Who Pays for What Is Thrown Away?

Delmarva Poultry Industry Inc., a trade group, has been working to influence public perception and policy.
(By Frank Johnston The Washington Post)

Photo Gallery:
The Poultry Industry

Delmarva's Chicken Industry

How Excess Nutrients Reach Bay
How Nutrients Affect the Bay

In This Series
Who Pays for What's Thrown Away?
From Farm to Slaughterhouse

Permitting a Pattern of Pollution
Inside the Modern Poultry Plant
Waste Trucked to Maryland

An Unsavory Byproduct: Runoff and Pollution

By Peter S. Goodman
Washington Post Staff Writer
Tuesday, August 3, 1999; Page A1

Last of three articles

Two years after the toxic microbe Pfiesteria piscicida emerged on Chesapeake Bay tributaries, riveting attention to the chicken farms that dominate Eastern Shore fields, Maryland, Virginia and Delaware have all adopted laws aimed at preventing chicken manure from fouling water.

But the effectiveness of the new rules may depend upon a fundamental question: Who will be responsible for safely disposing of the 750,000 tons of manure produced each year by the peninsula's 600 million chickens? The five name-brand companies that own and market the birds, registering sales of $1.6 billion a year? Or the local farmers who tend the chickens under contract with the companies?

In the contracts that govern the chicken trade, the companies – also known as integrators – own the chickens. They supply growers with chicks and feed, then return to claim the birds for slaughter. The growers own the waste. They are left to deal with the several hundred chickens that usually die before maturity as well as the manure all the birds generate.

On the Web
The National Contract Poultry Growers Association
Delmarva Poultry Industry Inc.
EPA Chesapeake Bay Program
USGS Coastal and Marine Geology Program
Perdue Farms Inc.
Tyson Foods Inc.
Townsends Inc.
Chesapeake Bay Foundation
U.S. Environmental Protection Agency
Maryland Department of the Environment
Maryland Department of Natural Resources
Virginia Department of Environmental Quality
Delaware Department of Natural Resources and Environmental Control
Coast Alliance
Poultry companies lobbied heavily in Maryland, Delaware and Virginia to ensure the new laws did not change that relationship. Although some lawmakers proposed forcing the big chicken companies to take over responsibility for manure disposal, the companies fended it off, arguing that manure is a commodity valued by contract growers who spread it on fields as fertilizer.

But the new laws have made chicken manure a liability for some farmers, forcing those with more of it than crops can absorb to find another way to get rid of it. Regulators, environmentalists and some lawmakers and farmers say the big chicken companies must be forced to shoulder some of that burden, or excess waste will continue to foul water.

Many farmers already participate in voluntary conservation programs, erecting storage sheds to prevent rain from washing manure into waterways, testing soils before spreading manure, and composting to safely dispose of dead birds. But pfiesteria outbreaks spotlighted the inadequacy of those individual efforts. Regulators concluded there's simply too much manure in key areas of the peninsula. Some will have to be moved away.

Only the big chicken companies, they say, have the deep pockets, distribution systems and business savvy to develop alternative uses for chicken manure -- perhaps burning it as fuel or converting it into fertilizer pellets that can be economically trucked away, unlike loads of heavy manure.

"Farmers are not going to be be able to dispose of all this stuff on their farms," said Dane Bauer, deputy director of water management at the Maryland Department of the Environment. "They're going to have tons and tons of this that they can't get rid of. The companies are the only ones that can market it and get rid of it. Farmer Joe can't market it."

Susan King, whose two poultry houses outside Pocomoke City, Md., are home to 31,600 Tyson chickens, took a similar view. "All a chicken grower basically is, is a person leasing out their building and baby-sitting those birds for 51 days," she said. "[The companies] bring the birds, they feed them. This stuff comes out. The amount of manure you're talking about is just so great. . . . The integrators ought to come and take it away."

Leaving responsibility for manure disposal at the farm level could complicate enforcement of the new laws, industry critics contend. Keeping tabs on the roughly 2,700 chicken farmers who tend birds for the companies is far more difficult, they argue, than holding just five well-financed companies accountable for where the waste goes.

"Make the owner of the chickens responsible for the disposition of all the wastes," wrote Maryland state Dels. Leon G. Billings (D-Montgomery) and James W. Hubbard (D-Prince George's) in a recent letter to state officials.

But the chicken companies say the market, not lawmakers, should determine who finds new uses for manure, and they are loath to take on added financial burdens.

"This is an industry that measures its profitability in the tenths of pennies," said James A. Perdue, president of the family chicken empire, in an interview. "It's an intensely competitive business. If our costs go up, we simply can't survive."

In March, federal regulators released a national strategy to reduce farm pollution that specifically encourages states to pin legal liability for manure and dead birds on the poultry companies.

Maryland promptly announced plans to force poultry companies to share the burden of safely disposing of manure. State regulators said they would accomplish this by inserting new provisions into state permits governing chicken slaughterhouses.

Under permits now being drafted by the Department of the Environment, companies would be liable for fines of as much as $27,500 a day if their contract growers do not test soils to see how much manure can be absorbed, then limit the manure they spread accordingly. The chicken companies would be required to give state authorities a list of their contract growers, the amounts of manure generated and how it will be disposed.

Final drafts have not been released. Meanwhile, industry representatives have marshaled a furious effort to derail the new policy, arguing that it unfairly holds them accountable for the transgressions of independent farmers. They have mobilized powerful allies in the Maryland General Assembly to lobby the administration of Gov. Parris N. Glendening (D).

"We were blindsided," said Gerard E. Evans, an Annapolis lobbyist who represents the industry. "We're going to resist this legislatively and legally. We're going to fight this with every sinew."

Pfiesteria Prompts Action

It was pfiesteria that ignited the drive for legal controls on poultry waste. Its outbreak on the Pocomoke in the summer of 1997 prompted Glendening to close the river for several weeks. Watermen complained of confusion and memory loss -- ailments later linked to the microbe by a panel of scientists.

Although little was known about pfiesteria, research suggested it feasted on the nitrogen and phosphorus that are abundant in chicken waste, and on the algae that grow when too many of those nutrients are present in water. Eyes turned to the riverbanks: The land was thick with chicken houses.

Although poultry farms had grown steadily for decades, swelling into a global enterprise, no rules governed the disposal of chicken manure.

In an e-mail sent to an EPA official in October 1997, Curtis H. Dalton of the Maryland Department of the Environment noted that representatives from seven states were convening in Atlanta to discuss pfiesteria.

"It certainly is getting a lot of attention," Dalton wrote. "Hopefully, this event will give the politicians the will to implement mandatory agricultural controls instead of the current voluntary programs."

After Glendening appointed a commission to investigate the pfiesteria outbreaks, poultry leaders hired Evans, the state's top-grossing lobbyist, and a close confidant and former aide to Senate President Thomas V. Mike Miller Jr. (D-Prince George's.)

In January 1998, Glendening devoted part of his State of the State speech to pfiesteria. Then he championed a bill prescribing the country's first limits on how much manure farmers may spread.

A classic statehouse battle ensued. The poultry industry warned that new rules could spell the end of chickens on Delmarva. Environmentalists countered that without new rules, water quality in the Chesapeake would worsen.

When the dust cleared, the General Assembly adopted a law that by 2004 will force all farmers to test their soils and apply no more manure than crops need. Some farmers who now rely on chicken manure will have to replace it with commercial fertilizer to derive the nitrogen needed without extra phosphorus. That will cost them money while saddling them with a manure disposal problem.

But the law does not force poultry companies to help find other uses for manure. When Sen. Christopher Van Hollen Jr. (D-Montgomery) proposed a bill handing poultry companies legal responsibility for disposing of manure, Evans called it extremist. Eastern Shore lawmakers warned such rules would force the industry to flee the state. The governor distanced himself from the measure. It died quietly.

The law that did pass established a joint industry-state program to help farmers truck surplus manure to areas where soils can safely absorb it. The state has earmarked $3 million for the program over the next four years. Poultry companies have agreed to match the state funds, though the law does not require a contribution.

Following Md.'s Tough Lead

Beyond Maryland's borders, the state's decision to regulate poultry manure has resonated, hastening similar action in Richmond and Dover, Del.

In January, the Virginia General Assembly adopted a compromise bill that limits how much manure farmers may spread, beginning in 2001. Poultry companies are legally obligated to help growers test soils and seek alternative uses for manure, but the law does not say how much the companies must spend to meet that mandate or specify the limits of their responsibilities.

"Coming off the heels of Maryland adopting their law, it really got to be the hottest environmental issue," recalled Hobey Bauhan, president of the Virginia Poultry Federation, a trade group that sought to kill the bill, then negotiated a deal with environmentalists. "It became apparent that a more onerous bill was almost certain to pass, despite all our efforts to educate legislators and overcome erroneous information about our environmental stewardship."

With help from the Vectre Corp., a prominent Richmond lobbying firm headed by H. Benson Dendy III, a onetime aide to then-governor Charles S. Robb (D), the companies successfully killed language that would have given them legal liability for manure, exposing them to fines if their growers wound up polluting water.

Delaware's new law, which was signed by Gov. Thomas R. Carper (D) in June, came in response to direct federal pressure. W. Michael McCabe, the ranking U.S. Environmental Protection Agency official in the mid-Atlantic, pointedly threatened federal intervention if the state failed to adopt manure regulations during this year's legislative session.

"When you see what Maryland has done, when you see what Virginia has done," McCabe said in an interview, "you can't have one state on the Delmarva turning its back on the problem."

Sensing momentum was building in Delaware for new controls on manure, Delmarva Poultry Industry Inc. in January hired its first Dover lobbyist: W. Laird Stabler Jr., a former U.S. attorney, state attorney general and majority leader in the Delaware House of Representatives.

Under the resulting law, all Delaware farmers will be required to limit how much nitrogen and phosphorus they apply to fields by 2007, but the regulations on how that will be accomplished are to be drafted by a 15-member commission, whose majority will be controlled by agricultural interests. By law, seven of the seats must go to farmers and another to a representative of the fertilizer industry.

The EPA pronounced the new Delaware law sufficient. Delmarva Poultry Industry, Inc., a trade group whose largest benefactor is Perdue, praised it as reasonable. But environmentalists complained that the bill does not obligate poultry companies to do anything.

"The integrator responsibility is really nowhere in this bill," said Debbie Heaton, conservation chair of the Delaware chapter of the Sierra Club.

Same Side, Different Interests

Before the new state laws, there was unity within the poultry industry on the subject of new pollution rules: Not wanted. But the new rules changed the dynamic, driving a wedge between some farmers and the chicken companies over the issue of who pays.

"Legislators . . . are always saying, 'I'm supporting the farmer, I'm supporting the poultry industry.' These are very different entities," said Perdue grower Christine Johnson of Marion, Md., testifying at a hearing in Annapolis on the EPA's farm pollution strategy. "I'm a farmer. The industry is a bunch of major corporations. Our interests are not the same."

Some farmers continue to see any new rules as the enemy, blaming Maryland and Glendening personally for ending their days of relatively free reign.

"I'd like to take my spreader and cover up that governor with my chickenshit, 'cause he's the one that started all this nonsense," said Larry Mitchell, who grows chickens for Townsends Inc. in Dagsboro, Del., and would prefer to continue free of bureaucratic supervision. "We're getting a raw deal."

But now that pollution controls are law, others have come to see state and federal action as the best way to gain some help with their disposal problems.

Last September, Rep. Wayne T. Gilchrest (R-1st District) hosted a town meeting in Salisbury to discuss the changing rules that apply to poultry farming.

At the meeting, EPA regional administrator McCabe said he hoped poultry companies would agree to a half-cent surcharge on every pound of chicken sold in the country, with the funds going to pay for pollution programs. Without such a scheme, McCabe said, "all the environmental protection programs we're talking about would fall at the feet of the growers."

The proposal drew praise from David Barnes, a member of the Delmarva Contract Poultry Growers Association, a small, activist group of farmers. As the meeting broke up, Barnes began speaking with a reporter. The companies -- not he -- should be responsible for manure, he said.

But before Barnes could finish his thoughts, he was heatedly interrupted by Kenneth M. Bounds, president of Delmarva Poultry Industry, and vice president of marketing at Chesapeake Farm Credit, a bank that specializes in lending money for new chicken houses.

"Poultry companies are gone if they've got to deal with the manure," Bounds said.

The Politics of Poultry

John K. Chlada, once a top official at the Maryland Department of the Environment and now Perdue's manager for environmental services, is the designated industry torchbearer in the fight to influence public perception and policy.

In December, Chlada stood before the Maryland Coastal Bays Program Citizen Advisory Committee, boasting of how Perdue was improving its feed mills by adding an enzyme called phytase. It helps chickens digest phosphorus, limiting the amount that ends up in the manure. Here, Chlada said, was tangible evidence the industry was working to limit pollution.

"We're a whole lot further along than what the general public perceives," he said.

But Chlada didn't mention that Perdue is legally compelled to add phytase to its mills by the end of 2000, under the new Maryland law -- a provision Perdue strenuously sought to kill. Evans held up the bill for days in a joint House-Senate committee as he sought to strip the phytase mandate.

The industry was already studying phytase as a way to save money. If chickens are able to digest more phosphorus, then companies don't have to feed them as much to stimulate growth. But the companies argued that a legal requirement to use phytase would discourage them from researching other ways to cut phosphorus.

The phytase provision was the only measure in Glendening's bill that forced poultry companies to spend money on pollution measures. The governor and his legislative allies would not budge. In the end, Evans and Del. Ronald A. Guns (D-Cecil), a powerful industry advocate, gained poultry companies state reimbursement for half the costs of adding equipment to their mills that allows them to apply phytase -- a deal worth about $270,000, at last reckoning.

On Capitol Hill, Delaware's senior senator, William V. Roth Jr. (R), chairman of the Senate Finance Committee, is now pressing to include in his party's tax-cut bill a $50 million tax credit for ventures that use chicken waste as a power source.

Delmarva Poultry Industry has been lobbying for the measure, along with another trade organization, the National Chicken Council, and a British firm hoping to build chicken-litter-fired generators in the United States.

In February, Perdue and a Missouri-based company, AgriRecycle, announced plans to jointly build a factory to turn manure into fertilizer pellets, relieving some farmers of their burden. Environmentalists praised the news as a significant step toward solving the problem of too much manure on not enough land. Glendening said the state will support the effort with a $500,000 grant.

But while Perdue said it planned to buy manure from farmers, the company wouldn't say how much it will pay. And farmers worry that -- whatever the costs -- they will end up subsidizing them.

"You have no leverage with these people," said Barnes, the Contract Growers Association activist. The contract grower system is "a great deal. I'm just on the wrong end."

Big Chicken's Big Battle

Even as the companies adjust to the changing climate, pursuing new uses for manure, they continue to battle against new mandates. The primary political front these days is drawn at Maryland's effort to force liability for manure on poultry companies, prompting worries that other states could follow, as they did with the new rules for farmers.

When Bounds, the Delmarva Poultry president, took the podium at the group's Booster Banquet in April to address a room full of contract growers, company officials and politicians, he highlighted the Maryland policy as the key danger facing the industry.

"Some of you may, at first, think that this is a good idea, but, folks, this is a major threat to each and every one of you," Bounds said. "What does this mean to you? I can tell you: Significant fines levied on a daily basis, more government intrusion into your lives and the increased likelihood that the companies would have to drop you as a grower for nothing related to poultry performance."

In May, Delmarva Poultry sent letters to poultry growers, urging them to write to Maryland legislative leaders and state officials to protest the new slaughterhouse permits, with their special provisions including liability for manure.

"We're getting deluged," said J.L. Hearn, director of the state's Water Management Administration. The letters say " 'You're going to put us out of business,' and, 'Leave us alone.' "

Last month, the pressure intensified.

Executives from the three poultry companies with plants in Maryland gathered at Guns's office in Annapolis. Putting aside rivalries, Allen conferred with James Perdue, Chlada, two Tyson Foods officials from the company's headquarters in Arkansas, and Bill Satterfield, Delmarva Poultry's executive director.

For nearly an hour, they met behind closed doors, before reconvening in the conference room of Speaker Casper R. Taylor Jr. (D-Allegany), joining Secretary of the Environment Jane Nishida and deputy water director Bauer.

A product of rural Western Maryland, Taylor this year wrote to Glendening, accusing the state of "overreaching" in handing slaughterhouses liability for manure. Now, he was a chairing a meeting designed to allow the poultry companies to press their case with the state.

Guns closed the door, taking the discussion out of public view.

When the meeting ended more than three hours later, most of the participants refused to say what had occurred, citing an agreement they'd made among themselves to stay silent. But Taylor, who left the session early, said his staff told him the Department of the Environment agreed to reconsider its plans for the strict permits.

"There has been no conclusion," Taylor said in an interview. "It's a work in progress."

According to Taylor, at the meeting the companies warned state officials that the new permits could force them to shutter their Maryland operations.

"They were simply making an observation that it would be a simple thing to do," Taylor said. "The processor who has made a processing investment in the state of Maryland can simply go up the road to that magic line that goes up into Delaware and circumvent the whole thing."

Nishida flatly contradicted Taylor, while refusing to disclose details of the meeting.

"The department has not shifted its position," she said. "There was not a concession made."

The state plans to release the final permits later this summer.

That will drive the details into public view, and reveal the effect of the industry's lobbying.

© Copyright 1999 The Washington Post Company

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