RD411 - Annual Funding Needs for Effective Implementation of Agricultural Best Management Practices (BMPs)


Executive Summary:
In 2008 the Virginia Natural Resources Commitment Fund (VNRCF) was established in Virginia Code as a subfund of the Virginia Water Quality Improvement Fund. Monies placed within the VNRCF are to be used solely for the Virginia Agricultural Best Management Practices Cost-Share Program. The Department of Conservation and Recreation (DCR) is directed by § 10.1-546.1 to submit annually by October 15th, the “...funding amount for effective Soil and Water Conservation District technical assistance and implementation of agricultural best management practices…for each year of the ensuing biennial period.”

DCR examined the agricultural BMP funding needs that pertain to achieving water quality objectives in the Chesapeake Bay basin, as well as the agricultural BMP needs for “TMDL” (Total Maximum Daily Load) waters that fail to achieve state water quality standards for the Southern Rivers portion of the state (waters outside the Bay basin). DCR recognizes the need to address all water quality problems that are associated with agricultural nonpoint source pollution; however the Environmental Protection Agency’s (EPA) development of a Chesapeake Bay TMDL is expected to impose undesirable consequences for jurisdictions (6 states and the District of Columbia) that fall short of Chesapeake Bay nutrient and sediment reduction targets.

The Chesapeake Bay TMDL is to be completed by EPA in December, 2010. On September 3, 2010 Virginia submitted its DRAFT Watershed Implementation Plan (WIP) to achieve the nutrient and sediment allocations set by EPA. On September 24, 2010 EPA released a summary Evaluation of Virginia’s Draft Watershed Implementation Plan. It is clear from EPA’s summary that they believe the Virginia Plan is not sufficient to achieve the required nutrient reductions and therefore, EPA would impose a moderate level of more aggressive controls on permitted facilities. Public comment is being received from September 24 through November 8, 2010. Virginia will submit a final Phase I WIP to EPA by November 29, 2010. Once the Chesapeake Bay TMDL is final and Virginia’s WIP is accepted, DCR will update projections for the agricultural BMP needs to support Virginia’s Bay Clean-up efforts.

To address the agricultural BMP needs within the Chesapeake Bay, DCR used the most current (2005) Tributary Strategy reduction goals which were established through use of the EPA Chesapeake Bay Program Office’s phase 4.3 watershed model. DCR has focused on the implementation of the five priority practices (nutrient management plans, cover crops, livestock exclusion from waterways, conservation tillage including continuous no-till and establishment of riparian buffers) over a 15 year period that begins in fiscal year 2011 and ends in 2025 –the agreed to deadline by EPA and Bay jurisdictions to have in place the strategies that will achieve the Bay’s water quality objectives.

Funds placed within the VNRCF must be divided with 55% supporting BMPs in the Chesapeake Bay, 37% for BMPs in the Southern Rivers and 8% for provision of technical assistance by Soil and Water Conservation Districts (SWCD). By using the annual funding projections for BMPs in the Chesapeake Bay, DCR represented the amounts as 55% of the total annual deposit in the VNRCF. By mathematically deriving the total deposit amount, the remaining 45% was apportioned with 37% of deposited funds supporting BMPs in the Southern Rivers and 8% supporting SWCD technical assistance. Statewide funding needs are summarized on page 9 of this report and total approximately $1.1 billion between FY11 and FY25.

In addition, the Chesapeake Bay states, including Virginia, have committed to meeting two-year “milestones” in order to accelerate restoration and provide greater accountability. The 2011 Milestone is considered a “voluntary” Milestone since it was conceived prior to the development of the Chesapeake Bay TMDL. The two-year Milestones beginning with 2013 are part of the progress accounting system for the TMDL and may carry regulatory consequences if they are not achieved.

It is important to recognize that projections of needed BMPs and their associated costs are dynamic and will change over time. Funding levels in the near term will ultimately affect needs to later years. It is also important to recognize that current difficult economic conditions may hamper the ability of the Commonwealth to meet the total needs. Further, acreage in agricultural production varies from year to year (some acres are lost to other land uses, some acreage is gained when idle land is cropped). Projections of needed BMPs changes when implementation of cost-shared practices is credited, and when better accounting for voluntary BMPs is documented. Cost-share funding amounts change over time to elicit farmer participation in voluntary state and federal cost-share programs. These factors and others mean that the projections of funding for agricultural BMPs should be examined over time and as directed by § 10.1-546.1, DCR shall report annually by October 15th, the funding amount needed for implementation of agricultural BMPs.

The Virginia General Assembly during their 2010 session established a recurring source of revenue to support implementation of agricultural BMPs. A portion of the recordation fee collected by localities for land transactions is now being deposited in the Natural Resources Commitment Fund. The annual projection of revenue is placed at approximately $9.1 million.

The commonwealth ended FY10 with a balance of funds that may enable monies to be dedicated to address nonpoint source (NPS) pollution and the implementation of agricultural BMPs. Closure to enable a deposit in the Water Quality Improvement Fund and its sub fund, the Natural Resources Commitment Fund will require action by the Virginia General Assembly in 2011. Such a deposit could exceed $25 million to address NPS, dependent upon General Assembly action and actions by individuals authorized by Code to make such funding decisions. If appropriated, funds would be available for BMPs beginning in FY12.

While the basis for projecting funding needs for the period FY11 through FY25 remains unchanged since DCR’s initial report (submitted in October, 2009), significant financial appropriations from state and federal sources are impacting the overall funding needs for FY11 and FY12. In short, the combined existing and projected funding for FY11 and FY12 is expected to:

• fulfill the agricultural BMP funding needs in the Chesapeake Bay basin,
• fall somewhat short of funding needs in the Southern Rivers in FY11 while fulfilling the needs in FY12,
• and fall short of fulfilling the technical assistance financial needs of SWCDs in both fiscal years.

A comprehensive explanation of the available and projected funding is provided within the Introduction: Overview of the Funding Projections portion of this report.