Water Quality

Water quality, or lack thereof, has received a staring role in the press during the last several years, a position that has been challenged only recently by ethanol. After several years of massive changes in the water quality program, the DNR is now shifting to a “fill in the details” phase. As an example, after implementing the Use Assessment and Use Attainability Analyses (UAA’s) classifications and field work for Iowa’s rivers, perennial streams and lakes, the DNR will turn to the development of individual UAAs in 2008. Either in 2008 or 2009 it is likely that there will be another round of litigation as environmental groups challenge individual NPDES permit renewals that have been on hold during the development of the new UAAs.

Water Quantity

One hot-button issue sure to be seen in 2008 is water quantity. Few issues seem to spill more ink in the State’s newspapers than the prospect that the State is going to run out of water. This is a topic that I will be writing more about this year. What you need to know is that the legislature awarded the DNR $480,000 to restart the process of collecting and studying data on Iowa’s water resources. The DNR and the Geological Survey Bureau have not been updating their database since the 1980s and this funding only “primes the pump.” The DNR has indicated that it will file a request with the legislature for a plan to raise about $2 million from fees and reallocations of other funds. This proposal may include a $0.50 per $1 million gallons allocated in each permit and it is likely that this request will be permanent. While the fees for nearly all users will be negligible, utilities are complaining that they will be hit with six figure fees for each power plant.

Air Quality

The DNR would like to eliminate the “anti-stringency rule,” or as I call it, the “no more stringent than EPA rule” contained in Iowa Code section 455B.133(4). this is a rule that prevents the DNR from making air regulations that are more stringent than what the EPA requires. The DNR cites the EPA’s increase in the PSD limit to 250 tons for ethanol plants as the basis for this desired change, with the argument that they did not want to approve the change but were forced to. Although DNR legislative initiatives have not fared well in recent years, this year may be the DNR’s best opportunity to get its agenda passed, so pay attention to its legislative agenda which should be issued in final form any day. Expect a major legislative battle if the DNR tries to eliminate this restriction.

Biofuels

The energy bill signed by President Bush in late 2007 provided a significant boost for the ethanol industry just as it was beginning to lose momentum after an astonishing six years of frantic growth. The energy bill encourages a five-fold increase in biofuels to 36 billion gallons a year within the next 14 years. Most of the increase is targeted to come from cellulosic sources. However, the biofuel industry is facing major price pressures on both the ledger. As I write this entry, corn is $4.66 per bushel, gasoline is at $2.87 per gallon, and ethanol is at $2.18 per gallon. In other words, corn has nearly doubled in price in the last two years but the price that plants get for ethanol is nearly flat. The futures markets show corn continuing to go up and ethanol continuing to go down through 2008. The industry has seen one ethanol plant bankruptcy in Nebraska and more may well follow in 2008. Iowa’s ethanol industry is comparatively young and therefore well positioned to weather this storm so that it can catch a second wind. It will be interesting to see how this industry will react to these different pressures in 2008 and even more interesting to see if Iowa can capitalize on the opportunities for cellulose as a stock.

Global Warming

The presidential election, a “lame duck” administration, and upcoming congressional elections are likely to stall federal efforts to enact meaningful legislation to address global warming in 2008. But that will not stop Iowa’s own efforts. First, the DNR has stated in its draft legislative agenda that it wants to regulate greenhouse gases as pollutants. Expect several bills to be introduced with this goal and expect a great deal of lobbying to stop this effort. One problem that the DNR will face is that greenhouse gases do not cause measurable environmental harm based on local concentrations. Therefore, regulating greenhouse gases “as a pollutant” will not literally work.

Another development is that Iowa’s own Climate Change Advisory Council managed to issue a brief interim report setting some very general goals and target years for greenhouse gas reductions in Iowa including state-wide reductions in greenhouse gases. The ICCAC decided to delay setting actual interim reduction targets “until policies and actions could be studied and deliberated.” The Council promises to “continue its work on selecting GHG mitigation options and energy opportunities from a catalog of possibilities. Cost-effectiveness of these options will be evaluated.” A target date of December 31, 2008 has been announced. If this effort is to move any quicker it will require more deliberate legislative funding.

Feed Lots

The Sierra Club and several other environmental groups have petitioned the EPA to withdraw the NPDES program delegation from the State of Iowa. One of the elements of the petition targets House File 805, signed into law on May 23, 2005. That legislation regulates open feedlots. The challengers claim that the regulations are less stringent than the federal requirements and that the law allows feedlots to discharge manure directly to streams after having gone through a simple settling process and without having to obtain NPDES permits. It will be interesting to see how this portion of the petition plays out. It is also worth noting that the DNR’s draft legislative agenda also displays a concern that the DNR is still lacking effective enforcement tools in this area.

— James Pray