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Eureka Springs Independent

Guestatorial Cargill Op-Ed response
Dane Schumacher
Wednesday, December 17, 2014


There are times in the course of human events, when things are so unbelievable I just have to gasp in amazement. That was my first reaction to food giant Cargill’s comments, as reported in a recent Eureka Springs Independent article, following the latest developments on the Buffalo River: A U.S District Court Judge found on Dec. 2 that in the case of the Cargill-supplied 6500-hog industrial facility located in the Buffalo River Watershed at Mt. Judea, the Farm Service Agency and Small Business Administration illegally guaranteed loans to the hog farmers, and the court now requires the agencies to re-do their Environmental Assessments within one year.

In the article, Cargill Pork Division President Mike Luker characterizes the farm owners as “three local families who have resided in rural northwest Arkansas for eight generations, farmed the land for half a century… raised hogs for more than a decade… grew up near… Mount Judea, learning to swim in local creeks… fish in local ponds…” This is all true enough. But it’s in the next paragraph where things start to get amazing. Luker paints the farmers as doing everything right, by the book, according to EPA rules, as if no court had just found serious flaws with environmental analyses that paved the way for the farm. From what Mr. Luker suggests, one wonders how such stalwart citizens could be suffering the brunt of legal actions.

Well, according to the court decision, the proceedings that enabled their farm’s existence were not so stalwart. Whether the farmers knew what they were doing in the events conspiring to establish C&H Hog Farms, or they just believed things would be all right if they followed the questionable lead of big business and state agencies, is not known. For sure, they allowed themselves to be propped up by Cargill and others on a platform as legally porous as the ground surrounding the farm. And somewhere in those proceedings and consequent illegal actions is where the culpability for this mess lies.

Under false pretenses, we now have a very large hog farm up and running in the Buffalo River watershed, coupled with numerous assurances of safety offered after the fact and in denial of the almost certain pollution of the river. “State of the Art,” the latest,” the “safest” – these are words and terms bandied about by Cargill to describe this first industrial size hog farm in the watershed, a refrain echoed by the hog farm owners, the powerful American Farm Bureau Federation lobby, and even the Arkansas Department of Environmental Quality.

Cargill has publicly stated it intends to drain the current clay-lined lagoons holding two million gallons of feces and urine and rebuild them with plastic-like liners. In addition, they are entertaining the idea of something called a “plasma arc” system to zap the untreated waste and release it into the atmosphere, an expensive and questionable process that has never been fully tested on this type of byproduct.

While I appreciate Cargill trying to right a wrong, the singular right thing to do is relocate this facility to an appropriate location and remove its threat to one of the state’s finest rivers. Their offered solutions leave me asking “Why, if it ain’t broke, are they trying to fix it?” Do they, too, recognize that this “state of the art” CAFO is no match for the forces of karst geology, and will almost certainly compromise the Buffalo River?

Thankfully by court order, the validity of this CAFO in the watershed, put in place by faulty loans and faulty environmental analyses, must be thoroughly re-examined. And if in the process this family of farmers loses what they’ve gained under false pretenses, then let us cast our scrutiny on those who perpetuated the false pretenses.

Finally, with the new court findings and a more revealing and honest appraisal up ahead, if C & H, Farm Bureau and/or Cargill really had the community in mind, wouldn’t they find an honorable way to move the hog operation from its current inappropriate location, and not waste precious time?

Dane Schumacher Buffalo River Watershed Alliance

KATV

Gov. Beebe discusses early career, legacy and retirement
Posted: Dec 11, 2014 9:55 AM CST

Updated: Dec 11, 2014 9:55 AM CST
By Roby Brock, Talk Business & Politics


LITTLE ROCK (KATV) -
Democratic Arkansas Governor Mike Beebe spent an hour on stage Wednesday with political columnist John Brummett to discuss the outgoing governor's political career, legacy and plans for retirement.

The event, which was held for the Little Rock nonprofit LifeQuest, was recorded for this week's edition of Talk Business & Politics, which will air on KATV Channel 7 Sunday at 9 a.m. and subsequently on TalkBusiness.net.

Beebe and Brummett discussed a variety of personal, professional and political topics in a casual, comfortable one-on-one setting before a live audience that was ripe with mutual ribbing, serious reflection and the interjection of laughter from a crowd of more than 100.

Brummett is a political columnist with the Arkansas Democrat-Gazette and is a contributor to Talk Business & Politics.

ACCOMPLISHMENTS & OBSERVATIONS

The governor analyzed what he thought occurred in recent election cycles that have bolstered Republican elected officials up and down the ballot despite his own popularity. He said that political moods swing back-and-forth and that Republicans must prove they can govern capably to continue to earn voters' trusts.

He said he hoped to help Democrats rebuild the party in Arkansas after the losses incurred in 2010, 2012 and 2014 – momentum he said was largely caused by the unfavorable view of President Barack Obama. Beebe warned that if Republicans swung too far from the mainstream with its governing style, namely referring to Tea Party supporters, voters would reassess their recent endorsements of the GOP.

Beebe named two accomplishments of his time as Governor that he hoped would be transformational and long-lasting. One was the Payment Reform Initiative that he sees as bending the cost curve on health care costs through a episodic care model versus a fee-for-service model.

He also said he wanted Arkansas to have a higher self-esteem through his leadership – a “swagger” that would reflect a can-do mindset for the state.

“Not a negative Texas one (swagger), but a good positive one,” Beebe said.

Beebe also admitted failure – and regret – on one major issue: an industrial hog farm that was permitted in the Buffalo River watershed in Newton County. The controversial Concentrated Animal Farming Operation (CAFO) was permitted through the Arkansas Department of Environmental Quality and opened for business nearly two years ago despite legal challenges.

Critics say the waste from the plant will pollute the Buffalo River, while supporters contend there is a system in place to protect waste from leeching into the stream.

Brummett said a voter he spoke to in Northwest Arkansas said the hog farm and its potential negative impact on the environment would be a part of the governor's “place in history.”

“[This man said] you were asleep at the switch. Your whole administration let that happen. Was there something you and your administration could have done?” Brummett asked.

“Could I have raised the alarm earlier? Yes. You're absolutely right,” Beebe answered. “Was someone asleep because we didn't? The answer is, ‘Yes' because I didn't know about it.”

“Who's supposed to tell you?” asked Brummett.

“It's my fault. It's my fault. If my people – whether they're agency heads or agency personnel, or even my own staff – if I don't know it, it's still my fault,” said Beebe.

He added, “I wish it was never there. I've stopped all future ones. We have put all sorts of stuff from the University of Arkansas to monitor, and at the first opportunity that it looks like there's leeching in that Buffalo watershed, we will take the appropriate steps to stop it. We have followed the law. I don't really like the law. I think they ought to change the law, so that CAFO's don't exist anywhere around a watershed going forward and we're going to do the best we can to make a better situation out of a bad situation. If I had it to do over, it wouldn't happen.”

Beebe also said that he would have fought the Hempstead County-based Turk power plant – a clean coal plant – but said it was too far along in the building process to reverse course when he became governor.

“Natural gas is much cleaner, and we've got a lot of it,” said Beebe. “I wish the plant (Turk) was there – I wish it was a natural gas plant.”

RETIREMENT

When he leaves office in January, Beebe will have wrapped up a political career that began in 1981. He has served as a State Senator, Attorney General and Governor.

As he has repeated many times, he said running for elected office is not in his future political plans. But Beebe hasn't announced what he may do besides play golf, read and stay out of his wife's way when the first couple returns to their hometown of Searcy.

“I don't have any immediate plans to do anything. I am open to some things,” he said, admitting he may get bored. “There are just so many rounds of golf you can play and there's only so many books you can read… I've conjured in my mind some options – none of which are full time. I've said I may serve on a board or two. I've said I may teach a college course. I may consult, but not as a lobbyist because I don't want to do any of that stuff.”

“I don't plan on doing anything full-time. I plan on letting it evolve. I plan on taking it easy and see what happens. If I get too bored, we'll go figure out something. We'll go tear something up and try to fix it,” Beebe added.

A portion of the hour-long conversation will air on Talk Business & Politics on KATV Channel 7 Sunday at 9 a.m. The full interview will be hosted on TalkBusiness.net following Sunday's TV program.

NWAOnline Newspapers (AR)

Benton County Daily Record (AR)

December 11, 2014
Lawmakers Should Protect The Buffalo
Section: Opinion
Page: 5A
 
Critics of banning large or medium hog farm operations within the watershed of the Buffalo National River say fear, not science, is driving those fighting to preserve one of the jewels of Arkansas tourism.
Well, let’s embrace fear, as they call it. No, we don’t suggest fear should drive public policy, but state lawmakers need to recognize many Arkansans who support protecting this incredible river have some justification for fears. They aren’t based on the science or lack of science involved in permitting hog farms. Instead, they’re based on a lack of trust in Arkansas’ environmental protection policies and leadership.

The existence of the area’s first, and we hope only, operating large-scale hog farm on Big Creek in Mount Judea, about six miles from where the creek meets the Buffalo River, is Exhibit No. 1 in demonstrating the concerns of Arkansans. The way that operation gained approval, without adequate notification of even the U.S. National Park Service much less interested Arkansans, has convinced many residents the state’s environmental protection leadership can’t be trusted.

The hog operation, known as C&H Hog Farm, wouldn’t be affected by a ban because it has already been granted permission to operate. The question is whether it serves Arkansas’ best interests to allow more hog farms in the watershed that feeds one of its most iconic and popular natural features. Remember, this is The Natural State, right?

Perhaps state lawmakers must be reminded there’s nothing like the Buffalo River anywhere in Arkansas. It draws more than 1 million visitors a year who spend an estimated $46 million while they’re here, according to the National Parks Service. In whose world does it make sense to threaten all the work that’s gone into establishing the Buffalo National River as a destination for nature lovers? Even if one accepts the proposition that the thousands of piglets and hogs can be contained with no contamination of the environment, do Arkansans want to allow even the possibility that the area around the river could become known as prime territory for additional hog farm operations?

And if Cargill, for which C&H Farms produces its animals, believes one operation there is a success, why wouldn’t it promote the establishment of other farms in the area?

It’s natural (there’s that word again) for farmers across Arkansas to react with their own fears to any state regulatory scheme that might get in the way of agricultural operations. Indeed, if you’re going to farm in this state, you’re going to be near a waterway.

But we’re not just talking about any waterway here. We’re talking about the Buffalo River, a natural resource the state should, as a matter of policy, protect at all costs.

The Illinois River, which starts in Arkansas and flows into Oklahoma, has a long history of man-made pollution that the two states have fought over for years. Its watershed was degraded over the years by chicken farms and hog farms. Does Arkansas want to wait until that happens to the Buffalo before its lawmakers realize action is needed?

One hog farm is there. That’s enough. State lawmakers should protect the watershed from further encroachment, and that can be done without threatening farmers elsewhere.

Long flow the Buffalo River. Arkansas should make an enduring commitment to preserve the river as one of the state’s great resources.

Memo:
WHAT'S THE POINT ?
The Buffalo River is an unmatched Arkansas natural resource that continues to draw a million visitors a year. It should be jealously protected by the state Legislature and state agencies.

Copyright 2014, Benton County Daily Record.

American College Of Environmental Lawyers

Old MacDonald Had a Farm [Loan] E-I-E-I-O My

Posted on December 10, 2014 by Charles Nestrud

On December 2, 2014 the United States District Court for the Eastern District of Arkansas enjoined the Small Business Administration (SBA) and the Farm Service Agency (FSA) (together the “Agencies”) from making any payments on their loan guaranties to Farm Credit Services of Western Arkansas (Bank), pending the Agencies’ compliance with the National Environmental Policy Act (NEPA) and the Endangered Species Act (ESA). The Bank had loaned nearly $5 million to C&H Hog Farms, Inc. (C&H) in 2012 for the construction of a confined animal feeding operation (CAFO), collateralized by a guaranty from the United States.

The court’s decision paves the way for potential alteration of the collateral agreement terms, over two years after the non-party Bank had closed and funded the loan. Such court action could jeopardize the farm loan guaranty program.

In its decision the court found that the SBA failed to conduct any environmental review of its loan guaranty or to consider the impact of that loan on the endangered Gray Bat that resides in an area near the CAFO, and that the FSA’s environmental impact and endangered species reviews were inadequate; the Agencies’ actions thereby violated both NEPA and ESA. The court’s injunction precludes the Agencies from making any payment on their loan guaranties to the Bank until they have complied with their obligations under NEPA and ESA, giving them a year to do so.

In August of 2012, and as provided under state regulation, C&H received a General No Discharge Permit (Permit) from the Arkansas Department of Environmental Quality (ADEQ) that addresses the management of manure, litter, and process wastewater generated from the CAFO. The Permit authorizes up to 6503 swine, at a location along a creek that discharges to the Buffalo National River, the nation’s first national river.

Upon completion of FSA’s review process and issuance of a Finding of No Significant Impact in August 2012, C&H obtained an initial construction loan of $3.6 million, 75% of which was guaranteed by SBA. C&H later received a $1.3 million loan, with 90% of that loan guaranteed by FSA. Both loan guaranties were required by the Bank. The loans were funded, construction was completed, CAFO operations commenced, and C&H has been making timely loan payments.

In August of 2013 the Buffalo River Watershed Alliance and several other organizations sued the Agencies, alleging that the CAFO permit contemplated at least occasional discharges of waste into surface waters that could pollute the Buffalo National River, and that the Agencies had violated NEPA, ESA, and certain other federal requirements. The plaintiffs requested that the loan guaranties be enjoined, pending a further environmental review. On December 2, 2014 an injunction was issued. C&H and the Bank were not parties to the litigation.

The significance of this decision is not the finding of a NEPA or ESA violation. What is surprising, and noteworthy, is the Court’s conclusion that such agency action was sufficiently related to a loan arrangement between two entities that were not party to the suit, leading to possible rewriting of that loan two or more years after it was negotiated and closed, and the funds dispersed.

The court concluded there was a sufficient causation nexus because “[w]ithout the guaranties, there would’ve been no loans. Without the loans, no farm.” In addition, the Court concluded that requiring further NEPA and ESA review would in fact redress the plaintiffs’ injuries for the loans already made since the Agencies have an “ongoing role in monitoring any conditions placed on their guaranties,” thereby suggesting that further restrictions could well be placed on C&H’s operation of the CAFO.

The Agencies have now agreed to undertake the additional review within the mandated 12 month time period. That review may result in no additional restrictions, or in restrictions that C&H can carry out without difficulty. With C&H being current on its loan payments, this decision may ultimately have no practical impact on C&H or its Bank. However, the “oh my” scenario is equally possible, because the court’s decision has no limits on the scope of additional restrictions that may be imposed.

As noted by the court, “[t]he federal agencies, through guaranty conditions, have control over C&H’s case-relevant behavior” and “it’s likely that more environmental review will change how C&H operates its farm.” If C&H is unable to meet those restrictions, resulting in a loan default, the Bank will lack the guaranty it required to fund the loan in the first place. Thus, the court has authorized the guarantor to re-write the terms if its guaranty, post hoc, to the severe detriment of the non-party Bank.

With a six year statute of limitations on filing a NEPA claim, what farm loan guaranty is safe from being altered or eliminated as a result of judicial action? Will Old MacDonald be prohibited from obtaining next year’s crop loan until the Agencies complete an EIS, a process that will take a year to complete and likely cause him to miss the planting season?

And what about other endangered species that could implicate the validity of other farm loan guaranties? EPA’s proposed habitat designation for two newly listed endangered mussels will encompass over 40% of the area of the state of Arkansas, impacting one third of all property owners in the state, most of which are farmers.

In addition, the broader implications of this decision on security interests cannot be overlooked. There were no parties in the litigation to argue that relieving the United States from its debt/collateral obligation would unfairly reward the Agencies for their failure to comply with NEPA and ESA. The Agencies certainly did not advance that argument. In fact, the injunction is what the Agencies requested, the court noting that its “Order will follow generally the terms [of the injunction] suggested by [the Agencies].” The Court even ordered the Agencies to “modify or void the loan guaranties as they deem appropriate in light of their revised and supplemented NEPA and ESA analysis.” The impact upon the agricultural loan program is clear, since these loans are routinely traded as federally insured securities.

The Arkansas Farm Bureau has succinctly identified the potential implications of this decision: “[The opinion] probably just made it a whole lot harder for the next guy who’s trying to get a farm loan, regardless of where they are.” You can take that to the bankundefinedor not!

Eureka Springs Independent

Cargill defends C&H hog farm
Becky Gillette
Wednesday, December 10, 2014

Cargill, the international ag conglomerate contracted to purchase pork from the C & H Hog Farm located in the Buffalo National River (BNR) watershed, said owners of the 6,500-head swine operation are responsible stewards of the environment.
“The farm is owned by three local families who have resided in rural northwest Arkansas for eight generations, farmed the land for half a century and raised hogs for more than a decade,” Mike Luker, president of Cargill Pork said. “They grew up near the mountain community of Mount Judea, learning to swim in local creeks and fish in local ponds, all the while producing food for others.”
Luker said in 2013, with a state-approved permit in hand, the three families of C&H expanded hog production by building a farm incorporating the latest design elements, including environmental safeguards exceeding state or federal government requirements. The farm houses 2,500 Cargill-owned sows and up to 4,000 piglets. The piglets stay on the farm for about 21 days before being weaned and transported to farms outside Arkansas to be raised for pork.
“Additionally, the U.S. Environmental Protection Agency spent three days on the farm, and its report indicated that nothing noteworthy was found,” Luker said. “C&H has been a model farm for the more than a year it’s been operating.
“Cargill understands the importance of being environmental stewards who protect and conserve resources used to produce food. Last spring, our Cargill Pork leadership team embarked on an outreach effort in Arkansas and met with many people and organizations to hear from them regarding concerns about the farm,” Luker said. “We listened, and learned about the passion for the Buffalo River. We came away believing all sources impacting Buffalo River water quality, present and future, must be addressed. We are working with C&H to further enhance the environmental safeguards already in place. Synthetic liners and covers will be added to manure ponds; we have implemented a permanent moratorium on hog facility expansion in the watershed, and we support the state’s approach for making decisions based on science and facts.”
Luker said at Cargill Pork, they believe various uses of land, water and other resources can continue to successfully coexist in the Buffalo River watershed, as they have for generations.

Eureka Springs Independent

Environmental victory may have national implications
Becky Gillette
Wednesday, December 10, 2014

Environmental groups who filed a federal lawsuit regarding the failure of the Small Business Administration (SBA) and the Farm Service Agency (FSA) to do an adequate environmental study before approving government loan guarantees for a 6,500-head confined animal feeding operation in the Buffalo National River watershed have won a victory not just for the BNR, but possibly for areas affected by similar CAFOs across the country.
D. Price Marshall, U.S. District Judge for the Eastern District of Arkansas, ruled Dec. 2 that federal agencies arbitrarily and capriciously guaranteed loans to the C&H Hog Farm near the BMR by failing to take a hard look at environmental impacts and not following proper procedures to protect threatened and endangered species.
“We are really excited about this decision,” said Earthjustice attorney Hannah Chang, one of the attorneys in the lawsuit that resulted in a ruling that the National Environmental Policy Act (NEPA) was violated when the SBA and the FSA failed to consider environmental impacts when approving taxpayer funded loan guarantees for the C&H facility. “If they are going to approve loan guarantees like this, they at least have to consider environmental impacts, involve the public and get comments before approving those dollars. That is a big step forward. They should have been doing this all along.”
Chang said if the ruling is not appealed, it would mean that nationwide those agencies will be called to meet certain standards they have not been applying to loan guarantees for CAFOs.
“It looks to us based on their arguments that the SBA didn’t think it was necessary to review environmental impacts,” Chang said. “The judge’s decision says, ‘Actually, you do.’ That should have an impact on similar scenarios around the country. I don’t know how many CAFO loans they are approving. But to the extent they are approving CAFO loans, they need to follow the law.”
Chang said the court saw the federal government agencies’ actions as a disdain and complete disregard for the laws that protect the environment. “We believe the court’s decision will help to set things straight in this debacle that has put more than $3.6 million in federal taxpayer dollars on the line to support a massive swine factory farm upstream of a treasured national resource.”
Who sued and why
The lawsuit was filed by the Buffalo River Watershed Alliance, the Arkansas Canoe Club, the Ozark Society and the National Park Conservation Association. Dane Schumacher, a member of the BRWA board, said the lawsuit was focused on the approval of federal taxpayer money for the purchase of 23 acres and the construction of gestation and farrowing barns for C & H Hog Farm and the gross inadequacies of the environmental assessment required as part of the loan process. These loans were approved without notifying the BNR National Park officials. Few people knew about the large new CAFO until after it was built.
Schumacher said it was a welcome surprise that the Arkansas lawsuit could have national implications for others facing similar CAFOs, which produce large amounts of foul smelling wastes that environmentalists contend can contaminate air and groundwater, and harm people’s health.
“This could affect the status quo for CAFOs across the country,” Schumacher said. “The judge’s ruling obviously concurred with what we stated in our claims. Now they have to go back to the beginning and look at any environmental consequences from this swine facility.”
Schumacher said the agencies would have to look at facts such as 9 spray fields located on karst terrain and near a tributary to the Buffalo River, Big Creek. These fields are receiving raw liquid wastes making surface to groundwater contamination a high risk. There are also spray fields located near the Mount Judea School that could impact school children and teachers, and an endangered species of gray bat lives near the facility.
“None of that was included in the environmental assessment,” Schumacher said. “One of the things the federal agencies should have done and didn’t do was provide notice of the proposed loan guarantees in the local paper. Hopefully, now they will open up a comment period, and the public can weigh in and express their opinion on the issue. It means they are going to have to go back and do what they should have done in the beginning.” She said the ruling makes it a very different picture from 2012 when the facility was quietly approved by the Arkansas Department of Environmental Quality (ADEQ).

Environmental, Energy, and Water Blog

Mitchell Williams Law Firm

THE BUFFALO RIVER/HOG FARM FEDERAL DISTRICT COURT DECISION: TRANSACTIONAL LESSONS?

Posted December 10, 2014
Author: Walter G. Wright

United States District Judge D. P. Marshall, Jr. of the Eastern District – Arkansas, in a December 2nd decision (“Order”) determined loan guarantees by two federal agencies to a swine farm in the vicinity of the Buffalo National River were provided without fulfilling certain National Environmental Policy Act (“NEPA”) and Endangered Species Act (“ESA”) procedural requirements. Buffalo River Watershed Alliance, et al. v. Department of Agriculture, No. 4:13-CV-450 DPM (E.D. Ark.).
Judge Marshall’s Order has received national attention because it involves the iconic Buffalo National River.

The suitability of the C & H Hog Farms, Inc. (“C & H”) swine farm to operate in the area and the applicable state regulatory requirements had been the subject of significant discussion. However, the Arkansas permitting requirements applicable to the swine farm were not an issue in the federal lawsuit. Instead, the plaintiff environmental groups, Buffalo River Watershed Alliance, Arkansas Canoe Club, National Parks Conservation Association and Ozark Society, (whose representation included Little Rock lawyer Hank Bates) challenged the federal Farm Service Agency (“FSA”) and Small Business Administration (“SBA”) financial guarantees arguing that certain assessment and/or notice requirements required by NEPA and the ESA were not fulfilled.

The use of NEPA and to a lesser extent the ESA to challenge federal financing activities associated with the C & H facility provides a reminder of both the scope of these two federal statutes and the corresponding procedural mandates. Equally important, these procedural mandates are not limited to large public works or major private sector development projects. Even tangential federal involvement in what may be perceived as a mundane or routine activity can provide grounds for challenge if the procedural requirements of these federal statutes are not met.
The outcome of Judge Marshall’s decision arguably provides a further important lesson. Both the federal agency and the affected private sector participant must ensure that procedural (documentation/notice) requirements (particularly those mandated by NEPA) are not perceived as an afterthought.

Background

C & H began operation along Big Creek near the Buffalo National River pursuant to an Arkansas Department of Environmental Quality (“ADEQ”) permit. Nine of the farm’s waste-application fields are stated to be on Big Creek, which is one of the Buffalo National River’s tributaries. The facility is the first large concentrated animal-feeding operation in the Buffalo National River Watershed to receive a permit from the ADEQ. In order to receive a permit, the facility had to prepare a plan for land application of the generated waste on the various fields.

C & H applied for $3.6 million in loans from Farm Credit Services of Western Arkansas (“Farm Credit”). In order to obtain the loan, C & H was required to obtain loan guarantees from SBA and the FSA. The entrance of the two federal agencies into the transaction potentially invoked an obligation for them to undertake certain NEPA and ESA procedural requirements.

National Environmental Policy Act

NEPA established in 1970 a supplemental mandate for Federal agencies to consider the potential environmental consequences of their proposals, document the analysis, and make this information available to the public for comments prior to implementation. The environmental protection policy established in NEPA, Section 101, is supported by a set of “action forcing” provisions in Section 102 that form the basic framework for Federal decision-making and the NEPA process.

The NEPA process requires different levels of environmental review and analysis of Federal agency actions, depending on the nature of the action. There are three types of review under NEPA: categorical exclusions (“CX”), environmental assessments (“EA”), and environmental impact statements (“EIS”).

An EIS is a detailed analysis of actions presumed to have significant environmental impacts, and is followed by a Record of Decision. An EA is a concise public document that briefly provides sufficient evidence and analysis for determining whether to make a Finding of No Significant Impact (“FONSI”) or prepare an EIS. CX refers to a category of actions which do not individually or cumulatively have a significant effect on the human environment and do not require an EA or EIS.

NEPA requires federal agencies to prepare a detailed statement of environmental impact (i.e., an Environmental Impact Statement) for “major Federal actions” significantly affecting the quality of the human environment.” Therefore, whether an EIS is required requires an affirmative response to two questions:

Is there a federal action?
Individually or cumulatively significantly affecting the human environment?

The Plaintiffs argument that NEPA was violated was primarily based on their position that the SBA and FSA failed to comply with the required procedural steps to determine whether an EIS should be prepared.
As to question (1), it is important to recognize that NEPA can potentially encompass both federally financed and privately financed projects. Federal “action” could be funding, permitting, or many other types of federal involvement. The SBA argued that providing the guaranty of C & H facility did not constitute a NEPA federal “action.” Judge Marshall rejected this argument citing the federal agency’s own regulations.

The FSA and SBA’s loan guarantees resulted in question “1” being answered in the affirmative (i.e., NEPA federal “action”). The agencies were, therefore required to undertake some level of NEPA review.
An affirmative answer to question “2” would require the preparation of an EIS. Nevertheless, whether or not an EIS should have been prepared was not an issue in the lawsuit. Instead, the question was whether the agencies adequately and/or correctly assessed and publicized potential environmental impacts. Judge Marshall’s decision identified deficiencies issues such as:

Failure of the FSA EA to reference:
Buffalo River
Big Creek
Mt. Judea School
Absence of rationale for conclusion that ADEQ mitigation measures would address impact
Failure to publish guaranty notice in local paper
Failure to conduct environmental review.

NEPA is a procedural law. It does not dictate a certain substantive result. A project regardless of the merits can proceed as long as the various NEPA procedural requirements are fulfilled. The potential impacts must simply be identified. However, the determination of procedural deficiencies in regard to the loan guarantees was a NEPA violation prompting the Court to issue an injunction.

Endangered Species Act

The ESA forms the basis for federal protection of listed threatened or endangered plants and wildlife. The federal statute has provisions that can impose obligations on federal and/or private activities that involve species that have been identified by the federal government as endangered or threatened.

Section 7 of the statute applies solely to federal agencies. It requires that the federal agencies consult with the United States Fish and Wildlife Service (“Service”) to ensure that any actions authorized or funded or carried out by the agency are not likely to “jeopardize the continued existence of any endangered or threatened species or result in the destruction or adverse modification of lands determined by the Service to be critical habitat.” A Section 9 prohibition against the “taking” (a broadly defined term) of listed endangered species applies to both private and federal activities.

Of course, various types of federal activities (such as funding, permitting, etc.) are potentially relevant to private sector projects. In other words, either Section 7 or 9 can potentially constitute a federal nexus to a private project in the appropriate circumstances.

The Order notes that the FSA had written the Service asking about any potential effect of the C & H facility on endangered species in the area. The Service responded that the Gray Bat lived in caves and forages around the C & H facility. Further, the Service suggested some potential mitigation steps in highlighted areas for further investigation. The Service cautioned that the response was informational and not a “blessing.”

The Order concludes that the FSA and SBA were required by the ESA to ensure that their actions would not hurt the Gray Bat. The Gray Bat was stated to forage along the river’s tributaries (including Big Creek). The Gray Bat was also stated to be found in caves along the Buffalo River (including at least one near C & H) potentially triggering the potential applicability of the ESA.

Both the FSA and SBA argued that their guaranties were not actions within the reach of the ESA. Judge Marshall concluded in regards to this issue:
This argument again understates the role of the guaranties. They were essential for C & H’s financing. And C & H had to finance $3.6 million to start the farm. The federal Agencies knew that C & H would bring several thousand swine into the Buffalo River watershed. In the circumstances, the Agencies were required by law to ensure that C & H didn’t jeopardize any endangered species. The Small Business Administration made no attempt to comply with the Act. The Farm Service Agency began consulting informally with the Fish and Wildlife Service, but then abandoned any collaboration. The Endangered Species Act required more consultation by both the Small Business Administration and the Farm Service Agency. 50 C.F.R. §§ 402.13 & 402.14. And their insufficient consultation violated the law. …

The Order’s conclusion is not that the Gray Bat would necessarily be adversely affected by the C & H facility. Instead, the Court was not satisfied that this potential issue was adequately resolved and/or documented by the federal agencies.

Lessons?

Any private project or activity that potentially has a federal nexus should be diligent in determining whether NEPA or the ESA potentially applies. If so, ensuring the appropriate level of effort to meet the procedural requirements will be prudent. Suggestions might include:

1) A federal agency may be responsible for NEPA/ESA procedural compliance. Nevertheless, the private sector project proponent should ensure that the procedural requirements (including required public notices) are adequately addressed. Some federal agencies are more diligent at addressing such issues than others.

2) NEPA/ESA issues should be addressed as early as possible. They should not be perceived as an afterthought. A substantive project decision that predates a required NEPA review may be viewed as suspect.

3) Documentation matters. Vague, incomplete or speculative analysis provides opportunities for opponents to argue there are procedural gaps. If so, a court will enjoin the activity until addressed.

4) Determine in advance whether ESA endangered or threatened species may be potentially impacted by the proposed activity. Particularly important will be whether or not designated critical habitat may be affected. Ensure relevant procedural matters are addressed and conclusions

Arkansas Democrat Gazette

The judge rules
By Mike Masterson

U.S. District Judge D. Price Marshall has ruled two federal agencies clearly violated their own regulations and environmental laws by guaranteeing $3.6 million in loans that allowed the controversial C&H Hog Farms to take root in the Buffalo National River watershed at Mount Judea.
And I suspect the wise judge is no more an environmental radical than me. His injunction order issued last week was based solely on what he deemed was the arbitrary, improper and illegal way the USDA's Farm Service Agency and the Small Business Administration blew off their obligations to thoroughly assess the potential environmental impact of a hog factory housing up to 6,500 swine before guaranteeing its taxpayer-supported loan.
As a result, the court enjoined the agencies from making payments on the loan guarantees, allowing them a year to come into compliance with laws.
"The public interest is best-served by ensuring that federal tax dollars aren't backing a farm that could be harming natural resources and an endangered species," the judge wrote.
This means both agencies now have a year to prepare satisfactory and thorough reports that analyze the potential environmental impact to this sensitive region from the factory farm they brought into existence through their loan guarantees.
The plaintiffs in this case consisted of local, state, and national conservation groups represented by environmental law firm Earthjustice in New York and attorneys Hank Bates and Hannah Chang.
The court found both agencies acted capriciously by simply failing to examine potential environmental effects of creating, in this ecologically sensitive watershed, the first hog factory permitted under the state's new General Permit. The agencies also failed to properly notify the public or follow requirements that protect threatened and endangered species like the gray bat.
Responses from plaintiff groups gushed forth following Price's decision.
In a press release, Chang said: "The court saw the federal government agencies' actions for what they were--a disdain and complete disregard for the laws that protect our environment. We believe the court's decision will help to set things straight in this debacle that has put more than $3.6 million in federal taxpayer dollars on the line to support a massive swine factory farm upstream of a treasured national resource."
Robert Cross, president of the Ozark Society, said his group was satisfied by the decision. "The flaunting of federal regulations by the Farm Service Agency and the Small Business Administration in the loan guarantee process that allowed the construction of C&H Hog Farms was a severe blow to the people of Arkansas and the nation who believe in the protection of our unique and beautiful natural resources such as the Buffalo River. The decision can undo only some of the damage done, but it will hopefully serve as a message to others who consider similar egregious acts in the future."
Bob Allen of the Arkansas Canoe Club said: "It isn't a question of if, but rather when and how much, pollutants from the hog factory, including excess nitrogen, phosphorous and bacteria, will make their way to the Buffalo National River. The court's decision today means that the federal government will actually have to consider the environmental impacts of the hog factory that it made possible--something the involved agencies should have done from the very start."
Emily Jones of the National Parks Conservation Association called the order a vital step forward in helping protect the river. "The Buffalo River belongs to the nation and the American people for this and future generations to enjoy and its protection is the responsibility of the federal government. This ruling squarely calls into question the adequacy of the Farm Service Agency's and Small Business Administration's prior environmental review, and requires that both agencies undertake the procedures necessary to ensure adequate protections of this national treasure."
On page 5 of his order, Judge Marshall specifically addresses the fact that the factory generates about 1,780,000 gallons of waste each year stored in two small settling lagoons beside the barns. "The ponds seep," he writes. "It's uncertain how much waste water will seep out, but C&H's engineers estimated that several thousand gallons a day could. Each year in the spring and in the fall, C&H plans to drain the ponds. After testing nutrient levels in certain nearby fields, C&H will spray the water on them. ... The Buffalo River watershed is characterized by karst geology--underground limestone which has been eroded over time."
Therein the judge identifies the problem caused, not by a decent Newton County family of caring and responsible hog farmers, but by our state's Department of Environmental Quality (cough) that wrongheadedly permitted this factory in the state's most environmentally sensitive region.
Dr. John Van Brahana and his volunteers continue to show how rapidly and far subsurface water flows from the areas around this factory.

Arkansas Times

Hog manure talks; environmentalists walk on Buffalo River protection rule
Posted By Max Brantley on Fri, Dec 5, 2014 at 11:07 AM

A report from the scene indicates supporters of a rule to ban more medium and large concentrated hog feeding operations in the Buffalo River watershed faced a barrage of hositle questions from Farm Bureau advocates and the rule was headed to defeat.

Public Health and Agriculture committees met jointly on the rule, aimed at avoiding another C and H Hog Farm, now hiousing 6,500 swine, in the Buffalo watershed. Opponents fear both groundwater contamination and flooding that could overflow waste pits, along with the smell of such operations in the area, heavily visited by tourists attracted to the national river.

The proposed rule from the Pollution Control and Ecology Commission required approval from 11 members of the House Public Health Committee and 5 from the Senate committee. A quorum of the committees seemed lacking, which doomed the rule, along with scant support from members.

UPDATE: No vote. Which means no rule. Which means a six-month moratorium on such operations granted in October is the last remaining protection for the Buffalo River. To date, the major instigator of CAFOs, Cargill, has said it has plans for no more manure factories in that particular watershed. The good news is that a recent federal court ruling is likely to make future operations more difficult. Judge Price Marshall said federal environmental law requires a better review of potential impact that two federal agencies did in guaranteeing loans for the existing hog farm. A meaningful review seems unlikely to clear a path for many such operations in such a sensitive area.

Judge says hog farm loans illegal; Orders environmental study
 
Posted: Wednesday, December 3, 2014 5:00 pm
By DAVID HOLSTED davidh@harrisondaily.com 

In a decision that was lauded by several environment groups, a district judge has ruled that federal agencies illegally guaranteed loans for a factory hog farm in the Buffalo River watershed. The decision came in a lawsuit naming as plaintiffs the Buffalo River Watershed Alliance; the Arkansas Canoe Club; the National Parks Conservation Association; and the Ozark Society. Defendants were the Department of Agriculture, the Small Business Administration and the Farm Service Agency.
District Judge D. Price Marshall of the Eastern District of Arkansas, in a 17-page ruling filed on Dec. 2, found that the federal agencies failed to take a hard look at environmental impacts that would result from the C&H Hog Farms near Mt. Judea. The agencies also failed to follow proper procedures to protect threatened and endangered species potentially affected by the facility.
According to a press release from Earthjustice, a nonprofit environmental law organization that worked with local attorneys on the issue, “the Court found that the federal agencies arbitrarily and capriciously guaranteed loans to the C&H factory farm near the Buffalo National River....”
C&H Hog Farms is a 6,500-pig factory farm located in Mount Judea on Big Creek, a major tributary of the country’s first national river, the Buffalo National River. The factory farm is under contract with Cargill, an international producer and marketer of agricultural products.
In his ruling, Marshall said, “The Farm Service Agency says it assessed the environmental issues and its administrative record supports its findings that C&H wouldn’t significantly affect the environment. The Small Business Administration didn’t assess the farm’s environmental effects and says the law didn’t require it to.”
Marshall later noted that the Farm Service Agency’s final environmental assessment did not mention the Buffalo River or Big Creek. Nor did it mention the nearby Mt. Judea school.
“The Court saw the federal government agencies’ actions for what they were undefined a disdain and complete disregard for the laws that protect our environment,” Earthjustice attorney Hannah Chang was quoted in the press release. “We believe the Court’s decision will help to set things straight in this debacle that has put more than $3.6 million in federal taxpayer dollars on the line to support a massive swine factory farm upstream of a treasured national resource.”
The Daily Times contacted Chang at her New York City office.
According to Chang, the immediate ramifications of Marshall’s ruling is that the federal agencies are prohibited from making any payments on the loans until they do the required environmental studies. The court’s order, Chang went on to say, sets a one-year deadline for the study. Chang emphasized that the study must include the public being notified of any informational meetings.
The agencies failure to properly conduct an environmental study was a violation of the law, Chang said.
“The lack of adequate public notice is just one of a number of egregious failures,” Earthjustice said in its press release,”on the part of the state and federal government to ensure that this facility will not have detrimental impacts on the exceptional natural resources of the Buffalo River watershed.
Marshall’s ruling understandably resulted in positive responses from the plaintiffs.
“The Court’s decision today,” said Robert Cross, a board member of the Arkansas Canoe Club, “means that the federal government will actually have to consider the environmental impacts of the hog factory that it made possible undefined something the involved agencies should have done from the very start.”
Emily Jones, Senior Program Manager of the National Parks Conservation Association, considered the ruling an important step forward for the protection of the Buffalo River, the country’s first national river.
“The Buffalo River belongs to the nation and the American people for this and future generations to enjoy and its protection is the responsibility of the federal government,” Jones said.
Robert Cross, president of the Ozark Society, called the flaunting of federal regulations by the Farm Service Agency and the Small Business Administration a severe blow to the people of Arkansas and others who believe in the protection of our natural resources.
“The decision can undo only some of the damage done,” Cross said, “but it will hopefully serve as a message to others who consider similar egregious acts in the future.”
Speaking with the Daily Times, Dane Schumacher, a Buffalo River Watershed Alliance board member, expressed her satisfaction with Marshall’s ruling. She was hopeful that it would mean the laws that are in place now will be followed.
Schumacher had been disturbed that the hog farm had been put in place without proper public notice or input, so the judge’s ruling that public meetings be held was encouraging.
Schumacher was heartened by the cooperation between all the environmental groups during the past two years in working toward a resolution.
“We just wanted to see what happened without jumping to conclusions,” she said. “We just wanted to have a fair assessment.”