Wednesday, April 22, 2009

EPA to tax cows

In a move that could have far-reaching impacts on businesses down to the grower level, EPA last week announced that greenhouse-gas emissions would be regulated under the Clean Air Act. EPA administrator Lisa Jackson said that these gases endanger public health and welfare of future generations.
The finding will be followed by a 60-day comment period, after which EPA could begin drawing up regulations. It is believed those regulations would focus first on automobile emissions, but eventually could target power plants, factories, and other businesses.
Agribusiness could be affected by the new regulations. In November, the Florida Farm Bureau issued an Action Alert on how this move might impact some in agriculture. Once an endangerment finding is made, Title V of the Clean Air Act requires that any entity with the potential to emit more than 100 tons per year of a regulated pollutant must obtain a permit in order to continue to operate.
For previously regulated pollutants, a threshold of 100-tons meant that only the largest of emitters were required to be permitted. For greenhouse gases, the situation is much different. Not only would power plants and factories, but also many office and apartment buildings, schools, hospitals, large churches and even large homes would be regulated. According to the alert, literally hundreds of thousands of entities could be required to obtain permits.
The vast majority of livestock operations would easily meet the 100 ton threshold and fall under regulation. In fact, USDA has stated that any operation with more than 25 dairy cows, or 50 beef cattle would have to obtain permits. According to USDA statistics, this would cover about 99% of dairy production and more than 90% of beef production in the U.S.
As the proposal stood in November, the permit fees would equate to a "tax" of $175 per dairy cow and $87.50 per beef cow.
President Obama has stated that he would rather Congress take on the issue and pass cap and trade legislation, which would cap the levels of pollution an entity could emit. If the business exceeds the cap, it would in effect have to pay a tax for the right to pollute.
Regardless if Congress passes cap and trade, Friday’s EPA finding could likely have the same effect as regulations are put into place over the next few years.

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