IMPACTS OF EPA DAIRY WASTE REGULATIONS ON FARM PROFITABILITY

provided by Research Papers in Economics

IMPACTS OF EPA DAIRY WASTE REGULATIONS
ON FARM PROFITABILITY

Ronald D. Knutson, Joe L. Outlaw and John W. Miller
Texas A&M University

With the initiation of dairy waste regulatory activity in Texas and
Florida during the early 1990s, questions have arisen regarding the
impacts of these regulations if extended throughout the United
States. The Agricultural and Food Policy Center (AFPC) system of
representative dairy farms provided a unique opportunity to evalu-
ate the impacts of these regulations on dairy farm profitability if ex-
tended to all other states.

EPA Dairy Waste Policy

With the exception of concentrated animal feeding operations
(CAFOs), agriculture has been treated as a nonpoint source of pollu-
tion. Nonpoint pollution means there is no legally recognized identi-
fiable source of that pollution. Point pollution, on the other hand,
can best be illustrated by an industrial plant or a sewer system that
drains directly into a river or stream, leaving no question regarding
the source of that pollution. The requirement has been that such
point sources of pollution internalize the cost of cleaning up the dis-
charge except under extremely unusual and basically uncontrollable
circumstances. Such point sources of pollution must receive a permit
explaining measures taken to prevent illegal discharges.

Concentrated animal feeding operations have been identified as a
point pollution source because, in the eyes of the regulatory au-
thorities, they are much like a factory. The issue becomes one of de-
fining a CAFO. The Environmental Protection Agency (EPA) cur-
rently requires a discharge permit for any dairy having more than
700 cows. The permit will be issued if the dairy farmer demonstrates
he or she has taken steps to contain pollutants and prevent dis-
charges up to a twenty-five-year∕twenty-four-hour storm event. If
there is already an identifiable direct discharge, the threshold for re-
ceiving a permit may extend to 200 cows or even less, if a complaint
is received by the EPA. The requirements for receiving a permit are
more stringent for new operations than they are for existing opera-
tions.

In most states, EPA regulations are enforced by state environmen-
tal regulatory agencies under what is called delegated authority
(Table 1). The requirement for a state to receive delegated authority

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