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2000
REVIEW OF THE CONSERVATION RESERVE PROGRAM, CONSERVATION RESERVE ENHANCEMENT PROGRAM, AND OTHER CONSERVATION MATTERS AFFECTING U.S. AGRICULTURE

HEARING

BEFORE THE

SUBCOMMITTEE ON
GENERAL FARM COMMODITIES, RESOURCE
CONSERVATION, AND CREDIT

OF THE
COMMITTEE ON AGRICULTURE
HOUSE OF REPRESENTATIVES

ONE HUNDRED SIXTH CONGRESS

SECOND SESSION

MARCH 31, 2000, MANKATO, MN

Serial No. 106–49
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Printed for the use of the Committee on Agriculture


COMMITTEE ON AGRICULTURE

LARRY COMBEST, Texas, Chairman
BILL BARRETT, Nebraska,
    Vice Chairman
JOHN A. BOEHNER, Ohio
THOMAS W. EWING, Illinois
BOB GOODLATTE, Virginia
RICHARD W. POMBO, California
CHARLES T. CANADY, Florida
NICK SMITH, Michigan
TERRY EVERETT, Alabama
FRANK D. LUCAS, Oklahoma
HELEN CHENOWETH-HAGE, Idaho
JOHN N. HOSTETTLER, Indiana
SAXBY CHAMBLISS, Georgia
RAY LaHOOD, Illinois
JERRY MORAN, Kansas
BOB SCHAFFER, Colorado
JOHN R. THUNE, South Dakota
WILLIAM L. JENKINS, Tennessee
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JOHN COOKSEY, Louisiana
KEN CALVERT, California
GIL GUTKNECHT, Minnesota
BOB RILEY, Alabama
GREG WALDEN, Oregon
MICHAEL K. SIMPSON, Idaho
DOUG OSE, California
ROBIN HAYES, North Carolina
ERNIE FLETCHER, Kentucky

CHARLES W. STENHOLM, Texas,
    Ranking Minority Member
GARY A. CONDIT, California
COLLIN C. PETERSON, Minnesota
CALVIN M. DOOLEY, California
EVA M. CLAYTON, North Carolina
DAVID MINGE, Minnesota
EARL F. HILLIARD, Alabama
EARL POMEROY, North Dakota
TIM HOLDEN, Pennsylvania
SANFORD D. BISHOP, Jr., Georgia
BENNIE G. THOMPSON, Mississippi
JOHN ELIAS BALDACCI, Maine
MARION BERRY, Arkansas
MIKE McINTYRE, North Carolina
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DEBBIE STABENOW, Michigan
BOB ETHERIDGE, North Carolina
CHRISTOPHER JOHN, Louisiana
LEONARD L. BOSWELL, Iowa
DAVID D. PHELPS, Illinois
KEN LUCAS, Kentucky
MIKE THOMPSON, California
BARON P. HILL, Indiana
JOE BACA, California
——— ———
Professional Staff

WILLIAM E. O'CONNER, JR., Staff Director
LANCE KOTSCHWAR, Chief Counsel
STEPHEN HATERIUS, Minority Staff Director
KEITH WILLIAMS, Communications Director

Subcommittee on General Farm Commodities, Resource Conservation, and Credit
BILL BARRETT, Nebraska, Chairman
JOHN A. BOEHNER, Ohio,
    Vice Chairman
NICK SMITH, Michigan
FRANK D. LUCAS, Oklahoma
SAXBY CHAMBLISS, Georgia
JERRY MORAN, Kansas
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JOHN R. THUNE, South Dakota
WILLIAM L. JENKINS, Tennessee
DOUG OSE, California
ROBIN HAYES, North Carolina

DAVID MINGE, MN,
     Ranking Minority Member
BENNIE G. THOMPSON, Mississippi
DAVID D. PHELPS, Illinois
BARON P. HILL, Indiana
EVA M. CLAYTON, North Carolina
EARL POMEROY, North Dakota
TIM HOLDEN, Pennsylvania
SANFORD D. BISHOP, Jr. Georgia
JOHN ELIAS BALDACCI, Maine
(ii)
C O N T E N T S

    Barrett, Hon. Bill, a Representative in Congress from the State of Nebraska, opening statement
    Gutknecht, Hon. Gil, a Representative in Congress from the State of Minnesota, opening statement
Prepared statement
    Minge, Hon. David, a Representative in Congress from the State of Minnesota, opening statement
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    Peterson, Hon. Collin C., a Representative in Congress from the State of Minnesota, opening statement
Submitted material

Witnesses
    Beckman, Tracy, State Executive Director, Farm Service Agency, U.S. Department of Agriculture
    Davis, Michael L., Deputy Assistant Secretary for Civil Works, U.S. Army
Prepared statement
    French, Nelson T., Friends of the Minnesota Valley
Prepared statement
    Harnack, Ron, executive director, Board of Water and Soil Resources, State of Minnesota
Prepared statement
    Hugoson, Gene, commissioner of agriculture, Minnesota Department of Agriculture
Prepared statement
    Hunt, Bill, State Conservationist, Natural Resources Conservation Service, U.S. Department of Agriculture
    Joachim, Gary, Minnesota Soybean Association
Prepared statement
    Kalahar, Tom, conservation technician, Renville Soil and Water Conservation District
Prepared statement
    Knutson, Owen, president, Minnesota Association of Soil and Water Conservation Districts
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Prepared statement
    Nomsen, David, vice-president, governmental affairs, Pheasants Forever
Prepared statement
Submitted material
    Olson, Sherman, farmer, Swift County Soil and Water Conservation Board
Prepared statement
    Ward, David, corn and soybean producer, Mapleton, MN
Prepared statement

Submitted Material

    Christopherson, Al, president, Minnesota Farm Bureau
    Coalition for a Clean Minnesota River, submitted by Mr. Minge
    Sparlin, Scott, Coalition for a Clean Minnesota River
    Moe, Roger D., majority leader, Minnesota State Senate
    Sviggum, Steven, speaker, Minnesota House of Representatives
REVIEW OF THE CONSERVATION RESERVE PROGRAM, CONSERVATION RESERVE ENHANCEMENT PROGRAM, AND OTHER CONSERVATION MATTERS AFFECTING U.S. AGRICULTURE

FRIDAY, MARCH 31, 2000
House of Representatives,    
Subcommittee on General Farm Commodities,
Resource Conservation, and Credit,
Committee on Agriculture,
Mankato, MN.
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     The subcommittee met, pursuant to call, at 9:30 a.m. at the Council Chambers of the City Hall, Mankato, MN, Hon. Bill Barrett (chairman of the subcommittee) presiding.
    Present: Representative Minge.
    Also present: Representatives Peterson and Gutknecht.
    Staff present: David Ebersole and Anne Simmons.
OPENING STATEMENT OF HON. BILL BARRETT, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEBRASKA
    Mr. BARRETT. The hearing of the Subcommittee on General Farm Commodities, Resource Conservation, and Credit will come to order. We will open the hearing to review the Conservation Reserve Program, the Conservation Reserve Enhancement Program and other conservation matters.
    I'm pleased to welcome all of you here to this excellent facility. We look forward to a very effective hearing yet this morning. We have two excellent panels of witnesses to be seen. Today I think the subcommittee has an excellent opportunity to learn more about how several conservation programs important to the United States and to Minnesota agriculture are actually working on the ground.
    The Committee on Agriculture, working through this subcommittee, has made a substantial dollar investment for helping farmers and ranchers get soil and water conservation on their land. Programs operating through the Farm Service Agency and the Natural Resources Conservation Service amount to about $12 billion annually. Congress decided a long time ago that these programs should be administered to the maximum extent possible at the local level. I don't believe congressional intent has changed.
    The programs and activities should be incentive-based, not driven by Federal regulations. And certainly, they should not be run by a Federal agency requiring a one-size-fits-all, top-to-bottom, rule-driven process backed by punitive enforcement measures. Your farming operation is on your land. You know what's best for it. This Committee wants USDA agencies to assist you and not tell you what to do.
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    This morning we will hear about the Conservation Reserve Program and its expanded version, the Conservation Reserve Enhancement Program, which uses a more formal Federal/State partnership to address water quality matters.
    We will also get some reaction to the Environmental Protection Agency's recent proposals on applying point-source pollution laws to nonpoint sources. These proposals may bring agricultural fields, dairies and small feedlots as well as private woodlots under the EPA's regulatory umbrella.
    I know that my colleague, Congressman Minge, the ranking member of the subcommittee, has concerns about several wetlands issues, including wetlands mitigation and mitigation banking issues, carried out by the EPA and the Army Corps of Engineers.
    We're also joined by Congressman Collin Peterson, whose congressional district, as most of you know, is just up the road from here. I'm glad that Mr. Peterson, who is a member of the full committee, could join us this morning.
    Finally, I'm delighted to bring the subcommittee to the congressional district of our colleague, Congressman Gil Gutknecht, who is also a very valuable and hardworking member of the full Committee on Agriculture. I appreciate Gil's work and his staff's assistance in putting this field hearing together.
    At this point, I now recognize the ranking minority member of the subcommittee, Mr. David Minge.
OPENING STATEMENT OF HON. DAVID MINGE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MINNESOTA
    Mr. MINGE. Thank you, Mr. Chairman. And I would like to join with you in expressing my appreciation to the city of Mankato for hosting us. It's a beautiful city council chamber in which to hold this hearing and it certainly is a fitting location.
    Mankato is at the point in the Minnesota River where it makes an abrupt 90-degree turn from flowing southeast to go northeast and joined by the Blue Earth River, and it's really essential to the Minnesota River basin. I'd like to just briefly highlight the considerations that led to our deciding to hold a hearing in Minnesota this spring.
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    First, all of us acknowledge that the farm economy is in dire straits. A combination of low prices, now increasing fuel costs, dry soil, concern about drought, increasing interest rates; all of these have combined to make it very problematical for thousands of farmers in Minnesota and actually across the country.
    The full committee is in the process of holding a dozen hearings around the United States; the closest to this area will be in Sioux Falls, SD. In scheduling this hearing, we agreed that we would focus on something other than just the farm programs and questions that might arise regarding the farm programs.
    So as a consequence, I don't want anyone to feel that any of us are in any way insensitive or unaware of the struggles that Minnesota farmers are experiencing. We feel that the full committee hearing will give us an opportunity to review this in terms of the upper Midwest region when we meet in Sioux Falls on May 2, and we look forward to that hearing.
    But in the meantime, there are certainly other matters that are of critical importance, and the chairman has already alluded to these: conservation wetlands mitigation, and probably the most popular program that we have at the Federal level that works with conservation, namely, the Conservation Reserve Program.
    We have been fortunate here in Minnesota in that we are one of three sites in the United States that's been selected for the Conservation Reserve Enhancement Program. And here it focuses on the Minnesota River basin. This program was created in the mid–1990's when the Federal Government had deficits exceeding $100 billion a year.
    This program made the cut when we had the struggle over how to balance the budget and the pulls and tugs for defense, for health care, for education, and many other Federal activities. So this indicates the importance of the Conservation Reserve Enhancement Program at the Federal level.
    This State received a commitment that up to 100,000 acres and, if things went well, even an additional 90,000 acres could be included in the CREP program. This represents approximately $170 million commitment from the Federal Government.
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    And one of the concerns at this point is, when will the State be providing its share? And this is an awkward situation for us, because the State does have a surplus, unlike the deficit we struggled with when we made the commitment. And secondly, this is a program that we requested at the State level. So this is, in a sense, Minnesota-initiated.
    We've suffered in other respects in Minnesota. We are at the bottom of the list of States in per capita Federal spending. And we often are criticizing the Federal Government for not investing in Minnesota to the same extent it invests in perhaps Nebraska or the Dakotas.
    Well, here we have a chance to utilize up to $170 million of Federal money. It's on the table, and we've asked for it. It's good for Minnesota's farmers. It's good for the conservation community, wildlife community, those that are looking for recreational land, for preserving habitat, for protecting ourselves against some of the flooding problems that we've experienced in the Minnesota River and many other reasons. So this is a win/win situation for Minnesota.
    And I look forward to the testimony of the witnesses this morning with respect to the Minnesota River Conservation Reserve Enhancement Program. How is it working? What are the problems, if any, that we've encountered? And how can we make sure that we successfully complete the program?
    There is a second concern that I have, and that is that often at the State and Federal level, we have some real uneasy relationships with local folks, with farmers, landowners, and people that have to deal with Federal agencies. And part of making the Conservation Reserve Enhancement Program successful is showing that our agencies work together, State/Federal/local partnerships are effective, and that we can meet local needs and we can adjust what we do to make sure that it makes sense.
    And this leads to my comment about mitigation. We have had at least a half a dozen State and Federal agencies involved in the wetlands decision-making. And unfortunately, the coordination among these agencies has not been a model. The agencies run from those in the U.S. Department of Agriculture, such as NRCS and FSA, to the Defense Department, the Army Corps of Engineers, the Environmental Protection Agency, the Fish and Wildlife Service and others. So that's the cast at the Federal level. At the State level, we have DNR, we have BWSR, we have the Pollution Control Agency. At the local level, we have County Soil and Water Conservation Districts and others.
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    And if we don't have a coordinated effort among these various agencies when it comes to just the issues of how we address the delineation of wetlands and how we deal with the right that's written in the laws to have a mitigation option available, regardless of what the substantive law is, the frustration that's encountered with the procedure undermines the credibility of all government programs.
    And, so, part of what I would like to make sure that we get to the bottom of today is, How can we make sure that just a simple practice like mitigation works and we don't get caught up in turf battles between State and Federal agencies? That level of frustration, when it's experienced by farmers and landowners, it undermines the credibility of all of our programs, even the CREP program. So this is another matter that I would like to make sure that we take up before we leave at the end of the morning.
    I would like, before I end, to ask for unanimous consent to include in the record a letter from Roger Moe, who is the majority leader in the Minnesota State Senate with respect to the CREP program and State funding and, also, an editorial from the Minneapolis Star Tribune that was published yesterday. It was a lead editorial and it had to do with the Minnesota River and the CREP program.
    I'd also ask that we leave the record open in the event that the State House of Representatives would submit another letter.
    Mr. BARRETT. Without objection, so ordered.
    Mr. MINGE. I have one final announcement. We have dealt with the mayor and the city of Mankato with respect to the parking. And some of us saw these signs saying ''Two-Hour Parking,'' and with some trepidation, we left our cars. We didn't know where else to go.
    I have been advised by the city officials that if anyone receives a ticket while parking in one of the open common areas, to take it to the desk out here, and they will look at the circumstances. And there's an opportunity, no doubt, for an adjustment on that.
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    Mr. BARRETT. An appeal?
    Mr. MINGE. An appeal on that matter.
    Mr. BARRETT. I thank the gentleman, and that may have been the most important announcement of the whole morning. Now I would like to recognize the gentleman from Minnesota, Mr. Gil Gutknecht, who is a member of the full Agriculture Committee for any opening remarks that he might like to make.
OPENING STATEMENT OF HON. GIL GUTKNECHT, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MINNESOTA
    Mr. GUTKNECHT. Well, thank you, Mr. Chairman. I first of all want to thank you and the rest of the subcommittee members for coming here today, especially you, Mr. Barrett. I also want to say a special thank you to Congressman Larry Combest. I don't know if sometimes the general public doesn't really realize how hard he works on behalf of agriculture.
    He has set up sort of a brutal schedule this spring of going around the country. In fact, I'm flying back to Washington Sunday night so we can go to a hearing out in Pennsylvania. We're going to Sioux Falls, we're going to Sacramento, traveling the country to try and hear from actual producers.
    I just want to share with the folks who are gathered here that the Agriculture Committee does understand, as my colleague Mr. Minge, indicated, that the Agriculture Committee does understand we really do have two economies going on in the United States. One is doing extremely well, and the other is the one that is struggling. And the farm economy, unfortunately, is the one that is struggling right now.
    And we want to do all we can, not only to improve the prospects for agriculture in the short run, but to lay the foundation for a better farm program as we go into the future. And Chairman Combest is working, I think, on a very bipartisan and open basis to try and accomplish that. I want to thank the county and the city for all for helping us to put this meeting together.
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    I especially want to say a special thank you to the FSA, to all of you who are here. We really appreciate the work that they do. They're in the front line and they have made a special effort to join us today. I want to thank our staff, who has worked hard to put this meeting together, especially Larry Steen, who is sort of on loan from us to the NRCS right now.
    My staff has done a great job in preparing an opening statement, Mr. Chairman. I won't read it, but I would like to submit it for the record. Finally, I just want to mention a couple of things about the importance of conservation, particularly here in Minnesota. We are known as the Land of 10,000 Lakes, and we take our water and air quality very seriously here in Minnesota.
    And I think altogether too often, that sometimes the environmental debate has been framed in a win/lose type of situation. I think we in Minnesota have recognized for a long time that if there's going to be a long-term solution to having an environment that's good for our children as well as an economy that we can work with, there has to be a win/win situation.
    And I think the great thing about the Conservation Reserve Program and a number of the other programs that we're talking about is that they really are win/win/win situations. They're a win for the environment, they're a win for the farm economy, and they're a win for the people who live here in the State of Minnesota. So it has been a win/win/win circumstance.
    I just want to say a tribute to and a good example is Bill Hunt, and I don't know if he's going to testify today. He's certainly here to answer any questions. Our staff and I worked with him for an extended period of time on a project down in the Whitewater Watershed Project, which is a very fragile system. In fact, if you enjoy trout fishing, that is a great place to go here in the State of Minnesota.
    But I think there's an example where Bill provided the kind of leadership and listened to people, worked with people. And at the end of the day, that's a project that I'm very proud of and I think Minnesotans in general can be extremely proud of. And it was largely because of the pleasant persistence of Bill Hunt that that ultimately was done, so I want to thank him.
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    With that, Mr. Chairman, I would yield it back to you. And we do have a great panel. We have two panels that are lined up to talk to us this morning, and perhaps others will want to testify. And again, thank you all for coming.
    [The prepared statement of Mr. Gutknecht follows:]
PREPARED STATEMENT OF HON. GIL GUTKNECHT, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MINNESOTA
    First, Mr. Chairman, I want to welcome you to Mankato and express my gratitude for conducting this field hearing on a subject that is very important to our farmers, conservationists, and for every citizen in Minnesota who cares deeply about improving and protecting our natural resources. For many years now, Federal farm policy has played a major role in the conservation of our soil and water resources. With passage of the 1985 Food Security Act, America's farmers's stewardship of their land has been significantly aided by programs such as the Conservation and Wetlands Reserve Programs. Congress has not only approved even greater resources for our major conservation programs, but it has expanded these programs to address a broader range of environmental concerns. To be sure, the conservation programs of the Department of Agriculture have evolved well beyond protecting highly erodible land. By embracing a greater emphasis on wildlife habitat, bio-diversity, as well as air and water quality, Congress has expanded the scope of our conservation programs to a point that concerns are being raised over the impact these changes are having on the agriculture community's interest and participation.
    These programs, if administered properly, can be a win-win for both our farmers and the environment. Regrettably, I fear that we are creating too many bureaucratic and regulatory burdens within programs that are founded on voluntary incentives and technical assistance from the Federal Government. Our family farms are committed to being the best possible stewards of their land, but the public and Congress must understand that additional regulations and mandates such as the new feedlot rules are adding to the financial stresses on producers.
    Despite the fact that we have seen an increase in CRP enrollment to 1.4 million acres from 1.3 million acres in the State in Minnesota in the last sign-up, producers are understandably frustrated with the lengthy application process which frequently result in waiting periods as long as 4 months after they submit their offers. With recent attempts to focus our resources on environmentally sensitive land, we are presumably evaluating bids based on an environmental benefits index. Yet, this same point system includes an inherent bias toward applications with low land rentals that conflicts with our environmental goals to enroll our most highly erodible lands. As an example, producers in southeast Minnesota have experienced first hand the inconsistencies in the administration of today's CRP. While 65 percent of the CRP applications submitted by Minnesota landowners were accepted this past year, the success rate in the first district ranged from 25 percent to 100. Although Environmental Benefits Index scores in southeast Minnesota compare favorably to other parts of the State, it appears areas north of the Twin Cites metro area, have enjoyed relatively higher acceptance. The region's higher application acceptance rate under EQIP, the Environmental Quality Incentives Program, suggests we have two programs going in opposite directions.
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    As a strong supporter of expanding the Conservation Reserve Program, I am concerned with the direction we are moving—from a farmer friendly program to a process that is increasingly confusing and difficult for our FSA and NRCS personnel to administer. The work loads on the field offices and the time required of the producer indicate a more complicated application process than first envisioned by Members of Congress. Even worse, the costs of participating in CRP are eating away at the financial benefits for taking environmentally sensitive land out of production. Costs for establishing high biodiversity grass cover can range from $200 to $250 per acre. To achieve higher Environmental Benefit Index scores, some producers will add native shrubs that will cost as much as $400 to 500 acre. Even with a 50 percent cost share arrangement, farmers receiving rental rates of $85 to $95 are paying anywhere between 1 to 2 years of CRP payments for the cost of their bio-diversity cover. Under the program's original biodiversity cover, the financial burden on producers was considerably less at $85 per acre. This raises a question of fairness -are we imposing an unreasonable burden on our farmers to promote
    greater biodiversity in the CRP?
    Finally, I want to take this opportunity to commend the good work being accomplished in Minnesota by all the folks who play an active role in our conservation efforts, our local and State Federal agencies, the Farm Service Agency, the Natural Conservation Service, the Association of Soil and Water Conservation Districts, and the Board of Water and Soil Resources, the Minnesota Departments of Agriculture and Natural Resources. Minnesota is also very fortunate to enjoy the support and a cooperation of many conservation groups who complement the agencies' efforts. Mr. Chairman, I look forward to today's testimony from these folks and learning how we can build on the success on our conservation programs.

    Mr. BARRETT. I thank you, gentlemen. I'd like to call on another Minnesotan, Collin Peterson, who, as I said earlier, is a member of the full House Agriculture Committee, for any opening statement that he might like to make.
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OPENING STATEMENT OF HON. COLLIN C. PETERSON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MINNESOTA
    Mr. PETERSON. Thank you, Mr. Chairman, and thanks for coming to Minnesota. We appreciate it. And we appreciate the chance to visit about the conservation situation.
    I'd like to talk about a couple of things. I'd kind of like to look at the broader picture here. Last year we spent more money than we've ever spent on farm programs since, I believe, 1986. I think it was $24 billion. And we really didn't accomplish anything long-term with it. It was important. People wouldn't be surviving today had we not done it, but a lot of us think that there's better ways that we can spend this money.
    And, so, I just wanted to make people aware that some of us are working on some alternatives. As you are all aware, the administration came out with a proposal, finally, a few months ago proposing a countercyclical type of safety net along with some conservation funding.
    And I just wanted to report that there is a group working in the House that I'm involved in, along with David, and Charlie Stenholm and others on our side of the aisle to come up with an alternative somewhat along the lines of what the administration has come forward with.
    The week before last, I guess it was, we had the budget situation. The Blue Dogs, that Dave and I are involved with, offered an alternative budget, which we obviously think would have been a better situation.
    One of the important things we were trying to point out is that in the budget that we passed, that finally passed in the House, there is no additional baseline for any of this spending in the long-term. And this is really going to be critical as we address these problems that we have in agriculture and as we try to get something additional done in conservation. And I think eventually this is going to become something that everybody is going to support, because I think all of us realize, in agriculture at least, that we have to improve this baseline.
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    But what we're trying to suggest, some of us, rather than just continue to pay AMTA payments as a way to get income to people, we ought to look at trying to do a countercyclical type of a payment system where there's more money paid out when the prices are low and less when the prices are high, be more targeted towards the actual producers and what they're actually producing, and that some of this money should go into the conservation efforts.
    So we're close to coming up with a consensus within the Blue Dogs. And 14 of the 23 Democrats on the House Agriculture Committee are Blue Dogs. So if we get a consensus, we'll pretty much get a consensus on our side of the aisle, and we are going to be introducing a bill that will have a lot of the conservation items in it. So I just wanted to report that.
    We haven't resolved at all yet at this point what's going to be in there, but clearly we will be advocating increased CRP, increased money for WRP and EQIP and the other programs similar to what the President proposed. As some of you know, I have been advocating for some time that we should increase the CRP to 45 million acres, which was the amount of the original program. The administration is now up to 40 million acres. I think we are going to get something done with that, hopefully. So, there's a consensus developing.
    And one other thing that I'm involved in, some of you may not be aware of, is the Sportsmen's Caucus, which now is the biggest caucus in the House. We have 291 members of the House out of 435 that belong to the Sportsmen's Caucus. And we are getting the caucus involved in working with the Agriculture Committee and others on these conservation issues as well.
    So there's a lot of work going on behind the scenes in Washington on these issues, and we think that with all of the money that's being spent to prop up agriculture, that clearly some of this money could and should be diverted to a conservation-type program. And, hopefully, this meeting today will help get up some more support for that.
    Also, Mr. Chairman, I would like unanimous consent to have this entered in the record. This is an Agreement in Principle that's been put together in South Dakota by about 25, 30 groups here that represent everything. We've got the Farm Bureau and the Sierra Club signed to the same agreement. How do you like that?
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    Mr. BARRETT. Surely not.
    Mr. PETERSON. This is revolutionary. And I have been working, as you know, on the CRP for some time and there are some problems. And this Agreement in Principle gets at one of the problems, and that is with the continuous sign-up. We've had this problem of people not wanting to use the continuous sign-up. We've got all that acreage sitting there.
    One of the problems we have out near the prairie pothole country is wetlands, can't be in the CRP, because originally it was set up as a production control system, not as a conservation program. So what they have put together is a proposal that's been signed off by everybody that would allow wetlands to be signed up in the continuous sign-up to go along with the buffer zones and riparian areas and so forth. So it would take a change in policy, either in USDA or some kind of legislative changes, to do that.
    But they have worked very hard on this, and they have come up with a system and an agreement, I think, that works. All of the farm groups have signed off, all of the environmental groups, the wildlife groups. And, so, I'd like to enter this into the record and also make people aware that copies of this are over there all the different piles of testimony over there. So if anybody is interested in looking at the specifics, they could look at that, and I don't even know who I give this to.
    Mr. BARRETT. Hearing no objection, so ordered.
    [The information appears at the conclusion of the hearing.]
    Mr. PETERSON. I appreciate that. And one other thing I'd like to bring up. We're going to be looking at the EQIP program, I believe, as one of the issues that's a purview of this subcommittee. And this is just kind of a parochial thing that I have to bring up, being from northwest Minnesota.
    In your packet, there's a list of where the EQIP application or the funding and the offers have been. And I don't want to pick on Congressman Gutknecht, but there's been a lot more of this money going down to the southern part of the State than in the northern part of the State.
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    Mr. GUTKNECHT. I have a similar chart on the CRP.
    Mr. PETERSON. Well, I grant you that. But I just think we need to be sensitive to how this stuff gets put out there on the ground. And I'm all for increasing CRP acreage in your district, and I hope you all support me in looking at some of the ways we can get EQIP money up in our area, because we do need money to be directed that way. So I just needed to bring that up.
    Mr. BARRETT. OK.
    Mr. PETERSON. And I look forward to the testimony here today. And hopefully we can help drive a consensus to get some of this money that we're going to be spending anyway diverted to conservation, because I think it's going to pay off in the long run. So thank you, Mr. Chairman.
    Mr. BARRETT. Thank you for your opening statement.
    Mr. MINGE. Mr. Chairman, I have a statement from the Coalition for Clean Minnesota Rivers here, Friends of the Minnesota River Valley, the Minnesota Audubon Society, the Center for Environmental Advocacy and New Ulm Area Sports Fishermen, and I'd like to ask the members' consent to be included in the record.
    And I would just like to note that one of these groups, Clean Up Our River Environment, was invited to testify but was not able to attend this morning. So this is really on behalf of a broad coalition of conservation and river protection groups.
    Mr. BARRETT. Without objection, so ordered.
    [The information appears at the conclusion of the hearing.]
    Mr. BARRETT. Now to the point at which we hear from our witnesses, the primary purpose for our being in Mankato. Our first panel consists of Michael Davis, Deputy Assistant Secretary of the Army for Civil Works, Washington, DC, on my far right. We have also Mr. Gene Hugoson, commissioner of agriculture, Minnesota Department of Agriculture. And Mr. Ron Harnack, executive director, Board of Water and Soil Resources, State of Minnesota.
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    We also have with us Bill Hunt, State Conservationist, Natural Resources Conservation Service, U.S. Department of Agriculture, Saint Paul. And finally, Mr. Tracy Beckman, State Executive Director, FSA, U.S. Department of Agriculture, Saint Paul.
    We welcome all of you, gentlemen. We look forward to your testimony. And, Mr. Davis, we'll begin with you.
STATEMENT OF MICHAEL DAVIS, DEPUTY ASSISTANT SECRETARY OF THE ARMY FOR CIVIL WORKS, WASHINGTON, DC

    Mr. DAVIS. Thank you, Mr. Chairman, and other members of the subcommittee. I am Michael Davis, the Deputy Assistant Secretary of the Army for Civil Works, and I am also very pleased to be in Minnesota today to provide testimony on behalf of the Army and the administration on the very important topic of wetlands mitigation and wetlands mitigation banking.
    With me today is Colonel Ken Kasprisin, the Commander of the Corps, Saint Paul District. In my complete statement, which I would like to submit for the record, I have provided an overview of the Clean Water Act Section 404 regulatory program, its current levels of performance, recent changes in the Army's nationwide permit programs and Administrative Appeals Program, and our experience to date in implementing wetlands mitigation and mitigation banking. It will take just a few minutes to summarize a few of these areas.
    The Clean Water Act Section 404 program is a vital part of our Nation's overall effort to protect, restore and preserve our water resources. The overarching statutory goal of the section 404 program is to protect the waters of the United States, including wetlands.
    Over the past 28 years, the Army Corps of Engineers has prevented the destruction of thousands of acres of wetlands and the degradation of thousands of miles of rivers and streams. This has reduced property damage and loss of lives from flooding, and protected fish and wildlife habitat and water quality; all vital to the Nation's economy and overall health.
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    From a good public policy and investment perspective, the section 404 program has been a success. For example, the program has played a key role in reducing wetland losses from over 400,000 acres a year in the mid–1970's to approximately 100,000 acres a year in the mid–1990's.
    While the program helps stem the loss of wetlands and other aquatic resources, it does so in a manner that minimizes the unnecessary regulatory burden of those that must apply for permits. Administering the Army Regulatory Program in a fair, flexible and effective manner has been a priority of this administration since 1993.
    The Corps received an average of 74,500 section 404 permit requests each year from fiscal year 1996 to fiscal year 1999. Of those requests, over 84 percent were authorized through a general permit. Only 6.7 percent of all permit applications were subject to the more detailed individual permit evaluation, through which impacts are avoided and compensated.
    Because of our effectiveness in avoiding and mitigating impacts, only three-tenths of 1 percent of all section 404 permits were denied during this period. Decisions for individual section 404 permits took, on average, 107 days, with the decisions for general permits averaging only 14 days.
    The importance of agriculture to our Nation and to our economy is always an important factor in the development of wetlands policy. And we appreciate the state of the agricultural economy as it's been discussed already this morning. While we have worked hard to reduce wetland losses, we have also attempted to make wetland regulation fair and more understandable for the Nation's farmers.
    We have clarified that most day-to-day agriculture activities are exempt from regulation based on existing Clean Water Act exemptions. We have also worked to ensure that all Federal agencies use the same approaches in identifying wetlands and that the Nation's farmers get the same answers, regardless of which agency they ask. In 1994, four Federal agencies signed a Memorandum of Agreement to help promote this consistency.
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    I would not suggest to you today that the system works perfect every time, but I do believe that, on balance, it works very well and that overall we have made substantial improvements. For example, the new Nationwide Permit 40 authorizes discharges of dredged or fill material into non-tidal waters of the United States to improve agriculture production, construct building pads for farmers, relocate existing drainage ditches. As with all other nationwide permits, however, the maximum acreage loss of wetlands authorized under this nationwide program is one-half acre.
    Nationwide Permit 40 authorizes projects that receive minimal effect exemptions from the USDA and allows them to go forward with no review by the Army Corps of Engineers. In this situation, the landowner would interact only with the Natural Resources Conservation Service.
    I would now like to briefly discuss wetlands mitigation and mitigation banking, a subject I know that Congressman Minge is very interested in. One of the fundamental requirements of the section 404 program is that wetlands impacts be avoided where practicable. We continue to believe that it is a very important policy.
    When impacts cannot be avoided, it is generally necessary that lost wetlands functions be compensated for. This refers to the restoration, creation or enhancement of other wetlands. The ability to require such compensation allows us to issue permits consistent with the Clean Water Act.
    The success of wetlands mitigation nationally has been very mixed. In some cases, it has worked well. In others, it has, frankly, failed. We must work to improve our record on mitigation if we are to ensure that we do not have a net loss of the Nation's remaining wetlands and that we can continue to issue permits.
    One answer may be the successful use of wetlands mitigation banks. This administration has supported the use of wetlands mitigation banks for unavoidable impacts. In fact, in November 1995, the Army, the Environmental Protection Agency, the U.S. Fish and Wildlife Service, the National Marine Fisheries Service and the Natural Resource Conservation Service published joint Federal guides concerning the establishment and operation of wetlands mitigation banks. I am pleased to report that mitigation banking has begun to play an important role in wetlands regulation and mitigation.
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    Mitigation banking is an innovative market-based way for landowners to meet their mitigation requirements. If properly sited and managed, mitigation banks provide the wetland and other aquatic resources needed to improve our mitigation track record. My written statement discusses in considerable detail the benefits of mitigation banking. And in the interest of time, I will not elaborate on those now.
    In conclusion, Mr. Chairman, the Nation's aquatic resources are vital to our environmental and economic health. Our rivers, lakes and wetlands are the lifeblood of our great landscapes. They support the fish and wildlife that we catch, hunt and watch. They provide us with water, an essential component for all living things. The Army Regulatory Program plays an important role in protecting these resources for today and for future generations.
    Through the Army Regulatory Program, we are committed to serving the public in a fair and reasonable manner while ensuring the protection of the aquatic environment as required by laws and regulations. We will continue to pursue the important initiatives described in my statement. Our regional and nationwide general permits program will continue to be evaluated for opportunities to improve both environmental protection and performance.
    We have established a full administrative appeals process that will allow the public to challenge permit decisions and wetlands jurisdictional determinations without costly, time-consuming litigation. Interagency mitigation banking guidance affirms the administration's support for mitigation banking and the realization of the important role mitigation banking can play in Federal wetlands programs.
    Mitigation banking is an important option that should be available to those needing authorization under section 404 and the Swampbuster programs. And, finally, we will continue to consider fully the importance of agriculture to our Nation's well-being. We will continue to work with the Congress and the agricultural community to improve wetlands protection and make wetlands programs work better for our Nation's farmers.
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    Mr. Chairman, that concludes my statement. I will be pleased to answer any questions you or the subcommittee may have.
    [The prepared statement of Mr. Davis appears at the conclusion of the hearing.]
    Mr. BARRETT. Thank you, Mr. Davis. I would remind our witnesses that we have the two lights at the top of this table in front of you, beside you. We try to stick to the 5-minute rule. When the amber light goes on, that indicates you have approximately a minute left. We will not be mean about it, but we do hope that you will try to stay within those guidelines.
    Mr. Hugoson? And by the way, may I suggest, Gene, that I'm delighted to see you again. And I thank you publicly, in front of your peers, for appearing before the full Agriculture Committee in Grand Island, NE, a year or two ago. And again, we appreciated the fine testimony that you shared with us. Nice to see you again.
STATEMENT OF GENE HUGOSON, COMMISSIONER, MINNESOTA DEPARTMENT OF AGRICULTURE, SAINT PAUL, MN

    Mr. HUGOSON. Well, thank you, Mr. Chairman. And, indeed, it is a pleasure on behalf of Governor Jesse Ventura to welcome you and the subcommittee to Minnesota. On behalf of all of Minnesota's agriculture community, we thank you and the subcommittee for taking the time to be here today.
    We were in Washington yesterday and appreciated the fine hospitality that was shown to the State of Minnesota by the House of Representatives, and only hope that we can repay that hospitality to you here on this day.
    One of the most pressing issues for agriculture in Minnesota, and in really virtually all the other States, is that balance that exists between farming and the environment. And too often this issue is portrayed as a tug-of-war between one group that wants to farm and another group that wants to protect our natural resources. And I want to state emphatically that I believe that this is a false distinction, because I believe that the great majority of those that farm in this State care very deeply about our environment.
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    Farmers' dedication to protecting our natural resources is clearly evident when you consider the progress we have made in cleaning up the Minnesota River. In 1992, Minnesota set a goal of making the river safe for fishing and swimming within 10 years; quite an ambitious goal, considering that the river has been polluted over the course of a century or more.
    Even to date, there have been some noteworthy success stories coming from the agricultural sector; for instance, the Federal Conservation Reserve Program, the State's Reinvest in Minnesota Program, which have helped to encourage farmers to set aside more than a million acres of environmentally sensitive land in this State. Likewise, the more recent Conservation Reserve Enhancement Program has taken nearly 14,000 acres of the most sensitive farmland out of production in the past year.
    We sincerely applaud these programs and support them. And as the administration has taken a stand in terms of committing dollars in the budget to this CREP program, we want to go on record as supporting that program. And Mr. Harnack in just a few minutes will go into more detail about the administration's position on that particular program as well.
    Certainly farmers are taking advantage of cost share programs that are designed to help them implement agricultural best management practices, or as they are referred to, the agriculture BMPs. These programs provide farmers with partial cost grants and loans to implement practices such as reduced tillage of fields, building of grass waterways and other erosion-control structures and upgrading or repairing animal waste management structures.
    Six years ago, the Department of Agriculture in Minnesota formed the agriculture BMP loan program, and to date, we disbursed some $26.6 million in loans, funding more than 2,400 projects statewide; 1,000 environmentally friendly projects here within the Minnesota River basin alone. All of this is beginning to pay dividends.
    In some areas, farmers have managed to reduce soil erosion by more than 90 percent through conservation tillage. And on a larger scale, independent studies conducted by the University of Minnesota and the Minnesota Pollution Control Agency show that the sediment washing off from farmlands into the Minnesota River has dropped by 25 percent in the past decade.
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    Clearly, we do recognize the importance of protecting the natural resources that are important for generations to come. And during this period of economic difficulty, we're looking for ways to continue to make our farms more environmentally friendly.
    However, I must bring to caution—and I just would raise this issue, because I think while the topic in general today is very good to be talking about and that's where we are focusing, I need to raise an issue that I think we need to be looking toward in the future. And that has to do with some of the new requirements that are going to be placed on farmers as it relates to regulation of nonpoint-source pollution, or as it's more commonly known, manure discharge from farmland into the waterways.
    While this is a worthy goal that has been set by many of the agencies at the Federal level, there has been little discussion of exactly what sort of assistance will be available to farmers who need to make changes in their operations. And obviously, with today's low commodity prices and the narrow profit margins, this is something that's very important for us to consider.
    Our goal is to help producers comply with environmental requirements. But we also realize that the regulations can place crippling burdens on those that are being regulated, particularly at a time of a depressed farm economy, when the profit margins are either nonexistent or are very thin. This means that there may be difficulties for some producers to comply with EPA requirements and still remain in business.
    While much of the focus among Federal and State policymakers has been on how to improve the prices for farmers, we must also pay attention to the other side of the ledger, and that is the cost that regulations place on the producers as well. We put the future of our livestock industry at risk if we ask them to shoulder the cost at a time in which they cannot simply do it based on today's prices.
    The livestock industry is extremely important in this State. There is something like $8 billion of our cash receipts that come from the livestock industry. And this is extremely important to where we are trying to go in improving profitability for our farmers.
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    In Minnesota we're currently revising our State feedlot rules in response to pressure from the EPA and on the States to more tightly regulate their feedlots. We have done some initial estimates of what it's going to cost our farmers to comply with these regulations. And so far, we're looking at in excess of a quarter of a billion dollars in the State of Minnesota alone in order to bring our feedlots into compliance.
    That's not any extra profitability, that's only to bring into compliance with what some of these regulations, in fact, will entail. That's a lot of money, no matter how you count it. And under present economic conditions, it could be very, very difficult for people to stay in business.
    Two things I would ask the committee to consider. First of all, to pay close attention to what Federal agencies are doing and how much pressure they're placing on States to the mandated changes. It's particularly important to watch how much time is going to be allowed for agriculture to come into compliance with some of the new restrictions.
    Second, I would ask that the committee look at ways in which we together can cooperatively look at providing financial and technical assistance to our producers who need to make these changes. We're prepared to be involved with helping to give technical and financial assistance. We would ask that you as a subcommittee consider this as well in terms of some of the pieces of legislation that are being considered so that it might be possible to, even through the use of block grants or some other innovative ways, provide assistance to producers that are out there.
    And certainly, when you look at the whole issue of competitiveness, that's important to agriculture. At one time, we used to think of our competitiveness as being with Iowa or South Dakota or even Nebraska. But anymore, our competitiveness now involves Brazil, Canada, Argentina, Australia, and places like that.
    With that in mind, it becomes extremely important that the Federal Government do what they can to help maintain our river navigational systems, because certainly as for those of us in the Midwest part of the United States that have to move our commodities long distances in order to reach international markets, it becomes essential that we be in a position to compete with those countries that have a well-supported and often subsidized system in place.
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    With that, Mr. Chairman, I'll close by just saying that all of us here in Minnesota, farmers or not, have an interest in improving our water quality. We support sensible environmental regulations, even if they require some changes in the way we farm. However, we cannot expect our farmers to bear this cost alone.
    And with that in mind, Mr. Chairman and subcommittee members, I would invite us all to work together at the Federal and State level to do what we can to help farmers work through these expectations. Thank you very much.
    [The prepared statement of Mr. Hugoson appears at the conclusion of the hearing.]
    Mr. BARRETT. Thank you, Commissioner. Mr. Harnack.
STATEMENT OF RONALD HARNACK, EXECUTIVE DIRECTOR, MINNESOTA BOARD OF WATER & SOIL RESOURCES, SAINT PAUL, MN

    Mr. HARNACK. Mr. Chairman and members, I would also like to thank you for coming to Minnesota. It's a great opportunity that we don't get very often, and we really appreciate it.
    I would like to take a few minutes this morning to talk about three programs. My formal testimony covers a number of different areas: the Conservation Reserve Program, the Conservation Reserve Enhancement Program, Wetland Reserve Program, Soil Survey Initiatives, USDA Technical Assistance, the Natural Resources Inventory, EQIP, and wetlands.
    And I would like to just say a few words about CRP, the Conservation Reserve Enhancement Program, and wetlands, because I think those are the most critical at this point in the Minnesota River and to Minnesota.
    The CRP program is a landmark Federal program that provides unheralded benefits for water quality, water quantity, soil conservation and habitat as well as enhancing farm income and community economic stability. The program also has significantly reduced State and Federal costs for disaster assistance and subsidies for crop insurance.
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    Minnesota has enjoyed significant success with CRP over the years. Enrollment approached 1.85 million acres in the early nineties; today, approximately 1.5 million acres remain. The reduction reflects, in part, a greater emphasis on environmental indicators and the conservation approach rather than just purely a set-aside. We feel that that is beneficial and returns a greater benefit per cost of acre enrolled.
    However, the high value of Minnesota cropland seems to be a primary factor in re-enrolling these acres. Due to the higher rental value of cropland, CRP applications on highly erodible and flood-prone lands have not been as competitive on a national scale.
    Increased education by USDA and State agencies and changes in the EBI scoring criteria that recognizes land price relative to bid has helped reduce the problem. However, I urge the committee to continue to be mindful of this issue, as it will contradict efforts to seek new ways to help cash-strapped farmers and ranchers enroll in CRP.
    Another issue that could be of concern with respect to CRP is recent court interpretations with respect to the self-employment tax code. A recent court case ruled that farmers must pay a self-employment tax if they receive CRP program payments. The decision could result in farmers owing thousands of dollars by being forced to adjust tax returns as far back as 1996.
    A recent article in a paper by a professor of agriculture law at Kansas State reflects that he feels the court case's decision was erroneous. However, it's unfortunate that farmers cannot rely on the tax code.
    Rather than have farmers one by one fight the IRS, it is appropriate that Congress take swift action to clarify the law. This same tax penalty applies only to those that are self-employed; therefore, active farmers bear the brunt of this unreasonable tax policy. Clearly, it is an inequity in tax policy that deserves attention.
    Mr. Chairman, with respect to the Conservation Reserve Enhancement Program, Minnesota has really been one of the ones that has received greatest benefit from it. It is providing a unique opportunity to realize some critical water quality, habitat enhancement and soil conservation benefits that would have taken Minnesota itself significantly longer to achieve.
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    The partnership in the Minnesota River is an outgrowth of a two-year, multimillion-dollar effort to assess natural resources in the basin and recommended strategies to address the issues.
    The Citizens Advisory Committee recommended that 200,000 acres of flood-prone and riparian cropland be set aside in permanent easements and select fee title acquisition. The implementation of this recommendation will significantly reduce sedimentation, enhance water quality for the Minnesota River, the Mississippi River, and extend downstream to the Gulf of Mexico to help deal with the whole issue of hypoxia.
    In addition, it establishes greater opportunities for hunting, fishing and other recreational pursuits. This coupled with the significant economic contribution to farmers and ranchers in small rural communities cannot be understated.
    The Minnesota CREP program was approved in February 1998 and after several months of negotiation, finally got under way in the fall of 1998. Landowner interest in the program has continued to increase. ''Farm the Best—Buffer the Rest'' and ''Leave a Legacy'' are the program marketing slogans.
    To date, landowners have enrolled over 16,000 acres. Minnesota has invested to date $10 million towards matching the approximate $163 million in USDA funds. Governor Ventura is fully committed to seeing that the State's contribution is realized in matching those Federal funds over the course of the next 2 years.
    Although the legislature has voiced strong support to date for CREP, their initial actions to limit appropriations may make it very challenging to meet that 100,000-acre goal. As you know, we are in our legislative session currently with conference committees meeting, and I am optimistic that we're going to come out of it with a realistic capability to achieve that goal over the next few years.
    Local governments and conservation interests in other geographical areas of Minnesota are seeing the benefits of the CREP program and are asking for information on how a similar program might be developed in their area. Discussions are beginning in the Red River Valley relating to a three-State CREP: North Dakota, South Dakota and Minnesota.
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    The current USDA policy to limit a State to one CREP detracts from USDA's efforts to achieve buffer goals nationally and does little to further partnerships toward common Federal/State/local conservation goals. To that end, I would encourage the committee to continue to support flexibility in the administration of existing CRP and CREP initiatives, including raising the CRP cap to 45 million, extending CREP authorizations, enhancing CREP flexibility, permitting limited haying and grazing on CRP land to promote vegetative diversity and habitat enhancement.
    Last, I would like to ask the committee to legislatively clarify the tax code so that farmers and ranchers do not have to pay a self-employment tax on CRP payments now or retroactively to 1996.
    And, Mr. Chairman and members, just a few words regarding wetlands. The regulation of wetlands in Minnesota has at times been very frustrating for landowners and regulators alike. All too often, landowners get caught between regulatory agencies that have differing rules and different delineation processes.
    In Minnesota, we have taken several steps to help address this problem through coordination with other State and Federal agencies. Recent State legislation and recent modifications to the Corps of Engineers' procedures to align State rules and processes with the Federal has significantly simplified wetland regulations.
    Although the landowner may in some cases still have to secure a permit from more than one agency, the agencies do coordinate the review and field assessment so that the landowner is not caught in the middle of the regulatory process.
    Despite these efforts, there are still some issues that need to be addressed. There is a difference between the Federal agencies on delineation of wetlands and the identification process between the USDA and the Corps of Engineers.
    Although these differences seem minor, the application of the method occasionally leaves landowners with the impression that their wetlands are not regulated, when, in fact, they are. And we have had instances where project delays, cease-and-desist orders, even criminal actions have been taken by local, the State or Federal agents inappropriately because of those issues.
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    Wetland designations determined under the farm program are not always communicated to local, State and Federal wetland program agencies. Again, this puts the farmer or rancher at risk. We believe communication is the key.
    And again, to that end, we have in Minnesota recently had a meeting to help minimize that effort by development of a Minnesota wetland memorandum that would be signed by the Corps of Engineers, NRCS, Department of Natural Resources, and the Board of Water and Soil Resources.
    This memorandum would clearly spell out the roles and responsibility between the agencies, the protocol for communication, and it hopefully will result in minimization, if not elimination, of those kinds of problems for our ranchers and farmers that we have seen today.
    Minnesota's Interagency Wetlands Team has developed also a Minnesota wetland assessment methodology as a means to help ensure consistency in evaluating mitigation with respect to wetlands, whether it be for a farmer, whether it be for a developer or anyone else. And we feel that adoption of this Minnesota wetland methodology by all agencies will minimize the conflict and will provide the opportunity for farmers and ranchers to do mitigation in a reasonable and rational way.
    Minnesota does retain and have in place a wetland banking program. The bank currently has in excess of 1,500 acres that are in the bank that any landowner can draw on for losses to wetlands. And we feel that this provides an effective and efficient way to help address wetland issues.
    We believe we're on the verge of having one-stop shopping for wetlands in the State. The Corps of Engineers in their recent general permit letter of permission is aligned very well with Minnesota's program. We would hope that we can do the same with the USDA.
    We believe that there may be some Congressional limitations allowing the USDA to partner with the State and achieve it. However, we have done some piloting in Mower County and Kandiyohi County, and it makes such a good example for how we might be able to extend that statewide for the benefit of the landowners.
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    Mr. Chairman, that concludes my testimony, and I appreciate the opportunity to present this to you today.
    [The prepared statement of Mr. Harnack appears at the conclusion of the hearing.]
    Mr. BARRETT. Thank you, sir. Mr. Hunt.
STATEMENT OF BILL HUNT, STATE CONSERVATIONIST, NATURAL RESOURCES CONSERVATION SERVICE, U.S. DEPARTMENT OF AGRICULTURE
    Mr. HUNT. And, Mr. Chairman and members of this distinguished subcommittee, I'm very happy to be with you today. I have no prepared comments. I'm not authorized to give any prepared comments by the U.S. Department of Agriculture.
    I am here at the invitation of several of you and will be prepared to answer any questions that you have. But before I do that, let me make one of two comments about some people that are up there today, and specifically Congressman Minge, who I have worked very closely with on a number of projects. And I appreciate your field staff, because they work very closely with my field staff to make sure that your constituents' needs are brought to our attention. And we work very closely with Herb Halverson and your local staff to make certain that we get the right information back to you.
    Congressman Gutknecht, I appreciate the comments you made and the compliments you gave to me, but I'm going to rebound those comments, because it was you who rolled up your sleeves and took a very difficult situation, dealing with some private property rights and other issues, out of the Whitewater watershed that made that whole effort move. Without you, it could not have happened.
    And Congressman Peterson, I really appreciate the work that you did with us in the State River watershed. And Mayor Nelson and that whole group up there are very anxious to not relive some of the tragedies of the past that happen almost yearly in Warren, MN. And we really appreciate you being there and moving that whole effort forward with our P.L. 556 project.
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    With that, Mr. Chairman, unfortunately I haven't had an occasion to work with you, but I look forward to it. And I would be open to answer any questions that members of the panel might have for me.
    Mr. BARRETT. Thank you, Mr. Hunt. Mr. Beckman.
STATEMENT OF TRACY BECKMAN, STATE EXECUTIVE DIRECTOR, FARM SERVICE AGENCY, U.S. DEPARTMENT OF AGRICULTURE
    Mr. BECKMAN. Thank you, Mr. Chairman and members. I just want to recognize David Haugo who is with us today. He's the chair of our State FSA committee and has traveled all the way from the northwestern part of the State to be down here today for this hearing. As well as Carl Johnson, who is a member of our State committee in the Saint Peter area. I also have Greg Anderson, who leads up our conservation department in the State office, for any kind of technical questions that you may have.
    I would also say that we have a number of our county executive directors here today for this hearing. We consider this to be a very important hearing and are anxious to give you our input. I'm pleased to appear before you today, members of the subcommittee, to talk to you about the Farm Service Agency's role in delivering conservation programs to Minnesota's 87,000 farmers.
    Conservation programs like the Conservation Reserve Program safeguard millions of acres of American topsoil from erosion, increase wildlife habitat, enhance the Nation's air quality and protect the grounds and surface water by reducing water runoff and sedimentation. Countless lakes and rivers and ponds and streams are cleaner and more vital in part because of the CRP.
    Even more impressive, CRP's success is accomplished through voluntary partnerships between individuals and government. Instead of compelling participation, the program provides incentives and assistance to farmers and ranchers to establish invaluable conservation practices that have a beneficial impact on resources both on and off the farm.
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    It encourages farmers to plant voluntarily long-term covers of grass and trees on land that is subject to erosion, where vegetation can improve air and water quality and provide food and habitat for wildlife. This use of volunteerism helps make the CRP one of the most effective Federal conservation programs in operation today.
    Acreage is enrolled in the CRP under a highly competitive general sign-up; a continuous sign-up of highly desirable environmental practices permit much larger acreage; or under a new effort, the Conservation Reserve Enhancement Program, in which CRP resources are combined with State resources to target areas with special environmental issues, such as in Minnesota.
    According to our records, there are 22 million acres of cropland in Minnesota. And of that acreage, there are approximately a million and a half acres enrolled in the CRP program. I take pride in the fact that this represents approximately 30,000 Minnesota producers who have voluntarily entered into an agreement with the Farm Service Agency to protect Minnesota's precious environment.
    In February of 1998, Deputy Secretary Rominger and then-Governor Arne Carlson combined an agreement between the USDA and the State of Minnesota to implement in the Minnesota River watershed the Conservation Reserve Enhancement Program, known as the CREP.
    CREP in our State represents a melding of Minnesota's Reinvest in Minnesota (RIM) Reserve Program and CRP. The goal of the program is to initially retire up to 100,000 acres of environmentally sensitive land in the Minnesota River watershed area.
    Enrollment is targeted towards flood-prone land along the Minnesota River and its 12 principal tributaries, riparian buffers and filter strip land along watercourses in the Minnesota River watershed and wetland restoration.
    This CREP offers landowners an opportunity to enroll acreage in up to a 15-year CREP contract if they agree to execute a contract and easement under the State's RIM program. In return, the landowner will receive 15 annual CRP payments, a RIM signing bonus and up to 50 percent cost share for both the CREP and the RIM, establishing long-term conservation cover.
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    The State funding of the RIM portion of the CREP is currently completed. I understand that Governor Ventura and the legislature have submitted funding proposals for the RIM program. But both proposals fall short of the funds necessary to fully leverage the Federal dollars that are out there.
    The USDA is hopeful that the Governor and the legislature will appropriate the necessary dollars to fulfill the CREP agreement, since its success of the program is dependent upon the State's commitment to fund the RIM program.
    The administration believes a critical part of the farm safety net that would yield benefits to all Americans is providing assistance to farmers and ranchers who practice environmentally sound land management. The President's budget provides $1.3 billion at this point to help farmers take steps to protect water quality and the environment and to preserve farmland.
    This includes $600 million for a new conservation security program that will assist farmers who voluntarily adopt comprehensive plans to curb erosion and protect water supplies from pesticides and nutrient runoff as well as an expansion of the CRP program to 40 million acres.
    The budget also proposes increased discretionary and mandatory funding for a number of other conservation programs and provides the funding necessary for USDA technical assistance to implement these programs.
    Mr. Chairman, this will conclude my comments. I appreciate the opportunity to testify today, and I stand ready to respond to any of your questions. Thank you.
    Mr. BARRETT. Thank you, Mr. Beckman. I'd like to go very quickly to Mr. Harnack. You talked about rental rates and so forth for CRP lands, Mr. Harnack, and I think you were suggesting that they are too low. That's not an uncommon statement; you hear it quite often.
    Are you suggesting also that rental rates are not equalized, or should be equalized if they're not, between counties, and even States, for that matter? We hear a little of that too.
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    Mr. HARNACK. Mr. Chairman, in fact, we see it more between States than we do within the State. We don't feel that Minnesota really in the last few sign-ups, because of the high rental values that we have in Minnesota, end up being competitive when it reaches the black box in Washington, moreover again, in some of the neighboring States in particular.
    And we don't have necessarily all the answers to be able to try to fix that, but we feel greater recognition of the higher value of land in Minnesota should be a factor in considering the priority or eligibility for these in probably more of a way than it is currently with the bid-to-rental-value price, because they do gain additional points if they bid below the bid price currently. It gives them some additional competitiveness, but we feel it still falls short in comparison to some of the other States.
    Mr. BARRETT. The competition between, for example, Minnesota and North or South Dakota would be——
    Mr. HARNACK. Mr. Chairman, that would be an excellent comparison.
    Mr. BARRETT. Yes. Would you suggest that low rates don't necessarily make better CRP land but just cheaper land?
    Mr. HARNACK. Mr. Chairman, I would believe that that is the case. We have a lot of flood-prone lands and highly eroded land that is of very high value in terms of the rental rates and are rather productive. And unless we provide an adequate incentive for the producers to look at setting those aside into more appropriate conservation measures, we're just never going to be competitive in that vein.
    And personally, some of my experience in traveling across the Midwest, I think that a lower value of land is not necessarily more at risk to conservation. And at the same time, a high value to land should not be considered at a less risk to conservation.
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    Mr. BARRETT. Mr. Hugoson, I was very interested in your comments about EQIP costs and so forth. We haven't raised a lot of cattle back down where I come from. And I think you suggested that under the new rules, it could cost as much as $250 million for you to implement these rules?
    Mr. HUGOSON. Mr. Chairman, actually, with the combination of existing rules, some modifications that we're looking at currently, the estimates that we put together at the Department of Agriculture, together with some of the estimates from some of the other State agencies, including the Board of Water and Soil Resources, would, yes, show that that would be nearly, if not exceeding, about $250 million.
    Mr. BARRETT. Would those be current rules or proposed rules?
    Mr. HUGOSON. Mr. Chairman, under the existing rules, we would be between $200 and $250 million dollars. If you take the new ones into account and the enforcement of some of the—or the enforcement of some of the existing rules, it will bring that up to over the $250 million.
    Mr. BARRETT. Roughly, what size of an operation would you be talking about?
    Mr. HUGOSON. Well, Mr. Chairman, and this is one of the strange situations of this whole debate, because oftentimes, the livestock debate gets characterized large versus small and how—in fact, the regulations are geared towards containing large operations. In fact, my conclusion is, and I think there are many others that have come to the same conclusion, that what we are really doing here is we're putting at risk, with most of those costs, most of that quarter of a billion dollars, actually the small- to medium-sized operations.
    The larger operations, the newer operations, have been constructed or permitted with most of these safety factors in place. So what we really are looking at would be, in Minnesota, the 50-cow dairy operations or the small beef herd, even some of the pasturing that goes on with some of those beef herds.
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    It's not a case of large versus small in this situation, but actually the preservation and enhancement of the small livestock operation is probably greater at risk than even the so-called large operations.
    Mr. BARRETT. Yes, yes. You probably know Administrator Browner has testified before, I think it was, the Senate Agriculture Committee recently, and she said that she was taking no action to require new permits for AFOs and so forth. She said that the any regulations would be done at the State and local level, where it should be done.
    And yet, your testimony, I think it was on page 3 of your testimony that we have from you, indicates that you say, ''pay close attention to what EPA is doing and how much pressure they are placing on States to mandate changes.'' Somehow that seems to be contradictory to me. Maybe you could explain it a little more.
    Mr. HUGOSON. Mr. Chairman, one of the frustrations, and I share this in the context of my counterparts in the other States, particularly the midwestern States, is that what oftentimes happens is there's differences of philosophy, but differences of emphasis between the various regional offices of agencies, and EPA would be a good example.
    And, so, not everything is necessarily applied equally, the requirements, what they would like to see done. And, so, as a result, there develops a frustration, a difficult situation of trying to understand really what it is. I think most farmers who feel frustrated said they would like to know what they need to do, and they'll do it.
    But where the difficulty comes in, whether we're talking Federal or State agencies, and we all have to pay attention to this, is that things get applied differently depending on where you might be located. Yes, we need to take into account various topographies and the types of soil conditions and what exists in various regions. But not everything is expected equally of States. Not everything is expected equally of various regions. And that becomes a real frustration for livestock producers.
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    Mr. BARRETT. And to some extent, perhaps a lesser degree, who is interpreting the rules?
    Mr. HUGOSON. Exactly.
    Mr. BARRETT. Thank you. Mr. Minge.
    Mr. MINGE. Thank you, Mr. Chairman. And I would like to again thank the witnesses for participating with us this morning. I did notice that we have maps in the back of the room on the wall that both show the major drainages in the State and participation in conservation programs and then the Minnesota River watershed basin and the Conservation Reserve Enhancement sign-ups that we have within the basin. And I would commend that to everybody's viewing.
    I'd like to start by asking Mr. Beckman, as I understand it, September 30 of the year 2002 is when the CREP program expires. And I had asked earlier if you could determine if the USDA is planning to consider extensions for this or any of the other CREP programs. Have you had any word back from Washington in that regard?
    Mr. BECKMAN. Mr. Chairman and Congressman Minge, we have not. We're operating under the assumption that if the dollars aren't leveraged by 2002, that that money just doesn't get spent. And I'm not sure that the administration can commit anything past that, at least I haven't gotten any sort of commitment to try to commit the next potential administration.
    I guess we're operating under the assumption that if the dollars aren't appropriated for this from the RIM program from the States, from the legislatures, and the governors, that we're simply not going to be able to sign up additional acres. So we're out of money right now.
    Mr. MINGE. Can you tell me how long it takes FSA to go through the sign-up process? For example, if money is supposed to be utilized by September 30, 2002, when does the process need to start so that you can actually close by September 30? How many months of lead time?
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    Mr. BECKMAN. About 2 weeks, Mr. Anderson tells me, for FSA.
    Mr. MINGE. So that's from the date the farmer walks in your office to the date you complete the project, it takes 2 weeks?
    Mr. BECKMAN. That's correct.
    Mr. MINGE. Is there anybody else that has to work with this, or is this from beginning to end for FSA?
    Mr. ANDERSON. Mr. Chairman, the process for the——
    Mr. BARRETT. Would you please identify yourself?
    Mr. ANDERSON. My name is Greg Anderson, USDA Farm Service Agency.
    Mr. BARRETT. Thank you.
    Mr. ANDERSON. The process for the Conservation Reserve Enhancement Program is a two-faced process; one is a sign-up for the Conservation Reserve Program, which can take somewhere between 2 to 4 weeks, another part of it is the Reinvest in Minnesota State program, which can take several months because of the easement process.
    Mr. MINGE. Do you check title or do they check title?
    Mr. ANDERSON. The State checks title.
    Mr. MINGE. So all the business about bringing abstracts up to date and having an attorney examine the abstract or title insurance, that's done prior to the beginning of this 2-week period?
    Mr. ANDERSON. That would be after that.
    Mr. MINGE. It would be subsequent to?
    Mr. ANDERSON. Yes. The process would be that the farmer would make initial application at the Agricultural Service Center, make application for CRP and RIM, and then it takes several months for the RIM process to occur, as far as the easement searching and all the records that have to be checked in the courthouse and so forth.
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    Mr. MINGE. OK. Mr. Harnack, I'd like to ask, how many months, in your experience, does it take to sign land into the RIM program as a part of this CREP effort?
    Mr. HARNACK. Mr. Chairman and Congressman Minge, it takes approximately on average of about 9 months. It could be longer if we're doing wetland restorations and we get into a lot of problems with issues on land issues. It could be longer in dealing with clearing the title. But we've had it also take as little as 6 months. But it's an average of about 9 months to complete the State's work from beginning to end.
    Mr. MINGE. Would it be fair to say that our State funding ought to anticipate that lead time then so that we should have our State funding in place approximately 9 months before the expiration of the CREP program?
    Mr. HARNACK. Mr. Chairman and Congressman Minge, we believe that is true. We believe that we need to front-end this as much as possible, and I believe the administration's perspective of looking at about 30, 30 and 12 would help achieve that objective.
    That means we would be looking at some kind of an emergency bonding bill next year that would have to pick up some of the additional dollars. So we're anticipating we're going to have to front-end that.
    We're also looking at some other alternatives that if the funding doesn't come all up front, that we may be able to offer landowners maybe a split payment. They would get half of it now, and maybe for tax purposes, they would be even more than willing to have the balance of it come later. But those are issues that have yet to be worked out with the Conference Committee.
    Mr. MINGE. Do you need to go back to the Department of Agriculture if you're going to get a split payment approach, or is this something you can do within the memorandum that you have signed up with the State of Minnesota?
    Mr. HARNACK. Mr. Chairman, Congressman Minge, I think we can work that out without having to go back and amend the agreement. There is other issues that we may need to go back to amend the agreement for that are outside of that issue.
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    Mr. MINGE. I would just like to ask the USDA people, do you agree that you can do the split payment approach under the current agreement?
    Mr. ANDERSON. Mr. Chairman, Congressmen, our process with the Conservation Reserve Enhancement Program and the CRP portion of that is that we pay the CRP payment on an annual basis sometime after October, after the Secretary of Agriculture has released authorization for making payment. We would have to see what the Washington officials think about the split payment.
    Mr. MINGE. Can you make the payment in 2002, then, after September 30, 2002?
    Mr. ANDERSON. Any application that would be approved by the 2002 date, yes, those payments would be subsequent to that. They would be made after that.
    Mr. MINGE. That would be part of the 15-year payoff?
    Mr. ANDERSON. Yes.
    Mr. MINGE. Mr. Harnack, have you furnished this agreement that you've talked about on mitigation to the Corps at this point?
    Mr. HARNACK. Mr. Chairman and Congressman Minge, we have currently a signed Memorandum of Agreement with the Corps of Engineers regarding mitigation of wetlands in the State.
    Mr. MINGE. So the one that you referred to in your testimony has already been signed up. I was under the impression that some of this was still a work in progress.
    Mr. HARNACK. Mr. Chairman, Congressman Minge, just because we've got an agreement in place doesn't mean always things move as smoothly as you would like to see them. We're working on an additional memorandum to our field staff that would go to the USDA field staff, Corps staff, BWSR staff, DNR staff, who are involved in some way or another in the wetlands issue out there to ensure that the communication and the protocols for dealing with each other are consistent and we do not put the landowner at risk.
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    Mr. MINGE. I'd like to also compliment you, Mr. Harnack, on bringing up this question about the self-employment tax on CRP payments. And I, too, read with interest the comments about the court's decision in Kansas, I believe it was, and have drafted legislation which I'm currently looking for co-sponsors on to change that course of the Internal Revenue Code so that we don't have thousands and thousands of farmers across this country caught up in this, what I think is, very unfortunate controversy with the IRS. It would both be very costly to farmers, unanticipated, and I think it would be very destructive to the CRP program. So I'd like to thank you for calling attention to that.
    I see that there's an orange light on, Mr. Chairman. I would like to ask if we could have a second round of questions, and I'll yield back the balance of my time.
    Mr. BARRETT. If there are no objections, certainly. Mr. Gutknecht.
    Mr. GUTKNECHT. Thank you, Mr. Chairman. I'll try to be brief. Mr. Harnack, you used a word that—and Mr. Hunt will acknowledge this, that when it came up in our discussions of the Whitewater Watershed Project, all of a sudden, the hair on the back of everyone's neck went up, and that was the term ''hypoxia.'' Can you talk a little bit about that? How much more do we know about that today than we may have 2 years ago?
    Mr. HARNACK. Mr. Chairman, Congressman Gutknecht, I'm not the resident expert in this by any means of the imagination. We have been part of a group with PCA and the Department of Agriculture in trying to keep tabs on where it's going.
    Our primary concern is we feel that the upper Midwest, and Midwest in particular, is being looked at because of its corn and soybean growing area and because of the application of fertilizers to maintain that kind of crop productivity.
    And what we want to be able to show through the programs that we're implementing, that we're doing a significant amount in cooperation with the landowners here to reduce sediment yield to the river system and, subsequently, the contribution of pollutant loading to the river as well. So that we can say we're doing our share, we don't need to be burdened with any additional government regulations, if you will, that will be unreasonable and impractical for our producers to deal with.
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    Mr. GUTKNECHT. But there is no new science, because the court is still really out on this whole issue here. There's been a whole lot of speculation going on in terms of what the causes are. And I just want to share with the members of the panel that farmers are really doing a fabulous job relative to control of their use of pesticides and herbicides and so forth.
    And we have two glaring examples in southern Minnesota. First of all, the number of trout from the trout streams is up. Trout are a little like the canaries in the mines; they're very good monitors of how well we're doing in terms of the water quality.
    And the second is the Mississippi River. We have small mouth bass in just about every stretch of the Mississippi, from the Iowa border up to the headwaters. And there again, I think we see that our farmers are doing a very good job. So whenever this issue comes up, I always try to at least say the studies—there are lots of studies being done, but the court is still out on that.
    I would like to change briefly and go back to Mr. Hugoson. Really, for the benefit of Mr. Barrett, talk just briefly, can you, how important the value-added agriculture is to Minnesota and—because I think sometimes we even forget, because of our location of Washington, that we desperately need to be feeding livestock, whether it's in the milk industry or pork or even a little bit of beef left.
    Mr. BARRETT. Thanks for acknowledging that.
    Mr. HUGOSON. Mr. Chairman, Congressman Gutknecht, certainly when we look at the preference of moving corn or soybeans or wheat out of Minnesota to our export markets, it doesn't take a rocket scientist to realize that in Minnesota, we're located virtually farther from the coast than any other State in the United States.
    So as a result, anything that we can do to add value to those raw products before it leaves our State becomes a great economic benefit, not only for the farmers themselves, but certainly for the State as a whole. And with that in mind, we have discovered, not surprisingly, that some of the biggest cheerleaders for the livestock industry are the corn and soybean farmers, because they realize that this is important to what they're trying to do.
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    And it's for that reason that we have sent delegations overseas to talk about marketing our product and we're promoting our livestock industry. The grain farmers have been part of this movement. So it's like the adage of any time the dollar can turn around more in the local community, it benefits everyone. And certainly that becomes the case for the livestock industry itself.
    And my biggest fear on this whole issue, again, is not even so much that we might be losing livestock to Nebraska or to some other State, but that we are on the verge of losing our livestock industry to South America and places that are outside our own national borders.
    Mr. GUTKNECHT. Thank you, Mr. Chairman. My light is on. Finally, I do want to acknowledge the presence of my predecessor and former member, Tim Penny, who has joined us this morning. We're delighted to have you join us. I would yield back the balance of my time.
    Mr. BARRETT. Thank you. Hello, Tim, nice to see you.
     Mr. Peterson.
    Mr. PETERSON. Thank you, Mr. Chairman. Mr. Beckman and Mr. Hunt, are you familiar at all with the work that's being done in South Dakota that I mentioned earlier on this wetlands—on the continuous sign-up issue? I guess maybe, Mr. Hunt, you probably deal with this quite a bit.
    One of the statements they make in the paper that I put in the record is the fact that it's not been widely used is because the wetlands cannot be put in, you can only put the air in around it. Would you agree with that, that that's been a major obstacle to the continuous sign-up being utilized?
    Mr. HUNT. Mr. Chairman and Mr. Peterson, I assume you're referring to the buffer area around the wetland areas? Yes.
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    Mr. PETERSON. The buffer areas can go in, but the wetlands can't go in. But what this proposal would do is it would expand it; you can not only put in the buffer area, but you can put in the wetlands area in addition to that. And would you agree that if that were the case, it will significantly enhance people's interest in this?
    Mr. HUNT. If I were permitted to, yes, I would. But that's a program that's run by my sister agencies, so I'd better check with them.
    Mr. PETERSON. I'll let you off the hook. Do you agree with that?
    Mr. BECKMAN. Thank you, Mr. Hunt. I think the problem, Mr. Chairman and Mr. Peterson, is the number of acres that it would take and the number of acres that we have available.
    Mr. PETERSON. What we're doing here would be expanding the continuous CRP. See, there's 5 million acres that the USDA has set aside for the continuous CRP. They have only signed up 850,000 acres. This is a problem all over the country. This is a particular problem they have been working on in South Dakota. And I think that this would make a difference in this area.
    Now, there's other problems involved in this whole continuous thing beyond that, but I was just wondering if you disagreed with this premise just generally?
    Mr. BECKMAN. We would certainly be willing to work with you, Congressman Peterson, on any input we could give you.
    Mr. PETERSON. I was going to shift this debate to Mr. Hugoson and Mr. Harnack. Have you heard about the work in South Dakota that's been done with these groups on this issue?
    Mr. HARNACK. Mr. Chairman, Congressman Peterson, we have had just a couple discussions with some folks out there regarding this and their interest in wanting to include wetlands themselves, existing wetlands, as a part of the continuous sign-up. Certainly I think that would be an additional incentive for the producer to participate in it.
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    And I think in Minnesota, probably one of the biggest shortcomings is, is many people still look at the value of the land over and against the payment. And I think that's the biggest drawback. I do understand, though, that FSA is looking at adding an additional bonus payment for the continuous sign-up. And I think that would certainly help here in Minnesota in that respect.
    I do have a concern that that additional bonus may not be applicable to existing State-approved Conservation Reserve Enhancement Programs as new ones are signed up. And that could create, I think, some unwanted competition between two programs that, again, get pretty frustrating for the landowner.
    Mr. PETERSON. I believe that's in the President's budget proposals, that provision is in there. So as I said earlier, if we don't get any extra money and shift it around, how this additional money is being paid out, that's not going to happen.
    So I guess, if I could, just suggest that maybe you folks—the South Dakota people, there's five or six of them back here, if you guys want to raise your hands. If you guys could maybe get with them after the program is over, because I would be interested in having Minnesota do something similar to what's being done in South Dakota, build some support for this, because I think it would help and it would provide another option for protecting wetlands and maybe use some of this continuous sign-up money that's sitting there, which may not get used otherwise. So if you would do that, I would appreciate it.
    Mr. HARNACK. Will do. Thank you.
    Mr. PETERSON. And on the self-employment issue, I'm also glad you brought that up. I just want to point out that Sam Johnson and I had a bill that passed just last week, I think, to take the earnings limit off Social Security. So at least if you get taxed on your CRP, they won't take your Social Security away from you if you're over 65. So we got that part of it fixed.
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    But it is a problem, not only with CRP, but the IRS is getting more and more aggressive in taxing people on their rental payments in general, and we have been trying to fix this. As Dave said, that's an uphill battle, trying to get anybody to pay attention.
    But one good thing that happened out of the Social Security debate we had is that every time I got a chance, I brought up this issue of the rental and the CRP and the IRS going after farmers. So we educated a lot of people in Washington about this, so maybe we can get something done about it.
    Last, if I could, Mr. Chairman, Representative Kind has got this bill—and I think, Gil, you and Dave are both authors. Are you familiar with this bill on the upper Mississippi?
    Mr. HARNACK. Mr. Chairman and Congressman Peterson, yes, we are. And we think there's a lot of good attributes in that bill. We think it can do a lot for the upper Mississippi River basin.
    One issue of concern that we would have is that we don't reinvent the wheel. It calls for locally led conservation teams. We've already got locally led conservation teams, a lot of whom have already done excellent work to set their priorities and know what needs to be done to deal with water quality, to deal with water quantity and conservation out there.
    And I would hope that if such continues to move forward, that we don't press to have people go back and revisit everything they've done, but to acknowledge what they have done and allow for implementation to take place quicker than it might otherwise move forward.
    Mr. PETERSON. Well, I appreciate that, and I'm out of time. But I'd also like to point out that some of the solutions in this bill are exactly the same thing that's in the President's budget proposal and what we're working on, increasing WRP, CRP, and all these kinds of things to get at the problem. So I think we're all heading in the same direction. We just need to pull together to get more of a lobbying force behind this to make it happen. So thank you.
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    Mr. BARRETT. Thank you. Without objection.
    Mr. Minge.
    Mr. MINGE. And I defer, if you have additional questions.
    Mr. BARRETT. Proceed.
    Mr. MINGE. I would like to just pick up on one question that I asked of Mr. Anderson and Mr. Beckman, and that is, If the State of Minnesota does not have its funding in place so that the State can complete the sign-up of programs by September 30, 2002, can you spill over after September 30, 2002, some aspects of the sign-up so we don't lose the 100,000 acres?
    I'm just wondering, Are there ways we can massage that deadline? And I'm not asking you for a long, sort of analysis; just sort of a ''yes,'' ''no'' or ''maybe, we'll have to look at it''?
    Mr. BECKMAN. Congressman Minge, as far as I know, that's the date served.
    Mr. MINGE. So the State legislature and the Governor's office—our State should be looking at September 30, 2002, as a very important date and give BWSR and Soil and Water Conservation District enough lead time to work through the process so at least they can sign land up?
    Mr. BECKMAN. That's correct.
    Mr. MINGE. And do they have to make their payment in order for us to meet the 2002 deadline, or is it just that they have to sign land into the RIM program as a part of the CREP program?
    Mr. BECKMAN. I'm not certain of that.
    Mr. ANDERSON. Mr. Chairman, Congressman Minge, that deadline of 2002, two things would have to happen. The CRP contract would have to be approved by the government officials at the local county committee level, and the Reinvest in Minnesota contract would have to be approved.
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    And Mr. Harnack would be able to tell what particular date that would be. But they would both have to be in place and approved in order for that to be a contract in the future.
    Mr. MINGE. So it's not necessarily the State has to pay all the money, they have to sign things into the RIM program and you have to sign things into the Conservation Reserve Program by that September 30 date? We have to have a final agreement with the landowner by that time?
    Mr. ANDERSON. Mr. Chairman, Mr. Minge, yes, that would be right.
    Mr. MINGE. All right. I have another question I'd like to ask of Mr. Hunt. NRCS and U.S. Department of Agriculture were a part, along with the Army Corps of Engineers, of agreeing to—I don't know if it's called a Memorandum of Agreement on delineation of wetlands and so on. Where does that agreement stand at this time?
    Mr. HUNT. Mr. Chairman and Congressman, we have an agreement here that was signed back in 1994 that's here in Minnesota. We do not have an agreement at the national level between the four signatory agencies, the U.S. Fish and Wildlife, EPA, NRCS.
    Mr. MINGE. But we did have an agreement at one time?
    Mr. HUNT. We had one, you are correct, and it was in force and effect until the 1996 farm bill, and there were a number of things that changed. In fact, my agency name has changed since we entered into the last agreement we have now, and the National Appeals Division was created.
    There were additional provisions for wetland mitigation that you added in the 1996 farm bill, and those are not adequately reflected in the interagency MOA; yes, you're correct.
    Mr. MINGE. Mr. Davis, I'd like to ask you on behalf of the Corps, is there anything that's currently happening to put this agreement back together? Because I know that some of us worked for many months trying to achieve that initial agreement and saw that as a landmark event, that finally we had—it was at least four, maybe five Federal agencies that were agreeing on how we were going to delineate farm wetlands as opposed to having different agencies having different standards and very, very frustrated and upset landowners.
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    Mr. DAVIS. Congressman Minge, I agree with what Mr. Hunt said, at least in part, in that the changes to the 1996 farm bill did bring about some statutory changes that were inconsistent with the approaches that we were taking in 1994.
    However, the national MOA is in effect. The principles behind that MOA, many of the objectives, are still in play. For example, the idea that all Federal agencies use one wetlands delineation manual is still the policy of the Clinton-Gore administration.
    Mr. MINGE. And is this true at the Army Corps as well?
    Mr. DAVIS. Yes, sir.
    Mr. MINGE. And then have you approved any mitigation projects in Minnesota? Are there any that have been approved by the Army Corps within this State?
    Mr. DAVIS. Do you mean mitigation banks or mitigation——
    Mr. MINGE. No, just mitigation itself.
    Mr. DAVIS. I believe there are substantial amounts of mitigation that have been approved in this State. I think last year, the Saint Paul District issued—evaluated about 7,200 permits in the State of Minnesota. All but five of those were issued, and I'm certain that the vast majority of those that were issued had some type of wetlands or compensatory mitigation associated with them.
    Mr. MINGE. And has mitigation banking been approved in Minnesota by the Corps?
    Mr. DAVIS. I think there's about 20 banks, is my understanding, that are operating now within the State of Minnesota. I'm not certain how many of those were actually approved by the Corps of Engineers. Certainly any new banks that have come on line since December of 1995 would have been approved by the Army Corps of Engineers.
    In fact, my colleague here, Mr. Harnack, and the Saint Paul District have entered into an agreement on how mitigation banks are going to be developed and how they're going to be operated. I think it was May 1999, they published some material for the public to look at on mitigation banking in a joint effort between the Corps and the State of Minnesota.
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    Mr. MINGE. One of my frustrations with mitigation banking, it appears it's not really available to farmers because of the economics of it. It's good for developers, but the cost of participation in mitigation banking is virtually prohibited for a farmer.
    And the tales of woe that we hear from farmers is that they give up in frustration in trying to do even mitigation with the Corps. And they may get a permit, but they say the permit is not one that they can even begin to work with, and they just walk away from it.
    And there is a farmer who I believe will be testifying a little later, if your schedule allows you to stay for a couple minutes, and it might be useful to hear his experience. Because this is one of the things that we have struggled with in getting the CREP program and Conservation Reserve off the ground, is people are suspicious of what's going on with some of the other programs we've had.
    Mr. DAVIS. I would agree with you that mitigation banking, being a market-based type of a concept, probably doesn't work as well in the context of the agricultural landscape as it's worked in other places.
    Certainly in Florida and places where people can afford to pay $30,000, $40,000, $50,000 an acre for a credit when you're building a large condominium development, that's working pretty well. And the number of banks has gone up pretty substantially since 1995.
    We are concerned, however, like you, that in the context of the agriculture environment, that it's not affordable. I think we do need to work together to look for opportunities to promote mitigation banking for agriculture uses. I understand that there is a group, an organization, that has done that in some States, but not in Minnesota. And I would like the opportunity to work with you to look into that issue.
    Mr. MINGE. Mr. Chairman, if I may, I'd just like to direct a question to Mr. Hunt again. Is there any suggestion that you would make, Mr. Hunt, as to what could be done to make this mitigation process—assuming that we are sensitive to the conservation and wildlife issues, to make this mitigation process work better among the Federal agencies involved?
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    Mr. HUNT. Mr. Chairman, Congressman Minge, yes, I'd love to stand before you here today—or sit before you today and tell you that everything is well. But as an agency that has to deal with farmers and my employees on a day-to-day basis, there's lots that's being done right in the wetlands areas, but there are a significant number of frustrated farmers; with my agency, with the Corps of Engineers and with the other agencies that deal with wetlands.
    And yes, the suggestion I would have is that we Federal agencies get our act together. At one time under this interagency MOA, we had a single point of contact that farmers could go to. If you had agriculture land, you knew that you could get an answer and you could take action with a degree of certainty that you were in compliance with Federal laws. Obviously, you also had to work with those State laws.
    Mr. Davis and I and others have already had a conversation here today that we've got to get our act together. That's not fair to the farmers to get caught in the middle of differing—Federal agencies having differing requirements.
    When I and my people give a producer a Swampbuster determination and yet I turn them over and say, You now are going to have to go to the Corps to see if you're in compliance with the Clean Water Act and you also have to go to the State to find out if you're in compliance with the Wetlands Conservation Act, that is very confusing to the producers.
    Mr. MINGE. And, Mr. Davis, I understand you are working with Mr. Hunt so we can bring some closure to this type of just procedural frustration that we've been talking about.
    Mr. DAVIS. We have been working at the national level with Secretary Glickman and the Under Secretary of Agriculture very closely since 1993 to give farmers, to the extent we possibly can, a single point of contact and a single answer. And I think we've made some progress.
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    The MOA that we signed in 1994, that you endorsed, has had some very positive effects. It hasn't, frankly, worked out in every State the way that we wanted to. And we're looking at revising it right now, trying to get it back in play. But it has had a positive effect.
    We've trained thousand of NRCS, Corps, EPA, Fish and Wildlife Service employees, got them in a room together, talked about using the same methodologies, required them to use the same methodologies. So in many States, we've had a very positive effect. We're talking to each other; whereas, before 1994, we didn't even know each other's names. So I think it's working pretty well in some regards. We need to improve it and we will.
    Another problem we have is just the basic statutory framework that we are working under has created some problems for us. There's only so far that we can go in administering the Clean Water Act and handing that responsibility over to NRCS, for example, trying to achieve one-stop shopping. There are limits.
    There are clear legal limits on how far we can go and perhaps even how far we should go. And a good example of a problem we've had that resulted from the 1996 farm bill is that it was determined that the NRCS determinations are essentially good forever. We can't go that far under the Clean Water Act.
    And, so, now farmers are faced with one set of rules for USDA programs, we have a different set of rules for the Clean Water Act program. We've made a decision that those determinations are good for 5 years, but we really can't go—we don't believe it's reasonable to go beyond that. So we have some inconsistencies in the laws that drive these two different programs.
    Mr. MINGE. Well, I appreciate that, I appreciate your coming up from Washington. I would urge that, at the national level and here at the State level, that we make every effort to make these programs user friendly in the sense that a user can go or a farmer can go to one office and get answers and not be exhausted by the process itself.
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    Now, this is not to say the answer will always be the answer the farmer is looking for, but at least get a reasonably prompt answer. And I appreciate the fact that we have different committees in Congress, we have different members of Congress, there are different agendas and we don't have in that 70-volume set of U.S. statutes the type of harmony that would exist in a utopian society. But when they say it takes an act of Congress to get something done, that's some hint as to the challenge in the Congressional setting.
    And I would urge that as administrative agencies, you seek ways to try to make these things work as effectively as we can within the existing statutory framework, recognizing that, to a certain extent, Congress is punting to you as Federal civil service and other Federal employees to help make this system work, because some of these issues in the political setting are not being handled as effectively as we would like.
    But we need to work together to make the whole process one that at least the American people can understand and not this incomprehensible situation that they have encountered, I think, with many of their requests for assistance on some of the wetlands disputes that they have experienced.
    I'd like to thank you again for coming out here.
    Mr. DAVIS. Thank you, and I agree with you, and I think there are a lot of successes out there and that we should also look at some of the successes. I think the State and the Corps is trying to work really well together on mitigation banking. The Saint Paul District has issued some State-specific general permits that have streamlined the process in the State of Minnesota.
    And I think one of the things we're really looking at in revisions to this MOA is a recognition that we need to empower the State conservationist, the district engineers and the Corps and the regional administrators at EPA and others to really kind of work locally to lay out the ground rules for their State.
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    We can give them some national policy principles, but if we're very prescriptive, perhaps the overly prescriptive way we were in 1994, it may not work. So our focus now, I think, is really going to be on getting the State people together, letting them work out the arrangements, because they know their work load, they know the talent of their people, they know the natural resources they're dealing with, they know the farmers' issues better than any of us in Washington can ever know.
    So I think our focus is going to be pushing it down and letting them work it out and come up with some statewide agreements.
    Mr. BARRETT. Mr. Gutknecht passes. Mr. Peterson.
    Mr. PETERSON. Yes. I just wanted to clarify, Mr. Chairman, on this issue we're talking about. Apparently, there are some things that the administration can do administratively, and they are proposing a $10-an-acre bonus payment for ten-year contracts and $15 for 15-year contracts and some other 40 percent additional incentive payments for conservation practices that are being cleared through the working group right now, and they are expected to have them in place by April 15.
    So they are making some administrative changes. And I may have misspoke when I said that. Some of the things that they're asking for have to be done legislatively, but there is nothing to do administratively. So I wanted to clear that up.
    Mr. BARRETT. Thank you. I want to thank the panel as well. I think it was excellent testimony, and a lot of good information for the record. We appreciate your taking the time and the trouble to be with us. Thank you. We welcome the next panel, please.
    From Pine Island, MN, Mr. Owen Knutson, president of the Minnesota Association of Soil and Water Conservation Districts. From Alexandria, MN, Mr. David Nomsen, vice-president of governmental affairs, Pheasants Forever. Mr. Sherman Olson, a farmer, Swift County Soil and Water Conservation Board member from Danvers. We also have Mr. Nelson T. French, Friends of the Minnesota Valley from Bloomington. And then Gary Joachim, Minnesota Soybean Association from Claremont. Tom Kalahar, conservation technician, Renville County Soil and Water Conservation District, Olivia. And Mr. David Ward, a soybean farmer from Mapleton, MN. Gentlemen, you may proceed, with Mr. Knutson first.
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STATEMENT OF OWEN KNUTSON, PRESIDENT, MINNESOTA ASSOCIATION OF SOIL AND WATER CONSERVATION DISTRICTS, PINE ISLAND, MN

    Mr. KNUTSON. Thank you, Mr. Chairman and honored Members of Congress. Hello, I am Owen Knutson, president of the Minnesota Association of Soil and Water Conservation Districts. I farm in partnership with my son in southern Minnesota near the town of Pine Island. My daughter-in-law is employed as a legal secretary, and my wife has worked alongside of me for my entire farming career as a partner in the barns and fields.
    We operate a dairy operation of approximately 65 milk cows and all the young stock that go with it, including the steer calves, which are sold as yearling feeders. We have utilized a liquid manure system for upwards of 20 years, whereby we inject the manure using the umbilical cord system. We operate about 700 acres of land cropped to corn, soybeans, alfalfa and a small amount of oats. We have cattle on four sites in this operation.
    As you are aware, I'm sure, conservation districts are a vital link in the delivery system for conservation nationwide. We are the local units of government that are everywhere and available all the time. We have much expertise and adjust our services to the local need. With that in mind, I wish to share some comments today on Federal conservation programs.
    H.R. 4013, just recently introduced and titled ''The Upper Mississippi River Basin Conservation Act of 2000,'' has many interesting components. The term ''sound science'' is very important in all of our conservation actions and we need to always keep it foremost in our planning and implementation.
    Recognition of the need for increased technical assistance at the local level, along with the appropriate funding, is commendable. I applaud the increased level of authorization to 45 million acres for the CRP, 1,075,000 acres for wetland reserve, increased funding for WHIP and EQIP. I'll comment more on these individual programs shortly.
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    The cooperative working agreements certainly need to recognize the expertise of local conservation districts along with other entities. Protecting personal data will make the operation run smoothly, since a program like this is accomplished best with local cooperation on a voluntary basis.
    CRP needs to be a conservation program, not a price support program. With that in mind, I believe that the formulas need to recognize that even in areas where the rent of farmland is high because of production ability, there are cases of land that really ought to be in some sort of set-aside as opposed to being cropped.
    While farmed wetlands are a thorny issue, there may be some cases where they serve us better as conservation buffers rather than poor wetlands or wet cropland. Revisiting that issue would be justified. Adjusting the cost share rates for trees of a larger size in order to better assure survival rates in some of the buffer situations, particularly in the riparian settings, would be a better bang for the buck.
    We at our farm helped a landlord of ours re-enroll some CRP acres and had to plow up some very good sod, work it down, and reseed it. In my estimation, it was a poor use of resources in that the Federal Government had to pay to redo something that was perfectly good. And I had to spend an inordinate amount of time tearing up and reseeding something that I thought was good enough to survive for the duration of the next contract. The continuous, or buffer strip, CRP is very popular and effective. Even the large crop farmers like it.
    One more issue on CRP that I wish to comment on is the issue of income tax based on rental status versus earned income. I believe the CRP is truly a rental situation and should be treated as such. Perhaps someone here today could challenge the IRS and convince them that the first ruling was the appropriate one.
    WHIP is a very popular and effective program that certainly needs more funding. It is embraced by farmers and nonfarmers alike. While I'm more into the commercial side of making a living on the land, I listen to my rod and gun friends, knowing that they appreciate and support the wildlife features of these conservation activities. Their support is critical, in my estimation.
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    CREP in Minnesota is moving forward on the Minnesota River basin. Our local SWCDs are working hard to implement the program and we are also working hard in the Minnesota legislature to secure the proper funding necessary to leverage the Federal dollars. We're optimistic that the State government will share in their appropriate amounts. This program is a wise investment of public dollars in a Federal/State partnership and is well-received.
    EQIP is a cost program for long-term conservation challenges. In designing it, the concepts were great; however, the implementation process could use some fixing. Perhaps some consideration could be given to some sort of short-term contracts. Many constituents are wary of 5- to 10-year contracts with the economy the way it is currently.
    Also, I believe that some consideration ought to be given to the constituent who has a lot of their operation in a proper conservation mode, but needs help to move on to the next step. This is particularly true where an operation has livestock and needs to upgrade to meet the new AFO or CAFO regulations under Minnesota 7020 rules and then falls through the cracks of the EBI guidelines, resulting in a low enough rate to be eliminated from eligibility.
    I believe that this could be corrected by allowing credit for already completed conservation efforts. The shorter term contracts referred to above could be similar to the old ACP program and would help solve many of the less severe problems.
    Many of the Federal programs for conservation have been targeted to specific causes or specific regional areas and have served well. As we move forward into the new century, we need to consider new approaches as well as fixing the old ones.
    I really like the conservation incentives approach whereby a landowner or occupier receives tax credits or payments for doing a good conservation job on their property. This could very well replace the long-standing practice of set-aside or crop subsidy payments.
    It at least ought to run in concert with those older programs, whereby it would reduce the insurance risk and the pollution potential. I further believe this concept ought to be implemented right away instead of waiting for the reauthorization of the farm bill.
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    I believe the time is right to elevate conservation to a much higher level in the eyes of the public. We need to fund the initiatives adequately. We need to utilize the local units of service to the utmost. At the same time, we need to recognize that local control needs to have the freedom to function. All of the mandates, particularly the unfunded ones, have handcuffed and demoralized many of the competent staff and governing boards.
    Mr. Chairman, I will be happy to answer any questions that you may have for me today.
    [The prepared statement of Mr. Knutson at the conclusion of the hearing.]
    Mr. BARRETT. Thank you, sir. Mr. Nomsen.
STATEMENT OF DAVID NOMSEN, VICE-PRESIDENT, GOVERNMENTAL AFFAIRS, PHEASANTS FOREVER, INC., SAINT PAUL, MN

    Mr. NOMSEN. Mr. Chairman and members of the subcommittee, my name is Dave Nomsen, I'm the vice-president of governmental affairs for Pheasants Forever and reside in Alexandria, MN. This testimony is supported today by Pheasants Forever, Ducks Unlimited, the International Association of Fish and Wildlife Agency, Izaak Walton League of America, the National Rifle Association, National Wild Turkey Federation, National Association of Conservation Districts, Trout Unlimited, The Nature Conservancy, The Wildlife Society, Wildlife Management Institute, Delta Waterfowl Foundation, and the Minnesota Waterfowl Association.
    These groups agree on the following key elements for USDA programs critical to natural resource protection, maintenance of viable farming operations and strong rural economies. The Conservation Reserve Program has been one of this Nation's most successful conservation programs. We support efforts to expand CRP to 45 million acres and support CREPs on the continuous CRP buffer initiative.
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    The Wetlands Reserve Program has also been one of the Nation's conservation success stories. We particularly support the very progressive nature of WRP, providing long-term resource protection and support efforts to authorize enrollment of 250,000 WRP acres per year. We also support the Environmental Quality Incentives Program, the Wildlife Habitat Incentives Program and concur that sufficient technical assistance be provided to Natural Resources Conservation Service to effectively help landowners apply farm conservation programs on the ground.
    Recent USDA natural resource inventory data show that we are still falling short on nationwide conservation efforts. We believe that solutions to these problems must protect our natural resources, maintain farm health and productivity.
    Additional investment in nonregulatory incentive-based conservation programs benefit farmers and landowners, offer needed resource protections and may lessen future regulatory actions. We encourage the subcommittee to support CRP expansion and note, Mr. Chairman, that all Members present here today at this hearing are co-sponsors of Mr. Peterson's bill, H.R. 408, to expand CRP to 45 million acres. And for that, we thank you.
    A high priority is needed for future voluntary programs to conserve native grasslands and rangeland and to ensure longer term protection for environmentally sensitive lands due to expire under CRP.
    Being here in Mankato, MN, in the heart of the upper Mississippi watershed, I must mention the opportunity we have to address the growing nationwide problem of hypoxia in the Gulf of Mexico. Programs such as CREPs, like those here in Minnesota and Illinois, and the regular continuous CRP sign-up provide the best nonregulatory incentive-based tools that we have available to counter this growing problem.
    If you look at where the CRP buffer initiative has been successful in many parts of the country, often a wildlife story is the reason behind a successful program. At Pheasants Forever, we have assisted farmers and landowners with 25,000 projects each year now. And one of the things that we do know from our experiences is, is that while farmers and landowners are very concerned about water quality issues, they will act based upon local visible benefits to wildlife.
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    With that in mind, we all support including wildlife field borders, crop wetlands, and wetland restorations in the buffer initiative continuous CRP sign-up. It's especially important that landowners with small, frequently farmed wetlands be allowed to enroll them under the continuous CRP sign-up.
    Programs like CRP and WRP have proven track records, providing soil, water and wildlife benefits in harmony with agricultural production benefiting farmers and landowners. A fully enrolled 45 million-acre CRP, coupled with WRP enrollment of 250,000 acres per year is a cornerstone for providing needed resource protection to ensure the health of our Nation's private farmlands.
    As we look forward to the next farm bill's conservation title, we will need additional needs for resource protection with harmony with agriculture. Ranchers will need assistance through voluntary grassland easements to protect the integrity of ranching operations and provide resource protection for existing grasslands.
    We look forward to working hand in hand with America's farmers and landowners in partnership to ensure the integrity of farming and ranching operations while protecting and enhancing our Nation's resources.
    This concludes my statement, Mr. Chairman. Thank you for the opportunity to appear here today.
    [The prepared statement of Mr. Nomsen appears at the conclusion of the hearing.]
    Mr. BARRETT. Thank you, sir. Mr. Olson.
STATEMENT OF SHERMAN OLSON, FARMER AND SWIFT COUNTY SOIL AND WATER CONSERVATION BOARD MEMBER, DANVERS, MN

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    Mr. OLSON. Mr. Chairman and Congressmen, my name is Sherman Olson. I have farmed in west central Minnesota for 27 years, raising primarily corn and soybeans. My farm operation is currently over 1,800 acres. I've also operated a game preserve for 5 years.
    I have been invited to give testimony on the United States agriculture conservation programs and issues. Since I have enrolled several hundred acres in State and Federal conservation programs, I do have some opinions regarding this.
    For the most part, my experience with Federal conservation programs has been favorable, especially on the local level with the front-line staff. I have 247 acres of filter strips and marginally profitable farmland enrolled in CRP. I feel the CRP is a beneficial program overall.
    As a local Soil and Water Conservation District board member, a complaint I have been hearing on CRP is regarding the expiration of water bank contracts and the question of fairness of keeping the payments at the same rate instead of the new CRP rental rates.
    Also, as a hunting preserve operator, I would like to clarify the status of allowing game preserve operations on CRP acres. I have 13 acres pending enrollment in CREP. It appears to be a beneficial program also. The time lines for CRP and CREP are well-defined, both with the enrollment deadline and the notification of acceptance, unlike the Wetland Reserve Program, in which I have 40 acres enrolled.
    This too is a very beneficial program, but the time lines are not clearly defined and the process can become unreasonably lengthy. The appraisal process can cause delays because they do not use local appraisers, and the program funding process could also be expedited.
    The other conservation programs I have land enrolled in are State or private, and they work very well also. They include RIM, the Minnesota Land Trust, the State cost sharing on grass and waterways and tree plantings.
    As I said, most of my experience with the conservation program has been positive. However, in March 1997, I requested mitigation of some farmed and designated wetlands. This turned into an extremely lengthy and frustrating process. We began with the local and area NRCS offices, who put in their time and expertise on research and site assessments.
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    The next step was the Army Corps of Engineers, where the process seemed to stall. All the work done by the NRCS personnel did not appear to be used by the Corps once they began. There were many phone calls and written correspondence between the Corps and myself. Public notice of our permit application was finally given on March 16, 1998, with a 30-day limitation for comments.
    On May 1, I received copies of the comments and was invited to respond in writing, which I did, as there were several issues I disagreed with. I received a provisional permit dated June 17, 1998, which spelled out conditions for mitigation which were not acceptable to me. I was not given an option to negotiate these conditions.
    Additionally in this letter, I was notified the permit would not become valid until the Minnesota Pollution Control Agency issued a 401 certification for the project. They had until March 16, 1999, to do so. And if they did not certify the permit, it would not become valid.
    At this point, I decided it was pointless to continue the process. It appears that the mitigation process is designed to discourage farmer participation. I would offer these suggestions for improvement: If farmers and landowners are going to be willing to participate, there should be set procedures that all corresponding agencies and applicants are well aware of, the time lines must be more realistic, and the attitude of the Army Corps of Engineers should be less adversarial.
    The first two suggestions could be applied to all Government conservation programs. As a Soil and Water Conservation District board member, I see much potential for conservation participation if the process was less time-consuming and regulations were clearer. It would also be an improvement in program operation if area FSA and NRCS offices were not as short-staffed as they are due to budget constraints.
    Overall, I think the Government conservation programs can be of great benefit for farmers and landowners as well as to the environment. Thank you.
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    [The prepared statement of Mr. Olson appears at the conclusion of the hearing.]
    Mr. BARRETT. Thank you, sir. Mr. French.
STATEMENT OF NELSON FRENCH, EXECUTIVE DIRECTOR, FRIENDS OF THE MINNESOTA VALLEY, BLOOMINGTON, MN

    Mr. FRENCH. Mr. Chairman and members, I'm Nelson French, executive director of Friends of the Minnesota Valley. It's indeed an honor to be invited to appear here to speak with you about the Minnesota River Conservation Reserve Enhancement Program and its relationship to broad public and private efforts under way to improve the ecological health of the Minnesota River while maintaining a vital agriculture economy in the Minnesota River basin. And I think it's appropriate we're here in the Minnesota River Room talking about this today.
    The Friends was incorporated in 1982 as a nonprofit organization. Our focus at the time was the establishment of the Minnesota Valley National Wildlife Refuge, which is a 14,000-acre unit of the National Wildlife Refuge System and is located at the end of the river, at the end essentially of the Minnesota River. So what happens to the basin affects that refuge.
    The Friends envision a healthy lower Minnesota River watershed where an informed citizenry takes personal and group responsibility to ensure that ecological systems and human economic and social systems coexist in a fashion sustainable into the future. We recognize the health of the main stem of the Minnesota River, as it passes through the lower Minnesota River watershed, is very dependent upon land use in the 11 watersheds upriver as well as inputs to the river from the 14 subwatersheds in the lower Minnesota River watershed.
    I think we all here today agree that the public has a right to expect improved water quality in the Minnesota River. And we recognize the Minnesota River will never be a crystal clear running stream as historically, as an ecological river, it was not.
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    However, we are part of a coordinated effort to improve the health of the Minnesota River system. All parties are in agreement that serious degradation in water quality has occurred over the last 150 years with the changes in land use that have occurred. The land use change has resulted in the Minnesota River basin now dominated by two major features.
    First is the vast agricultural landscape which contributes billions of dollars to the economy of Minnesota. Second is the large urban population of the Twin Cities at the mouth of the Minnesota River, where it enters the Mississippi.
    Approximately three-quarters of a million people live in the basin, and nearly two-thirds of this population is within the lower Minnesota River watershed, which is our organization's focus. These two features help explain the poor water quality and fragmentation and loss of wildlife habitat in the Minnesota River basin.
    As you all know, pollutants of concern include bacteria and disease-causing organisms, suspended sediments, excess nutrients, and decaying organic material. These are all compromising the health of this river system and they come from a variety of sources, urban and rural.
    As we are now learning, and I am not the expert on this topic, Mr. Chairman, these pollutants are having an impact as far away as the Gulf of Mexico, and we need to understand these issues more and do our part to take care of it.
    Between 1988 and 1992, the Minnesota River Assessment Project gathered scientific data on the Minnesota River system, much as the Kind legislation proposes for a larger area, and defined a resource at risk. That technical assistance was reviewed by a group called the Minnesota River Citizens' Advisory Committee, a diverse group of 30 individuals selected from across this Minnesota River basin to analyze scientific data and come up with a recommendation for improving water quality, water diversity and the natural beauty of the Minnesota River.
    Our organization was one of many participating in that effort to produce this report, which if I might have this entered into the record now, if that's possible to do that?
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    Mr. BARRETT. Without objection, certainly.
    [The information is on file with the committee.]
    Mr. FRENCH. Thank you. It's entitled ''Working Together: A Plan to Restore the Minnesota River.'' One of my board members, John Hickman, who was co-editor of that report, is here with us in the audience. This report made 10 major recommendations to improve the conditions within the Minnesota River basin. We refer to them as our Ten Commandments for this watershed.
    They are: Restore 200,000 acres of flood plains and riparian areas, restore wetlands, manage drainage ditches and storm sewers as tributaries, improve land management practices, establish a Minnesota River Commission, establish local joint powers agreements in watersheds, improve technical assistance to local governments, engage the general public, and finally, enforce existing laws. These 10 principles have been subscribed to by this broad range of individuals to focus on improving the health of this river.
    In March 1998, representatives from the USDA, the State of Minnesota, Congress, and citizen organizations were pleased to stand on the bluffs of the Minnesota River as Governor Carlson announced the new Conservation Reserve Enhancement Program agreement. This effort has been applauded by all the organizations that participated in the development of the report that I mentioned earlier.
    We know that CREP is a unique opportunity for Minnesota to dramatically improve the quality of the water in the basin and achieve some of the goals in the report. And we really appreciate the constructive partnership that we have with the Federal Government and the support that this committee and Congress have shown to this effort.
    The program allows us to match Federal dollars to put conservation easements on approximately 100,000 acres of property; halfway towards that goal, from the report. Fortunately, Governor Ventura recognized the value of this program by recommending $30 million in his capital budget for this year to fund implementation costs for the CREP program and to match the Federal money available.
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    Although this falls short of the $72.3 million in State funds needed to fully complete the goals of this program, we as supporters would have supported that full funding, but we do have an opportunity to get about halfway there this session.
    Unfortunately, as of today, both the Minnesota House of Representatives and the Senate have approved $20 million and $22 million, respectively, in their two bodies towards this program this year. And we are encouraging them to raise the bar, as you have heard from earlier conversation and testimony.
    In order to complete these easements, we do need to get the funds appropriated now and we do appreciate the efforts that Congressman Minge and others have been making toward getting this done.
    The beneficiaries of this program are many, and I think we all know that landowners who are participating in this get good compensation for their efforts to protect the river. There is reduced crop damage payments for land that is taken out of production that otherwise would have received flood payments. There is going to be up to a 20 percent reduction in the pollutants to the Minnesota River if these lands are set aside.
    But we don't oftentimes think about the other benefits which go beyond this geographical region which include areas like the Minnesota Valley National Wildlife Refuge and its ecosystem, the city of Saint Paul, which has made hundreds of millions of dollars in improvements to the riverfront, this effort will clean up the river as it passes by their community, Red Wing, Lake Pepin, and as we have mentioned earlier, the Gulf of Mexico.
    So we think there are reasons to be optimistic about improving the health of the Minnesota River and we believe that people are working together locally to achieve goals that they have established and agreed to. We are beginning to take the steps required so that we can regain our pride in the Minnesota River and have a swimmable, fishable and unpolluted river.
    This concludes my remarks. I'll be glad to answer any questions you have.
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    [The prepared statement of Mr. French appears at the conclusion of the hearing.]
    Mr. BARRETT. Thank you, sir. Mr. Joachim.
STATEMENT OF GARY JOACHIM, FARMER, REPRESENTING THE MINNESOTA SOYBEAN ASSOCIATION, CLAREMONT, MN

    Mr. JOACHIM. Good morning and thank you, Mr. Chairman. I'm Gary Joachim, a soybean and corn producer from Claremont, Minnesota. Today I am here representing the members of the Minnesota Soybean Growers Association, but I also serve on the board of directors of the American Soybean Association. I appreciate the opportunity to be with you today to discuss conservation issues.
    Soybean growers in Minnesota as well as those across the country have a history of being strong conservationists and good stewards of our natural resources. We support voluntary and incentive-based programs such as the Environmental Quality Incentive Program and the Conservation Reserve Program.
    We believe these programs are very useful tools for helping to protect our most environmentally sensitive lands. We believe these programs should remain conservation- focused, and do not support using the CRP as a supply management program.
    We believe it will be increasingly important in the future for individual producers and their commodity associations to take the initiative in addressing environmental concerns. A leading concern across the country and here in Minnesota is water quality.
    The Minnesota Soybean Growers Association decided to get more involved last year when the American Soybean Association and the National Corn Growers Association sponsored a series of Total Maximum Daily Load, or TMDL, forums in three States, including Minnesota.
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    The purpose of the forum was to establish better communications between the State corn and soybean associations and the State agencies that have responsibility for carrying out the TMDL program. We also wanted to establish the basis for cooperation as TMDLs are developed and implemented for nonpoint sources such as agriculture.
    These forums and our dialog with the Minnesota Pollution Control Agency reinforced our belief that locally driven problem solving will be the key to water quality improvement. Growers want to be a part of that process whether or not TMDLs are driving it.
    I happen to live in the uppermost reaches of the Zumbro River basin and farm in both the Cannon and Zumbro River valleys. Each of these has a number of water quality issues that are being successfully addressed by local watershed organizations. Some of these organizations participated in our TMDL forum. And we plan to continue to work together as TMDL implementation plans are developed over the next several years.
    We are confident that enforceable regulations will not be necessary to accomplish water quality improvements that are needed. As long as growers are included in the decision-making process that lays out who must do what in an impaired watershed in order to reduce pollution, they are likely to voluntarily comply.
    Education, technical assistance and financial incentives will also be essential in ensuring cooperation. And adequate funding for these incentives must be provided by the Federal Government.
    The EPA's proposed TMDL rule does not adequately acknowledge the progress that has been made and that will continue to be made to improve water quality on the basis of cooperation as opposed to regulation. We hope that the TMDL mechanism will be used more to assess and prioritize impaired waters rather than to regulate landowners. The proposed rule should not be finalized until it can be more completely discussed within the context of Clean Water Act reauthorization.
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    I'd like to go back to another program that should be and has been a useful tool for protecting our water sources, the CRP continuous enrollment program. Recently, many of us have considered enrolling fragile land in the continuous sign-up. However, at least in my instance, that has not been as easy as I thought it would be or should be.
    The qualifying criteria for continuous sign-up has been restrictive and unreasonable, in my opinion. For instance, on my own farm, I have a drainage ditch which runs through a quarter section. Except for about 400 feet on one side of the ditch, I have established grass cover that gets anywhere from knee to waist high in the summer.
    A couple of years ago, I went to the NRCS to sign up, or FSA, whichever I went to first, I was informed that my existing cover did not qualify because it lacked diversity. I was told unless I reseeded both sides of the ditch, I would not qualify for the continuous sign-up program. The reseeding would have been costly, time consuming, and the area would have been susceptible to erosion during the reseeding period.
    Because the qualifying criteria was unjustly burdensome, in my opinion, I chose not to enroll this area in the continuous CRP and am continuing at my own expense. I recognize that USDA provides the implementation of the program and not Congress. However, I would encourage the committee to work with the department on developing realistic guidelines and criteria.
    I believe we all want this program to work. However, without good common-sense regulations, this program will not be utilized to the greatest extent possible, and everyone will lose. In closing, I would like to again thank the committee for coming to Minnesota to listen to groups like the Soybean Association, to hear our ideas and concerns regarding these important issues.
    Producers are good stewards and they will continue to be so if we are given the tools to assist us. These much needed tools include voluntary incentive-based programs and good sound technical assistance. With these resources, I know producers will be able to meet the environmental challenges of the future, and we will be able to continue our proud history of good stewardship.
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    Again, thank you, and I would be happy to answer questions when the time comes.
    [The prepared statement of Mr. Joachim appears at the conclusion of the hearing.]
    Mr. BARRETT. Thank you. Mr. Kalahar.
STATEMENT OF TOM KALAHAR, CONSERVATION TECHNICIAN, RENVILLE COUNTY SOIL AND WATER CONSERVATION DISTRICT, OLIVIA, MN

    Mr. KALAHAR. Hi, my name is Tom Kalahar, Mr. Chairman. I'm with the Soil and Water Conservation District in Olivia. Renville County is located in the heart of Minnesota's farming area and it's made up of about 640,000 acres of some of the best farmland in the world. The county is intensively farmed and, according to the 1999 Minnesota Agriculture Statistics, has the following crop production rankings: It's No. 1 in corn, No. 1 in soybeans, No. 1 in green peas, No. 1 in sweet corn and No. 3 in hogs.
    I think it's noteworthy that Renville County is also No. 1 in Reinvest in Minnesota's perpetual conservation easements. And I think that says volumes for the landowners and farmers that occupy Renville County's landscapes.
    I have worked in the conservation field for 21 years in the same field office and I witnessed farm programs come and go. Some good and some—as far as conservation issues are concerned—some poor. Farmers are generally a good group of people that are good stewards and that care about soil, water and wildlife. However, when offered programs by government agencies that offer little or no financial benefits for conservation purposes, they have no choice but to react poorly.
    This was mostly the case with farm programs that were offered during the 1970's and 1980's. I can remember going to USDA landowner meetings where the message was we had to feed a hungry world, we needed to farm as many acres as we possibly could. And there was a fencerow-to-fencerow, road-to-road farming message that farmers were given. And those policies have resulted in some of the current environmental situations that we have in our farming world today.
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    And then in the mid–1980's, a farm program was offered which had some very good conservation programs attached to it; the Conservation Reserve Program was one of those programs. And again, the farmers reacted to the farm program; however, this time they reacted favorably toward the environmental problems that were associated with farming practices.
    The CRP has been a home for those acres that were brought into production in the 1970's and 1980's to satisfy the annual set-aside acre requirements. During that period of time, I witnessed many poor quality farms being purchased by farmers, and they were being purchased by farmers to satisfy the annual set-aside acre requirements. And these acres are now our CRP, our CREP, our Reinvest in Minnesota and WRP acres.
    The problem is, is that the amount of acres converted to cropland back in those days far exceeds the acres that are allowed in the CRP program today. The results are that we have farmers that are losing money trying to farm lands that do not cash-flow unless artificially supported by a USDA payment.
    These marginal acres are producing mostly erosion and water quality problems that we are experiencing throughout the country. We have a vast amount of acres that are excellent cropland and should remain so. However, we have a small percentage of acres, I estimate about 10 to 15 percent in Renville County of the 640,000 acres, that should be retired to a long-term conservation program.
    The farm programs since 1985 have moved in that direction but have fallen far short in accepting the number of acres needed to make a significant impact on the impaired watercourses in the State and the country.
    CRP is a program that's very profitable to the farming community and the citizenship at large. The average American has a high appreciation for the American farmer and wants to help him or her with the struggle to make a living and safeguard the environment.
    We need to expand on these kind of programs that have this kind of public support and show the American people that we as a government can protect our farmers' financial interests and, at the same time, protect the environment.
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    We as conservationists cannot have a meaningful effect on conservation and protecting our natural resources without programs such as CRP. It just isn't in the books. We need to raise the cap on CRPs so we can help farmers financially and make it possible for them to improve the health of our natural resources.
    The Conservation Reserve Enhancement Program, I want to thank you all for passing that. This program will have the greatest positive effect on the agricultural part of the State of Minnesota than any other program in history, bar none.
    As most of you know, the Minnesota River is the most polluted watercourse in the State of Minnesota. It and its tributaries are dead smack in the center of one of the most intense agricultural crop production regions in the world. The Mighty Minnesota, which is our namesake river, is an embarrassment to our State, to the Nation, and to the agricultural community that surrounds it.
    However, thanks to the CREP program, we are going to be able to have a fighting chance as natural resource managers to make noticeable and meaningful improvements to this very troubled and impaired watercourse. We as Americans have all had a hand in making the Minnesota River what it is today. I think we all have a responsibility to help clean it up. And again, it's wonderful to receive these Federal funds in order to do that.
    CREP in Renville County is doing very well. We have 69 applications that are close to approved, with another 84 or 85 pending. The interest of landowners is very high. It is, by far, the most asked about program in our office on a daily basis. CREP has been a popular program because it offers a fair price and it gives the landowners the ability to be able to improve the environment and make it financially possible for them to do that.
    Renville County has a total of 210 perpetual conservation easements. And I've heard lots of people say that farmers are not acceptable to perpetual easements. Well, I think the success of perpetual easements in Renville County shows that farmers will accept long-term easements if the payments are appropriate and the benefits to the public are measurable.
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    Farmers want to show the rest of the nonfarming community that they are good stewards and are moving forward with conservation; however, we as a government must give them the farm programs to be able to continue in this direction.
    One other thing that I'd like to mention is that some of the success of the CREP in Renville County has to go to the well-trained and motivated employees of the Soil and Water Conservation District, the NRCS office and the FSA office. We as government agencies cannot deliver programs if we do not have the people and the training to do so. The present state of employee shortages in the USDA offices is neither acceptable nor logical if we wish to deliver programs and assist farmers.
    In closing, I would like to say we have come a long way in the conservation of our natural resources in the last 15 years. We have some good programs to work with and the response by the farming community has been good. It's my opinion that we cannot have any real or measurable success in conservation of water and soil without programs such as CRP, WRP and CREP. We need to move towards long-term solutions for long-term problems. And farmers are ready to move in that direction. It's up to us to offer them the programs to do so. Thank you all. And I'll answer any questions later.
    [The prepared statement of Mr. Kalahar appears at the conclusion of the hearing.]
    Mr. BARRETT. Thank you. Mr. Ward.
STATEMENT OF DAVID WARD, CORN AND SOYBEAN FARMER, MAPLETON, MN

    Mr. WARD. I guess I've got that on, so you can hear me. I'm David Ward, and I appreciate the chance, Mr. Chairman, to address this body. I farm south of here 30 miles. I have lived there all my life. I'm a producer of food and energy through the raising of corn, soybeans and livestock. I commend you for being here in the field today to hear these comments.
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    The advantage of being at the end of the panel is perhaps I could say ''ditto.'' But I would share with you just a couple perhaps overviews that I might have. In the essence of time, I have made written attachments, which I hope you can find. I understand they are available in front of you here at this time. But I'm going to speak to the environmental issues that are facing farmers today in this region and how our actions may also affect our neighbors.
    I understand that the primary purpose of the hearing today is to address those programs that are presently enjoying the Federal funding. And I want to thank my county—I don't want to rival Renville County here, but Faribault County, as I have consulted with some of the staff to share some of their comments on the present programs.
    And I have referred to attachment A. I do want to note that that is an agency which I would call ''farmer friendly.'' And I want to thank Kevin Beekman and Ruth Sonnek for putting together that summary. I would draw attention to the middle of the first page of attachment A, where they do note the differences in rental rates between counties and also States.
    Also, on the second page of that attachment, there is a comment about funding. And I want to commend those of you from the Federal Government who have funded these programs, and now it's up to the State of Minnesota to come through with our cost share there. Hopefully that may occur today or before the session has ended.
    I do want to also note that there is a summary page there which under the general comments notes, ''The more farmer friendly we can make these programs, the more likely we are to get participation.'' And I would concur with that.
    I do want to note in regard to that, water quality issues here in this area of the State and Nation are usually linked with water quantity. As you know, this land is some of the most productive in the world, and agriculture drainage has greatly enhanced its productivity. Agriculture drainage has also raised questions about possible adverse effects, such as downstream flooding, topsoil erosion, nutrient leaching and stream bank deterioration.
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    Area farmers need to maintain and improve these drainage systems. Some of these are around 100 years old. In this area, as well as in all environmental mega decisions, farmers want to do the right thing but want dictated practices to be based on sound science.
    Attachment B is a brief summary of the research opportunity for Federal dollars to couple with private and State dollars to get some good answers. I or someone else here today or in the future will try to respond to questions you may have. Due to time, I would only note that on the second page of attachment B, there is a brief summary of the initial startup costs for that project, it notes the regional importance and refers to some contact people available.
    I would be remiss if I did not comment on air quality. We feed hogs. Hog facilities can smell. Locating facilities properly helps reduce the chance of offending others. EQIP funds should be expanded to aid farmers in relocation or with odor-reduction equipment.
    The cost for cleanup of abandoned feedlots should also qualify for the cost share funds. I believe that some Federal environmental dollars should be prioritized for research into manure odor reduction that could result in affordable odor remedies.
    The other air quality issue for farmers is emissions, engine emissions. And in this area of environmental concern, farmers in partnership with sound Federal environmental policy and continued product research can provide the solution.
    For example, the improvements on the Mississippi River locks and dams can reduce truck travel. And by using truck and automobile fuels that are blended with agriculture-based renewable products, we can clean up the air, we can increase farmer income, reduce government costs in farm price supports and reduce dependence on foreign fuels. I would have you note attachment C. That tells about some of our blends available today.
    For consideration of future programs, I would suggest that we look at rewarding farmers for volunteer practices that do enhance the environment. Sometimes they are dubbed ''green payments,'' but I'd also caution you not to make such practices mandatory for farmers.
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    We should look at expanding the Conservation Reserve Program acres and other similar programs and consider shorter term easements. We should study the ''flexible fallow'' proposal; that may have a great deal of short-term environmental benefit as well as some commodity price enhancement. Certainly we must remember the more local flexibility that programs are allowed, the better the programs are.
    Before I conclude, I'd ask you to be aware of attachment D. It consists of excerpts from the speech of Secretary Dan Glickman to the National Summit on Private Land Conservation. He talks about the urgency and responsibility of those conservation measures on private land. He and I agree that farmers want to do the right thing.
    I would also note that good profit margins in farming help farmers to avoid taking shortcuts that might challenge the environment; that we want decisions that affect us to be based on good science and not just emotion; that technology, including biotechnology, can improve the environment; and that if practices are mandated by society for the good of society which either increase our costs or reduce potential income for farmers, that society should compensate farmers accordingly. Farmers cannot pass on these costs. Let us work together to promote opportunities to enhance the quality of life. I thank you.
    [The prepared statement of Mr. Ward appears at the conclusion of the hearing.]
    Mr. BARRETT. Thank you, sir. I appreciate especially your attachments that you referred to. They're very helpful, and they do a good job of summarizing what you just shared with us.
    Mr. WARD. Thank you.
    Mr. BARRETT. Nice job. Mr. Olson, I particularly appreciate your positive approach to your work with conservation programs. It's a very positive attitude, I thought. But you did mention perhaps a problem with the Wetland Reserve Program, I believe; your efforts to the appraisal process, was that——
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    Mr. OLSON. That's right.
    Mr. BARRETT. Yes. Could you describe what that problem was or does it continue to be a problem, so forth?
    Mr. OLSON. In our own personal cases, the way I understood it, they hire an appraiser that does it for the whole State. And it took a period of months before he made it up into our area to appraise our property. And I think if they could utilize appraisers in the areas that they're working with, it would expedite the procedure.
    Mr. BARRETT. Do you sense that there's maybe too much fieldwork or paperwork that has to be done before the actual appraisal is made; is that a part of the problem?
    Mr. OLSON. Well, I don't think so, no.
    Mr. BARRETT. OK. Thank you. Mr. Kalahar, you had glowing remarks about your county, Renville County.
    Mr. KALAHAR. I like them.
    Mr. BARRETT. It reminded me of my home county. You said something about 210 perpetual easements in your county. Are these on privately owned land?
    Mr. KALAHAR. Yes, sir, they are. They are in the Reinvest in Minnesota program and total about 7,000 acres. And it was started in 1986. So we've had very great success with that program.
    Mr. BARRETT. In your written testimony, you also said something about, and I quote, ''fallen far short in accepting the number of acres needed to make a significant impact on the impaired water courses in this State and the country.'' Would you embellish that a little, why?
    Mr. KALAHAR. All conservation programs, especially the Reinvest in Minnesota program, we have been underfunded ever since the inception of the program in 1986. They are probably ten to one; for every ten applications that the Soil and Water Conservation District receives, one gets approved. It's been that way ever since the inception.
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    The same way with CRP. We get a lot more people that would like to go to the CRP program that basically just don't qualify or the rental rates are too high in Renville County and they don't get accepted. That's what I meant by that comment, is that we have a lot more acres that need to be put in the programs; however, the programs can't accommodate them.
    Mr. BARRETT. Good testimony. I appreciate it. Mr. Minge.
    Mr. MINGE. Thank you. Mr. French, you spoke at some length about the values of the Conservation Reserve Enhancement Program for not just the Minnesota River drainage, but also areas downstream. Could you amplify on that?
    How do people in Minneapolis and Saint Paul, which is really where your organization is based, benefit from something that's happening, let's say, out towards Ortonville on the western end of the State? Because I think you set up a perception that this is—it's primarily a rural program. And I was interested in your appearing because I identify your group as being an urban-based group.
    Mr. FRENCH. I think for those residents in the Twin Cities urban area who don't take the occasion to recreate in the rest of the basin and wouldn't experience the improvements firsthand, they're going to benefit through increased water quality and improvement in the ecosystem in the Twin Cities region. There is a lot of recreational activity occurring; an increased amount of those recreational activities occurring along the rivers in the Twin Cities.
    I mentioned the economic redevelopment that's occurring in Saint Paul and their focus to get people to the river and put their eyes back on the river. It's going to benefit them immensely to have the Minnesota River basin providing cleaner water to the riverfront in Saint Paul.
    We have, at the Minnesota Valley National Wildlife Refuge, tens of thousands of visitors a year who are bird-watching, taking hikes along the refuge, hiking and biking the trails, as I know you do. For those users of the area, they're going to have a much more enhanced resource to enjoy.
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    As the water quality improves, so will the habitat for wildlife and fishery species. I should mention the fishing that occurs in both the Minnesota and the Mississippi Rivers. A significant increasing activity on those urban river waters is fishing. And all of those participants will benefit.
    Mr. MINGE. Thank you. Mr. Olson, the commitment that you in your testimony reveal to conservation is impressive. And I counted up the number of acres that you farm and the number of acres you have in conservation programs. It certainly appeared to me that you have gone the extra mile as a farmer with respect to conservation.
    And I'm just wondering, having heard the testimony from the Corps and NRCS and then your own experience here this morning, do you have any suggestions as to how we can make some of these frustrations that you've experienced successes rather than frustrations?
    And I guess I'm accepting your experience entirely when it comes to a commitment to conservation, and I would expect you're trying to drain a cattail swamp or what might be nesting areas or areas that would have some other value. Do you see a way to try to work through that experience that you had that led to your frustration with the Corps?
    Mr. OLSON. It seems like the agencies are not working together at all as far as our own case went about it. We started on March 12, 1997, and we offered 24 acres that we were willing to mitigate in exchange for 16.9 acres of farmed wetlands. And these wetlands, some of them were tiled wetlands and the other ones were designated a ''W.''
    And we were looking at just if we would get a two- or three-inch rain in some of those areas, we would lose them and we would have all our input in it. I just didn't like losing the crop all the time.
    And I guess after that, we started April 4, we got into, in 1997, the Fish and Wildlife Service, our local office. They did a COMPER [phonetic] survey and they came up on the site that we were looking to mitigate that it would be, like, 18.5 acres. And I guess it was less than what we originally looked at.
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    But the site we were looking at restoring was a basin. And we thought we'd be making a lot better area than what we were trying—the tile are farmed wetlands and wetlands that were—I mean, we still farmed them, but there was no cover for—one site had cover on it, otherwise, all the other sites, we farmed right through them.
    Mr. MINGE. So you felt you had quite a bit going in terms of the alternatives you were offering?
    Mr. OLSON. Well, we thought we were going to be doing something better for the environment by creating this area that we were looking at.
    Mr. MINGE. Mr. Nomsen, I believe earlier this morning you had a graph or someone with you had a graph showing the wildlife population. Was it the meadowlarks and pheasants, the increased population in CRP land? Could you share that with the committee? I didn't see it in the testimony that you presented and I'm just wondering if that's something that wouldn't be important for all of us to see or to have.
    Mr. NOMSEN. I'd be happy to offer this graph for the record as a part of my testimony. It was put together by Kurt Haroldson of the Minnesota Department of Natural Resources, who had it available this morning when we met. And I think even from sitting back there, you can see the relationship here between pheasants and meadowlarks and the percent of an area that's in CRP and grasslands. And it needs no further discussion. Beyond that, pheasants love CRP.
    Mr. MINGE. I think on the back, there is something Mr. Gutknecht would be interested in.
    Mr. NOMSEN. Well, I'm sure Mr. Gutknecht is interested in the back where we look at a long-term change with quite a reduction in the CRP acreage in the district. And I might conclude by just mentioning that it's our belief that programs like CRP and WRP, that if we can't work together with the agencies and farmers and landowners—we need programs like that as an integral component of any type of an agricultural landscape, regardless of the land values in that particular area.
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    Mr. MINGE. Thank you. I see my time is up.
    Mr. BARRETT. Mr. Gutknecht.
    Mr. GUTKNECHT. Thank you, Mr. Chairman. Back to the issue of CRP. My colleague, Mr. Peterson, was talking about a particular program that affects his area, and particularly in some of our counties. We've got the charts here that demonstrate what had happened because of the formulas that were used.
    Perhaps I'd start with you, Mr. Nomsen. Then I'd like to get a response from some of the actual farmers. One of the ideas that has at least been discussed, I'm not advancing it as necessarily a good idea or a bad idea, but I'd like to get some feedback on the idea. And that is, there is some type of two-tier CRP program that if the farmer agreed to open up the CRP lands for hunting with some kind of permission, at least discuss it with the landowner, they would achieve a certain level of payment, and if they kept hunters off the land, there would be a different level. Any comment on that, Mr. Nomsen?
    Mr. NOMSEN. Mr. Chairman and Congressman Gutknecht, that was an idea that was very, very popular back in 1985 at the onset of the original CRP program. And it's a concept that we widely support. And we agree that an incentive payment for additional public access to those lands has a lot of merit.
    And one of the nice things about it is that the landowner then gets to make a choice as to what he does as far as access to those lands. A number of States around the country have felt that that's so important, that they have kind of stepped up to the plate and offered State programs that essentially do this, places like the South Dakota Walk-in Access Program, the large block program in Montana. Nebraska has a program related to access on CRP that the Chairman is very familiar with. So we do think it's important.
    There's a lot of folks out there that enjoy a little bit of pheasant hunting or bird-watching or just out there enjoying the recreational activities that may be available on CRP lands. And we like the idea of allowing the landowner to be compensated in some way for providing access to those lands.
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    Mr. GUTKNECHT. Wouldn't it be a way to leverage fewer dollars and get a better return, at least that would be one of the items if you gave it to the farm producers? Would you care to comment on that?
    Mr. NOMSEN. That sounds like a reasonable view to me. I think it was pointed out, with the farmer's permission. I think the property rights issue, the access to the farm property, I think you need to have the farmer's permission. If that would be included in there, I think that would be a commendable way of perhaps leveraging more dollars properly.
    Mr. GUTKNECHT. Mr. Olson, maybe you're a bad one to ask about the preserve business, are you?
    Mr. OLSON. I guess we deal with a lot of different customers, but it would all depend on the dollar value. If it's only $2, $3 an acre to myself, then a liability is not worth that to let somebody go in there.
    Mr. GUTKNECHT. Gary.
    Mr. JOACHIM. I've heard that concept, and I think it's very viable on the whole area of incentives to get some of these lands in. The feeling that's been broached to me that—especially on some of these ditches in watercourses, where they—usually they don't—nature isn't convenient, they don't go at 90 degrees through a property line, they go at some sort of an angle.
    And I don't know how much leeway there is to allow for straightening up the remainder of the field so that it's easier to farm. And also, if you think about it, the areas near the ditch when you're working with point rows is exactly the area where you're going to be double-applying. So I think it would be really helpful, both environmentally and to make it more attractive, for us farmers to square these fields out, so that what is left is the most efficient way to farm.
    In fact, that even goes for really small fields that aren't necessarily near a watercourse. They're still going to be the ones most prone to overapplication, because it's hard to make square corners when the field is kitty-corner, it's hard to make square corners.
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    Mr. GUTKNECHT. Mr. Kalahar, any comment?
    Mr. KALAHAR. As far as resource management goes, any time that we can assist a landowner to make it work, this is what we need to do. And sometimes we have rules and regulations that are restricted to the point where it doesn't work, so not only do we lose that initial contact, but the landowner has walked out of the office and doesn't come back. So I think that's a real valid point, that CRP and other programs need to be loosened up enough so we can actually make it more possible in the field.
    Mr. GUTKNECHT. OK.
    Mr. WARD. In regard to the question of hunting and incentives, we happen to manage quite a large area of CRP ground right now. And we have always let anybody hunt those acres and encourage them to do so. And, so, I see that's just a plus for both the farmer and the residents of the area.
    Mr. GUTKNECHT. Well, I see the yellow light is on. Mr. Chairman, I would just like—I do really want to thank the—particularly the farm producers, for their testimony today, because you were both constructive and pointed out some of the problems we still have to continue to work on to try and get the various agencies to work together to make it easier for you to comply with some of these things and to make those sign-ups. And I think if we all work together and are pleasantly persistent about this, we can continue to move hopefully in that direction. I yield back my time.
    Mr. BARRETT. Thank you. Mr. Peterson?
    Mr. PETERSON. Thank you, Mr. Chairman. One of the things that's being apparently proposed by the administration, they're going to do administratively, is allow you to round off your fields. So hopefully that will get taken care of, because that's something we hear about quite a bit.
    Mr. Olson, you have a game preserve or a game farm or hunting preserve or whatever. I thought you said you need it clarified. I thought it had been clarified that you could operate those hunting operations as long as it wasn't fenced. Wasn't that the decision that was made, or did something else happen?
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    Mr. OLSON. Mr. Chairman and Mr. Peterson, through our local FSA office, I have not received any definite clarification.
    Mr. PETERSON. I thought—or there can be fences. I think that's where it's going to end up, is that as long as it's not fenced, I think you're going to be OK. There's a controversy over this whole fenced hunting situation and whether it's CRP inside the fence and so forth, but that's where the real controversy is. But if you don't have a fence around your CRP, I don't think you're going to have a problem, from what I'm hearing from people.
    The other thing I'd like to ask, we were talking about wetlands and the continuous CRP. As I said earlier, I think the reason that wetlands were left out initially was because this was not a conservation program when it first started, it was a supply management program.
    What do you all think about allowing wetlands to be enrolled in the regular CRP program and get paid for those wetland acres, and they would be just put right in with the rest of your property and you can get paid on that? Anybody have any idea—I think the argument is—for some people is they think it's going to take too much demand on the acres and put too much pressure on the program. But I don't know. What do you all think about it?
    Mr. JOACHIM. Mr. Chairman and Congressman Peterson, I realize that the situation as you go into the Dakotas is different because historically, except for the nineties, you have been a lot dryer than we in Minnesota, so we have more of those spots where it's been drained already, whereby your guys have to farm around them.
     I think it may be advantageous if they could, unless you have half an acre there breaking off, why should you not be able to put it into the qualified area? Why shouldn't you be able to put it in the CRP? After all, having the habitat around, you're going to have—you will have the diversity of habitat in that situation; it just happens naturally. I think it would be good for wildlife and everything else.
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    Mr. NOMSEN. Mr. Chairman and Mr. Peterson, I think it's a relative thing and it's a nuisance factor. If we're talking about solving a nuisance problem, I think it's commendable we're sitting here in Minnesota.
    But I know some people in Florida that have farmed humongous—as much land as wetland and then it's farmed. And if you talked about putting the Everglades back in the CRP program, I think you would have some problems. But it's a nuisance factor.
    On my place, I got an acre here and a half an acre there, and you bring in a 24-row planer and try and go around a half-acre piece of wetland, then it's a problem. So I think it's relative.
    Mr. PETERSON. Are we taking questions from the audience?
    Mr. ROEBKE. Chairman and members, I think the most important thing you can do for farmers, and Congressman Peterson brought it up, is the fact to allow us farmers to square up fields under the continuous CRP program. We need to do that on crooked ditches, odd-shaped fields, where areas get double- and triple-sprayed and fertilized and——
    Mr. BARRETT. Would you care to give the committee your name and whom you represent?
    Mr. ROEBKE Alan Roebke, a farmer in Hector, MN. And we're pleased to have Pheasants Forever, Ducks Unlimited, all those. We can put 4 to 5 million acres in the continuous CRP if we could square up fields, odd-shaped fields.
    Mr. BARRETT. Thank you, sir. Thank you. Mr. Peterson, anything further?
    Mr. PETERSON. No.
    Mr. WARD. Yes, Mr. Chairman, Mr. Peterson. I would comment just in regard to, as I did allude to, the drainage system in this area of the State. As we're looking at updating these systems, we're finding that it would be a great advantage if there would be low lying areas adjacent to these drainage systems that could be put into perpetual easements which would allow for settling basins to reduce sedimentation and also to reduce some of the downstream flooding.
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    So I think there would be great advantage to take a look at expanding some of these programs to allow that type of entrance into long-term easements. Thank you.
    Mr. PETERSON. Thank you.
    Mr. BARRETT. Thank you. And I would like to again thank the members of the panel as well. This was excellent testimony, and we do appreciate your sharing it with us. The Chair will seek unanimous consent to allow the record of today's hearing to remain open for 10 days to receive additional material and supplementary written responses from witnesses to any questions posed by a member of the panel. Without objection, it is so ordered. The hearing is adjourned.
    [Whereupon, at 12:35 p.m., the subcommittee was adjourned, subject to the call of the Chair.]
    [Material submitted for inclusion in the record follows:]
Statement of Ron Harnack
    Mr. Chairman and members of the subcommittee, my name is Ron Harnack. I am a resident of Almelund, MN and am the executive director of the Minnesota Board of Water and Soil Resources, BWSR. Thank you for the opportunity to address the Committee. I will take a few minutes to address some issues relating to the following:
    Conservation Reserve Program (CRP), Conservation Reserve Enhancement Program (CREP), Wetland Reserve Program(WRP), Soil Surveys, USDA Technical Assistance, 1Natural Resources Inventory (NRI), Environmental Quality Incentives Program (EQUIP), Wetlands
MINNESOTA'S CROPLANDS
    Minnesota has approximately 23 million acres of cropland most of which is highly productive. This productivity has not been realized without some risk to Minnesota's natural resources. The USDA programs complement Minnesota's programs in an effort to enhance agricultural productivity and natural resources where the social, economic and environmental quality of life creates sustainable communities. The soil conservation needs for Minnesota's 23 million acres of cropland can be assessed as follows:
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    10 million acres of cropland:
     Adequately protected from erosion
     Annual erosion < tolerable rate of soil loss, T
     Need to maintain good management practices
    8 million acres of cropland:
     Eroding at one to two times the tolerable rate of soil loss, T
     Target technical assistance to landowners for practices to protect soil
I112.5 million acres of cropland:
     Eroding > twice the tolerable rate of soil loss, T
     Productive land only if protected with conservation practices
     Targeted cost-share programs for structural conservation practices critical
    2.5 million acres of cropland:
     Marginal lands
     Highly erodable and floodplains
     Should not be farmed
     Targeted for conservation land retirement programs
THE CONSERVATION RESERVE PROGRAM
    The CRP program is a landmark Federal program that provides unheralded benefits for water quality and quantity, soil conservation, and habitat, as well as enhancing farm income and community economic stability. The program also significantly reduces State and Federal costs for disaster assistance and subsidies for crop insurance. Minnesota has enjoyed significant success with CRP over the years. Enrollment approached 1.85 million acres in the early 90's. Today approximately 1.5 million acres remain enrolled. The reduction reflects a greater emphasis on environmental indicators and as well as emphasis on the bidding price. The Environmental Benefits Index (EBI), on a national scale, has increased the program benefits per cost of enrolled acre. However, the shift to EBI has made it economically unfeasible for many Minnesota landowners with previously enrolled acres to re-enroll those acres. The high value of Minnesota cropland seems to be the primary factor in re-enrolling these acres. This has been beneficial as the most environmentally sensitive lands become enrolled rather than normally highly productive, nonerodable or minimally erodable lands. However, due to the higher rental value of cropland, CRP applications on highly erodable and flood prone lands have not been as competitive on a national scale. Increased education efforts by USDA and State agencies and changes in the EBI scoring criteria that recognizes land price relative to bid has helped reduce the problem. I urge the Committee to continue to be mindful of this issue as it will contradict efforts to seek new ways to help cash-strapped farmers and ranchers with CRP.
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    In 1986 Minnesota established the Reinvest in Minnesota Reserve Program (RIM Reserve) to complement CRP and to acknowledge that 2.5 million acres of cropland deserved permanent set aside, not just 10 or 15 years. Since RIM Reserve's inception in 1986, Minnesota has enrolled 94,016 acres (see attached) into permanent easements on marginal lands, buffers and wetland restorations. The RIM Reserve program is permanent and breaks the pay and pay again for cropland that should not be farmed.
    Although the RIM Reserve program and CRP program continue to have successes in Minnesota, more can be done in partnership with Federal, State and local governments and private organizations to achieve common goals and objectives for conservation, habitat and water quality. First and foremost is to continue the Federal investment in CRP by increasing the enrollment cap of CRP to 45 million acres. Only by increasing the cap will there be the ability to help landowners meet conservation needs that are critical to a strong agricultural economy.
    Another issue of concern that could significantly impact landowner interest in the CRP is court interpretations of the self-employment tax code. A recent court decision ruled that farmers must pay a self-employment tax if they receive CRP program payments. The decision could result in farmers owing thousands of dollars by being forced to adjust tax returns as far back as 1996. The IRS is now expected to try to collect self-employment taxes on those returns. A recent article (attached) quoted Roger McEowen, professor of agricultural law at Kansas State University. He said ''I still think the law is clear, and I think the 6th Circuit erred seriously in this decision'''. It is unfortunate that farmers cannot rely on the tax code. Rather than have the farmers, one by one, fight the IRS, it is appropriate for Congress to take swift action to clarify the law. This same tax penalty only applies to those that are self-employed, therefore active farmers bear the brunt of this unreasonable tax policy. Clearly this is an inequitable tax policy that deserves Committee attention.
CRP - THE CONSERVATION RESERVE ENHANCEMENT PROGRAM
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    Minnesota has a CREP initiative for the Minnesota River Basin, a 16,000 square mile watershed that includes 300,000 acres of flood prone lands. In addition to the flood prone lands, the Minnesota River CREP focuses on riparian lands and wetland restorations. The Minnesota River CREP was approved in February 1998 after fifteen months of negotiation. The program finally got underway in the fall of 1998 after another several months of discussion relating to buffer widths. Landowner interest in the program has continued to increase. To date there are over 16,000 acres have been enrolled. The program offers a great opportunity for landowners to enroll these sensitive lands into agreements that extend the benefits of CRP into perpetuity. The 100,000 acres enrolled into CREP will significantly enhance water quality in the Minnesota River as well as in the Mississippi River and downstream to the Gulf of Mexico. Minnesota has invested $10 million of the total $70 million State investment needed to fully implement the Minnesota River CREP and leverage $163,000,000 in Federal funds. Governor Ventura is committed to fully funding the program over the next two years to realize the 100,000 acres. Although the legislature has voiced strong support for CREP, their actions limiting appropriations will make it very challenging to meet the 100,000 acre goal. ''Farm the Best—Buffer the Rest'' and ''Leave a Legacy'' are the program marketing slogans.
    Local units of government in other geographical areas of the State are seeing the benefits of the Minnesota River CREP and are asking for information on how a similar program might be developed in their area of the State. Discussions are beginning in the Red River Valley relating to a 3-State CREP. The current USDA policy that a State will only be permitted one CREP initiative is short sighted and does little to promote further partnerships towards common conservation goals. Flexibility as discussed earlier under CRP is encouraged.
CRP-BUFFERS INITIATIVE
    There have been some indications from USDA that there will be additional incentives offered to encourage landowners to enroll in the buffers initiative. It is important that these changes are implemented in a manner that applies, across the board, to all buffers programs including CREP's. Initial indications from USDA, FSA is that the additional incentives will not apply to existing CREP's without amending the agreements. If it is intended that additional bonus payments should apply to existing CREP's, then the policy should just make it happen and forego the paper shuffle of amending the agreements. However, if the intent is not to authorize the additional buffers bonus for existing CREP's, then advising States to apply for an agreement amendment is a waste of time and effort. I would expect farmers and ranchers in existing CREP States to express the strong dissatisfaction and frustration if the additional buffers incentives do not apply. The Committee is strongly encouraged to ensure that fair and equitable application of the additional buffers incentives is established.
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    CRP and related buffers and CREP have been good for farmers and ranchers, for water quality, for habitat and for the economy of rural Minnesota. However, more can be done to engage State and local government and private organizations. Funding and technical resources are available to a greater extent than currently utilized to develop initiatives that can complement CRP. Continue to increase the flexibility for States to negotiate modifications to certain CRP provisions. Some opportunities include: planting of trees on marginal pasture, enrolling land in CRP that has been in a State program similar to CRP, permitting grazing and haying on CRP for purposes of promoting sustainability of warm season grasses (see attached), and modification of buffer widths to promote habitat as well as water quality. I envision a mini-CREP process that is similar to CREP in that a proposal and commitment of financial and technical resources is needed from the State, but the overall rigor of CREP approval is reduced as is the acreage commitment. In Minnesota, flexibility in buffer width and conservation practices could have substantially greater benefits than is currently realized through CRP and the Buffers Initiative alone.
    A critical issue for continued success of CRP is the limitation of available acres within the cap established for the program. I encourage the Committee to give serious consideration to raising the CRP cap to at least 45 million acres, to extend CREP's for a full term of five years and to enhance the incentives for buffers. In times when farmers and ranchers are economically strapped and States are willing to augment CRP funding, raising of the cap has some urgency.
THE WETLAND RESERVE PROGRAM
    The WRP has also seen considerable success in Minnesota. WRP provides a unique opportunity for landowners to retire marginal agricultural lands containing drained and altered wetlands. Similar to CRP, WRP pays landowners for safeguarding these marginal lands by establishing vegetative cover and restoring and protecting wetlands. However, WRP requires long term easements, rather than 10 or 15 year agreements as with CRP.
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    Much of WRP's success in Minnesota is due to partnerships that has NRCS has developed between the State and private organizations. Just over 50 percent of all WRP easements enrolled in Minnesota are done so under a partnership with Minnesota's RIM Reserve program. The result of this partnership is a permanent easement utilizing the financial and technical resources of both NRCS and BWSR to provide the landowner with the best possible easement program. This Federal/State partnership allows us to more efficiently achieve our common goals and objectives for these two conservation easement programs.
    To date in Minnesota, WRP has enrolled approximately 20,000 easement acres. NRCS estimates that approximately 10,000 acres of wetlands will be restored on those acres. Of that, approximately 7,800 easement acres were done so under the RIM/WRP partnership. In the partnership, approximately 230 drained wetlands have been enrolled and their restoration will result in approximately 3,210 wetland acres.
    There continues to be more landowner demand than for restoring wetlands than there are financial and technical resources available. Increased allocation of these resources to WRP would significantly benefit the wetland restoration efforts in Minnesota.
SOIL SURVEYS AND GEOGRAPHIC INFORMATION SYSTEMS
    The BWSR, NRCS, University of Minnesota and SWCD's continue to work together to complete soil surveys in Minnesota, including digitization. Accurate and user-friendly soil survey information is often the foundation of effective conservation assistance. Government and the private sector use soil surveys extensively. It is important to remain dedicated to completion of statewide coverage and digitization of soil survey data.
    Soil survey information is essential for everything we do with the land, including the design of water quality and soil conservation practices and preparing plans for CRP enrollees. A survey of GIS users by the University of Minnesota finds that soils information is the number one data need. Although we are making progress on producing digital soils information, the lack of uptodate basic soils information for many Minnesota counties is limiting our ability to provide what users are requesting. Twenty-three counties lack up-to-date soil surveys. Those counties are willing to provide 50 percent of the funding and the State of Minnesota is also willing to provide funding, yet we are limited by the lack of NRCS staff to significantly staff the effort. We have employed private sector soil scientists in an effort to overcome the shortage of NRCS staff. In our experience, private sector soil scientists work well on special surveys and as support to larger soil survey efforts. However, to undertake a major multicounty inventory of soils, we have not a found an acceptable replacement for NRCS leadership. To that end, I strongly support funding to the NRCS to complete the inventory of Minnesota soils so that digital products such as online WEBbased soil surveys can be produced and be accessible to farmers and ranchers.
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    In addition local, State and Federal agencies have been working together to develop common protocols for digitizing conservation land, as well as exploring new ways to use GIS for reporting of program outcomes. Application of GIS technology holds great opportunity to improve planning, delivery and reporting of conservation on public and private lands. These efforts need to be given appropriate priority and funding to achieve timely results.
USDA TECHNICAL ASSISTANCE
    Technical assistance from NRCS has continued to decline year after year, yet USDA and EPA are demanding more and more of farmers and ranchers year after year. There are two elements to technical assistance. The first is the day-to-day assistance to the farmers and ranchers. The second is the specialized technical assistance to support the States and districts and to provide training that enhances State and district capacity. The capability of NRCS to serve both these needs has diminished. I believe that this decline of technical assistance to the farmers and ranchers can be reversed through unique partnerships between NRCS, the State and the districts. The States and districts have proven they are up to the challenge of providing quality and timely technical assistance to farmers and ranchers. This can be significantly enhanced through USDA technical assistance grants to States that would be matched by State and district resources. The focus of NRCS would then shift to specialized technical assistance and training for State and district staff. This approach results in significantly greater capability and capacity for the State and districts. It also realizes a sharing of costs and establishes a highly specialized ''state of the art'' capability within NRCS to support the State and districts as well as providing quality training. I would encourage the Committee to give this consideration during the budget deliberations. A pilot program in a few States may provide the necessary evaluation for future consideration.
NATURAL RESOURCES INVENTORY (NRI)
    The NRI is a significant resource that helps assess the ''State of natural resources'' on a regional, State, and national scale. The last NRI information has only recently been available to resource managers. This information can help resource managers target and prioritize areas of concern and the allocation of financial and technical resources. NRCS is significantly under-staffed and unable to meet the growing assistance requests for NRI.
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    A limitation of the NRI data is the inability to apply it on a county or sub watershed basis. I have a particular interest in partnering with USDA to establish county level reliability of the information. Minnesota's soil and water conservation districts, watershed districts, and counties stand at the forefront of locally led conservation. It is important that there is an ability to provide information on the status of their resources and related trends.

ENVIRONMENTAL QUALITY INCENTIVES PROGRAM (EQIP)
    Overall, the Environmental Quality Incentive Program works quite well. NRCS has done a good job of implementation. The change to a competitive EQIP application has been beneficial in that the funds are awarded to applicants who have done their homework with their local partners. The establishment of priority areas has targeted the available resources to areas that should achieve a greater return on the investment. However, this approach does leave many areas of the State without the resources to address their local water quality priorities. The EQIP process established locally led teams to assess the resource needs and prioritize actions to address those resource needs. In many instances this process duplicated existing processes of districts and counties. We have suggested integrating the processes at the local level through the local water management efforts of counties and districts. I feel that we are achieving some degree of success in establishing a process that is effective and efficient by integrating the EQIP local work groups with the local water management (planning and implementation) teams. This would hopefully lead to even greater coordination and, ultimately, integration of State and Federal financial assistance programs. We still have a long way to go. However, if the purpose of the Federal efforts is to support local priorities, then such an integrated process should be natural evolution in the delivery of Federal assistance.
    There continues to be a focus on feedlots with more than 50 percent of the funds going to animal agriculture operations. This targeting tends to be driven more by emotion than by resource need. Recent assessments of pollution loading in Minnesota reveals that soil erosion and sedimentation of rivers, streams, and lakes is significantly greater than that caused by feedlots. However, since the regulatory agencies continue to put emphasis on feedlots, then out of necessity, the financial and technical assistance programs follow feedlots. Clearly, our shared vision is to enhance water quality and other natural resources while enhancing agriculture. Unfortunately, we are not putting our collective resources where we will most effectively and efficiently realize that shared vision. There may be benefit in providing flexibility that would permit EQIP funds to be allocated to the projects that achieve the greatest environmental benefit, whether or not they are feedlots. A watershed approach would provide the framework for judging the extent and degree of flexibility that would be authorized. It's clear that ''one size does not fit all''. Minnesota has steep slopes in the southeast, flat to rolling prairie in the southwest, forests and lakes in the northeast, the lakebed of the Red River that flows north, and an ever-expanding urbanization in the metro areas. We need flexibility in the Federal programs to achieve most effective and efficient use of the resources.
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WETLANDS
    The regulation of wetlands in Minnesota has, at times, been very frustrating for landowners. In many instances the landowner is caught between regulatory agencies that have differing rules and wetland delineation processes. Minnesota has taken several steps to address this problem through coordination with other State agencies and with the Corps of Engineers (Corps). Recent legislative revisions to State wetland processes and modifications to the Corps procedures to align with the State changes, have substantially simplified wetland regulations. Landowners have one application and one process that are acceptable to the agencies. Although the landowner may still have more than one permit to secure in some instances, the agencies do coordinate the review and field assessments of the project so that the landowner is not caught in the middle of the regulatory process.
    However, there are continuing problems between the Corps responsibilities under the Federal Clean Water Act and USDA application of Federal Farm Program rules. Differences in delineation and mitigation and lack of communication between agencies have left some landowners not knowing which way to turn. Since there is not currently an official memorandum of agreement between EPA, USDA and the Corps, Minnesota's Interagency Wetlands Team has taken on the task of developing a State-Federal wetland memorandum of understanding that will help minimize problems for landowners by establishing standards and protocols for local, State and Federal agency coordination. I would encourage the Committee to review the Federal policies and procedures relating to wetlands and attempt to sort out the appropriate roles and responsibilities at the Federal level so that wetlands are protected and landowners are treated in a consistent, equitable and fair manner.
     
Statement of Owen Knutson
    I am Owen Knutson, president of the Minnesota Association of Soil and Water Conservation Districts. I farm in partnership with my son in southern Minnesota near the town of Pine Island. My daughter-in-law is employed as a legal secretary and my wife has worked along side of me for our entire farming career as a partner in the barns and fields. We operate a dairy of approximately 65 milk cows and all of the young stock that go with it, including the steer calves, which are sold as yearling feeders. We have utilized a liquid manure system for upwards of twenty years, whereby we inject the manure using the umbilical cord system. We operate about 700 acres of land cropped to corn, soybeans, alfalfa and a small amount of oats. We have cattle on four sites in this operation
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    As you are aware, I'm sure, conservation districts are a vital link in the delivery system for conservation nationwide. We are the local units of government that are everywhere and available all the time. We have much expertise and adjust our services to the local need. With that in mind, I wish to share some comments today on Federal conservation programs.
    H.R. 4013, just recently introduced and titled ''Upper Mississippi River Basin Conservation Act of 2000'' , has many interesting components. The term ''sound Science'' is very important in all of our conservation actions and we need to always keep it foremost in our planning and implementation. Recognition of the need for increased technical assistance at the local level, along with the appropriate funding, is commendable. I applaud the increased level of authorization to 45,000,000 acres for the CRP, 1,075,000 acres for wetland reserve, increased funding for WHIP and EQIP. I'll comment more on these individual programs, shortly. The cooperative working agreements certainly need to recognize the expertise of local conservation districts along with other entities. Protecting personal data will make the operation run smoothly, since a program like this is accomplished best with local cooperation on a voluntary basis.
    CRP needs to be a conservation program, not a price support program. With that in mind, I believe that the formulas need to recognize that even in areas where the rent of farm land is high because of production ability, there are cases of land that really ought to be in some sort of set aside as opposed to being cropped.
    While farmed wetlands are a thorny issue, there may be some cases where they may serve us better as conservation buffers rather than poor wetlands or wet cropland. Revisiting that issue would be justified. Adjusting the costs share rate for trees of a larger size in order to assure a better survival rate in some of these buffer situations (particularly riparian settings) would be a better bang for the buck. We helped a landlord of ours reenroll some CRP acres and had to plow up some very good sod, work it down , and reseed it. In my estimation it was a poor use of resources in that the Federal Government had to pay to redo something that was perfectly good and I had to spend an inordinate amount of time tearing up and rseeding something that I thought was good enough to survive for the duration of the next contract. The continuos (or buffer strip) CRP is very popular and effective. Even the larger crop farmers like it. One more issue on CRP that I wish to comment on is the issue of income tax based on rental tax status versus earned income. I believe the CRP is truly a rental situation and should be treated as such. Perhaps someone here today can challenge the IRS and convince them that the first ruling was the appropriate one.
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    WHIP is a very popular and effective program that certainly needs more funding. It is embraced by farmers and non-farmers alike. While I'm more into the commercial side of making a living on the land, I listen to my rod and gun friends knowing that they appreciate and support the wildlife features of these conservation activities. Their support is critical, in my estimation.
    CREP in Minnesota is moving forward on the Minnesota River basin. Our local SWCD's are working hard to implement the program and we also are working hard in the Minnesota legislature to secure the proper funding necessary to leverage the Federal dollars. We are optimistic that the State government will share in their appropriate amounts. This program is a wise investment of public dollars in a Federal/State partnership and is well received.
    EQIP is a cost share program for long term conservation challenges. In designing it the concepts were great, however the implementation process could use some fixing. Perhaps some consideration could be given to some sort of shorter term contracts. Many constituents are wary of 5 to 10 year contracts with the economy the way it currently is. Also I believe that some consideration ought to be given to the constituent who has a lot of their operation in a proper conservation mode, but needs help to move on to the next step. This is particularly true where an operation has livestock and needs to upgrade to meet the new AFO or CAFO regulations (or Minn. 7020 rules) and falls through the cracks of the EBI guidelines resulting in a low enough ranking to be eliminated from eligibility. I believe that this could be corrected by allowing credit for already completed conservation efforts. The shorter term contracts referred to above could be similar to the old ACP program and would help solve many of the lesser severe problems.
     Many of the Federal programs for conservation have been targeted to specific causes or specific regional areas and have served well. As we move forward into the new century, we need to consider new approaches as well as fixing the old ones. I really like the conservation incentives approach whereby a land owner or occupier receives tax credits or payments for doing a good conservation job on their property. This could very well replace the longstanding practice of set aside or crop subsidy payments. It at least ought to run in concert with those older programs whereby it would reduce insurance risk and pollution potential. I further believe this concept ought to be implemented right away, instead of waiting for the reauthorization of the farm bill.
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    I believe the time is right to elevate conservation to a much higher level in the eyes of the public. We need to fund the initiatives adequately. We need to utilize the local units of service to the utmost. At the same time we need to recognize that local control needs to have the freedom to function. All of the mandates, particularly the unfunded ones, have handcuffed and demoralized many of the competent staff and governing boards. I will be happy to answer any questions you have for me today.
     
Testimony of Tom Kalahar
    Renville County is located in the heart of Minnesota's farming region and is made up of 640,000 acres of the best farmland in the world. The county is intensively farmed and according to the 1999 Minnesota Agricultural Statistics has the following crop production rankings:No. 1 in corn production; No. 1 in soybean production, No. 1 in green pea production; No. 1 in sweet corn production and No. 3 in hog production. It is also noteworthy that Renville County is No. 1 in perpetual State of Minnesota conservation easements.
    I have worked in the conservation field for 21 years and have witnessed farmers reactions to farm programs. Farmers generally are a good group of people who care about the water, soil and wildlife. However, when given programs by USDA that offer little or no financial benefits for conservation, they have no choice but to react poorly. This was mostly the case with the farm programs offered throughout the 1970's and early 1980's. I can remember going to USDA landowner meetings where the message was that we had to feed a hungry world and that we could not grow enough grain to supply this demand. Landowners were encouraged to plant fencerow-to-fencerow, road-to-road, and to bring as much land into production as possible. These policies have resulted in the current environmental problems facing this State, which can be directly linked to crop and livestock, production.
    In the mid 1980's a farm program was offered which had some very good conservation programs. One of these programs was the Conservation Reserve Program (CRP). Again farmers reacted, but this time in a positive direction, towards improving the environmental problems associated with farming and farm practices. CRP has been a home for those marginal crop acres, which were brought into production in the 1970's and 1980's to satisfy annual set aside acre requirements. I witnessed many poor quality farms being purchased by farmers so that they would have enough poor acres to satisfy their annual set-aside requirements. These acres are now our CRP, CREP, RIM and WRP acres. The problem is that the amount of acres converted to cropland back in those days far exceeds the number of acres allowed into the CRP program today. The results are that we have farmers losing money trying to farm land that do not cash flow unless artificially supported by a USDA payment.
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    These marginal acres are also producing most of the erosion and water quality problems that we are experiencing throughout the country today. We have a vast amount of acres that are excellent cropland and should remain in production. However, we have a small percentage of acres (I estimate 10–15 percent of Renville County) that should be retired to a long-term conservation program. The farm programs since 1985 have moved in that direction, but have fallen far short in accepting the number of acres needed to make a significant impact on the impaired water courses in this State and the country. CRP is a program that is very popular with the farming community and the citizenship at large. The average American has a high appreciation for the American farmer and wants to help him(her) with the struggle to make a living and safeguard the environment. We need to expand on those programs that have this kind of public support and show the American public that we as a government can protect our farmers financial interests and the environment at the same time. We as conservationists cannot have a meaningful effect on conserving and protecting our natural resources without programs such as CRP. Please raise the cap on CRP so that we can help our farmers financially as well as make it possible for them to improve and protect the health of our Nation's natural resources.
    Conservation Reserve Enhancement Program. Thank You! This program will have the greatest positive effect on the agricultural region of the State of Minnesota of any program in history. As most of you know, the Minnesota River is the most polluted watercourse in the State of Minnesota. It, and its tributaries, are dead smack in the center of one of the most intense agricultural crop production regions of the world. The Mighty Minnesota, which is our namesake river, is an embarrassment to the State, to the Nation, and to the agricultural community that surrounds it. However, thanks to the CREP program, we have a fighting chance as natural resource managers to make noticeable and meaningful improvement to this very troubled and impaired watercourse. We as Americans have all had a hand in the degradation of rivers like the Minnesota. It's wonderful to receive Federal funds to help clean it up.
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    CREP in Renville County is doing well. As of this writing, sixty-nine CREP applications have been accepted protecting 2,031 acres of marginal and environmentally sensitive cropland. Another 85 applications are pending (landowners have shown enough interest that we have compiled application paperwork and developed worksheets for eligible acres and payment for them.) Landowner interest is high. We receive inquires about the program daily and it is by far the most asked about program in our office today.
    CREP has been a popular program here because if offers a fair payment for acres offered into the program and it allows landowners to be able to afford to the do the right thing. For years farmers did not have conservation options to choose from. They had to choose between farming the acres and hoping for a profit or letting those acres sit idle with no hope of a profit. With programs like CREP we can offer a good choice and landowners have proven they will choose the CREP program over trying to farm land that does not cash flow.
    Renville County has a total of 210 perpetual conservation easements to date. Farm group leaders, politicians, and bureaucrats have told me that farmers will not accept perpetual easements. I think the success of perpetual easements in this county shows that farmers will accept long-term easements if the payments are appropriate and the benefits to the public are measurable. Farmers want to show the nonfarming community that they are good stewards and are moving forward with conservation. However, we as a government must give them the farm programs to be able to continue in this direction.
    Some of the success of the CREP in Renville County has to go to the well-trained and motivated employees of the SWCD, NRCS and FSA offices. We as government agencies cannot deliver programs if we do not have the people and the training to do so. The present State of employee shortages in the USDA offices is neither acceptable nor logical if we wish to deliver programs and assist farmers.
    In closing, I would like to say that we have come a long way in the conservation of our natural resources in the last 15 years. We have some very good programs to work with and the response by the farming community has been good. However, we need to increase efforts to conserve and protect our natural resources. It is my opinion that we cannot have any real or measurable success in conservation of water and soil without programs such as CRP, WRP and CREP. We need to move towards long term solutions for long term problems. Farmers are ready to move in that direction. It is up to us to offer them the farm programs to do so.
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Testimony of Gary Joachim
    Good morning. I am Gary Jachim, a soybean and corn producer from Claremont, MN. today I am representing the members of the Minnesota Soybean Growers Association, but I also serve on the board of directors for the American Soybean Association.
    I appreciate the opportunity to be with you today to discuss conservation issues. Soybean growers in Minnesota as well as those across the country have a history of being strong conservationists and good stewards of our natural resources. We support voluntary, incentive-based programs such as the Enviromental Quality Incentive Program and Conservation Reserve Program.
    We believe these propgrams are very useful tools for helping to protect our most environmentally sensitive lands. We believe these programs should remain conservation focused and do not support using the crp as a supply management program.
    We believe it will be increasingly important in the future for individual producers and their commodity associations to take the initiative in addressing environmental concerns. A leading concern across the country, and here in Minnesota, is water quality.
     The Minnesota Soybean Growers association decided to get more involved last year, when the american soybean association and national corn growers association sponsored a series of tmdl forums in three States, including Minnesota. The purpose of the forums was to establish better communication between the State corn and soybean associations and the State agencies that have responsibility for carrying out the tmdl program. We also wanted to establish the basis for cooperation as tmdls are developed and implemented for nonpoint sources like agriculture.
    The forums, and our dialog with the Minnesota Pollution Control Agency (MPCA), reinforced our belief that locally driven problem solving will be the key to water quality improvement. Growers want to be a part of that process, whether or not tmdls are driving it. I live in the cannon river basin, which has a number of water quality issues that are being successfully addressed by local watershed organizations. Several of these organizations participated in our tmdl forum, and we plan to continue to work together as tmdl implementation plans are developed over the next several years. We are confident that enforceable regulations will not be necessary to accomplish the water quality improvements that are needed. As long as growers are included in the decision making process that lays out who must do what in an impaired watershed in order to reduce pollution, they are likely to voluntarily comply. Education, technical assistance and financial incentives will also be essential in ensuring cooperation, and adequate funding for these incentives must be provided by the Federal Government.
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    EPA's proposed TMDL rule does not adequately acknowledge the progress that has been made, and that will continue to be made, to improve water quality on the basis of cooperation, as opposed to regulation. We hope that the tmdl mechanism will be used more to assess and prioritize impaired waters, than to regulate landowners. The proposed rule should not be finalized until it can be more completely discussed within the context of clean water act reauthorization.
    This leads me back to another program that should be a useful tool for protecting our water sources. The crp continuous enrollment program. Recently many of us have considered enrolling fragile land in the continuous sign-up. However, at least for me that has not been as easy as I had thought it would be, or should be.
    The qualifying criteria for continuous sign-up has been restrictive and unreasonable. For instance, on my own farm, I have a drainage ditch which runs for half- mile through the center of a quarter of a section. Except for 400 feet on one side of the ditch I have grass cover that gets from knee to waist high. When I went to nrcs I was informed my cover did not qualify because it lacked diversity. I was told unless I re-seeded both sides of the ditch I would not qualify for continuous sign-up. The re-seeding would have been costly, time consuming and the area would have been susceptible to erosion during the re-seeding period. Because this qualifying criteria was unjustly burdensome in my opinion, I choice not to enroll this area in the continuous crp and am continuing at my own expense.
    I recognize that usda provides the implementation of the program not Congress. However, I would encourage the committee to work with the department on developing realistic guidelines and criteria. I believe we all want this program to work. However, without good common sense regulations, the program will not be utilized to the greatest intent possible and everyone loses.
    In closing, I would like to again thank the committee for coming to Minnesota to listen to groups like the soybean association, to hear our ideas and concerns regarding these important issues. Producers are good stewards and they will continue to be so if given the tools to assist them. These much needed tools include voluntary, incentive-based programs, and good sound technical assistance. With these resources, I know producers will be able to meet the environmental challenges of the future, and we will be able to continue our proud history of good stewardship.
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    Again thank you for allowing me to particpate in this hearing. At the appropriate time, I will be happy to answer any questions the committee might have.
     
Testimony of Gene Hugoson
    Mr. Chairman, committee members, my name is Gene Hugoson and I serve as Commissioner of the Minnesota Department of Agriculture. On behalf of Governor Jesse Ventura and our State's agricultural community, I want to thank you for coming to Minnesota and giving us an opportunity to share our thoughts with you.
    One of the most pressing issues for agriculture in Minnesota and other States is the balance between farming and the environment. Too often this issue is portrayed as a tug of war between one group that wants to farm and another group that wants to protect our natural resources. I want to state emphatically that this is a false distinction. I know that a great majority of those who farm in this State also care deeply about our environment.
    Farmers' dedication to protecting our natural resources is clearly evident when you consider the progress we have made in cleaning up the Minnesota River. In 1992, Minnesota set a goal of making the river safe for fishing and swimming within 10 years—quite an ambitious goal, considering the river was polluted over the course of a century or more.
    There have already been some noteworthy success stories coming from the agricultural sector. For example, there's the Federal Conservation Reserve Program and the State's Reinvest in Minnesota program, which have helped encourage farmers to set aside more than a million acres of environmentally sensitive land. Likewise, the Conservation Reserve Enhancement Program has taken nearly 14,000 acres of the most sensitive farmland out of production in the past year.
    Farmers also are taking advantage of cost-share programs designed to help them implement agricultural best-management practices (or Ag BMPs). These programs provide farmers with partial-cost grants and loans to implement practices such as reduced tillage of fields, building of grass waterways and other erosion control structures, and upgrading or repairing of animal waste management structures.
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    Six years ago, the Minnesota Department of Agriculture formed its Ag BMP loan program to help address water quality issues at the local level. To date, the MDA has disbursed $26.6 million in loans, funding more than 2,400 projects statewide and 1,000 environmentally friendly projects just within the Minnesota River basin.
    All this work is paying dividends. In some areas, farmers have managed to reduce soil erosion by more than 90 percent through conservation tillage. On a larger scale, independent studies conducted by the University of Minnesota and the Minnesota Pollution Control Agency showed the sediment washing off farmlands into the Minnesota River has dropped by 25 percent in the past decade.
    Clearly Minnesota's farmers recognize the importance of protecting natural resources for future generations, and even during periods of economic difficulty they look for ways to make their farms more environmentally friendly. As good conservationists, farmers also recognize the need for sensible environmental regulations. However, many Minnesota farmers are concerned about certain aspects of the Environmental Protection Agency's increased focus on regulating livestock operations.
    States are now being required by EPA to implement programs or regulations to eliminate non-point source pollution and manure discharge from farmland. While this is a worthy goal, there has been very little discussion of exactly what sort of financial assistance will be available for farmers who need to make changes to their operations. With today's low commodity prices and narrow profit margins, this is an important consideration.
    Our goal is to help producers comply with environmental requirements, but we also realize that regulations can sometimes place crippling burdens on those being regulated. With today's depressed farm economy, profit margins are either non-existent or razor thin. That means many producers will have great difficulty finding a way to comply with these EPA requirements and remain in business.
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    While much of the focus among Federal and State policymakers has been on how to improve the prices farmers get for their products, we also must pay attention to the other side of the ledger. We need to be sure that Federal and State regulators are not adding unnecessary or excessive costs to the farmer's balance sheet.
    We put the future of our livestock industry at risk if we ask farmers to shoulder the cost of complying with these new environmental regulations without offering a financial assistance strategy. As rough as things are now for some rural communities, the picture would become a whole lot worse without our livestock industry. Animal agriculture comprises half of Minnesota's total agricultural economy, with dairy, pork, poultry and other forms of livestock production bringing in more than $8 billion in farm cash receipts each year. Furthermore, livestock production adds value to our corn, soybeans and other feed crops. That is why we believe it is important that the Federal Government assist in developing a strategy for helping farmers get into compliance.
    Minnesota is currently revising its State feedlot rules in response to pressure from EPA on States to more tightly regulate feedlots. We've done some initial estimates on what it will cost our farmers to comply with the regulations that have been proposed so far, and the estimates have shown that in order to comply with our new regulations livestock producers will have to put out close to a quarter of a billion dollars over the next 10 years. That's a lot of money no matter how you count it, and under present economic conditions, it's hard to imagine that the farm community will be able to bear this cost on its own without a mass exodus from the industry.
    There are two things I would ask the committee to consider in order to help farmers in Minnesota and other States.
    First, pay close attention to what EPA is doing and how much pressure they are placing on States to mandate changes. It is particularly important to watch how much time is allowed for coming into compliance, and whether the agency takes into account the fragile agricultural economy. As I have said before, we understand the need for sensible regulation, but we do not want to see unreasonable expectations placed on an already troubled farm sector.
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    Second, I would ask the committee to look for ways to help us get financial and technical assistance to our producers who need to make changes. We know there are many farms that will need to make changes to comply with the new requirements. Our State will be looking for ways to give technical and financial assistance to producers to help them make those changes. I would ask that this committee do the same, possibly by stepping up USDA's role in providing technical and financial assistance to American farmers.
    There are a number of possibilities for Federal financial assistance, including a redirection of existing resources or a cooperative effort with States through block grants or other strategies. No matter what the tools that are chosen, the end goal must be to find a way to help producers make the needed changes without incurring a debt load that amounts to a financial death penalty.
    One additional factor to consider is the question of competitive ability. Farmers in Minnesota and other States are increasingly affected by global competition. We no longer look across the border to measure ourselves against States such as South Dakota, Iowa or Nebraska. We have to look at what is happening in Brazil, Canada, Argentina and Australia to see what our competitors are doing.
    One example of where we need to keep an eye on the competition is in the transportation infrastructure. Right now, the quality of our transportation systems—specifically our river transportation system—is one of our competitive advantages. However, competing nations are making major upgrades to their water transportation systems and unless we take steps to maintain our system and update it when necessary, we risk losing this important advantage.
    In that spirit, State and Federal Government should always be mindful of the effects our regulations—environmental or otherwise—have on the ability of our farmers to compete with their counterparts in other, less-regulated countries. This is not to say that we should not be taking reasonable steps to protect our environment. Rather, we have to be sure that we set reasonable timetables for complying with reasonable regulations while not adding undue burdens to producers.
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    In closing, let me say that all Minnesotans—farmers or not—have an interest in improving our water quality. We support sensible environmental regulations, even if they require some changes in the way we farm. However, we cannot expect farmers to bear the cost alone. I invite the committee to work with us at the State level to develop joint strategies for helping farmers meet the expectations we are placing on them.
     
    "The Official Committee record contains additional material here."