The Legislative Council on Friday granted conditional authority to its leaders to approve the governor's request to use up to $6.2 million in "rainy-day" funds to obtain a conservation easement to shut down a hog farm in the Buffalo National River watershed.
The council authorized its co-chairmen -- Sen. Cecile Bledsoe, R-Rogers, and Rep. Jeff Wardlaw, R-Hermitage -- to sign off on the governor's request only after the co-chairmen are satisfied the state has a first lien position on the easement, meaning the state would be superior to any other lien holder regarding the use of the land.
The action came after about 45 minutes of wide-ranging discussion on Gov. Asa Hutchinson's request to transfer the rainy-day funds to the Department of Arkansas Heritage for the easement. The governor typically requests approval regarding rainy-day funds, which are used in case of emergencies or for his priorities.
Sen. Jimmy Hickey, R-Texarkana, said he wants to make sure that the conservation easement is in the first lien position ahead of any other liens for the property of C&H Hog Farms.
"We just have got to make sure that is done because, if that [isn't] done, we could possibly be throwing all this money away," he said. "I want to make sure that title work is done correctly before we authorize millions of dollars to be used for this purpose."
Arkansas Heritage Director Stacy Hurst said attorneys have represented their clients very well in this agreement and all parties are satisfied.
"It covers any debt that they have, any liens that they might incur, so I think all parties are satisfied that this is a safe agreement for all," she said.
"We'll have to finalize the full conservation easement, and I'll inquire whether or not that [easement in the first lien position] will be in there and I will let you know. This is a preliminary agreement and it does not have that language."
Afterward, Hutchinson said the "contract is clear that any debt on the property will be paid off and the state will have assurance from the title search that the conservation easement will be conveyed by the landowners free and clear of any liens.
"The resolution of the hog farm permit is widely supported in the General Assembly and I trust the funding will be approved," the Republican governor said in a written statement.
Hutchinson last week announced that C&H Hog Farms will close later this year under an agreement reached with him and Arkansas Heritage.
The large-scale hog farm has been in operation since 2013 and has faced public push-back ever since from environmental groups concerned about the possibility of hog manure ending up in the Buffalo River, the first river in the United States to be designated as a national river. The facility is located on Big Creek, 6.6 miles from where it flows into the Buffalo.
The creek and river are on the department's proposed list of impaired water bodies for E. coli, but no government agency has concluded that C&H is responsible for the bacteria's presence.
Upon the funding of an escrow account, C&H "shall cease insemination of sows and acquisition of swine and shall act as quickly as commercially reasonable, but shall have up to 180 ... days to fully shut down and allow for the regular grow-out cycle of piglets to be completed."
State Budget Administrator Jake Bleed told lawmakers Friday that state officials expect to be able to use about $1 million in private donations from the Nature Conservancy and use rainy-day funds for the rest of the $6.2 million purchase of the conservation easement.
The agreement between the state and farm allows for the purchase of a conservation easement in perpetuity on the 23-plus acres where C&H Hog Farms operates a concentrated animal feeding operation, and restricts the use of the land, Hurst said.
"Of course, the main restriction that will be placed is that there will be no ability to operate a CAFO [concentrated animal feeding operation]. There will be some limited farming that can be done there. They can have a house there, for example," she said. "All of that is outlined in the agreement that was released. There are three performance documents that are being finalized."
Afterward, Hurst said the three performance documents are the conservation easement language, a cleanup plan from the Department of Environmental Quality and an escrow agreement.
Earlier, she told lawmakers that the preliminary agreement gives performance measures will have to be satisfied by all parties and then C&H Farms will be able to access the funds that were placed in escrow in four to six months.
Wardlaw asked an official with the Department of Environmental Quality how much the cleanup will cost.
Michael Grappe, chief program officer for the department, said he didn't know, adding, "We haven't been on the site to assess it."
Rep. DeAnn Vaught, R-Horatio, who is a hog farmer, speculated it could cost the department up to $500,000 to clean out a waste lagoon.
Sen. Kim Hammer, R-Benton, asked whether the C&H Hog Farms matter would set a precedent for other farms operating under permits from the Department of Environmental Quality.
Hurst said there are none in the Buffalo River watershed.
Sen. Gary Stubblefield, R-Branch, said he's worried that "we are using $5.2 million of public funds to take their farm.
"Since that farm has been there ... has there been one shred of scientific evidence that that farm was the source of any contamination in that river?" he asked.
Grappe said there is "nothing tied directly" to the farm.
Stubblefield asked if the state would continue to monitor the Buffalo River downstream from C&H to see if the water quality changes.
"There are plans to do that," Grappe said.
"I am dumbfounded that we would make a $6.2 million mistake and it costs the citizens of this state $6.2 million," Rep. Jim Wooten, R-Beebe, said. "Now, I don't blame the people that built the hog farm. I want to know, who is responsible for issuing that permit?"
Grappe said his department issued the permit under the previous administration of then-Gov. Mike Beebe.
"I think there is a sense that there was a mistake made and this attempt is to make that right," Bleed said.
Rep. Dan Douglas, R-Bentonville, said C&H Hog Farms was granted a five-year operating permit by the state that was authorized by the U.S. Environmental Protection Agency. The farms' owners spent millions of dollars to build a facility to make a living "with the good faith of the state of Arkansas' agreement that they could do it."
Then the EPA revoked or discouraged the use of this permit when C&H Farms sought renewal of the permit and the required permit could not be granted by the state, Douglas said.
"So under this situation, we have individuals that invested millions of dollars on the good faith of the state of Arkansas and then they cannot get their permit renewed and they will go out of business and default through no fault of their own," he said. "There has been no water quality issues. That's not the issue here. The issue is they cannot get the permit that they were assured that they could to begin with and so this is just repaying damages to them because they won't be to operate and they will be foreclosed on, forced into bankruptcy, through no fault of their own."
Metro on 06/22/2019