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House of Representatives,
Subcommittee on Forestry,
Resource Conservation, and Research,
Committee on Agriculture,
Washington, DC.

    The subcommittee met, pursuant to notice, at 9:30 a.m., in room 1300, Longworth House Office Building, Hon. Larry Combest (chairman of the subcommittee) presiding.
    Present: Representatives Barrett, Pombo, Lucas, Moran, Dooley, Farr, Stabenow, John, Peterson, Clayton, Minge, Pomeroy, Holden, and Stenholm [ex officio].
    Staff present: Dave Ebersole, senior professional staff; Russell Laird, subcommittee staff director; Mike Neruda, Wanda Worsham, clerk; Vernie Hubert, minority counsel; Anne Simmons, and Andy Johnson.
    Mr. COMBEST. Good morning and thank you all for coming. We will get started.
     I'm very hopeful we can have this concluded by 12 o'clock, and I certainly don't want to cut any members off, but if we are not finished, then it's going to be necessary to take a break for another commitment and then we would resume. But hopefully that would not be required.
    Good morning and welcome to everyone here, and I would first like to thank our witnesses from the Department of Agriculture for their time and efforts in preparation to discuss the implementation of this program that we are discussing this morning.
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    The Environmental Quality Incentive Program, commonly known as EQIP, was created in the 1996 farm bill as an effort to make our conservation dollars produce the most benefits possible by operating in a more efficient manner. The Congress and specifically this committee made a strong commitment to this goal by consolidating a few old conservation programs and making the funding consistent by picking up the tab. It is significant to note that the $200 million now spent annually on this programs comes from the Commodity Credit Corporation. In essence, in the 1996 farm bill Congress committed a portion of the resources that have traditionally gone to farm income support programs to this conservation program. I think that makes it imperative that we know what is being accomplished by this program so we can tell that story to the public and to agriculture producers.
    Many of the concerns that need to be addressed are often in the news and we're not at any loss to explain to the public the alleged problem that may exist. As we all well know in our business, too often perception can become reality in the minds of the public, whether it be concerns over depletion of underground water resources and aquifers, run-off of manure from poultry, hog farms, or dairies; all of these issues are in the news and on the minds of the public.
    An article recently published in the National Journal magazine focusing on this issue stated that: ''For the public the American Gothic view of farming has been replaced with nightly news reports on fish kills and hog farm pollution.'' While I personally thought this article may have been a little out of proportion and could have been a little more balanced, it is incumbent upon all of us to tell the story of how we are already working hard in committing Federal tax dollars into assuring that these concerns are adequately addressed before they become real problems.
    While a discussion today of the various types of resource concerns which are being addressed by EQIP in different regions of the country will be helpful, what will be more important is to focus specifically on how these concerns are being addressed. I have consistently and still do contend that the best way to address these concerns is through voluntary incentive programs such as EQIP. While I strongly believe that this is the right approach, I know that there are some who would push for greater controls through increased regulation. In order to preempt this move, we must be able to tell of the successes that are resulting through our efforts in programs such as EQIP.
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    Bills have been introduced in the U.S. Senate and the House of Representatives which, I am concerned, would result in increased regulation of livestock operations due to environmental concerns. These issues are also being debated in several State legislatures, including Maryland, North Carolina, Oklahoma, Kansas, Mississippi, Minnesota, Nebraska, and probably more. So while these issues are in the news, we need to be able to tell the public what has already been done to address the problem. However, other than explaining that we are spending $200 million per year at the Federal level, we are at a loss to explain really how hat is being done with these tax dollars to take care of the concerns that the public is all too aware of. While the news media takes the reactive approach and reports the news, we must take the aggressive and proactive approach in addressing these issues and letting the public know what we are doing.
    I think we all understand that with any of these new programs there will be a transition period involved to work out the complexities of the administration of the program and to get it working officially. But after that short transition period, we must be able to have efficient program and be able to report to the public the successes that are resulting from it.
    I would mention that the issue, I think, that has been focused on this morning, and each of you should have a copy of a Washington Post front-page story that the EPA plans to regulate livestock waste. This is a new movement. It does have, I think, very substantial concerns and impacts on this. I had discussed with some members, including the ranking member of the committee, this subcommittee holding a hearing on what we would call nutrient management, to try to look at how the nutrient management programs are being dealt with. There are a lot of questions; the State of Maryland and the State of Virginia are looking at two different approaches in regulation of poultry production and, more importantly I suppose, the elimination of poultry waste, and how they're being handled. This I think does bring this to a new level, because the EPA, according to this article, will be moving into some areas that traditionally they have not been. I think it is important to note that as they are looking at animal units, that is also a cutoff at the same number of animal units that they will be looking at for participation in the EQIP program.
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    So maybe we ought to consider that. I don't want to ever get into the situation that someone is accusing us of just helping the large farmer. On the other hand, if those are the areas that are going to be targeted in terms of new regulations, which no one knows today what they're going to be, but I think it's safe to say that the general initial anticipation of that might be new over-regulation. We may want to take a look at that and see how this program can assist. And so if you would address that as we move forward, I would certainly appreciate that.
    We are all concerned about environment; that's why programs such as EQIP were established. And yet, on the other hand, we want to make for sure that it is logical and that it is thoughtful and that it is done in a way in which we can have both industry and a clean environment.
    I would recognize Mr. Dooley for any comments that he might have.
    [The Washington Post article appears at the conclusion of the hearing.]
    Mr. DOOLEY. Thank you, Mr. Chairman, and thank you for holding this hearing today. I believe that this hearing will provide much-needed information to this committee about a program that I very much want to support and that I hope will become increasingly successful. However, as any new program, there are some problems that need to be addressed.
    As a farmer from the Central Valley of California, I know first-hand the difficulties facing farmers every day because of increasing environmental pressures; and I have long advocated incentive-based programs to deal with the environmental issues. I believe this type of program can be much more effective than a regulatory approach in achieving the maximum level of environmental benefits. However, if these programs are not well managed and funding is not provided to those areas where it is most needed, the full potential of these programs will not be realized.
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    As you are aware, I am very concerned about the State allocation of funds under EQIP. It appears the USDA has made a policy decision that is some ways contrary to the Congressional intent of the law and has skewed the allocations to maintain traditional funding patterns. While the farm bill clearly states that the purpose of EQIP is to carry out the program in a manner that maximizes environmental benefits per dollar expended, it appears that this is not how the program is being administered today, and I'm looking forward to exploring this question.
    I also hope that we can use this hearing today to provide USDA with some constructive feedback that we have received from our States regarding the operation of the EQIP program. These concerns range from a lack of information available to farmers on the operation of the program to a lack of meaningful input from the State Technical Committee on the State request. I believe that the focus on local input is an important aspect of EQIP, but it is important that all farmers have equal access to that program.
    Mr. Chairman, as you know, it was our hope that we would also include some other witnesses; however, a decision was made to limit the hearing today to administration witnesses, but I would like at this time also to request that a statement from the California Cattlemen's Association be included in the testimony.
    Mr. COMBEST. Certainly, without objection. I appreciate the gentleman's comments and any statements of any group or certainly statements of members would be, without objection, entered into the record.
    [The prepared statements of Mr. Barrett, Mrs. Chenoweth, Mr. Dooley, and Mr. Stenholm follow:]
    "The Official Committee record contains additional material here."

     Mr. COMBEST. We would like to invite our witnesses who are at the table and appreciate again their coming forward. I would like to introduce Mr. Craig Cox and Mr. Dallas Smith. Mr. Cox is the Acting Deputy Under Secretary for Natural Resources and Environment at USDA; Mr. Smith is Deputy Under Secretary for Farm and Foreign Agricultural Services at USDA. There are others. Mr. Cox, you may wish to introduce them and you may begin, sir. Thank you very much.
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    Mr. COX. Thank you. Mr. Chairman, members of the subcommittee, I am very pleased to appear before you today to talk about our accomplishments in implementing EQIP over the past 2 years.
    We have asked several USDA staff persons to join us today to help me answer those questions, and I may simply ask them to stand as I mention their names: there's Doug Williams with the Natural Resources Conservation Service; Robert Molleur, NRCS; Leslie Deavers, NRCS; Gary Nordstrom, NRCS; Jeff Loser, NRCS; Tim Denley with FSA; and Dallas, I may ask you to introduce your folks.
    Mr. DALLAS. Cheryl Zavodny, FSA, and Tom Weber, NRCS.
    Mr. COMBEST. Is there anyone at the Department? [Laughter.]
    Mr. COX. Mr. Chairman, I do have written testimony that I'd like to request that be submitted for the record.
    Mr. COMBEST. It certainly will be, without objection.
    Mr. COX. Thank you. For my statement, I'd simply like to try to hit the high points of the testimony and emphasize the four general guiding principles that have really guided our implementation of EQIP to date; and in the process, I'd like to draw your attention to some of the items in the information packet or notebook that we've provided you this morning, that provides more detailed facts and figures about the progress in implementing EQIP so far.
    Mr. Chairman, members of the subcommittee, the 2 years since passage of the 1996 farm bill have truly been banner years for the conservation of private lands in this country. In that short time we have helped farmers and ranchers develop over 2 million HEL determinations or conservation plans to ensure that those producers could participate in the AMTA program. We've helped nearly 240,000 producers develop bids for the Conservation Reserve Program in the 15th and 16th sign-up; we've launched a major nationwide conservation buffer initiative, and my information is we've got 150,000 miles of buffers and roads so far in that program. We've delivered disaster assistance to over 400 counties in 47 States in these 2 years, and—more to the point of this hearing—we've helped almost 60,000 producers apply for the EQIP in 1997. What this means, I think, Mr. Chairman, is that farmers and ranchers are, with our help and using the tools that you provided us in the 1996 farm bill, improving the health of private lands all across this country.
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    EQIP is one of the most important tools we have in the conservation toolbox you gave us. I'd like to again touch briefly on the four primary principles that have guided the implementation of EQIP, and draw your attention to information that we've provided you in the packet.
    The first and the most important overarching principle of EQIP is to help farmers meet their conservation objectives. The 1996 farm bill goes beyond that directive and asks us to pay particular attention to assisting producers meet the requirements of State and Federal environmental laws using a voluntary incentive-driven approach, a directive that takes on perhaps new significance, Mr. Chairman, given the article that you cited, EPA's announcement about expanding regulations on livestock producers.
    Interest in EQIP, this new program, has been running very high. As I mentioned, in 1997 about 60,000 producers applied to participate in the program. With the $200 million that we had available in 1997 we were able to sign up about 23,000 of those producers. Tab C4 in your information packet provides a county by county breakdown of EQIP contracts that were signed up in 1997. This overwhelming interest by farmers and ranchers in the program—we think is our clearest indication that we're off to a good start in getting this program on the ground. But frankly, Mr. Chairman, this interest has a down side: people wanting to participate are outstripping our ability to satisfy their demand by 3 to 1, and that means as a matter of fact that we have had to turn down farmers and ranchers that by any objective measure should be participating in the program; and I would conclude that many of the most difficult problems we've faced implementing this program since the farm bill has been our inability to satisfy the legitimate demand of farmers and ranchers to participate in the program.
    The second principle that has guided our implementation of EQIP to date is locally-led conservation. What we mean by that is keeping decision-making as close to the ground as possible. The two most important elements of this locally-led conservation process are: first, the local work group. These local work groups are composed of conservation districts, FSA county committees, and others. These groups get together to make recommendations, including recommendations on what should be considered priority areas and which practices ought to be eligible for EQIP assistance. Tab D1 in your packet provides a fact sheet that explains in more detail what this locally-led conservation process is and how it works. State Technical Committees are the second key component of the locally-led process. These groups, made up of agricultural groups, conservation groups, State and Federal agencies, and others, perform at the State level basically the same functions that local work groups perform at the county level. NRCS State Conservationists and FSA State Directors consult with these committees before coming to concurrence on how EQIP funds should be allocated in the State and which practices should be eligible for assistance. In the individual State profiles that we've provided for the members of this subcommittee, there are descriptions of the composition of the State Technical Committees in each of your States.
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    The primary decisions left to Washington is for NRCS and FSA to come to concurrence on how much money each State should receive under the EQIP allocation. In 1997 and in 1998 we used an allocation formula based on 27 natural resource concerns to make that initial allocation to States. In tab B2 of your information packet is a fact sheet that details what those factors were and how that allocation works. Once that initial allocation decision is made to the States, then the most important decisions regarding allocation of EQIP dollars are left up to the States, including which priority areas to fund, which statewide general resource concerns to fund, and which practices are eligible. That's all done with the concurrence of the NRCS State Conservationist and the FSA State Director on a State by State basis. Tabs B2 and B3 provide a State by State breakdown of what those allocation decisions have been in fiscal year 1998.
    The third major principle that's guided implementation of EQIP is the statutory directive to direct and target assistance to high-priority natural resource concerns. We do this in two ways: EQIP dollars are allocated to geographic priority areas and to high priority statewide natural resource concerns. In 1997 65 percent of the EQIP funds, or about $130 million, went to geographic priority areas across the country. The remaining funds, 35 percent, about $70 million, went to high-priority statewide natural resource concerns. For perspective, the $70 million going to statewide concerns is about the funding level that ACP was at in fiscal year 1995, the last year it existed before the farm bill was passed. Again, tab B2 in your packet provides a State by State breakdown of allocations to priority areas and statewide resource concerns in 1998. Water quality is far and away the dominant resource concern that States have targeted to date. Our information from fiscal year 1998 program is that about 56 percent of the funds will be targeted at water quality, about 23 percent of the funds to soil erosion, 11 percent to water quantity concerns, 4 percent to wildlife habitat quality, 1 percent to air quality, and 6 percent to other natural resource concerns.
    The fourth and final principle that has shaped implementation of EQIP is the emphasis in the statute on partnerships and leveraging of resources from State and local and non-Governmental sources to support EQIP. Our primary Federal partner in implementing EQIP is FSA. I've already mentioned that NRCS and FSA reach concurrence at National and State levels on EQIP allocation decisions and the role that FSA county committees play on local work groups. We also rely very heavily on FSA for contracting and other assistance in the day-to-day operation of this program. At the State and local level conservation districts, resource conservation and development councils, and a host of State agencies and local organizations are teaming up with us to get conservation on the ground through partnerships with the EQIP program. Tab D3 in your booklet provides a map that illustrates the extent to which EQIP is leveraging support from these other sources and departments.
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    In conclusion, Mr. Chairman and members of the subcommittee, helping producers, local control, targeting high-priority problems, and partnerships are the four primary principles that have guided how EQIP has been implemented to date. We've come a long way since 1996 in putting this new program on the ground. We have experienced growing pains, but I'm confident that we've improved the program in each year of its operation and I'm even more confident that we'll improve the program in every year in the future.
    I want to thank you again, Mr. Chairman, for this opportunity to discuss the EQIP program with you, and my colleagues and I would be happy to try to answer as best we can any questions you may have. Thank you.
    [The prepared statement of Mr. Cox appears at the conclusion of the hearing.]
    Mr. COMBEST. Thank you, Mr. Cox. Was there anyone else that had any statements?
    Mr. COX. No, sir.
    Mr. COMBEST. Was there any discussion or consultation that you're aware of or at least with any of you, from the EPA relative to their proposal which was discussed in today's Post?
    Mr. COX. Mr. Chairman, members of the subcommittee, we have had technical reviews of the EPA AFO strategy two or three times in the past 12 months with our technical people interacting with their technical people to give some guidance on whether EPA was proposing was technically sound or technically feasible.
    In the clean water action plan that the Vice President and the President released a couple weeks ago, EPA announced that they would deliver this strategy in March for public comment. That clean water action plan then commits USDA to work with EPA and all stakeholders to try to develop a more unified comprehensive national policy or strategic direction for the livestock problem. So we have reviewed the document on a technical basis.
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    Mr. COMBEST. Did you find that it was technically sound?
    Mr. COX. The document is technically sound, although implementation, the demands of permit writing, and other issues that are hinted at in that document will create demands that will be very difficult for USDA to meet.
    Mr. COMBEST. Will those permits have to be written with USDA personnel?
    Mr. COX. That is unclear in the document. The strategy does request that USDA provide assistance in technical guidance and technical standards through our field office technical guides that could be used to provide some uniformity across the country in what technical standards might be used in writing permits, but the draft is silent on who might be asked to actually work with producers on a one-on-one basis to develop the nutrient management plans and other elements of a permit that could be required under EPA strategy.
    Mr. COMBEST. Generally, when something of this type happens where you have a lead agency—in this case, EPA—and if in fact USDA personnel were involved in having to help a farmer or an individual comply writing permits, is there a process or mechanism established to help in funding the additional cost that the other agency—in this case, USDA—would assume?
    Mr. COX. It's my understanding, Mr. Chairman, that the draft does discuss the desire of EPA to have voluntary incentive-based assistance, both technical and financial, available to producers to meet whatever obligations might arise out of EPA's new strategy, but there's no estimates to my recollection of what the volume of that technical assistance might be and to what extent existing programs might be able to meet that demand.
    Mr. COMBEST. Normally when this would occur, are you asked to provide estimates of what you think a new requirement or a new job that you've been asked to undertake would cost?
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    Mr. COX. I would, Mr. Chairman. I think the discussions to date are that we would like to take up all of these issues in a much more comprehensive way when Secretary Glickman and Administrator Browner get together to discuss how we'll move forward on this development of this more comprehensive national strategy. I know that Secretary Glickman is very concerned about this issue and very concerned about our ability to assist producers and to meet whatever demands might be created by this new EPA direction.
    Mr. COMBEST. Well, I realize you're not to that point yet to begin to come up with the numbers, but the question is: Is it normally done that you would be required to come up with an estimate of the cost that USDA would entail?
    Mr. COX. Mr. Chairman, I'm not sure if it's normally done or not. It has been discussed with EPA in our technical discussions, but we have not done the work to do good quantitative estimates of what this may be.
    Mr. COMBEST. Well, I can state for the record—I don't know about the entire committee, but I would be happy to follow this up with a letter—I'm very interested in knowing what those estimated costs would be if in fact USDA is required to help in that process and exactly then where that would be coming from and how that amount of money would be made up.
    As you had indicated earlier, as you were having your morning coffee is when you saw this have you had some thoughts since that period of time of how this regulation might have an impact on your request for EQIP participation that might not have occurred otherwise? You have said you've had more applicants than you have the resources to deal with. I would expect that there's even going to be more now.
    Mr. COX. Mr. Chairman, members of the subcommittee, even before this announcement, what I've been hearing from agricultural producers and our people in the field is that the demand we've experienced for this program is just the beginning, that they're telling me we should expect much greater demand as interest in the program and understanding of the program grows among producers. I would be concerned that the demand for assistance to help producers meet whatever new regulatory requirements might come out of this EPA strategy could seriously tax both our ability to deliver the technical assistance with the people we have on the ground and seriously strap the financial assistance that's currently available under EQIP.
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    Mr. COMBEST. Thank you, Mr. Cox. As always, we'll try to adhere to the 5-minute questioning rule and we'll certainly have more than one round.
     Mr. Dooley.
    Mr. DOOLEY. Thank you, Mr. Chairman. I guess I would like to address some of the issues which I noted in my opening statement dealing with the allocation of funds.
    From a California perspective, we can't help but be a little bit troubled in terms of the actual dollar amounts that we're receiving relative to a number of other States, obviously, our State by far and away being the leading agriculture State in the Nation. Yet, when you look at allocations we're at about six—you know, there's many States that are getting a significant amount more and I guess I'm a little concerned why. What is the justification and rationale for that?
    Mr. COX. Mr. Dooley, I think the best way to attack this is to go to the tab that provides a breakdown on the allocation formula that's been used——
    Mr. DOOLEY. Right, and I looked at that, and I appreciate getting this information and we got it this morning, which could have help, too, if we had a little more time to assess it. That might have helped me to answer some of my questions this morning. But what I'd be interested in is, if we allocated the EQIP funds solely on this formula that is presented to us in tab B, without any consideration of past funding allocations, how would that have impacted EQIP dollars?
    Mr. COX. Let me just give you a bit of history so you understand the context of my answer.
    In 1997 in the allocation of dollars to States, we in fact did constrain the allocation to States by historical funding patterns. We did not allow any State to experience a decrease of more than 5 percent nor an increase of more than 30 percent from historical funding patterns under the programs that have been rolled into EQIP. In 1998 we have taken that constraint off, and we have not constrained the EQIP allocations to States based on historical funding patterns. So in fiscal year 1998 we have allocated based solely on the formula and the analysis of resource concerns taken into consideration in that formula. If you compared allocations in 1997 to 1998 you would, in fact, see the impact of taking that constraint on historical funding off the program.
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    Mr. DOOLEY. I think that there was also information provided to us that I thought showed that there were the percentage change, but that must have been only for 1997 numbers where you were constrained by that—related to past expenditures.
    Mr. COX. That's correct, sir.
    Mr. DOOLEY. So it's based solely on the formula. In terms of the formula, and the methodology that was used to arrive at this, is there written explanation in terms of how this weighted average was derived, how it was derived?
    Mr. COX. The fact sheet in tab B2 provides some information on how the allocation formula was derived. This allocation formula and the process was developed by an interagency team of Federal agencies that have participated in this process both in 1997 and 1998.
    I'm beginning to approach the limits of my knowledge of the technical aspects of this allocation formula. I could ask our Deputy Chief for Programs to give you more detail on how this allocation formula was put together, if you would like, sir.
    Mr. DOOLEY. That would be of interest certainly to myself and maybe other members of the committee and maybe followup with that.
    Mr. CLARK. Thank you, Mr. Dooley. As you look at the handout that's behind tab—I don't have my notebook with me, but the tab that you're looking at that contains the formula, tab B2. The 1997 weighted numbers that relate to each of the 27 factors that were considered are the factors that were developed by this interagency group. What those factors point to, or their basis is, that what they try to do is capture the needs that are consistent with the program goals and objectives; and so you do find in those formulas a number of them that deal with cropland types of issues as well as livestock issues. The weights themselves were developed by the interagency team and what they do is, they do give some sense of priority to a particular element that's in that formula. Consequently, a weight of 6.5 in 1997 would mean that cropland eroding above T would be significantly different in terms of its impact on allocations than, say, Federal grazing land, which is 0.8 percent.
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    Mr. DOOLEY. All right, thank you. I'm finished for now.
    Mr. COMBEST. Mr. Pombo.
    Mr. POMBO. Thank you, Mr. Chairman. Just walk me through how this would work. For example, a dairy in a particular area of the country that had a problem and they were trying to put together a management program and it was being done in an area that had several dairies and they were trying to do that, and they qualified to have a cost share on this money, they would apply to you and receive partial funding to carry out that program.
    Mr. COX. Mr. Chairman, Mr. Pombo, I'm not sure how much detail you would like on the process at this time. The proposals for what will be eligible for EQIP assistance really begins at the county level using that county work group, so in your example that county work group could propose that there be a geographic priority area that would encompass this watershed or area that you're referring to, or they could suggest that the State have a general resource concern for animal waste management, for example.
    Mr. POMBO. My county happens to be in one of those areas that's identified, and they come forward and say that they have a problem, what happens with that particular information? Is that kept at NRCS, do they keep that information with somebody coming forward and saying, we've got a problem and we need to fix it?
    Mr. COX. My understanding of what happens at the field office level is a producer approaches us with interest in the EQIP. We help them do an initial assessment that, again, is developed at the county level, and it's those ranking criteria that are used to decide who gets into the program and who doesn't if the program is oversubscribed in that county. So we would assist a producer develop the information needed in order to make that decision about whether the producer qualifies for the program or not. Following that decision then we would work directly with that producer to develop the conservation plan in more detail and to schedule the practices and when those practices would need to be implemented, and we'd work with our FSA partners to develop the contract under the Commodity Credit Corporation that is the vehicle through which dollars are actually transferred to the producer.
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    Mr. POMBO. Now is the information that's obtained through this process, is that kept confidential?
    Mr. COX. Mr. Pombo, my honest answer is that I don't know that for sure. I believe it is held confidentially——
    Mr. POMBO. Can any of the people that you have with you answer that, whether or not that is confidential and how that information could be obtained by someone else?
    Mr. COX. Mr. Pombo, my understanding from staff is that any of the financial characteristics or financial information regarding the producer is kept confidential. However, the information regarding resource concerns or conservation practices or other elements of what is being publicly funded is subject to FOIA requests or other requests for public information.
    Mr. POMBO. So outside people have the ability to get the information, and in that context we all want people to use this program and we want people to come forward and try to develop a plan. We have had in my area a number of groups that have stepped forward and filed lawsuits, individual lawsuits against individual producers saying that they were somehow polluting a stream or a creek. I have one particular producer who has gone through a 3-year process of updating his facility so that it would meet all of the regional water quality control criteria that they have; but that particular person—and he feels it was through the release of information that a lawsuit was filed against him by an outside group. How can we get people to use this program if there's a feeling out there that if they use it, there's going to be the possibility that they're opening themselves up to some kind of a lawsuit from an outside group?
    Mr. COX. Obviously I'm not familiar with the details of that particular case, although I find your story very troubling.
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    Mr. POMBO. Well, I'm asking more in general; I don't expect you to comment on this particular case; and if you did know the details of this particular case, I wouldn't expect you to comment in a public hearing on it anyway. But in a more general term, this is a concern that I'm beginning to hear back from a number of the producers within my area.
    Mr. COX. My staff is advising me, that the only full protection in cases like this would be a legislative change to the Freedom of Information Act. It appears that if producers are receiving public funds to install particular practices, that that information could be subject to a FOIA request.
    Mr. Pombo, apparently, I should have requested a lawyer along with—— [Laughter.]
    Mr. POMBO. I thought you had enough people there.
    Mr. COMBEST. The odds are, with as many people that you've got out there, there's not a lawyer—it's astounding. [Laughter.]
    Mr. POMBO. Mr. Chairman, this is a serious concern that I have and I would like to work with you, the ranking member, and the Department in trying to—if it takes a legislative fix, trying to come up with that legislative fix, because this is a major concern of mine and a number of my constituents.
    Mr. COMBEST. And at this time the Chair would ask unanimous consent, as is normal, that the record be left open for 10 days to receive additional information or pose additional questions; and it might be necessary to follow that up and get legal advice and suggestion. Mrs. Clayton.
    Mrs. CLAYTON. Thank you, Mr. Chairman. Just to recap some of the things that I think I understand, that 1997 was a transitional year and therefore the allocations that various producers or regions or areas might have received might have not been based fully—maybe different—and in my understanding the different really is that you really didn't have your rules and regulations in place so historically there what you've done in 1995 and 1996 might have been very similar to what you did in 1997. But because actually they weren't the whole process of implementing this requires rule setting and allowing the public to comment, and actually you started the program a little earlier, before that was completed. So I guess I'm trying to establish there is a basis for looking in the back of the book and seeing 1997 and 1998 different based on what's in the bill having an administrative procedure that required some adjustment. Is that correct?
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    Mr. COX. Mrs. Clayton, 1997 has seriously constrained our ability to do the full locally-led process and the full and public involvement that would prefer to use for that program. In 1997 decisions regarding funding of priority areas and recommendations of eligible practices and funding of statewide concerns was done solely at the State level through advice from the State Technical Committee. There was no time to go all the way to the county level to get recommendations or advice on how EQIP should be funded in 1997. That is different in 1998. In 1998 we are attempting to implement the full-blown locally-led conservation practices—or conservation process—with full input from the county level on how this program ought to be operated. That's probably the biggest difference between 1997 and 1998 in the operation of the program.
    On a more technical level, we did, as I said earlier, use an allocation formula in 1997 to make that initial allocation to States. There were some adjustments to that allocation formula made in 1998. Some factors were eliminated, some factors were added based on the recommendations of this interagency team; and, as I discussed earlier in response to a question from Mr. Dooley, we did not constrain the fiscal year 1998 allocations based on historical funding for the programs.
    In those three ways fiscal year 1997 was a transitional year for us in EQIP.
    Mrs. CLAYTON. Thank you. Mr. Dooley and I would have different opinions on how we got funded. He thinks I got too much. I as just trying to establish the basis for why I should continue to get more, that's all. I was trying to put it in the record. [Laughter.]
    The process of what is funded, if it follows the rule, as I understand the bill, it has both a geographical priority area. Describe a little fully what that geographical criteria is based upon.
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    Mr. COX. The geographic priority area is based upon a geographic region, whether it be a watershed or a county, that has a common resource problem. It may be a water quality problem associated with sediment; it may be a water quality problem associated with nutrient runoff; it may be a problem associated with a watershed where there's a high concentration of dairies or swine production or other livestock production, or it may be an area where grazing is, you know, where grazing lands are threatened by an invasion of noxious weeds. What I'm trying to describe is a geographic area where there's some fundamental natural resource concerns or problems that most of the producers in that watershed face in common, and that's the basis on which those geographic areas are drawn; and as I've said before, the initial recommendation for these areas comes out of the local work group and then a lot of discussion at the State level, advice from State Technical Committees on what, which of these areas should receive higher priority.
    Mrs. CLAYTON. Well, I think what I was trying to understand why you had stated in reference to another question, you responded 65 percent of the allocation had gone to geographical rather than to certain priority areas like the category areas like animal waste, wetlands individually. So I'm assuming in the geographical area there are a large number of producers who benefit. Why the larger allocation resources to the geographical if it's not benefitting the producer? I'm trying to understand why is that preference made?
    Mr. COX. Mrs. Clayton, two answers to that question. First, the EQIP statute itself, our interpretation of that statute, I think, clearly directs us towards a geographically based targeting program; and the way we've implemented that program has been to try to be in good faith with what the statute has directed us to. Perhaps on a higher plane, the thinking behind the geographically targeted program is that we can focus resources within that geographic area for 3 to 5 years. We can solve the problems that producers face, we can demonstrate that a voluntary incentive-based approach to environmental issues is in fact effective and is in fact the approach that ought to be taken to dealing with conservation or environmental issues on private lands; and then we could move on to the next region where producers are facing challenges from environmental laws or regulations and help them solve their problems.
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    Mrs. CLAYTON. Mr. Chairman, may I submit my additional questions for the record, though?
    Mr. COMBEST. Absolutely you may submit those for the record and we will forward them on, or we will be having another round of questioning. Mr. Moran.
    Mr. MORAN. Thank you, Mr. Chairman.
     Mr. Cox, fluctuations that we see between 1997 and 1998, I think have been described as 1997 being a transition year. Would we expect those fluctuations to continue, or when we look at the 1998 allocation is that what we should anticipate based upon current levels of funding would be allocated similarly in 1999 and beyond?
    Mr. COX. Mr. Moran, I would expect that there would be only small changes in the allocation to States in the future. If you notice in the description of the allocation process there, we have in 1997 and 1998 held back $10 million or 5 percent of the program for incentive bonuses to States at the discretion of the Chief of NRCS and with concurrence of our partners in FSA. Those incentive grants are designed to help encourage States to do a better job of running the locally-led process of working with partners and so forth, so there is the potential for changes in allocations from State to State based on the distribution of those incentives.
    Mr. MORAN. What's the ongoing process for changing the formula?
    Mr. COX. The only way I think we would change that allocation formula is in two circumstances: one is we do have an ongoing process of oversight and evaluation. We've done an evaluation of the program in 1997; we're expecting to do another evaluation in 1998; and if that formal process of oversight and evaluation should suggest that we've got serious problems in the allocation formula, then I would expect that we would take steps to try to correct those deficiencies as they're brought to our attention.
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    Mr. MORAN. What role, if any, does density of population play in the nearness to people?
    Mr. COX. In your packet on B2 one of the elements in the allocation formula that was, in fact, added to this allocation formula in 1998—it was not there in 1997—is a factor that's related to the population of the State, as an attempt to try to get a handle on the extent to which people may be affected by the resource concerns that are identified in other parts of——
    Mr. MORAN. Does number of farms or number of farmers—is there a factor as well?
    Mr. COX. Mr. Chairman, Mr. Moran, there is a factor for number of farms and ranches that appears about in the middle of the list of factors under tab B2. There are factors relating to the number of limited resource farmers, tribal land, and other characteristics that would be, I think, along the lines that you're suggesting.
    Mr. MORAN. Do you know if States as they develop the priority areas, if proximity to population is a factor in developing a priority area?
    Mr. COX. I don't know the amount of funds or in developing the criteria in the past, in the future.
    Mr. MORAN. What role have they played and will they continue to play?
    Mr. COX. Our regional offices and our six regional offices—and there's a map that shows their boundaries somewhere in your packet, I can't remember where at the moment—play the following role in the allocation of resources. As you may know, each of our regions produces a natural resource strategic plan as part of our overall effort to meet the requirements of GPRA. We ask our regional offices to take a look at the initial allocations that we are suggesting by the formula being made to States. We ask regions to take a look at the priority areas and the statewide concerns that are being suggested by States, to take a higher level strategic cut and analysis and identify whether this program will, in fact, contribute to the achievement of the GPRA strategic goals and objectives that we're now bound to meet under GPRA.
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    Mr. MORAN. How long have the regional offices existed?
    Mr. COX. Since 1994 and 1995.
    Mr. MORAN. Thank you, Mr. Chairman.
    Mr. COMBEST. Thank you. Mr. Minge.
    Mr. MINGE. Thank you. Well, first I'd like to say that I'm very pleased that we have a program of this type. I think it's important. I think that as we increasingly try to contend and deal with the problems of livestock management especially, that this program helps provide the financial incentives to implement manure handling practices that are very important for the environment of the areas.
    In listening to the testimony this morning, I believe I've identified five different ways in which ranking and priority areas and so on are all mixed together, and I'm a little confused. It appears that there's some historical basis for the allocation of funds. It appears that we have priority areas within State allocation formula among States, and finally that we have a screen and that large producers are not eligible for funds, but smaller producers. And I'm a little confused as to how all of these fit together in contrast, say, to CRP which, as I understand it, we have a simple national competition among those that apply for assistance.
    Is it possible to move to some sort of a national-based program, or is the mix of all of these different considerations fundamental to the successful operation of this program, in your opinion?
    Mr. COX. Mr. Minge, as I said in my opening statement, the concept of local control to date has been absolutely fundamental to our vision of where EQIP should be and how EQIP should run; so we frankly have attempted to avoid constructing a program where there's a national competition among individual farmers for participation in the EQIP. We've actually gone a long ways towards minimizing the national-level control of this program and maximizing the local-level control of this program; and frankly, sir, I think we've paid a price in some cases for maximizing local control and one element of that price is some confusion and some lack of clarity about how precisely allocation decisions are being made because they are, in fact, being made in some cases slightly differently in different communities and different States. But in the end, I think that's a very positive part of this program; and I would just urge us to be patient. I think as this program rolls out, a lot of these questions about how these decisions are being made will become much clearer.
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    I don't think, sir, that EQIP would be, even if we decided to abandon our commitment to local control, as easily subject to a single national sign-up as CRP. CRP producers are all bidding to do basically the same thing, which is to take land out of production for environmental purposes. In EQIP producers are proposing to do a huge variety of things, from nutrient management to streamside buffers to grazing land improvement to construction of animal waste facilities; and frankly, sir, I find the thought daunting that we could construct some sort of credible basis on which to hold a national competition that would allow us to really credibly evaluate individual bids from 60,000 producers each year.
    Mr. MINGE. One complaint that I've heard in talking to folks at home about the program is that there's not enough money, and, of course, that's not a sin that we can lay at your feet; that is a problem that we have here in Congress. But I've seen this with a number of programs that we have, that they are popular but the application process is arduous, the wait for funding can be long and frustrating, and at some point it undermines the credibility of the program because people are frustrated and disappointed.
    It would certainly be helpful to us if you could make some recommendations as to whether or not a program like this has to be adjusted in terms of your statutory operating authority if the funding levels are not adequate to implement the program on a scale that you think it ought to be implemented; and I would just urge that you be very frank with this committee in that respect as I hope you're frank with the appropriators—well, this is being funded, isn't it, through the CCC?
    Mr. COX. Yes.
    Mr. MINGE. Well, be frank with this committee then, so that we fight for the appropriate level of funding. Otherwise, I fear that the program may go the way of some others where the initial euphoria for the program is lost because of the frustration of not being able to participate.
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    Mr. COX. Mr. Minge, I would like to point out that the President has part of the President's Clean Water Initiative. So I believe there is recognition on the administration's part that this program does desperately need more resources in other to both meet the demands of farmers and meet the environmental challenges that private landowners face.
    Mr. MINGE. Thank you.
    Mr. COMBEST. Mr. Farr.
    Mr. FARR. Thank you, Mr. Chairman. I want the staff to hand you these newspaper articles that came out yesterday, because I want to ask generically about the issue. But first of all, I've been in this committee for 5 years, and this is the first time that a Federal agency has come in and stated that they are an agency about working and starting at the local level and working up, and I want to congratulate you on that. The biggest problem that I've found is trying to solve the problems on land use where you have local and State control and the Federal Government can't get everybody on the same page. You can't order it from Washington; it has to be initiated local level.
    Having said that, you outlined in your California packet, which I appreciate giving us—I'm most familiar with that State. Do you have an idea of what is the most successful of the programs in California? Is there one example that——
    Mr. COX. I'm afraid I don't think I understand your question. Do you mean which of the priority areas or which of the areas under EQIP are most successful?
    Mr. FARR. Which of the areas under EQIP are most successful?
    Mr. COX. Mr. Farr, let me consult with my folks and see if someone knows more about California than I do.
    Mr. FARR. Well, while they're consulting, let me ask you another question.
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    Mr. COX. All right.
    Mr. FARR. In the area that you outlined for us in my congressional district, you talk about three or more in the congressional district, but three other ones: the Elkhorn Slough Watershed Priority Area. The goal is to reduce erosion, reduce sediment delivery, reduce annual rate of erosion.
    What I passed out to you is an article about what's happened, and I would hope that maybe you could address how we might be able to get the Federal agencies on board. That erosion has caused the Moss Landing Harbor District to fill up with sediment. Some of that sediment—very old sediment—has DDT in it. We've been dumping that sediment in the largest marine canyon in the United States with the consent of the marine scientists who discovered the DDT in the sediment, essentially saying, there is no problem. EPA comes along and now tells the Harbor District that they cannot dump that sediment in the ocean. The cost to the Harbor District for upland disposal is about $6 million. The budget for the Harbor District is $1 million. Stuck in the mud is the commercial fleet for central California and a research vessel that depends on Federal research dollars to do its business. We've got Federal money stuck in the mud. Can this type of program help unjam EPA's attitude that they can only fund upland disposal?
    Mr. COX. That sounds to me like a made-in-heaven project for EQIP, and exactly why we've put so much emphasis on State Technical Committees and the interaction of Federal agencies and State agencies and people at the State Technical Committee level to identify precisely those kinds of opportunities.
    Mr. FARR. We've had them all in the room, and everybody agrees except EPA that there's an ocean disposal here that is environmentally safe. EPA refuses to budge but will not give the money, so what happens is you've got a—their solution is an inexpensive solution; there is no money to pay for it. Nothing gets done, and this is where the Federal Government ends up looking pretty ridiculous with these erosion—I'm glad we're going to put an ounce into prevention, but while we're doing it we also have to get the commerce flowing again.
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    Mr. COX. I'm not happy to hear that kind of story about the inability to use this program because of lack of cooperation from one of our sister agencies. I would be more than happy to talk with you about anything that we might be able to do here in Washington to talk with our EPA colleagues and see if there isn't some way to bring some resolution to that problem in your district.
    Mr. FARR. How about right after this hearing? [Laughter.]
    Mr. COX. That's fine.
    Mr. FARR. Thank you, Mr. Chairman.
    Mr. COMBEST. I think there's a number of us who'd like to get in on that list of things that we'd like to suggest you talk to your sister agency about. Mr. Peterson.
    Mr. PETERSON. Thank you, Mr. Chairman. I suppose you're not specifically familiar with some of these areas. Are any of you familiar with the Beach Ridge Priority Area that's listed in my district? You are? The gentleman behind you says he is.
    I'm just curious as to what you're up to here. I mean, this Beach Ridge has been focused on until it's kind of—just makes me wonder what's going on here. Can you tell me what you're trying to accomplish here? Are you trying to restore wetlands, are you trying to restore the native prairie? Is that the main focus of what you're trying to do in the Beach Ridge Priority Area?
    Mr. COX. I may simply ask the staff person that knows the answer to that question to speak directly with you.
    Mr. NORDSTROM. Gary Nordstrom, for the record.
    Those priority areas, Mr. Peterson, were done with the assistance of the local folks there to try to address what they considered within your area there to be the most and highest priority environmental issues that they wanted to address. On the tab in your book—I don't know if you've looked at your particular——
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    Mr. PETERSON. Yes.
    Mr. NORDSTROM [continuing]. We tried to just very briefly describe some of the principal issues and concerns that that particular priority area is in fact addressing.
    Mr. PETERSON. Well, I read that, but it does not clear—I mean, are you trying to get people to restore wetlands and native prairie, is that the main thing? I assume, that's generally what they've been up to there.
    Mr. NORDSTROM. Yes, that's one of the ones that they identified in that particular one, but there could be other practices that they have approved for priority ranking that would also be for things other than just that.
    Mr. PETERSON. Well, what I'm wondering is how would this work? How does this program accomplish re-establishing these wetlands and native prairie specifically? I mean, my concern is, we've got a proposal out there, first of all, to create a national park or refuge or something where they're going to take 77,000 acres and try to put it into some kind of a national wildlife refuge that is not going to be connected; it's going to be scattered all over the place. That's one thing they're up to. During the CRP, they tried to get this land into the CRP and they made it a priority area, and I told them that a lot of this wasn't going to go in and it didn't, because the way the rules were written, so now they're going to take and try to make this program accomplish—and so what I'm wondering is how are we going to go about this? My big concern is we have a lot of people in that area that are concerned about, that you're going to require permanent easements and come in and have the Government actually control more of this land. I don't think that's what this program does, and I just want to make sure that whatever happens here is going to be voluntary and it's not going to require that there be permanent easements and that the land actually transfer to the Federal Government, and so forth. Am I correct in that?
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    Mr. COX. Mr. Peterson, EQIP frankly is designed to keep lands in production and manage whatever natural resource concerns may be associated with keeping those lands in production. It's really a perfect match with CRP in that the focus of this program is to keep our working lands working. How we would approach these objectives within this particular area is to work directly with producers one on one to try to find those producers who have some interest in restoring wetlands or planting native prairies, and working with them on a voluntary basis to do that.
    Mr. PETERSON. Well, I understand that's good theory. What you folks need to understand is, I don't think that people really know what's going on in this area. A lot of it is owned by foreign companies that are in the gravel business, and they were precluded from the CRP. I mean, the problem is that some of these folks who want to put this priority I don't think have any clue of what's really going on, and none of these things work very well. It just frustrates me the disconnect we get on some of this stuff.
    I grew up there and I'm very familiar with what the whole area. When I was in the State legislature, we tried to maintain the wetlands and native prairie by—we actually had a tax credit where you didn't have to pay property taxes on that land if you kept it in wetlands and native prairie, which was probably the best thing we ever did. As soon as I left the legislature, they repealed it. But anyway, I guess I would like if somebody could give me more specific information about what you think is going to happen out there and how all of this is going to work.
    Another thing that's been an issue over the years is the people down in the valley who have drained everything would like to see the people up in the Beach Ridge establish holding areas so that they don't have to do anything about their problems down below. That's been a continuing thing, and I'm just wondering if that has something to do with what's going on here as well, where they see this as a way where they can maybe hold some of the water up there. So if anybody could give me some kind of a run-down on that, I would appreciate it. Thank you, my time has run out.
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    Mr. COX. We'd be more than happy to follow up and get you as much detail as you'd like.
    Mr. COMBEST. Mr. Holden.
    Mr. HOLDEN. Thank you, Mr. Chairman. I have a few questions for the panel.
    Gentlemen, I understand that in Pennsylvania 20 percent of EQIP funds will be used by NRCS for technical assistance. I'm concerned that that is increased from 10 percent last year and is greater than the 19 percent portion being designated nationally for technical assistance. This funding should be used for our farmers who are on good ground cost sharing. Why isn't the money being taken out of the administrative funds for NRCS?
    Mr. COX. Mr. Holden, you are correct; we are using about 19 percent of the funds in 1998 for technical assistance to help operate this program. There's a number of ways I think I could approach your question.
    First of all, let me say that we see technical assistance not as something separate from the purposes of the EQIP, but absolutely fundamental to the EQIP in that technical assistance is, in fact, the foundation on which financial assistance has the effect that we want it to have. Most of the good that we do in NRCS comes from technical assistance, not from financial assistance. Most of the progress that we make and most of the resource conservation we put on the ground is done in the absence of any cost sharing assistance with farmers. So I'm trying to portray how we think about technical assistance as not being administrative overhead but simply one of the benefits equal to or exceeding the benefits to a producer of getting financial assistance.
    From a more practical point of view from the agency's perspective, we are facing substantial demands for technical assistance for all kinds of purposes to assist farmers and ranchers. In fact, the word that we're getting from agricultural producers is our ability to deliver technical assistance—is eroding in the field because of the need to spend more and more of our time on delivering programs. So our request for 19 percent of EQIP funds to operate this program is really to protect the good we do already through technical assistance under our conservations operations account. We would, frankly, prefer to have a much larger conservation operations account so that we would not have to ask for technical assistance funds out of financial assistance dollars; but that simply is not the case, and we're struggling to meet the demands for farmers for technical assistance in asking for technical assistance funds out of these financial assistance programs is the only way we think we can really get the program on the ground and still maintain our commitments to producers who are either not interested in or not eligible to participate in these financial assistance programs.
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    Mr. HOLDEN. Thank you. I'm also concerned about how you're prioritizing your funds. I understand that in Pennsylvania 75 percent of the EQIP funding will be tied up in just 6 or 7 percent of Pennsylvania. I'm wondering why such a large percentage?
    Mr. COX. I'll have to beg ignorance on the specifics of the Pennsylvania case and simply repeat myself, I'm afraid, that the decision on how much money goes to priority areas and how large those priority areas are is really made at the Pennsylvania level by the State Conservationist and the State FSA Director in consultation with that State Technical Committee; and I can tell you in generics that there are different States that have taken different strategies. Some have tried to make their priority areas quite small so that they can finish the job there in 3 years and move on and make more people eligible. Other States have taken different strategies that they think fit better for their State. But I would have to get back to you, frankly, sir, with a more detailed understanding of——
    Mr. HOLDEN. We'd appreciate it. I understand that there needs to be some priority spending, but it just seems that 75 percent seems quite high. Maybe a number closer to 50 would make a heck of a lot more sense. And I have one more question specific to Pennsylvania. Maybe you can't answer that, but I'll put it to you anyway.
     One percent or $418,000 of Pennsylvania's $4.18 million for fiscal year 1998 EQIP funding goes to education programs. I'm just wondering, what exactly does NRCS spend the education portion of EQIP funding on?
    Mr. COX. Mr. Holden, the statute requires us to provide three kinds of assistance under the EQIP: that's technical assistance, financial assistance, and educational assistance. Again, I'll have to plead ignorance about precisely what those educational assistance funds are used for in Pennsylvania, but generally those educational assistance funds have been used to spread the word about EQIP, to make the program more visible and make more producers aware that EQIP exists. They've been used to hold public meetings at which local groups help define what the priorities for the program should be. They've been used to provide training opportunities for staff other than NRCS that help us implement that program. They've been used     for a variety of those sorts of educational purposes, outreach purposes, making sure that people know about the program and can utilize the program.
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    Mr. HOLDEN. Thank you. Thank you, Mr. Chairman.
    Mr. COMBEST. I would encourage you to—and we will certainly encourage the EPA—for the two agencies to work very closely together as the EPA begins to move forward in their regulations on this.
    There are some things that just obviously stand out where you've got—taking poultry, for example—where you've got a bunch of small farmers that contract to a large poultry producer and whose name is on the chicken that you buy in the grocery store, whoever that may be; and each of those smaller farms, I would presume, would be eligible for some assistance. And yet, for example, one of the quotes in the paper today in the Washington Post in this article on the EPA was a gentleman relative to the Maryland situation that talks about the fact that you would have to look at—of course, applying for new permits, that the major producers who contract out are going to also have to be brought under the regulations. That you can't just place all the burden on the small farmer, which I agree could make it very difficult for them. But then you've got counter programs where you've got EPA's looking at the larger producer which wouldn't qualify for any EQIP funding, and there's never going to be enough EQIP funding to do everything we want to do, but there does need to be similarities and there does need to be, I think, some consistency and so I think USDA would be very willing to work in a cooperative manner with EPA as they're coming up with some of these proposals, but I would certainly encourage that.
    You had mentioned in your opening statement, Mr. Cox, the old ACP program; and, as we're all aware, the EQIP is sort of a—it's a home that all of these other programs eventually found when they were eliminated. But tell me the differences that any of us would recognize and notice on a farm that is being serviced under the EQIP, and how much different would that be from, let's say, the old ACP program, and what would you be able to be doing that ACP would not have done?
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    Mr. COX. The practices, I think, that are eligible for EQIP that a producer could be very similar to those that that producer could have received under ACP.
    I think the primary differences between ACP and what EQIP does are at a larger cut level. The one difference that we've spent a lot of time talking about is the geographically targeted basis of EQIP, which was, for the most part, different than the way the ACP program was administered, although there were special areas and targeted areas under the ACP program as well. But generally the ACP program, as you know, funds were allocated to the county level and then out to producers from there without the same emphasis on geographically-based targeting.
    The second primary difference is the EQIP program is largely a long-term agreement program, 5- to 10-year agreements with producers with a more comprehensive conservation plan and with multiple practices scheduled for implementation over time. Under the ACP program, there was more opportunity for annual practices. That is not the case; the statute in EQIP clearly directs us to run this program as a long-term agreement program rather than an annual program.
    Mr. COMBEST. How are the targeted areas determined?
    Mr. COX. The geographic priority areas are determined, first based on recommendations that we receive or that our State folks receive from the local work groups. These groups of county folks, conservation districts, and FSA county committees, and others make recommendations on what these geographic areas ought to be and what the purpose of those areas ought to be. Then it's at the State level with our NRCS State Conservationist and the State FSA Director taking consultation recommendations from the State Technical Committee that determine in the end what the shape and configuration of those priority areas ought to be and also what level of funding they will receive.
    Mr. COMBEST. How often are those reviewed? Or would they be under the program?
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    Mr. COX. They're reviewed annually. The concept of the program is these areas should be of a scale that the problem can be fixed in 3 to 5 years.
    Mr. COMBEST. You had given us a breakdown in your opening statement that 56 percent of the program was going to water, 23 percent to soil erosion. Did that happen by accident or did that happen by plan, that those percentages came out that way?
    Mr. COX. Mr. Chairman, I would hesitate to characterize that outcome as by accident. It really is a result of the deliberations at a State by State level on what this program ought to be doing on a State by State basis. There were no percentages directed to States from Washington about how we wanted to see that come out. That is simply a result of deliberations at the State level on what the most important concerns in that State are.
    Mr. COMBEST. And that certainly was not a trick question. I was just wondering how that had occurred, because I'm thinking that if you're talking about in an area of—for example again the article—if in fact we go to, since it's all under Clean Water Act that this is being enforced, and is obviously going to have a connection with water, that that percentage could even substantially grow if we see an area that's being targeted and being dealt with. It certainly has been of interest in the past but maybe not to the liability extent that it was in the past.
    Mr. Dooley.
    Mr. DOOLEY. Thank you, Mr. Chairman. And I really appreciate the time and the information that you've provided us today. It really has helped my understanding of the allocation of the funds.
    I have one other area there that I'm not quite clear on. In terms of when you go through the formula and you make the allocations based on that formula, then what role does the Regional Conservationist play? I know you responded to Mr. Moran somewhat there, but I'm still not clear on that.
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    Mr. COX. The role the Regional Conservationist plays is we use the allocation formula to make an initial cut on what each State should receive. Then the Regional Conservationist takes a look at what that larger pot of money within his or her region would be, and looks at how those dollars are allocated to the States within that region; and if they think there's a serious discrepancy will suggest to headquarters that adjustments need to be made in that allocation.
    Mr. DOOLEY. Can you give me an example of what would be a reason that has been used in the past in making an adjustment?
    Mr. COX. Let me take advice from my staff, but I'll do a hypothetical example that——
    Mr. DOOLEY. Well, we don't even need to do a hypothetical, I wouldn't think. I think we could do an actual, couldn't we?
    Mr. COX. Let me use a real example from the western region of the country.
    One of the problems of a locally-based program is that sometimes those local groups do not recognize problems that are experienced by people that are outside of their local area. An example would be Colorado River salinity or the Gulf of Mexico or Chesapeake Bay or these larger areas of national significance; and one role our regional conservationists are asked to play is to try to identify if those sorts of multi-State, multi-region larger-scale issues are in fact being missed in the—in either decisions to fund particular statewide concerns or priority areas. So that's the kind of strategic look that we're asking our Regional Conservationists to play in this program.
    Mr. DOOLEY. And then what is the role of the State committees and technical committees on those decisions by the regional conservationists that would, in fact, reallocate some dollars beyond the formula allocation?
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    Mr. COX. Although the Regional Conservationist can suggest that changes be made in the allocation of the formula, there's two points in the process where concurrence has to be reached between NRCS and FSA. That's at the national level and at the State level; so the State Director and the NRCS State Conservationist work with their State Technical Committees, take recommendations from the State Technical Committees, but at the end the real decision-making is at that State level and at the national level. The State Technical Committees—I want to be clear—are not decision-making bodies. They are recommendation-making bodies, but the decisions remain with the USDA officials.
    Mr. DOOLEY. Yes. We have received just some comments from people that are serving on the State Technical Committees, just expressing some concern that in terms of being put in the position where they're provided information with very little time in order to respond to and make recommendations; and I would just encourage you in the future—you know, these people, I think, are taking their responsibilities very seriously and any effort that you can engage in to insure that that information is provided them in time for them to do the assessment and the analysis so that they can really make the decisions I think would be most appreciated. And I just pass that along.
    Mr. COX. Thank you.
    Mr. DOOLEY. And I thank you. This has really been helpful for my understanding. I really appreciate the time that you folks have spent here.
    Mr. COMBEST. Mr. Minge.
    Mr. MINGE. I just have a couple things I'd like to follow up on.
    Have you had a chance within the Department to hold any review with either landowners or farmers who are participants in the program or your State offices of how the program has worked here the first 18 months or 2 years, and what changes you should either make in the operations of the program or changes you'd like to see made in the legislative framework under which you are constrained to operate?
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    Mr. COX. We have not had the opportunity to have formal focus groups, or however you'd like to characterize that process of talking with producers about their perceptions of the program. We have had an evaluation team in the field in 1997; we are going to do another evaluation in 1998. In that 1998 evaluation we are going to specifically survey producers regarding their experience with the program and what kind of experience they've had and what suggestions they might have about how to make the program work better. So I think we would very much like to take the opportunity or take advantage of what producers can tell us about how they have experienced the program.
    Mr. MINGE. Well, I've not heard a vast amount of criticism of the program, and I don't wish to imply by my question or my subsequent comment that I see the program as suffering from those types of difficulties. But I would like to urge that you follow through with what you've said. I compliment you on that intention.
    I would say that there are a couple of matters that have come to my attention. One is that the burden of preparing a whole farm plan and all that that might entail is sometimes an impediment to people participating in the program; and I've also heard that there is a waiting period between the time that a person's application may be accepted for assistance and funds are actually available, and that this prolonged wait makes it difficult in some cases for people to actually take advantage of what they had thought would be quite an assist in their farm operation.
    Mr. COX. We've heard all three of those concerns as well; in fact, all three of those concerns were raised by the 1997 evaluation process. I can briefly hit on all three of those.
    The whole farm plan is not, in fact, required for participation in the EQIP, but there is clearly an incentive for producers who are willing to propose a more comprehensive plan than a producer who is interested in more of a single practice plan. So, in effect, most of the plans that we are preparing for EQIP are more comprehensive, although I'm not sure we would call them whole farm plans.
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    The waiting period we've heard a lot of complaints about. That waiting period is, in fact, statutorily driven; there is a provision in the EQIP statute that tells us we cannot fund—or we cannot deliver—assistance to a producer until the following fiscal year that the plan has been completed. So that 1 year—not necessarily a year, but that waiting period between being accepted, getting the plan done, and having the ability to deliver financial assistance is, in fact, driven by the statute itself.
    Mr. MINGE. Let me interrupt you on that. Is there a good policy reason for continuing that statutory requirement, or would you recommend to this subcommittee that we make an adjustment in the law at this level and recommend to pass this on up to the floor for consideration?
    Mr. COX. There's been a lot of discussion within the Department about this issue in the context of the legislative package that the administration will send forward to accompany the budget. I know this issue is one of those on the table, but I would prefer to wait until the legislative package is delivered to you before expressing my opinion; but I assure you that this issue is receiving a lot of attention in that package.
    Mr. MINGE. I interrupted you; you were going to comment on the third point.
    Mr. COX. The final point that we've heard from producers and our field people is—and the R&E team is—that there is a sense that some of the administrative burdens associated with participation in EQIP are too large. And we've made a commitment internally to work within NRCS and our FSA partners to try to explore whatever options we can to meet the requirements of the statute but strip away as much of the administrative processes that are current in place. So we'll be working on that this year with some vigor.
    Mr. MINGE. Thank you.
    Mr. COMBEST. Which agency is responsible for telling us how the money is spent?
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    Mr. COX. Mr. Chairman, I would say I think NRCS and FSA are partners in telling you where the money is spent. Let me explain my understanding of how that's going to work or how it's worked in the past. In fact, some of the data that are provided in your packet we relied on FSA to deliver those, that information to us. Specifically, I remember the data on payments that have already been made to producers, and our data that we relied on our FSA partners to provide for us and to you.
    At the field level, where the rubber meets the road, there's really two complementary systems of capturing information regarding the EQIP. Through the conservation planning process that we go through for EQIP—that's NRCS's primary responsibility at the field level with EQIP—we capture in that process information about what practices are in that conservation plan, what the timing of those practices are, and so on and so forth. At the field level, FSA is really responsible for the contracting and the disbursements of funds to the producer. So on that side of the table we capture what the dollars are and where those dollars are going. So what we hope to be able to do in the future, and are beginning to be able to do in fiscal year 1998 is match up where the dollars are going with the conservation plan and be and. We see this as a jointly, certainly administered program with policy leadership in NRCS, but day to day we work directly with our FSA partners.
    Mr. COMBEST. All right, but does NRCS actually make payments? Do they actually cut checks? Or that would all be FAS?
    Mr. COX. FSA.
    Mr. COMBEST. I'm sorry. FSA. FSA should be able to give us then an accounting breakdown of how the money was spent and for what, even though I recognize that NRCS does a lot of the work on it. In terms of actually making the payments and the checks and for what it was, FSA should be able to do that?
    Mr. SMITH. Mr. Chairman, yes, FSA should be able to provide that detailed information on the accounting.
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    Mr. COMBEST. All right. Thank you.
    On page 515–91 of the EQIP manual, the producers' responsibilities are to develop and submit a conservation plan that protects soil, water, air, or related natural resources. The language reads like producers must develop whole farm plans, and in fact conservation district newsletters indicate that EQIP requires a producer to develop a whole farm plan. Could you explain that?
    Mr. COX. Mr. Chairman, EQIP does not require a producer to develop a whole farm plan. There is in the ranking criteria and the way that individual producers are selected for participation, there is clearly an incentive built into those ranking criteria that give more points for a producer that's proposing to do more practices and have a greater environmental effect than producers that are proposing to do fewer practices or have a smaller environmental benefit. That ranking criteria was developed to respond to the numerous directives in the statute that this program be run in a way that maximizes environmental benefits per dollar expended, so that that ranking criteria and many other aspects of the program have been constructed in order to be able to demonstrate that we are operating this program in that sort of cost-effective manner. So there clearly is an incentive for a producer to propose to do more practices and more comprehensively address whatever natural resource issues are on their farm or ranch, but there is no requirement that a ''whole farm plan'' be developed in order to be eligible for EQIP. Given the limitation of funds, there are more multiple practice plans being approved than single practice plans, because of, again, the benefits per dollar expended.
    Mr. COMBEST. I think everyone appreciates and supports the idea of the maximum benefit of the dollars expended; and even though there is not a requirement, if Cal Dooley and I farm next to each other and I filled out my plan not as extensively as Mr. Dooley did and we're competing for funds, is it fair to say that he would stand a better chance to have his application approved?
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    Mr. COX. Mr. Chairman, let me back up a minute. I really want to clarify this whole farm plan issue, because what we talk about in the context of EQIP is not a whole farm plan. What we talk about is a comprehensive plan with a set of practices that fully addresses whatever the resource concern is. In other words, if your resource concern is soil erosion, we would give more points to a plan that suggests three or four comprehensive practices that will really take care of that soil erosion problem. In a whole farm plan, as we understand it, a whole farm plan would include all kinds of practices not related to soil erosion; it might be wildlife habitat, it might be other concerns. So what we're focusing on is evaluating the comprehensiveness with which whatever resource concern is identified on that farm is addressed. So the extent to which your proposal or Mr. Dooley's proposal would more fully address whatever that identified resource concern is, you would receive more ranking points within our ranking criteria.
    Now the second step in making that final decision is to introduce the element of cost, and we do that by simply dividing the ranking points that you've been given based on what it appears you're going to achieve with your proposed plan by the financial assistance that you are requesting.
    So there is on two bases that decisions are made regarding whether you or Mr. Dooley would receive—would be asked to participate. One is both the environmental benefits but then also the cost; and the directive in the statute is clearly where environmental benefits are equal we should ask, or should select the producer that should achieve those benefits at a lower cost. So there is those two parts of making that decision on participation.
    Mr. COMBEST. OK. What I would like to try to do is to be able, if a farmer comes to us and asks us for advice about what they need to do as they did for CRP, for example.
    Mr. Dooley and I have farms side by side; we have the same soil types; we're both concerned about soil conservation.
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    Mr. COX. Right.
    Mr. COMBEST. But if Mr. Dooley decides that he also wants to do a farm plan about wildlife and about some other things that are not related to the specific problem we're trying to solve, but overall is relative to environmental benefits, can you say or not say that he would be more likely, if he went further than I did in developing a plan, even though it's not a requirement, to be competing for the same pot of money, would he would be more likely to receive assistance than I would?
    Mr. COX. If Mr. Dooley's proposal took care of the resource concern that was identified——
    Mr. COMBEST. Right. Soil conservation.
    Mr. COX. And then Mr. Dooley is proposing to go beyond that and achieve additional benefits with wildlife habitat in some means, he would, in fact, receive additional points on the ranking system.
    Mr. COMBEST. Thank you.
    Mr. COX. That itself would not necessarily achieve participation because the cost factor would have to be evaluated.
    Mr. COMBEST. Yes. I just wouldn't want to be in a position, if a farmer came to me and asked me, and I said, ''Look, you don't have to do a whole farm plan,'' but I would want to be able to give them the best advice we possibly could about how they might be able to receive assistance. And I think that answer would be, ''Make it as total as you can to all of the environmental benefits that you possibly could achieve, or see achieved under the program.'' Would that be erroneous information?
    Mr. COX. Mr. Chairman, it would be erroneous only to the extent that a producer could suggest an extremely comprehensive plan that is very expensive and would require lots of financial assistance, and that—the cost of doing that could——
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    Mr. COMBEST. It could then be a negative. I'm going to have him call you when he asks me. [Laughter.]
    The subcommittee is pleased to have the ranking member who was here earlier, and would recognize Mr. Stenholm for whatever time he would use.
    Mr. STENHOLM. Mr. Chairman, I have a statement that I would like to have inserted in the record.
    Mr. COMBEST. It will be done.
    Mr. STENHOLM. I would also like to submit questions to be answered in writing. Mr. Chairman, following-up on your line of questioning, in the Great Plains we used to have the Great Plains program, which was designed to be a total farm plan. You pretty much had to have a total farm plan in order to qualify, and this was based mainly on erosion control: It was a very, very successful plan and it also had a limit on how much an individual producer could receive. Mr. Cox talked about some of the potential of getting into very large cost which we are now beginning to run into. In fairness, EQIP probably was not as well thought out at the legislative level. Then we passed the Fair Act in April 1996, and began the proposed rule and 800 responses, 2,500 comments, and all of this that went into the rulemaking process. This created somewhat of a delay, and we didn't get the information out to the producers in time to spend all of the money available last year.
    I'm trying to establish criteria for spending the money, we've now run into another problem which will be exacerbated by what as a result of this morning's paper announcement of EPA is now proposing to do with the large animal operations. Even though I believe I heard you say you personally only read about proposal, I think it's fair to say no one was really shocked about this; it's been talked about for years, that something of this nature would be proposed.
    One of the areas that I really want to see USDA and NRCS—''Team USDA'' pursue is a more active, working relationship with EPA. If the EPA is going to require certain things, if they are going to be the policemen, we are hearing the NRCS say ''We don't want to be the policeman, we want to be the folks voluntarily carrying out what is necessary to protect the environment and our neighbors up and down the streams.'' And I believe that. But somebody's going to be the policeman. And when you've got a policeman making decisions about things that cost a lot of money, then we had better be concerned about where we're going to get the money.
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    And we have a problem in agriculture in that our baseline is not large enough to do everything that is going to be required of us in this one area alone. If we put all of the resources into solving the animal waste problem, we don't have enough in our budget. But I look around at things like the debate on Superfund and we see that half of the billions of dollars we put into Superfund have gone to lawyers in litigation. And then I look at the EPA budget and I get envious, because they've got a heck of a lot of money and we fight with them all the time on this committee. We shouldn't be doing that. We ought to be fighting with them when they're wrong, but we also need to be looking for solutions. There are monies in the EPA budget, and if they are going to require without any scientific basis whatsoever other than somebody's opinion, that certain things have to be done in agriculture, then part of their budget should be spent solving the problem. This could work, if we can ever get over the turfbattles.
    We've got to do this, Mr. Chairman, somehow, someway. I hope your subcommittee will delve into this and that at some point in time we can have EPA and NRCS all at that same table working to solve the problems. I can quickly give you a little example of a problem in Erath County, TX. We have large dairy operations we've had to deal with. Fortunately, 5 years ago we began developing scientific information, so that we now have a good, solid record about who's doing what to whom. We have a serious problem, how can we solve it? Then I pick up the paper this morning and I read EPA again coming into this, I see some of the constant problems we have with that part of our Government in which they say we have a problem, but then we get into the litigation because no one has a solution that can be defended by good, sound, solid science.
    Fortunately, in the case of Erath County, we have evidence of this, and we've got to put this together into a reasonable plan. Part of the intent of the USDA reorganization of 1994 was to create an entity within USDA that would develop credibility, so that when another agency of Government decided we had a problem that needed to resolution, we could step up and say, yes, we are there; we're the ones to solve it, and we're prepared to do it.
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    Now I have just one brief comment. USDA hasn't done as good a job getting ready for this as you should have. Mr. Cox, I'm not shooting the messenger, but we're involved right now in the on-going turf battles within USDA, so that we don't really have that opportunity to do it. We're fighting it from one end of this country to the other and we're going to resolve it in the next year or so.
    I'll conclude, Mr. Chairman, I appreciate the indulgence of time, but we've got a problem and I look at it as an opportunity. You are totally correct, and when you represent the desires and wishes of soil conservation districts, NRCS personnel all over the country, we want to be the solvers of the problem. But somehow, someway, we've got to build the cooperation and the partnership between two agencies—in this case EPA and USDA. One party has more money than the other, you can force us to litigate. You can force us to do what we have done in Texas. We have forced dairyman after dairyman after dairyman to spend countless amounts of their own money solving a problem that nobody adequately researched.
    And one of the things I submit for the record, Mr. Chairman, is a letter from a dairyman in Texas, pointing out just what I have said. But I hope that somehow, someway, this subcommittee can delve into this and provide the leadership that will be required, working in partnership with the Department and hopefully bringing about the kind of cooperation between the two agencies in question that will be necessary to solve this problem and still maintain a competitive agriculture. It can be done; I look forward to working with you, Mr. Chairman.
    Mr. COMBEST. The Chair appreciates the gentleman's comments and in a couple rounds of questioning I was encouraging that participation and cooperation to the group here and said we would certainly encourage the other agency to as well be cooperative.
    And the budget envy that you were speaking of—one of the questions that I had asked following this morning's article on the new EPA livestock regulations was how much of a potential cost burden was that going to impose on USDA, which is unknown at this point; but it was indicated that possibly in permitting some other areas there would be costs imposed and I would be very glad to work with the gentleman on the draft of a letter—that there be a very close accounting of what that cost might be and if EPA is coming up with regulations that USDA has to enforce, I expect EPA to pay them, to pay for it.
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    Mr. STENHOLM. I hope one message came through; when EPA pays, it's the taxpayer, not EPA, paying the bill.
    Mr. COMBEST. Well, the taxpayer——
    Mr. STENHOLM. You and I understand that——
    Mr. COMBEST. I want to make sure that USDA didn't have to eat it out of their budget, out of a program that was established for some other purposes.
    Mr. STENHOLM. But here again I am perfectly willing to acknowledge that we have a problem, and I'll speak only for one narrow part of my district, Erath County. We acknowledge we've got a problem. We have brought about the cooperation through a lot of dedicated hard work at the local level to get the community working together to solve the problem. We've been short of resources, for the reasons that I will sign your letter, Mr. Chairman. I will sign your letter because I want to point this out over and over. Let me emphasize this; if one agency is going to require agriculture to do something, first off spend a little bit of time on research, and know if you force something that you're going to have a reasonable chance of solving the problem. There is no better agency to do that than USDA. We have the talent, the resources, in land grant universities and other universities all over this country, to provide the research and the answers, once somebody ascertains the problem.
    What I worry about this morning is, here we go again. Here we go again with a problem, and somebody's going to have solutions without working as closely with the people that have the solutions. At some point, I hope we can put all of these entities together and do just that. If you're going to force this on agriculture, and you're going to force it without good sound science, then you pay for it, out of your budget. That's what I hear you saying, Mr. Chairman; I'll sign that letter twice. [Laughter.]
    Mr. COMBEST. The gentleman from Texas understands exactly what this gentleman is saying. [Laughter.]
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    Gentlemen, any other questions or comments? To our guests, ladies and gentlemen, we appreciate again very much your coming up and discussing this, and I would propose that may be something we want to look at as to have those of you who represent the agency you do and EPA up for a joint discussion about some of these problems and thank you very much. And the hearing is adjourned.
    [Whereupon, at 11:25 a.m., the subcommittee adjourned subject to the call of the Chair.]
    [Material submitted for inclusion in the record follows:]
Testimony of Craig Cox
    Mr. Chairman and members of the subcommittee:
    I am very pleased to appear before you today to detail our accomplishments in the implementation of the Environmental Quality Incentives Program (EQIP). With me today is Dallas Smith, Deputy Under Secretary for Farm and Foreign Agricultural Services.
    Nearly 2 years have passed since the Federal Agriculture Improvement and Reform Act of 1996 was signed into law. From development of program guidance to our experiences in the initial contract application and selection period this past summer and early fall, there is a great deal of information to share. Today, I hope to outline our achievements and to describe how the goals of the program are being addressed.
    Program Development
    To begin, I'd like to briefly review how we arrived at this point in the implementation of EQIP. Both the Congress and the administration had similar visions for this new conservation program. In the administration's farm bill guidance, commonly referred to as the Blue Book, we identified the need to offer farmers more decision-making opportunities and greater flexibility in how they farm their land. We also advocated shifting more authority to local and State officials and targeting conservation programs. A principal goal of our recommendations was to simplify conservation and environmental program requirements and better incorporate State and local priorities. We suggested policies that provide farmers and ranchers with voluntary incentives to adopt sound conservation practices.
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The vision articulated in the Blue Book was that of Coordinated Conservation Assistance, which aimed to improve the performance of conservation programs in the following manner:
    Conservation assistance should begin with national and regional guidance and standards that reflect national priorities developed through an open and inclusive process.
    An open and inclusive process should also be used at the State level to identify priority areas consistent with national guidelines that can be addressed on a watershed or some other geographical basis. State level problems in watersheds should be identified by State and local groups as should the solutions. Funds, to the extent available, should support these activities where they are consistent with national priorities.
    A central goal should be to develop site-specific plans in full cooperation with the producers and ranchers in a particular area, including where practical the consolidation and simplification of the numerous Federal and State plans affecting landowners to reduce the administrative burden to producers.
    Simplified conservation assistance should be established through consolidation of existing cost-share programs into one program, or through consolidation of conservation authorities, to ensure that the best elements of each program are retained.
    Congress, for the most part, adopted legislation very consistent with these principles and incorporated them in the EQIP provisions of the Federal Agriculture Improvement and Reform Act of 1996 (the 1996 act), which amended the Food Security Act of 1985, as amended (the 1985 act).
    Since President Clinton signed the 1996 act into law on April 4, 1996, the Department has continued this open and inclusive process of developing EQIP and other conservation programs. We conducted nine listening forums to provide opportunities for public comment in advance of rule-making. A national-level interagency team was consulted as the Natural Resources Conservation Service (NRCS), the Farm Service Agency (FSA), and the Commodity Credit Corporation (CCC) developed the program rules and guidance. The proposed rule was published in the Federal Register in October, 1996, and the final rule was published and effective on May 22, 1997.
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    Throughout the time period before and after the final rule was published, a coordinated public information and outreach effort was conducted. This helped prepare farmers and ranchers for their first opportunity to apply for the program. Program application periods are determined at the State level because of the program's emphasis on reflecting State and local priorities and the need to accommodate different administrative processes.
    Program Dynamics
    EQIP is very different from previous programs. The program is driven from the field and State levels, using a bottom-up approach. EQIP covers numerous resource concerns on a much more localized level and strives to treat the highest priority natural resource problems in prescribed time. EQIP contracts are determined at the field level throughout the year, using flexible application periods that address diverse situations.
    EQIP encourages and allows all of the resource concerns to be addressed with a comprehensive, system-type approach rather than through individual practices that only addresses part of the problem. A comprehensive approach encourages farmers and ranchers to consider all of the effects of their actions on their own unit, as well as the impacts beyond their farm and ranch.
    EQIP is the key Federal program to help implement those conservation plans that can be linked to other local, State, tribal, and Federal programs to assist farmers and ranchers to protect or restore natural resources. This requires a much broader approach than the more narrow focus of the conservation programs replaced by EQIP. Those old programs primarily focused on solving one natural resource problem through cost-share payments only and did not require a conservation plan. EQIP can help farmers and ranchers comply with Federal and State environmental laws with reduced burden and expense.
    Program Implementation
    Fiscal year 1997 was really a transition year. An abbreviated process was used to ensure EQIP funds were available soon enough to be obligated prior to the end of the fiscal year. Fiscal year 1998 will be our first full year of implementation using a locally-led approach. A process has been established that ensures conservation problems in the priority areas are identified by local work groups. It will further ensure that solutions are developed and pursued by these groups. Locally-led conservation involves in the decision-making process farmers, ranchers, and other people at the local level who can ensure that these activities are focused and successful.
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    Preparations for the implementation of EQIP at the State and local levels actually began in October, 1996, when NRCS consulted with State Technical Committees to identify the State level priority areas where the program should be delivered. The process for selecting these priority areas begins with the local conservation district convening a local work group, which is a partnership of the conservation district, NRCS, FSA, FSA county committees, Cooperative Extension Service, and other state, local, and tribal entities with an interest in natural resource conservation. They develop proposals for priority areas, develop ranking criteria to be used to prioritize producer's applications for EQIP, make program policy recommendations, and other related activities.
    The priority areas recommended to NRCS by the local work group are submitted to the NRCS State Conservationist, who with the advice of the State Technical Committee sets priorities for the program, including approval of priority areas. Over 600 priority areas were approved by State Conservationists. When fund allocations were made to the States, it resulted in 550 priority areas being approved for funding. Funds are made available to the State NRCS offices based upon the quality of the priority area proposal, local initiatives, and the environmental needs of the affected areas. Although we were not able to fully utilize the local work groups in the process in fiscal year 1997, we are pleased to report that the locally-led conservation effort has been engaged to identify where and how EQIP will be delivered in fiscal year 1998 and beyond.
    There has been significant response to this program by farmers and ranchers. We received nearly 60,000 applications in fiscal year 1997. It would require over $550 million to fully fund all of the applications received last year, alone, which is three times the available financial assistance funds. After NRCS ranked the applications based on criteria developed at the local and State level, FSA county committees approved over 23,000 long-term contracts with farmers and ranchers. The EQIP financial assistance on these contracts will exceed $174 million.
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    The 1985 act directs the Secretary to operate a national program that helps producers address their most significant natural resource challenges. It also directs the Secretary to give a higher priority to providing assistance in conservation priority areas and in a manner that maximizes environmental benefits. One of the things we did in fiscal year 1997 to help us achieve these goals was to provide funding in a state at levels of which at least 65 percent of the funds are allocated to priority areas and a maximum of 35 percent to significant statewide natural resource concerns that may occur outside funded priority areas. Data for fiscal year 1997 contracts shows that State leaders have actually decided to target nearly 70 percent of the funds in priority areas. It is clear that the shift to a more targeted approach is occurring and supported by local decisionmakers. Part of the reason behind this targeting is a desire by local leaders to support those farmers and ranchers whose lands and operations are in the greatest need of protection. Based on the fact that requests for assistance far exceed available funding, there is a need to continue to prioritize and focus our efforts so that we meet our Congressional mandate to maximize environmental benefits per dollar expended.
    The 1985 Act's requirement that 50 percent of the available funds be targeted to address natural resource problems relating to livestock production. This target was considered throughout the program's development and was included in our process for allocating funds to States. State Conservationists made estimates of the amount of funds that will be spent on livestock-related concerns in each priority area and for each statewide concern. Our current estimate is that 54 percent of the EQIP funds will be spent on livestock-related problems.
    In preparation for this hearing, Chairman Smith asked NRCS to provide certain information on EQIP implementation for six states. That information revealed that of the 4,223 contracts approved, 51 percent are livestock-related only, 28 percent are non-livestock-related only, and 21 percent are mixed. Although the number of contracts does not assure that the associated funds will be of the same ratio, there is every indication that the 50 percent requirement will be achieved in these six states.
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    We recently gathered more comprehensive data on the first round of contracts. Evaluation of fiscal year 1997 contracts showed:
     Leveraging technical assistance and educational assistance contributions, especially in-kind assistance, from State, local, and private sources to assist the program achieve the identified goals and objectives.
     Enhancing the buffer initiative by leveraging itself with other buffer implementation efforts to help fill in gaps, overcome other initiative limitations, or provide other opportunities (technical and educational assistance) to help achieve even greater results.
     Providing opportunities for small and socially-disadvantaged farmers by expanded outreach and mentoring efforts to this important constituency.
    Lessons Learned
    Secretary Glickman, FSA Administrator Keith Kelly, and I believe that these indications are good, and that we have a program that achieves the goal set out for it in statute: maximizing environmental benefits per dollar expended by assisting farmers and ranchers in mitigating or resolving soil, water, and related natural resource problems, and in complying with environmental laws.
    There are several lessons that we have learned from the initial implementation of EQIP, and some of them indicate that we have some work to do to refine the program and make it more effective.
    First, when evaluating the response from the farmers and ranchers across the country, we learned that there is a tremendous need for a comprehensive natural resource conservation program. Even with the new program requirements for a conservation plan and a 5- to 10-year contract, the demand is high and will likely become higher as more producers become aware of the program. We believe that one reason for the popularity is the important role that local interests have had in identifying where the program should be delivered. Through the locally-led conservation efforts a strong interest in the program has already developed.
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    Second, the 1985 act places simultaneous emphasis on helping farmers and ranchers deal with their priority natural resource challenges, doing so by working in priority conservation areas, and seeking to maximize environmental benefits. Last March, the Soil and Water Conservation Society (SWCS) convened a roundtable representing a broad array of perspectives on agricultural resource conservation. A white paper report, published by SWCS, summarized the roundtable. The white paper stated that a central change to conservation programs enacted by the 1996 act is that the basis for allocating conservation funds is shifting from a pattern of equity, which provides similar levels of support in most places regardless of the need, to efficiency, and concentrates a larger portion of financial resources on the most severe problems. Enacting the use of priority areas should lead to conservation efforts being more efficiently applied. We have learned that it is not easy to get the right mix of these objectives.
    Third, while there is a considerable amount of interest in the program, we have learned that we must increase our efforts to inform and reach out to producers. Many producers, especially low-income and minority farmers have not traditionally participated in the previous conservation programs that were supplanted by EQIP. We need to reach out to these producers, as we do to all other producers, to help them understand the natural resource conditions on their farms and ranches, and in their communities. In addition, we have emphasized appropriate lower-cost technologies that might be more easily adopted and that better fit the interests and needs of socially disadvantaged farmers. We also have a great challenge to encourage producers to think beyond their own farm boundaries. People need to understand that applying practices here and there, in a fragmented fashion, may not achieve tangible benefits beyond the farm level.
    Last but not least, we have also learned that some of our employees and conservation partners need more training and experience to help them carry out the program the way it was designed. We will be looking at ways the process used to rank applications can be streamlined, better coordinated across a state, or improved to ensure that the applicants who will achieve the greatest environmental benefits for the least program expenses are chosen. In other instances, the development and approval of conservation plans and contracts needs to be performed in a more efficient manner so that producers are better served. Some of us also need to change our thinking and culture away from the paradigms of the past programs to a new paradigm; some became so accustomed to working with programs that existed for decades and changing to something new is not easy.
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    Undoubtedly, other lessons will be learned and we will respond to those lessons accordingly.
    Local work groups recently recommended nearly 1300 priority areas to State Conservationists for approval. State Conservationist, who with the advice of the State Technical Committee, set priorities for the program and approve priority areas. Over 650 priority areas were approved by State Conservationists. These proposals again far exceed the available funds for fiscal year 1998.
    The current fiscal year provided EQIP its first full year of locally-led involvement. The number and quality of these priority areas reveals that many more local work groups were involved in the process in fiscal year 1998. The shift to this new approach is clearly taking hold throughout the nation.
    Based on the fact that requests for assistance far exceed available funding, there is a need to continue to prioritize and focus our efforts so that we achieve the maximum environmental benefits possible. National interest in animal nutrient management is becoming of increasing concern. The applicability of EQIP as a tool to address this issue will spur additional program participation. In addition, we will work to reach out to potential minority and low-income producers who are not aware of the opportunities that EQIP affords. The 1999 budget proposal seeks to increase funding for EQIP by $100 million for fiscal year 1999. The increased funding would be directed toward technical, financial, and educational assistance to farmers and ranchers in addressing problems associated with agricultural runoff. The ability of the program to remediate water quality concerns will make it a primary tool in meeting the ambitious goals contained in the President's Clean Water Action Plan as well. In addition, the request will also help with increased assistance to minority and limited resource farmers to ensure participation in the program.
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    Improving and protecting our private land is important to all of us. However, our lands have been telling us for many years that things must be done differently, to treat all of our natural resource problems. The locally-led conservation initiative initiated by EQIP is simply an effort to listen to the land where it is heard best, on the local level. Our locally-led conservation effort strives to get our nations farmers and ranchers to consider everything within their farm boundaries and beyond. EQIP encourages local residents to work together and take responsibility for solving environmental problems. Locally-led conservation is an effort to diagnose and prioritize problems, support local initiative and involvement, develop comprehensive plans of treatment, identify sources of help, and provide the best financial, educational and technical assistance resources available to provide solutions.
    I would like to state very strongly for the record that our employees have a strong grasp of this principle and have done an impressive job to get EQIP on the ground quickly, efficiently, and with a strong adherence to the vision of the program . Making the transition to new programs is never without difficulty. However, I assure you that from the process of rule-writing right down to the field office level, we have focused on keeping the program straight-forward, and for ensuring that taxpayers get the maximum environmental benefits possible. I am confident that we will continue to improve, and by analyzing the information that is coming in, we will be able to further sharpen EQIP for the future. We will also strive to better capture our accomplishments so that they may be utilized to further improve the program and prove its value to the taxpayer. As conservationists strive to help local people realize their goals, we want to ensure that EQIP will be a tool that they reach for time and again. I thank you again for the opportunity to provide my remarks and will be happy to answer any questions that you might have.
    "The Official Committee record contains additional material here."
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