Federal Regulations: Necessary or Burdensome? Experts weigh in at ICIE's Annual Meeting

At ICIE’s Annual Meeting in November, a panel addressed the issue of federal environmental regulations – are they unduly burdensome, or absolutely necessary?  Most speakers, while differing in opinion occasionally, fell somewhere in the middle of these two ends of the spectrum.

Jim Werntz, Director of Idaho Office of EPA noted that Republican presidential candidates have gone so far as to call for abolishment of his agency, arguing that federal regulations negatively impact businesses and therefore the economy.  But Werntz also noted there have been some major successes attributable to the laws and regulations even when examined from a cost/benefit standpoint.

“You won't hear me say that protecting our environment doesn't cost money, but these are wise investments, and often result in cost savings overall, resulting in lower health care costs, less cancer and fewer deaths.”

Werntz said there are those who think our economic recovery is going to gain steam and momentum if we cut regulation.  But he noted a recent Idaho Statesman article with figures from the Idaho Department of Labor citing the number of jobs lost overall as a result of the burden of federal regulations as 1/20^th of one percent.  The impact of regulations, Werntz said, is measurable but small, with a National Federation of Independent Businesses survey that cited poor sales as the biggest impact on jobs, followed by regulations.

Werntz said that the most significant successes of the EPA have been its addressing of health and environmental problems including the Clean Air Act and the Clean Water Act and the Superfund. 

Werntz conceded that there are problems with having the bar of a federal standard set by the EPA as directed by Congress.  One example of this problem, he said, is illustrated by the issue of arsenic in drinking water, the levels for which were reset about a decade ago from 50 ppb to 10 ppb.  This is problematic, because so much arsenic comes from Idaho’s geology, and Werntz says the cost to communities to get down below that new arsenic standard is “ridiculously high.”

Werntz pointed out that a lot of EPA regulations come from court decisions, leaving the agency in the position of having to struggle to implement complex regulations.

“I can only imagine what small businesses are struggling with,” he said. “Many of our rules are more complex and more convoluted than we'd like.”

The Small Business Perspective

Suzanne Budge of the National Federation of Independent Business agreed with Werntz about the complexities of EPA rules and the burden they represent to small businesses.  To a large degree, she said, small businesses are affected more than large businesses.  Budge cited some specific examples, and statistics:
-  For small businesses, the average cost per employee to comply with Federal regulations is $10,585
- There are 800 new or pending regulations that can impact small businesses
- President Obama in his first 2 years in office has presided over regulations (not just environmental) that Budge says cost the economy at least $100 million annually. Budge said this is an amount that is dramatically higher than either the Clinton or Bush administrations.

The Big Business Perspective

Trent Clark, Monsanto’s Public and Government Affairs Director, weighed in on the topic of environmental regulations from the perspective of big businesses, from the standpoint of Monsanto’s herbicide product, RoundUp.

This product originates in Idaho, he said, and uses elemental phosphorus, which requires that phosphate be stripped of its oxygen component after mining.  Soda Springs, Idaho, is the location of the last phosphate furnace in the US, where there used to be 28 nationwide, a decrease largely due to environmental regulations.

Other critical needs for elemental phosphorus, Clark said, include the nonflammable hydraulic fluid for airplanes and tracer rounds such as those used by the military over Bagdahd.

Clark says that in the last 6 years Monsanto has encountered a significant obstacle to their domestic source for phosphorus.  Conforming to water quality standards for Bluegill fish, a mine project near the Blackfoot river must exceed even drinking water quality standards.  Even though the Blackfoot River is not blue gill habitat, the cost of the project was inflated from $3 million to $30 million.  Monsanto did, however, show that there is a way to mine the Blackfoot Ridge mine in a way that does not produce an effluent that would be bad for blue gills. 

Additional modeling on selenium sources resulted a need to account for burrowing rodents.  That was done by caping the mine with a geo-synthetic clay liner laminate material that costs about $28,000 per acre.

In the midst of this work, Clark said, a new problem arose: the Blackfoot river was declared to be impaired for selenium.  The standard for selenium effluent changed to 0.    Idaho declared that “zero” is actually a level that is detectable at less than a  1/2 part per billion standard.  Monsanto therefore designed a water collection system underneath the pile, again increasing the cost of the mine, this time to $60 milion.

Clark said that Monsanto produces elemental phosphorus in direct competition with China, where 50% of their phosphorus comes from artisan operations – essentially, where families burrow in the hillside, filling wicker baskets.  A task master weighs the baskets and metes out about enough to buy that day's food.  In this operation, nothing is spent making sure that the nearby water is safe for blue gills.   Clark said he wonders about the environmental impact will be if Monsanto decides $60 million is too much to open such a mine.

“The impact would be taking a world-class sustainable operation out of the US, forcing dependence on artisan mining in China,” he said.  “I can't see how anyone would say that that would be good for the environment.”


Court interpretation of EPA rules complicate clean water regulations

Attorney Andy Waldera provided context on the NPDES permit program under the Clean Water Act, which dictates under what circumstances pollutants can be discharged into jurisdictional waters and by whom.

The purpose of the CWA is to protect water bodies to make them safe for fishing and swimming, with an overarching goal to prevent discharge.  Waldera qualified the permit program as the exception to that general rule.  If you get a permit, and are meeting the terms of the permit, you’re allowed to function as a point source, or a discrete conveyance of pollutants.   The fines for not complying with the terms of the permit are up to $37,000 per day per violation, per point source.   There are also criminal provisions.

Waldera said a big concern with the CWA is citizen supervision.   A citizen can file suit against anyone they feel is in violation of the CWA.  Those who do so, and are successful in bringing in an enforcement action, can recover legal fees.  In the long run, the cost of filing suit is covered by tax dollars.

Exemption from the permit requirements include return flows from irrigated agriculture.  Irrigation facilities are jurisdictional waters, which more often than not, include interconnections with waters of the US.

How did an effort to maintain clean water become so complicated? Waldera said a lot of EPA's direction lately has been coming from the courts. 

“I feel for the EPA,” he said, “it has to deal with fairly reasonable regulations that come through the courts, and then through litigation become much more cumbersome.”

Another issue is the Federal Insecticide, Fungicide and Rodenticide Act.  FIFRA says as long as pesticides are applied in accordance with the label, the applicant is protected. But Waldera said this is in conflict with the CWA, which considers issues on a case by case analysis rather than a cost/benefit analysis. 

What about applications with drift where you could hit waters of the US?  The Court ruled that insecticides are pollutants to begin with.  How can you have a pesticide or an insecticide that performs a beneficial service, Waldera asked, particularly when you're applying it in accordance with its FIFRA label, you don't over apply, or have lingering breakdown residue, and still treat it as a point source?  The EPA, in considering this decision came up with the Aquatic Pesticide rule, which addresses direct application and the concept of drift.  This rule says that if you are using a compound that serves a beneficial purpose and is in compliance with FIFRA, the benefits outweigh the costs. Even if there is some impact to the environment, you are in compliance with the CWA.  This decision also noted that you could not have a point source discharge of a pollutant, because it had not broken down into a pollutant yet. 

Waldera said the 6th Circuit Court ruled that the EPA's new rule did not meet the requirements of the CWA.  So the court vacated the rule, but then clarified that not all pesticides are pollutants at the time they are applied, those that leave behind a chemical residue are pollutants.  Also, if you apply it in excess of what is needed, the excess product is a chemical waste and a pollutant. The court also said the NPDES permit applies to indirect application as well as direct application.

The Clean Water Act also called out biological materials as pollutants.  The court did not accept the  timing analysis that said you could not have the point source responsible for the pollutant, because the pollutant is the result of the chemical breakdown.  The courts said that you would not have the breakdown products without the point source.

So as a result, Waldera said, what would have been a reasonable rule becomes the NPDES permit.