Committee briefed on S.124: CAFO permitting, fee shifts and EPA corrective-action risks

Members of the House Ways & Means Committee received an overview of S.124, a Natural Resources bill that clarifies state responsibilities for concentrated animal feeding operation (CAFO) permitting, shifts some fee revenue from the Agency of Agriculture to the Agency of Natural Resources (ANR), and responds to EPA corrective-action concerns, Legislative Council and fiscal analysts said.

Legislative Council attorney Michael (Mike) O'Grady told the committee that the federal Clean Water Act requires delegated states to permit certain discharges—including CAFO discharges—and described how Vermont historically used an Agency of Agriculture program to avoid some CAFO permits by preventing discharges through state agricultural programs. "If you don't give us a corrective action plan, you're subjecting the state to de delegation. And de delegation does not mean you lose just the CAFO program. You lose it all," O'Grady said, describing EPA's enforcement leverage.

Under the bill as discussed, large and medium farm operations that must obtain CAFO permits would pay fees to ANR when ANR issues the permit; farms would not pay two separate fees for the same activity. Staff said the fee amounts already exist in statute but have not been routinely collected because many farms were never issued the corresponding permits. O'Grady described the current statutory fees as $2,500 for a large farm permit and $1,500 for a medium farm permit; under the bill, the fee destination would change depending on whether ANR or the Agency of Agriculture issues the permit.

James Epping of the Joint Fiscal Office said the bill does not change the state's top-line permit revenue but will shift revenue between special funds. "This bill would not establish a new universe of payers. What it would do is shift some permit holders and thus their fee revenue from the Ag Water Quality Special Fund to the Environmental Permit Special Fund," Epping said. He told the committee the shift could slightly exacerbate ongoing deficits in the Ag Water Quality Special Fund; the fiscal briefing listed roughly $240,000 in FY2024 receipts from farm-operation permits compared with required transfers to the fund on the order of $6.68 million that year.

Staff emphasized that shifting fee revenue does not reduce total state permit revenue but does change which agency's special fund receives the money and therefore which programs are directly supported. The committee asked several procedural questions; Representative Nelson asked why some statutory fees were never charged, and was told the fees were not assessed because permits had not been issued in those cases.

Committee members were reminded that the committee would not vote on S.124 at this meeting; staff asked members to retain the information for future consideration once the bill comes into committee custody.

Why it matters: clarifying permitting responsibilities and fee destinations affects agency funding for permitting and enforcement, could require administrative changes to fee collection, and is part of state actions to avoid federal de-delegation of Clean Water Act responsibilities.