Get ready for the biggest change in water-quality regulations affecting animal agriculture in nearly 30 years. Stiffer rules on water quality will impact at least 650 livestock producers in Missouri. It could force some out of business.

According to the U.S. Environmental Protection Agency (EPA), 40 percent of the nation's assessed waters are "impaired." The agency blames animal agriculture for the impairment of 60 percent of those rivers and streams, and 30 percent of the lakes. EPA notes the United States has some 376,000 livestock operations that confine animals, which generate 128 billion pounds of manure each year. The agency believes too much of that manure finds its way into streams, lakes, coastal waterways and groundwater. That manure, says the agency, is a major source of water pollution.

In response, EPA drafted rule changes that will affect many--if not most--Missouri livestock and poultry producers. These rules would represent the biggest change in water-quality regulations affecting beef, dairy, swine and poultry operations in nearly 30 years. Crop farmers who apply manure on their fields may also be subject to many features of the proposed regulations.

"At least 650 additional Missouri livestock producers would need permits to stay in business," said

Raymond Massey, University of Missouri crops economist. "The rules also include major changes in the way livestock farmers store manure and determine manure application rates."

Smaller operations affected, too
Under current EPA rules, concentrated animal feeding operations (CAFOs) of 1,000 or more animal units are required to get permits under the National Pollutant Discharge Elimination System. EPA's new rules offer two options for operations needing permits: 500 or more animal units or 300 or more animal units (see Table 1).

"Missouri currently has about 370 operations with permits--there are fewer than 2,500 operations with permits nationwide," said Massey. "EPA predicts 650 to 700 additional Missouri operations would require permits under the rule change. We believe EPA's estimate of affected Missouri operations may be low according to USDA data we have looked at."

Zero discharge
Under current rules, operations are exempted from penalties if their manure-handling facilities overflow during an extreme rainfall event. This standard is based on a 25-year, 24-hour rainfall design. In other words, if your operation were hit by a 24-hour toad-strangler that is the biggest rain to be expected in a 25-year period, you wouldn't be fined if your manure-storage facility ran over.

The new rules won't permit it for hog and poultry producers. Any loss of manure, regardless of the rainfall, would be a violation of the permit. In many cases, manure lagoons would need to be covered to meet the requirements of the new standard.

If it is not possible to cover a lagoon, then it would need to be closed. Covered manure storage would have to be built. Incidentally, you'd need an approved plan for closing a manure storage structure under the new rules.

"The zero discharge feature may be the hardest part of the proposed rules for some producers," said Massey. "This rule is aimed at operations with waste lagoons, and EPA makes no bones about the fact that they don't like lagoons."

Phosphorus-based nutrient plans
EPA's new rules would require a lot more planning and record keeping on land receiving manure. The biggest change is farmers would need to base manure application rates on the phosphorus content of the manure if soil tests show phosphorus above a certain level.

Until now, farmers could apply manure based on the nitrogen needs of the crop. The proposed rules require a system to evaluate phosphorus levels in the soil and to determine: a) if the producer can continue applying manure based on the nitrogen-needs measure; b) if he must apply manure based on phosphorus; or c) if the producer cannot apply manure at all.

"This rule may not be a major problem with most lagoon applications on corn-soybean rotations," said Massey. "But with more concentrated manure, as in poultry litter or cow or hog slurry, phosphorus levels can build up rapidly. And applying manure based on phosphorus levels can require double the land--or more--compared with the current nitrogen standard."

Also, EPA would require that manure be applied to growing crops. That might not be too onerous for, say, a dairy producer who has fall-growing pastures to take the manure. But for crop-livestock farmers, this means no fall application for next spring's crops.

This rule might well require building new or expanding existing manure storage structures. If your current lagoon or pit has storage for six months of manure--or even for a year's worth--that may not be enough capacity to carry you to the next time you could spread manure under permit requirements.

Under proposed rules, all permitted operations must have a written nutrient management plan, drafted or reviewed by a certified nutrient management specialist. These plans must be reviewed annually and renewed every five years.

"EPA says it will take an additional 80 hours of record keeping per year under the new rules," said Massey. "For many operations, that estimate may be low."

The cost
EPA has estimated costs of compliance with the proposed rules. Specific costs include:

1. Capital costs, such as buying new storage or equipment.
2. Annual operating and maintenance costs: fuel, labor, maintenance.
3. Incremental costs. To estimate the cash-flow impact, EPA estimated the start-up or first-year costs. All costs estimated by EPA are "incremental" to existing manure-handling costs. In other words, if compliance with current regulations costs $5,000 per year and compliance with the new rules costs $7,000, the estimated cost of compliance is $2,000 (see Table 2).

"EPA's cost analysis improperly discounts costs," said Massey. "I think they may have underestimated the cost of complying with the new regulations."

EPA has also tried to assess the financial impact of the regulations and divided the impacts into three categories. For example, an operation whose incremental compliance costs are less than 3 percent of its total revenue will be considered financially able to afford compliance, regardless of its cash flow or debt-to-equity ratio.

Operations with costs of 3 to 10 percent of total revenue are not considered in financial stress unless the debt-to-asset ratio exceeds 40 percent or they have a negative cash flow.

Across the United States, at the CAFO level of 500 or more animal units, 17 percent of swine operations and 9 percent of dairy operations would be in financial stress. At the 300 animal-unit level, 10 percent of dairy operations and 11 percent of hog operations would be financially stressed.

Will these proposed rule changes be a prelude to similar regulations for crop producers?

"I think they are a steppingstone to EPA requiring much the same thing of cropping operations," said Ray Massey. "It's probably just a matter of time."