EPA:

Anti-reg Republicans crying over spilled milk

To Republicans, it sounds like the perfect symbol of a regulatory agency run amok: U.S. EPA treating spilled milk the same way that it does spilled oil.

"Having milk regulated the same as oil -- that's so ridiculous, it could be a skit on Jon Stewart," Sen. Rand Paul (R-Ky.) said in a brief interview this week after leaving a Republican conference luncheon where, he added, EPA's dairy-spill rule was cited as an example of a runaway federal bureaucracy.

Paul is hardly the only conservative raising alarms over the agency's milk regulations. Rep. Chris Gibson (R-N.Y.) urged EPA to show "common sense" in exempting dairy farmers from the rules in a Tuesday interview with Fox Business Channel, which was teased with a warning of regulators "going rogue" and arguing "your local dairy farm could be the next Exxon Valdez." And Rep. Denny Rehberg (R-Mont.), set to challenge Sen. Jon Tester (D-Mont.) in 2012, turned the rule into a laugh line during a speech this week: "If anyone wants a 'first responder' for spilled milk, just adopt a cat!"

But the back story behind the milk rule is more complicated, dating back to the implementation of Clean Water Act mandates for spill-response planning in the 1970s and flaring up under the George W. Bush administration's EPA, according to dairy industry officials. While milk producers are not declaring victory until EPA issues a final exemption for their businesses, the agency has fully excused dairies from the requirement to plan for spills on their property.

The elevation of the spilled milk rule "to a kind of cause, where people rally around what they might consider a nonsensical regulation," came as a surprise to the National Milk Producers Federation's (NMPF) vice president of regulatory affairs, Jamie Jonker, he said in an interview. Yet quieting the outcry would be simple for EPA, Jonker added: "Ultimately, a timely conclusion of the bulk milk exemption really would take everything that's happened in the media and in Congress and put it to final rest."

The so-called Spill Prevention, Control and Countermeasure (SPCC) rule, first imposed 38 years ago, calls on oil and gas companies to guard against any release of their products into waterways or onto shorelines. The regulation took on new political volatility after last year's Gulf of Mexico oil disaster, when BP PLC was lambasted for failing to have enough equipment in place to contain its multimillion-gallon gusher, but EPA was moving to give milk producers a break from the rules during that summertime spill.

"EPA has already proposed to exclude milk storage tanks from the spill prevention regulatory program" and "has stayed any compliance requirements for milk storage tanks pending the agency's final action," the agency said in a statement. "It is widely known that EPA will take final action on the proposed permanent exclusion this spring."

So how did the notion that dairy producers would be hit with spill-planning rules become so pervasive? International Dairy Foods Association (IDFA) Vice President Clay Detlefsen "was content working through the regulatory process [and] more on a scientific basis," he said in an interview.

"I don't know if it helps" that members of Congress from both parties are now offering legislation that would force EPA to finalize the milk exemption, Detlefsen added. "I think EPA is genuinely engaged in the regulatory process and trying to figure out a way to deal with this situation."

'Slippery issue'

Milk producers first became aware that SPCC regulations could hit their industry during the George W. Bush administration, when EPA raised a concern that the animal fat in milk might put it in the same category as oil, the dairy representatives recalled.

Under existing law, Detlefsen explained, the concept of "what is oil was always sort of ambiguous. I don't mean to make a pun, but it was a slippery issue."

Given that uncertainty, the dairy industry pressed for and won a proposed rule exempting milk storage and containers from the spill-planning rules. In an unfortunate twist of timing, however, the proposed rule was issued the week before Bush left office and became part of a broader freeze of pending regulations that typically occurs when a new administration takes over.

Meanwhile, as EPA worked on the scope of its final SPCC exemption for milk containers, dairy companies began pressing their case on Capitol Hill. Armed with estimates of $155 million in industrywide compliance costs should their facilities not be excluded, dairy groups urged EPA to save their industry further uncertainty by finishing its exclusion.

How that effort began to snowball into the milk rule's use as an effective talking point is difficult to determine.

House Republican critics of the agency were citing the spill regulation and proposing bills to force EPA's hand on an exclusion as far back as mid-2010 (E&E Daily, May 28, 2010).

But President Obama's recent drive to eliminate unnecessary or overlapping federal regulations, punctuated by a State of the Union quip about salmon, appears to have driven the milk-spill exclusion into the mainstream.

A Wall Street Journal editorial two days later fanned the flames with what Detlefsen described as "some inaccuracies," including a contention that EPA was planning to apply SPCC rules to dairies, rather than grant an exemption.

With a final exemption for milk producers expected from EPA within weeks, the dairy industry is hoping to see language from the agency that generally tracks with the original proposed rule issued in January 2009. In fact, quite a few farms within their ranks are still expecting to be subject to spill-planning rules because they store fuel or oil elsewhere on their property.

"We have not asked EPA or asked anyone in Congress that [farms with fuel storage] wouldn't be required" to follow the rule, Jonker said. Detlefsen estimated that as many as 40 percent of dairy processing plants ultimately would be covered by SPCC requirements.