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Regulatory problems at Lost Valley Farm, a controversial Oregon dairy, prompted a recent legislative hearing about the situation.

EO MEDIA GROUP - The Lost Valley Dairy outside of Boardman. Regulatory problems at Lost Valley Farm, a controversial Oregon dairy, prompted a recent legislative hearing about the situation.SALEM — Regulatory problems facing a controversial Oregon dairy have raised questions among lawmakers about avoiding "too big to fail" livestock operations in the future.

Negative publicity has continued to mount for Lost Valley Farm of Boardman, which in 2018 has faced a $10,600 fine, a lawsuit filed by state farm regulators and financial troubles resulting in bankruptcy proceedings.

The 7,300-acre farm is home to nearly 14,000 head of cattle.

The Senate Interim Committee on Environment and Natural Resources summoned the state's top agriculture and water regulators for a legislative hearing on May 21 to begin analyzing what went wrong.

The hearing was cut short after an hour because the full Senate was expected to convene, but Sen. Michael Dembrow, D-Portland, said the matter will likely be revisited during legislative committee days in September.

"I would like to see what we can do to prevent this from happening again," said Dembrow, the committee's chair.

The state government should be wary of confined animal feeding operations, or CAFOs, that are "too big to fail" due to the large numbers of animals involved, he said.

In the case of Lost Valley Farm, the dairy's size has been used as an argument against its forced closure, since cows will continue generating milk and waste regardless of a court order.

"I think most of us will agree this is a story of failure," said Dembrow, adding that it's unclear whether it's a "failure of personalities or the whole CAFO program?"

The testimony of Alexis Taylor, director of the Oregon Department of Agriculture, focused on the permitting required for dairies and how Lost Valley Farm navigated this process.

Dairies make up 206 of the 516 CAFOs inspected by the agency, which issues a civil penalty in fewer than 1 percent of the 880 inspections its employees conduct each year, Taylor said.

Lost Valley Farm is the most extensively monitored CAFO in Oregon, with groundwater from 11 wells being tested for pollutants, she said.

The ODA has acted quickly in regard to the dairy's wastewater problems — within roughly a year, the agency has repeatedly notified the company of violations, issued a hefty civil penalty and sought a temporary restraining order that resulted in a settlement, Taylor said.

The court judgment, entered in March, provides an additional option for the agency: The dairy can be punished for contempt of court for violating the agreement, she said.

Such drastic measures are rarely necessary in regulating CAFOs, Taylor said. "It's really when an operator is unable or unwilling to be in compliance."

Weekly inspections of the Lost Valley Farm facility have continued since the settlement, but ODA is discussing further steps with attorneys from Oregon's Department of Justice, she said.

"I think we are at a point the operation is not able to comply with the permit," Taylor said.

Any regulatory action is separate from the company's bankruptcy proceedings, she said.

The dairy's owner, Greg Te Velde, has filed for bankruptcy in California, where he's asked a judge to allow for the dairy, cattle and property to be sold for more than $100 million.

The company's largest creditor, Rabobank, instead wants the herd liquidated as soon as possible, arguing it's losing value.

Tom Byler, the director of the Oregon Water Resources Department, said the dairy was allowed to use groundwater under an exemption for livestock watering despite being located in a restricted area.

The operation's long-term potable water needs remain unresolved, since proposed water transfers have been blocked by administrative protests, Byler said.

However, a neighboring farm is foregoing groundwater withdrawals, alleviating immediate concerns about groundwater levels in the area, he said.

When asked by Dembrow whether the stockwater exemption was "exceptional" or a "misuse" in this case, Byler said he's not sure what Oregon lawmakers envisioned when they created the exemption in the early 1900s.

There were no "mega dairies" back then, but that doesn't mean large livestock uses didn't exist, he said.

Chad Allen, president of the Oregon Dairy Farmers Association, drove to the hearing in Salem from his farm in Tillamook but was unable to testify.

Allen said he wanted legislators to understand Oregon is a "leader" in the arena of CAFO regulation and that ODA acted aggressively in reacting to problems at Lost Valley Farm.

"The system clearly works," he said.

The unforeseen circumstance of addiction played a major role in the dairy's dysfunction, which isn't likely to be a problem for other Oregon dairy operators, Allen said.

Greg te Velde, Lost Valley's owner, was arrested last year for methamphetamine possession and patronizing a prostitute and later pleaded guilty to a lesser charge. Rabobank has argued in court papers that his erratic behavior was caused by addiction, for which he's sought drug treatment.

While the state's CAFO regulations functioned properly, the case has certainly been a gift to critics of the dairy industry, Allen said.

"I think we'll be throwing water on this for a while in terms of getting it to cool down," he said.

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