[Federal Register: February 10, 2003 (Volume 68, Number 27)]
[Proposed Rules]
[Page 6655-6673]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10fe03-25]
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DEPARTMENT OF AGRICULTURE
Natural Resources Conservation Service
7 CFR Part 1466
RIN 0587-AA31
Environmental Quality Incentives Program
AGENCIES: Natural Resources Conservation Service and Commodity Credit
Corporation, Agriculture.
ACTION: Proposed rule with request for comments.
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SUMMARY: This proposed rule implements the provisions of Title II of
the Farm Security and Rural Investment Act of 2002 (the 2002 Act)
relating to the Environmental Quality Incentives Program. The Natural
Resources Conservation Service (NRCS) proposes to revise and update the
rule for the Environmental Quality Incentives Program (EQIP). This
proposed rule describes how the NRCS intends to implement EQIP as
authorized by amendments in the 2002 Act.
DATES: Comments must be received by March 12, 2003.
ADDRESSES: Submit written comments to Mark W. Berkland, Director,
Conservation Operations Division, U.S. Department of Agriculture
(USDA), Natural Resources Conservation Service (NRCS), 1400
Independence Avenue SW., Room 5241, Washington, DC 20250-2890. This
proposal may also be accessed, and comments submitted, via Internet.
Users can access the NRCS homepage to submit comments to
FarmBillRules@usda.gov. Persons with disabilities who require
alternative means for communication (Braille, large print, audio tape,
etc.) should contact the USDA TARGET Center at (202) 720-2600 (voice
and TDD).
FOR FURTHER INFORMATION CONTACT: Mark W. Berkland, Director,
Conservation Operations Division, USDA, 1400 Independence Avenue SW.,
Room 5241, Washington, DC 20250-2890. Phone: (202) 720-1845; e-mail:
mark.berkland@usda.gov.
SUPPLEMENTARY INFORMATION:
Discussion of Program
The Farm Security and Rural Investment Act of 2002 (the 2002 Act)
(Pub. L. 107-171, May 13, 2002) re-authorized and amended the
Environmental Quality Incentives Program, which had been added to the
Food Security Act of 1985 (the 1985 Act) (16 U.S.C. 3801 et seq.) by
the Federal Agriculture Improvement and Reform Act of 1996 (the 1996
Act) (Pub. L. 104-127). The 2002 Act also amended the Environmental
Conservation Acreage Reserve Program by changing the section name to
the Comprehensive Conservation Enhancement Program and removing the
authority for the Secretary of Agriculture to designate areas as
conservation priority areas.
As provided by section 1241 of the 1985 Act (16 U.S.C. 3841), as
amended by the 2002 Act, the funds, facilities, and authorities of the
Commodity Credit Corporation (CCC) are available to NRCS for carrying
out EQIP. (The Chief of the NRCS is a vice-president of the CCC.)
Accordingly, where NRCS is mentioned in this rule, it also refers to
the CCC's funds, facilities, and authorities where applicable.
Through EQIP, NRCS provides assistance to farmers and ranchers who
face threats to soil, water, air, and related natural resources on
their land. These include grazing lands, wetlands, private non-
industrial forest land, and wildlife habitat. Participation in the
program is voluntary. Under EQIP, NRCS will provide assistance in a
manner that will promote agricultural production and environmental
quality as compatible goals, optimize environmental benefits, and help
farmers and ranchers meet Federal, State, and local environmental
requirements. NRCS will offer the program throughout the Nation using
the services of NRCS and technical service providers. NRCS will
implement a consolidated and simplified process to reduce any
administrative burdens that would otherwise be placed on producers.
In this rule, NRCS proposes to incorporate changes in the EQIP
regulations, 7 CFR 1466, resulting from the passage of the 2002 Act.
Several important changes were made in the 2002 Act that require
changes to the regulation. These include:
(1) Changing the maximum payment limitation from $50,000 per person
per contract to $450,000 per individual or entity for all contracts
entered into in fiscal years 2002 through 2007;
(2) Revising the purpose from ``maximize environmental benefits per
[[Page 6656]]
dollar expended'' to ``optimize environmental benefits'';
(3) Eliminating the competitive bidding by applicants;
(4) Allowing payments to be made in the first year of the contract;
(5) Removing language authorizing targeting of funds to
Conservation Priority Areas;
(6) Removing the provision prohibiting a producer from receiving
cost-shares for an animal waste facility on an animal operation with
more than 1,000 animal units;
(7) Allowing cost-share rates of up to 90 percent for limited
resource farmers or ranchers and beginning farmers or ranchers;
(8) Reducing the minimum length of a contract from five years to
one year after installation of the last practice;
(9) Increasing funding from $200 million per year to $400 million
in FY 2002 and increasing to $1.3 billion per year in FY 2007; and,
(10) Imposing an average adjusted gross income (AGI) limitation.
In an effort to make the program more effective and efficient, the
Department has initiated several streamlining changes, including:
(1) Eliminating the program's dual administration by changing Farm
Service Agency (FSA) participation from concurrence to consultation;
(2) Reducing the planning requirements needed to develop the
contract; and
(3) Allowing producers to have more than one contract per tract at
any given time.
The fundamental philosophy of the program, assisting agricultural
producers install conservation practices to provide environmental
benefits, has not changed. The statutory and Departmental changes
respond to limitations and restrictions identified by agency staff and
participants. Agricultural producers who are interested in
participating in the program will apply as they have in the past and
should experience a quicker turn around on their application. Producers
also have some expanded financial opportunities with higher contract
limits and the ability to receive payments earlier in the contract
period.
Optimizing Environmental Benefits
While the fundamental philosophy of the program has not changed,
the revision to purpose of the program combined with removal of
provisions related to Conservation Priority areas and the elimination
of competitive bidding by applicants has required NRCS to propose an
approach that will meet the new purpose of EQIP--the optimization of
environmental benefits. NRCS is proposing to optimize environmental
benefits through an approach that integrates consideration of National
Priorities in four key program components: (1) The allocation of
financial resources to States; (2) the allocation of financial
resources within states; (3) the selection of conservation practices
and the establishment of cost-share and incentive payment levels; and
(4) the application ranking process.
With the advice of Federal agencies, NRCS will establish National
Priorities that reflect our most pressing natural resource needs and
emphasize off-site benefits to the environment. NRCS has identified the
following National priorities:
[sbull] Reductions of nonpoint source pollutants; such as
nutrients, sediment, or pesticides and excess salinity; in impaired
watersheds consistent with Total Maximum Daily Loads (TMDL's) where
available, as well as the reduction of groundwater contamination, and
the conservation of ground and surface water resources;
[sbull] Reduction of emissions, such as particulate matter,
NOX, volatile organic compounds, and ozone precursors and
depleters that contribute to air quality impairment violations of
National Ambient Air Quality Standards;
[sbull] Reduction in soil erosion and sedimentation from
unacceptably high rates on highly erodible land; and
[sbull] Promotion of at-risk species habitat recovery.
In establishing a National priority of at-risk species habitat
recovery, NRCS recognizes unique local situations have the potential to
add to Federally listed and candidate species. NRCS supports activities
that will reduce the need for additional regulation but will monitor
implementation of this aspect of the program to assure that primary
focus is listed and candidate species.
NRCS has also identified National measures that can help EQIP
achieve its National priorities and statutory requirements more
efficiently. These proposed measures include identifying and
implementing conservation practices that:
[sbull] Increase overall environmental benefits, for example by
addressing multiple resource concerns, ensuring more durable
environmental benefits and limiting adverse ancillary impacts;
[sbull] Encourage innovation;
[sbull] Support the statutory mandate to apply nationally 60
percent of available financial assistance to livestock-related
conservation practices;
[sbull] Employ appropriate tools to more comprehensively serve EQIP
purposes, such as Comprehensive Nutrient Management Plans and
Integrated Pest Management Plans.
In the NRCS allocation of financial resources to states, NRCS is
proposing that the National priorities and measures be used as guidance
in determining the amount of funds received by states. NRCS is also
proposing to retain a portion of EQIP funding to reward states that
demonstrate a higher level of performance and address National
priorities. Within states, NRCS is proposing that State
Conservationists consider National priorities and measures as they
allocate funds and determine priority resource concerns within their
state. Similarly, NRCS is proposing that the State Conservationist, or
the Designated Conservations, develop an application ranking that
reflects both priority resource concerns within states and the National
priorities and measures. Further detail about the specific changes in
each of these key components is included in the Summary of Provisions.
While this proposal explicitly recognizes National priorities and
measures, NRCS will continue to rely on ``locally led conservation'' as
an important cornerstone of EQIP. Using a locally led process ensures
consideration of the wide variability between and within states
regarding resource issues, solutions, and limitations. Resource issues
and concerns change as a result of shifts in population, climatic, or
consumer habits; and Federal, state and local laws. Likewise, technical
solutions evolve with the advent of new technology and the availability
of new data on the effectiveness of practices. As a result, EQIP
implementation may vary across jurisdictional boundaries. For example,
some states may use state-level based program delivery while others
will use county or parish based or regional (multi-county) based
delivery.
Efficient and effective implementation of EQIP will be accomplished
by building upon the existing NRCS delivery system that uses a line and
staff organizational structure to provide both technical \1\ and policy
guidance from the
[[Page 6657]]
National level to the local District Conservationist level. This
delivery system will empower the state and local levels to adapt
National Priorities and measures to site-specific conditions. State and
local NRCS Conservationists will continue to supplement the EQIP Manual
by specifying which practices qualify for EQIP payments and
establishing maximum cost share rates, incentive payment levels, and
the application ranking processes.
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\1\ Technical guidance is provided to all NRCS personnel using
manuals, handbooks, bulletins, and memos. The primary technical
tools are the soil surveys, the National Planning Procedures
Handbook, the General Manual, and the Handbook of Conservation
Practices. Based on this guidance from the National level, the State
and District Conservationists, in coordination with universities,
other federal agencies, conservation districts, and others, assemble
the Field Office Technical Guide (FOTG) which is specific to each
local NRCS office. The FOTG contains the primary scientific
references tailored for NRCS at the local level. The FOTG contains
identified natural resource concerns at each location, local
reference data about soil, watersheds, air, and plant and animal
resources, locally approved conservation practices including interim
practices, the cost of implementing conservation practices, local
and state laws and regulations, etc. Information about FOTGs can be
found at http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.nrcs.usda.gov/technical/efotg/.
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Ground and Surface Water Conservation
The 2002 Act also added a provision to EQIP which specifically
addresses ground and surface water conservation with dedicated funding.
Section 1240I of the 1985 Act provides the Secretary authority to
promote ground and surface water conservation by providing cost-share
payments, incentive payments, and loans to producers to carry out
eligible water conservation activities including improvement to
irrigation systems; enhancement of irrigation efficiencies; conversion
to the production of less water-intensive agricultural commodities or
dryland farming; improvement of the storage of water through measures
such as water banking and ground water recharge; or mitigation of the
effects of drought. NRCS seeks comments regarding how to administer a
loan program in accordance with this section.
The Secretary may provide EQIP assistance for ground and surface
water conservation to a producer only if the assistance will facilitate
a conservation measure that results in a net savings in ground water or
surface water resources in the agricultural operation of the producer.
NRCS seeks comments regarding what criteria NRCS should use to
determine what should constitute an agricultural operation. Should NRCS
consider all the land operated by the producer, the contiguous parcel
that includes the field where the practices are being implemented, or
just the field in which the practices are being implemented?
Klamath Basin
Section 1204I(c)(2) of the 2002 Act dedicates an additional $50
million for ground and surface water conservation activities in the
Klamath Basin located on the Californian/Oregon border. Pursuant to the
2002 Act, NRCS intends to use EQIP to implement this provision in
accordance with the statutory requirements for ground and surface water
conservation, such as improved irrigation systems, enhanced irrigation
efficiencies, and improved water storage, with a goal of an overall
``net savings'' for agricultural operations. However, due to the
complexity of resource issues in the Klamath Basin, a reduction of
water usage may not always be the only appropriate solution available.
Improving the quality of Klamath Basin water resources makes more
``usable'' water available, thus resulting in a net savings related to
agricultural uses. Water conservation activities in the basin can
therefore include water quality improvements as well as a reduction in
water usage by agricultural operations.
The two Klamath Basin State Conservationists will lead a basin
planning effort to identify water conservation activities to address
the basin's resource issues. This plan may require additional funding
from sources other than the $50 million in EQIP funding identified for
the basin. NRCS seeks comments regarding how the Klamath Basin water
conservation provisions should be implemented.
Credit Trading
NRCS recognizes that long-term environmental benefits can also be
achieved utilizing innovative alternative approaches to provide
incentives for a producer to implement conservation practices. One
example is the use of trading mechanisms for water quality credits,
under which a producer could sell credits derived from the
implementation of conservation practices to other dischargers, who
would use these credits for regulatory compliance. In order to assure
net reductions in pollutant discharges, credits would need to be
derived from conservation practices that go beyond any existing
responsibilities of the producer. Pilot trading programs have already
demonstrated substantial environmental progress at reduce cost.
NRCS would like to support the institutionalization of water
quality credit trading. Accordingly, NRCS is considering the
possibility of waiving any and all interests in credits the producers
generate using EQIP funds. While producers would be normally be
compensated for the costs incurred in generating credits through their
sale in private markets, NRCS recognizes that in the absence of
established markets, there is considerable uncertainty for producers,
particularly if they wish to implement conservation practices before a
buyer has been identified. For this reason, NRCS believes it may be
appropriate to support development of trading program, for a limited
time until functioning markets are established, by allowing producers
to generate credits using EQIP funds that could potentially be sold in
a trading market. At the same time, NRCS recognizes that there may be
concern about allowing credits generated with taxpayer money to be sold
for private gain. Any such waiver would likely have limitations; for
example restricted to only those credits associated with the EQIP
program and only for the duration of the 2002 Farm Bill, FY 2002
through FY2007. NRCS might also try such a waiver program on a pilot
basis, to determine if it was effective in helping to establish self
sustaining credit markets. NRCS seeks comments on adopting a limited
waiver program, as well as on innovative mechanisms more generally that
NRCS could consider to institutionalize alternatives for encouraging
conservation implementation.
Summary of Provisions
The rule is organized into three subparts: Subpart A--General
Provisions; Subpart B--Contracts; and, Subpart C--General
Administration. The basic structure of the rule has not changed.
However, NRCS is proposing to eliminate, add, or change several
sections in Subparts A and B to make the rule consistent with the
requirements of the 2002 Act and Departmental streamlining, to
explicitly incorporate National priorities and measures, and to
increase the overall transparency of the program. We provide a summary
of each section below for Subparts A and B and identify proposed
changes. We do not provide a detailed summary of Subpart C. This
subpart describes administrative aspects of EQIP including appeal
rights and exceptions thereto, the responsibilities of the participant
to obtaining necessary easements and complying with other laws and
regulations and provide USDA representatives with access to land, and
provisions for relief if a participant relies on advice or action of a
NRCS representative. Only minor changes were made in this subpart to
reflect the determination that NRCS will administer EQIP.
Subpart A--General Provisions
Section 1466.1 sets forth the purpose, scope, and objectives of
EQIP. The use of EQIP for educational assistance is removed from this
section to reflect section 1240(B) of the 1985 Act, as amended by the
2002 Act. Air has also been added to the list of natural
[[Page 6658]]
resource concerns addressed by this program.
Section 1466.2 describes the roles of NRCS, FSA, other agencies,
the State Technical Committees, and Local Work Groups. This section has
been changed to reflect the Department's streamlining initiative.
Specifically, with the delegation of EQIP to NRCS, Sec. 1466.2(a)-(d)
of the current rule, which described FSA's roles and responsibilities,
has been eliminated. In Sec. 1466.2(b), NRCS and FSA will consult at
the national level on program and policy decisions and FSA may continue
to have an advisory capacity in the administration of EQIP by
participating on the State Technical Committees and Local Work Groups.
NRCS is clarifying the roles and responsibilities of State
Technical Committees and Local Work Groups in Sec. 1466.2 (c). While
EQIP is administered by NRCS and all program decisions are made by
NRCS, some decisions, such as determination of eligible practices and
cost-shares rates and development of the ranking process, may be
delegated to the State Conservationist. The State Conservationist will
use advice of the State Technical Committee to make these decisions.
The State Conservationist can, in turn, make a final decision or
delegate the authority to a Designated Conservationist at the regional
or local level. The Designated Conservationist will use advice from a
Local Work Group to make decisions delegated to their level. Additional
information regarding NRCS policy for State Technical Committees and
Local Work Groups can be found at http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://policy.nrcs.usda.gov/scripts/lpsiis.dll/M/M_440_501.htm
.
Section 1466.3 sets forth definitions for terms used throughout the
part. Several new definitions, including comprehensive nutrient
management plan, limited resource farmer or rancher, beginning farmer
or rancher, priority natural resource concerns, National priorities,
National measures, Conservation Innovation Grants, EQIP plan of
operations, and technical service providers are proposed to address
statutory changes and administrative changes resulting from the
Department's streamlining initiative. Other terms, such as agricultural
operation, conservation district, and wildlife have been proposed to
provide greater clarity. Because the administration of EQIP has been
delegated to NRCS, definitions related to FSA, such as Administrator
and Farm Service County Committee have been removed from this section.
We are also proposing to eliminate definitions for Conservation
Management System, Conservation Plan, Livestock related Natural
Resource Concerns, National Conservation Priority Area, Priority Area,
and Private Agribusiness Sector, Resource management system, unit of
concern, and vegetative practice because these terms are no longer used
in the proposed regulatory language.
A definition for the comprehensive nutrient management plan (CNMP)
is included because it is specifically authorized by the 2002 Act. The
definition is included to provide the technical base and is the same
that NRCS uses in its Comprehensive Nutrient Management Planning
Technical Guidance which is part of the NRCS National Planning
Procedure Handbook.
Section 1240B of the 1985 Act, as amended by the 2002 Act, gives
the Secretary the authority to increase the cost-share rate up to 90
percent for Limited Resource Farmers and Ranchers and beginning farmers
or ranchers. NRCS proposes to use two criteria to define a limited
resource producer or rancher. Specifically, a Limited Resource Producer
or Rancher is a person with direct or indirect gross farm sales not
more than $100,000 (to be increased starting in FY 2004 to adjust for
inflation) and a total household income at or below the national
poverty level for a family of four, or less than 50 percent of county
median household income (to be determined annually), in each of the
previous two years.
NRCS will use a definition for Beginning Farmer or Rancher that is
consistent with the USDA definition of that term under section 343(a)
of the Consolidated Farm and Rural Development Act (7 U.S.C. 1991(a))
as found at 7 CFR 1941.4. NRCS is proposing to define a Beginning
Farmer or Rancher as an individual or entity who has not operated a
farm or ranch, or who has operated a farm or ranch for not more than 10
years and will materially and substantially participate in the
operation of the farm or ranch. In the case of a contract with an
individual, individually or with the immediate family, material and
substantial participation requires that the individual provide
substantial day-to-day labor and management of the farm or ranch,
consistent with the practices in the county or State where the farm is
located. In the case of a contract made with an entity, all members
must materially and substantially participate in the operation of the
farm or ranch. Material and substantial participation requires that the
members provide some amount of the management, or labor and management
necessary for day-to-day activities, such that if the members did not
provide these inputs, operation of the farm or ranch would be seriously
impaired. For an entity to be defined as a Beginning Farmer or Rancher,
all members of the entity must qualify. This regulation interprets the
maximum length of farming experience allowable for Beginning Farmer or
Rancher to be 10 consecutive years.
In order to assure consistency of program implementation, new
definitions have been included for National priorities, National
measures and priority natural resource concerns.
A definition of Conservation Innovative Grants is defined in this
section because it is specifically authorized by the 2002 Act. This
definition is included to provide guidance as to what these grants will
be used for.
The 2002 Act authorizes NRCS to use certified Technical Service
Providers for providing technical assistance, a definition of who
qualifies as a TSP is included. A definition of the EQIP plan of
operations is included to clarify to producers what is required to be
eligible for EQIP assistance. A discussion of the EQIP plan of
operations is included in Sec. 1466.9.
Section 1466.4 is a new section that lists and describes how
National priorities will be used to implement EQIP. Regulatory language
related to Program Requirements found in Sec. 1466.4 of the current
EQIP rule has been moved to Sec. 1466.7 in this proposal.
NRCS has established National priorities and measures to guide the
allocation of EQIP funds and assist in the prioritization of EQIP
applications. The National priorities are listed in Sec. 1466.4(a) and
Sec. 1466.4(b) describes how NRCS will use the National priorities to
implement the program at the state and local level. The Chief intends
to review these National priorities and measures annually, utilizing
input from the public and affected stakeholders and Federal agencies,
and make revision as required to address emerging resource issues.
Information and updates about the National priorities and measures will
be provided to the State Conservationists through revisions to the EQIP
manual.
Section 1466.5 is a new section that describes program management
including National funding allocation. In Sec. 1466.5 of the current
rule priority areas and significant statewide natural resource concerns
have been deleted from the regulatory language of this proposal.
This section describes the first key component in ``optimizing
environmental benefits'', the allocation
[[Page 6659]]
of EQIP funds from the Chief to the State Conservationists. It also
includes provisions for program management such as an incentive awards
holdback, progress monitoring, periodic evaluation of program delivery
and public disclosure of program results.
NRCS is proposing that the Chief of NRCS, with advice of other
Federal agencies and in consultation with FSA, will make National
funding allocation decisions that reflect the most pressing national
resource needs.
Specifically, NRCS will determine the allocation of EQIP funds to
NRCS State Conservationists based on National priorities and measures.
NRCS will also include other considerations in their allocation
decision, such as:
[sbull] The significance of the environmental and natural resource
concern and the opportunity for environmental enhancement;
[sbull] The conservation needs of farmers and ranchers in complying
with the highly erodible land and wetland conservation provisions of 7
CFR part 12;
[sbull] The ways the program can best assist producers in complying
with Federal, State, local, and Tribal environmental laws, quantified
where possible;
[sbull] The amount of agricultural land in different land use
categories, such as grazing land, specialty crops, and others; and
[sbull] Other relevant information to meet the purposes of the
program.
NRCS will evaluate the existing allocation formula and will
consider additional factors to address air quality concerns such as air
quality non-attainment areas and acres of cropland with excessive wind
erosion. When updating the national allocation formula, NRCS intends to
solicit input from an interagency Task Force of Federal agencies, which
have knowledge and expertise in the areas of soil, water, air, wildlife
and other related natural resources. NRCS seeks comments regarding what
process should be used and factors should be considered when evaluating
the National funding allocation formula.
NRCS is also proposing to retain a portion of the initial EQIP
funding each fiscal year to reward states that demonstrate a higher
level of performance in the implementation of EQIP and in addressing
the National priorities in the previous year. When allocating the
incentive holdback funds to those states demonstrating higher levels of
performance, the Chief of NRCS will analyze the management decisions of
the State Conservationist and State EQIP implementation performance
considering factors such as:
[sbull] The degree to which states strategically prioritize and
address priority resource concerns, such as through statewide
conservation plans, fund allocation, and application ranking;
[sbull] The use of contracts with long lived practices;
[sbull] The use of contracts with cost-effective practices;
[sbull] The use of contracts that benefit multiple resources;
[sbull] The efficiency and cost-effectiveness of program delivery;
[sbull] The degree to which program implementation addresses
National priorities;
[sbull] The extent to which Technical Service Providers are engaged
to help deliver the program;
[sbull] The degree to which Limited Resource Producers are
participating; and
[sbull] The degree to which states encourage innovation and the
leveraging of EQIP funds.
NRCS is formulating the incentive award process and anticipates
that the financial bonus will be distributed to a limited number of
states assuring that the concept of a bonus is maintained. NRCS is
soliciting comments regarding what approaches NRCS can use to
efficiently and effectively implement this award incentive.
NRCS will set aside a portion of the available EQIP funding for
purposes of complying with the ``regional equity'' provision of section
1241(c) of the 1985 Act as amended by section 2701 of the 2002 Act. The
``regional equity'' provision requires the Secretary to give, before
April 1, a priority for certain conservation program funding to
applications in states that have not received an aggregate of $12
million from those programs.
In order to manage EQIP in a manner that continues to optimize
environmental benefits, NRCS will undertake periodic reviews of the
effects of program delivery at the state and local level. State
Conservationists will prepare annual reports explaining how EQIP was
implemented within the state and the accomplishments that were achieved
and the Chief will assure that information regarding EQIP
implementation will be made available to the public using technology
such as the Internet on the NRCS World Wide Web site at http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.nrcs.usda.gov/EQIP/.
NRCS seeks comments on how best to evaluate
the performance of the EQIP program. For example, how should
environmental changes be measured, and what methodologies would best
identify environmental effects due to contract activities? What kind of
output measures and data collection strategies should NRCS consider?
What approaches could NRCS use to evaluate cost-effectiveness?
Section 1466.6 is a new section that describes the responsibilities
of State Conservationists in the allocation of funds and implementation
of the EQIP program. Much of the language found in Sec. 1466.6 of the
current rule, Conservation plan, has been used in Sec. 1466.9 of the
proposed rule, EQIP Plan of Operations.
The allocation of funds within States is the second key component
in ``optimizing environmental benefits.'' NRCS proposes that the State
Conservationists will be responsible for identifying State priority
natural resource concerns that incorporate National priorities and
measures, for identifying which of the available conservation practices
should be encouraged with recommended funding levels, for establishing
local level EQIP performance goals and treatment objectives, and for
monitoring program performance of the NRCS field offices to ensure that
National priorities and measures are being achieved. As part of this
process, the State Conservationist will consider the advice of the
State Technical Committee and National guidance, in the form of notices
and manuals, state priorities and state based resource inventories.
NRCS also proposes that the State Conservationist may delegate
implementation of EQIP to Designated Conservationists. Designated
Conservationists will use the advice of Local Work Groups to implement
EQIP within their area. This delegation by the State Conservationist
allows for greater management flexibility at the State level and,
perhaps more importantly, explicitly provides for locally led
conservation. The State Conservationist will also provide specific
guidance to the offices reviewing and ranking applications regarding
what factors should be considered in the ranking process. The State
Conservationists will provide periodic reports to the public and the
Chief regarding implementation of EQIP.
NRCS is also proposing to require that State Conservationists use
the following in decisions related to the management of the program and
the allocation of funds:
[sbull] The nature and extent of natural resource concerns at the
state and local level;
[sbull] The availability of existing programs to assist with the
activities
[[Page 6660]]
related to the priority natural resource concerns;
[sbull] The existence of multi-county and/or multi-state
collaborative efforts to address natural resource concerns;
[sbull] Ways and means to measure performance and success; and
[sbull] The degree of difficulty that producers face in complying
with environmental laws.
As part of these considerations, NRCS expects that State
Conservationists will quantify, when and where possible the goals,
objectives, and solutions for natural resource concerns in order to
optimize environmental benefits that would be delivered by Federal
dollars. NRCS also expects that State Conservationists will use
science-based background data, quantified when and where possible, on
the environmental status and needs, soils information, demographic
information, and other available technical data that illustrate the
nature and extent of natural resource concerns.
Section 1466.7 is a new section that describes how NRCS will
establish special program outreach activities at the National, State,
and local levels in order to ensure that producers whose land has
environmental problems know that they are eligible to apply for program
assistance. NRCS will target its outreach efforts to limited resource
farmers, Tribes, beginning farmers and ranchers, and others with
historically low participation rates in the programs of NRCS, NRCS, and
other USDA agencies. NRCS is exploring new possibilities to increase
its outreach to these communities and Tribes.
Section 1466.7 of the current EQIP rule, Conservation Practices,
has been moved to Section 1466.10 of the proposed rule.
Section 1466.8 sets forth program requirements such as land and
applicant eligibility and the amount of EQIP financial assistance to be
used for livestock practices. With the following exceptions, NRCS is
retaining the language of Section 1466.4 in the current EQIP rule:
[sbull] Section 1466.4(b) of the current rule has been removed.
Much of this language appears in proposed Section 1466.5;
[sbull] Section 1466.4(d)(iii) has been eliminated;
[sbull] Proposed Section 1466.8(b)(3) adds submission of an
acceptable EQIP plan of operations as an eligibility requirement; and
[sbull] Proposed Section 1466.8(d) increases the amount directed to
be used for livestock practices from 50 to 60 percent, pursuant to
section 1240B(g) of the 1985 Act, as amended by the 2002 Act.
Section 1466.9 describes the requirements of the EQIP plan of
operations which is the basis of EQIP contracts. Producers will be
required to develop and apply an EQIP plan that addresses identified
priority natural resource concerns. The producer develops the plan of
operations with the assistance of NRCS or other public or private
technical service providers. With the following notable exceptions,
NRCS is retaining the language of Section 1466.6 in the current EQIP
rule:
[sbull] Section 1466.6(a) in the current rule has been deleted. It
contained requirements for maximizing environmental benefits per
dollar.
[sbull] Section 1466.6(b) and (c) have been removed from this
section. Proposed Section 1466.11 addresses technical assistance.
[sbull] Section 1466.6(e)(1), (2), have been deleted. This
information is contained in the producer's conservation plan and would
be a duplication of effort.
[sbull] Section 1466.6(f) has been deleted. The single plan that
was referenced is available to producers through the NRCS Conservation
Operations program and is not required as a part of an EQIP contract.
[sbull] Proposed Section 1466.9(c) requires that an EQIP plan of
operations include an animal waste storage or treatment facility to
include a comprehensive management nutrient plan. Section 1240E(a)(3)
of the 1985 Act, as amended by the 2002 Act, requires, in the case of a
confined livestock feeding operation for the producer to submit an EQIP
plan of operations that provides for the development and implementation
of a comprehensive nutrient management plan.
[sbull] Proposed Section 1466.9(e) allows participant to receive
assistance to implement an EQIP plan of operations for water
conservation with funds authorizes by section 1240I of the 1985 Act
only if the assistance will facilitate a net savings in ground or
surface water resources in the agricultural operation of the producer.
Section 1466.10 describes how eligible practices will be determined
by NRCS. NRCS State Conservationists will determine which conservation
practices will be eligible and the maximum payment levels in the State.
The State Conservationist may also request that the Designated
Conservationist determine which conservation practices will be eligible
in localities within the limits established by the State
Conservationist.
The proposed language in Section 1466.10 does not include any of
the language related to confined livestock operations found in Section
1466.7(b) of the current EQIP rule. The 2002 Act removed the
restriction that a producer who owns or operates a large confined
livestock operation cannot be eligible for cost-share payments through
EQIP to construct an animal waste management facility. Financial
assistance is available to all livestock producers regardless of size.
NRCS is also proposing to add paragraph (f) to Section 1466.10. It
would permit NRCS to approve interim conservation practice standards
and financial assistance for pilot testing new technologies or
innovations. NRCS will involve other entities, including extension and
research agencies and institutions, conservation districts,
universities, private industry, and others, in pilot testing to
evaluate and assess the practices. This portion of the regulation
remains unchanged.
Section 1466.11 is a new section that addresses the sources of
technical assistance to carry out EQIP. NRCS will provide technical
assistance and will encourage producers to use the services of
certified personnel of cooperating Federal, State, or local agencies,
or private entities who can provide technical assistance. As determined
by the State Conservationist, NRCS may contract with private
enterprises or enter cooperative agreements with other Federal, State,
or local entities for services related to EQIP implementation. NRCS
retains the responsibility for ensuring that technical program
standards are met. This section of the regulation remains unchanged, as
proposed, but may be modified in the final rule to conform with the
final rule for Technical Service Provider Assistance, 7 CFR 652 (see 72
FR 70119, Nov. 21, 2002).
Subpart B--Contracts
Section 1466.20 addresses applications for contracts and selection
of offers from producers. The revisions to this section are pursuant to
both statutory changes regarding section 1240C, which provides that
contract selection will give higher priorities to applications that
encourage cost-effective conservation and address National priorities,
and USDA's streamlining initiative. The evaluation of applications
using a ranking process is the fourth contributing factor to
``optimizing environmental benefits''.
NRCS will accept applications for EQIP throughout the year, but
will rank the applications and select the participants periodically as
determined at the local and/or State level. NRCS will announce, in
advance, the date on
[[Page 6661]]
which NRCS will begin evaluating and ranking applications.
Before evaluating individual applications, the State
Conservationist or designee, with advice from the State Technical
Committee, and Local Work Groups, will develop ranking criteria to
prioritize producer applications. The ranking process will evaluate
applications according to the magnitude of the environmental benefits
resulting from the treatment of the priority natural resource concerns.
The ranking will determine which applications will be awarded
contracts. The ranking process will be designed to award higher scores
for offers from producers that address National and State priorities in
conjunction with local resource concerns. The ranking process will
score the producer's offer of conservation practices according to the
following criteria as well as other locally defined pertinent factors:
[sbull] Use of cost-effective conservation practices;
[sbull] Treatment of Multiple Resource Concerns;
[sbull] Use of conservation practices that provide environmental
enhancements for a longer periods of time; and
[sbull] Compliance with Federal, state, or local regulatory
requirements concerning soil, water, and air quality; wildlife habitat;
and ground and surface water conservation.
NRCS proposes that state and local lists of eligible practices,
cost-share rates and incentive payment levels, and the ranking process
will be posted on the NRCS EQIP website before final ranking of
applications. NRCS will also make the appropriate ranking process or
processes available at each local NRCS office.
NRCS is proposing to delete the ranking and selection criteria
currently in Sec. 1466.20(f)(1) and (g). The first criterion refers to
consideration of the environmental benefits per dollar. As this purpose
has been eliminated from the authorizing statute, this criterion is no
longer necessary. Consistent with 2002 Act, NRCS is proposing that cost
considerations alone will not be the only factor when comparing two
applications that are expected to provide similar environmental
benefits.
NRCS will give additional consideration to contracts that will help
the producers comply and exceed requirements of environmental laws,
such as EPA's Concentrated Animal Feeding Operations (CAFO) regulatory
requirements, the Clean Water Act and Endangered Species Act.
In development of the ranking process, NRCS will recognize that
EQIP can play an important role in assisting producers with
conservation, restoration, and enhancement of fish and wildlife habitat
on working lands. By identifying sound habitat practices targeted at
priority species that are at risk from long term declines, EQIP can
help producers aid those species while avoiding complications arising
out of listings. Many at risk species are benefited by existing soil
and water conservation practices. With minor additional effort they can
be aided by additional practices that will benefit all resources
simultaneously in a manner compatible with working operations. NRCS,
state technical committees and local working groups will continue to
collaborate with United States Fish and Wildlife Service, National
Marine Fisheries Service, and state fish and wildlife agencies to
capitalize on opportunities to proactively address at risk fish and
wildlife species in conjunction with other resource concerns.
NRCS is also proposing that the approving authority for EQIP
contracts will be the State Conservationist or designee except that:
(1) The approving authority for any contract that contains a
structural practice with a cost-share rate exceeding 50 percent is the
State Conservationist, and
(2) The approving authority of all contracts with payments greater
than $100,000 is the NRCS Regional Conservationist.
Section 1466.21 addresses the requirements for EQIP contracts. Only
land that meets the purpose and goals of the program and is to be
treated under EQIP will be included in the contract. NRCS is including
the following changes to the current EQIP language:
[sbull] In Section 1466.21(a) that both cost share payments and
incentive payments may be included in the EQIP contract.
[sbull] Pursuant to section 1240B(b)(2) of the 1985 Act, as amended
by the 2002 Act, Section 1466.21(b) the minimum contract length is
revised from five years to one year after installation of the last
practice. This part was also revised to allow more than one contract on
a tract as a result of the Department's streamlining efforts.
[sbull] In Section 1466.21(b) NRCS proposes in paragraph (3)(iv) to
require the implementation of a comprehensive nutrient management plan
when the EQIP contract includes a waste storage or waste treatment
facility.
Section 1466.22 addresses the participant's responsibility for
conservation practice operation and maintenance. This part remains
unchanged.
Section 1466.23 addresses cost-share rates, incentive payment
levels, grants, and payment eligibility and limitations. In conjunction
with Section 1466.10, this is the third key component in ``optimizing
environmental benefits.''
Subject to the National direct funding caps, State Conservationists
with advice of Local Work Groups and the State Technical Committee can
set cost-share rates and incentive payment limits as determined
appropriate to encourage a producer to perform the land management
practice that would not otherwise be initiated without such assistance.
The number and type of eligible practices and the cost-share rates
and incentive payment levels determined by the State Conservationist or
designee influence the extent to which the program will optimize
environmental benefits and what resource concerns will be addressed.
The State Conservationist or designee, with advice from State Technical
Committees and Local Work Groups will determine which conservation
practices are eligible for EQIP funding in each state. The State
Conservationist or designee will consider the level of environmental
benefits of the eligible conservation practices and will use that
information to determine cost-share rates and incentive payment levels.
In general, cost share rates will be determined for structural
practices, while incentive payments will be determined for land
management practices. No incentive payments will be made available for
land management practices that are currently generally accepted and
practiced in the agricultural community. The State Conservationist or
designee will set cost share rates and incentive payments that reflect:
(1) The cost effectiveness of conservation practices;
(2) The number of resource concerns a practice will address (e.g. a
waste treatment facility that reduces ammonia emissions benefiting both
air and water quality should have a higher cost-share rate than a waste
storage lagoon.);
(3) The degree of treatment of priority natural resource concerns;
(4) The longevity of the beneficial environmental effect derived
from the practice; and
(5) The energy savings demonstrated by the practice.
NRCS intends to fund most structural practices at no more than 50
percent cost-share. NRCS will make payments to the producer when NRCS
determines that the conservation practices specified in the contract
are satisfactorily established. NRCS intends to monitor and evaluate
the program to ensure that
[[Page 6662]]
financial assistance is used in an appropriate manner to optimize the
environmental benefits.
The EQIP contract specifies the cost-share or incentive payments
the producer will receive from NRCS in return for applying the needed
conservation practices and land-use adjustments according to a
specified schedule. NRCS, with the advice of the State Technical
Committee and/or Local Work Group and subject to funding caps, will
determine the appropriate cost-share rates for structural practices and
incentive payments for land management practices. In determining the
amount and rate of incentive payments the State Conservationist should
accord a greater significance to practices that address priority
natural resource concerns.
NRCS, with the advice of the State Technical Committee or Local
Work Groups, will also determine the appropriate incentive payments for
development of a comprehensive nutrient management plan (CNMP). NRCS
seeks comments regarding how incentive payments to develop a CNMP
should be implemented.
The National direct funding cap for structural practices is 75
percent of the actual cost or 90 percent for limited resource producer
and beginning farmer (Section 1240B(d)(2) of the 1985 Act as amended by
the 2002 Act).
Section 1466.24 is concerned with payment eligibility and payment
limitations. Pursuant to section 1240G of the 1985 Act, as amended by
the 2002 Act, this part is revised to increase the contract total from
$50,000 per person to a total of $450,000 maximum per individual or
entity for all FY 2002-FY 2007 contracts and deletes the $10,000 per
year limitation. It is also revised pursuant to section 1001D of the
1985 Act, as amended by Section 1604 of the 2002 Act, to limit payment
eligibility for participants who have an average adjusted gross income
of more than $2.5 million for the previous three years as determined
under 7 CFR part 1400, subpart G.
(1) Payment Eligibility
For the definition of ``individual'' and ``entity'', NRCS proposes
to continue to use the provisions in 7 CFR Part 1400 related to the
definition of ``person'' and the limitation of payments will be used,
except that:
(a) States, political subdivisions, and entities thereof will not
be persons eligible for financial assistance.
(b) Payments in excess of the limitation may be made to a Tribal
venture if an official of the Bureau of Indian Affairs or a Tribal
official certifies that no one Tribal member will receive, directly or
indirectly, more than the limitation. Annually, the certifying official
must provide to NRCS a list of members, by Social Security Number, and
the benefit each member has received.
Further, the following provisions in 7 CFR 1400 will not be used
because they are not consistent with the intent and language of the
EQIP statute: Subpart C for determining whether persons are actively
engaged in farming, Subpart E for limiting payments to certain cash
rent tenants, and Subpart F for determining whether foreign persons are
eligible for payment.
(2) Individual Payment Limitation
Section 1240G of the 1985 Act, as amended by the 2002 Act,
establishes a $450,000 EQIP payment limit to any individual or entity
for all FY2002 through FY2007 contracts they enter either as an
individual or as a beneficiary of an entity. In order to ensure that no
individual will receive more than the $450,000, NRCS will track all
EQIP funds paid to any and all individuals by the social security
number. In order to be eligible to participate in EQIP, the application
of an individual, entity (e.g., corporation, limited liability
partnership, irrevocable trust, or any other organization listed as an
entity in FSA's rule 7 CFR 1400), or any other application in which
there is more than one individual listed as a beneficiary must provide
a list of all members or beneficiaries, their social security numbers
and the percentage interest of each member or beneficiary.
(3) Adjusted Gross Income Eligibility
Section 1001D of the 1985 Act, as amended by section 1604 of the
2002 Act, provides that an individual or entity shall not be eligible
to receive payments from several programs, including EQIP, during a
crop year if the average adjusted gross income of the individual or
entity exceeds $2,500,000, unless not less than 75 percent of the
average adjusted gross income of the individual or entity is derived
from farming, ranching, or forestry operations. This provision of the
1985 Act will be implemented in accordance with 7 CFR 1400, Subpart G--
average adjusted gross income limitation. However, since NRCS will be
making a commitment for payments under an EQIP contract for a period of
time into the future, NRCS will make a one-time eligibility
determination in accordance with Subpart G, 7 CFR 1400 at the time of
contract approval.
Section 1466.25 addresses contract modifications and transfers of
land. This section is revised to remove a requirement that Conservation
District will approve modifications to both the EQIP plan of operations
and EQIP contract to assure there will be no conflict of interest where
the Conservation District is also a Technical Service Provider.
Section 1466.26 addresses the procedures to be followed for
contract violations and terminations. Changes reflect the determination
that NRCS will administer EQIP.
Section 1466.27 is reserved for future regulations that address
implementation of Conservation Innovation Grants.
Section 1240H of the 1985 Act, as added by the 2002 Act, gives the
Secretary the authority to use EQIP funds to pay up to 50 percent of
the cost of competitive grants that are intended to stimulate
innovative approaches to leveraging Federal investment in environmental
enhancement and protection, in conjunction with agricultural
production. USDA will issue a future public notice to solicit comments
on how the Conservation Innovation Grants provision should be
implemented.
Regulatory Certifications
Executive Order 12866
Pursuant to Executive Order 12866 (58 FR 51735, October 4, 1993),
it has been determined that this proposed rule is an economically
significant regulatory action because it may result in an annual effect
on the economy of $100 million or more. The administrative record is
available for public inspection in Room 5241 South Building, USDA, 14th
and Independence Avenue SW., Washington, DC. Pursuant to Executive
Order 12866, NRCS conducted an economic analysis of the potential
impacts associated with this program, and included the analysis as part
of a Regulatory Impact Analysis document prepared for this rule. A
summary of the Economic Analysis can be found at the end of this
preamble and a copy of the analysis is available upon request from Mark
W. Berkland, Conservation Operations Division, Natural Resources
Conservation Service, Room 5241, Washington, DC 20250-2890 or
electronically at http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.nrcs.usda.gov/programs/eqip/index.html
under ``Additional Information''.
Regulatory Flexibility Act
The Regulatory Flexibility Act is not applicable to this rule
because NRCS is not required by 5 U.S.C. 533 or any other provision of
law to publish a notice of proposed rulemaking with respect to the
subject matter of this rule.
[[Page 6663]]
Environmental Analysis
A draft Environmental Assessment (EA) has been prepared to assist
in determining whether this proposed rule, if implemented, would have a
significant impact on the quality of the human environment. Based on
the results of the draft EA, NRCS proposes issuing a finding of no
significant impact (FONSI) before a final rule is published. Copies of
the draft EA and draft FONSI may be obtained from Mark W. Berkland,
Conservation Operations Division, Conservation Operations Division,
Natural Resources Conservation Service, Room 5241-S, Washington, DC
20250-2890 and electronically at http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.nrcs.usda.gov/programs/
eqip/index.html under ``Additional Information''. Mail comments on the
draft EA and draft FONSI by March 12, 2003, to Mark W. Berkland,
Conservation Operations Division, Natural Resources Conservation
Service, Room 5241, Washington, DC 20250-2890, or submit them via the
Internet to farmbillrules@usda.gov.
Civil Rights Impact Analysis
NRCS has determined through a Civil Rights Impact Analysis that the
issuance of this proposed rule will not have a significant effect on
minorities, women and persons with disabilities. Copies of the Civil
Rights Impact Analysis and Finding of No Significant Impact may be
obtained from Mark W. Berkland, Conservation Operations Division,
Natural Resources Conservation Service, PO Box 2890, Washington, DC
20013-2890, and electronically at http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.nrcs.usda.gov/programs/
eqip/index.html under ``Additional Information'.
Paperwork Reduction Act
Section 2702(b)(1)(A) of the 2002 Act provides that the
promulgation of regulations and the administration of Title II of the
Act shall be made without regard to chapter 35 of Title 44 of the
United State Code, the Paperwork Reduction Act. Accordingly, these
regulations and the forms, and other information collection activities
needed to administer the program authorized by these regulations, are
not subject to provisions of the Paperwork Reduction Act, including
review by the Office of Management and Budget.
NRCS is committed to compliance with the Government Paperwork
Elimination Act (GPEA) and with the Freedom to E-File Act, which
require Government agencies in general and NRCS in particular to
provide the public the option of submitting information or transacting
business electronically to the maximum extent possible. The forms and
other information collection activities required for participation in
the program proposed under this rule are not yet fully developed for
the public to conduct business with NRCS electronically. However, the
application form will be available electronically through the USDA
eForms Web site at http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.sc.egov.usda.gov for downloading.
Applications may be submitted at the local USDA service centers, by
mail or by FAX. Currently, electronic submission is not available
because signatures from multiple producers with shares in agricultural
operations are required.
Executive Order 12988
This proposed rule has been reviewed in accordance with Executive
Order 12988, Civil Justice Reform. The provisions of this proposed rule
are not retroactive. The provisions of this proposed rule preempt State
and local laws to the extent such laws are inconsistent with this
proposed rule. Before an action may be brought in a Federal court of
competent jurisdiction, the administrative appeal rights afforded
persons at 7 CFR parts 614, 780, and 11 must be exhausted.
Federal Crop Insurance Reform and Department of Agriculture
Reorganization Act of 1994
Pursuant to section 304 of the Federal Crop Insurance Reform and
Department of Agriculture Reorganization Act of 1994 (Pub. L. 103-354),
USDA classified this proposed rule as major and NRCS conducted a risk
analysis. The risk analysis establishes that the EQIP proposed rule
will produce benefits and reduce risks to human health, human safety,
and the environment in a cost-effective manner. A copy of the risk
analysis is available upon request from Mark W. Berkland, Conservation
Operations Division, Natural Resources Conservation Service, PO Box
2890, Washington, DC 20013-2890, and electronically at http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.nrcs.usda.gov/programs/eqip/index.html
under ``Additional
Information'.
Unfunded Mandates Reform Act of 1995
Pursuant to Title II of the Unfunded Mandates Reform Act of 1995
(Pub. L. 104-4), NRCS assessed the effects of this rulemaking action on
State, local, and Tribal government, and the public. This action does
not compel the expenditure of $100 million or more by any State, local,
or Tribal governments, or anyone in the private sector; therefore, a
statement under section 202 of the Unfunded Mandates Reform Act of 1995
is not required.
Economic Analysis--Executive Summary
Background
Pursuant to Executive Order 12866, Regulatory Planning and Review,
the Natural Resources Conservation Service has conducted a benefit cost
analysis of the Environmental Quality Incentives Program as formulated
for the proposed rule. The Department of Agriculture Reorganization Act
of 1994 and the Unfunded Mandates Reform Act of 1995 also require
analysis of costs, benefits and risks associated with major regulation.
These requirements provide decision makers with the opportunity to
develop and implement a program that is beneficial, cost effective and
that minimize negative impacts to health, human safety and the
environment.
The analysis estimates EQIP will have a beneficial impact on the
adoption of conservation practices and, when installed or applied to
technical standards, will increase net farm income. In addition,
benefits would accrue to society for long-term productivity maintenance
of the resource base, reductions in non-point source pollution damage,
and wildlife enhancements. As a voluntary program, EQIP will not impose
any obligation or burden upon agricultural producers that choose not to
participate. The program was authorized at $6.16 billion over the six-
year period of FY 2002 through FY 2007, with annual amounts for the
base program and the ground and surface water conservation provisions
increasing to $1.36 billion in FY 2007 after the initial authorization
in FY 2002 year of $425 million. In addition, the 2002 Act authorizes a
total of $50 million for the Klamath Basin in California and Oregon.
Prior to the promulgation of the Environmental Protection Agency's
``National Pollutant Discharge Elimination System Permit Regulation and
Effluent Limitation Guidelines and Standards for Concentrated Animal
Feeding Operations'' (EPA CAFO) final rule which was published on
December 15, 2002, NRCS estimated that 63 million acres of agricultural
land will be treated over the six years of the program, including 44
million acres of cropland, 10 million acres of grazing land (pasture
and rangeland), and 9 million acres for wildlife. The total evaluated
on and off-site environmental benefits were projected to be $6.8
billion including $3.6 billion from animal waste treatment and $3.2
billion
[[Page 6664]]
from land treatment. Some of the off-site environmental benefits are
attributable to improvements made to enhance freshwater and marine
water quality and fish habitat, improved aquatic recreation
opportunities, reduced sedimentation of reservoirs, streams, and
drainage channels, and reduced flood damages. Additional benefits are
from reduced pollution of surface and ground water from agrochemical,
improvements in air quality by reducing wind erosion, and enhancements
to wildlife habitat.
This analysis was conducted prior to the promulgation of the EPA
CAFO final rule. The CAFO rule was published on December 15, 2002 and
it underwent changes up to the time of promulgation. As a result, this
analysis could not accurately separate the benefits and costs
associated with the CAFO rule and those associated with the EQIP
proposed rule. There is still some flexibility in the EPA CAFO rule
relative to which facilities will be required to have an National
Pollutant Discharge Elimination System (NPDES) permit. However, it is
known that the CAFO rule will apply to all facilities with more than
1,000 animal units (AUs). Since the CAFO rule claims the environmental
benefits for controlling pollution on these facilities, the EQIP rule
cannot make the same claim. EQIP will be a primary vehicle for funding
compliance with the CAFO rule transferring some of the funding
obligations from producers to EQIP so the costs associated with
implementing the required pollution control measures apply to EQIP.
This analysis will be revised to take into account comments
received during the Proposed Rule comment period. During this revision,
a full review of the overlap of the costs and benefits associated with
the CAFO and EQIP rules will be undertaken. Meanwhile, it is estimated
that approximately $1.7 billion in annual benefits that were identified
in the EQIP economic analysis can be attributed to the EPA CAFO
regulation. Consequently, total EQIP benefits are $5.1 billion and net
benefits relative to EQIP funds are $620 million and net benefits
relative to total costs of -$1.5 billion.
Methodology
In developing the benefit cost analysis for EQIP, it was necessary
to identify a baseline for comparison. Since EQIP was created in 1996,
the regulation and policy guidance for implementing that version was
considered a baseline. In addition, changes to EQIP as outlined in the
2002 Farm Bill have been implemented via a Notice of Fund Availability
(NOFA) issued in fiscal year 2002. This version of the program was also
used as a basis for comparison, hence a two-tiered approach to the
cost-benefit analysis. In order to estimate potential program impacts,
several alternatives or variations of EQIP as outlined in the NOFA have
been evaluated. Costs and benefits have been quantified where possible.
Costs and benefits that could not be adequately or accurately
quantified are discussed qualitatively.
Public costs quantified in this analysis are the total technical
and financial assistance outlined in Congressional Budget Office
scoring of the 2002 Farm Bill. Private costs are out of pocket costs
paid by producers based on average cost share rates of EQIP. The
quantifiable benefits are a subset of the environmental benefits that
accrue to the types of practices implemented with EQIP. Available data
and literature were found which support benefit in the following
categories:
[sbull] Reduction in sheet and rill reduction as predicted by the
Universal Soil Loss Equation (USLE).
[sbull] Improved forage production on grazing lands.
[sbull] Reduced wind erosion resulting in both improved air quality
and reduced soil loss.
[sbull] Increased irrigation water use efficiency.
[sbull] Benefits of wildlife viewing and hunting resulting from
improved wildlife habitat management.
[sbull] Reduced fertilizer expense resulting from nutrient
management practices not associated with animal waste.
[sbull] Animal waste benefits.
[sbull] Savings resulting from decreased fertilizer purchases.
[sbull] Increased recreational activity resulting from improved
water quality.
[sbull] Improved commercial shell fishing.
[sbull] Reduced incidence of fish kills.
[sbull] Reduced contamination of private wells.
In order to conduct the analysis, it was necessary to make certain
assumptions based on the available data.
[sbull] Practice mix for the old and new EQIP is the same.
[sbull] Quantifiable benefits and per unit benefits are constant,
and all benefits are based on national averages.
[sbull] Technical assistance costs are based on the full workload
and costs associated with implementing the EQIP program, and are based
on a projected average contract size.
[sbull] Average annual and net present value calculations use an
OMB-recommended discount factor of 7 percent.
Description of Alternatives
Tier One
The baseline for comparison is the historical EQIP as established
in the 1996 Federal Agricultural Improvement and Reform Act. The
baseline reflects historical funding levels projected forward along
with existing policy. Alternative one consists of EQIP as defined in
the 2002 NOFA. The NOFA alternative reflects increased funding levels,
no buy-down provision,\2\ the elimination of priority areas, and
maximum payment limitation of $450,000, with a payment cap of 50
percent cost-share for any practices with an actual cost exceeding
$100,000, and the inclusion of large confined animal feeding operations
(CAFOs). These are the most significant changes in the program
legislation in terms of economic costs and benefits.
---------------------------------------------------------------------------
\2\ The buy-down provision of the old EQIP allowed producers to
improve the offer index of their applications by reducing the amount
of cost share funds they would expect.
---------------------------------------------------------------------------
Tier Two
For the second tier of the cost-benefit analysis, the baseline
(EQIP 2002 Farm Bill as outlined in the NOFA) is compared to three
alternatives. Comparison of these alternatives represents sensitivity
analyses of potential policy impacts of EQIP implementation. Following
is a brief description.
Alternative One--Varying AFO/CAFO Funding Allocation by Size Class
The first alternative is an analysis of various methods of
allocating funds to animal feeding operations (AFO) and confined animal
feeding operations (CAFO) based on the size of the operation. The
specific scenarios evaluated were allocating funds equally to each size
class, allocating funds according to the necessary treatment costs,
allocating funds based on the total number of animal units, allocating
funds based on the number of operations, and allocating funds only to
middle or smaller size operations.
Alternative Two--Varying Payment Limitation Between $50,000 and
$450,000
Although legislation allows a maximum payment of $450,000 per
participant, the analysis considered potential benefits if different
payment limitations were allowed based on local market, cultural or
economic conditions. Alternative two analyzes the effects of payment
limitations ranging from $50,000, up to the legislated maximum of
$450,000.
[[Page 6665]]
Alternative Three--Varying Methods of Environmentally Targeting Funds
The third alternative analyzes the effects of different fund
allocation methods which target natural resource issues and concerns.
The methods are:
[sbull] Homogenous evaluation process (NOFA)--A standardized
allocation formula is applied to every application in every location.
[sbull] Spatial evaluation process--More points are given based on
proximity to an identified natural resource (i.e. an impaired stream,
underground aquifer, etc.), but no participants are excluded.
[sbull] Allocation and evaluation by natural resource concern--More
points are given based on an identified natural resource concern, ie.
water quality, soil erosion, or wildlife habitat development.
[sbull] Variable cost share rates--Rates vary by practice based on
effectiveness or other criteria.
[sbull] Allocation formula--Established criteria are evaluated
based on a weighted formula.
[sbull] Holdback option--Funds are set aside to be allocated at a
later point to locations that achieved higher levels of program
efficiency based on measures which have yet to be determined.
Conclusions
Tier One--Comparison of 1996 EQIP to EQIP as Outlined in the NOFA
The EQIP Benefit Cost Analysis compares the EQIP program created in
1996 (``old program'') with those changes associated with the 2002
program implemented through the NOFA. Additionally, several
alternatives associated with the proposed rule were then compared with
the NOFA.
Based upon this analysis, if EQIP is implemented as described in
the NOFA, it is estimated that 63 million acres of agricultural land
will be treated, categorized by 44 million acres of cropland, 10
million acres of grazing land, and 9 million acres for wildlife habitat
improvement if the proposed program is implemented. This results in
$6.8 billion in total benefits, including $3.6 billion due to animal
waste treatment and $3.2 billion due to non-animal waste land
treatments.
The treatment level is expected to increase when compared to the
old EQIP. An additional 0.9 million acres for sheet and rill water
erosion (USLE) reduction, 2.3 million acres for wind erosion, 8.5
million acres for non-waste nutrient management, 9.6 million acres for
net irrigation water reduction, 3.1 million acres for grazing
productivity, and 4.1 million acres for wildlife habitat could be
expected to occur on the landscape. In addition, 4.8 million animal
units, and 2,755 animal feeding operations could be treated and total
soil loss from agricultural land decreased by 7.5 million tons/year.
Under the assumption of the old program continuing at level funding
and not accounting for the effects of the EPA CAFO rule, the net
present value of benefits over the period of 2002-07 was estimated to
be $2.2 billion with $0.3 billion coming from waste treatment and $1.9
billion from land treatment. Net benefits were $1.2 billion above EQIP
funds and -$0.2 billion if total costs were accounted for.
Net benefits under the new program were $2.3 billion above EQIP
funds and $0.2 billion if total costs were accounted for.
The difference between the net benefits estimates of the two
scenarios is due to three factors:
[sbull] Scale effect associated with increased funding;
[sbull] Practice mix effect as a larger share of funds are
allocated to livestock waste treatment and efficiencies; and
[sbull] Cost effect, since with cost share buy down eliminated, the
government cost per treated unit is most likely increased.
Analysis suggests that implementation of EQIP outlined in the NOFA
would provide substantial benefits and would help achieve program
objectives of solving identified natural resource concerns while
optimizing environmental benefits.
The option to include large AFOs, elimination of priority areas and
discussion of increased payment limitation are discussed in detail in
Tier Two of the benefit-cost analysis. Other proposed changes in EQIP
are not quantified in this analysis due to lack of available data
necessary to accurately evaluate effects. These include potentially
shorter average contract lengths due to the fact that single practices
will be allowed and contracts may terminate one year after completion
of the last practice, allowing multiple contracts per tract of land,
and providing higher cost share rates for limited resource producers or
beginning farmers.
Tier Two--NOFA Compared to Policy Options
Alternative One: Alternatives to AFO/CAFO Funding
This analysis was generated before EPA has promulgated the CAFO
rule, which regulates all large AFOs above 1,000 AUs. With the
promulgation of this rule, EQIP can no longer claim environmental
benefits from treatment of large producers, since they must comply with
CAFO regulations. Use of EQIP resources would therefore be most
efficiently used in treating the next largest non-regulated class of
producers.
Allocating funds based on share of total animal units (AUs) results
in 42 percent of the funding going to the largest size class
(1,000 AUs), and achieves the greatest net benefits of $2.03
billion and $1.02 billion for EQIP funds and total costs. Conversely,
the allocation based on share in numbers of operations, the largest
size class would only receive 4 percent of the funding and would
achieve net benefits of $378 million and -$315 million for EQIP funds
and total costs, respectively. Clearly, some efficiencies are lost due
to the fact that it costs more per animal unit to treat the smaller
size class AFOs than the large farms.
The strategy generating the highest net benefits (of the six
alternatives evaluated) is to allocate the funds across the size
classes according to their proportionate share in total number of AUs.
That strategy would result in treatment of 15.8 million AUs, compared
to as low as 9.4 million AUs for the strategy with the lowest net
benefits (allocation divided evenly to the 3 smallest size classes and
excluding funding to CAFOs.) The more that funds are shifted towards
the (non regulated) larger AFOs, the larger the number of AUs treated,
the lower the TA cost, and the greater the estimated benefits.
By comparison, if farms with greater than 1,000 animal units
remained excluded from EQIP funding for animal waste practices, a total
of 11,400 farms, with a total of 23 million animal units, and an
overall need of $500 million in CNMP costs would remain ineligible for
EQIP funding. In the scenario of not funding large CAFOs, this analysis
shows that although net benefits would exceed the net EQIP costs, net
benefits would be the lowest of all scenarios, with $314 million for
EQIP funds and $-421 million for total costs.
Under the NOFA scenario, this analysis assumed that the 50 percent
of EQIP funding designated for animal waste treatment would be divided
equally across the four AFO size classes. However, from the total EQIP
benefits, the benefits accruing from treatment of the largest class of
AFOs, greater than 1,000 AUs, are excluded. This exclusion is
appropriate now that the Environmental Protection Agency has formally
published its revised CAFO rule and the benefits from treatment of
those large AFOs are credited to the CAFO rule rather than the EQIP
program. The definition of AFOs
[[Page 6666]]
governed by the new CAFO rule has a broader reach than the simple
``greater than 1,000'' class defined in this analysis. At this time,
the extent to which the CAFO regulation covers small and medium sized
AFOs is unclear. It is assumed that the coverage is not significant.
Alternative Two: Payment Limits Between $50,000 and $450,000
Although actual payment depends on the specific conservation system
applied and the cost share rate, an assumed or artificial limit on
payments can be used to analyze comparative environmental benefit. Data
in the benefit-cost analysis suggests that while the various payment
limitations do not have great bearing on the total number of farms that
would be affected by the caps, a significant number of animal units
could be eligible for funding without payment limitations at the higher
cap levels.
At the $450,000 payment limitation level, only one percent of the
remaining livestock farms would still be capped in the costs of
implementing animal waste-related conservation practices. However,
those large farms control 27 percent of the animal units. These
represent the biggest farms with the highest total costs, but lowest
cost per animal unit.
Although there are relatively few additional farms that would be
funded as payment limitations increase, these farms have a large number
of animal units. Increasing the payment limitation from $50,000 to
$100,000 would allow an additional 9 million animal units to be
eligible for funding under the payment limitation. Increasing the
payment limitation from $300,000 to $450,000 would only increase the
number of animal units by fewer than 3 million.
At $50,000, only 33 percent of the livestock farms' animal units
would be eligible for funding without reaching the cap. At $100,000,
half of the nation's animal units would qualify for EQIP funding
without reaching the cap, and at the $450,000, almost three quarters of
the nation's animal units would qualify for EQIP funding without
reaching the payment limitation cap.
Although legislation allows a maximum payment of $450,000 per
participant, it is assumed that the Agency and states may set lower
limitations if necessary based on local market, cultural or economic
conditions. The economic analysis indicates, there is no economic gain
associated with imposing lower payment limitations. Since the larger
farms represent those with the highest number of animal units and
greatest cost efficiencies per animal unit, the program benefits by
allowing full participation up to the payment maximum.
Alternative Three: Alternative Application Evaluation Procedures To
Ensure Cost-Effective, Environmentally Targeted Fund Allocation
Under the previous program, 65 percent of funds were allocated to
specially targeted, geographically defined areas. The NOFA/Proposed
Rule eliminates the process of designating funds to conservation
priority areas. There is concern that this will have a negative impact
on the potential environmental benefits due to the fact that funds may
not be targeted to specific geographic areas, and the environmental
effects of practice implementation will be diluted by scattering cost
share assistance over a much broader area.
Six options for environmentally targeting EQIP funds were compared
in this alternative. Results of these comparisons indicate that if
technical assistance costs are constant, then adopting some form of
spatial evaluation, varying cost share by practice effectiveness, or
allocating funds with a formula based on priority resource concerns
could all have positive effects on total benefits.
In the case of varying fund allocation to emphasize a particular
resource concern, the share of total funds allocated in the NOFA was
increased by 5 percent for one category and decreased by 1 percent for
the other benefit categories identified in this analysis, with the
exception of animal waste. The results of these changes indicate that
targeting non-animal waste related nutrient management concerns would
yield the greatest net benefits above total costs ($673 M), compared to
net benefits of $180 Million for the NOFA. When compared to the NOFA,
net benefits would increase respectively for each category that was
emphasized using the set percentages. When compared to the NOFA, total
net benefits would decrease if grazing land productivity or wind
erosion categories were to receive an increased share of funds.
Although targeting by resource concern can have overall positive
effects on benefits, emphasizing one particular resource concern may
overlook the relationships between natural resource effects, and fail
to capitalize on them.
In the case of varying cost share levels by practice, the National
priorities are emphasized by reducing the cost share rates for
practices that have primary impacts in the other benefit categories.
For the purposes of this analysis, it is assumed that the average cost
share for EQIP is 75 percent in the NOFA. This rate is decreased to 60
percent (mild) and to 50 percent (aggressive) for erosion reduction,
grazing productivity, and wildlife habitat improvement. The results
indicate that pursuing National priorities with a cost share mechanism
can increase total benefits by 5 percent in the ``mild'' scenario, and
by 8 percent for the more aggressive scenario. This rule allows
flexibility at the state level to provide higher cost-share rates for
practices that impact local resource concerns while reducing cost-share
rates for practices that do not optimize benefits at the local level.
In addition to these methods, a holdback of funds for distribution
based upon an objective comparison of states using performance criteria
can be a useful tool that could increase net benefits and increase
program efficiency. Data suggests that in spite of the removal of the
requirement for geographically based priority areas, other approaches
to targeting of EQIP funds to the most critical natural resource
concerns are feasible and will have positive effects on total program
benefits. This will ensure that environmental benefits are optimized
and program objectives are met, but without excluding participation by
persons outside of a designated boundary.
NRCS will revise and enhance this analysis for the final rule.
Future analysis will seek to evaluate alternative allocations of
program dollars across different conservation practices and quantify
and estimate their impacts.
To better implement the program to optimize environmental benefits,
as required by the 2002 Act, NRCS seeks public comment, data, or
references that can quantitatively or qualitatively enhance its
analytical efforts. NRCS especially welcomes comments or data on levels
or trends in conservation technology adoption, the on-site and off-site
environmental benefits and economic returns to various conservation
practices, and other literature about incentive schemes for technology
adoption.
List of Subjects in 7 CFR Part 1466
Administrative practices and procedures, conservation, natural
resources, water resources, wetlands, payment rates.
For the reasons stated in the preamble, the Commodity Credit
Corporation proposes to revise Part 1466 of Title 7 of the Code of
Federal Regulations to read as follows:
[[Page 6667]]
PART 1466--ENVIRONMENTAL QUALITY INCENTIVES PROGRAM
Subpart A--General Provisions
Sec.
1466.1 Applicability.
1466.2 Administration.
1466.3 Definitions.
1466.4 National priorities.
1466.5 National allocation and management
1466.6 State allocation and management
1466.7 Outreach activities.
1466.8 Program requirements.
1466.9 EQIP plan of operations.
1466.10 Conservation practices.
1466.11 Technical and other assistance provided by qualified
personnel not affiliated with USDA.
Subpart B--Contracts and Payments
1466.20 Application for contracts and selecting offers from
producers.
1466.21 Contract requirements.
1466.22 Conservation practice operation and maintenance.
1466.23 Cost-share rates and incentive payment levels.
1466.24 EQIP payments.
1466.25 Contract modifications and transfers of land.
1466.26 Contract violations and termination.
1466.27 Conservation Innovation Grants.
Subpart C--General Administration
1466.30 Appeals.
1466.31 Compliance with regulatory measures.
1466.32 Access to operating unit.
1466.33 Performance based upon advice or action of representatives
of NRCS.
1466.34 Offsets and assignments.
1466.35 Misrepresentation and scheme or devise.
Authority: 15 U.S.C. 714b and 714c; 16 U.S.C. 3839aa--3839aa--8.
Subpart A--General Provisions
Sec. 1466.1 Applicability.
Through the Environmental Quality Incentives Program (EQIP), the
Commodity Credit Corporation (NRCS) provides assistance and to eligible
farmers and ranchers to address soil, water, air, and related natural
resources concerns, and to encourage enhancements on their lands in an
environmentally beneficial and cost-effective manner. The purposes of
the program are achieved by implementing structural and land management
conservation practices on eligible land.
Sec. 1466.2 Administration.
(a) The funds, facilities, and authorities of the Commodity Credit
Corporation (CCC) are available to NRCS for carrying out EQIP.
Accordingly, where NRCS is mentioned in this part, it also refers to
the CCC's funds, facilities, and authorities where applicable.
(b) NRCS and the Farm Service Agency (FSA) will consult, at the
National level, in establishing policies, priorities, and guidelines
related to the implementation of this part. FSA may continue to
participate in EQIP through participation on State Technical Committees
and Local Work Groups.
(c) NRCS supports ``locally-led conservation'' by using State
Technical Committees at the state level and Local Work Groups at the
county/parish level to advise NRCS on technical issues relating to the
implementation of EQIP such as:
(1) Identification of priority natural resource concerns;
(2) Identification of which conservation practices should be
eligible for financial assistance; and
(3) Establishment of cost-share rates and incentive payment levels.
(d) No delegation in this part to lower organizational levels shall
preclude the Chief of NRCS or a Designated Conservationist from
determining any issues arising under this part or from reversing or
modifying any determination made under this part.
(e) NRCS may enter into cooperative agreements with other Federal
or State agencies, Indian Tribes, conservation districts, units of
local government, and public and private not-for-profit organizations
to assist NRCS with implementation of the program.
Sec. 1466.3 Definitions.
The following definitions will apply to this part and all documents
issued in accordance with this part, unless specified otherwise:
Agricultural land means cropland, rangeland, pasture, private non-
industrial forest land, and other land on which crops or livestock are
produced.
Agricultural operation means an area covered by the ground and
surface water conservation program requirements and used to establish
net savings.
Animal waste management facility means a structural conservation
practice used for storing or treating animal waste.
Applicant means a producer, either an individual or entity, who has
requested in writing to participate in EQIP. Producers who are members
of a joint operation, as defined in 7 CFR part 1400, shall be
considered one applicant.
Beginning Farmer or Rancher means an individual or entity who:
(1) Has not operated a farm or ranch, or who has operated a farm or
ranch for not more than 10 consecutive years. This requirement applies
to all members of an entity, and
(2) Will materially and substantially participate in the operation
of the farm or ranch.
(i) In the case of a contract with an individual, individually or
with the immediate family, material and substantial participation
requires that the individual provide substantial day-to-day labor and
management of the farm or ranch, consistent with the practices in the
county or State where the farm is located
(ii) In the case of a contract with an entity, all members must
materially and substantially participate in the operation of the farm
or ranch. Material and substantial participation requires that each of
the members provide some amount of the management, or labor and
management necessary for day-to-day activities, such that if each of
the members did not provide these inputs, operation of the farm or
ranch would be seriously impaired.
Chief means the Chief of NRCS, USDA, or designee (State
Conservationist or Designated Conservationist).
Comprehensive Nutrient Management Plan (CNMP) means a conservation
system that is unique to an animal feeding operation (AFO). A CNMP is a
grouping of conservation practices and management activities which,
when implemented as part of a conservation system, will help to ensure
that both production and natural resource protection goals are
achieved. A CNMP incorporates practices to use animal manure and
organic by-products as a beneficial resource. A CNMP addresses natural
resource concerns dealing with soil erosion, manure, and organic by-
products and their potential impacts on all natural resources including
water and air quality, which may derive from an AFO. A CNMP is
developed to assist an AFO owner/operator in meeting all applicable
local, Tribal, State, and Federal water quality goals or regulations.
For nutrient impaired stream segments or water bodies, additional
management activities or conservation practices may be required by
local, Tribal, State, or Federal water quality goals or regulations.
Confined livestock feeding operation means an animal feeding
operation that stables, confines, feeds, or maintains animals for a
total of 45 days or more in any 12-month period and does not sustain
crops, vegetation, forage growth, or post-harvest residues in the
normal growing season over any portion of the confined area.
Conservation district means any district or unit of State or local
government formed under State or territorial law for the express
purpose of developing and carrying out a local soil and water
conservation program. Such district or unit of government may be
[[Page 6668]]
referred to as a ``conservation district'', ``soil conservation
district'', ``soil and water conservation district'', ``resource
conservation district'', ``land conservation committee'', or similar
name.
Conservation Innovation Grants means competitive grants made under
EQIP to individuals, governmental and non-governmental organizations to
stimulate innovative methods to leverage Federal funds to implement
EQIP to enhance and protect the environment in conjunction with
agricultural production.
Conservation practice means a specified treatment, such as a
structural or land management practice, that is planned and applied
according to NRCS standards and specifications.
Contract means a legal document that specifies the rights and
obligations of any person who has been accepted to participate in the
program. An EQIP contract is a cooperative agreement for the transfer
of assistance to the participant as opposed to procurement contract.
Cost-share payment means the financial assistance from NRCS to the
participant to share the cost of installing a structural conservation
practice.
Designated Conservationist means an NRCS employee whom the State
Conservationist has designated as responsible for administration of
EQIP in a specific area.
EQIP plan of operations means the identification, location and
timing of conservation practices, both structural and land management,
that the producer proposes to implement in order to address the
priority natural resource concerns and optimize environmental benefits.
Field office technical guide means the official NRCS guidelines,
criteria, and standards for planning and applying conservation
treatments and conservation management systems. It contains detailed
information on the conservation of soil, water, air, plant, and animal
resources applicable to the local area for which it is prepared.
Incentive payment means the financial assistance from NRCS to the
participant in an amount and at a rate determined appropriate to
encourage the participant to perform a land management practice that
would not otherwise be initiated without program assistance.
Indian Tribe means any Indian Tribe, band, nation, or other
organized group or community, including any Alaska Native village or
regional or village corporation as defined in or established pursuant
to the Alaska Native Claims Settlement Act (43 U.S.C. 1601 et seq.)
that is recognized as eligible for the special programs and services
provided by the United States to Indians because of their status as
Indians.
Indian trust lands means real property in which:
(1) The United States holds title as trustee for an Indian or
Tribal beneficiary, or
(2) An Indian or Tribal beneficiary holds title and the United
States maintains a trust relationship.
Individual means a person who can receive EQIP payments.
Land management practice means conservation practices that
primarily use site-specific management techniques and methods to
conserve, protect from degradation, or improve soil, water, air, or
related natural resources in the most cost-effective manner. Land
management practices include, but are not limited to, nutrient
management, manure management, integrated pest management, integrated
crop management, irrigation water management, tillage or residue
management, stripcropping, contour farming, grazing management, and
wildlife habitat management.
Lifespan means the period of time during which a conservation
practice is to be maintained and used for the intended purpose.
Limited Resource Farmer or Rancher means:
(1) A person with direct or indirect gross farm sales not more than
$100,000 (to be increased starting in FY 2004 to adjust for inflation),
and
(2) Has a total household income at or below the national poverty
level for a family of four, or less than 50 percent of county median
household income (to be determined annually), in each of the previous
two years.
Liquidated damages means a sum of money stipulated in the EQIP
contract which the participant agrees to pay NRCS if the participant
fails to adequately complete the contract. The sum represents an
estimate of the anticipated or actual harm caused by the failure, and
reflects the difficulties of proof of loss and the inconvenience or
non-feasibility of otherwise obtaining an adequate remedy.
Livestock means animals produced for food or fiber such as dairy
cattle, beef cattle, poultry, turkeys, swine, sheep, horses, fish and
other animals raised by aquaculture, or animals the State
Conservationist identifies with the advice of the State Technical
Committee.
Livestock production means farm and ranch operations involving the
production, growing, raising, breeding, and reproduction of livestock
or livestock products.
Local work group means representatives of local offices of FSA, the
Cooperative State Research, Education, and Extension Service, the
conservation district, and other Federal, State, and local government
agencies, including Tribes, with expertise in natural resources who
advise NRCS on decisions related to EQIP implementation.
National measures means measurable criteria identified by the Chief
of NRCS, with the advice of other Federal agencies and State
Conservationists, to help EQIP achieve the National Priorities and
statutory requirements.
National priorities means resource issues identified by the Chief
of NRCS, with advice from other Federal agencies and State
Conservationists, which will be used to determine the distribution of
EQIP funds and to guide local implementation of EQIP.
Operation and maintenance means work performed by the participant
to keep the applied conservation practice functioning for the intended
purpose during its life span. Operation includes the administration,
management, and performance of non-maintenance actions needed to keep
the completed practice safe and functioning as intended. Maintenance
includes work to prevent deterioration of the practice, repairing
damage, or replacement of the practice to its original condition if one
or more components fail.
Participant means a producer who is a party to an EQIP contract.
Priority natural resource concern(s) means an existing or pending
degradation of natural resource condition(s) as identified locally by
the State Conservationist or Designee with advice from the State
Technical Committee and Local Work Groups.
Producer means a person who is engaged in livestock or agricultural
production.
Regional Conservationist means the NRCS employee authorized to
direct and supervise NRCS activities in an NRCS region.
Related natural resources means natural resources that are
associated with soil and water, including air, plants, and animals and
the land or water on which they may occur, including grazing land,
wetland, forest land, and wildlife habitat.
Secretary means the Secretary of the U. S. Department of
Agriculture.
State Conservationist means the NRCS employee authorized to direct
and supervise NRCS activities in a State, the Caribbean Area, or the
Pacific Basin Area.
[[Page 6669]]
State Technical Committee means a committee established by the
Secretary in a State pursuant to 16 U.S.C. 3861.
Structural practice means a conservation practice that involves
establishing, constructing, or installing a site-specific measure to
conserve, protect from degradation, or improve soil, water, air, or
related natural resources in the most cost-effective manner. Examples
include, but are not limited to, animal waste management facilities,
terraces, grassed waterways, tailwater pits, livestock water
developments, contour grass strips, filterstrips, critical area
plantings, tree planting, permanent wildlife habitat and capping of
abandoned wells.
Technical assistance means the personnel and support resources
needed to conduct conservation planning; conservation practice survey,
layout, design, installation, and certification; training,
certification, and provide quality assurance of professional
conservationists; and evaluation and assessment of the program.
Technical service provider means an individual, private-sector
entity, or public agency certified by the State Conservationist to
provide technical services to program participants or to NRCS.
Wildlife means birds, fishes, reptiles, amphibians, invertebrates,
and mammals along with all other non-domesticated animals.
Sec. 1466.4 National priorities.
(a) The following National priorities will be used in the
implementation of EQIP:
(1) Reductions of nonpoint source pollutants such as nutrients,
sediment, or pesticides and excess salinity in impaired watersheds
consistent with TMDL's where available as well as the reduction of
groundwater contamination and the conservation of ground and surface
water resources;
(2) Reduction of emissions, such as particulate matter,
NOX, volatile organic compounds, and ozone precursors and
depleters that contribute to air quality impairment violations of
National Ambient Air Quality Standards;
(3) Reduction in soil erosion and sedimentation from
unacceptability high rates on highly erodible land; and
(4) Promotion of at-risk species habitat recovery.
(b) With the advice of other Federal agencies, NRCS will undertake
periodic reviews of the National priorities and the effects of program
delivery at the state and local level. The Chief intends to annually
review the National priorities to adapt the program to address emerging
resource issues. NRCS will:
(1) Use the National priorities to guide the allocation of EQIP
funds to the State NRCS offices,
(2) Use the National priorities to assist with prioritization and
selection of EQIP applications at the state and local levels, and
(3) Periodically review and update the National priorities
utilizing input from the public and affected stakeholders to ensure
that the program continues to address national resource needs.
Sec. 1466.5 National allocation and management.
The Chief allocates EQIP funds to the State Conservationists to
implement EQIP at the state level. In order to optimize the overall
environmental benefits over the duration of the program, the Chief of
NRCS will:
(a) Use an EQIP fund allocation formula that reflects National
priorities and measures and that uses available natural resource and
resource concerns data to distribute funds to the states level. This
procedure will be updated periodically to reflect adjustments to
National priorities and information about resource concerns and program
performance. The data used in the allocation formula will be updated as
it becomes available.
(b) Provide an incentive award to States that demonstrate a high
level of program performance in implementing EQIP considering factors
such as strategically planning EQIP implementation, the use of long
lived and cost-effective practices, benefits to multiple resources, the
efficiency and cost-effectiveness of program delivery, achieving
National priorities, the use of Technical Service Providers, contracts
with Limited Resource Producers, and encouraging innovation and the
leveraging of EQIP funds. These funds will be made available annually
from a reserve established at the National level when funds become
available.
(c) Use NRCS's Integrated Accountability System to establish state
level EQIP performance goals and treatment objectives.
(d) Ensure that National, state and local level information
regarding program implementation such as resource priorities, eligible
practices, ranking processes, allocation of base and reserve funds, and
program achievements is made available to the public using available
technology such as the internet.
(e) Consult with State Conservationists and other Federal agencies
with the appropriate expertise and information when evaluating the
considerations described in this section.
(f) Authorize the State Conservationist, with advice from the State
Technical Committee and Local Work Groups, to determine how funds will
be used and how the program will be administered to achieve National
priorities and measures in each state.
Sec. 1466.6 State allocation and management.
The State Conservationist, will:
(a) Identify State priority natural resource concerns with the
advice of the State Technical Committee that incorporate National
priorities and measures and will use NRCS's Integrated Accountability
System to establish local level EQIP performance goals and treatment
objectives;
(b) Identify, as appropriate and necessary, Designated
Conservationists who are NRCS employees that are assigned the
responsibility to administer EQIP in specific areas, and
(c) Use the following to determine how to manage the EQIP program
and how to allocate funds within a state:
(1) The nature and extent of natural resource concerns at the state
and local level;
(2) The availability of human resources, incentive programs,
education programs, and on-farm research programs from Federal, State,
Indian Tribe, and local levels, both public and private, to assist with
the activities related to the priority natural resource concerns;
(3) The existence of multi-county and/or multi-state collaborative
efforts to address regional priority natural resource concerns;
(4) Ways and means to measure performance and success; and
(5) The degree of difficulty that producers face in complying with
environmental laws.
Sec. 1466.7 Outreach activities.
NRCS will establish program outreach activities at the National,
State, and local levels in order to ensure that producers whose land
has environmental problems and priority natural resource concerns are
aware, informed, and know that they may be eligible to apply for
program assistance. Special outreach will be made to eligible producers
with historically low participation rates, including but not restricted
to limited resource producers, small-scale producers, Indian Tribes,
Alaska natives, and Pacific Islanders.
Sec. 1466.8 Program requirements.
(a) Program participation is voluntary. The applicant develops an
EQIP plan of operations for the agricultural land to be
[[Page 6670]]
treated that serves as the basis for the EQIP contract. NRCS provides
participants with cost-share or incentive payments to apply needed
conservation practices and land-use adjustments.
(b) To be eligible to participate in EQIP, an applicant must:
(1) Be in compliance with the highly erodible land and wetland
conservation provisions found at 7 CFR part 12;
(2) Have control of the land for the life of the proposed contract
period.
(i) An exception may be made by the Chief in the case of land
allotted by the Bureau of Indian Affairs (BIA), Tribal land, or other
instances in which the Chief determines that there is sufficient
assurance of control;
(ii) If the applicant is a tenant of the land involved in
agricultural production, the applicant shall provide the Chief with the
written concurrence of the landowner in order to apply a structural
conservation practice.
(3) Submit an EQIP plan of operations that is acceptable to NRCS as
being in compliance with the terms and conditions of the program;
(4) Comply with the provisions at 7 CFR 1412.304 for protecting the
interests of tenants and sharecroppers, including provisions for
sharing, on a fair and equitable basis, payments made available under
this part, as may be applicable; and
(5) Supply information, as required by NRCS, to determine
eligibility for the program, including information to verify the
applicant's status as a limited resource farmer or rancher or beginning
farmer or rancher.
(c) Land used as cropland, rangeland, pasture, private non-
industrial forest land, and other land on which crops or livestock are
produced, including agricultural land that NRCS determines poses a
threat to soil, water, air, or related natural resources, may be
eligible for enrollment in EQIP. However, land may be considered for
enrollment in EQIP only if NRCS determines that the land is:
(1) Privately owned land;
(2) Publicly owned land where:
(i) The land is under private control for the contract period and
is included in the participant's operating unit; and
(ii) The conservation practices will contribute to an improvement
in the identified natural resource concern; or
(3) Tribal, allotted, or Indian trust land.
(d) Sixty percent of available EQIP financial assistance will be
targeted to conservation practices related to livestock production,
including practices on grazing lands and other lands directly
attributable to livestock production, as measured at the National
level.
Sec. 1466.9 EQIP plan of operations.
(a) All conservation practices in the EQIP plan of operations must
be carried out in accordance with the applicable NRCS field office
technical guide.
(b) The EQIP plan of operations must include:
(1) A description of the participant's specific conservation and
environmental objectives to be achieved;
(2) To the extent practicable, the quantitative or qualitative
goals for achieving the participant's conservation and environmental
objectives;
(3) A description of one or more conservation practices in the
conservation management system to be implemented to achieve the
conservation and environmental objectives;
(4) A description of the schedule for implementing the conservation
practices, including timing and sequence; and
(5) Information that will enable evaluation of the effectiveness of
the plan in achieving the environmental objectives.
(c) An EQIP plan of operations that includes an animal waste
storage or treatment facility must include a comprehensive nutrient
management plan.
(d) Participants are responsible for implementing the EQIP plan of
operations.
(e) A participant may receive assistance to implement an EQIP plan
of operations for water conservation with funds authorized by section
1240I of the 1985 Act, 16 U.S.C. 3839aa-9, only if the assistance will
facilitate a net savings in ground or surface water resources in the
agricultural operation of the producer.
Sec. 1466.10 Conservation practices.
(a) NRCS will determine which structural and land management
practices are eligible for program payments. To be considered as an
eligible conservation practice, the practices must provide beneficial,
cost-effective approaches for participants to change or adapt
operations to address priority natural resource concerns. A list of
eligible practices will be available at the local NRCS office.
(b) Cost-share and incentive payments will not be made to a
participant for a conservation practice that the applicant has applied
prior to application for the program.
(c) Cost-share and incentive payments will not be made to a
participant who has implemented or initiated the implementation of a
conservation practice prior to approval of the contract unless a waiver
was granted by the State Conservationist or Designated Conservationist
prior to the installation of the practice.
(d) A participant will be eligible for cost-share or incentive
payments for irrigation related structural and land management
practices only on land that has been irrigated for three of the last
five years prior to application for assistance.
(e) Where new technologies or conservation practices that provide a
high potential for optimizing environmental benefits have been
developed, NRCS may approve interim conservation practice standards and
financial assistance for pilot work to evaluate and assess the
performance, efficacy, and effectiveness of the technology or
conservation practices.
Sec. 1466.11 Technical and other assistance provided by qualified
personnel not affiliated with USDA.
(a) NRCS may use the services of qualified technical service
providers in performing its responsibilities for technical assistance.
(b) Participants may use technical and other assistance from
qualified personnel of other Federal, State, and local agencies, or
Indian Tribes who are certified as Technical Service Providers by NRCS.
(c) Technical and other assistance provided by qualified personnel
not affiliated with USDA may include, but is not limited to,
conservation planning; conservation practice survey, layout, design,
installation, and certification; information, education, and training
for producers; and training, certification, and quality assurance for
professional conservationists. Payments to certified technical
assistance providers will be made only for an application that has been
approved for payments.
(d) NRCS retains approval authority over certification of work done
by non-NRCS personnel for the purpose of approving EQIP payments.
(e) When NRCS authorizes payment for a practice that is certified
by non-USDA personnel, the technical service provider must indemnify
and hold NRCS and the program participant harmless for any costs,
damages, claims, liabilities and judgments arising from past, present
and future negligent acts or omissions of the technical service
provider in connection with the technical service provided.
[[Page 6671]]
Subpart B--Contracts and Payments
Sec. 1466.20 Application for contracts and selecting offers from
producers.
(a) Any producer who has eligible land may submit an application
for participation in the EQIP. Applications are accepted throughout the
year. Producers who are members of a joint operation may file a single
application for the joint operation.
(b) The State Conservationist or Designated Conservationist with
advice from the State Technical Committee or Local Work Groups will
develop a ranking process to prioritize applications for funding which
address priority natural resource concerns. The State Conservationist
or Designated Conservationist will periodically select for funding the
applications based on applicant eligibility and the NRCS ranking
process. The State Conservationist or Designated Conservationist will
rank all applications according to the following factors:
(1) Use of cost-effective conservation practices,
(2) The magnitude of the environmental benefits resulting from the
treatment of the priority natural resource concerns,
(3) Treatment of multiple resource concerns,
(4) Use of conservation practices that provide environmental
enhancements for a longer period of time,
(5) Compliance with Federal, state or local regulatory requirements
concerning soil, water and air quality; wildlife habitat; and ground
and surface water conservation, and
(6) Other locally defined pertinent factors, such as the location
of the conservation practice, the extent of natural resource
degradation, and the degree of cooperation by local producers to
achieve environmental improvements.
(c) If the State Conservationist determines that the environmental
values of two or more applications for cost-share payments or incentive
payments are comparable, the State Conservationist will not assign a
higher priority to the application solely because it would present the
least cost to the program.
(d) The ranking will determine which applications will be awarded
contracts. The approving authority for EQIP contracts will be the State
Conservationist or designee except that:
(1) The approving authority for any EQIP contract that contains a
structural conservation practice with a cost-share greater than 50
percent is the State Conservationist.
(2) The approving authority for any EQIP contract with total
payment greater than $100,000 is the NRCS Regional Conservationist.
Sec. 1466.21 Contract requirements.
(a) In order for a participant to receive cost-share or incentive
payments, the participant must enter into a contract agreeing to
implement one or more conservation practices. Both cost-share payments
and incentive payments may be included in a contract.
(b) An EQIP contract will:
(1) Identify all conservation practices to be implemented, the
timing of practice installation, and applicable cost-shares and
incentive payments allocated to the practices under the contract;
(2) Be for a minimum duration of 1 year after completion of the
last practice, but not more than 10 years;
(3) Incorporate all provisions as required by law or statute,
including requirements that the participant will:
(i) Not conduct any practices on the farm or ranch unit under the
contract, or agricultural operation of the producer for ground and
surface water conservation contracts, that would tend to defeat the
purposes of the contract;
(ii) Refund any program payments received with interest, and
forfeit any future payments under the program, on the violation of a
term or condition of the contract, consistent with the provisions of
Sec. 1466.25;
(iii) Refund all program payments received on the transfer of the
right and interest of the producer in land subject to the contract,
unless the transferee of the right and interest agrees to assume all
obligations of the contract, consistent with the provisions of Sec.
1466.24;
(iv) Implement a comprehensive nutrient management plan when the
EQIP contract includes a waste storage or waste treatment facility; and
(v) Supply information as may be required by NRCS to determine
compliance with the contract and requirements of the program.
(4) Specify the participant's requirements for operation and
maintenance of the applied conservation practices consistent with the
provisions of Sec. 1466.22; and
(5) Specify any other provision determined necessary or appropriate
by NRCS.
(c) The participant must apply at least one contracted practice
within the first 12 months of signing a contract.
Sec. 1466.22 Conservation practice operation and maintenance.
The contract will incorporate the operation and maintenance of
conservation practices applied under the contract. The participant must
operate and maintain each conservation practice installed under the
contract for its intended purpose for the life span of the conservation
practice as determined by NRCS. Conservation practices installed before
the execution of a contract, but needed in the contract to obtain the
environmental benefits agreed upon must be operated and maintained as
specified in the contract. NRCS may periodically inspect a conservation
practice during the lifespan of the practice as specified in the
contract to ensure that operation and maintenance are occurring. When
NRCS finds that a participant is not operating and maintaining
practices in an appropriate manner, NRCS will request a refund of cost-
share or incentive payments made for that practice under the contract.
Sec. 1466.23 Cost-share rates and incentive payment levels.
(a) Determining cost-share payment rates. (1) The maximum cost-
share payments made to a participant under the program will not be more
than 75 percent of the actual cost of a structural practice, as
determined by the State Conservationist or Designated Conservationist,
except that for a Limited Resource Farmer or Rancher or Beginning
Farmer and Rancher cost-share payments may be up to 90 percent, as
determined by the State Conservationist or Designated Conservationist.
(2) Cost-share rates and incentive payment levels for conservation
practices will be established by the State Conservationist or
Designated Conservationist with advice from the State Technical
Committee and Local Work Groups in consideration of the practice cost-
effectiveness, longevity and environmental benefit achieved. The State
Conservationist or Designated Conservationist will develop a list of
eligible conservation practices with varied cost-share rates and will
set:
(i) Cost-share rates and incentive payment levels that reflect a
conservation practice cost-effectiveness and innovation,
(ii) Cost-share rates and incentive payment levels for practices
based on the degree of treatment of priority natural resource concerns,
(iii) Cost-share rates and incentive payment levels that reflect
the number of resource concerns a practice will address,
(iv) Cost-share rates and incentive payment levels that reflect a
practice's longevity of beneficial environmental effect, and
[[Page 6672]]
(v) Cost-share rates and incentive payment levels based on other
pertinent local considerations.
(3) The cost-share payments to a participant under the program will
be reduced proportionately below the rate established by the State
Conservationist or Designated Conservationist, or the cost-share limit
as set in paragraph (a)(2) of this section, to the extent that total
financial contributions for a structural practice from all public and
private sources exceed 100 percent of the actual cost of the practice.
(b) Determining incentive payment levels. NRCS will provide
incentive payments to participants for a land management practice or to
develop a comprehensive nutrient management plan in an amount and at a
rate necessary to encourage a participant to perform the practice that
would not otherwise be initiated without government assistance. The
State Conservationist or Designated Conservationist, with the advice of
the State Technical Committee or Local Work Groups, may consider
establishing limits on the extent of land management practices that may
be included in a contract.
Sec. 1466.24 EQIP payments.
(a) Except as provided in paragraph (b) of this section, the total
amount of cost-share and incentive payments paid to an individual or
entity under this part may not exceed an aggregate of $450,000,
directly or indirectly, for all contracts entered into during fiscal
years 2002 through 2007.
(b) To determine eligibility for payments, NRCS will use the
provisions in 7 CFR part 1400 related to the definition of person and
the limitation of payments, except that:
(1) States, political subdivisions, and entities thereof will not
be considered to be persons eligible for payment.
(2) For purposes of applying the payment limitations provided for
in this section, the following will not apply: the provisions in 7 CFR
part 1400, subpart C for determining whether persons are actively
engaged in farming, subpart E for limiting payments to certain cash
rent tenants, and subpart F as the provisions apply to determining
whether foreign persons are eligible for payment.
(3) To be eligible to participate in EQIP, all individuals
considered to be part of an application must provide a social security
number.
(4) To be eligible to participate in EQIP, any entity, as
identified in 7 CFR part 1400, must provide a list of all members of
the entity and embedded entities along with the member's social
security numbers and percentage interest in the entity.
(5) With regard to contracts on Tribal land, Indian trust land, or
BIA allotted land, payments exceeding the payment limitation may be
made to the Tribal venture if an official of BIA or a Tribal official
certifies in writing that no one person directly or indirectly will
receive more than the limitation. The Tribal entity must also provide,
annually, listing of individuals and payments made, by social security
number, during the previous year for calculation of overall payment
limitations. The Tribal entity must also produce, at the request by
NRCS, proof of payments made to the individuals that incurred the costs
for installation of the practices.
(6) Any cooperative association of producers that markets
commodities for producers will not be considered to be a person
eligible for payment.
(7) Eligibility for payments in accordance with 7 CFR part 1400,
subpart G, average adjusted gross income limitation, will be determined
at the time of contract approval.
(8) Eligibility for higher cost-share payments in accordance with
paragraph (a)(1) of this section w