-10 shows the estimated pollutant reduction for nitrogen, 
phosphorus, fecal coliform, fecal streptococci, and sediment for each 
of the five NPDES regulatory scenarios based on either nitrogen or 
phosphorus manure land application. Nitrogen reductions range from 14 
million to 33 million kgs per year; phosphorus ranges from 35 million 
to 59 million kgs per year; fecal coliform from 26 billion to 38 
billion colonies per year; fecal streptococci from 37 to 65 billion 
colonies per year; and sediment from 0 kgs to 38 million kgs per year.
    The proposed Phosphorus--Scenario 2/3 shows a reduction of 30 M kg 
(66M lbs) of nitrogen, 54M kg (119M lbs) of phosphorus, 34 billion 
colonies of fecal coliform, 60 billion colonies of fecal strep, and 35B 
kg (77B lbs) of sediment. Phosphorus--Scenario 4a shows a reduction of 
29 million kg (64M lbs)of nitrogen, 52 million kg (115 M lbs) of 
phosphorus, 32 billion and 58 billion colonies of fecal coliform and 
fecal streptococci, respectively and 34 billion kg (75B lbs) of 
sediment to our nation's waters each year.

[[Page 3117]]



   Table 11-10.--Pollutant Reduction Based on Nitrogen or Phosphorus Manure Application Rates by NPDES Scenario
----------------------------------------------------------------------------------------------------------------
                                                                                 Fecal       Fecal      Sediment
                                                        Nitrogen  Phosphorus   Coliform      Strep     (billion
                                                       (million    (million    (billion    (billion    (billion
                                                          kg)         kg)      colonies)   colonies)      kg)
----------------------------------------------------------------------------------------------------------------
 Nitrogen--Scenario 1...............................         14          35          26          37           0
 Nitrogen--Scenario 2/3.............................         16          45          31          45           0
 Nitrogen--Scenario 4a..............................         15          42          29          44           0
 Nitrogen--Scenario 4b..............................         18          48          34          47           0
 Phosphorus--Scenario 1.............................         25          42          29          50          26
 Phosphorus--Scenario 2/3*..........................         30          54          34          60          35
 Phosphorus-- Scenario 4a*..........................         29          52          32          58          34
 Phosphorus--Scenario 4b............................         33          59          38          65         38
----------------------------------------------------------------------------------------------------------------
*proposed scenarios.

    In addition, EPA estimated loadings reductions to surface waters 
for various metals found in manure: zinc, copper, cadmium, nickel and 
lead. The range of loadings reductions is shown in Table 11-11.

     Table 11-11.--Range of Metal Loading Reductions Across Scenarios
------------------------------------------------------------------------
              Metal                    low (kg)            high (kg)
------------------------------------------------------------------------
 Zinc...........................  10 M..............  19 M
 Copper.........................   546 K............  1,051 K
 Cadmium........................  23 K..............  39 K
 Nickel.........................  219 K.............  418 K
 Lead...........................  395 K.............  777 K
------------------------------------------------------------------------

    Table 11-12 is a list of metals and load reductions per year for 
the proposed scenarios.

   Table 11-12.--Metal Loading Reductions for Scenario 2/3-Scenario 4a
------------------------------------------------------------------------
                  Metal                             Kilograms*
------------------------------------------------------------------------
 Zinc..................................  18 million/17 million.
 Copper................................  1 million/895 thousand.
 Cadmium...............................  37 thousand/35 thousand.
 Nickel................................  400 thousand/345 thousand.
 Lead..................................  740/690 thousand.
------------------------------------------------------------------------
*rounded to the nearest 10.

    The methods used to develop these loading reduction estimates are 
outlined in detail in the Environmental and Economic Benefits of the 
NPDES/ELG CAFO Rules.
2. Monetized Benefits
    a. National Water Pollution Control Assessment Model (NWPCAM). 
Economic benefits associated with the various AFO/CAFO scenarios are 
based on changes in water quality use-support (i.e., boatable, 
fishable, swimmable) and the population benefitting from the changes. 
Benefits are calculated state-by-state at the State (local) scale as 
well as at the national level. For each State, benefits at the local-
scale represent the value that the State population is willing to pay 
for improvements to waters within the State or adjoining the State. For 
each State, benefits at the national-scale represent the value that the 
State population is willing to pay for improvements to waters in all 
other states in the continental United States.
    Based on the NWPCAM analysis, the total national willingness-to-pay 
(WTP) benefits at the local-scale for all water quality use-supports 
ranged from approximately $4.3 million (1999 dollars) for the least 
stringent scenario to $122.1 million for the most stringent scenario. 
The total national WTP benefits at the national-scale for all water 
quality use-supports ranged from approximately $0.4 million (1999 
dollars) for the least stringent scenario to $22.7 million for the most 
stringent scenario. Total WTP benefits (i.e., sum of local-scale and 
national-scale) for all water quality use-supports ranged from 
approximately $4.9 million (1999 dollars) for the least stringent 
scenario to $145 million for the most stringent scenario.
    Table 11-13 summarizes the resulting estimates of economic benefits 
for each of the six regulatory scenarios analyzed. EPA estimates that 
the annual benefits of Phosphorus--Scenario 2/3 is approximately $127 
million per year; for Phosphorus--Scenario 4a is $108 million per year.

   Table 11-13.--Economic Benefit of Estimated Improvements in Surface
                              Water Quality
                      [In millions of 1999 dollars]
------------------------------------------------------------------------
                                                                Annual
                    Regulatory scenario                        benefits
------------------------------------------------------------------------
Nitrogen--Scenario 1.......................................         $4.9
Nitrogen--Scenario 2/3.....................................          6.3
Nitrogen--Scenario 4a......................................          5.5

[[Page 3118]]

 
Nitrogen--Scenario 4b......................................          7.2
Phosphorus--Scenario 1.....................................         87.6
Phosphorus--Scenario 2/3*..................................        127.1
Phosphorus--Scenario 4a*...................................        108.5
Phosphorus--Scenario 4b....................................       145.0
------------------------------------------------------------------------
*Proposed scenarios.

    b. Shellfish Beds. Pathogen contamination of coastal waters is a 
leading cause of shellfish bed harvest restrictions and closures. 
Sources of pathogens include runoff from agricultural land and 
activities. Using The 1995 National Shellfish Register of Classified 
Growing Waters (shellfish register) published by the National Oceanic 
and Atmospheric Administration (NOAA), EPA estimated the possible 
improvements to shellfish bed harvesting due to expected pathogen 
reductions of each regulatory scenario.
    First, EPA characterized the baseline annual shellfish bed 
loadings. Then, EPA estimated the area of shellfish-growing waters for 
which current loadings are harvested. For the third step, EPA 
calculated the average annual per-acre yield of shellfish form 
harvested waters. Next, EPA estimated the area of shellfish-growing 
waters that are currently unharvested as a result of pollution from 
AFOs. From this, EPA calculated the potential harvest of shellfish from 
waters that are currently unharvested as a result of pollution from 
AFOs. Estimates for all scenarios range from $1.8 million to $2.9 
million. Phosphorus--Scenario3 is $2.7 million and Phosphorus--Scenario 
4a is $2.4 million.
    c. Fishkills. Episodic fish kill events resulting from spills, 
manure runoff, and other discharges of manure from animal waste feeding 
operations continue to remain a serious problem in the United States. 
The impacts from these incidents range from immediate and dramatic kill 
events to less dramatic but more widespread events. Manure dumped into 
and along the West Branch of the Pecatonica River in Wisconsin resulted 
in a complete kill of smallmouth bass, catfish, forage fish, and all 
but the hardiest insects in a 13 mile stretch of the river. Less 
immediate catastrophic impacts on water quality from manure runoff, but 
equally important, are increased algae growth or algae blooms which 
remove oxygen from the water and may result in the death of fish. 
Manure runoff into a shallow lake in Arkansas resulted in a heavy algae 
bloom which depleted the lake of oxygen, killing many fish.
    Fish health and fish kills are an indication of water quality. If 
fish cannot survive or are sick in their natural habitat then the 
public may view the water as unsuitable for recreational activities and 
fish unfit for human consumption. Parts of the Eastern Shore of the 
United States have been plagued with problems related to pfiesteria, a 
dinoflagellate algae that exist in rivers at all times, but can 
transform itself into a toxin that eats fish. Fish attacked by 
pfiesteria have lesions or large, gaping holes on them as their skin 
tissue is broken down; the lesions often result in death. The 
transformation of pfiesteria to the toxic form is believed to be the 
result of high levels of nutrients. Fish kills related to pfiesteria in 
the Neuse River in North Carolina have been blamed on the booming hog 
industry and the associated waste spills and runoff from the hog farms.
    There is preliminary evidence that suggests that there are human 
health problems associated with exposure to pfiesteria. As a result, 
people most likely would limit or avoid recreational activities in 
waters with pfiesteria-related fish kills. The town of New Bern, a 
popular summer vacation spot along the Neuse River in North Carolina, 
was concerned about a decline in tourism after several major fish kills 
in the summer of 1995. Not only were fish killed, people became sick 
after swimming or fishing in the waters. People swimming in the waters 
reported welts and sores on their body. Summer camps canceled boating 
classes and children were urged to stay out of the water. Fishing boats 
were concerned about taking people fishing on the river. People were 
warned not to eat fish that were diseased or sick. At one point, after 
seeing miles and miles of dead fish, a top environmental official 
issued a warning urging people not to swim, fish, or boat in the fish-
kill zone. Many blame the heavy rainfall which pumped pollutants from 
overflowing sewage plants and hog lagoons into the river, creating 
algae blooms, low oxygen and pfeisteria outbreaks as the cause of the 
fish kills.
    Reports on fish kill events in the United States were collected by 
the Natural Resources Defense Council and the Izaak Walton League. 
Nineteen states reported information on historical and current fish 
kills. Using these data, EPA estimated the benefits related to reduced 
fish being killed for each regulatory scenario. At a seven percent 
discount rate, benefits range from $2 million to $42 million. Benefots 
for Phosphorus--Scenario 3 range from $2.4 million to $30.6 million; 
for Phosphorus--Scenario 4a, from $2.8 million to $34.5 million.
    d. Groundwater Contamination. CAFOs can contaminate groundwater and 
thereby cause health risks and welfare losses to people relying on 
groundwater sources for their potable supplies or other uses. Of 
particular concern are nitrogen and other animal waste-related 
contaminants (originating from manure and liquid wastes) that leach 
through the soils and the unsaturated zone and ultimately reach 
groundwaters. Nitrogen loadings convert to elevated nitrate 
concentrations at household and community system wells, and elevated 
nitrate levels in turn pose a risk to human health in households with 
private wells (nitrate levels in community wells are regulated to 
protect human health). The proposed regulation will generate benefits 
by reducing nitrate levels in household wells, and there is clear 
empirical evidence that households have a positive willingness to pay 
to reduce nitrate concentrations in their water supplies.
    The federal health-based National Primary Drinking Water Standard 
for nitrate is 10 mg/L, and this Maximum Contaminant Level (MCL) 
applies to all Community Water Supply systems. Households relying on 
private wells are not subject to the federal MCL for nitrate but levels 
above 10 mg/L are considered unsafe for sensitive subpopulations (e.g., 
infants). Several economic studies indicate a considerable WTP by 
households to reduce the likelihood of nitrate levels exceeding 10 mg/L 
(e.g., $448 per year per household (Poe and Bishop, 1991)). There also 
is evidence of a positive household WTP to reduce nitrate levels even 
when baseline concentrations are considerably below the MCL 
(approximately $2 per mg/L of reduced nitrate concentration 
(Crutchfield et al., 1997, De Zoysa, 1995)).
    Based on extensive U.S. Geologic Survey (USGS) data on nitrate 
levels in wells throughout the country, an empirical model was 
developed to predict how each regulatory option would affect the 
distribution of nitrate concentrations in household wells. Table 11-14 
indicates the number of household wells that are estimated to have 
baseline (i.e., without regulation) concentrations above 10 mg/L and 
that will have these concentration reduced to levels below the MCL for 
each option.

[[Page 3119]]

Also shown are the households with predicted nitrate levels that are 
below the MCL at baseline, but that will experience further reductions 
in nitrate levels due to the proposed regulation.

 Table 11-14.--Reduction in Households Exceeding MCL and mg/L of Nitrate
                                in Wells
------------------------------------------------------------------------
                                       Reduction, from
                                       baseline, in #    Total number of
         Regulatory Scenario             households      mg/L reduced in
                                      exceeding 10 mg/  wells at 1-10 mg/
                                              L            L baseline
------------------------------------------------------------------------
Baseline # of households affected...         1,277,137         6,195,332
Nitrogen--Scenario 1................           152,204           961,741
Nitrogen--Scenario 2/3..............           152,204         1,007,611
Nitrogen--Scenario 4a...............           161,384         1,186,423
Nitrogen--Scenario 4b...............           161,384         1,186,423
Phos.--Scenario 1...................           161,384         1,103,166
Phos--Scenario 2/3*.................           161,384         1,159,907
Phos--Scenario 4a*..................           165.974         1,374,990
Phos--Scenario 4b...................           165,974        1,374,990
------------------------------------------------------------------------
* Proposed scenarios.

    The monetized benefits of these nitrate concentration reductions is 
estimated to be $49.4 million per year for Phosphorus--Scenario 2/3, as 
shown in Table 11-15. The total benefits of this scenario consist of 
$47.8 million for the households that have nitrate levels reduced to 
below the MCL from baseline concentrations above 10 mg/L, plus an 
additional $1.5 million for those households with nitrate reductions 
relative to baseline levels below the MCL. The monetized benefits of 
these nitrate concentration reductions is estimated to be $51.0 million 
per year for Phosphorus--Scenario 4a. The total benefits of this option 
consist of $49.2 million for the households that have nitrate levels 
reduced to below the MCL from baseline concentrations above 10 mg/L, 
plus an additional $1.7 million for those households with nitrate 
reductions relative to baseline levels below the MCL. The household 
benefits of the other options are also shown in the table, and range 
from $46.4-$50.1 million per year.

           Table 11-15.-- Annualized Monetary Benefits Attributable To Reduced Nitrate Concentrations
----------------------------------------------------------------------------------------------------------------
                                                                              Benefits from      Benefits from
                                                                                households         households
                    Regulatory scenario                     Total benefits   exceeding MCL at   between 1 and 10
                                                                                 baseline       mg/L at baseline
----------------------------------------------------------------------------------------------------------------
Nitrogen--Scenario 1......................................     $46,372,457        $45,118,803         $1,219,763
Nitrogen--Scenario 2/3....................................      46,432,250         45,118,803          1,276,293
Nitrogen--Scenario 4a.....................................      49,386,622         47,840,089          1,498,104
Nitrogen--Scenario 4b.....................................      49,386,622         47,840,089          1,498,104
Phosphorus--Scenario 1....................................      49,278,094         47,840,089          1,396,043
Phosphorus--Scenario 2/3*.................................      49,352,058         47,840,089          1,465,648
Phosphorus--Scenario 4a*..................................      50,993,067         49,200,732          1,729,337
Phosphorus--Scenario 4b...................................      50,993,067         49,200,732         1,729,337
----------------------------------------------------------------------------------------------------------------
* Proposed scenarios.

    e. Total Benefit of Proposed Regulatory Scenario. Table 11-16 shows 
the annualized benefits for each of the studies conducted. Table 11-17 
shows the summary of annualized benefits for three discount rates (3, 
5, and 7 percent). The total monetized benefits for this proposed rule 
are, at a minimum, $163 million for Phosphorus--Scenario 2/3 and $146 
million for Phosphorus--Scenario 4a, discounted at seven percent. At a 
three percent discount rate, the annualized benefits for Phosphorus--
Scenario 3 are $180 million and for Phosphorus--Scenario 4a, $163 
million. These represent the lower bound estimates for this analysis. 
The upper end of the range would include estimates for drinking water 
treatment plant cost savings, surface water improvements from 
nonboatable to boatable water quality conditions, and other benefits 
that we were unable to estimate at this time. We plan to include some 
of these monetized benefits in the final rule.

                     Table 11-16.--Estimated Annualized Benefits of Revised CAFO Regulations
                                            [1999 dollars, millions]
----------------------------------------------------------------------------------------------------------------
                                                        Recreational                                  Reduced
                 Regulatory Scenario                     and non-use     Reduced      Improved     private well
                                                          benefits      fish kills  shellfishing   contamination
----------------------------------------------------------------------------------------------------------------
Nitrogen--Scenario 1.................................             4.9      0.1-0.2       0.1-1.8       33.3-49.0
Nitrogen--Scenario 2/3...............................             6.3      0.1-0.3       0.2-2.4       33.3-49.1
Nitrogen--Scenario 4a................................             5.5      0.1-0.3       0.2-2.2       35.5-52.2
Nitrogen--Scenario 4b................................             7.2      0.1-0.3       0.2-2.6       35.5-52.2

[[Page 3120]]

 
Phosphorus--Scebarui 1...............................            87.6      0.2-0.3       0.2-2.1       35.4-52.1
Phosphorus--Scenario 2/3*............................           127.1      0.2-0.4       0.2-2.7       35.4-52.1
Phosphorus--Scenario 4a*.............................           108.5      0.2-0.4       0.2-2.4       36.6-53.9
Phosphorus--Scenario 4b..............................           145.0      0.2-0.4       0.2-3.0      36.6-53.9
----------------------------------------------------------------------------------------------------------------
* Proposed scenarios.


                                  Table 11-17.--Summary of Annualized Benefits
                                            [1999 dollars, millions]
----------------------------------------------------------------------------------------------------------------
                                                                                  Discount rates
                                                                 -----------------------------------------------
                       Regulatory scenario                           3 percent       5 percent       7 percent
                                                                 -----------------------------------------------
                                                                    Low    High     Low    High     Low    High
----------------------------------------------------------------------------------------------------------------
Nitrogen--Scenario 1............................................    54.1    55.9    45.0    46.9    38.4    40.2
Nitrogen--Scenario 2/3..........................................    55.7    58.0    46.6    48.9    39.9    42.3
Nitrogen--Scenario 4a...........................................    58.0    60.2    48.3    50.5    41.2    43.4
Nitrogen--Scenario 4b...........................................    59.7    62.3    50.1    52.6    43.0    45.5
Phosphorus--Scenario 1..........................................   140.0   142.1   130.4   132.4   123.3   125.4
Phosphorus--Scenario 2/3*.......................................   179.7   182.3   170.0   172.7   163.0   165.6
Phosphorus--Scenario 4a*........................................   162.8   165.1   152.8   155.2   145.5   147.9
Phosphorus--Scenario 4b.........................................   199.4   202.2   189.4   192.2   182.1  185.0
----------------------------------------------------------------------------------------------------------------
* Proposed scenarios.

XII. Public Outreach

A. Introduction and Overview

    EPA has actively involved interested parties to assist it in 
developing a protective, practical, cost-effective regulatory proposal. 
EPA has provided many opportunities for input in this rulemaking 
process. EPA has met with various members of the stakeholder community 
on a continuing basis through meeting requests and invitations to 
attend meetings, conferences, and site visits. These meetings with 
environmental organizations, agricultural organizations, producer 
groups, and producers representing various agricultural sectors have 
allowed EPA to interact with and receive input from stakeholders about 
the Unified Strategy and the NPDES and effluent limitations regulatory 
revisions. In addition, EPA convened a Small Business Advocacy Review 
Panel to address small entity concerns. EPA also sent an outreach 
package to and met with several national organizations representing 
State and local governments. More detailed information on EPA's public 
outreach is provided in the rulemaking record.

B. Joint USDA/EPA Unified AFO Strategy Listening Sessions

    In the fall of 1998, EPA and USDA announced eleven public outreach 
meetings designed to allow public comment on the Draft Unified National 
AFO Strategy. The meetings were held in the following cities: Tulsa, 
Oklahoma; Harrisburg, Pennsylvania; Ontario, California; Madison, 
Wisconsin; Seattle, Washington; Des Moines, Iowa; Chattanooga, 
Tennessee; Indianapolis, Indiana; Fort Worth, Texas; Denver, Colorado; 
and Annapolis, Maryland. Each meeting included a pre-meeting among 
state and regional officials, EPA, and USDA representatives to discuss 
the draft strategy and the issues posed by CAFOs in general. All 
participants in the public sessions, including numerous small entities, 
were given the opportunity to sign up and provide their comments to a 
panel consisting of EPA, USDA, and local representatives. Many of the 
commenters made points or raised issues germane to small entities. A 
transcript of these comments was used by EPA and USDA in developing the 
final Unified National AFO Strategy. These comments and concerns have 
been considered by EPA in the development of the revised NPDES CAFO 
regulations. The transcripts of these meetings are available on the OWM 
Web Site (www.epa.gov/owm/afo.htm) and are available in the record.

C. Advisory Committee Meeting

    EPA was invited to meet with the Local Government Advisory 
Committee, Small Community Advisory Subcommittee on September 8, 1999. 
At this Federal Advisory Committee Act meeting, EPA described the CAFO 
regulatory revisions being considered, and responded to questions 
concerning the effect of EPA's regulatory actions on small communities. 
While the CAFO regulations do not directly affect small communities, 
AFOs do have an effect on local economies and on the local environment. 
Thus, how they are regulated (or not regulated) has implications for 
local governments. EPA is keeping local government concerns in mind as 
it proceeds with the CAFO regulatory revisions and general public 
outreach activities.

D. Farm Site Visits

    EPA conducted approximately 110 site visits to collect information 
about waste management practices at livestock and poultry operations. 
Agency staff visited a wide range of operations, including those 
demonstrating centralized treatment or new and innovative technologies. 
EPA staff visited livestock and poultry operations throughout the 
United States, the majority of which were chosen with the assistance of 
the leading industry trade associations and also by the Natural 
Resources Defense Council, the Clean Water Network, university experts, 
State cooperative and extension agencies, and state and EPA regional 
representatives.

[[Page 3121]]

EPA also attended USDA-sponsored farm tours, as well as tours offered 
at industry, academic, and government conferences. Details on these 
visits are provided in the rulemaking record.
    EPA staff visited cattle feeding operations in Texas, Oklahoma, 
Kansas, Colorado, California, Indiana, Nebraska, and Iowa, as well as 
veal operations in Indiana. The capacities of the beef feedlots varied 
from 500 to 120,000 head. EPA also visited dairies in Pennsylvania, 
Florida, California, Colorado, and Wisconsin, with the total mature 
dairy cattle at the operations ranging from 40 to 4,000 cows. In 
addition, EPA visited broiler, layer and turkey facilities in Georgia, 
Arkansas, North Carolina, Virginia, West Virginia, Maryland, Delaware, 
Pennsylvania, Ohio, Indiana, and Wisconsin. EPA visited hog facilities 
in North Carolina, Ohio, Iowa, Minnesota, Texas, Colorado, Oklahoma, 
and Utah.

E. Industry Trade Associations

    Throughout regulatory development, EPA has worked with 
representatives from the national trade groups, including: National 
Cattlemen's Beef Association (NCBA); American Veal Association (AVA); 
National Milk Producers Federation (NMPF); Professional Dairy Heifers 
Growers Association (PDHGA); Western United Dairymen (WUD); National 
Pork Producers Council (NPPC); United Egg Producers and United Egg 
Association (UEP/UEA); National Turkey Federation (NTF); and the 
National Chicken Council (NCC). All of the above organizations have 
provided assistance by helping with site visit selection, submitting 
supplemental data, reviewing descriptions of the industry and waste 
management practices, and participating in and hosting industry 
meetings with EPA.

F. CAFO Regulation Workgroup

    EPA established a workgroup that included representatives from USDA 
and seven states, as well as EPA Regions and headquarters offices. The 
workgroup considered input from stakeholders and developed the 
regulatory options presented in today's proposal.

G. Small Business Advocacy Review Panel

1. Summary of Panel Activities
    To address small business concerns, EPA's Small Business Advocacy 
Chairperson convened a Small Business Advocacy Review (SBAR) Panel 
under section 609(b) of the Regulatory Flexibility Act (RFA) as amended 
by the Small Business Regulatory Enforcement Fairness Act (SBREFA). 
Participants included representatives of EPA, the Small Business 
Administration (SBA) and the Office of Management and Budget (OMB). 
``Small Entity Representatives'' (SERs), who advised the Panel, 
included small livestock and poultry producers as well as 
representatives of the major commodity and agricultural trade 
associations. Information on the Panel's proceedings and 
recommendations is in the Final Report of the Small Business Advocacy 
Review Panel on EPA's Planned Proposed Rule on National Pollutant 
Discharge Elimination System (NPDES) and Effluent Limitations Guideline 
(Effluent Guidelines) Regulations for Concentrated Animal Feeding 
Operations (hereinafter called the ``Panel Report''), along with other 
supporting documentation included as part of the Panel process. This 
information can be found in the rulemaking record.
    Prior to convening a SBAR Panel, EPA distributed background 
information and materials to potential SERs on September 3, 1999 and 
September 9, 1999. On September 17, 1999, EPA held a conference call 
from Washington, D.C. which served as a pre-panel forum for small 
business representatives to provide input on key issues relating to the 
proposed regulatory changes to the ``CAFO Rule.'' Twenty-seven small 
business representatives from the beef, dairy, swine, poultry, and 
exotic animal livestock industries participated in the conference call. 
A summary of the conference call is included in the Panel Report. 
Following the conference call, 19 of the 41 small business advisors and 
national organizations invited to participate on the conference call 
submitted written comments. These written comments are included in the 
Panel Report.
    The SBAR Panel for the ``CAFO Rule'' was formally convened on 
December 16, 1999. On December 28, 1999, the Panel distributed an 
outreach package to the final group of SERs, which included many of the 
participants in EPA's September 17, 1999 outreach conference call. The 
package included: a SER outreach document, which provided a definition 
of a small business and described those entities most likely to be 
affected by the rule; an executive summary of EPA's cost methodology; 
regulatory flexibility alternatives; a cost methodology overview for 
the swine, poultry, beef, and dairy sectors; a cost annualization 
approach; and a list of questions for SERs. Additional modeling 
information was also sent to SERs on January 7, 2000 and January 10, 
2000. A complete list of these documents can be found in the Panel 
Report; all information sent to the SERs is included in the record.
    The SERs were asked to review the information package and provide 
verbal comments to the Panel during a January 5, 2000 conference call, 
in which 22 SERs participated. During this conference call, SERs were 
also encouraged to submit written comments. SERs were given an 
additional opportunity to make verbal comments during a second 
conference call held on January 11, 2000, in which 20 SERs 
participated. During both conference calls, SERs were asked to comment 
on the costs and viability of the proposed alternatives under 
consideration by EPA. A summary of both conference calls can be found 
in the Panel Report. Following the calls, the Panel received 20 sets of 
written comments from 14 SERs. A complete set of these comments is 
included in the Panel Report.
2. Summary of Panel Recommendations
    A full discussion of the comments received from SERs and Panel 
recommendations is included in the Panel Report. The major issues 
summarized are as follows.
    a. Number of Small Entities. The Panel reviewed EPA's methodology 
to develop its estimate of the small entities to which the proposed 
rule will likely apply. EPA proposed two alternative approaches to 
estimate the number of small businesses in these sectors. Both 
approaches identify small businesses in these sectors by equating SBA's 
annual revenue definition with the number of animals at an operation 
and estimate the total number of small businesses in these sectors 
using farm size distribution data from USDA. One approach equates SBA's 
annual revenue definition with operation size using farm revenue data, 
as described in Section X.J.2 of this document. Another approach 
equates SBA's annual revenue definition with the operation size using a 
modeling approach developed by EPA that calculates the amount of 
livestock revenue at an operation based market data, including the 
USDA-reported price received by producers, average yield, and the 
number of annual marketing cycles. (Additional information on this 
latter approach is in the rulemaking record.)
    During the Panel process, and following formal consultation with 
SBA, the Panel participants agreed to use the first approach to 
estimate the number of small businesses in these sectors. More details 
on this approach is provided in Section X.J.2 and in Section 9 of the

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Economic Analysis. More detail on the Panel's deliberation of the 
approach used to determine the number of small businesses is provided 
Sections 4 and 5 of the Panel Report and in other support documentation 
developed during the SBAR Panel process. The Panel noted that the 
revised methodology may not accurately portray actual small businesses 
in all cases across all sectors. The Panel also recognized that, under 
this small business definition, EPA would be regulating some small 
facilities, but urged EPA to consider the small business impacts of 
doing so.
    b. Potential Reporting, Record Keeping, and Compliance 
Requirements. Record Keeping Related to Off-Site Transfer of Manure. 
The Panel reviewed EPA's consideration of record keeping and reporting 
requirements in connection with off-site transfer of manure. The Panel 
recommended that EPA review and streamline the requirements for small 
entities. In response to this recommendation, EPA is limiting its 
proposal to keep records of the name and address of the entity to which 
the CAFO is transferring manure, how much is being transferred and the 
nutrient content of the manure on-site. This information would allow 
EPA to track manure, and to follow-up with the third party recipient to 
ascertain whether the manure was applied in accordance with Clean Water 
Act requirements that may apply. EPA is also proposing under one co-
proposed option that a CAFO obtain a certification from recipients that 
land application is done in accordance with proper agricultural 
practices. EPA assumes recipients of manure are mostly field crop 
producers who already maintain appropriate records relating to nutrient 
management. EPA is not proposing to establish specific requirements for 
these offsite recipients.
    Permit Application and Certification Requirements. The Panel asked 
EPA to consider the burden associated with increasing the number of 
entities subject to permit between 300 AU and 1,000 AU. Furthermore, 
the Panel recommended that EPA carefully consider appropriate 
streamlining options before considering a more burdensome approach. EPA 
considered several alternative scenarios for the scope of permit 
coverage of facilities in this size group, and decided to 
simultaneously co-propose two scenarios, as each offers different means 
of accomplishing similar environmental outcomes.
    The first alternative proposal would retain the current three-tier 
structure, but would require an operation in the 300-1,000 AU size tier 
to certify to the permitting authority that it does not meet any of the 
``risk-based'' conditions (described in Section VII), and thus is not 
required to obtain a permit. The three-tier structure would require all 
AFOs with 300 AU or more to, at a minimum, obtain a permit nutrient 
plan and submit a certification to the permit authority. This 
alternative would provide the permit authority the opportunity to 
implement effective programs to assist AFOs in order to minimize how 
many would be required to apply for a permit. Because those certifying 
would not be CAFOs, however, they would have access to section 319 
nonpoint source funds. This co-proposed alternative does not meet one 
of the goals of today's proposal, as recommended by the Panel, that is, 
to simplify the regulations to improve understanding and therefore 
compliance by the regulated community. Further, the conditions are such 
that all facilities with 300 AU or more would incur some cost 
associated with certifying they do not meet any of the conditions. EPA 
is also requesting comment on a variation of the three-tier structure 
that was presented to the SERs and generally favorably received by the 
Panel (see detailed discussion in Section VII.B.3).
    The second alternative proposal would adopt a two-tier structure 
that defines all operations with 500 AU or more as CAFOs. (EPA is also 
requesting comment on a 750 AU threshold.) This proposal would provide 
regulatory relief for operations between 300 AU and 500 AU that may be 
considered CAFOs under the existing regulations. Operations in this 
size group would not be subject to the certification process and would 
not incur the costs associated with certification, such as the costs to 
obtain a certified Permit Nutrient Plan and to submit a certification 
to the permit authority. Under the two-tier structure, operations with 
more than 500 AU would all be required to apply for a permit. All 
facilities with fewer than 500 AU would be subject to permitting as 
CAFOs only through case-by-case designation based on a finding that the 
operation is a significant contributor of pollution by the permit 
authority. This proposal offers simplicity and clarity as to which 
entities will be subject to the proposed regulations and those that 
will not, which was recommended by the Panel, as well as indicated by 
the regulated community as one of the goals of today's proposal. 
Representatives of some State programs, however, have indicated that 
they would prefer an option that allows State non-NPDES programs to 
address issues at CAFOs in their states, rather than being required to 
write permits.
    EPA is also proposing to provide regulatory relief to small 
businesses by eliminating the mixed animal calculation. As a result, 
smaller operations that house a mixture of animal types where none of 
these animal types independently meets the regulatory threshold are not 
considered CAFOs under either of today's proposals, unless they are 
individually designated. EPA believes that this will provide maximum 
flexibility for these operations since most are now participating in 
USDA's voluntary CNMP program, as outlined in the AFO Strategy. For 
more information, see discussion in Section VII. A summary of EPA's 
economic analysis is provided in Section X.J of this preamble.
    Frequency of Testing. The Panel reviewed EPA's consideration of 
requiring periodic soil testing. The Panel agreed that testing manure 
and soil at different rates may be appropriate, but expressed concern 
about the burden of any inflexible testing requirements on small 
businesses. The Panel recommended that EPA consider leaving the 
frequency of required testing to the discretion of local permit 
writers, and request comment on any testing requirements that are 
included in the proposed rule. The Panel further recommended that EPA 
weigh the burden of testing requirements to the need for such 
information.
    EPA is proposing to require soil testing of each field every three 
years and manure testing once per year. The proposed frequency is 
consistent with standards in many states and also recommendations from 
agricultural extension services. To ensure that soils have not reached 
a critical concentration of phosphorus, EPA believes that it is 
necessary to establish a minimum sampling frequency and testing 
requirements for all CAFOs, regardless of size. Since it is believed 
that much of the water pollution from agriculture comes from field 
runoff, information on manure and soil content is essential for the 
operator to determine at what rate manure should be applied. EPA 
believes this information is essential for the permitting authority to 
know whether the manure is being land applied at proper rates. The 
local permit writer retains the discretion to require more frequent 
testing.
    Groundwater Requirements Where Linked to Surface Water. The Panel 
reviewed EPA's consideration of an option that would require 
groundwater controls at facilities that are determined to have a direct 
hydrological connection

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to surface water since there is reasonable potential for discharges to 
surface water via ground water at these facilities (``Option 3''). 
Because of the potentially high costs to small operators associated 
with both making a determination of a hydrologic link and installing 
controls (such as lagoon liners, mortality composting devices, 
groundwater monitoring wells, concrete pads, and other technologies), 
the Panel recommended that EPA examine this requirement, giving careful 
consideration to the associated small entity impacts, in light of the 
expected environmental benefits resulting from this option. The Panel 
further recommended that if EPA decides to propose any such 
requirements that it consider streamlining the requirements for small 
entities (e.g., sampling at reduced rates) or exempting them 
altogether.
    (i) Existing CAFOs. EPA is proposing to require existing beef and 
dairy CAFOs to install groundwater controls when the groundwater 
beneath the production area has a direct hydrologic connection to 
surface water (Option 3, as described in Section VIII). This includes 
installation of wells and biannual sampling to monitor for any 
potential discharge from the production area. CAFOs are also expected 
to construct concrete pads or impermeable surfaces, as well as install 
synthetic liners if necessary to prevent discharges to surface water 
via direct hydrologic connection. The groundwater controls which are 
part of the proposed BAT requirements are in addition to the land 
application requirements which ensure that the manure and wastewater 
application to land owned or controlled by the CAFO is done in 
accordance with a PNP and does not exceed the nutrient requirements of 
the soil and crop. EPA has determined that this option represents the 
best available technology for existing beef and dairy CAFOs and that 
this requirement is economically achievable under both proposed 
permitting scenarios (i.e. the two-tier and three-tier structures), 
although some CAFOs in these sectors may experience increased financial 
burden. Because the risks from discharged pollutants from groundwater 
to surface water are location-specific, EPA believes that the proposed 
groundwater requirements are necessary at CAFOs where there is a 
hydrologic connection to surface waters. EPA's is proposing that these 
requirements are economically achievable by operations that are defined 
as CAFOs and are also small businesses. The results of EPA's small 
business analysis is provided in Section X.J of this preamble. 
Moreover, EPA believes that the estimated benefits in terms of 
additional groundwater-surface water protections would be significant. 
EPA's pollution reduction estimates across options are presented in the 
Development Document.
    EPA is not proposing BAT requirements for the existing swine, veal 
and poultry subcategories on the basis of Option 3, i.e., EPA rejected 
proposing groundwater monitoring and controls in the effluent 
guidelines for these CAFOs. As described in Section VIII of this 
preamble, EPA is proposing Option 5 as the best available technology 
economically achievable, which requires zero discharge from the animal 
production area with no exception for storm events. Were EPA to add the 
requirement to control discharges to groundwater that is directly 
connected to surface waters in addition to the Option 5 requirements, 
the costs would result in much greater financial impacts to hog and 
poultry operations. EPA's analysis shows that the full cost of 
groundwater controls (``Option 3'') in addition to requirements under 
Option 5 would not be economically achievable by operations in these 
sectors.
    (ii) New CAFOs. EPA is proposing to require that all new CAFOs in 
all subcategories install groundwater controls. EPA expects that 
requiring groundwater monitoring is affordable to new facilities since 
these facilities do not face the cost of retrofit. EPA's economic 
analysis of new facility costs is provided in Section X.F.1(b) of this 
preamble. More detailed information is provided in the Economic 
Analysis and the Development Document.
    c. Relevance of Other Federal Rules. The Panel did not note any 
other Federal rules that may duplicate, overlap, or conflict with the 
proposed rule.
    d. Regulatory Alternatives. The Panel considered a wide range of 
options and regulatory alternatives for reducing the burden on small 
business in complying with today's proposal. These included:
    Revised Applicability Thresholds. The Panel recommended that EPA 
give serious consideration to the issues discussed by the Panel when 
determining whether to establish less stringent effluent limitations 
guidelines for smaller facilities, and whether to preserve maximum 
flexibility for the best professional judgement of local permit 
writers. The Panel also recommended that the Agency carefully evaluate 
the potential benefits of any expanded requirements for operations with 
between 300 and 1,000 AU and ensure that those benefits are sufficient 
to warrant the additional costs and administrative burden that would 
result for small entities.
    EPA is proposing to apply the effluent limitation guidelines to all 
facilities that are defined as CAFOs, although EPA is also requesting 
comment on an option under which they would only apply to facilities 
with greater than 1,000 AUs. Thus, under the three-tier structure all 
CAFOs with 300 AU or more would be subject to the effluent guidelines. 
Under the two-tier structure, all CAFOs with 500 AU or more would be 
subject to the effluent guidelines. EPA is also requesting comment on a 
750 AU threshold for the two-tier structure. Under both of the co-
proposed alternatives, EPA is proposing to eliminate the ``mixed'' 
animal calculation for operations with more than a single animal type 
for determining which AFOs are CAFOs. As a result, smaller operations 
that house a mixture of animal types where none of these animal types 
independently meets the regulatory threshold are not considered CAFOs 
under today's proposed rulemaking, unless they are individually 
designated. EPA believes that this will provide maximum flexibility for 
these operations since most are now participating in USDA's voluntary 
CNMP program, as outlined in the AFO Strategy. For more information, 
see discussion in Section VII.
    EPA's two-tier proposal provides additional relief to small 
businesses. Under the two-tier structure, EPA is proposing to establish 
a regulatory threshold that would define as CAFOs all operations with 
more than 500 AU. This co-proposed alternative would provide relief to 
small businesses since this would remove from the CAFO definition 
operations with between 300 AU to 500 AU that under the current rules 
are defined as CAFOs. These operations would no longer be defined as 
CAFOs and may avoid being designated as CAFOs if they take appropriate 
steps to prevent discharges. In addition, if operations of any size 
that would otherwise be defined as CAFOs can demonstrate that they have 
no potential to discharge, they would not need to obtain a permit. 
Also, under the two-tier structure, EPA is proposing to raise the size 
standard for defining egg laying operations as CAFOs from 30,000 to 
50,000 laying hens. This alternative would remove from the CAFO 
definition egg operations of this size that under the current rules are 
defined as CAFOs, if they utilize a liquid manure management system.
    EPA believes that revising the regulatory thresholds below 1,000 AU 
is necessary to protect the environment

[[Page 3124]]

from CAFO discharges. At the current 1,000 AU threshold, less than 50 
percent of all manure and wastewater generated annually would be 
captured under the regulation. Under the co-proposed alternatives, 
between 64 percent (two-tier) and 72 percent (three-tier) would be 
covered. (See Section IV.A of this preamble.) Total pre-tax compliance 
costs to CAFOs with fewer than 1,000 AU is estimated to range between 
$226 million annually (two-tier) to $298 million annually (three-tier), 
or about one-third of the total estimated annual costs (see Section 
X.E.1). EPA believes that the estimated benefits in terms of additional 
manure coverage justify the estimated costs. EPA estimates that 60 
percent (two-tier) to 70 percent (three-tier) of all operations that 
are defined as CAFOs and are also small businesses are operations with 
less than 1,000 AU. EPA's economic analysis, however, indicates that 
these small businesses will not be adversely impacted by the proposed 
requirements. EPA's estimates of the number of small businesses and the 
results of its economic analysis is provided in Section X.J of this 
preamble.
    Under each co-proposed alternative, EPA is proposing that 
operations that are not defined as CAFO (i.e., operations with fewer 
animals than the AU threshold proposed) could still be designated as 
CAFOs on a case-by-case basis. During the Panel process, the Panel 
urged EPA not to consider changing the designation criteria for 
operations with less than 300 AU. This includes the criterion that the 
permitting authority must conduct an on-site inspection of any AFO, in 
making a designation determination. EPA is not proposing to eliminate 
the on-site inspection requirement. EPA believes it is appropriate to 
retain the requirement for an on-site inspection before the permitting 
authority determines that an operation is a ``significant contributor 
of pollution.'' No inspection would be required to designate a facility 
that was previously defined or designated as a CAFO. EPA is, however, 
requesting comment on whether or not to eliminate this provision or to 
redefine the term ``on-site'' to include other forms of site-specific 
data gathering. In addition, EPA is proposing to delete two criteria, 
including discharge from manmade device and direct contact with waters 
of the U.S., as unnecessary to the determination of whether an 
operation should be designated as a CAFO. EPA is also proposing to 
clarify EPA's designation authority in States with NPDES approved 
programs. For more information, see Section VII.
    25-year, 24-hour Storm Event. At the time of SBREFA outreach, EPA 
indicated to SERs and to the Panel that it was considering removing the 
exemption, but not changing the design requirement for permitted CAFOs. 
The Panel expressed concern about removing this exemption for 
operations with fewer than 1000 AU. The Panel recommended that if EPA 
removes the exemption, it should fully analyze the incremental costs 
associated with permit applications for those facilities that are not 
presently permitted that can demonstrate they do not discharge in less 
than a 25-year, 24-hour storm event, as well as any costs associated 
with additional conditions related to land application, nutrient 
management, or adoption of BMPs that the permit might contain. The 
Panel recommended that EPA carefully weigh the costs and benefits of 
removing the exemption for small entities. The Panel also urged EPA to 
consider reduced application requirements for small operations affected 
by the removal of the exemption.
    EPA is proposing to require that all operations that are CAFOs 
apply for a permit. EPA is proposing to remove the 25-year, 24-hour 
storm exemption from the definition of a CAFO. It is difficult to 
monitor, and removal of this exemption will make the rule simpler and 
more equitable. However, we are proposing to retain the 25-year, 24-
hour storm event as a design standard in the effluent limitation 
guidelines for certain animal sectors (specifically, the beef and dairy 
cattle sectors). As a result, operations in these sectors that 
discharge only in the event of a 25-year, 24-hour storm would not be 
exempt from being defined as CAFOs, but would be in compliance with 
their permit as long as they met the 25-year, 24-hour storm design 
standard. EPA is proposing to establish BAT for the swine, poultry, and 
veal subcategories on the basis of Option 5 which bans discharge from 
the production area under any circumstances. The technology basis for 
this option is covered lagoons, and does not establish a different 
design standard for these lagoons. Removal of the exemption from the 
CAFO definition should have no impact on operations that are already 
employing good management practices. More information is provided in 
Sections VII and VIII of this document. Prior to proposing to remove 
this exemption, EPA evaluated the incremental costs associated with 
permit applications for those facilities that are not presently 
permitted and other associated costs to regulated small entities. EPA's 
economic analysis is provided in Section X.J of this preamble. 
Estimated costs to the NPDES Permitting Authority are presented in 
Section X.G.1. Section X.I presents a comparison of the annualized 
compliance costs and the estimated monetized benefits.
    Manure and Wastewater Storage Capacity. The Panel noted the SERs' 
concern about the high cost of additional storage capacity and 
recommended that EPA consider low-cost alternatives in its assessment 
of best available technologies economically achievable, especially for 
any subcategories that may include small businesses. The Panel was 
concerned about the high cost of poultry storage and asked EPA to 
consider low cost storage. EPA is proposing that facilities may not 
discharge pollutants to surface waters. To meet this requirement, 
facilities may choose to construct storage sheds, cover manure, collect 
all runoff, or any other equally effective combination of technologies 
and practices. The proposal does not directly impose any minimum 
storage requirements.
    Land Application. The Panel recommended that EPA continue to work 
with USDA to explore ways to limit permitting requirements to the 
minimum necessary to deal with threats to water quality from over-
application and to define what is ``appropriate'' land application, 
consistent with the agricultural stormwater exemption. The Panel 
recommended that EPA consider factors such as annual rainfall, local 
topography, and distance to the nearest stream when developing any 
certification and/or permitting requirements related to land 
application. The Panel also noted the high cost of P-based application 
relative to N-based application, and supported EPA's intent to require 
the use of P-based application rates only where necessary to protect 
water quality, if at all, keeping in mind its legal obligations under 
the CWA. The Panel recommended that EPA consider leaving the 
determination of whether to require the use of P-based rates to the 
permit writer's discretion, and continue to work with USDA in exploring 
such an option.
    EPA recognizes that the rate of application of the manure and 
wastewater is a site-specific determination that accounts for the soil 
conditions at a CAFO. Depending on soil conditions at the CAFO, EPA is 
proposing to require that the operator apply the manure and wastewater 
either according to a nitrogen-standard or,

[[Page 3125]]

where necessary, on a phosphorus-standard. If the soil phosphorus 
levels in a region are very high, the CAFO would be prohibited from 
applying any manure or wastewater. EPA believes that this will improve 
water quality in some production regions where the amount of phosphorus 
in animal manure and wastewater being generated exceeds crop needs and 
has resulted in a phosphorus build-up in the soils in those regions. 
Evidence of manure-phosphorus generation in excess of crop needs is 
reported in analyses conducted by USDA. Other data show that larger 
operations tend to have less land to land apply manure nutrients that 
are generated on-site. EPA believes that each of the co-proposed 
alternatives establish a regulatory threshold that ensures that those 
operations with limited land on which to apply manure are permitted. 
Under the three-tier structure, EPA is proposing risk conditions that 
would require nutrient management (i.e., PNPs) at operations with 300 
to 1,000 AU. In addition, EPA is proposing under one co-proposed option 
to require letters of certification be obtained from off-site 
recipients of CAFO manure. Operations that are not defined as CAFOs, 
but that are determined to be a ``significant contributor of 
pollution'' by the permit authority, may be designated as CAFOs.
    EPA is proposing a method for assessing whether phosphorus-based 
application is necessary that is consistent with USDA's policy on 
nutrient management. In all other areas, a nitrogen-based application 
rate would apply. EPA's proposal grants flexibility to the states in 
determining the appropriate basis for land application rates. EPA will 
continue to work with USDA to evaluate appropriate measures to 
distinguish proper agricultural use of manure.
    Co-Permitting. The Panel reviewed EPA's consideration of requiring 
corporate entities that exercise substantial operational control over a 
CAFO to be co-permitted. The Panel did not reach consensus on this 
issue. The Panel was concerned that any co-permitting requirements may 
entail additional costs and that co-permitting cannot prevent these 
costs from being passed on to small operators, to the extent that 
corporate entities enjoy a bargaining advantage during contract 
negotiations. The Panel thus recommended that EPA carefully consider 
whether the potential benefits from co-permitting warrant the costs 
particularly in light of the potential shifting of those costs from 
corporate entities to contract growers. The Panel also recommended that 
if EPA does require co-permitting in the proposed rule, EPA consider an 
approach in which responsibilities are allocated between the two 
parties such that only one entity is responsible for compliance with 
any given permit requirement. This would be the party that has primary 
control over that aspect of operations. Flexibility could also be given 
to local permit writers to determine the appropriate locus of 
responsibility for each permit component. Finally, the Panel 
recommended that if EPA does propose any form of co-permitting, it 
address in the preamble both the environmental benefits and any 
economic impacts on small entities that may result and request comment 
on its approach. If EPA does not propose a co-permitting approach, the 
Panel recommended that EPA discuss the strengths and weaknesses of this 
approach and request comment on it.
    EPA is proposing in the rule to clarify that co-permitting is 
appropriate where a corporate or other entity exercises substantial 
operational control over a CAFO. Data show that some corporations 
concentrate growers geographically, thus producing a high concentration 
of nutrients over a limited area. EPA is leaving to the States 
decisions on how to structure co-permitting. A discussion of the 
strength and weaknesses of co-permitting is contained in Section 
VII.C.5 with several solicitations of comment. EPA is also soliciting 
comment on an Environmental Management System as a sufficient program 
to meet co-permitting requirements. Please refer to Section VII.C.5 for 
further discussion of Environmental Management Systems.
    CNMP Preparer Requirements. The Panel reviewed EPA's consideration 
of requiring permittees to have CNMPs (Comprehensive Nutrient 
Management Plans) developed by certified planners. The Panel 
recommended that EPA work with USDA to develop low cost CNMP 
development services or allow operators to write their own plans. The 
Panel was concerned about the cost of having a certified planner 
develop the plans and urged EPA to continue to coordinate with other 
federal, state and local agencies in the provision of low-cost CNMP 
development services, and should facilitate operator preparation of 
plans by providing training, guidance and tools (e.g., computer 
programs).
    EPA is proposing that CAFOs, regardless of size, have certified 
Permit Nutrient Plans (PNPs) that will be enforceable under the permit. 
The proposal states that USDA's Technical Guidance for Developing CNMPs 
may be used as a template for developing PNPs. EPA believes that USDA 
documentation and standards will be appropriate for use as the primary 
technical references for developing PNPs at CAFOs. In the proposal, EPA 
has identified certain practices that would be required elements of 
PNPs in order to protect surface water from CAFO pollutant discharges. 
These practices are consistent with some of the practices recommended 
in USDA's CNMP guidance; however, the PNP would not need to include all 
of the practices identified in the USDA guidance. As an enforceable 
part of the permit, the PNP would need to be written either by a 
certified planner or by someone else and reviewed and approved by a 
certified planner. EPA believes it is essential that the plans be 
certified by agriculture specialists because the permit writer will 
likely rely to a large extent on their expertise. The plans would need 
to be site specific and meet the requirements outlined in this rule. 
EPA is continuing to coordinate with other regulatory agencies and with 
USDA on the development of these proposed requirements. EPA has 
concluded that development of the PNP is affordable to small businesses 
in these sectors and will improve manure management and lead to cost 
savings at the CAFO. EPA's economic analysis is provided in Section X.J 
of this preamble. More detailed information on the cost to develop a 
PNP is in the Development Document.
    General vs. Individual Permits. The Panel reviewed EPA's 
consideration of requiring individual permits for CAFOs that meet 
certain criteria, or increasing the level of public involvement in 
general permits for CAFOs. The Panel recommended that EPA not expand 
the use of individual permits for operations with less than 1,000 AU. 
EPA believes that individual permits may be warranted under certain 
conditions such as extremely large operations, operations with a 
history of compliance problems, or operations in environmentally 
sensitive areas. Accordingly, EPA is co-proposing two options. In one 
option, each State develops its own criteria, after soliciting public 
input, for determining which CAFOs would need to have individual rather 
than general permits. EPA is also coproposing an option that would 
establish a national criteria for issuing individual permits. The 
criteria identifies a threshold that represents the largest operations 
in each sector. (See Section XII for a detailed discussion.)
    Immature Animals. The Panel reviewed EPA's consideration to include 
immature animals for all animal types in determining the total number 
of

[[Page 3126]]

animal units at a CAFO. The Panel recommended that EPA count immature 
animals proportionally to their waste generation. EPA is proposing to 
continue to account for only the mature animals at operations where all 
ages of animals are maintained (mostly dairy and hog operations). Once 
an operation is covered by the existing regulations, however, all 
manure and wastewater generated by immature animals that are confined 
at the same operation with mature animals would also be subject to the 
requirements. EPA is proposing to maintain this requirement because all 
young animals are not always confined and immature populations vary 
over time, whereas the mature herd is of a more constant size. 
Furthermore, the exclusion of immature animals adds to the simplicity 
we are seeking in this rulemaking. However, EPA is proposing to include 
immature animals as subject to the regulations only in stand-alone 
nursery pig and heifer operations. For stand-alone nursery pig 
operations, EPA is proposing to account for immature animals 
proportionate to their waste generation, as discussed in Section VIII. 
Stand-alone heifer operations are included under the beef subcategory 
and are subject to the proposed regulations if they confine more than 
500 heifers (two-tier) or more than 300 AU, under certain conditions 
(three-tier).
    e. Other Recommendations. Benefits. The Panel recommended that the 
EPA evaluate the benefits of the selected regulatory options and that 
EPA carefully evaluate, in a manner consistent with its legal 
obligations, the relative costs and benefits (including quantified 
benefits to the extent possible) of each option in order to ensure that 
the options selected are affordable (including to small farmers), cost-
effective, and provide significant environmental benefits. EPA has 
conducted an extensive benefit analysis of all the options and 
scenarios considered. The findings of the benefit analysis are found in 
Section XI of this report. More detailed information is provided in the 
Benefits Analysis. Section X.I presents a comparison of the annualized 
compliance costs and the estimated monetized benefits.
    Estimated Compliance Costs. The Panel recommended that EPA continue 
to refine the cost models and consider additional information provided. 
EPA has continued to refine the cost models and has reviewed all 
information provided to help improve the accuracy of the models. A 
summary of EPA's cost models is provided in Section X of this preamble. 
More detailed information is provided in the Economic Analysis and 
Development Document provided in the rulemaking record.
    Public Availability of CNMP. The Panel urged EPA to consider 
proprietary business concerns when determining what to make publicly 
available. To the extent allowed under the law, EPA should continue to 
explore ways to balance the operators' concerns over the 
confidentiality of information that could be detrimental if revealed to 
the operators' competitors, with the public's interest in knowing 
whether adequate practices are being implemented to protect water 
quality. EPA is not requiring CAFOs to submit the PNPs to the permit 
authority. However, EPA is proposing that the PNPs must be available 
upon the request of States and EPA. The agencies would make the plans 
available to the public on request. EPA is proposing to require the 
operator of a permitted CAFO to make a copy of the PNP cover sheet and 
executive summary available for public review. EPA is also requesting 
comment as to whether CAFOs should be able to claim these elements of 
the PNP as confidential business information and withhold those 
elements of the PNP from public review on that basis, or alternately, 
that whether other portions of the PNP should be made available as 
well.
    Dry Manure. The Panel asked EPA to consider the least costly 
requirements for poultry operations with dry manure management systems. 
The Panel recommended that in evaluating potential requirements for dry 
manure poultry operations, EPA consider the effects of any such 
requirements on small entities. EPA is not mandating a specific storage 
technology or practice, but is proposing a zero discharge performance 
standard and a requirement that poultry operations develop and 
implement a PNP. EPA is also proposing that certain monitoring and 
recordkeeping requirements would be appropriate. EPA's economic 
analysis is provided in Section X.J of this preamble. More detailed 
cost information is provided in the Development Document.
    Coordination with State Programs. The Panel recommended that EPA 
consider the impact of any new requirements on existing state programs 
and include in the proposed rule sufficient flexibility to accommodate 
such programs where they meet the minimum requirements of federal NPDES 
regulations. The Panel further recommended that EPA continue to consult 
with states in an effort to promote compatibility between federal and 
state programs. EPA has consulted with states. There were seven states 
represented on the CAFO workgroup (see Section XII.G.1). In addition, 
EPA asked for comment on the proposed options from nine national 
associations that represent state and local government officials. (See 
Section XIII.G.) In conducting its analyses for this rulemaking, EPA 
accounted for requirements under existing state programs. A summary of 
EPA's estimated costs to the NPDES Permitting Authority are presented 
in Section X.G.1 and Section XIII.B.

XIII.Administrative Requirements

A. Executive Order 12866: ``Regulatory Planning and Review''

    Under Executive Order 12866 [58 FR 51735, October 4, 1993], the 
Agency must determine whether the regulatory action is ``significant'' 
and therefore subject to OMB review and the requirements of the 
Executive Order. The Order defines ``significant regulatory action'' as 
one that is likely to result in a rule that may:
    (1) have an annual effect on the economy of $100 million or more or 
adversely affect in a material way the economy, a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or tribal governments or 
communities;
    (2) create a serious inconsistency or otherwise interfere with an 
action taken or planned by another agency;
    (3) materially alter the budgetary impact of entitlements, grants, 
user fees, or loan programs or the rights and obligations of recipients 
thereof; or
    (4) raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
the Executive Order.''
    It has been determined that this proposed rule is a ``significant 
regulatory action'' under the terms of Executive Order 12866. As such, 
this action was submitted to OMB for review. Changes made in response 
to OMB suggestions or recommendations will be documented in the public 
record.

B. Regulatory Flexibility Act (RFA) as amended by the Small Business 
Regulatory Enforcement Fairness Act of 1996 (SBREFA), 5 U.S.C. 601 et 
seq.

    The RFA generally requires an agency to prepare a regulatory 
flexibility analysis for any rule subject to notice and comment 
rulemaking requirements under the Administrative Procedure Act or any 
other statute unless the agency certifies that the rule will not have a 
significant economic impact on a substantial number of small entities.

[[Page 3127]]

Small entities include small businesses, small organizations, and small 
governmental jurisdictions.
    The RFA provides default definitions for each type of small entity. 
It also authorizes an agency to use alternative definitions for each 
category of small entity, ``which are appropriate to the activities of 
the agency'' after proposing the alternative definition in the Federal 
Register and taking comment. 5 U.S.C. Sec. 601(3)-(5). In addition to 
the above, to establish an alternative small business definition, 
agencies must consult with the Small Business Administration (SBA) 
Chief Counsel for Advocacy.
    For purposes of assessing the impacts of today's rule on small 
entities, small entity is defined as: (1) a small business based on 
annual revenue standards established by SBA, with the exception of one 
of the six industry sectors where an alternative definition to SBA's is 
proposed; (2) a small governmental jurisdiction that is a government of 
a city, county, town, school district or special district with a 
population of less than 50,000; and (3) a small organization that is 
any not-for-profit enterprise which is independently owned and operated 
and is not dominant in its field.
    The definitions of small business for the livestock and poultry 
industries are in SBA's regulations at 13 CFR 121.201. These size 
standards were updated in September, 2000. SBA size standards for these 
industries define a ``small business'' as one with average revenues 
over a 3-year period of less than $0.5 million annually for dairy, hog, 
broiler, and turkey operations, $1.5 million for beef feedlots, and 
$9.0 million for egg operations. In today's rule, EPA is proposing to 
define a ``small'' egg laying operation for purposes of its regulatory 
flexibility assessments under the RFA as an operation that generates 
less than $1.5 million in annual revenue. Because this definition of 
small business is not the definition established under the RFA, EPA is 
specifically seeking comment on the use of this alternative definition 
as part of today's notice of the proposed rulemaking. EPA has consulted 
with the SBA Chief Counsel for Advocacy on the use of this alternative 
definition. EPA believes this definition better reflects the 
agricultural community's sense of what constitutes a small business and 
more closely aligns with the small business definitions codified by SBA 
for other animal operations. A summary of EPA's analysis pertaining to 
the alternative definition is provided in Section 9 of the Economic 
Analysis. A summary of EPA's consultation with SBA is provided in the 
record.
    In accordance with Section 603 of the RFA, EPA prepared an initial 
regulatory flexibility analysis (IRFA) that examines the impact of the 
proposed rule on small entities along with regulatory alternatives that 
could reduce that impact. The IRFA is available for review in the 
docket (see Section 9 of the Economic Analysis). This analysis is 
summarized in Section X.J of this preamble. Based on available 
information, there are no small governmental operations or nonprofit 
organizations that operate animal feeding operations that will be 
affected by today's proposed regulations.
    The majority (95 percent) of the estimated 376,000 AFOs are small 
businesses, as defined by SBA. Of these, EPA estimates that there are 
10,550 operations that will be subject to the proposed requirements 
that are small businesses under the two-tier structure. Under the 
three-tier structure, an estimated 14,630 affected operations are small 
businesses. The difference in the number of affected small businesses 
is among poultry producers, particularly broiler operations. Section 
X.J.2 provides additional detail on how EPA estimated the number of 
small businesses.
    Based on the IRFA, EPA is proposing concludes that the proposed 
regulations are economically achievable to small businesses in the 
livestock and poultry sectors. EPA's economic analysis concludes that 
the proposed requirements will not result in financial stress to small 
businesses in the veal, dairy, hog, turkey, and egg sectors. However, 
EPA's analysis concludes that the proposed regulations may result in 
financial stress to 150 to 280 small broiler operations under the two-
tier and three-tier structure, respectively. In addition, EPA estimates 
that 10 to 40 small beef and heifer operations may also experience 
financial stress under each of the proposed tier structures. EPA 
considers these operations--comprising about 2 percent of all affected 
small CAFO businesses--may be vulnerable to closure. Details of this 
economic assessment are provided in Section X.J.
    EPA believes that moderate financial impacts that may be imposed on 
some operations in some sectors is justified given the magnitude of the 
documented environmental problems associated with animal feeding 
operations, as described in Section V of this document. Section IV 
further summarizes EPA's rationale for revising the existing 
regulations, including: (1) address reports of continued discharge and 
runoff from livestock and poultry operations in spite of the existing 
requirements; (2) update the existing regulations to reflect structural 
changes in these industries over the last few decades; and (3) improve 
the effectiveness of the existing regulations. Additional discussion of 
the objectives of and legal basis for the proposed rule is presented in 
Sections I through III.
    Section XIII.F summarizes the expected reporting and recordkeeping 
requirements required under the proposed regulation based on 
information compiled as part of the Information Collection Request 
(ICR) document prepared by EPA.
    Section X.J.4 summarizes the principal regulatory accommodations 
that are expected to mitigate future impacts to small businesses under 
the proposed regulations. Under both of the co-proposed alternatives, 
EPA is proposing to eliminate the ``mixed'' animal calculation for 
operations with more than a single animal type for determining which 
AFOs are CAFOs. As a result, smaller operations that house a mixture of 
animal types where none of these animal types independently meets the 
regulatory threshold are not considered CAFOs under today's proposed 
rulemaking, unless they are individually designated. Additional 
accommodations are being proposed under the two-tier structure. Under 
the two-tier structure, EPA is proposing to establish a regulatory 
threshold that would define as CAFOs all operations with more than 500 
AU. EPA is also considering a two-tier alternative that would define 
all operations with more than 750 AU as CAFOs. The two-tier structure 
would provide relief to small businesses since this would remove from 
the CAFO definition operations with between 300 AU and 500 AU (or 750 
AU) that under the current rules may be defined as CAFOs. Also, under 
the two-tier structure, EPA is proposing to raise the size standard for 
defining egg laying operations as CAFOs. This alternative would remove 
from the CAFO definition egg operations with between 30,000 and 50,000 
laying hens (or 75,000 hens) that under the current rules are defined 
as CAFOs, if they utilize a liquid manure management system. Additional 
information on the regulatory relief provisions being proposed by EPA 
is provided in Section VII of this preamble.
    As required by section 609(b) of the RFA, as amended by SBREFA, EPA 
also conducted outreach to small entities and convened a Small Business 
Advocacy Review Panel to obtain advice and recommendations from 
representatives of the small entities that potentially would be subject 
to the rule's requirements. Consistent with the

[[Page 3128]]

RFA/SBREFA requirements, the Panel evaluated the assembled materials 
and small entity comments on issues related to the elements of the 
IRFA. A complete summary of the Panel's recommendations is provided in 
the Final Report of the Small Business Advocacy Review Panel on EPA's 
Planned Proposed Rule on National Pollutant Discharge Elimination 
System (NPDES) and Effluent Limitations Guideline (Effluent Guidelines) 
Regulations for Concentrated Animal Feeding Operations (April 7, 2000). 
This document is included in the public record. As documented in the 
panel report, the participants of the Small Business Advocacy Review 
Panel did not identify any Federal rules that duplicate or interfere 
with the requirements of the proposed regulation.
    Section XII.G of this document provides a full summary of the 
Panel's activities and recommendations. This summary also describes 
each of the subsequent actions taken by the Agency, detailing how EPA 
addressed each of the Panel's recommendations. EPA is interested in 
receiving comments on all aspects of today's proposal and its impacts 
on small entities.

C. Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), P.L. 
104-4, establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local, and tribal 
governments and the private sector. Under section 202 of the UMRA, EPA 
generally must prepare a written statement, including a cost-benefit 
analysis, for proposed and final rules with ``Federal mandates'' that 
may result in expenditures to State, local, and tribal governments, in 
the aggregate, or to the private sector, of $100 million or more in any 
one year.
    Before promulgating an EPA rule for which a written statement is 
needed, section 205 of the UMRA generally requires EPA to identify and 
consider a reasonable number of regulatory alternatives and adopt the 
least costly, most cost-effective or least burdensome alternative that 
achieves the objectives of the rule. The provisions of section 205 do 
not apply when they are inconsistent with applicable law. Moreover, 
section 205 allows EPA to adopt an alternative other than the least 
costly, most cost-effective or least burdensome alternative, if the 
Administrator publishes with the final rule an explanation why that 
alternative was not adopted.
    Before EPA establishes any regulatory requirements that may 
significantly or uniquely affect small governments, including tribal 
governments, it must have developed under section 203 of the UMRA a 
small government agency plan. The plan must provide for notifying 
potentially affected small governments, enabling officials of affected 
small governments to have meaningful and timely input in the 
development of EPA regulatory proposals with significant Federal 
intergovernmental mandates, and informing, educating, and advising 
small governments on compliance with the regulatory requirements.
    EPA has determined that today's proposed regulations contain a 
Federal mandate that may result in expenditures of $100 million or more 
for the private sector in any one year. Accordingly, EPA has prepared 
the written statement required by section 202 of the UMRA. This 
statement is contained in the Economic Analysis and also the Benefits 
Analysis for the rule. These support documents are contained in the 
record. In addition, EPA has determined that the rules contain no 
regulatory requirements that might significantly or uniquely affect 
small governments. Thus, today's rules are not subject to the 
requirements of section 203 of the UMRA. Additional information that 
supports this finding is provided below.
    A detailed discussion of the objectives and legal basis for the 
proposed CAFO regulations is presented in Sections I and III of the 
preamble. A consent decree with the Natural Resources Defense Council 
established a deadline of December 2000 for EPA to propose effluent 
limitations for this industry.
    EPA prepared several supporting analyses for the final rules. 
Throughout this preamble and in those supporting analyses, EPA has 
responded to the UMRA section 202 requirements. Costs, benefits, and 
regulatory alternatives are addressed in the Economic Analysis and the 
Benefits Analysis for the rule. These analyses are summarized in 
Section X and Section XI of this preamble. The results of these 
analyses are summarized below.
    EPA prepared a qualitative and quantitative cost-benefit assessment 
of the Federal requirements imposed by today's final rules. In large 
part, the private sector, not State, local and tribal governments, will 
incur the costs of the proposed regulations. Under the two-tier 
structure, total annualized compliance costs to industry are projected 
at $831 million (pre-tax)/$572 million (post-tax). The cost to off-site 
recipients of CAFO manure is estimated at $10 million per year. Under 
the three-tier structure, costs to industry are estimated at $930 
million per year (pre-tax)/$658 million (post-tax), and the annual cost 
to off-site recipients of manure is estimated at $11 million. This 
analysis is summarized in Section X.E.1 of this preamble.
    Authorized States are expected to incur costs to implement the 
standards, but these costs will not exceed the thresholds established 
by UMRA. Under the two-tier structure, State and Federal administrative 
costs to implement the permit program are estimated to be $6.2 million 
per year: $5.9 million for States and $350,000 for EPA. Under the 
three-tier structure, State and Federal administrative costs to 
implement the permit program are estimated by EPA at $7.7 million per 
year, estimated at $7.3 million for States and $416,000 for EPA. This 
analysis is summarized in Section X.G.1 of this preamble. More detailed 
information is provided in the Economic Analysis. The Federal resources 
(i.e., water pollution control grants) that are generally available for 
financial assistance to States are included in Section 106 of the Clean 
Water Act. There are no Federal funds available to defray the costs of 
this rule on local governments. Since these rules do not affect local 
or tribal governments, they will not result in significant or unique 
impacts to small governments.
    Overall, under the two-tier structure, the projected total costs of 
the proposed regulations are $847 million annually. Under the three-
tier structure, total social costs are estimated at $949 million 
annually.
    The results of EPA's economic impact analysis show that the 
percentage of operations that would experience financial stress under 
each of the proposed tier structures represent 7 percent of all 
affected CAFOs (Section X.F.1). This analysis is conducted without 
taking into account possible financial assistance to agricultural 
producers that could offset the estimated compliance costs to CAFOs to 
comply with the proposed regulations, thus mitigating the estimated 
impacts to these operations. Federal programs, such as USDA's 
Environmental Quality Incentives Program (EQIP), and other State and 
local conservation programs provide cost-share and technical assistance 
to farmers and ranchers who install structural improvements and 
implement farm management practices, including many of the requirements 
that are being proposed today by EPA. EQIP funds are limited to 
livestock and poultry operations with fewer than 1,000 animal units 
(AUs), as defined by USDA, but could provide assistance to operations 
with less than 1,000 AU as well as to some larger operations in the 
poultry and hog sectors.

[[Page 3129]]

    EPA also conducted an analysis that predicts and quantifies the 
broader market changes that may result due to compliance. This analysis 
examines changes throughout the economy as impacts are absorbed at 
various stages of the food marketing chain. The results of this 
analysis show that consumer and farm level price changes will be 
modest. This analysis is summarized in Section X.F.3.
    EPA does not believe that there will be any disproportionate 
budgetary effects of the rules on any particular area of the country, 
particular types of communities, or particular industry segments. EPA's 
basis for this finding with respect to the private sector is addressed 
in Section 5 of the Economic Analysis based on an analysis of community 
level impact, which is summarized in Section X.G.2 of the preamble. EPA 
considered the costs, impacts, and other effects for specific regions 
and individual communities, and found no disproportionate budgetary 
effects. EPA's basis for this finding with respect to the public sector 
is available in the record.
    The proposed mandate's benefits are primarily in the areas of 
reduced health risks and improved water quality. The Benefits Analysis 
supporting the rulemaking describes, qualitatively, many such benefits. 
The analysis then quantifies a subset of the benefits and, for a subset 
of the quantified benefits, EPA monetizes (i.e., places a dollar value 
on) selected benefits. EPA's estimates of the monetized benefits of the 
proposed regulations are estimated to range from $146 million to $165 
million under the two-tier structure. Under the three-tier structure, 
estimated benefits range from $163 million to $182 million annually. 
This analysis is summarized in Section XI of this preamble.
    EPA consulted with several States during development of the 
proposed rules. Some raised concerns that the national rule would have 
workload and cost implications for the State. Some States with 
implementation programs underway or planned want to have their programs 
satisfy the requirements of the proposed rule. Other States expressed 
concerns about the loss of cost-share funds to AFOs once they are 
designated as point sources. There were additional comments regarding 
inconsistencies with the Unifed Strategy. See Section IX.A for a 
discussion of alternative State programs, Section X.G for a discussion 
of State costs and the workload analysis, Sections III.D and VII.B for 
a discussion of consistency with the AFO Strategy, and Section IX.E for 
a discussion of cost-share funds.
    For the regulatory decisions in today's rules (allowing for the 
options reflected by the co-proposal), EPA has selected alternatives 
that are consistent with the requirements of UMRA in terms of cost, 
cost-effectiveness, and burden. The proposal is also consistent with 
the requirements of the CWA. This satisfies section 205 of the UMRA. As 
part of this rulemaking, EPA had identified and considered a reasonable 
number of regulatory alternatives. (See Section VII for NPDES Scenarios 
and Section VIII for effluent guidelines technology options). Section 
X.E compares the costs across these alternatives. Section X.H provides 
a cost-effectiveness analysis that shows that the proposed BAT Option 
is the most cost-effective of these alternatives. Sections VII and VIII 
of the preamble are devoted to describing the Agency's rationale for 
each regulatory decision. Section IV of this document further 
summarizes EPA's rationale for revising the existing regulations.

D. Executive Order 13045: ``Protection of Children from Environmental 
Health Risks and Safety Risks''

    Executive Order 13045 (62 FR 19885, April 23, 1997) applies to any 
rule that: (1) Is determined to be ``economically significant'' as 
defined under E.O. 12866, and (2) concerns an environmental health or 
safety risk that EPA has reason to believe may have a disproportionate 
effect on children. If the regulatory action meets both criteria, the 
Agency must evaluate the environmental health and safety effects of the 
planned rule on children, and explain why the planned regulation is 
preferable to other potentially effective and reasonably feasible 
alternatives considered by the Agency.
    This proposed rule is subject to E.O. 13045 because it is an 
economically significant regulatory action as defined by E.O. 12866, 
and we believe that the environmental health or safety risks addressed 
by this action have or may have disproportionate effects on children. 
Accordingly, we have evaluated, to the extent possible, the 
environmental health or safety effects of pollutants from CAFOs on 
children. The results of this evaluation are contained in sections V.C 
and XI.B of the preamble as well as the Environmental Assessment and 
Benefits Assessment (these documents have been placed in the public 
docket for the rule).
    The Agency believes that the following pollutants have or may have 
a disproportionate risk to children: nitrates, pathogens, trace metals 
such as zinc, arsenic, copper, and selenium, pesticides, hormones, and 
endocrine disruptors. These health risks are summarized in Section V.C 
and described in detail in the Environmental Assessment. With the 
exception of nitrates in drinking water, the Agency has very little of 
the detailed information necessary to conduct an assessment of these 
risks to children for these pollutants. The Agency solicits risk and 
exposure data and models that could be used to characterize the risks 
to children's health from CAFO pollutants.
    There is evidence that infants under the age of six months may be 
at risk from methemoglobinemia caused by nitrates in private drinking 
water wells, typically when ingesting water with nitrate levels higher 
than 10 micrograms/liter. The Agency only has enough information to 
determine that a chronic dose of 10 micrograms/liter may cause an 
adverse health effect, but there is no dose-response function for 
nitrates, nor does the Agency have other information necessary to 
conduct a detailed health risk assessment (for example, the actual 
number of cases of methemoglobinemia are not reported and are thus 
highly uncertain). Instead, the Agency has estimated the reduction in 
the number of households that will be exposed to drinking water with 
nitrate levels above 10 micrograms/liter in Chapter 8 of the Benefits 
Assessment (noting that the Agency does not have information on the 
number of households exposed to nitrates that also have infants). The 
Agency assumes that nitrate levels lower than 10 micrograms/liter pose 
no risk of methemoglobinemia.
    The Agency estimates that there are approximately 13.5 million 
households with drinking water wells in counties with animal feeding 
operations. Of these, the Agency estimates that approximately 1.3 
million households are exposed to nitrate levels above 10 micrograms/
liter. The Agency further estimates that approximately 166,000 
households would have their nitrate levels brought below 10 micrograms/
liter under the two-tier structure. Approximately 161,000 households 
would have their nitrate levels brought below 10 micrograms/liter under 
the three-tier structure. Furthermore, the Agency estimates that 
options more stringent than those proposed would have small incremental 
changes in pollutant loadings to groundwater (see the Technical 
Development Document). Thus, the Agency expects the number of 
additional households protected from nitrate levels greater than 10 
micrograms/liter would be negligible under more stringent options. The 
Agency therefore does not believe that requirements more stringent than 
those

[[Page 3130]]

proposed would provide meaningful additional protection of children's 
health risks from methemoglobinemia. Furthermore, the Agency is only 
able to regulate groundwater quality through NPDES permits if there is 
a direct hydrologic connection to surface water (see Section 
VII.C.2.j).
    Methemoglobinemia is only one children's health risk caused by CAFO 
pollutants, as discussed above, in Section V.C, and elsewhere in the 
record. It was the only risk to children's health which the Agency was 
able to quantify (if incompletely) in any way. The options considered 
by the Agency, as well as the rationale for the proposed options, are 
discussed in detail in Sections VII and VIII of this preamble. To the 
extent possible under the authority of the CWA, EPA chose options that 
were protective of environmental and human health, including children's 
health. These option selections were based on the best risk assessments 
possible given the limited data available. The public is invited to 
submit or identify peer-reviewed studies and data, of which the Agency 
might not be aware that assessed results of early life exposure to 
nitrates or any other pollutant discharged by CAFOS.

E. Executive Order 13084: Consultation and Coordination With Indian 
Tribal Governments

    Under Executive Order 13084, EPA may not issue a regulation that is 
not required by statute that significantly or uniquely affects the 
communities of Indian tribal governments, and that imposes substantial 
direct compliance costs on those communities, unless the Federal 
government provides the funds necessary to pay the direct compliance 
costs incurred by the tribal governments, or EPA consults with those 
governments. If EPA complies by consulting, Executive Order 13084 
requires EPA to provide to the Office of Management and Budget, in a 
separately identified section of the preamble to the rule, a 
description of the extent of EPA's prior consultation with 
representatives of affected tribal governments, a summary of the nature 
of their concerns, and a statement supporting the need to issue the 
regulation. In addition, Executive Order 13084 requires EPA to develop 
an effective process permitting elected and other representatives of 
Indian tribal governments ``to provide meaningful and timely input in 
the development of regulatory policies on matters that significantly or 
uniquely affect their communities.''
    Today's rule does not significantly or uniquely affect the 
communities of Indian tribal governments nor imposes substantial direct 
compliance costs on them. First, there are currently no tribal 
governments that have been authorized to issue NPDES permits. Thus, 
there will be no burden to tribal governments. Second, few CAFO 
operations are located on tribal land. Therefore, compliance costs to 
tribal communities will not be significant. Accordingly, the 
requirements of section 3(b) of Executive Order 13084 do not apply to 
this rule.
    However, EPA has let tribal communities know about this rulemaking 
through a presentation of potential rule changes at the National 
Environmental Justice Advisory Committee meeting in Atlanta in June, 
2000 and through notices in tribal publications.

F. Paperwork Reduction Act

    The information collection requirements in this proposed rule have 
been submitted for approval to the Office of Management and Budget 
(OMB) under the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. An 
Information Collection Request (ICR) document has been prepared by EPA 
(ICR No. 1989.01) and a copy may be obtained from Sandy Farmer by mail 
at Collection Strategies Division; U.S. Environmental Protection Agency 
(2822); 1200 Pennsylvania Ave., NW, Washington, DC 20460, by email at 
[email protected], or by calling (202) 260-2740. A copy may 
also be downloaded off the internet at http://www.epa.gov/icr.
    Today's proposed rule would require all animal feeding operations 
(AFOs) that meet the proposed CAFO definition to apply for a permit and 
develop a certified permit nutrient plan and to implement that plan. 
Implementation of the plan includes the cost of recording animal 
inventories, manure generation, field application of manure and other 
nutrients (amount, rate, method, incorporation, dates), manure and soil 
analysis compilation, crop yield goals and harvested yields, crop 
rotations, tillage practices, rainfall and irrigation, lime 
applications, findings from visual inspections of feedlot areas and 
fields, lagoon emptying, and other activities on a monthly basis. 
Records may include manure spreader calibration worksheets, manure 
application worksheets, maintenance logs, and soil and manure test 
results.
    The average annual burden for this rule covering both the private 
and public sector for the three-tiered option is 1.6 million hours and 
$37 million annually; for the two-tiered option, burden is 1.2 million 
hours annually at $29 million annually. These values do not account for 
State programs that may already be requiring some of the recordkeeping 
and reporting requirements already. Thus, this burden would be an 
overestimate to the degree that some States already require such 
actions.
    For the three-tiered structure, the average annual CAFO burden is 
estimated to be 80 hours with the frequency of responses based on 
requirements ranging from two times per year to once every five years. 
There are 19,519 likely CAFO respondents and 28 states. Under this 
scenario, the state annual average burden is estimated at 3,214 hours. 
The average annual operation and maintenance costs are estimated at 
$4.3 million for CAFOs and $60,000 for States; labor costs are 
estimated at $28.9 million for CAFOs and $2.6 million for States; 
capital costs are estimated at $1.6 million for CAFOs and $0.0 for 
States.
    For the two-tiered structure, CAFO average annual burden per 
respondent is 81 hours and the State burden is 2,500 hours. There are 
15,015 likely CAFO respondents and 28 states. The 28 state count is an 
average over three years assuming that half the delegated states will 
have a program established in year one, half in year 2 and all in year 
three. Average annual operation and maintenance costs are $3.3 million 
for CAFOs and $60,000 for States; labor costs are $22.6 million for 
CAFOs and $2.0 million for States; capital costs are $1.3 million for 
CAFOs and $0.0 for States.
    The burden required for this rulemaking will allow EPA to determine 
whether a CAFO operator is monitoring his waste management system in an 
environmentally safe way. This data will be used to assess compliance 
with the rule and help determine enforcement cases. The Permit Nutrient 
Plan data requirements ensure that the CAFO owner has established the 
appropriate application rate for their fields on which they spread 
manure; is providing adequate operation and maintenance for the storage 
area and feedlot, and is meeting the requirements to keep agriculture 
waste out of the Nation's waters. The information requested herein is 
mandatory (33 U.S.C. 1318 (Section 308 of the Clean Water Act)). Twqhe 
Agency is requesting comment in this proposal on how much, if any of 
this information should be confidential business information.
    Burden means the total time, effort, or financial resources 
expended by persons to generate, maintain, retain, disclose or provide 
information to or for a Federal

[[Page 3131]]

agency. Burden estimates include the time needed to review 
instructions; develop, acquire, install, and utilize technology and 
systems for the purposes of collecting, validating, and verifying 
information, processing and maintaining information, and disclosing and 
providing information; adjust the existing ways to comply with any 
previously applicable instructions and requirements; train personnel to 
be able to respond to a collection of information; search data sources; 
complete and review the collection of information; and transmit or 
otherwise disclose the information. Additional burden has been 
estimated for off-site recipients who must certify that they are 
applying manure in an appropriate manner.
    An Agency may not conduct or sponsor, and a person is not required 
to respond to a collection of information unless the collection form 
displays a currently valid OMB control number. The OMB control numbers 
for EPA's regulations are listed in 40 CFR Part 9 and 48 CFR Chapter 
15.
    Comments are requested on the Agency's need for this information, 
the accuracy of the provided burden estimates, and any suggested 
methods for minimizing respondent burden, including through the use of 
automated collection techniques. Send comments on the ICR to the 
Director, Collection Strategies Division; U.S. Environmental Protection 
Agency (2822); 1200 Pennsylvania Ave., NW, Washington, DC 20460; and to 
the Office of Information and Regulatory Affairs, Office of Management 
and Budget, 725 17th St., N.W., Washington, DC 20503, marked 
``Attention: Desk Officer for EPA.'' Include the ICR number in any 
correspondence. Since OMB is required to make a decision concerning the 
ICR between 30 and 60 days after [January 12, 2001 Federal Register], a 
comment to OMB is best assured of having its full effect if OMB 
receives it by February 12, 2001. The final rule will respond to any 
OMB or public comments on the information collection requirements 
contained in this proposal.

G. Executive Order 13132: ``Federalism''

    Executive Order 13132, entitled ``Federalism'' (64 FR 43255, August 
10, 1999), requires EPA to develop an accountable process to ensure 
``meaningful and timely input by State and local officials in the 
development of regulatory policies that have Federalism implications.'' 
``Policies that have Federalism implications'' is defined in the 
Executive Order to include regulations that have ``substantial direct 
effects on the States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government.''
    This proposed rule does not have Federalism implications. It will 
not have substantial direct effects on the States, on this relationship 
between the national government and the States, or on the distribution 
of power and responsibilities among the various levels of government, 
as specified in Executive Order 13132. EPA estimates that the average 
annual impact on all authorized States together is $6.0 million. EPA 
does not consider an annual impact of $6 million on States a 
substantial effect. In addition, EPA does not expect this rule to have 
any impact on local governments.
    Further, the revised regulations would not alter the basic State-
Federal scheme established in the Clean Water Act under which EPA 
authorizes States to carry out the NPDES permitting program. EPA 
expects the revised regulations to have little effect on the 
relationship between, or the distribution of power and responsibilities 
among, the Federal and State governments. Thus, Executive Order 13132 
does not apply to this rule.
    In the spirit of Executive Order 13132, and consistent with EPA 
policy, EPA consulted with representatives of State and local 
governments in developing this proposed rule. EPA sent a summary 
package outlining the proposed changes to the State and local 
associations that represent elected officials including the National 
Governor's Association, National Conference of State Legislators, U.S. 
Conference of Mayors, Council of State Governments, International City/
County Management Association, National Association of Counties, 
National Association of Towns and Townships, and County Executives of 
America. In addition, as discussed in Section XII.F., there was State 
representation on the CAFO Regulation Workgroup.
    EPA received four responses from these national associations, the 
National Governor's Council, the National League of Cities, the 
National Council of State Legislators and the National Association of 
Conservation Districts. EPA also received a letter from the Governor of 
Delaware and the Delaware Congressional delegation. The National 
Governor's Association (NGA), the National League of Cities (NLC) and 
the National Association of Conservation Districts (NACD) disagree with 
EPA's assessment that the rule would have minimal impact on the States. 
Except for this issue, the NLC supported the rule package especially 
the coverage of poultry and immature animals, the clarification of 
stormwater runoff exemptions, the lower threshold, and the seven 
strategic issues EPA listed to address pollution from animal feeding 
operations. NLC encouraged EPA to exercise its authority to issue NPDES 
permits where a delegated State has not taken appropriate action.
    NGA and Delaware want the flexibility to design functionally 
equivalent programs. NGA and NACD expressed concern regarding lowering 
the threshold as this would bring in more entities to be permitted and 
the States already have a permit backlog. In addition, they are 
concerned that 319 and EQIP funds will no longer be available to 
operations that are defined as CAFOs. Another concern is the 
elimination of the 25 year/24 hour exemption. NGA comments address the 
burden on the State permitting authority (backlog issue) and the 
unfairness of facilities that work with states to eliminate discharges 
would still have to get a permit. On the issue of adequate public 
involvement in general permits as well as the site specific 
requirements of the Effluent Limitation Guideline, NGA is concerned the 
advantage of general permits as a time saver for the states may be 
lost. In response to NGA's concerns, EPA met with NGA and discussed the 
package and its potential impacts. EPA, also upon request, met with the 
National Association of State Legislators to review the package and 
answer their questions. (See Section IX for discussion of alternative 
State programs. See Section VII.B for a discussion of rule scope. See 
Section X.G for costs to permitting authorities. See Section VII.C for 
discussion of the 25 year/24 hour storm exemption. See Section VII.E 
for discussion of public involvement.)
    The primary concern raised by the States represented on the CAFO 
Regulation Workgroup was to clarify and simplify the rules to make them 
more understandable and easier to implement. Many of the proposed 
changes were made with this objective in mind. Also, the States wanted 
EPA to accept functionally equivalent State programs. To address this 
concern, as stated in the Joint Unified USDA/EPA AFO Strategy (see 
``Strategic Issue #3''), where a State can demonstrate that its program 
meets the requirements of an NPDES program consistent with 40 CFR Part 
123, EPA is proposing to amend the current NPDES authorization to 
recognize the State program. In addition, States were concerned about 
the cost of implementing any changes to the program. EPA believes the 
costs to the States for implementing this

[[Page 3132]]

proposed rule will not be high. EPA is assuming that all States will 
adopt the sample general permit. Some States already have a general 
permit that would just need to be modified.
    In the spirit of Executive Order 13132, and consistent with EPA 
policy to promote communications between EPA and State and local 
governments, EPA specifically solicits comment on this proposed rule 
from State and local officials.

H. Executive Order 12898: ``Federal Actions To Address Environmental 
Justice in Minority Populations and Low-Income Populations''

    The requirements of the Environmental Justice Executive Order are 
that* * *'' EPA will * * * review the environmental effects of major 
Federal actions significantly affecting the quality of the human 
environment. For such actions, EPA reviewers will focus on the spatial 
distribution of human health, social and economic effects to ensure 
that agency decisionmakers are aware of the extent to which those 
impacts fall disproportionately on covered communities.'' EPA has 
determined that this rulemaking is economically significant. However, 
the Agency does not believethis rulemaking will have a disproportionate 
effect on minority or low income communities. The proposed regulation 
will reduce the negative affects of CAFO waste in our nation's waters 
to benefit all of society, including minority communities.
    The National Environmental Justice Advisory Committee (NEJAC) 
submitted a set of recommendations to EPA regarding CAFOs that included 
recommendations to be addressed in revisions to EPA's regulations for 
CAFO's. Each recommendation is addressed below.
    The NEJAC recommended that EPA ``promulgate new, effective 
regulations that set uniform, minimum rules for all AFOs and CAFOs in 
the United States.'' In response, EPA believes that today's proposed 
rule revisions would represent new, uniform and effective requirements 
for CAFOs (AFOs by definition are not point sources and so would not be 
subject to today's proposed CAFO rules).
    The Committee requested that EPA impose a zero discharge standard 
on runoff from land application of CAFO wastes. For the reasons 
described in section VIII. C.3., BAT Options Considered, of today's 
notice, EPA believes it is not appropriate to set a technology-based 
standard at this level with respect to land application runoff.
    NEJAC requested that EPA prohibit or restrict the siting of 
facilities in certain areas such as flood plains. Siting of private 
industry is primarily a local issue and should be addressed at the 
local level. Discharge limitations proposed today should, however, 
discourage operators from locating in flood plains. Proposed 
requirements for swine, veal and poultry CAFOs would require no 
discharge under any circumstances. Beef and dairy CAFOs would have to 
comply with zero discharge except in the event of a chronic or 
catastrophic storm which exceeds the 25 year, 24 hour storm. If 
existing operations are located in flood plains it is in their best 
interest to divert uncontaminated storm water away from their 
production area to avoid inundation of the production area and 
potential breaching of their manure storage system during flood events. 
EPA proposes to prohibit manure application to crop or pasture land 
within 100 feet of surface waters, tile intake structures, agricultural 
drainage wells, and sinkholes which will also minimize the risk of 
discharge under flood conditions.
    NEJAC requested monitoring requirements in the rule. EPA has 
proposed an appropriate set of monitoring requirements to be included 
in CAFO permits (See section XIII of today's notice).
    NEJAC also requested public notification of the construction or 
expansion of CAFOs or issuance of permits. Under today's proposed 
rules, EPA would require individual permits, which are subject to 
individual public notice and comment, for facilities that are located 
in an environmentally sensitive area; have a history of operational or 
compliance problems; are an exceptionally large or significantly 
expanding facility; or where the Director is aware of significant 
public concern about water quality impacts from the CAFO. For all other 
facilities that are to be covered by general permits, for purposes of 
public notice, today's proposal would require the permitting authority 
to publish on a quarterly basis its receipt of Notices of Intent (NOIs) 
submitted by CAFOs.
    NEJAC further recommended that EPA require States and tribes to 
develop inspection programs that allow unannounced inspections of all 
CAFOs and to make these programs available for public comment. This 
concern is already addressed by existing Clean Water Act requirements. 
Specifically, under the Act, EPA may conduct unannounced inspections, 
and States must have the authority to inspect to the same extent as 
EPA. Although there is no specific requirement that State inspection 
plans be made publicly available, they may be available under State 
law.
    NEJAC requested that EPA require the adoption of non-lagoon 
technology. Section XIII of today's notice describes the control 
technologies that EPA has investigated and which ones EPA proposes to 
identify in these regulations as the best available technologies. As 
described in Section XIII, this proposal finds that it would not be 
appropriate to prohibit the use of lagoon technologies.
    NEJAC recommended requiring States and tribes to implement 
remediation programs for phased-out CAFO operations. In today's 
proposed rule, EPA proposes to require a CAFO to remain under permit 
coverage until it no longer has the potential to discharge manure or 
associated wastewaters.
    Finally, NEJAC recommended that EPA impose stringent penalties on 
violating facilities. The Clean Water Act provides authority to subject 
violators to substantial penalties. The issue of which penalties are 
appropriate to impose in individual situations is beyond the scope of 
this rulemaking.

I. National Technology Transfer and Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement 
Act (NTTAA) of 1995, (Pub. L. No. 104-113 Sec. 12(d) 15 U.S.C. 272 
note) directs EPA to use voluntary consensus standards in its 
regulatory activities unless to do so would be inconsistent with 
applicable law or otherwise impractical. Voluntary consensus standards 
are technical standards (e.g., materials specifications, test methods, 
sampling procedures, and business practices) that are developed or 
adopted by voluntary consensus standard bodies. The NTTAA directs EPA 
to provide Congress, through the Office of Management and Budget (OMB), 
explanations when the Agency decides not to use available and 
applicable voluntary consensus standards.
    This rulemaking involves technical standards. The rule requires 
operations defined as CAFOs in the beef and dairy subcategories to 
monitor groundwater for total dissolved solids (TDS), total chlorides, 
fecal coliform, total coliform, ammonia-nitrogen and TKN. EPA performed 
a search to identify potentially voluntary consensus standards that 
could be used to measure the analytes in today's proposed guideline. 
EPA's search revealed that consensus standards exist and are already 
specified in the tables at 40 CFR Part 136.3 for measurement of many of 
the analytes. All pollutants in today's proposed rule have voluntary 
consensus

[[Page 3133]]

methods. EPA welcomes comments on this aspect of the proposed 
rulemaking and, specifically, invites the public to identify 
potentially-applicable voluntary consensus standards and to explain why 
such standards should be used in this regulation.

XIV. Solicitation of Comments

A. Specific Solicitation of Comment and Data

    EPA solicits comments on all aspects of today's proposal. In 
addition, throughout this preamble, EPA has solicited specific comments 
and data on many individual topics. The Agency reiterates its interest 
in receiving comments and data on the following issues:
    1. EPA solicits comment on the use of a two tier structure based on 
lowering the existing 1,000 animal unit threshold to 500 for 
determining which AFOs are defined as CAFOs, and the elimination of the 
existing 300 to 1,000 animal unit category. EPA also solicits comment 
on the effect of a 500 AU threshold on the horse, sheep, lamb and duck 
sectors, as well as on the use of a 750 animal unit threshold for all 
sectors.
    2. EPA solicits comment on the use of a three tier structure, 
including the proposed criteria that could result in an AFO in the 
middle Group being defined as a CAFO and on whether to use different 
criteria that provide more flexibility than those in today's proposal.
    3. EPA solicits comment on revising the requirements for 
designation to eliminate the direct contact and man-made device 
criteria from the designation requirements of the CAFO regulations, and 
allow the designation of CAFOs by EPA in States with NPDES authorized 
programs. EPA also solicits comment on whether or not to eliminate the 
``on-site'' requirement for conducting inspections and, instead, allow 
other forms of site-specific information gathering to be used.
    4. EPA solicits comment on its proposal to clarify the definition 
of an AFO to clearly distinguish feedlots from pasture land and clarify 
coverage of winter feeding operations.
    5. EPA solicits comment on eliminating the use of the term ``animal 
unit'' or AU and the mixed animal calculation in determining which AFOs 
are CAFOs.
    6. EPA solicits comment on removing the 25-year, 24-hour storm 
event exemption from the definition of a CAFO.
    7. EPA solicits comment on the proposal to remove the limitation on 
the type of manure handling or watering system employed at poultry 
operations (i.e., subjecting dry poultry operations to the CAFO 
regulations). With regard to a two tier structure, EPA solicits comment 
on establishing the threshold for poultry operations at 50,000 birds or 
greater.
    8. EPA solicits comment on including immature swine and dairy 
cattle, or heifers, when confined apart from the dairy, for purposes of 
defining potential CAFOs. With regard to a two tier structure, EPA 
solicits comment on establishing the threshold limit for immature swine 
(weighing 55 pounds or less) at 5,000.
    9. EPA solicits comment on requiring, under a two tier structure, 
all CAFOs to apply for a NPDES permit and issuing permits to those 
operations that cannot demonstrate they have no potential to discharge 
pollutants.
    10. EPA solicits comment on requiring, under a three tier 
structure, all AFOs from 300 AU to 1000 AU to certify they do not meet 
threshold conditions, receive a determination they have no potential to 
discharge, or apply for a permit.
    11. EPA solicits comments on the proposed co-permitting provisions 
and the factors for determining substantial operational control. EPA 
solicits comment on whether there are additional factors that indicate 
substantial operational control which should be included in the 
regulation. EPA also requests comment on how to structure the co-
permitting provisions of the rulemaking to achieve the intended 
environmental outcome without causing negative impacts on growers. EPA 
requests comments on its cost passthrough assumptions in general and as 
they relate to the analysis of processor level impacts under the 
proposed co-permitting requirements.
    12. EPA solicits comment on addressing discharges to ground water 
with a direct hydrological connection to surface water. EPA requests 
comment on how a permit writer might identify CAFOs at risk of 
discharging to surface water via ground water. EPA is also requesting 
comment on the proposal to place the burden on the permit applicant to 
provide a hydrologist's statement when rebutting the presumption that a 
CAFO has potential to discharge to surface water via direct 
hydrological connection with ground water. EPA solicits comment on the 
assumption that 24 percent of the affected operations have a hydrologic 
connection to surface waters.
    13. EPA solicits comment on the definition of CAFO including the 
production area and land application area, and on the proposed 
requirements that would subject land application to specified permit 
requirements.
    14. EPA solicits comment on defining the agricultural storm water 
discharge exemption to apply only to those discharges which occurred 
despite the implementation of all the practices required by today's 
proposal at CAFO land application areas. EPA also requests comments on 
the alternative applications of the agricultural storm water discharge 
exemption discussed.
    15. EPA solicits comment on requiring a certification from off-site 
recipients of CAFO-generated manure that such manure is being land 
applied according to proper agricultural practices or, the alternative 
of tracking such off-site transfers through record keeping and 
providing information to the recipients regarding proper management.
    16. EPA solicits comment on restricting the land application of 
manure to those conditions where it serves an agricultural purpose and 
does not result in pollutant discharges to waters of the U.S. 
(potentially including prohibiting land application at certain times or 
using certain methods).
    17. EPA solicits comment on requiring CAFO operators to develop and 
implement a PNP for managing manure and wastewater at both the 
production area and land application area.
    18. EPA invites comment on today's proposal to define PNPs as the 
effluent guideline subset of elements addressed in the CNMP. EPA is 
especially interested in knowing whether PNP is the best term to use to 
refer to the regulatory components of the CNMP, and whether EPA's 
explanation of both the differences and relationship between these two 
terms (PNP and CNMP) is clear and unambiguous. EPA is also soliciting 
comments on whether a PNP with the addition of erosion control 
practices would be sufficient additional controls to prevent runoff. 
EPA further requests comment on the proposal to require that PNPs be 
developed, or reviewed and modified, by certified planners, as well as 
on conditions, such as no changes to the crops, herd or flock size, 
under which rewriting the PNP would not be necessary and therefore, 
would not require the involvement of a certified planner.
    19. EPA requests comment on the public availability of PNPs, 
including whether it is proper to determine that the PNPs must be 
publicly available under CWA Section 402(j) and under CWA Section 308 
as ``effluent data,'' or whether only a portion of PNP information 
should be publically

[[Page 3134]]

available. EPA solicits comment on today's proposal that the operator 
of a permitted CAFO must make a copy of the PNP cover sheet and 
executive summary available for public review. EPA is also requesting 
comment on whether CAFOs should be able to claim these elements of the 
PNP as confidential business information and withhold those elements of 
the PNP from public review on that basis, or alternately, that whether 
other portions of the PNP should be made available as well. EPA also 
requests comment on the proposal to require new facilities seeking 
coverage under a general permit, as well as applicants for individual 
permits, to submit a copy of the PNP to the permit authority along with 
the NOI or permit application, and whether, for individual permits, the 
PNP should be part of the public notice and comment process along with 
the permit.
    20. EPA is requesting public comment on the suitability of 
requiring erosion control as a special condition of a NPDES permit to 
protect water quality from sediment eroding from fields where CAFO 
manure is applied to crops. If erosion control is desirable, EPA is 
soliciting comment as to which approach would be the most cost-
efficient. EPA solicits comment and data on the costs and benefits of 
controlling erosion and whether erosion control should be a required 
component of PNPs.
    21. EPA solicits comment on requiring an operator of a permitted 
CAFO that ceases to be a CAFO to maintain permit coverage until his or 
her facility is properly closed.
    22. EPA requests comment on whether the procedures discussed 
regarding general permits are adequate to ensure public participation 
or whether individual permits should be required for any of the 
categories of facilities discussed above. Specifically, EPA requests 
comment on whether individual permits should be required for (a) 
Facilities over a certain size threshold; (b) all new facilities; (c) 
facilities that are significantly expanding; (d) facilities that have 
historical compliance problems; or (e) operations that are located in 
areas with significant environmental concerns.
    23. EPA solicits comment on the applicability of the proposed 
revised effluent limitations guidelines, including the thresholds under 
the two tier and three tier structure, the inclusion of veal production 
as a new subcategory, and the changes regarding applicability to 
chickens, mixed animals, and immature swine and dairy. EPA also 
requests comment on another three-tier option for defining a CAFO under 
which the effluent guidelines proposed today would not be applicable to 
facilities with 1,000 AU or less.
    24. EPA solicits comment on the proposed revised effluent 
limitations guidelines for CAFOs, specifically today's proposed 
requirements on the land application of manure and wastewater. EPA 
solicits comment on the proposal to allow States to establish the 
appropriate phosphorus-based method to be used as the basis for the 
land application rate at CAFOs.
    25. EPA requests comment on its analysis and on its proposed 
determination that Option 3 is economically achievable as BAT for the 
beef and dairy sectors. In addition, consistent with its intention at 
the time of the SBREFA outreach process, EPA requests comment on 
retaining the 25-year, 24-hour storm design standard (and thus basing 
BAT on Option 2) for the swine, veal and poultry subcategories.
    26. EPA solicits comment on the assumptions used for estimating the 
compliance cost impacts for feedlots to implement each of the model 
technologies considered for the proposed standards. EPA also solicits 
comment on the proposal's impact on small businesses.
    27. EPA solicits comment on the new source option for dairies that 
would prohibit any wastewater discharge from the production area. 
Specifically whether this option is technically feasible, since it 
assumes that all animals in confinement will be maintained under roof.
    28. EPA solicits comment on establishing BAT requirements on 
pathogens. Specifically on the appropriate technologies that will 
reduce pathogens and the estimated cost for these technologies.

B. General Solicitation of Comment

    EPA encourages public participation in this rulemaking. EPA asks 
that comments address any perceived deficiencies in the record 
supporting this proposal and that suggested revisions or corrections be 
supported by data.
    EPA invites all parties to coordinate their data collection 
activities with the Agency to facilitate mutually beneficial and cost-
effective data submissions. Please refer to the FOR FURTHER INFORMATION 
section at the beginning of this preamble for technical contacts at 
EPA.

List of Subjects

40 CFR Part 122

    Administrative practice and procedure, confidential business 
information, Hazardous substances, Reporting and recordkeeping 
requirements, water pollution control.

40 CFR Part 412

    Environmental protection, Feedlots, livestock, waste treatment and 
disposal, Water pollution control.

    Dated: December 15, 2000.
Carol M. Browner,
Administrator.
    For the reasons set out in the preamble title 40, chapter I of the 
Code of Federal Regulations is proposed to be amended as follows:

PART 122--EPA ADMINISTERED PERMIT PROGRAMS: THE NATIONAL POLLUTANT 
DISCHARGE ELIMINATION SYSTEM

    1. The authority citation for part 122 continues to read as 
follows:

    Authority: The Clean Water Act, 33 U.S.C. 1251 et seq.
    2. Amend Sec. 122.21 by adding paragraphs (i)(1)(iv) through (ix) 
to read as follows:


Sec. 122.21  Application for a permit (applicable to State programs, 
see Sec. 123.25).

* * * * *
    (i) * * *
    (1) * * *
    (iv) Either a copy of the cover sheet and executive summary of the 
permittee's current Permit Nutrient Plan that meet the criteria in 40 
CFR 412.37(b) and is being implemented, or draft copies of these 
documents together with a statement on the status of the development of 
its Permit Nutrient Plan. If the CAFO is subject to 40 CFR part 412 and 
draft copies are submitted, they must, at a minimum, demonstrate that 
there is adequate land available to the CAFO operator to comply with 
the land application provisions of part 412 of this chapter, if 
applicable, or describe an alternative to land application that the 
operator intends to implement.
    (v) Acreage available for application of manure and wastewater;
    (vi) Estimated amount of manure and wastewater that the applicant 
plans to transfer off-site;
    (vii) Name and address of any person or entity that owns animals to 
be raised at the facility, directs the activity of persons working at 
the CAFO, specifies how the animals are grown, fed, or medicated, or 
otherwise exercises control over the operations of the facility;

[[Page 3135]]

    (viii) Indicate whether buffers, setbacks or conservation tillage 
are implemented at the facility to control runoff and protect water 
quality; and
    (ix) Latitude and longitude of the CAFO, to the nearest second.
    3. Section 122.23 is revised to read as follows:


Sec. 122.23  Concentrated animal feeding operations (applicable to 
State NPDES programs, see Sec. 123.25).

    (a) Definitions applicable to this section: (1) For land on which 
manure from an animal feeding operation or concentrated animal feeding 
operation has been applied, the term ``agricultural storm water 
discharge'' means a discharge composed entirely of storm water, as 
defined in Sec. 122.26(a)(13), from a land area upon which manure and/
or wastewater has been applied in accordance with proper agricultural 
practices, including land application of manure or wastewater in 
accordance with either a nitrogen-based or, as required, a phosphorus-
based manure application rate.
    (2) An animal feeding operation or AFO is a facility where animals 
(other than aquatic animals) have been, are, or will be stabled or 
confined and fed or maintained for a total of 45 days or more in any 
12-month period. Animals are not considered to be stabled or confined 
when they are in areas such as pastures or rangeland that sustain crops 
or forage growth during the entire time that animals are present. 
Animal feeding operations include both the production area and land 
application area as defined below.

Option 1 for Paragraph (a)(3)

    (3) Concentrated animal feeding operation or CAFO means an AFO that 
either:
    (i) Confines a number of animals equal to or greater than the 
number specified in any one or more of the following categories. For 
the purposes of determining the number of animals at an operation, two 
or more AFOs under common ownership are considered to be a single AFO 
if they adjoin each other or if they use a common area or system for 
the disposal of wastes. Once an operation is defined as a CAFO, the 
requirements of this section apply with respect to all animals in 
confinement at the operation and all wastes and waste waters generated 
by those animals, regardless of the type of animal.
    (A) 350 mature dairy cattle;
    (B) 500 veal;
    (C) 500 cattle other than veal or mature dairy cattle;
    (D) 1,250 swine each weighing over 25 kilograms (approximately 55 
pounds);
    (E) 5000 swine each weighing less than 25 kilograms (approximately 
55 pounds);
    (F) 250 horses;
    (G) 5,000 sheep or lambs;
    (H) 27,500 turkeys;
    (I) 50,000 chickens; or
    (J) 2,500 ducks; or
    (ii) Is designated as a CAFO under paragraph (b) of this section.

Option 2 for Paragraph (a)(3):

    (3) Concentrated animal feeding operation or CAFO means an AFO 
which either is defined as a CAFO under paragraph (a)(3)(i) or (ii) of 
this section, or is designated as a CAFO under paragraph (b) of this 
section. Two or more AFOs under common ownership are considered to be a 
single AFO for the purposes of determining the number of animals at an 
operation, if they adjoin each other or if they use a common area or 
system for the disposal of wastes. Once an operation is defined as a 
CAFO, the requirements of this section apply with respect to all 
animals in confinement at the operation and all wastes and waste waters 
generated by those animals, regardless of the type of animal.
    (i) Tier 1 AFOs. An AFO is a CAFO if more than the numbers of 
animals specified in any of the following categories are confined:
    (A) 700 mature dairy cattle;
    (B) 1,000 veal;
    (C) 1,000 cattle other than veal or mature dairy cattle;
    (D) 2,500 swine each weighing over 25 kilograms (approximately 55 
pounds);
    (E) 10,000 swine each weighing less than 25 kilograms 
(approximately 55 pounds);
    (F) 500 horses;
    (G) 10,000 sheep or lambs;
    (H) 55,000 turkeys;
    (I) 100,000 chickens; or
    (J) 5,000 ducks.
    (ii) Tier 2 AFOs. (A) If the number of animals confined at the 
operation falls within the following ranges for any of the following 
categories, the operation is a Tier 2 AFO. A Tier 2 AFO is a CAFO 
unless it meets all of the conditions in paragraph (a)(3)(ii)(B) of 
this section and its operator submits to the Director a certification 
that it meets those conditions. The certification shall take the form 
specified in section 122.22(d).
    (1) 200 to 700 mature dairy cattle,
    (2) 300 to 1,000 veal,
    (3) 300 to 1,000 cattle other than veal or mature dairy cattle,
    (4) 750 to 2,500 swine each weighing over 25 kilograms 
(approximately 55 pounds),
    (5) 3,000 to 10,000 swine each weighing less than 25 kilograms 
(approximately 55 pounds),
    (6) 150 to 500 horses,
    (7) 3,000 to 10,000 sheep or lambs,
    (8) 16,500 to 55,000 turkeys,
    (9) 30,000 to 100,000 chickens, or
    (10) 1,500 to 5,000 ducks.
    (B) A Tier 2 AFO is not a CAFO if it meets all of the following 
conditions and its operator submits to the Director a certification 
that it meets the following conditions:
    (1) Waters of the United States do not come into direct contact 
with the animals confined in the operation;
    (2) There is sufficient storage and containment to prevent all 
pollutants from the production area from entering waters of the United 
States as specified in 40 CFR Part 412.
    (3) There has not been a discharge from the production area within 
the last five years;
    (4) No part of the production area is located within 100 feet of 
waters of the United States;
    (5) In cases where manure or process-generated wastewaters are land 
applied, they will be land applied in accordance with a Permit Nutrient 
Plan that includes the BMP requirements identified at 40 CFR 412.31(b) 
and 412.37; and

Option 2a for Paragraph (a)(3)(ii)(B)(6)

    (6) With respect to the off-site transfer of manure or process-
generated wastewaters to persons who receive 12 tons or more of manure 
or wastewater in any year, the owner or operator will first obtain 
assurances that, if the manure will be land applied, it will be applied 
in accordance with proper agriculture practices, which means that the 
recipient shall determine the nutrient needs of its crops based on 
realistic crop yields for its area, sample its soil at least once every 
three years to determine existing nutrient content, and not apply the 
manure in quantities that exceed the land application rates calculated 
using one of the methods specified in 40 CFR 412.31(b)(1)(iv); adequate 
assurances include a certification from the recipient, the fact that 
the recipient has a permit, or the existence of a State program that 
requires the recipient to comply with requirements similar to 40 CFR 
412.31(b). The owner or operator will provide the recipient of the 
manure with a brochure to be provided by the state permitting authority 
or EPA that describes the recipient's responsibilities for appropriate 
manure management.

Option 2b for Paragraph (a)(3)(ii)(B)(6)

    (6) With respect to manure or process-generated wastewaters that 
are

[[Page 3136]]

transferred off-site, the owner or operator will first provide the 
recipient of the manure with an analysis of its content and a brochure 
to be provided by the State permitting authority or EPA that describes 
the recipient's responsibilities for appropriate manure management.
    (4) The term land application area means any land under the control 
of the owner or operator of the production area whether it is owned, 
rented, or leased, to which manure and process wastewater from the 
production area is or may be applied.
    (5) The term operator, for purposes of this section, means:
    (i) An operator as that term is defined in Sec. 122.2; or
    (ii) A person who the Director determines to be an operator on the 
basis that the person exercises substantial operational control of a 
CAFO. Whether a person exercises substantial operational control 
depends on factors that include, but are not limited to, whether the 
person:
    (A) Directs the activity of persons working at the CAFO either 
through a contract or direct supervision of, or on-site participation 
in, activities at the facility;
    (B) Owns the animals; or
    (C) Specifies how the animals are grown, fed, or medicated.
    (6) The term production area means that part of the AFO that 
includes the animal confinement area, the manure storage area, the raw 
materials storage area, and the waste containment areas. The animal 
confinement area includes but is not limited to open lots, housed lots, 
feedlots, confinement houses, stall barns, free stall barns, milkrooms, 
milking centers, cowyards, barnyard, exercise yards, animal walkways, 
and stables. The manure storage area includes but is not limited to 
lagoons, sheds, liquid impoundments, static piles, and composting 
piles. The raw materials storage area includes but is not limited to 
feed silos, silage bunkers, and bedding materials. The waste 
containment area includes but is not limited to settling basins, and 
areas within berms, and diversions which separate uncontaminated storm 
water Also included in the definition of production area is any eggwash 
or egg processing facility.
    (b) Designation as a CAFO. The EPA Regional Administrator, or in 
States with approved NPDES programs, either the Director or the EPA 
Regional Administrator, may designate any AFO as a CAFO upon 
determining that it is a significant contributor of pollutants to the 
waters of the United States.
    (1) In making this designation, the Director or the EPA Regional 
Administrator shall consider the following factors:
    (i) The size of the AFO and the amount of wastes reaching waters of 
the United States;
    (ii) The location of the AFO relative to waters of the United 
States;
    (iii) The means of conveyance of animal wastes and process waste 
waters into waters of the United States;
    (iv) The slope, vegetation, rainfall, and other factors affecting 
the likelihood or frequency of discharge of animal wastes and process 
waste waters into waters of the United States; and,
    (v) Other relevant factors.

Option 1 for Paragraph (b)(2)

    (2) No AFO shall be designated under this paragraph (b) until the 
Director or the EPA Regional Administrator has conducted an on-site 
inspection of the operation and determined that the operation should 
and could be regulated under the permit program; except that no 
inspection is required to designate a facility that was previously 
defined or designated as a CAFO.

Option 2 for Paragraph (b)(2)

    (2) No AFO shall be designated under this paragraph (b) until the 
Director or the EPA Regional Administrator has conducted an on-site 
inspection of the operation and determined that the operation should 
and could be regulated under the permit program; except that no 
inspection is required to designate a facility that was previously 
defined or designated as a CAFO. In addition, no AFO with less than 300 
animal units may be designated as a concentrated animal feeding 
operation unless:
    (i) Pollutants are discharged into waters of the United States 
through a manmade ditch, flushing system, or other similar manmade 
device; or
    (ii) Pollutants are discharged directly into waters of the United 
States which originate outside of the facility and pass over, across, 
or through the facility or otherwise come into direct contact with the 
animals confined in the operation.
    (c) Who must apply for an NPDES permit? (1) All CAFOs must apply 
for a permit. For all CAFOs, the CAFO owner or operator must apply for 
an NPDES permit, except as provided in paragraph (c)(2) of this 
section. Specifically, the CAFO owner or operator must either apply for 
an individual NPDES permit or submit a notice of intent for coverage 
under a CAFO general permit. If the Director has not made a general 
permit available to the CAFO, the CAFO owner or operator must apply for 
an individual permit.
    (2) Exception. The CAFO owner or operator does not need to apply 
for an NPDES permit if the owner or operator has received from the 
Director a determination under paragraph (e) of this section that the 
CAFO has no potential to discharge.
    (3) Co-permitting. Any person who is an ``operator'' of a CAFO on 
the basis that the person exercises substantial operational control of 
a CAFO (see Sec. 122.23(a)(5)(ii)) must apply for a permit. Such 
operators may apply for an NPDES permit either alone or together as co-
permittees with other owners or operators of the CAFO.
    (d) In which case will the Director not issue an NPDES permit? The 
Director shall not issue an NPDES permit if the Director has determined 
that the CAFO has ``no potential to discharge'' pursuant to paragraph 
(e) of this section.
    (e) ``No potential to discharge'' determinations. (1) Determination 
by Director. The Director, upon request, may make a case-specific 
determination that a CAFO has no potential to discharge pollutants to 
waters of the United States. In making this determination, the Director 
must consider the potential for discharges from both the production 
area and any land application areas, and must also consider any 
potential discharges via ground waters that have a direct hydrologic 
connection to surface waters. For purposes of this subsection, the term 
``no potential to discharge'' means that there is no potential for any 
CAFO manure or waste waters to be added to waters of the United States, 
without qualification. For example, a CAFO may not claim that there is 
no potential to discharge even if the only pollutants that the CAFO has 
a potential to discharge would be exempt from NPDES requirements. A 
CAFO has a potential to discharge if it has had a discharge within the 
preceding five years.
    (2) Supporting information. In requesting a determination of no 
potential to discharge, the CAFO owner or operator must submit any 
supporting information along with the request. The Director has 
discretion to accept or reject any additional information that is 
submitted at a later date.
    (3) Requesting a ``no potential to discharge'' determination does 
not postpone the duty to apply for a permit. The owner or operator must 
apply for a permit according to the date specified in section (f) 
unless it has received a no potential to discharge determination before 
that date.
    (4) CAFO bears the risk of any actual discharge. Any unpermitted 
CAFO that discharges pollutants into the waters of the United States is 
in violation of the

[[Page 3137]]

Clean Water Act even if it has received a ``no potential to discharge'' 
determination from the Director.
    (f) By when must I apply for a permit for my CAFO? (1) For all 
CAFOs, the owner or operator of the CAFO must apply for an NPDES permit 
no later than [insert date that is three years after the date of 
publication of the final rule], except as provided in paragraphs (f)(2) 
through (6) of this section.
    (2) Operations that are defined as CAFOs prior to [insert date that 
is three years after the date of publication of the final rule]. For 
operations that are CAFOs under regulations that are in effect prior to 
[insert date that is three years after the date of publication of the 
final rule], the owner or operator must apply for an NPDES permit under 
40 CFR 122.21(a) within the time period specified in 40 CFR 122.21(c).
    (3) Operations that become CAFO new sources or new dischargers 
after [insert date that is three years after the date of publication of 
the final rule]. For operations that meet the criteria in 40 CFR 122.23 
for being defined as a CAFO for the first time after [insert date that 
is three years after the date of publication of the final rule], the 
owner or operator must apply for an NPDES permit 180 days prior to the 
date on which they first meet those criteria.
    (4) Operations that are designated as CAFOs. For operations for 
which EPA or the Director has issued a case-specific designation that 
the operation is a CAFO, the owner or operator must apply for a permit 
no later than 90 days after issuance of the designation.
    (5) Persons who are operators because they exercise ``substantial 
operational control'' over a CAFO. Persons who the Director determines 
to be operators because they exercise substantial operational control 
over a CAFO must apply for a permit within 90 days of the Director's 
determination.
    (6) No potential to discharge. Notwithstanding any other provision 
of this section, a CAFO that has received a ``no potential to 
discharge'' determination under paragraph (e) of this section is not 
required to apply for an NPDES permit.
    (g) Are AFOs subject to Clean Water Act requirements if they are 
not CAFOs? AFOs that are neither defined nor designated as CAFOs are 
subject to NPDES permitting requirements if they discharge the 
following from a point source:
    (1) Non-wet weather discharges: discharges from their production 
area or land application area that are not composed entirely of storm 
water as defined in Sec. 122.26(b)(13).
    (2) Wet weather discharges: discharges from their land application 
area that are composed entirely of storm water as defined in 
Sec. 122.26(b)(13), if the discharge has been designated under 
Sec. 122.26(a)(1)(v) as requiring an NPDES permit. Discharges may be 
designated under Sec. 122.26(a)(1)(v) if they are not agricultural 
storm water discharges as defined in Sec. 122.23(a)(1).
    (h) If I do not operate an AFO but I land apply manure, am I 
required to have a NPDES permit? If you have not been designated by 
your permit authority, you do not need a NPDES permit to authorize the 
discharge of runoff composed entirely of storm water from your manure 
application area. The land application of manure that results in the 
point source discharge of pollutants to waters of the United States may 
be designated pursuant to Sec. 122.26(a)(1)(v) as requiring a NPDES 
permit if the application is not in accordance with proper agriculture 
practices. Proper agricultural practices means that the recipient shall 
determine the nutrient needs of its crops based on realistic crop 
yields for its area, sample its soil at least once every three years to 
determine existing nutrient content, and not apply the manure in 
quantities that exceed the land application rates calculated using one 
of the methods specified in 40 CFR 412.31(b)(1)(iv).
    (i) What must be required in NPDES permits issued to CAFOs. Permits 
issued to CAFOs must require compliance with the following:
    (1) All other requirements of this part.
    (2) The applicable provisions of part 412.
    (3) Duty to Maintain Permit Coverage. No later than 180 days before 
the expiration of the permit, the permittee must submit an application 
to renew its permit. However, the permittee need not reapply for a 
permit if the facility is no longer a CAFO (e.g., where the numbers of 
confined animals has been reduced below the level that meets the 
definition of a CAFO) and the permittee has demonstrated to the 
satisfaction of the Director that there is no remaining potential for a 
discharge of manure or associated waste waters that were generated 
while the operation was a CAFO. With respect to CAFOs, this section 
applies instead of Secs. 122.21(d) and 122.41(b).
    (4) Co-permittees. In the case of a permit issued to more than one 
owner or operator of the CAFO, the permit may allocate to one of the 
permit holders the sole responsibility for any permit requirement, 
except that all permit holders must be jointly responsible for the 
management of manure in excess of what can be applied on-site in 
compliance with part 412
    (5) Permits issued to CAFOs that meet the applicability 
requirements of Subpart C (Beef and Dairy) or Subpart D (Swine, Poultry 
and Veal) of 40 CFR Part 412 shall also require compliance with 
paragraph (j) of this section.
    (6) Permits issued to CAFOs that do not meet the applicability 
requirements of Subpart C or Subpart D of 40 CFR Part 412 (including 
beef, dairy, swine, poultry or veal facilities not subject to those 
parts, and facilities with other types of animals) shall also require 
compliance with paragraph (k) of this section.
    (j) What must be required in NPDES permits issued to CAFOs that are 
subject to part 412, Subparts C (Beef and Dairy) and D (Swine, Poultry 
and Veal)? Permits issued to CAFOs that meet the applicability 
requirements of Subpart C or Subpart D of 40 CFR Part 412 must require 
compliance with all of the following:
    (1) Requirements to use the method in 40 CFR 412.31(b)(1)(iv) 
chosen by the Director to determine phosphorous field conditions and to 
determine appropriate manure application rates. The permit shall 
specify the factors to be considered and the analytical methods to be 
employed when determining those rates.
    (2) Prohibitions against or restrictions on applying manure to land 
during times and using methods which, in light of local crop needs, 
climate, soil types, slope and other factors, would not serve an 
agricultural purpose and would be likely to result in pollutant 
discharges to waters of the United States.
    (3) Requirement to notify the Director when the permittee's Permit 
Nutrient Plan has been developed or revised. Notification of the 
development of the permittee's initial Permit Nutrient Plan must be 
submitted no later than 90 days after the CAFO submits its NOI or 
obtains coverage under an individual permit. With the notice, the 
permittee shall provide a copy of the cover sheet and executive summary 
of the permittee's current Permit Nutrient Plan that has been developed 
under 40 CFR 412.37(b).

Option 1 for Paragraphs (j)(4) and (5)

    (4) Transfer of manure to other persons. The Director may waive the 
requirements of this paragraph if an enforceable state program subjects 
the recipient of CAFO wastes to land application requirements that are 
equivalent to the requirements in 40 CFR 412.31(b). The requirements of 
paragraph (f) of this section apply only to transfers to persons who 
receive 12

[[Page 3138]]

tons or more of wastes from the CAFO in any year. Prior to transferring 
manure and other wastes to other persons, the permittee shall:
    (i) Obtain from each intended recipient of the CAFO waste (other 
than haulers that do not land apply the waste) a certification that the 
recipient will do one of the following. The certification must contain 
a statement that the recipient understands that the information is 
being collected on behalf of the U.S. Environmental Protection Agency 
or State and that there are penalties for falsely certifying. The 
permittee is not liable if the recipient violates its certification;
    (A) Land apply the wastes in accordance with proper agriculture 
practices, which means that the recipient shall determine the nutrient 
needs of its crops based on realistic crop yields for its area, sample 
its soil at least once every three years to determine existing nutrient 
content, and not apply the manure in quantities that exceed the land 
application rates calculated using the method specified in 40 CFR 
412.31(b)(1)(iv) chosen by the Director;
    (B) Land apply the wastes in compliance with the terms of an NPDES 
permit that addresses for discharges from the land application area; or
    (C) Use the manure for purposes other than land application.
    (ii) Obtain from any commercial waste hauler the name and location 
of the recipient of the wastes, if known;
    (iii) Provide the recipient of the manure with an analysis of its 
content; and
    (iv) Provide the recipient of the manure with a brochure to be 
provided by the State permitting authority or EPA that describes the 
recipient's responsibilities for appropriate manure management.
    (5) Record keeping requirements. Requirements to keep, maintain for 
five years and make available to the Director or the Regional 
Administrator:
    (i) Records of the inspections and of the manure sampling and 
analysis required by 40 CFR 412.37(a);
    (ii) Records required by 40 CFR 412.37(e) related to the 
development and implementation of Permit Nutrient Plans required by 40 
CFR 412.37(b); and
    (iii) Records of each transfer of wastes to a third party, 
including date, recipient name and address, quantity transferred, an 
analysis of manure content and a copy of the certifications required by 
paragraph (j)(4) of this section. If the waste is transferred to a 
commercial waste hauler, records of where the hauler indicated it would 
take the waste, if known. If the waste is to be packaged as fertilizer, 
incinerated or used for a purpose other than direct land application, 
records of the analysis of the manure are not required.

Option 2 for Paragraphs (j)(4) and (5):

    (4) Transfer of manure to other persons. Prior to transferring 
manure and other wastes to other persons, the permittee shall:
    (i) Provide the recipient of the manure with an analysis of its 
content;
    (ii) Provide the recipient of the manure with a brochure to be 
provided by the State permitting authority or EPA that describes the 
recipient's responsibilities for appropriate manure management; and
    (iii) Obtain from any commercial waste hauler the name and location 
of the recipient of the wastes, if known.
    (5) Record keeping requirements. Requirements to keep, maintain for 
five years and make available to the Director or the Regional 
Administrator:
    (i) Records of the inspections and of the manure sampling and 
analysis required by 40 CFR 412.37(a);
    (ii) Records required by 40 CFR 412.37(e) related to the 
development and implementation of Permit Nutrient Plans required by 40 
CFR 412.37(b); and
    (iii) Records of each transfer of wastes to a third party, 
including date, recipient name and address, quantity transferred, and 
an analysis of manure content. If the waste is transferred to a 
commercial waste hauler, records of where the hauler indicated it would 
take the waste, if known. If the waste is to be packaged as fertilizer, 
incinerated or used for a purpose other than direct land application, 
records of the analysis of the manure are not required.
    (6) For CAFOs subject to 40 CFR 412.43 (existing swine, poultry and 
veal facilities), the Director must determine based on topographical 
characteristics of the region whether there is a likelihood that a CAFO 
may discharge from the production area via ground water that has a 
direct hydrologic connection to waters of the United States. If the 
Director finds there is such a likelihood, and the Director determines 
there is the potential for an excursion of State water quality 
standards due to such discharge, the Director must impose any water 
quality-based effluent limits necessary to comply with Sec. 122.44(d). 
The Director may omit such water quality-based effluent limits from the 
permit if the permittee has provided a hydrologist's statement that 
demonstrates to the Director's satisfaction that there is no direct 
hydrologic connection from the production area to waters of the United 
States.
    (k) What additional terms and conditions must be required in NPDES 
permits issued to CAFOs that are not subject to part 412, Subparts C 
and D? (1) All CAFOs not subject to part 412. In cases where a CAFO has 
fewer than the number of animals necessary to make it subject to the 
requirements 40 CFR Part 412, and the Director is establishing effluent 
limitations on a case-by-case basis based on best professional judgment 
under section 402(a)(1)(B) of the Act, the Director shall consider the 
need for the following effluent limitations:
    (i) Limits on the discharge of process wastewater pollutants from 
the production area, including limits based on the minimum duration and 
intensity of rainfall events for which the CAFO can design and 
construct a system to contain all process-generated wastewaters from 
such event;
    (ii) Limits on discharges resulting from the application of manure 
to land, including restrictions on the rates of application of nitrogen 
and phosphorous;
    (iii) Requirements to implement best management practices to ensure 
the CAFO achieves limitations under paragraphs (k)(1)(i) and (k)(1)(ii) 
of this section;
    (iv) Requirements to develop and implement a Permit Nutrient Plan 
that addresses requirements developed under paragraphs (k)(1)(i), (ii), 
and (iii) of this section; and
    (v) If the CAFO is in an area with topographic characteristics that 
indicate a likelihood that ground water has a direct hydrologic 
connection to waters of the United States, requirements necessary to 
comply with Sec. 122.44, unless the permittee submits a hydrologist's 
statement that the production area is not connected to surface waters 
through a direct hydrologic connection.
    (2) CAFOs subject to part 412, Subparts A and B. In addition to the 
applicable effluent limitations, when developing permits to be issued 
to CAFOs with horses, sheep or ducks subject to Subparts A and B of 40 
CFR 412, the Director shall consider the need for effluent limitations 
for wastestreams not covered by Subparts A and B, including the need 
for the requirements described in paragraphs (k)(1)(ii) through (v) of 
this section.
    (l) How will the public know if a CAFO is implementing an adequate 
permit nutrient plan?
    (1) The Director shall make publicly available via the worldwide 
web or other publicly available source, and update every 90 days:

[[Page 3139]]

    (i) A list of all CAFOs that have submitted a notice of intent for 
coverage under a general permit, and
    (ii) A list of all CAFOs that have submitted a notice that their 
permit nutrient plan has been developed or revised.
    (2) The Director shall make publicly available the notices of 
intent, notice of plan development, and the cover sheet and executive 
summary of the permittee's Permit Nutrient Plan. If the Director does 
not have a copy of the cover sheet and executive summary of the 
permittee's current Permit Nutrient Plan and the cover sheet and 
executive summary are not publicly available at the CAFO or other 
location, the Director shall, upon request from the public, obtain a 
copy of the cover sheet and executive summary. Until required by the 
Director, the CAFO operator is not required to submit cover sheet or 
executive summary to the Director.
    (3) Confidential business information. The information required to 
be in Permit Nutrient Plan cover sheet and executive summary, and 
required soil sampling data, may not be claimed as confidential. Any 
claim of confidentiality by a CAFO in connection with the remaining 
information in the Permit Nutrient Plan will be subject to the 
procedure in 40 CFR Part 2.
    4. Section 122.28 is amended by:
    a. Removing the word ``or'' at the end of paragraph (a)(2)(i) and 
adding the word ``or'' at the end of paragraph (a)(2)(ii)(D).
    b. Adding paragraph (a)(2)(iii).
    c. Adding two sentences to the end paragraph (b)(2)(ii)
    d. Redesignating paragraph (b)(3)(i)(G) as paragraph (b)(3)(i)(H) 
and adding a new paragraph (b)(3)(i)(G).
    e. Adding paragraph (b)(3)(vi).
    The additions read as follows:


Sec. 122.28  General permits (applicable to State NPDES programs, see 
Sec. 123.25).

    (a) * * *
    (2) * * *
    (iii) Concentrated animal feeding operations.
* * * * *
    (b) * * *
    (2) * * *
    (ii) * * * Notices of intent for coverage under a general permit 
for confined animal feeding operations must include: a topographic map 
as described in Sec. 122.21(f)(7); name and address of any other entity 
with substantial operational control; a statement whether the owner or 
operator has developed and is implementing its Permit Nutrient Plan 
and, if not, the status of the development of its Permit Nutrient Plan. 
New sources subject to 40 CFR Part 412 shall also provide a copy of a 
draft plan that, at a minimum, demonstrates that there is adequate land 
available to the CAFO operator to comply with the land application 
provisions of 40 CFR Part 412 or describes an alternative to land 
application that the operator intends to implement.
* * * * *
    (3) * * *
    (i) * * *
    (G) The discharge is from a CAFO. In addition to the other criteria 
in paragraph (b)(3) of this section, the Director shall consider 
whether general permits are appropriate for the following CAFOs:
    (1) CAFOs located in an environmentally or ecologically sensitive 
area;
    (2) CAFOs with a history of operational or compliance problems;
    (3) CAFOs that are exceptionally large operation as determined by 
the Director; or
    (4) Significantly expanding CAFOs.
* * * * *
    (vi) Prior to issuing any general permits for CAFOs, the Director, 
after considering input from the public, shall issue a written 
statement of its policy on which CAFOs will be eligible for general 
permits, including a statement of how it will apply the criteria in 
paragraph (b)(3)(i)(G) of this section.

Appendix B to Part 122 [Removed and Reserved]

    6. Remove and reserve Appendix B to part 122.
    9. Part 412 is revised to read as follows:

PART 412--CONCENTRATED ANIMAL FEEDING OPERATIONS (CAFOs) POINT 
SOURCE CATEGORY

Sec.
412.0   General applicability.
412.1   General definitions.
412.2   General pretreatment standards.
Subpart A--Horses and Sheep
412.10   Applicability.
412.11   Special definitions.
412.12   Effluent limitations attainable by the application of the 
best practicable control technology currently available (BPT).
412.13   Effluent limitations attainable by the application of the 
best available control technology economically achievable (BAT).
412.15   New source performance standards (NSPS).
Subpart B--Ducks
412.20   Applicability.
412.21   Special definitions.
412.22   Effluent limitations attainable by the application of the 
best practicable control technology currently available (BPT).
412.25   New source performance standards (NSPS).
412.26   Pretreatment standards for new sources (PSNS).
Subpart C--Beef and Dairy
412.30   Applicability.
412.31   Effluent limitations attainable by the application of best 
practicable control technology currently available (BPT).
412.32   Effluent limitations attainable by the application of the 
best control technology for conventional pollutants (BCT).
412.33   Effluent limitations attainable by the application of the 
best available control technology economically achievable (BAT).
412.35   New source performance standards (NSPS).
412.37   Additional measures.
Subpart D--Swine, Veal and Poultry
412.40   Applicability.
412.41   Effluent limitations attainable by the application of best 
practicable control technology currently available (BPT).
412.42   Effluent limitations attainable by the application of the 
best control technology for conventional pollutants (BCT).
412.43   Effluent limitations attainable by the application of the 
best available control technology economically achievable (BAT).
412.45   New source performance standards (NSPS).

    Authority: 33 U.S.C. 1311, 1314, 1316, 1317, 1318, 1342 and 
1361.


Sec. 412.0  General applicability.

    This part applies to process wastewater discharges resulting from 
concentrated animal feeding operations (CAFOs). Manufacturing 
activities which may be subject to this part are generally reported 
under one or more of the following Standard Industrial Classification 
(SIC) codes: SIC 0211, SIC 0213, SIC 0241, SIC 0259, or SIC 3523 (1987 
SIC Manual).


Sec. 412.1  General Definitions.

    As used in this part:
    (a) The general definitions and abbreviations at 40 CFR part 401 
shall apply.
    (b) Concentrated Animal Feeding Operation (CAFO) is defined at 40 
CFR 122.23(a)(3).
    (c) Fecal coliform means the bacterial count (Parameter 1) at 40 
CFR 136.3 in Table 1A, which also cites the approved methods of 
analysis.
    (d) Process wastewater means water directly or indirectly used in 
the operation of the CAFO for any or all of the following: spillage or 
overflow from animal or poultry watering systems; washing, cleaning, or 
flushing pens, barns, manure pits, or other CAFO

[[Page 3140]]

facilities; direct contact swimming, washing or spray cooling of 
animals; litter or bedding; dust control; and stormwater which comes 
into contact with any raw materials, products or by-products of the 
operation.
    (e) Certified specialist shall mean someone who has been certified 
to prepare Comprehensive Nutrient Management Plans (CNMPs) by USDA or a 
USDA sanctioned organization.
    (f) Land application area means any land under the control of the 
CAFO operator, whether it is owned, rented, or leased, to which manure 
and process wastewater is or may be applied.
    (g) New source means a source that is subject to subparts C or D of 
this part and, not withstanding the criteria codified at 40 CFR 
122.29(b)(1): Is constructed at a site at which no other source is 
located; or replaces the housing including animal holding areas, 
exercise yards, and feedlot, waste handling system, production process, 
or production equipment that causes the discharge or potential to 
discharge pollutants at an existing source; or constructs a production 
area that is substantially independent of an existing source at the 
same site. Whether processes are substantially independent of an 
existing source, depends on factors such as the extent to which the new 
facility is integrated with the existing facility; and the extent to 
which the new facility is engaged in the same general type of activity 
as the existing source.
    (h) Overflow means the process wastewater discharge resulting from 
the filling of wastewater or liquid manure storage structures to the 
point at which no more liquid can be contained by the structure.
    (i) Production area means that part of the CAFO that includes the 
animal confinement area, the manure storage area, the raw materials 
storage area, and the waste containment areas. The animal confinement 
area includes but is not limited to open lots, housed lots, feedlots, 
confinement houses, stall barns, free stall barns, milkrooms, milking 
centers, cowyards, barnyard, exercise yards, animal walkways, and 
stables. The manure storage area includes but is not limited to 
lagoons, sheds, under house or pit storage, liquid impoundments, static 
piles, and composting piles. The raw materials storage area includes 
but is not limited to feed silos, silage bunkers, and bedding 
materials. The waste containment area includes but is not limited to 
settling basins, and areas within berms, and diversions which separate 
uncontaminated stormwater. Also included in the definition of 
production area is any egg washing or egg processing facility.
    (j) Setback means a specified distance from surface waters or 
potential conduits to surface waters where manure and wastewater may 
not be land applied. Examples of conduits to surface waters include, 
but are not limited to, tile line intake structures, sinkholes, and 
agricultural well heads.
    (k) Soil test phosphorus is the measure of the phosphorus content 
in soil as reported by approved soil testing laboratories using a 
specified analytical method.
    (l) Phosphorus threshold or TH level is a specific soil test 
concentration of phosphorus established by states. The concentration 
defines the point at which soluble phosphorus may pose a surface runoff 
risk.
    (m) Phosphorus index means a system of weighing a number of 
measures that relate the potential for phosphorus loss due to site and 
transport characteristics. The phosphorus index must at a minimum 
include the following factors when evaluating the risk for phosphorus 
runoff from a given field or site:
    (1) Soil erosion.
    (2) Irrigation erosion.
    (3) Run-off class.
    (4) Soil phosphorus test.
    (5) Phosphorus fertilizer application rate.
    (6) Phosphorus fertilizer application method.
    (7) Organic phosphorus application rate.
    (8) Method of applying organic phosphorus.
    (n) Permit Nutrient Plan means a plan developed in accordance with 
Sec. 412.33 (b) and Sec. 412.37. This plan shall define the appropriate 
rate for applying manure or wastewater to crop or pasture land. The 
plan accounts for soil conditions, concentration of nutrients in 
manure, crop requirements and realistic crop yields when determining 
the appropriate application rate.
    (o) Crop removal rate is the application rate for manure or 
wastewater which is determined by the amount of phosphorus which will 
be taken up by the crop during the growing season and subsequently 
removed from the field through crop harvest. Field residues do not 
count towards the amount of phosphorus removed at harvest.
    (p) Ten(10)-year, 24-hour rainfall event and 25-year, 24-hour 
rainfall event mean precipitation events with a probable recurrence 
interval of once in ten years, or twenty five years, respectively, as 
defined by the National Weather Service in Technical Paper No. 40, 
``Rainfall Frequency Atlas of the United States,'' May, 1961, or 
equivalent regional or State rainfall probability information developed 
from this source. The technical paper is available at http://www.nws.noaa.gov/er/hq/Tp40s.html.
    (q) The parameters that are regulated or referenced in this part 
and listed with approved methods of analysis in Table 1B at 40 CFR 
136.3 are defined as follows:
    (1) Ammonia (as N) means ammonia reported as nitrogen.
    (2) BOD5 means 5-day biochemical oxygen demand.
    (3) Chloride means total chloride.
    (4) Nitrate (as N) means nitrate reported as nitrogen.
    (5) Total dissolved solids means non-filterable residue.
    (r) The parameters that are regulated or referenced in this part 
and listed with approved methods of analysis in Table 1A at 40 CFR 
136.3 are defined as follows:
    (1) Fecal coliform means fecal coliform bacteria.
    (2) Total coliform means all coliform bacteria.


Sec. 412.3  General pretreatment standards.

    Any source subject to this part that introduces process wastewater 
pollutants into a publicly owned treatment works (POTW) must comply 
with 40 CFR part 403.

Subpart A--Horses and Sheep


Sec. 412.10  Applicability.

    This subpart applies to discharges resulting from the production 
areas at CAFOs where sheep are confined in open or housed lots; and 
horses are confined in stables such as at racetracks. This subpart does 
not apply to such CAFOs with less than the following capacities:

                            Applicable CAFOs
------------------------------------------------------------------------
               Livestock                         Minimum capacity
------------------------------------------------------------------------
Sheep..................................  10,000
Horses.................................  500
------------------------------------------------------------------------


[[Page 3141]]

Sec. 412.11  Special definitions.

    For the purpose of this subpart:
    (a) Housed lot means totally roofed buildings, which may be open or 
completely enclosed on the sides, wherein animals are housed over 
floors of solid concrete or dirt and slotted (partially open) floors 
over pits or manure collection areas, in pens, stalls or cages, with or 
without bedding materials and mechanical ventilation.
    (b) Open lot means pens or similar confinement areas with dirt, 
concrete paved or hard surfaces, wherein animals are substantially or 
entirely exposed to the outside environment, except where some 
protection is afforded by windbreaks or small shed-type shaded areas.


Sec. 412.12  Effluent limitations attainable by the application of the 
best practicable control technology currently available (BPT).

    (a) Except as provided in 40 CFR 125.30 through 125.32 and when the 
provisions of paragraph (b) of this section apply, any existing point 
source subject to this subpart must achieve the following effluent 
limitations representing the application of BPT: There must be no 
discharge of process wastewater pollutants into U.S. waters.
    (b) Whenever rainfall events cause an overflow of process 
wastewater from a facility designed, constructed and operated to 
contain all process-generated wastewaters plus the runoff from a 10-
year, 24-hour rainfall event at the location of the point source, any 
process wastewater pollutants in the overflow may be allowed to be 
discharged into U.S. waters.


Sec. 412.13  Effluent limitations attainable by the application of the 
best available technology economically achievable (BAT).

    (a) Except as provided in 40 CFR 125.30 through 125.32 and when the 
provisions of paragraph (b) of this section apply, any existing point 
source subject to this subpart must achieve the following effluent 
limitations representing the application of BAT: There must be no 
discharge of process wastewater pollutants into U.S. waters.
    (b) Whenever rainfall events cause an overflow of process 
wastewater from a facility designed, constructed and operated to 
contain all process-generated wastewaters plus the runoff from a 25-
year, 24-hour rainfall event at the location of the point source, any 
process wastewater pollutants in the overflow may be allowed to be 
discharged into U.S. waters.


Sec. 412.15  New source performance standards (NSPS).

    (a) Except as provided in paragraph (b) of this section, any new 
point source subject to this subpart must achieve the following 
performance standards: There must be no discharge of process wastewater 
pollutants into U.S. waters.
    (b) Whenever rainfall events cause an overflow of process 
wastewater from a facility designed, constructed and operated to 
contain all process-generated wastewaters plus the runoff from a 25-
year, 24-hour rainfall event at the location of the point source, any 
process wastewater pollutants in the overflow may be allowed to be 
discharged into U.S. waters.

Subpart B--Ducks


Sec. 412.20  Applicability.

    This subpart applies to discharges resulting from dry and wet duck 
feedlots with a capacity of at least 5000 ducks.


Sec. 412.21  Special definitions.

    For the purpose of this subpart:
    (a) Dry lot means a facility for growing ducks in confinement with 
a dry litter floor cover and no access to swimming areas.
    (b) Wet lot means a confinement facility for raising ducks which is 
open to the environment, has a small number of sheltered areas, and 
with open water runs and swimming areas to which ducks have free 
access.


Sec. 412.22  Effluent limitations attainable by the application of the 
best practicable control technology currently available (BPT).

    Except as provided in 40 CFR 125.30 through 125.32, any existing 
point source subject to this subpart shall achieve the following 
effluent limitations representing the application of BPT:

                                              Effluent Limitations
----------------------------------------------------------------------------------------------------------------
                                                                             Maximum                   Maximum
                     Regulated parameter                        Maximum      monthly      Maximum      monthly
                                                               daily \1\     avg.\1\     daily \2\     avg.\2\
----------------------------------------------------------------------------------------------------------------
BOD5........................................................         3.66          2.0         1.66         0.91
Fecal coliform..............................................        (\3\)        (\3\)        (\3\)       (\3\)
----------------------------------------------------------------------------------------------------------------
\1\ Pounds per 1000 ducks.
\2\ Kilograms per 1000 ducks.
\3\ Not to exceed MPN of 400 per 100 ml at any time.

Sec. 412.25  New source performance standards (NSPS).

    Any new source subject to this subpart must achieve the following 
standards:
    (a) Except as provided in paragraph (b) of this section, there must 
be no discharge of process wastewater pollutants into U.S. waters.
    (b) Whenever rainfall events cause an overflow of process 
wastewater from a facility designed, constructed and operated to 
contain all process-generated wastewaters plus the runoff from a 25-
year, 24-hour rainfall event at the location of the point source, any 
process wastewater pollutants in the overflow may be allowed to be 
discharged into U.S. waters.


Sec. 412.26  Pretreatment standards for new sources (PSNS).

    (a) Except as provided in 40 CFR Sec. 403.7 and in paragraph (b) of 
this section, any new source subject to this subpart must achieve the 
following pretreatment standards: There must be no discharge of process 
wastewater pollutants into a POTW.
    (b) Whenever rainfall events cause an overflow of process 
wastewater from a facility designed, constructed and operated to 
contain all process-generated wastewaters plus the runoff from a 25-
year, 24-hour rainfall event at the location of the new source, the 
discharge of any process wastewater pollutants in the overflow may be 
allowed.

Subpart C--Beef and Dairy


Sec. 412.30  Applicability.

    This subpart applies to concentrated animal feeding operations 
(CAFOs), as defined in 40 CFR Sec. 122.23, and includes the following 
types of animals: Mature dairy cows, either milking or dry; and cattle 
other than mature dairy or veal.

[[Page 3142]]

Sec. 412.31  Effluent limitations attainable by the application of the 
best practicable control technology currently available (BPT).

    Except as provided in 40 CFR Sec. 125.30 through Sec. 125.32, any 
existing point source subject to this subpart must achieve the 
following effluent limitations representing the application of BPT:
    (a) For CAFO production areas:
    (1) Except as provided in paragraph (a)(2) of this section, there 
must be no discharge of process wastewater pollutants into U.S. waters.
    (2) Whenever rainfall causes an overflow of process wastewater, 
pollutants in the overflow may be discharged into U.S. waters during 
those periods subject to following conditions:
    (i) The production area is designed and constructed to contain all 
process wastewaters including the runoff from a 25 year, 24 hour 
rainfall event; and
    (ii) The production area is operated in accordance with the 
requirements of Sec. 412.37(a)(1) through (3).
    (b) For CAFO land application areas:
    (1) Discharges resulting from the application of manure or process 
wastewater to land owned or under the control of the CAFO must achieve 
the following:
    (i) Develop and implement a Permit Nutrient Plan (PNP) that 
includes the requirements specified at Sec. 412.37; and establishes 
land application rates for manure in accordance with Sec. 412.31 
(b)(1)(iv).
    (ii) The PNP must be developed or approved by a certified 
specialist.
    (iii) The PNP must be written taking into account realistic yield 
goals based on historic yields from the CAFO, or county average data 
when historic yields are not appropriate. County average data may be 
used when a facility plants a crop that no yield data for that CAFO 
land application area has been obtained within the previous 10 years. 
CAFOs shall review the PNP annually and revise as necessary, and must 
rewrite the PNP at least once every five years.
    (iv) Apply manure and process wastewater at a rate established in 
accordance with one of the three methods defined in tables 1 through 3 
of this section. State approved indices, thresholds, and soil test 
limits shall be utilized such that application does not exceed the crop 
and soil requirements for nutrients:

                       Table 1.--Phosphorus Index
------------------------------------------------------------------------
   Phosphorus index rating       Manure and wastewater application rate
------------------------------------------------------------------------
Low Risk.....................  Application of manure and wastewater may
                                not exceed the nitrogen requirements of
                                the crop.
Medium Risk..................  Application of manure and wastewater may
                                not exceed the nitrogen requirements of
                                the crop.
High Risk....................  Application of phosphorus in manure and
                                wastewater may not exceed the amount of
                                phosphorus removed from the field with
                                crop harvest.
Very High Risk...............  No land application of manure or
                                wastewater.
------------------------------------------------------------------------


                     Table 2.--Phosphorus Threshold
------------------------------------------------------------------------
  Soil phosphorus threshold
            level                Manure and wastewater application rate
------------------------------------------------------------------------
 \3/4\ TH application........  Manure and wastewater may not exceed the
                                nitrogen requirements of the crop.
> \3/4\ TH,  2 TH application  Phosphorus in manure and wastewater may
                                not exceed the amount of phosphorus
                                removed from the field with crop
                                harvest.
> 2 TH application...........  No land application of manure or
                                wastewater.
------------------------------------------------------------------------


                     Table 3.--Soil Test Phosphorus
------------------------------------------------------------------------
  Soil test phosphorus level     Manure and wastewater application rate
------------------------------------------------------------------------
Low..........................  Application of manure and wastewater may
                                not exceed the nitrogen requirements of
                                the crop.
Medium.......................  Application of manure and wastewater may
                                not exceed the nitrogen requirements of
                                the crop.
High.........................  Application of phosphorus in manure and
                                wastewater may not exceed the amount of
                                phosphorus removed from the field with
                                crop harvest.
Very High....................  No land application of manure and
                                wastewater.
------------------------------------------------------------------------

    (2) Multi-year phosphorus applications are prohibited when either 
the P-Index is rated high, the soil phosphorus threshold is between \3/
4\ and 2 times the TH value, or the soil test phosphorus level is high 
as determined in paragraph (b)(1) (iv) of this section unless:
    (i) Manure application equipment designed for dry poultry manure or 
litter cannot obtain an application rate low enough to meet a 
phosphorus based application rate as determined by the PNP In the event 
a phosphorus application occurs during one given year which exceeds the 
crop removal rate for that given year, no additional manure or process 
wastewater shall be applied to the same land in subsequent years until 
all applied phosphorus has been removed from the field via harvest and 
crop removal.
    (ii) [Reserved]


Sec. 412.32  Effluent limitations attainable by the application of the 
best control technology for conventional pollutants (BCT).

    Except as provided in 40 CFR 125.30 through 125.32 and 412.41(2), 
any existing point source subject to this subpart must achieve the 
following effluent limitations representing the application of BCT:
    (a) For CAFO production areas: Discharges must achieve the same 
requirements as specified in Sec. 412.31(a).
    (b) For CAFO land application areas:
    Discharges resulting from the application of manure or process 
wastewater to crop or pasture land owned or under the control of the 
CAFO must achieve the same requirements as specified in Sec. 412.31(b) 
and Sec. 412.37.


Sec. 412.33  Effluent limitations attainable by the application of the 
best available technology economically achievable (BAT).

    Except as provided in 40 CFR 125.30 through 125.32 and 
412.33(a)(2), any existing point source subject to this

[[Page 3143]]

subpart must achieve the following effluent limitations representing 
the application of BAT:
    (a) For CAFO production areas:
    (1) There must be no discharge of process wastewater pollutants 
into U.S. waters, including any pollutants discharged to ground water 
which has a direct hydrologic connection to surface waters.
    (2) Whenever rainfall causes an overflow of process wastewater, 
pollutants in the overflow may be discharged into U.S. waters during 
those periods when the following conditions are met:
    (i) The production area is designed and constructed to contain all 
process wastewaters including the runoff from a 25 year, 24 hour 
rainfall event; and
    (ii) The production area is operated in accordance with the 
requirements of Sec. 412.37(a).
    (3)(i) The ground water beneath the production area must be sampled 
twice annually to demonstrate compliance with the no discharge 
requirement unless the CAFO has determined to the satisfaction of the 
permitting authority that the ground water beneath the production area 
is not connected to surface waters through a direct hydrologic 
connection.
    (ii) Ground water samples shall be collected up-gradient and down-
gradient of the production area and analyzed for:
    (A) Total coliforms.
    (B) Fecal coliform.
    (C) Total dissolved solids.
    (D) Nitrates.
    (E) Ammonia.
    (F) Chloride
    (b) For CAFO land application areas:
    Discharges resulting from the application of manure or process 
wastewater to crop or pasture land owned or under the control of the 
CAFO must achieve the same requirements as specified in Sec. 412.31(b) 
and Sec. 412.37.


Sec. 412.35  New source performance standards (NSPS).

    Any new source subject to this subpart must achieve the following 
standards:
    (a) For CAFO production areas:
    Subject to the provisions of paragraph (c) of this section, 
discharges must achieve the same requirements as specified in 
Sec. 412.33(a).
    (b) For CAFO land application areas:
    Subject to the provisions of paragraph (c) of this section, 
discharges resulting from the application of manure or process 
wastewater to crop or pasture land owned or under the control of the 
CAFO must achieve the same requirements as specified in Sec. 412.31(b) 
and Sec. 412.37.
    (c) Any new source subject to the provisions of this section that 
commenced discharging after [insert date 10 years prior to the date 
that is 60 days from the publication date of the final rule] and before 
[insert date that is 60 days from the publication date of the final 
rule] must continue to achieve the standards specified in the 2000 
version of Sec. 412.15, provided that the new source was constructed to 
meet those standards. For toxic and nonconventional pollutants, those 
standards shall not apply after the expiration of the applicable time 
period specified in 40 CFR 122.29(d)(1); thereafter, the source must 
achieve the standards specified in paragraphs (a) and (b) of this 
section.


Sec. 412.37  Additional measures.

    (a) Each CAFO subject to this subpart must implement the following 
requirements:
    (1) There must be routine visual inspections of the CAFO production 
area to check the following:
    (i) Weekly inspections of all stormwater diversion devices, such as 
roof gutters, to ensure they are free of debris that could interfere 
with the diversion of clean stormwater;
    (ii) Weekly inspections of all stormwater diversion devices which 
channel contaminated stormwater to the wastewater and manure storage 
and containment structure, to ensure that they are free of debris that 
could interfere with ensuring this contaminated stormwater reaches the 
storage or containment structure;
    (iii) Daily inspections of all water lines providing drinking water 
to the animals to ensure there are no leaks in these lines that could 
contribute unnecessary volume to liquid storage systems or cause dry 
manure to become too wet;
    (iv) Runoff diversion structures and animal waste storage 
structures must be visually inspected for: seepage, erosion, 
vegetation, animal access, reduced freeboard, and functioning rain 
gauges and irrigation equipment, on a weekly basis manure storage area 
to ensure integrity of the structure. All surface impoundments must 
have a depth marker which indicates the design volume and clearly 
indicates the minimum freeboard necessary to allow for the 25 year 24 
hour rainfall event. The inspection shall also note the depth of the 
manure and process wastewater in the impoundment as indicated by this 
depth marker.
    (2) Any deficiencies found as a result of these inspections shall 
be corrected as soon as possible. Deficiencies and corrective action 
taken shall be documented.
    (3) Mortalities may not be disposed of in any liquid manure or 
stormwater storage or treatment system, and must be handled in such a 
way as to prevent discharge of pollutants to surface water.
    (4) Land application of manure generated by the CAFO to land owned 
or controlled by the CAFO must be done in accordance with the following 
practices:
    (i) Manure may not be applied closer than 100 feet to any surface 
water, tile line intake structure, sinkhole or agricultural well head.
    (ii) The CAFO must take manure samples at least once per year and 
analyzed for nitrogen, phosphorus and potassium. Samples must be 
collected from all manure storage areas, both liquid and dry storage, 
as well as any wastewater or storm water storage. The CAFO must take 
soil samples once every three years if they apply manure to crop or 
pasture land under their control, and analyze the soil sample for 
phosphorus. Samples shall be collected in accordance with accepted 
Extension protocols and the analyses must be conducted in accordance 
with the state nutrient management standard. These protocols shall be 
documented in the PNP.
    (iii) Manure that is transported off-site must be sampled at least 
once a year for nitrogen, phosphorus and potassium. The results of 
these analyses must be provided to the recipient of the manure.
    (iv) Manure application equipment must be calibrated prior to land 
application of manure and/or process wastewaters at a minimum of once 
per year.
    (b) Record keeping requirements:
    Each CAFO must maintain on its premises a complete copy of the 
current PNP and the records specified in paragraphs (b)(1) through (12) 
of this section. The CAFO must make the PNP available to the permitting 
authority and the Regional Administrator, or his or her designee, for 
review upon request. Records must be maintained for 5 years from the 
date they are created.
    (1) Cover Sheet which includes the following information:
    (i) the name and location of the CAFO,
    (ii) name and title of the owner or operator
    (iii) name and title of the person who prepared the plan,
    (iv) date the plan was prepared,
    (v) date the plan was amended
    (2) Executive Summary which includes the following information:
    (i) Total average herd or flock size

[[Page 3144]]

    (ii) Identification of manure collection, handling, storage, and 
treatment practices
    (iii) Amount of manure generated annually
    (iv) Identification of planned crops (rotation)
    (v) Realistic yield goal as described in Sec. 412.31(b)(1)(iii)
    (vi) Field condition as determined by the phosphorus index, soil 
test phosphorus, or phosphorus threshold (for each field unit that will 
receive manure)
    (vii) number of acres that will receive manure
    (viii) amount of manure transported off-site
    (ix) animal waste application rate (gallons or tons/acre)
    (x) identification of watershed or nearest surface water body
    (3) Records documenting the inspections required under paragraph 
(a)(1) of this section.
    (4) Records tracking the repairs performed on drinking water lines, 
automated feeding equipment, feed storage and silos, manure storage, 
manure treatment facilities, as well as maintenance of berms and 
diversions that direct clean stormwater away from any manure and other 
process wastewater.
    (5) Records documenting the following information about manure 
application and crop production.
    (i) Expected crop yield based on historical data for the CAFO for 
its land application area, or county average yield data when the CAFO 
does not have a prior history of crop yields
    (ii) The date(s) manure is applied,
    (iii) Weather conditions at time of application and for 24 hours 
prior to and following application,
    (iv) Results from manure and soil sampling,
    (v) Test methods used to sample and analyze manure and soil,
    (vi) Whether the manure application rate is limited to nitrogen, 
phosphorus, or some other parameter,
    (vii) The amount of manure and manure nutrients applied,
    (viii) The amount of any other nutrients applied to the field 
reported in terms of nitrogen, phosphorus and potassium (including 
commercial fertilizer, legume credits, and biosolids),
    (ix) Calculations showing the total nutrients applied to land,
    (x) Calibration of manure application equipment,
    (xi) The rate of application of manure,
    (xii) The method used to apply the manure, estimated nitrogen 
losses based on application method used, and the route of nitrogen 
loss,
    (xiii) The field(s) to which manure was applied and total acreage 
receiving manure,
    (xiv) What crop(s) was planted,
    (xv) The date that crops were planted in the field, and
    (xvi) The crop yields obtained.
    (6) Records of the total volume or amount of manure and process 
wastewater generated by all animals at the facility during each 12 
month period. This must include milk parlor washwater and egg 
washwater. The volume or amount may be determined through direct 
measurements or an estimated value provided all factors are documented.
    (7) Records of rainfall duration, amount of rainfall, and the 
estimated volume of any overflow that occurs as the result of any 
catastrophic or chronic rainfall event.
    (8) A copy of the emergency response plan for the CAFO.
    (9) Records of how mortalities are handled by the CAFO.
    (10) Name of state approved specialist that prepared or approved 
the PNP, or record and documentation of training and certification for 
owners or operator writing their own PNP.

Subpart D--Swine, Poultry and Veal


Sec. 412.40  Applicability.

    This subpart applies to operations defined as concentrated animal 
feeding operations (CAFOs) under 40 CFR 122.23 and includes the 
following animals: Swine, each weighing 55 lbs. or more; swine, each 
weighing less than 55 lbs.; veal; cattle; chickens; and turkeys.


Sec. 412.41  Effluent limitation attainable by the application of the 
best practicable control technology currently available (BPT).

    Except as provided in 40 CFR 125.30 through 125.32, any existing 
point source subject to this subpart must achieve the following 
effluent limitations representing the application of BPT:
    (a) For CAFO production areas:
    Discharges must achieve the same requirements as specified in 
Sec. 412.31(a).
    (b) For CAFO land application areas:
    Discharges resulting from the application of manure or process 
wastewater to crop or pasture land owned or under the control of the 
CAFO must achieve the same requirements as specified in Sec. 412.31(b) 
and Sec. 412.37.


Sec. 412.42  Effluent limitations attainable by the application of the 
best control technology for conventional pollutants (BCT).

    Except as provided in 40 CFR 125.30 through 125.32 , any existing 
point source subject to this subpart must achieve the following 
effluent limitations representing the application of BCT:
    (a) For CAFO production areas:
    The limitations are the same as specified in Sec. 412.41(a).
    (b) For CAFO land application areas:
    The limitations are the same as specified in Sec. 412.41(b).


Sec. 412.43  Effluent limitations attainable by the application of the 
best available technology economically achievable (BAT).

    Except as provided in 40 CFR 125.30 through 125.32, any existing 
point source subject to this subpart must achieve the following 
effluent limitations representing the application of BAT:
    (a) For CAFO production areas:
    (1) There must be no discharge of process wastewater pollutants 
into U.S. waters.
    (2) Any CAFO subject to this subpart must also comply with the 
requirements specified in Sec. 412.37(a)(1) through (3).
    (b) For CAFO land application areas:
    The limitations are the same as specified in Sec. 412.41(b).


Sec. 412.45  New source performance standards (NSPS).

    Any new source subject to this subpart must achieve the following 
standards:
    (a) For CAFO production areas:
    (1) There must be no discharge of process wastewater pollutants 
into U.S. waters, including any pollutants discharged to ground water 
which have a direct hydrological connection to surface waters.
    (2) The ground water beneath the production area must be sampled 
twice annually to demonstrate compliance with the provisions of 
paragraph (a)(1) of this section, unless the CAFO has determined to the 
satisfaction of the permitting authority that the ground water beneath 
the production area is not connected to surface waters through a direct 
hydrologic connection. Ground water samples must be collected up-
gradient and down-gradient of the production area. and analyzed for:
    (i) Total coliforms
    (ii) Fecal coliform
    (iii) Total dissolved solids
    (iv) Nitrates
    (v) Ammonia
    (vi) Chloride
    (3) Any CAFO subject to this subpart must also comply with the 
requirements specified in Sec. 412.37(a)(1) through (3).
    (b) For CAFO land application areas:
    Discharges resulting from the application of manure or process 
wastewater to crop or pasture land

[[Page 3145]]

owned or under the control of the CAFO must achieve the same 
requirements as specified in Sec. 412.31(b) and Sec. 412.37.
    (c) Any new source subject to the provisions of this section that 
commenced discharging after [insert date 10 years prior to the date 
that is 60 days from the publication date of the final rule] and before 
[insert date that is 60 days from the publication date of the final 
rule] must continue to achieve the standards specified in Sec. 412.15, 
provided that the new source was constructed to meet those standards. 
For ``toxic'' and nonconventional pollutants, those standards shall not 
apply after the expiration of the applicable time period specified in 
40 CFR Sec. 122.29(d)(1); thereafter, the source must achieve the 
standards specified in paragraphs (a) and (b) of this section.

[FR Doc. 01-1 Filed 1-11-01; 8:45 am]
BILLING CODE 6560-50-P