eral funds, and others identified the need for a regulatory approach at the State or Federal level, or proper implementation of the 1990 Farm Bill.

As scattered as these results appear, one result did come through loud and clear. When we asked State administrators to rate the prospects for overcoming this wide range of barriers and developing an effective agricultural nonpoint source program, only about one-quarter said that the prospects were good or very good.

The Federal resources devoted to nonpoint source pollution control generally, and to agriculture in particular, are, of course, another highly relevant factor in the success of the 319 program to date. A very small number of EPA personnel are assigned to nonpoint source pollution control, perhaps fewer than 50 nationwide. According to the GAO, "less than 6 percent of fiscal year 1990 funding for the agency's... water pollution control activities were devoted to nonpoint related activities." 22 Clearly any reauthorization of the Clean Water Act should result in a significant increase in agency resources in this area.

We are also concerned about the amount and distribution of funding for the agriculture category of Section 319 grants to States (see Table 1). Bearing out our survey results, very little (two percent) of the money is being utilized for regulatory_purposes, for groundwater activities (10 percent), and for implementation of Best Management Practices (five percent). Nationwide for fiscal year 1990, the total for these three categories was only $2.4 million. The vast majority of 319 funds is being spent on information and education, monitoring, implementation of State programs and yet more planning.

For these reasons, we strongly support the provisions in S. 1081 that will result in a shift of hundreds of millions of dollars each year to nonpoint source pollution control. Funds provided in the bill would be ample to implement a much more effective program for agricultural nonpoint source pollution if at the same time, greater emphasis is placed on regulatory mechanisms in priority water quality problem areas.

CLEAN WATER ACT: POLICY OPTIONS FOR AGRICULTURE

Based on a preliminary review of the recently issued management measures guidance for the Coastal Zone Management Act (CŻMA), we are concerned that this approach may lead to another round of planning and paperwork by State-level officials that will not translate into meaningful action to address agricultural water quality problems at the farm-level. Part of the problem is that the penalties provided in last year's CZMA amendments are very modest compared to the expense and political pressure States must bear to rigorously execute the law.

The EPA guidance, for example, lists four options through which States might design their programs to be in conformity with forthcoming EPA and National Oceanic and Atmospheric Administration guidance. The options range from requiring States to implement specified management measures on all pollution sources with no targeting, to requiring States to develop performance standards to determine where to implement specified measures or equivalent measures on a case-by-case basis.23 Given the guidance and the statute, it seems unlikely that States will require farmers to deal with their water quality problems and that is what is needed. Based on past patterns under Sections 208 and 319, what is likely to emerge will be a voluntary program that requires massive financial incentives, and will only affect farmers who are willing to participate. Neither the States nor the Federal Government will have sufficient financial incentives and technical assistance to address the problem on a purely voluntary basis.

22 U.S. General Accounting Office. Water Pollution: Greater EPA Leadership Needed to Reduce Nonpoint Source Pollution. Washington, D.C., Oct. 1990. p. 51.

23 U.S. Environmental Protection Agency. Proposed Guidance Specifying Management Measures for Sources of Nonpoint Pollution in Coastal Waters. May, 1991. pp. 1–19.

Center for Resource Economics

July 17, 1991

Table 1. National Agricultural Expenditures for 319(H) Funds, FY 1990.

Moreover, the extensive listing of best management practices, measures or systems is only meaningful if the program causes them to be implemented at the farmlevel. In our experience, strictly voluntary adoption will not bring about this result. Designing on-farm water quality that are appropriate for a particular watershed will require some advance work by the State water quality agency.

The State needs to adopt water quality standards for the pollutants which may be contributed by nonpoint sources. Most water quality standards that are applicable today were designed for point source pollutants. The EPA could help with this step by revising the Federal criteria documents so that they are appropriate for nonpoint pollutants.

The second step is to identify water bodies that are not meeting designated uses and applicable water quality standards because of nonpoint sources. Again, State procedures may need revision since existing monitoring programs have been set up to identify point source problems. For instance, timing is critical as the nonpoint problem is seasonal and perhaps most serious just after storm events.

For water bodies not meeting standards, the State agency must allocate pollutant load reductions among the contributing sources. The Clean Water Act describes these allocation procedures in Section 303(d). Each water body is assigned a total maximum daily load, or TMDL, for the pollutants for which standards are violated. The TMDL is then allocated among sources. Typically, that has not included an enforceable allocation to nonpoint sources in the past.

We recommend that an explicit local reduction assignment be made to nonpoint sources in the same way that waste load allocations are assigned to point sources. The assignment may be to one or a few specific sources that are known to contribute significant portions of the pollutant loadings to the water body. Alternatively, the assignment or it may be allocated as a general reduction to all sources of a similar type within a watershed.

Even before waste load allocations are assigned, land owners will be able to begin preparing and implementing an on-farm water quality plan. The reason is that these plans, at the outset, can and should emphasize cost-effective or cost-saving farming practices that benefit the environment and farm profitability. The allocation identifies the pollutants of concern and a total loading or load reduction as the ultimate goal for the plan.

One approach to on-farm delivery is to utilize the resources and expertise of the USDA, in particular the Soil Conservation (SCS). SCS was given the lead role for financial and technical assistance to farmers under the water quality provisions of the 1990 Farm Bill. SCS already possesses a large field force with offices in every agricultural county and has a long tradition of working directly and cooperatively with farmers. Moreover, with the 1985 Farm Bill, the Service's voluntary assistance to agriculture has shifted-quite appropriately-to a quasi regulatory role. SCS now helps farmers develop and implement conservation compliance plans, and monitors plan implementation. We see many potential advantages to giving SCS a central and formal role in the development, implementation and monitoring of nonfarm water quality plans. In fact, with adequate funding, much of what needs to be accomplished could be achieved voluntarily through the Water Quality Incentives Program. Such an approach would postpone and reduce the need for the onset of regulations to solve water quality problems in agriculture. State agencies, with guidance from EPA would have to establish criteria for plan content and approval and would also have to develop some monitoring and enforcement capabilities.

The approach has two chief drawbacks. First, questions have arisen as to the ability of SCS to resist farmer pressure to weaken conservation compliance, Sodbuster and Swampbuster enforcement. We fear the same problems could arise for water quality plans. Second, as noted earlier, experience with implementation of the 1990 Farm Bill to date indicates that the agriculture community does not put its money where its mouth is when it comes to incentives and technical assistance for water quality. If environmentalists' support of a voluntary approach in the 1990 Farm Bill turns out to have been ill-founded, it would be irresponsible to pursue a similar strategy in the Clean Water Act.

Another approach would be to give a primary role for on-farm delivery to State water quality agencies and EPA. In essence, the Clean Water Fund authorized in S. 1081 would provide resources to establish a regulatory program for agricultural nonpoint source pollution that would be primarily implemented by State agencies under EPA guidance. EPA regional staff would be significantly expanded so that the agency could assist States directly with implementing, monitoring and enforcing onfarm water quality protection plans. Under this approach SCS, other USDA agencies, and experts in the private and government sectors would play a secondary, consultative role throughout the planning process. We believe that S. 1081 would

provide sufficient funding for an effective regulatory program of this overall design, provided that the program is carefully targeted to priority water quality problem areas at the outset.

We appreciate the invitation to testify and look forward to working with the committee on these issues in the months to come. I would be happy to respond to any questions.

APPENDIX

S. 1081 WATER POLLUTION PREVENTION AND CONTROL ACT

REVIEW OF NONPOINT SOURCE POLLUTION PROVISIONS

Section 15 Management Program

CRE's review of 319 plans found that agricultural components of State 319 plans varied in quality from good to very poor. It did not appear that EPA's regional review and approval process resulted in final plans that, on average, came up to the standards of the very best plans when submitted; that would have been useful. At this juncture however, planning revisions should not be a priority. None of the State administrators we surveyed indicated that an inadequate State 319 plan was a significant barrier to making progress in dealing with agricultural nonpoint source pollution. The planning process should now shift to the farm level in targeted areas. Subsection (a) of this section requires that a schedule be established containing annual milestones for the implementation of nonpoint control measurements or programs. We believe that such milestones could indeed be useful in the context of nonpoint source pollution control for agriculture. Given the current information on ag ricultural pollution loadings, however, it is going to be very difficult for the States to develop meaningful milestones. The problem is compounded by the fact that most States are not in a position to quantify program accomplishments.

The provisions for national program guidelines (subsection a) in our view should not be a priority. Again, the central problem for agricultural nonpoint source pollution control is not inadequate State level planning or incomplete lists of best management practices or other information. Rather, it is the lack of workable, enforcea ble mechanisms by which individual farmers will begin developing pollution prevention plans and implementing them. We believe it is possible to require water quality plans in designated, targeted problem areas. The States should designate the areas and approve plans following EPA guidance. Prior to developing such plans, States should follow the process we have outlined in our testimony for defining the agricultural nonpoint source problems according to EPA guidance. With regard to agriculture program coordination, in subsection b, we believe that for the water quality incentive program it is unnecessary to expand the list of areas to which the program might apply. Under the 1990 Farm Bill, the Administrator of the EPA and State agencies dealing with water quality have the authority to identify additional areas for the Secretary of Agriculture without the need for revision of the Farm Bill. With respect to CRP and the environmental easement program, we would simply reiterate our earlier statement that we do not believe that idling farm land either under ten year contracts or under long-term or permanent easements is going to be a cost-effective way to deal with the vast majority of agriculture's water quality problems. Accordingly, the current designations in the 1990 Farm Bill should be adequate for the limited role that these. programs are expected to play in agricultural pollution control in the future.

The Federal program coordination provisions (subsection c) of the bill represent important improvements to Section 319. We support this section.

The innovative provisions for commercial fertilizer management represent an important advance in the debate over how to deal with the fairly widespread problem of surface and ground water contamination by agricultural nutrients. We have a few suggestions that we think would strengthen this section of the bill. While fertilizer manufacturers and dealers can play a very valuable role in providing technical information about the properties of their products, and about the types of practices that can improve the efficiency with which these materials are used, we do not feel that manufacturers should have primary responsibility for developing and approv ing site-specific farm level nutrient management plans. We envision a need to involve private sector and government expertise in development of such plans, with technical review and monitoring by government personnel as in all other realms of pollution control. Because there are many sources of nutrients used in agriculture, including not only fertilizers sold commercially but also legumes and animal waste, we believe that any type of on-farm planning process should embrace all nutrients

that may pose a threat to water quality. For that matter, a comprehensive plan, covering all potential pollutants and pollutant sources, should be the objective.

The relationship between farmer and commercial fertilizer manufacturers and dealers is such that it will be impossible to determine whether or not the cost of preparation of a management plan is being passed to farmers. Our assumption is that any cost incurred by a manufacturer or a dealer in developing a plan is likely to be passed through to producers.

The specific components of commercial fertilizer management plans, if broadened to cover all nutrients, would enhance pollution prevention efforts significantly. (Again, comprehensive pollution prevention plans should be the overall objective.) Soil testing on an annual basis should be required; site-specific practices to protect water quality should also include source reduction practices to make certain that farmers are encouraged to use fertilizers and other nutrients as efficiently as possible. The recommendation that fertilizer applications are consistent with yield goals should be modified to read "average yields". One of the central problems in nutrient management is that farmers utilize unrealistically high yield goals in making decisions about the amount of fertilizer they apply.

PREPARED Statement of FRANK B. JONES

Thank you Mr. Chairman. Mr. Chairman my name is Frank Jones and I am the chairman of the National Cotton Council's Producer Task Force on Environmental Issues. Today I am speaking on behalf of the National Cotton Council, the National Association of Wheat Growers, the National Corn Growers Association, the American Soybean Association and the U.S. Rice Producers Group.

The National Cotton Council is the central organization of the United States cotton industry. Our members include producers, ginners, oilseed crushers, merchants, cooperatives, warehousemen and textile manufacturers. While a majority of our industry is concentrated in 17 cotton producing States, stretching from the Carolinas to California, the downstream manufacturers of cotton apparel and home furnishings are located in virtually every State. The National Association of Wheat Growers is a grass-roots organization with 20 affiliated States representing the growers who produce over 75 percent of the wheat grown in the United States. The National Corn Growers Association has more than 25,000 farmer members in 45 States. The American Soybean Association is a national organization representing U.S. soybean farmers with members in 29 States. The U.S. Rice Producers Group represents the rice growers in the five principle rice producing States. All these nonprofit organizations are dedicated to improving the positions of their producers through market development, research, education, trade policy and government and public relations.

We commend you for scheduling this hearing today and appreciate the opportunity to present our recommendations.

The American farmer is responsible, in a large part, for the high standard of living which we all enjoy. Agricultural products produced in the United States are safe, plentiful, and reasonably priced. Our farmers are good stewards of the land. No one is closer to it and the ecosystem. Farmers till the fields, apply important inputs and conserve the soil. They live on the land and their families depend on it for their livelihood.

Our modern production agriculture is the envy of the world. We need only to look at the long lines and the empty shelves in the Soviet Union and Eastern Europe or at the faces of the hungry people in third world countries to appreciate the achievements of U.S. farmers. Modern farming relies not only on production efficiencies but also on progressive environmental practices and techniques. This is most apparent in the conservation titles of the farm bills passed in 1985 and 1990. The provisions in these titles address "on-site" environmental problems such as soil erosion, "off-site" problems like nutrient runoff from agricultural fields, and “out-of-sight" problems relating to possible groundwater contamination. As debate begins on the Clean Water Act, producers of food and fiber commodities recognize the need to continue to responsibly address agricultural non-point source pollution in a cost efficient manner. Agricultural operations, along with urban, construction, septic and natural sources, require a comprehensive coordinated management strategy, much of which is already in place but in many cases inadequately funded.

Strategies to manage non-point source pollution were established in the 1985 and 1990 farm bills and compliment other ongoing programs. Most of these programs have already produced impressive results or have the potential for success if given enough time and funding. For example, funding began in 1990 for the President's