The following articles are excerpts from the newsletter:

EPA Proposes Two Major Rulemakings Affecting the "Total Maximum Daily Load" Program, Ellen B. Steen

Agricultural Biotechnology and the Segregated Marketplace: Keeping the Customer Satisfied, Thomas P. Redick

 

EPA PROPOSES TWO MAJOR

RULEMAKINGS AFFECTING THE

"TOTAL MAXIMUM DAILY LOAD" PROGRAM

Ellen B. Steen

On August 23, 1999, EPA proposed two significant rulemakings affecting agricultural concerns. See 64 Fed. Reg. 46,012 and 64 Fed. Reg. 46,058. The proposals contemplate a substantial overhaul of the Total Maximum Daily Load (TMDL) program under Clean Water Act Section 303(d), 33 U.S.C. § 1313(d), as well as major revisions to the Agency's antidegradation and permitting regulations designed to bring about water quality improvements in so-called "impaired" waters that are being addressed through the TMDL program. Public comments are currently due by January 2, 2000 (extended from an initial deadline of October 22, 1999).

The first proposal would "strengthen" the TMDL program by expressly requiring the establishment of TMDLs and the implementation of "load allocations" to reduce pollution from nonpoint sources, including agricultural runoff and "air deposition" of pollutants (such as nitrogen and phosphorus). The second proposal would require "reasonable further progress" toward attainment of water quality standards before States or EPA can issue permits to any new or expanding point sources -- such as Concentrated Animal Feeding Operations (CAFOs) or certain silvicultural operations -- where the new or expanding source is located along waters that do not meet water quality standards for a pollutant that the source would discharge. This requirement would mean at a minimum that the new or expanding source must obtain an "offset" from other sources in the watershed of at least 1.5 times the amount of the pollutant that the new source would discharge. This offset requirement would apply to all waters that do not meet water quality standards, up until the time that a TMDL is in place for the relevant pollutant on that waterbody.

EPA's second proposal would also purport to authorize EPA and National Pollutant Discharge Elimination System (NPDES)-authorized States to "designate" any forestry activity as a "point source" on a case-by-case basis, depending only on whether the activity is deemed to be a substantial contributor of pollutants to waters. In addition, EPA proposes to expressly assert its own authority to designate any animal feeding operation (AFO) as a CAFO subject to NPDES permitting where the operation is located in an NPDES-authorized State, if EPA concludes that the designation is appropriate to ensure achievement of an EPA-established TMDL in the State. EPA proposes to use both the forestry and CAFO case-by-case designation authority only to implement EPA-established TMDLs, although States' case-by-case designation authority would not be similarly constrained (i.e., States may designate forestry or AFOs as "point sources" any time they determine the activities are significant contributors of pollutants to waters).

Background

The TMDL program -- in existence for more than 25 years -- has historically been one of the most under-utilized and misunderstood Clean Water Act tools for the control of pollution. It has become the subject of increased public and EPA attention within the last few years, as dozens of lawsuits were brought (and often won) by environmentalists claiming that EPA was inadequately implementing the statute's directives: that States in the first instance and, failing them, EPA list waters where technology-based effluent limitations are not adequately stringent and establish TMDLs for those waters at levels necessary to implement water quality standards. See 33 U.S.C. § 1313(d)(1)(A), (d)(1)(C). The Act does not define TMDLs, nor does it explain their purpose, or what is to be done with them once they exist.

Spurred by the wave of lawsuits and several resulting court orders and consent decrees, EPA has undertaken to strengthen federal oversight of State identification of waters and TMDL development under Clean Water Act Section 303(d). In the process, and particularly with the two August rulemaking proposals, the Agency is adding some teeth to the program and purportedly filling some "gaps" in the statute in ways that could ultimately make this obscure, long-ignored statutory provision the most far-reaching program under the Clean Water Act -- mandating State regulation of all sources of water quality impairment. Whether the program will be workable as a practical matter, and whether EPA's rulemaking will survive the inevitable judicial challenges, remains to be seen.

The TMDL Proposal

Major elements of the TMDL proposal include the following:

# Use of the Section 303(d) list of waters as a "comprehensive accounting" of all impaired or threatened waters, regardless of the cause of the impairment or threat (e.g., waters impaired by nonpoint sources or air deposition).

# Requirement to list waters impaired or threatened by "pollution" but not a "pollutant" (but no requirement to prepare a TMDL for such waters).

# Requirement to list waters impaired or threatened by an "unknown cause" and to prepare TMDLs for such waters (with the "first step" in TMDL preparation being the identification of a "pollutant" causing the impairment).

# Requirement to list and prepare TMDLs for waters impaired or threatened solely by nonpoint sources.

# Requirement to prepare TMDLs for waters already "expected to meet" water quality standards within the next listing cycle, unless the waters are expected to meet standards as a result of enforceable laws or regulations.

# Requirement to list as "impaired" waters where antidegradation requirements have not been met (i.e., outstanding natural resource waters that have experienced any decline in water quality, or any waterbody that has failed to maintain an "existing use" as defined in EPA regulations).

# Mandatory "high" priority ranking for waters containing species listed as endangered or threatened under the Endangered Species Act and for waters contributing to a violation of Safe Drinking Water Act standards.

# Requirement that States provide "reasonable assurances" through "specific procedures and mechanisms" to demonstrate that nonpoint source load allocations will be implemented.

# Requirement that States include in their TMDLs "implementation plans," which are subject to EPA approval or disapproval, and which will be written by EPA in the event of disapproval.

The Related NPDES/Antidegradation Proposal

In a related notice published simultaneously with the TMDL proposal, EPA proposes to revise its antidegradation and NPDES regulations in ways designed to ensure "reasonable further progress" toward attainment of water quality standards in impaired waters, both before and after a TMDL is established. See 64 Fed. Reg. 46,058-89. The proposal essentially involves two components.

First, EPA proposes antidegradation regulation revisions to require that, for any waterbody that does not attain water quality standards and for which there is not in place an approved TMDL to address the impairment, new or expanding point source dischargers of the pollutant causing the impairment may not be permitted unless they demonstrate "reasonable further progress" toward attainment of the water quality standards. Id. at 46,063. "Reasonable further progress" would mean, at a minimum, that new or expanding sources must obtain a 1.5 to 1 "offset" from other sources of the pollutant that they intend to discharge. It may also include, however, any other requirements that the permitting authority (EPA or the authorized State) deems appropriate, such as pollution prevention plans and conservation easements. Id. at 46,067. New or expanding sources may obtain the required offsets from existing nonpoint sources of the pollutant affecting the same waterbody, but achievement of the nonpoint source load reductions would have to be ensured through enforceable conditions in the point source discharger's permit. Id. at 46,072.

The second component of this related rulemaking is the proposal to assert the authority of EPA and NPDES-authorized States to "designate" any forestry activity or any AFO as a "point source" on a case-by-case basis, depending only on whether the activity is deemed to be a substantial contributor of pollutants to waters. (With respect to AFOs, EPA and NPDES-authorized States already have the authority to determine whether they are "CAFOs" subject to permitting on a case-by-case basis, but EPA is proposing to expressly assert its own authority in an authorized State where appropriate to ensure achievement of an EPA-established TMDL within the State.)

With respect to the "designation" of forestry activities as "point sources," the proposed revision would eliminate the express regulatory definition of most silvicultural activities as "nonpoint" sources (40 C.F.R. § 122.27), which has existed since 1976. See 41 Fed. Reg. 24,709 (June 18, 1976). According to many, it would also run contrary to more than two decades of consistent Congressional direction that forestry activities be deemed "nonpoint" in nature and not regulated through NPDES permit requirements. Given its controversial nature, the case-by-case designation rule, like the TMDL regulation it accompanies, will almost certainly face challenges in court if promulgated as proposed (and perhaps under any circumstances).

 

AGRICULTURAL BIOTECHNOLOGY AND THE

SEGREGATED MARKETPLACE:

KEEPING THE CUSTOMER SATISFIED

Thomas P. Redick

Many consumers and retailers in the European Union (EU) and a few in the United States are expressing a preference for products that do not contain genetically modified organisms (GMOs) produced through modern biotechnology. In the past few months, the agricultural biotechnology industry has been flooded with a wave of media attention on ostensible consumer concerns (and retailer reaction) about the "right to know" about the process of genetic engineering in producing the food that reaches their plates. Consumer demands for information about the presence of GMOs in their food have in turn caused a ripple effect throughout the chain of commerce in corn and soybeans.

The uncertainties in the marketplace create opportunities for farmers seeking to increase their profits by segregating GMOs from non-GMOs. Those farmers and grain shippers that position themselves to seize market share with "non-GMO" corn or soybeans may find that the process of certifying "non-GMO" shipments favors those shipments from jurisdictions that have banned planting of GMOs (e.g., some overseas competitors of the United States). In contrast, those persons in the chain of commerce who are left holding the bag (of unsaleable GMO grains) may be exploring their options for recouping any adverse impacts on prices in the marketplace.

Several EU decisions made in recent years have raised legal barriers to GMOs -- i.e., the delay in approving new GMOs and the adoption of mandatory GMO labeling, with programs for corn and soybeans. The U.S. loudly protested these decisions threatening action at the World Trade Organization (WTO) earlier this year, only to change its position heading into the upcoming trade talks in Seattle commencing in November 1999.

Regular readers of this newsletter have followed the twists and turns taken in the fast evolving history of international biotechnology regulation. The EU's call for labeling of GMOs created a parallel track of private labeling that is largely immune from legal challenges. Legal issues arose when food producers in Europe announced adoption of voluntary labeling and segregation of GMOs. The ripple effects immediately reached the U.S., where major grain shippers (e.g., Archer Daniels Midland -- supermarket to the world) announced that they would segregate GMOs so that demands for non-GMOs can be met.

In the aftermath of media-driven hysteria in Europe, the agricultural biotechnology industry in the United States has to wonder how it could have lost the public debate. The evidence of adverse events is scanty when judged by standards existing for agricultural chemicals. A few preliminary, inconclusive studies finding possible adverse impacts in mice and monarch caterpillars has dominated press accounts. With retailers in Europe and a few in the United States (e.g., Gerber baby food) demanding only products with no GMOs, the chain of commerce in soybeans and corn has been thrown into disarray as parties rearrange their plans for marketing billions of dollars in grain.

The EU, Japan, and other trading partners are demanding labeling of GMO products, while retailers join in a chorus that is immune to challenge at the WTO by virtue of being private commercial choice. While the drive for labels and segregation of GMOs arise more from consumer and retailer responses to activists and media commentary than any genuine scientific breakthroughs in assessing risk, the world's approach to these risks may presage new approaches in chemical and environmental regulation. As a result, environmental lawyers and virtually anyone involved in agriculture should take notice of these developments and monitor them carefully. While the known environmental and human health impacts of GMOs are minimal, their immediate economic impacts could be cataclysmic.

The Labeling About Face: Marching to the EU's Drumbeat

Since genes were first spliced into one species from another, there have been opponents of genetic engineering raising concerns about widespread environmental degradation from GMOs used in agriculture, industry, and medicine. These concerns were heard and largely resolved by U.S. regulators. The United States Department of Agriculture (USDA) and the Environmental Protection Agency (EPA) required field trials and monitoring to address environmental concerns. The Food and Drug Administration (FDA) would declare GMO foods "substantially equivalent" after substantial testing for allergens or toxins. GMO foods were marketed without any additional regulatory labeling requirements (e.g., may contain genetically modified content). For over 20 years, growers and seed companies in the U.S. have planted and harvested these new crops until they became the dominant varieties (for soybeans, over two-thirds) in the harvested crops. U.S. farmers will produce a record 2.9 billion-bushel soybean crop this year. Approximately 50 percent of these soybeans were grown from more than 1,100 varieties of seedstock -- all containing the same Roundup Ready^® gene event -- that were derived through modern biotechnology.

As noted above, the U.S. reversed long-standing policy to suggest that labeling of GMOs would be a suitable topic for the upcoming WTO trade talks in Seattle. This sudden reversal comes within weeks of news reports from Japan indicating that a "senior U.S. government official" reiterated Washington's opposition to Japan's plan to require mandatory labeling of food products containing GMOs.

Existing FDA guidelines on labeling for food biotechnology would require special labeling only if the crops derived from agricultural biotechnology were not "substantially equivalent" in composition, nutritional profile, safety, or allergenicity. The FDA's science-based labeling and regulatory practices has provided U.S. consumers with the safest food supply in the world. If there is a change in long-standing FDA policy and U.S. trade policy, significant changes requiring extensive labeling of heretofore "substantially equivalent" foods will force widespread segregation of corn and soybean commerce (and perhaps other GMO crops too numerous to list here).

In a landmark event that was first heralded in Michael Hansen's speech presented to the Third Biotechnology Roundtable, the September 1999 edition of Consumer Reports magazine (a Consumers Union publication) published an article entitled "Seeds of Change," which called for mandatory federal review of agricultural biotechnology. Consumers Union's recommendations state that there is no evidence that genetically engineered food now on the market is unsafe to eat. The article asserts, however, that:

(1) GMO food lacks sufficient safeguards; and (2) the consumer gains little from the biotech crops being marketed today. Consumers Union suggests mandatory federal human-safety review before the biotech crops hit the market, and FDA-mandated labels on all foods containing genetically engineered ingredients. Industry should be held liable for economic or biological damage resulting from genetically engineered crops. Consumers Union also is calling for industry to stop using antibiotic "marker" genes in the manufacture of genetically modified crops.

While the call for regulatory solutions continues, it would appear that voluntary market pressures would suffice to provide consumer choice, given the power being exercised by retailers. Organic retailers provide consumers choice. This voluntary labeling approach also is similar to the labeling that exists for "free-range" meats and eggs.

A leading farmbelt legislator, Senator Charles Grassley, urged U.S. farmer trade associations to reach consensus on whether segregation of GMOs from non-GMOs was possible in the field and grain elevators of the grain belt. The National Corn Growers Association (NCGA) suggested that "channeling" (for no increased cost) would allow the growers to segregate five million acres of unapproved (in the EU) agbiotech corn varieties out of the U.S.'s 1999 corn crop. NCGA's "KNOW BEFORE YOU GROW" campaign provided farmers with updated information about approval status.

The American Soybean Association (ASA) took a firm position on segregation, expressing serious doubts that an untested, novel process would work at the level needed (there are no published "tolerances" for GMOs in most major markets, while rat feces and carcinogenic aflatoxins are allowed in greater concentrations). In late 1997, the ASA began to inform seed companies that they should not market any genetically modified soybean before its time (before securing final regulatory approvals for export to all major soybean markets -- especially the dilatory EU). In a speech at the Third Biotechnology Roundtable sponsored by the Special Committee on Agricultural Management in May 1999, Steven Censky, CEO of ASA, repeatedly stated that the economic consequences of marketing varieties of soybeans not yet approved for export to the EU could lead to "cataclysmic" trade losses, with the commingling of unapproved varieties rendering entire container ships unsuitable for export.

In response to these requests for forbearance, three seed companies took steps to remind U.S. farmers to keep genetically modified corn not approved in the EU out of U.S. export channels. Pioneer Hi-Bred International Inc., Novartis Seeds Inc., and AgrEvo USA Co., in separate responses to a letter sent last month by the National Grain and Feed Association (NGFA), outlined steps they have taken to deal with the sensitive trade issue. Other companies -- Dow AgroScience, Monsanto Company, and Optimum Quality Grains -- are expected to follow suit.

As this article went to press, however, rumors of plans to market and "channel" unapproved varieties were circulating. History has taught the grain industry the economic risks posed by GMOs. U.S. corn exports to Spain, Portugal, and countries in northern Europe have been blocked in recent years because of a lag between the U.S. and the EU approval process for genetically modified crops. The delay has cost U.S. producers about 2.0 million to 2.5 million tons in annual sales.

The NGFA suggested to growers that they check in advance with potential grain buyers to assure they are willing and able to accept delivery of corn. Novartis responded that it did not face "the issues addressed in your August 6 letter" because the two genetically modified corn varieties that it produces and sells have been approved for import into the EU. Novartis said it has worked with other seed companies, however, to develop a database of grain purchasers who will accept grain with GMO traits not approved by the EU for import. That database can be viewed on the American Seed Trade Association's website at http://www.amseed.org.

The seed industry received a further shock when Senator John Kerry from Nebraska demanded that Novartis, a Swiss agbiotech company, pay compensation to farmers for any losses incurred as the result of the refusal of a U.S. Novartis subsidiary, Gerber, to purchase GMO products. Gerber's independence lead it to refuse to purchase GMOs, including those produced from seeds sold by its parent company -- Novartis, citing concerns that mothers would not feed these products to their infants. In a presentation at the Section of Environment, Energy, and Resources' 7^th Section Fall Meeting, Kimball Nill of the ASA suggested that there was no known risk of toxicity from genetically modified products, while non-GMO corn varieties could have a higher incidence of aflatoxin (a carcinogenic fungus that grows in the holes left by corn borer caterpillars).

The issues of relative food safety (GMO, non-GMO, organic) will continue to be explored in industry and non-government organization position papers and studies. In the meantime, farmers and grain industry operators (elevators, shippers, etc.) will need to monitor the progress of events carefully, and segregate GMOs to ensure adequate markets for GMO and segregated non-GMO corn and soybean products exist at the time of harvest.

Global Action (or Precautionary Inaction)

President Clinton arranged a special meeting with the president of the European Parliament to discuss the EU opposition to approval of GMOs from the U.S. While nothing firm was decided, a compromise may be worked out in late 1999.

The precautionary approach to GMOs has found a long-term home in the EU, which would like the world to follow its lead. GMOs are one of the many important issues being considered by the Convention on Biological Diversity (Convention), an ambitious international environmental treaty designed to protect habitats of all species, which opened for signature at the Rio Earth Summit in 1992.

At their special Convention of the Parties held in February 1999 in Cartagena, Colombia, the parties to the Convention failed to finalize the terms of a proposed biosafety protocol (Protocol) that would have subjected GMOs to strict regulation. The bottom line of a complex proposed Protocol is: premarket notification and express approval would be required for all shipments of commodities containing GMOs. Opponents of genetic engineering had regaled the six prior meetings of the Ad Hoc Open-Ended Working Group on Biosafety (Biosafety Working Group) with apocalyptic visions of extinct species springing to life. The parties will be negotiating the Protocol again in January 2000, with differences on segregating commodities globally still causing divisions.

Despite this escape from global "advance informed agreement" at the Cartagena meeting for commodity shipments, GMO exporters will continue to face new regulatory challenges in the near future. Governments that are uneasy about exports may require labeling of products produced using GMOs, and liability regimes specific to GMOs are under review in Europe. As overseas laws proliferate, the previously unified and largely fungible markets for agricultural commodities, particularly corn and soybeans, will have to adjust to trade barriers erected with minimal notice. There are far too few agreed industry standards for testing and food safety to provide the certainty needed for international transactions.

The U.S. corn and soybean industries are struggling to develop controls and processes to prevent commingling of unapproved varieties of corn and soybeans in the export grain supply. The events of the past year serve as a caution to regulatory lawyers and their clients concerning the need to plan for overseas permitting and regulatory requirements. This planning must take into account the rapidly shifting landscape of overseas requirements. First, it must include use of more effective mechanisms to ensure timely compliance with existing overseas environmental permitting. Second, there should be a strategy to respond to delays and disruptions caused by politics. One example would be timely implementation of controls (such as diversion to certified seed production for the next year's seed sales) that keep unapproved varieties segregated from those varieties that are suitable for export.

Careful drafting of growers' agreements represent a first step toward ensuring that unapproved varieties are not commingled. Developments regarding regulatory delays, or sales of unapproved varieties, should be tracked closely in grower databases allowing early contact with growers. Delays in contacting growers when the U.S. ordered segregated harvest of unapproved corn varieties led to the commingling of the corn supply in 1997. Additionally, grower agreements must be supplemented by adequate processes to ensure compliance, and harmonized testing requirements to permit certification of grain shipments. Without such protections, the grain shipments may present unreasonable risk of commingling that causes them to be turned away for failure to comply with the environmental laws overseas in the EU. Thus, as other trading partners impose strict approval or labeling requirements for GMOs (Korea, Australia, and others), the complications presented by tracking grain shipments will change U.S. agriculture.

Consumers with specific questions can contact organizations that provide extensive information about food and biotechnology on their web sites, including the USDA (http://www.usda.gov.), Animal and Plant Health Inspection Service (http://www.aphis.usda.gov), the FDA (http://www.fda.org), and the International Food Information Council (http://ificinfo.health.org).

On May 26, 1999, in St. Louis, Missouri, the Special Committee hosted the Third Biotechnology Roundtable, entitled "Liability and Labeling for Genetically Modified Organisms," where high level stakeholders and policy makers gathered for an interdisciplinary discussion on law and the latest science. The Section's Special Committee on Agricultural Management is currently undertaking the preparation of a "white paper" and a book project outlining the biosafety protocol and its impact on U.S. interests.

Thomas P. Redick is of counsel with Chapin Fleming McNitt Shea and Carter in San Diego, practicing environmental law and litigation. He is vice chair of the Special Committee on Agricultural Management and the Toxic Tort and Environmental Litigation Committee.