2001 Cattle Feeders Annual -- Member Service

TCFA At Work For You

By Burt Rutherford

TCFA works in many different ways to help keep a competitive business environment for its members.

"The whole of science," Albert Einstein once observed, "is nothing more than a refinement of everyday thinking." That's the philosophy TCFA uses as it works toward reasonable environmental regulations.

It's an effort TCFA has been aggressively undertaking its entire 34 years of existence. The major environmental issues cattle feeders now face can be broken down into three general categories-efforts by the EPA to rewrite its CAFO regulations, EPA efforts to implement TMDL rules, and EPA's attempt to use the Superfund program to force confined animal feeding operations to report ammonia and hydrogen sulfide emissions.

CAFO Rules
Efforts to rewrite the rules governing Confined Animal Feeding Operations, or CAFOs, are the result of a lawsuit filed by the Natural Resources Defense Council. EPA has not revised rules for a number of industries since 1976 and the consent decree resulting from the suit instructed EPA to rewrite many of its national environmental regulations by December 2002.

Feedyards in Cattle Feeding Country are considerably ahead of the curve. While national CAFO regulations haven't been updated since 1976, an updated EPA Region 6 permit was issued in 1993 and covers the TCFA three-state region. "All our feedyards went through the process to obtain the new permit," says Ben Weinheimer, TCFA regulatory manager. "They adopted a Pollution Prevention Plan and got the corresponding engineering documentation and record keeping requirements in place." This process put feedyards in Cattle Feeding Country under the most stringent environmental regulations in the nation. While the court-ordered update will affect every CAFO nationwide, TCFA-area feedyards are in a position to more easily meet any new requirements. 

Weinheimer says there were no surprises when EPA released its proposed CAFO rules in December 2000. "There was an effort on our part for 2 1/2 years prior to that as this rule package has been under development. EPA staff has gone on some educational tours that we participated in and we've provided them with hands-on information and examples of what our feedyards already do for environmental stewardship." 

Because of the court order, EPA has no choice but to proceed with the rules update. However, affected industries nationwide are hopeful that the EPA under the Bush Administration will be more helpful in assisting them in walking through the process.

TMDL Regulations
The second major environmental issue affecting cattle feeders is Total Maximum Daily Loads, or TMDLs. While it's a separate issue and separate rules, TMDLs potentially could be more limiting than the rewrite of rules that CAFOs must work under to obtain and keep an environmental permit. That's because the TMDL rules will determine who and how many permits will be issued on any given watershed area. 
"The TMDL looks at defining a maximum amount of pollutant loading on a given segment and then evaluating the entire watershed area to determine who's producing that pollutant they've identified," Weinheimer says. "If it's a need to ratchet down or a need for no increase of that pollutant on a watershed, then they will ratchet down the permits that exist on the watershed or not issue any new permits." 

So potentially, a feedyard could be in compliance with all environmental rules as defined by their CAFO permit, yet still not be allowed to operate because of the TMDL regulations. 

In 2000, Congress pulled the funding that would have allowed EPA to adopt and enforce its TMDL rules. That funding will be restored in October 2001 unless Congress takes additional action. The delay was sought because of the sketchy science used in developing the rules. 
Weinheimer says there is documentation in many states that when EPA determined an individual stream or watershed area was impaired, they did so with a drive-by designation that produced insufficient data to support the decision. All affected industries, from shopping malls to cattlemen, will be geared up to again address this issue as the 2001-2002 funding year approaches.

Superfund
 The third significant environmental issue proposed by EPA is requiring feedyards to report ammonia and hydrogen sulfide emissions. 

"This is a stretch of the Superfund for EPA to justify the authority for this request," Weinheimer says. "This is not a done deal." TCFA and other livestock associations question EPA's authority and will meet with EPA during the year to minimize the impact of this proposal on feedyards. 

The challenges and opportunities for feedyards in Cattle Feeding Country remain. TCFA, just as it always has, will remain at the forefront as it keeps Cattle Feeding Country of Texas, Oklahoma and New Mexico the premier cattle feeding region in the world.

Power to Produce Program
 The aggregated load is equivalent to a medium-sized city. It's constant-the infrastructure gets used a substantial number of hours out of the year. And it will someday be deregulated in Cattle Feeding Country.

"It" is electricity and natural gas and as anybody who paid an energy bill and watched California's winter of discontent knows all too well, energy will be a significant policy and pocketbook issue for some time to come.

While energy issues seemed to come to a head in 2001, TCFA has been quietly working since 1998 to put its members ahead of the curve when energy deregulation ultimately becomes a reality. The fruition of those efforts happened in 2000 when TCFA rolled out its Power to Produce program. "It's an effort to provide an additional service to feedyards in their energy management needs," says Weinheimer. The program uses one of an association's time-tested advantages-volume purchasing and the associated cost savings. But it goes deeper than that.

Natural Gas
 "The gas project looked at two components-the transportation costs of gas and the total usage, or aggregated load, that feedyards in our area represent," Weinheimer says. TCFA began by asking feedyards if they were interested in participating in the project. Ninety said they were and the door remains open to other feedyards who may choose to join later.

TCFA works in cooperation with an energy consultant that provides energy industry expertise and intimate knowledge of all stages (and the associated costs) of delivering natural gas to an end user. "Our consultant evaluates whether or not the participating feedyards are getting the best rate to get the gas transported from the transmission lines to the feedyard." There are a number of distribution companies, Weinheimer says, and their delivery rates are not necessarily consistent from one end user to the next. "So this gives us a chance to evaluate the consistency of their rates and to look for alternatives."

The second part of the natural gas project is using the substantial purchasing power that feedyards represent to obtain the best price possible. "The first round of aggregation began the spring of 2000 and that allowed us to get our feet wet." By the end of 2001, Weinheimer expects to have a fully aggregated natural gas load available to many feedyards.

Electricity
 Electric deregulation is a reality. The big question, however, is when. In Cattle Feeding Country, electric deregulation was scheduled to start in Texas on Jan. 1, 2002 and in Oklahoma and New Mexico on July 1, 2002. As this was being written, however, moves were underway in all three states to delay deregulation by as much as five years to ensure that the California experience isn't repeated here.

Nonetheless, it's likely that some time or another, cattle feeders will have to operate in a deregulated energy environment. When that happens, TCFA will be ready. "The idea, similar to the history of phone deregulation, is you end up with enough companies in the business that you have sufficient competition to drive costs down," Weinheimer says. However, it's not the intent of deregulation to force each company to put up its own infrastructure. So the delivery of electricity, and the associated rates, will remain regulated. 

"That way, you don't have to deal with reliability issues through down power lines or installation of dual power lines to the same location."

Just as with natural gas, TCFA will take an aggregation approach as a means of reducing the cost of electricity. Because electric transmission will remain regulated, the point of contact where aggregation can best be used is with retail electric providers. The retail providers buy electricity from the generating companies, work out the transmission of that power, and then sell it to their customers.

In addition to providing electricity, Weinheimer says the retail providers will likely develop additional services-the call waiting or call forwarding of the electric business-in an effort to attract large electricity users. "That may be some type of detailed metering, where they feed back information that allows a feedyard to evaluate electric usage and become a smarter, more efficient user at peak times and cut down on electric usage." That, combined with the savings realized through aggregation, will allow feedyards in Cattle Feeding Country to reduce their energy costs.

When that happens, Weinheimer says, everyone wins. "As the feedyard becomes more efficient and can reduce its input costs to produce a ton of feed that the customer's cattle will eat, that's additional savings that the cattle feeder benefits from as well."

Editor's Note--Burt Rutherford is TCFA communications director