This section of the FEDERAL REGISTER

contains regulatory documents having general

applicability and legal effect, most of which

are keyed to and codified in the Code of

Federal Regulations, which is published under

50 titles pursuant to 44 U.S.C. 1510.

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new books are listed in the first FEDERAL

REGISTER issue of each week.

Rules and Regulations Federal Register

2293 

Vol. 74, No. 10 

Thursday, January 15, 2009 

DEPARTMENT OF AGRICULTURE 

Commodity Credit Corporation 

7 CFR Part 1466 

RIN 0578–AA45 

Environmental Quality Incentives 

Program 

AGENCY: Natural Resources 

Conservation Service and Commodity 

Credit Corporation, United States 

Department of Agriculture. 

ACTION: Interim final rule with request 

for comment. 

SUMMARY: This interim final rule with 

request for comment amends the 

existing Environmental Quality 

Incentives Program (EQIP) regulations to 

incorporate programmatic changes as 

authorized by amendments in the Food, 

Conservation, and Energy Act of 2008 

(2008 Act). 

DATES: Effective Date: This rule is 

effective January 15, 2009. 

Comment date: Submit comments on 

or before March 16, 2009. 

ADDRESSES: You may send comments 

(identified by Docket Number NRCS– 

IFR–08005), which will be available to 

the public in their entirety, using any of 

the following methods: 

Government-wide rulemaking Web 

site: Go to http://regulations.gov and 

follow the instructions for sending 

comments electronically. 

Mail: Financial Assistance Programs 

Division, U.S. Department of 

Agriculture, Natural Resources 

Conservation Service, 1400 

Independence Avenue, SW., Room 

5237S, Washington, DC 20250–2890. 

Fax: (202) 720–4265. 

Hand Delivery Room: Room 5237S of 

the USDA South Office Building, 1400 

Independence Avenue, SW., Room 

5237, Washington, DC 20250, between 9 

a.m. and 4 p.m., Monday through 

Friday, except Federal Holidays. 

This interim final rule may be 

accessed via Internet. Users can access 

the NRCS homepage at http:// 

www.nrcs.usda.gov/; select the Farm 

Bill link from the menu; select the 

Interim final link from beneath the Final 

and Interim Final Rules Index title. 

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). 

To view public comments, please ask 

the guard at the entrance to the South 

Office Building to call 202–720–4527 in 

order to be escorted into the building. 

FOR FURTHER INFORMATION CONTACT: Greg 

Johnson, Director, Financial Assistance 

Programs Division, U.S. Department of 

Agriculture, Natural Resources 

Conservation Service, Room 5237, P.O. 

Box 2890, Washington, DC 20013–2890. 

Phone: (202) 720–1845. Fax: (202) 720– 

4265. 

SUPPLEMENTARY INFORMATION: 

Regulatory Certifications 

Executive Order 12866 

Pursuant to Executive Order 12866 

(FR Doc. 93–24523, September 30, 

1993), this interim final rule with 

request for comment is an economically 

significant regulatory action, since it 

results in an annual effect on the 

economy of $100 million or more. The 

administrative record is available for 

public inspection in Room 5831 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. 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 the Director, Financial 

Assistance Programs Division, Natural 

Resources Conservation Service, Room 

5237S, Washington, DC 20250–2890 or 

electronically at: http:// 

www.nrcs.usda.gov/programs/eqip/ 

under the EQIP Rules and Notices with 

Supporting Documents title. 

Small Business Regulatory Enforcement 

Fairness Act of 1996 (SBREFA) 

Section 2904(c) of the Food, 

Conservation, and Energy Act of 2008 

requires that the Secretary use the 

authority in section 808(2) of title 5, 

United States Code, which allows an 

agency to forego SBREFA’s usual 60-day 

Congressional Review delay of the 

effective date of a major regulation if the 

agency finds that there is a good cause 

to do so. NRCS hereby determines that 

it has good cause to do so in order to 

meet the Congressional intent to have 

the conservation programs, authorized 

or amended by Title II, in effect as soon 

as possible. Accordingly, this rule is 

effective upon filing for public 

inspection by the Office of the Federal 

Register. 

Executive Order 13175 

Executive Order 13175 requires 

agencies to consult and collaborate with 

tribes, if policies or actions have 

substantial direct effects on tribes. 

NRCS has determined that this 

regulation does not have a substantial 

direct effect on tribes, since these 

regulatory provisions are required by 

statute, and these provisions do not 

impose unreimbursed compliance costs 

or preempt Tribal law. As a result, 

consultation is not required. 

Regulatory Flexibility Act 

The interim final rule will not have a 

significant environmental impact on 

small entities. NRCS has determined 

that the Regulatory Flexibility Act does 

not apply. 

Environmental Analysis 

Availability of the Environmental 

Assessment (EA) and Finding of No 

Significant Impact (FONSI). A 

programmatic environmental 

assessment has been prepared in 

association with this rulemaking. The 

analysis has determined that there will 

not be a significant impact to the human 

environment and as a result an 

Environmental Impact Statement is not 

required to be prepared (40 CFR part 

1508.13). The EA and FONSI are 

available for review and comment for 30 

days from the date of publication of this 

interim final rule in the Federal 

Register. A copy of the EA and FONSI 

may be obtained from the following 

Web site: http://www.nrcs.usda.gov/ 

programs/Env_Assess/. A hard copy 

may also be requested from the 

following address and contact: National 

Environmental Coordinator, Natural 

Resources Conservation Service, 

Ecological Sciences Division, 1400 

Independence Ave., SW., Washington, 

DC 20250. Comments from the public 

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2294 Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Rules and Regulations 

should be specific and reference that 

comments provided are on the EA and 

FONSI. Public comment may be 

submitted by any of the following 

means: (1) E-mail comments to 

NEPA2008@wdc.usda.gov, (2) e-mail to 

egov Web site—http:// 

www.regulations.gov, or (3) written 

comments to: National Environmental 

Coordinator, Natural Resources 

Conservation Service, Ecological 

Sciences Division, 1400 Independence 

Ave., SW., Washington, DC 20250. 

Civil Rights Impact Analysis 

NRCS has determined through a Civil 

Rights Impact Analysis that the interim 

final rule discloses no 

disproportionately adverse impacts for 

minorities, women, or persons with 

disabilities. Increased payment rates 

and advance payment for historically 

underserved producers, coupled with 

the national target of setting aside five 

percent of EQIP funds for socially 

disadvantaged farmers and ranchers and 

an additional five percent of EQIP funds 

for beginning farmers and ranchers is 

expected to increase participation 

among these groups. The data presented 

indicates producers who are members of 

the protected groups have participated 

in NRCS conservation programs at 

parity with other producers. 

Extrapolating from historical 

participation data, it is reasonable to 

conclude that NRCS programs, 

including EQIP, will continue to be 

administered in a non-discriminatory 

manner. Outreach and communication 

strategies are in place to ensure all 

producers will be provided the same 

information to allow them to make 

informed compliance decisions 

regarding the use of their lands that will 

affect their participation in USDA 

programs. EQIP applies to all persons 

equally regardless of their race, color, 

national origin, gender, sex, or disability 

status. Therefore, the EQIP rule 

portends no adverse civil rights 

implications for women, minorities and 

persons with disabilities. 

Paperwork Reduction Act 

Section 2904 of the 2008 Act provides 

that the promulgation of regulations and 

the administration of Title II of this Act 

shall be made without regard to chapter 

35 of Title 44 of the United States Code, 

also known as the Paperwork Reduction 

Act. Therefore, NRCS is not reporting 

recordkeeping or estimated paperwork 

burden associated with this interim 

final rule. 

Government Paperwork Elimination Act 

NRCS is committed to compliance 

with the Government Paperwork 

Elimination Act, which requires 

Government agencies, in general, to 

provide the public the option of 

submitting information or transacting 

business electronically to the maximum 

extent possible. To better accommodate 

public access, NRCS has developed an 

online application and information 

system for public use. 

Executive Order 12988 

This interim final rule has been 

reviewed in accordance with Executive 

Order 12988, Civil Justice Reform. The 

provisions of this interim final rule are 

not retroactive. The provisions of this 

interim final rule preempt State and 

local laws to the extent that such laws 

are inconsistent with this interim final 

rule. Before an action may be brought in 

a Federal court of competent 

jurisdiction, the administrative appeal 

rights afforded persons at parts 614, 780, 

and 11 of this title must be exhausted. 

Federal Crop Insurance Reform and 

Department of Agriculture 

Reorganization Act of 1994 

The Federal Crop Insurance Reform 

and Department of Agriculture 

Reorganization Act of 1994, Title III, 

section 304, requires that for each 

proposed major regulation with a 

primary purpose to regulate issues of 

human health, human safety, or the 

environment, USDA is to publish an 

analysis of the risks addressed by the 

regulation and the costs and benefits of 

the regulation. NRCS has determined 

that such a risk assessment does not 

apply to this interim final rule. NRCS 

recognizes that although such 

assessments can be quite helpful, the 

Act pertains only to a rule that has been 

designated as a ‘‘proposed major 

regulation.’’ NRCS does not consider 

‘‘interim final’’ or ‘‘final’’ rules as falling 

into the category of proposed major 

regulations. 

Unfunded Mandates Reform Act of 1995 

NRCS assessed the effects of this 

rulemaking action on State, local, and 

Tribal governments, and the public. 

This action does not compel the 

expenditure of $100 million or more in 

any one year (adjusted for inflation) 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 

Pursuant to Executive Order 12866, 

Regulatory Planning and Review, the 

Natural Resources Conservation Service 

(NRCS) has conducted a benefit-cost 

analysis (BCA) of the Environmental 

Quality Incentives Program (EQIP) as 

formulated for the Interim Final Rule. 

This requirement provides decision 

makers with the opportunity to develop 

and implement a program that is 

beneficial, cost effective, and that 

minimizes negative impacts to health, 

human safety, and the environment. 

Congress passed amendments to the 

program that requires the Secretary of 

Agriculture, within 90 days after the 

enactment of the EQIP amendments, to 

promulgate regulations necessary to 

carry out the program. 

In considering alternatives for 

implementing EQIP, the United States 

Department of Agriculture (USDA) 

followed the legislative intent to 

optimize environmental benefits, 

address natural resource concerns and 

problems, establish an open 

participatory process, and provide 

flexible assistance to producers who 

apply appropriate conservation 

measures that enable the satisfaction of 

Federal and State environmental 

requirements. Because EQIP is a 

voluntary program, the program will not 

impose any obligation or burden upon 

agricultural producers who choose not 

to participate. The program has been 

authorized by the Congress at $7.325 

billion over the five-year period 

beginning in fiscal year (FY) 2008 

through FY 2012, with annual amounts 

of $1.2 billion for FY 2008, $1.337 

billion in FY 2009, $1.45 billion in FY 

2010, $1.588 billion in FY 2011, and 

$1.75 billion in FY 2012. 

The EQIP technical and financial 

assistance facilitates the adoption of 

conservation practices that, when 

installed or applied to technical 

standards, can mitigate degradation of 

the environment. These actions are not 

limited to their beneficial impacts on 

resource conditions on-site, but produce 

significant off-site environmental 

benefits for the public-at-large, such as 

the reduction of non-point source water 

pollution, leading to enhancements to 

freshwater and marine water quality and 

fish habitat, improved aquatic recreation 

opportunities, and reduced 

sedimentation of reservoirs, streams, 

and drainage channels; more efficient 

irrigation water usage; improved air 

quality by reducing wind erosion; an 

increase in carbon stored in the soil, 

leading to reduced atmospheric 

amounts of carbon; reduced pollution of 

surface and ground water, leading to 

enhanced drinking water supplies; 

reduced flood damages; conserved 

energy; and enhancements to wildlife 

habitat. Most of these factors are taken 

into consideration in the transfer benefit 

values used in this analysis. 

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1The ‘‘1/’’ above signifies that this benefit 

category could be construed as having elements of 

both environmental and private benefit impacts. 

More information on these distinctions is provided 

in the document. 

2Additional time and resources would be 

necessary to modify the present model to 

incorporate such shifts in program emphasis. 

Other significant environmental 

impacts have an appearance of being 

solely a private benefit, such as: The 

maintenance of the long-term 

productivity of the resource base, 

improved grazing productivity, more 

efficient crop use of animal waste and 

fertilizer and the fostering of energy 

conservation. However for this analysis, 

these impacts are considered as public 

benefits in that they have also have 

impacts in input and output markets, 

i.e. increasing the availability of those 

inputs at lower prices and/or for use in 

other sectors of the economy. This 

analysis did not utilize a social welfare 

impact model or general equilibrium 

model that would show these final 

producer and consumer welfare changes 

(brought about by changes in inputs 

used and output levels of EQIP 

participants). Thus, the economic 

impacts estimated in this analysis by 

these changes should be considered as 

first approximations of possible social 

welfare gains in input and output 

markets. In this analysis, the benefit 

categories which could be construed as 

having a high component of private 

benefit are clearly identified. 

There is another group of benefits 

derived from EQIP which can not be 

empirically estimated at this time. As 

explained in the body of the report, 

there are also many conservation 

practices for which economic benefit 

estimates are not available. For example, 

the benefits derived from the remaining 

five percent of the EQIP funds used for 

23 practices for which monetary 

benefits are important but could not 

easily be estimated (over half of these 

remaining funds were for the Pest 

Management Practice—595). As a result, 

they are not included in the quantitative 

estimates of benefits. In addition, many 

other environmental impacts were not 

included in this economic analysis 

because no clear conversion methods of 

the environmental impacts to economic 

terms were available. For additional 

information on these environmental 

impacts, see the NEPA environmental 

assessment for this regulation. In the 

future, nationally consistent estimates of 

beneficial environmental outcomes 

resulting from conservation practices 

and systems will be possible through 

the use of the results from the 

interagency Conservation Effects 

Assessment Project (CEAP). CEAP was 

established to develop a scientific 

understanding and methodology for 

estimating the environmental benefits 

and effects of conservation practices on 

agricultural landscapes at national, 

regional, and watershed scales. CEAP 

will become a science-based plan 

designed to help meet the conservation 

and technology challenges of the future 

through a coordinated multi-agency 

assessment, research, and outreachextension program to translate science 

into practice. CEAP has been underway 

since 2003, and is composed of multiple 

components focusing on cropland, 

grazing land, wetlands, and wildlife, 

and watersheds. Initial CEAP results 

will be available for the cropland 

component in FY2009. Some results 

from the wetlands, wildlife, and 

watershed assessment components are 

already available at: http:// 

www.nrcs.usda.gov/technical/nri/ceap/. 

These results are expected to improve 

the Agency’s ability to report on longterm conservation benefits being 

delivered by programs, such as EQIP. 

Despite these limitations in our ability 

to estimate environmental benefits, the 

new EQIP is expected to have a 

substantial effect on the environment 

due to expanded funding compared 

with a baseline of continuing EQIP at an 

annual funding level of roughly $1 

billion. Resource treatments are 

estimated to increase protection for an 

additional 3.9 million acres for sheet 

and rill water erosion reduction, 3.9 

million acres for wind erosion reduction 

improving air quality, 5.6 million acres 

for improved fertilizer management, 2.0 

million acres for net irrigation water 

reduction, 17.5 million acres for grazing 

land productivity, and 2.8 million acres 

of improved wildlife habitat. Also, the 

waste from an additional 1.3 million 

animal units will be treated under the 

new program directly improving water 

quality. Using these quantity changes 

plus benefit transfer values derived from 

the literature, total benefits are 

estimated at $10.4 billion for EQIP with 

the 2008 Act expanded funding 

allocation. Throughout the analysis, 

benefit estimates are compared to $10.4 

billion total costs which include both 

the EQIP funds and costs borne by 

participants, producing a net benefit of 

approximately $57 million above total 

costs. 

Methodology 

In developing the BCA for EQIP, it is 

necessary to identify a baseline for 

comparison. The baseline for this 

analysis is EQIP as reauthorized in the 

2002 Act with FY 2007 funding levels. 

In the 2002 Act, EQIP funding for FY 

2005 through FY 2008 was capped at 

roughly $1 billion until the 2008 Act 

was passed when additional funding 

was provided. The actual FY 2007 

funding level of $978 million is used as 

the baseline. 

Public costs quantified in this 

analysis are the total TA and FA 

assistance funds outlined in the 

Congressional Budget Office’s (CBO) 

scoring of the 2008 Act. Private costs are 

out-of-pocket costs paid voluntarily by 

participants. As stated above, the 

quantifiable benefits are a subset of the 

environmental benefits that accrue to 

the types of practices implemented 

through EQIP. Available data and 

literature support benefits in the 

following benefit categories: 

• Animal waste management (leading 

to improved water quality through 

better management) 1/ 1; 

• Sheet and rill water erosion 

(reducing soil erosion); 

• Grazing land productivity 

(increasing yields) 1/; 

• Irrigation water use (reducing 

quantity used); 

• Air quality (through reduced wind 

erosion); 

• Fertilizer use (reduced fertilizer 

expense through nutrient management 

not associated with animal waste) 1/; 

• Wildlife habitat (enhanced wildlife 

viewing and hunting); 

• Energy use (reduced energy 

consumption associated with 

conservation tillage practices); and, 

• Carbon sequestration (higher soil 

carbon levels associated with 

conservation tillage and grassland 

practices). 

In order to conduct the analysis, 

certain assumptions were made based 

on the available data. 

• The practice mix for the current 

(2007-base) and the new EQIP is the 

same. The new rule places additional 

emphasis on energy, organic practices, 

and forest management; however, due to 

the lack of benefit data for these types 

of practices, their associated benefits are 

not included in this analysis.2

• Quantifiable and per-unit benefits 

are constant and based on national 

average estimates. 

• Technical assistance costs incurred 

by NRCS are based on the full workload 

associated with implementing EQIP and 

take into consideration projected 

average contract sizes. 

• Average annual and net present 

value calculations use discount factors 

of seven and three percent, which are 

recommended by the Office of 

Management and Budget (OMB). All 

tables are presented using the seven 

percent discount rate. The analysis is 

also calculated using the three percent 

discount rate (see table 9). 

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2296 Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Rules and Regulations 

• Environmental benefits generated in 

the animal waste management benefit 

category were adjusted downward by 42 

percent to account for mandatory 

regulatory requirements associated with 

large concentrated animal feeding 

operations (CAFOs). This reduction is 

necessary to avoid any double counting 

of benefits attributed to EPA’s CAFO 

regulations. The total CAFO-related 

costs associated with conservation 

practices were reduced by 23 percent 

• Other than large CAFOs meeting 

EPA regulatory requirements, the 

adoption of conservation practices by 

EQIP participants is assumed to be 

solely attributed to their participation in 

EQIP. 

Conclusions 

The EQIP benefit-cost analysis 

assumes that the basic program features 

of EQIP created in 2002 (the ‘‘current 

program’’) remains the same, but is 

funded at higher funding allocations as 

a result of the 2008 Act. 

The summary table below shows the 

estimated values of each benefit 

category and the estimated costs 

associated with EQIP for the ‘‘current’’ 

(2007-base) and ‘‘new’’ (with increased 

funding) scenario. Under the 

assumption that the current program 

continues at level funding, the expected 

present value of benefits over the period 

of FY 2007 to FY 2012 is estimated at 

$7.1 billion, with $0.5 billion coming 

from improved animal waste 

management and $6.6 billion from 

improved land treatment. Expected net 

benefits are estimated at $39 million 

above total costs, including producer 

costs, other non-federal costs, and 

federal (EQIP) costs. 

With expanded funding, the estimated 

present value of benefits over the period 

of FY 2007 to FY 2012 was $10.4 billion 

with $0.8 billion coming from improved 

animal waste management and $9.6 

billion from land treatment. Estimated 

net benefits were $57 million above 

total costs. This provides $18 million in 

additional net benefits due to the 

expansion of EQIP funds in the 2008 

Farm Bill over the roughly $1.0 billion 

annual baseline funding. 

TABLE 1—SUMMARY OF CUMULATIVE 5-YEAR EQIP BENEFITS AND COSTS OVER FY 2008–FY 2012, USING A SEVEN

PERCENT DISCOUNT RATE

[$ million of 2007 dollars] 

Benefit Category 

To not 

implement 

EQIP 

2007 EQIP 

with $1 billion/ 

year FY 2008– 

FY 2012 

2008 Act 

benefits & 

costs 

Increases with 

the 2008 Act 

2007 EQIP 

with $1 billion/ 

year (acres or 

animal units) 

2008 Act 

(acres or 

animal units) 

Unit 

Animal waste 

management *.

$0 $554 $816 $262 2,724,000 4,061,000 Animal Units. 

Sheet and rill 

water erosion.

0 1,948 2,869 920 8,019,000 11,955,000 Acres. 

Grazing land productivity.0 3,111 4,580 1,470 35,586,000 53,057,000 Acres. 

Irrigation water 

use.

0 231 341 109 4,014,000 5,985,000 Acres. 

Air quality ........... 0 181 266 85 8,039,000 11,985,000 Acres. 

Fertilizer use ...... 0 601 885 284 11,370,000 16,953,000 Acres. 

Wildlife habitat ... 0 172 254 81 5,660,000 8,439,000 Acres. 

Energy use ......... 0 210 309 99 7,446,000 11,102,000 Acres. 

Carbon sequestration.0 82 121 39 41,525,000 61,911,000 Acres. 

Grand Total 

Benefits.

0 7,091 10,441 3,350 

Costs: 

Total costs ** ...... 0 7,053 10,384 3,332 

Net Benefits: 

Net benefits ........ 0 39 57 18 

* Environmental benefits from improved animal waste management attributed to EQIP are 42 percent below the total CAFO-related benefits to 

account for environmental benefits captured by EPA regulatory requirements on large CAFOs. Likewise, costs associated with large CAFOs represent about 23 percent of NRCS costs related to CAFOs of all sizes. These costs were deducted from the analysis as well. 

** Total costs include all federal costs plus private and other non-federal costs which have historically matched federal EQIP FA funding at an 

overall 50 percent cost-share rate discounted at seven percent. Costs associated with large CAFOs (roughly 23 percent) were deducted from the 

analysis. 

Section 2904 of the Food, Conservation, 

and Energy Act of 2008 

The Commodity Credit Corporation 

(CCC) is not required by 5 U.S.C. 553 or 

by any other provision of law, to 

publish a notice of proposed rulemaking 

with respect to the subject matter of this 

rule. Section 2904 of the 2008 Act 

requires regulations to be published 

within 90 days after the date of 

enactment and authorizes the CCC to 

promulgate an interim final rule 

effective upon publication with an 

opportunity for notice and comment. 

CCC has determined that an interim 

final rule is necessary to expedite the 

effective date of rulemaking in order to 

meet the intent of section 2904. 

Discussion of Program 

The 2008 Act has reauthorized and 

amended the Environmental Quality 

Incentives Program, which had been 

added to the Food Security Act of 1985 

(1985 Act) (16 U.S.C. 3801 et seq.) by 

the Federal Agriculture Improvement 

and Reform Act of 1996 (1996 Act) (16 

U.S.C. 3839aa). The program is 

implemented under the general 

supervision and direction of the Chief of 

NRCS, who is a Vice President of the 

Commodity Credit Corporation (CCC). 

Through EQIP, NRCS provides 

assistance to farmers and ranchers to 

conserve and enhance soil, water, air, 

and related natural resources on their 

land. Eligible lands include cropland, 

grassland, rangeland, pasture, wetlands, 

nonindustrial private forest land, and 

other agricultural land on which 

agricultural or forest-related products, 

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Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Rules and Regulations 2297 

or livestock are produced and natural 

resource concerns may be addressed. 

Participation in the program is 

voluntary. 

Under EQIP, NRCS will provide 

assistance in a manner that will promote 

agricultural production, forest 

management, and environmental quality 

as compatible goals; optimize 

environmental benefits; and help 

farmers and ranchers meet Federal, 

State, and local environmental 

requirements. NRCS will offer a 

consolidated and simplified program 

throughout the Nation using the 

technical services of NRCS and 

technical service providers. NRCS first 

allocated $130 million in EQIP funds in 

1996. Since the program began, NRCS 

has entered into 314,000 contracts with 

farmers and ranchers to apply 

conservation practices on approximately 

143 million acres. The Agency has 

evaluated twelve years of program 

implementation and has assessed 

opportunities to improve program 

administration. The changes in this 

interim final rule are the result of this 

evaluation and the statutory changes 

authorized by the 2008 Act. 

In summary, these changes include, 

but are not limited to: 

• Extending EQIP’s implementation 

through fiscal year 2012. 

• Adding or revising the following 

terms and associated definitions: 

‘‘agricultural land,’’ ‘‘estimated income 

foregone,’’ ‘‘forest management plan,’’ 

‘‘integrated pest management,’’ ‘‘legal 

entity,’’ ‘‘local working group,’’ 

‘‘National Organic Program,’’ 

‘‘nonindustrial private forest land,’’ 

‘‘operation and maintenance 

agreement,’’ ‘‘organic system plan,’’ 

‘‘payment,’’ ‘‘person,’’ ‘‘socially 

disadvantaged farmer or rancher,’’ and 

‘‘technical assistance.’’ 

• Reaffirming EQIP’s eligible lands to 

include nonindustrial private forest 

lands. 

• Providing payments for 

conservation practices related to organic 

production and for conservation 

practices related to the transition to 

organic production. 

• Providing payments up to 75 

percent of the estimated costs associated 

with planning, design, materials, 

equipment, installation, labor, 

management, maintenance, or training, 

or up to 100 percent of the estimated 

income foregone by a producer to 

implement particular conservation 

practices. 

• Giving the State Conservationist, as 

delegated by the Chief, discretion to 

accord great significance to a 

conservation practice that the Secretary 

determines promotes residue 

management, nutrient management, air 

quality management, invasive species 

management, pollinator habitat, animal 

carcass management technology, or pest 

management. 

• Limiting payments to $20,000 per 

year or $80,000 during any six-year 

period for persons or legal entities who 

receive payments for conservation 

practices related to organic production 

or the transition to organic production. 

• Authorizing NRCS to cancel or 

otherwise nullify a contract if a 

producer who is receiving payments for 

conservation measures related to 

organic production is not pursuing 

organic certification or is not in 

compliance with the Organic Foods 

Production Act of 1990 (7 U.S.C. 6501 

et seq.). 

• Requiring NRCS to prioritize 

applications: (1) Based on overall costeffectiveness, (2) based on how 

effectively and comprehensively the 

project addresses the designated 

resource concern or resource concerns, 

(3) that best fulfill the purposes of EQIP, 

and (4) that improve conservation 

practices or systems in place at the time 

the contract offer is accepted or that will 

complete a conservation system. (Note: 

Items 2 and 3 are included in the 

existing EQIP regulations.) 

• Requiring applications of similar 

crop or livestock operations to be 

grouped together for evaluation 

purposes. 

• Requiring NRCS to consider a plan 

developed in order to acquire a permit 

under a water or air quality regulatory 

program as equivalent to a plan of 

operations, if the plan contains elements 

equivalent to those required in a plan of 

operations. Section 2506 of the 2008 Act 

amends § 1240E(b) of the 1985 Act to 

require the Secretary, to the maximum 

extent practicable to eliminate 

duplication of planning activities. 

• Requiring a forest management plan 

when the EQIP plan of operations 

addresses forestland. 

• Lowering the payment limitation 

for participants from $450,000 to 

$300,000 during any six-year period, 

except for projects having special 

environmental significance, in such 

cases the payments will be limited to 

$450,000. 

• Providing payments, through the 

Conservation Innovation Grants 

Program (CIG), to producers to 

implement practices to address air 

quality concerns from agricultural 

operations and to meet Federal, State, 

and local regulatory requirements. 

• Creating criteria to evaluate an 

acceptable watershed-wide project for 

the purpose of implementing water 

conservation or irrigation practices on 

newly irrigated lands. 

• Providing an increased payment 

rate to historically underserved 

producers that include limited resource, 

beginning, and socially disadvantaged 

farmers or ranchers. 

• Providing advance payments, of up 

to 30 percent of the anticipated costs to 

be incurred for the purpose of 

purchasing materials or services to 

implement a conservation practice, to 

historically underserved producers. 

• Establishing a national target to set 

aside five percent of EQIP funds for 

socially disadvantaged farmers or 

ranchers and an additional five percent 

of EQIP funds for beginning farmers or 

ranchers. 

The fundamental purpose of the 

program, assisting farmers and ranchers 

to implement conservation practices to 

provide environmental benefits, has not 

changed. Revisions to the program have 

focused primarily on expanding 

participation among traditionally 

underserved populations, including 

organic growers; limiting payments to 

$300,000 per legal entity or person, 

except for environmentally significant 

projects; streamlining the application 

and ranking process; and expanding 

practices and activities that are eligible 

for payment under EQIP. The interim 

final rule also includes changes to 

streamline program implementation and 

make the participant’s contract 

responsibilities clearer and more 

transparent. 

Conservation Innovation Grants 

The 2008 Act added a provision to 

EQIP which dedicates funding under 

the Conservation Innovation Grants 

program (CIG) to address air quality 

specifically. Section 1240H of the 1985 

Act, as amended by section 2509 of the 

2008 Act, authorizes the Secretary to 

provide payments to producers to 

implement practices, including 

innovative practices, to address air 

quality concerns from agricultural 

operations. NRCS will use these 

dedicated funds to assist producers in 

adopting and implementing existing and 

innovative practices to address air 

quality concerns. Eligible practices will 

meet NRCS Field Office Technical 

Guide (FOTG) standards or interim 

practice standards, approved by the 

State Conservationist, in consultation 

with the State Technical Committee. 

Section 1240B(b) of the 1985 Act 

specifies that payments are limited to 

‘‘implementing practices.’’ Payments for 

stand-alone equipment that have 

beneficial impacts on air quality are not 

authorized; however, payments for 

conservation practices may include 

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2298 Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Rules and Regulations 

consideration of the costs authorized for 

equipment that is deemed an essential 

component of a conservation practice 

included in the FOTG. NRCS welcomes 

comments and suggestions on new 

innovative practices that may be 

approved for payment, such as but not 

limited to, improvements in mobile or 

stationary equipment, including 

engines, and the use of slow and 

controlled release fertilizers. NRCS also 

welcomes comment about how the CIG 

air quality provisions should be 

implemented. 

Summary of Provisions 

The regulation is organized into three 

subparts: Subpart A—General 

Provisions; Subpart B—Contracts and 

Payments; Subpart C—General 

Administration. The basic structure of 

the regulation has not changed. 

However, NRCS proposes amending 

several sections in Subparts A and B to 

make the regulation consistent with the 

requirements of the 2008 Act 

amendments, streamline processes and 

procedures, and increase transparency 

of the program, particularly as it relates 

to a participant’s contract 

responsibilities. Below is a summary of 

each section. The summary of Subpart 

C is limited, since a majority of the 

changes in Subpart C are minor. 

Subpart A—General Provisions 

Section 1466.1, ‘‘Applicability,’’ is 

revised as follows: 

Section 1466.1 sets forth the purpose, 

scope, and objectives of EQIP. In 

paragraph (a), NRCS clarifies the 

program’s purposes to include forest 

management. Paragraph (a) also 

reaffirms the original statutory intent, 

ensuring EQIP continues to provide 

assistance to farmers and ranchers to 

address soil, water and air quality; 

wildlife habitat; surface and 

groundwater conservation; and related 

natural resource concerns. This interim 

final rule reiterates the statutory intent 

that EQIP purposes are to be achieved 

by implementing conservation practices, 

and includes a new reference to energy 

conservation on eligible land. 

NRCS added paragraph (b) to clarify 

where EQIP assistance is available. EQIP 

continues to be available to eligible 

persons or legal entities in all 50 States, 

the District of Columbia, the 

Commonwealth of Puerto Rico, Guam, 

the Virgin Islands of the United States, 

American Samoa, and the 

Commonwealth of the Northern Mariana 

Islands. 

Section 1466.2, ‘‘Administration,’’ 

describes the roles of NRCS, State 

Technical Committees, and local 

working groups. Paragraph (b) of 

§ 1466.2, which required consultations 

between the Farm Service Agency (FSA) 

and NRCS has been deleted, since a 

2003 decision by the Secretary 

authorizes NRCS to administer EQIP in 

its entirety. 

NRCS continues to administer EQIP at 

the State and local levels. 

Determinations related to eligible 

practices and payment rates are made at 

the State level, in consultation with the 

State Technical Committee. State 

Technical Committees and local 

working groups are bodies that provide 

advice to the State Conservationist and 

designated conservationist on technical 

and programmatic matters related to the 

implementation of the 1985 Act’s 

conservation programs. State Technical 

Committees and local working groups 

consist of representatives from Federal, 

State, Tribal, and local governments, as 

well as nongovernmental organizations 

and individuals, who have conservation 

expertise. 

Section 1466.3, ‘‘Definitions,’’ sets 

forth definitions for terms used 

throughout this regulation. Several new 

definitions have been added, such as: 

‘‘estimated income foregone,’’ ‘‘forest 

management plan,’’ ‘‘integrated pest 

management,’’ ‘‘National Organic 

Program,’’ ‘‘nonindustrial private forest 

land,’’ ‘‘operation and maintenance 

agreement,’’ ‘‘organic system plan,’’ and 

‘‘socially disadvantaged farmer and 

rancher.’’ Other definitions have been 

revised to accommodate requirements of 

the 2008 Act including: ‘‘agricultural 

land,’’ ‘‘animal waste management 

facility,’’ ‘‘Conservation Innovation 

Grants,’’ ‘‘conservation practice,’’ ‘‘legal 

entity,’’ ‘‘local working group,’’ 

‘‘participant,’’ ‘‘payment,’’ ‘‘person,’’ 

‘‘producer,’’ and ‘‘technical assistance,’’ 

while others have been revised in an 

effort to make them consistent with 

other NRCS-administered programs, 

such as ‘‘agricultural operation,’’ 

‘‘applicant,’’ ‘‘cost-effectiveness,’’ ‘‘EQIP 

plan of operations,’’ ‘‘liquidated 

damages,’’ ‘‘Natural Resources 

Conservation Service,’’ ‘‘operation and 

maintenance,’’ ‘‘priority resource 

concern,’’ ‘‘resource concern,’’ and 

‘‘wildlife.’’ The remaining definitions, 

‘‘historically underserved producer,’’ 

‘‘livestock,’’ ‘‘Regional Conservationist,’’ 

‘‘State Conservationist,’’ and ‘‘technical 

service provider,’’ have been revised in 

an effort to simplify and clarify 

definitions within the rule. Specifically, 

the following definitions have been 

amended: 

The definition of ‘‘agricultural land’’ 

is revised to include those areas 

identified by EQIP’s authorizing 

legislation as eligible land. The 

definition added the term ‘‘grassland’’ to 

clarify that such lands are eligible for 

EQIP assistance. The definition also 

further defined agricultural lands to 

include lands on which agricultural and 

forest-related products, or livestock are 

produced. Agricultural lands may 

include cropped woodland, marshes, 

incidental areas included in the 

agricultural operation, and other types 

of agricultural land used for production 

of livestock. Incidental areas are areas, 

within the agricultural operation that is 

receiving conservation treatment, which 

may not be grazed or cropped. Such 

areas may include, but are not limited 

to, pivot corners, access roads, and 

streambanks. 

NRCS revises the definition of 

‘‘agricultural operation’’ to make it 

consistent with other conservation 

programs administered by NRCS. 

‘‘Agricultural operation’’ is defined as a 

‘‘parcel or parcels of land whether 

contiguous or noncontiguous, which the 

producer is listed as the operator or 

owner/operator in the FSA record 

system, which is under the effective 

control of the producer at the time the 

producer applies for contract, and that 

is operated by the producer with 

equipment, labor, management, and 

production, forestry, or cultivation 

practices that are substantially separate 

from other operations.’’ 

The definition of ‘‘animal waste 

management facility’’ is clarified to state 

that such a facility will be implemented 

within the context of a Comprehensive 

Nutrient Management Plan and is 

consistent with the Field Office 

Technical Guide. 

The definition of ‘‘applicant’’ is 

revised to include the 2008 Act’s added 

terminology. Specifically, the term 

‘‘individual,’’ is replaced with the term 

‘‘person,’’ and the word ‘‘legal’’ is 

inserted prior to ‘‘entity’’ to reflect these 

changes. ‘‘Applicant’’ is defined as 

follows: ‘‘a person, legal entity, joint 

operation, or tribe that has an interest in 

an agricultural or forestry operation, as 

defined in part 1400 of this chapter, 

who has requested to participate in 

EQIP.’’ 

NRCS requests public comment on 

the current definition of ‘‘at-risk 

species.’’ As currently defined, ‘‘at risk 

species means any plant or animal 

species as determined by the State 

Conservationist, with advice from the 

State Technical Committee, to need 

direct intervention to halt its population 

decline.’’ Specifically, NRCS seeks 

public comment on how to tailor the 

definition to better assist species in 

greatest need. 

The term, ‘‘beginning farmer and 

rancher,’’ remains the same as the 

definition included in the final rule 

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published on May 30, 2003 (68 FR 

32337), as defined by 7 U.S.C. 1991(a). 

Throughout the text, the term has 

become a subset of the ‘‘historically 

underserved producer’’ term to reduce 

the number of times it and other 

associated terms are cited in the 

regulation. 

NRCS also revises the ‘‘Conservation 

Innovation Grants’’ definition to 

accommodate the 2008 Act’s 

clarification that forest management is 

considered agricultural production 

under EQIP. NRCS defines 

‘‘Conservation Innovation Grants’’ as 

‘‘competitive grants made under EQIP to 

individuals, and governmental and nongovernmental organizations to stimulate 

and transfer innovative technologies 

and approaches, to leverage Federal 

funds, and to enhance and protect the 

environment, in conjunction with 

agricultural production and forest 

management.’’ The term ‘‘transfer’’ is 

added to show that one of the purposes 

of the Conservation Innovation Grants is 

to transfer innovation to the private 

sector. 

The definition, ‘‘conservation 

practice,’’ is changed to reflect the 2008 

Act’s expansion of the definition of 

‘‘conservation practice’’ beyond 

structural and land management 

practices, to include forest management 

and vegetative practices, as well as other 

practices that achieve the program 

purposes and positive environmental 

outcomes, like comprehensive nutrient 

management plans, forest management 

plans, and other plans determined 

acceptable by the Chief. NRCS has built 

upon the statutory examples of planning 

activities that are comprehensive in 

nature, such as agricultural energy 

management plans, dryland transition 

plans, integrated pest management 

plans, and other planning activities that 

meet FOTG requirements, approved by 

the NRCS State Conservationist, in 

consultation with the State Technical 

Committee. NRCS requests comments 

from the public on what type of 

comprehensive planning activities 

should be eligible for payment under 

EQIP. Throughout this regulation, the 

term ‘‘conservation practice’’ replaces 

the terms ‘‘structural practices’’ and 

‘‘land management practices,’’ except 

where ‘‘structural practices is 

specifically mentioned.’’ 

Within the definition of ‘‘contract,’’ 

NRCS replaces the terms ‘‘individual’’ 

and ‘‘entity’’ with the term, 

‘‘participant.’’ ‘‘Contract’’ means ‘‘a 

legal document that specifies the rights 

and obligations of any participant in the 

program.’’ An EQIP contract is a binding 

cooperative agreement for the transfer of 

assistance from USDA to the participant 

to share in the costs in applying the 

conservation practices. 

The term, ‘‘cost-share payments’’ is 

removed to reflect the amended 

statutory language. To comply with the 

statutory change, the terms, ‘‘cost-share 

payments’’ and ‘‘incentive payments’’ 

have been merged to form one 

definition, entitled ‘‘payments,’’ which 

means financial assistance provided to 

the participant for estimated costs 

incurred performing or implementing 

conservation practices, including costs 

for: Materials, equipment, labor, design 

and installation, maintenance, 

management, or training, as well as the 

estimated income foregone by the 

participant for designated conservation 

practices. The term ‘‘payment’’ replaces 

the terms ‘‘cost-share payments’’ and 

‘‘incentive payments’’ throughout the 

regulation. 

NRCS revises the definition of ‘‘costeffectiveness.’’ The term ‘‘costeffectiveness’’ means the ‘‘least-costly 

option for achieving a given set of 

conservation objectives.’’ 

The term, ‘‘entity,’’ is replaced by the 

term, ‘‘legal entity,’’ to reflect the 

definitions outlined in the amendments 

to Section 1201 of the 1985 Act by 

Section 2001 of the 2008 Act. 

The definition of ‘‘estimated income 

foregone’’ is added to clarify how 

producers will be compensated in 

accordance with Section 1240B(d) of the 

1985 Act. As defined, ‘‘estimated 

income foregone means an estimate of 

the net income loss associated with the 

adoption of a conservation practice, 

including a change in land use or land 

taken out of production or the 

opportunity cost associated with the 

adoption of a conservation practice. 

This shall not include losses of income 

due to disasters or other events 

unrelated to the conservation practice.’’ 

The definition, ‘‘EQIP plan of 

operations,’’ is revised to clarify for 

applicants, participants, and the public 

that an operation and maintenance 

agreement and EQIP plan of operations 

are components of the EQIP contract. 

NRCS includes the acronym, ‘‘FOTG,’’ 

in the definition of ‘‘field office 

technical guide’’ and also removes the 

term, ‘‘treatment,’’ and replaces it with 

the inclusive term, ‘‘conservation 

practices,’’ which is defined in § 1466.3. 

NRCS defines ‘‘Field Office Technical 

Guide (FOTG)’’ as follows: ‘‘the official 

local NRCS source of resource 

information and interpretations of 

guidelines, criteria, and requirements 

for planning and applying conservation 

practices 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.’’ 

NRCS adds a definition for the term, 

‘‘forest management plan,’’ into 

§ 1466.3 as a result of requirements 

included in the amendments to Section 

1240E of the 1985 Act by Section 2506 

of the 2008 Act. A forest management 

plan means a site-specific plan that is 

prepared by a professional resource 

manager and approved by the State 

Conservationist. The plan, which is 

compatible with the participant’s 

objectives, identifies and describes 

actions to be taken by the participant to 

enhance soil, water, air, fish, and 

wildlife resources on such land. 

Section 1240E, as amended by Section 

2506 of the 2008 Act, requires a forest 

management plan, when the EQIP plan 

of operations addresses nonindustrial 

private forest land. The amendment 

gives discretion to the Secretary to 

determine the types of forest 

management plans that are eligible for 

EQIP payment. Indian forest lands, 

administered by the Bureau of Indian 

Affairs (BIA), have requirements for the 

implementation of forest management 

activities and these standards will be 

utilized when developing a forest 

management plan on BIA-administered 

land. NRCS has included the guidelines 

for a forest management plan within the 

‘‘forest management plan’’ definition, 

but has given further discretion to the 

appropriate State Conservationist. A 

forest management plan may be a forest 

stewardship plan, as defined in the 

Cooperative Forestry Assistance Act of 

1978, or another site-specific plan that 

contains elements equivalent to those of 

a forest management plan, approved by 

State Conservationist, in consultation 

with the State Forester or the BIA, 

where Indian forest lands and the 

associated natural resources are 

administered by BIA. The plan will 

comply with Federal, State, Tribal, and 

local laws, regulations, and permit 

requirements. NRCS is requesting public 

comment on other types of forest 

management plans that may be 

considered to be eligible for EQIP 

payment. 

The term ‘‘historically underserved 

producer’’ combines the terms 

‘‘beginning farmer or rancher’’, ‘‘limited 

resource farmer or rancher’’ and 

‘‘socially disadvantaged farmer or 

rancher’’ and their respective 

definitions into one term to simplify 

terms within the interim final rule. 

Definitions for ‘‘beginning farmer and 

rancher’’ and ‘‘limited resource farmer 

and rancher’’ remain the same as those 

definitions outlined in EQIP’s final rule 

published on May 30, 2003. However, 

the definition for ‘‘socially 

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disadvantaged farmer or rancher’’ has 

been added in accordance with the 2008 

Act which sought to expand EQIP 

participation to be more inclusive of 

farmers and ranchers who have been 

subjected to racial or ethnic prejudices 

because of their identity as a member of 

a group, without regard to their 

individual qualities. This definition 

originates from Section 2501(g) of the 

Food, Agricultural, Conservation, and 

Trade Act of 1990, which defines 

‘‘socially disadvantaged.’’ 

NRCS removes the term, ‘‘incentive 

payments.’’ To reflect the statutory 

language, NRCS merges the terms ‘‘cost 

share payments’’ and ‘‘incentive 

payments’’ into one single term, entitled 

‘‘payments.’’ ‘‘Payment’’ means 

financial assistance provided to the 

participant for estimated costs incurred 

performing or implementing 

conservation practices, including costs 

for: Materials, equipment, labor, design 

and installation, maintenance, 

management, or training, as well as the 

estimated income forgone by the 

participant for designated practices. 

NRCS inserts the term, ‘‘integrated 

pest management,’’ into § 1466.3 as 

result of changes made by Section 2001 

of the 2008 Act to Section 1201(a)(16) of 

the 1985 Act. The definition is the same 

as the statutory definition which defines 

integrated pest management as ‘‘a 

sustainable approach to managing pests 

by combining biological, cultural, 

physical, and chemical tools in a way 

that minimizes economic, health, and 

environmental risks.’’ 

NRCS replaces the term, ‘‘land 

management practice,’’ with the more 

inclusive term, ‘‘conservation practice,’’ 

to reflect statutory changes. In 

accordance with the 2008 Act 

amendments, the term, ‘‘conservation 

practice,’’ is expanded beyond 

structural and land management 

practices, to include forest management 

and vegetative practices, as well as other 

practices that fulfill the program 

purposes, like comprehensive nutrient 

management plans, forest management 

plans, and other plans determined to be 

acceptable by the Chief. NRCS has 

expanded the definition of conservation 

practice to include planning activities 

that are comprehensive and holistic in 

nature, such as agricultural energy 

management plans, dryland transition 

plans, integrated pest management 

plans, and other assessment and 

planning activities that meet FOTG 

requirements, approved by the NRCS 

State Conservationist in consultation 

with the State Technical Committee. 

The term, ‘‘legal entity,’’ replaces the 

term, ‘‘entity,’’ to reflect the definition 

set out in amendments by Section 2001 

of the 2008 Act. 

The term, ‘‘limited resource farmer 

and rancher,’’ remains the same as the 

definition included in the former 

program regulation, with an 

accommodation made to increase the 

level of gross farm sales from $100,000 

to $155,200. Throughout portions of the 

text, the term has become a subset of the 

‘‘historically underserved producer,’’ in 

order to reduce the number of times it 

and other associated terms are recited in 

the regulation. 

The term, ‘‘liquidated damages,’’ is 

revised to clarify when and under what 

circumstances liquidated damages are 

collected. Liquidated damages is 

defined as a ‘‘sum of money stipulated 

in the EQIP contract that the participant 

agrees to pay NRCS if the participant 

fails to adequately complete the terms of 

the contract. The sum represents an 

estimate of the technical assistance 

expenses incurred by NRCS to service 

the contract, and reflects the difficulties 

of proof of loss and the inconvenience 

or non-feasibility of otherwise obtaining 

an adequate remedy.’’ 

The term, ‘‘livestock,’’ is simplified 

and reflects the definition contained in 

the 2008 Act. It is the responsibility of 

the Chief to determine livestock 

operations that are eligible for EQIP 

assistance. The decisionmaking 

authority resides with the Chief in order 

to ensure consistency among States. 

The term, ‘‘local working group,’’ has 

been revised. Local working groups are 

defined in 7 CFR part 610. 

The term, ‘‘National Organic 

Program,’’ has been inserted to 

implement the 2008 Act’s amendments 

related to conservation practices 

associated with organic production or 

for conservation practices related to the 

transition to organic production. The 

National Organic Program is a national 

program which regulates the standards 

for any farm, wild crop harvesting, or 

handling operation that wants to sell an 

agricultural product as organically 

produced. The National Organic 

Program is administered by the 

Agricultural Marketing Service. 

The term, ‘‘Natural Resources 

Conservation Service,’’ has been 

inserted to define the USDA agency that 

has responsibility for administering 

EQIP. 

The term, ‘‘nonindustrial private 

forest land’’ has been inserted based on 

the definition in the 2008 Act 

amendments. Nonindustrial private 

forest land is rural land, as determined 

by the Secretary, that has existing tree 

cover or is suitable for growing trees; 

and is owned by any nonindustrial 

private individual, group, association, 

corporation, Indian tribe, or other 

private legal entity that has definitive 

decision-making authority over the 

land. 

NRCS revises the definition of 

‘‘operation and maintenance’’ to clarify 

that participants are expected to 

maintain EQIP-funded conservation 

practices for the conservation practice’s 

lifespan, as set forth in the operation 

and maintenance agreement. By 

maintaining the conservation practice 

for its lifespan, the participant ensures 

that the conservation practice will 

function for its intended use and will 

not cause harm or damage to the 

environment. 

NRCS adds the term, ‘‘operation and 

maintenance agreement,’’ to describe 

the document that, in conjunction with 

the EQIP plan of operations, specifies 

the Agency expectation that participants 

will operate and maintain conservation 

practices installed with EQIP assistance. 

NRCS adds the term, ‘‘organic system 

plan,’’ which is defined as a 

management plan for organic 

production or for an organic handling 

operation that has been agreed to by the 

producer or handler and the certifying 

agent. The Organic System Plan 

includes written plans concerning all 

aspects of agricultural production or 

handling. 

NRCS revises the definition, 

‘‘participant,’’ to reflect the 2008 Act’s 

statutory definition of ‘‘person’’ and 

‘‘legal entity.’’ A participant is a person, 

joint venture, legal entity, or tribe who 

is receiving payment or is responsible 

for implementing the terms and 

conditions of an EQIP contract. 

The term, ‘‘payment,’’ has been added 

and replaces the terms ‘‘cost share 

payments’’ and ‘‘incentive payments.’’ 

The term, ‘‘payment,’’ means financial 

assistance provided to the participant 

for estimated costs incurred performing 

or implementing conservation practices, 

including costs for: Materials, 

equipment, labor, design and 

installation, maintenance, management, 

or training, as well as the estimated 

income foregone by the participant for 

designated conservation practices. The 

term ‘‘payment’’ replaces the terms, 

‘‘cost share payments’’ and ‘‘incentive 

payments’’ throughout the text. 

The definition for ‘‘person’’ is revised 

to reflect the requirements of part 1400 

of this chapter, the regulation which 

details CCC’s payment limitation 

policies. 

NRCS revises the term ‘‘priority 

resource concern’’ to align program 

terminology with other conservation 

programs administered by NRCS. 

The term ‘‘producer’’ has been 

expanded to reflect the 2008 Act’s 

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amendments to EQIP so that ‘‘producer’’ 

now means a person or legal entity or 

joint operation who is engaged in 

agricultural production or forestry 

management. The term, ‘‘livestock,’’ is 

removed from this definition, because 

the term, ‘‘agricultural production,’’ is 

inclusive of livestock operations. 

The term, ‘‘Regional Assistant Chief,’’ 

has replaced the term, ‘‘Regional 

Conservationist.’’ In 2004, the NRCS 

reorganized, eliminated six Regional 

Conservationist positions, and created 

three Regional Assistant Chief positions. 

This definition has been revised to 

reflect that change. 

The term, ‘‘resource concern,’’ 

replaces the term, ‘‘related resource 

concern,’’ in an effort to streamline 

program terminology with other 

conservation programs administered by 

NRCS. 

NRCS inserts the term, ‘‘socially 

disadvantaged farmer or rancher,’’ and 

its associated definition. A ‘‘socially 

disadvantaged farmer or rancher’’ is a 

farmer or rancher who has been 

subjected to racial or ethnic prejudices 

because of their identity as a member of 

a group without regard to their 

individual qualities. The definition for 

‘‘socially disadvantaged farmer or 

rancher,’’ which includes members of 

Indian tribes, has been added in 

accordance with the 2008 Act which 

sought to expand EQIP participation to 

be more inclusive of farmers and 

ranchers who have been subjected to 

racial or ethnic prejudices. This 

definition originates from Section 

2501(g) of the Food, Agricultural, 

Conservation, and Trade Act of 1990, 

which defines ‘‘socially disadvantaged.’’ 

NRCS revises the definition of ‘‘State 

Conservationist’’ to clarify that the 

former State Conservationist of Hawaii 

position has become the director of the 

Pacific Islands. 

NRCS revises the term, ‘‘technical 

assistance,’’ to mirror the definition 

provided in the amendments by Section 

2001 of the 2008 Act. 

NRCS revises the definition, 

‘‘technical service provider (TSP),’’ to 

clarify that TSPs are used to provide 

technical services to program 

participants, in lieu of or on behalf of 

NRCS. A TSP is ‘‘an individual, privatesector entity, or public agency certified 

by NRCS to provide technical services 

to program participants in lieu of or on 

behalf of NRCS.’’ 

NRCS revises the term, ‘‘wildlife,’’ to 

make the definition consistent with 

definitions used in the other cost-share 

programs administered by NRCS. 

Section 1466.4, ‘‘National priorities,’’ 

has been amended to address comments 

made by the public. On March 23, 2005, 

NRCS published a Request for Public 

Comments (70 FR 14578) soliciting 

comments from the public on which 

resource concerns should be given 

national priority. NRCS sought public 

feedback in order to ensure that the 

stated national priorities reflected the 

most pressing natural resource needs 

while providing emphasis to off-site 

environmental benefits. NRCS received 

written comments from 85 individuals, 

agencies, and non-governmental 

organizations. In addition, NRCS held 

numerous public listening forums in 

which the public was invited to 

comment on the priorities. After 

consideration of the public input, NRCS 

determined that the former program’s 

national priorities adequately address 

the natural resource issues that were 

foremost identified, as no emerging 

issues of significance surfaced as a 

result of the feedback. However, as a 

result of public feedback and the need 

for clarification in the program, the first 

priority has been separated into two 

concerns, one for water quality, to 

include concentrated animal feeding 

operation (CAFO) as well as non-point 

source pollution, and a separate priority 

for water conservation, to address the 

quantity of ground and surface water 

available. 

Section 1466.5, ‘‘National allocation 

and management,’’ addresses national 

allocations and national program 

accountability. Overall, the changes in 

this section were changes in 

terminology, rather than changes in 

policies and procedures. NRCS replaces 

the terms, ‘‘beginning farmers and 

rancher’’ and ‘‘limited resource 

producer,’’ with the term, ‘‘historically 

underserved producer.’’ NRCS has 

revised its allocation process to 

integrate all performance-based funding 

with initial allocations each year. This 

change eliminates the need for a 

national reserve; therefore, the ‘‘national 

reserve’’ reference is removed. 

Section 1466.6, ‘‘State allocation and 

management,’’ is an existing section that 

describes State Conservationists’ 

responsibilities in the allocation of 

funds and the implementation of the 

program. This section was revised in an 

effort to streamline terminology among 

NRCS-administered programs and make 

existing terminology consistent with the 

2008 Act amendments. 

Section 1466.7, ‘‘Outreach activities,’’ 

describes how NRCS will establish 

special program outreach activities at 

the national, State, and local levels. 

While NRCS has made efforts to extend 

its outreach to limited resource, 

beginning, and socially disadvantaged 

farmers and ranchers that include tribes, 

this section is revised to clarify the 

Agency outreach activities, and to 

specifically emphasize the need to 

provide assistance to ‘‘socially 

disadvantaged farmers or ranchers’’ as 

defined in § 1466.3 and the 2008 Act 

amendments. 

Section 1466.8, ‘‘Program 

requirements,’’ sets forth land and 

applicant eligibility and the amount of 

EQIP funding to be used for livestock 

production, beginning farmers and 

ranchers, and socially disadvantaged 

farmers and ranchers. Producer 

associations and farmer cooperatives 

may submit applications, plans, and 

other necessary program materials on 

behalf of producers. However, eligibility 

and contract requirements still apply to 

any participant as set forth in § 1466.8. 

Specifically, § 1466.8 is revised as 

follows: 

In paragraph (a) the term 

‘‘nonindustrial private forest land’’ is 

included. Within this paragraph, NRCS 

eliminates the term, ‘‘land use 

adjustments,’’ leaving the more 

inclusive term, ‘‘conservation 

practices.’’ In paragraph (b)(2), NRCS 

replaces the term ‘‘farming operation’’ 

with the term ‘‘agricultural operation,’’ 

which is defined in § 1466.3. In 

paragraph (b)(4), a participant may 

substitute a plan developed for the 

purposes of acquiring an air or water 

quality permit for an EQIP plan of 

operations, provided the former plan 

contains elements equivalent to those 

elements required by an EQIP plan of 

operations. 

NRCS moves provisions in § 1466.24 

to § 1466.8 to better organize the 

participant’s requirements. As a result, 

paragraph (b)(6) is inserted in § 1466.8, 

which requires a person or legal entity 

to submit to NRCS its tax identification 

or unique identifier number when 

applying for EQIP assistance. Where 

applicable, American Indians, Alaska 

Natives, and Pacific Islanders may use 

another unique identifier for each 

individual eligible for payment. 

NRCS revises paragraph (c) to further 

clarify EQIP’s working landscape to 

include non-industrial private 

forestland, and other land on which 

agricultural products, forest-related 

products, and livestock are produced. 

These areas are identified in the 2008 

Act’s amendment of eligible lands and 

in the program’s purposes. Other 

agricultural lands include cropped 

woodland, marshes, incidental areas 

included in the agricultural operation, 

and other types of agricultural land used 

for production of livestock. Within 

paragraph (c), NRCS also clarifies that 

publicly owned land is eligible if it is 

an actively managed component of the 

agricultural and forestry operation and 

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the conservation practice contributes to 

an improvement in an identified 

resource concern that is located on 

private land. To demonstrate adequate 

control of the land, members of Indian 

tribes should provide valid Tribal 

documentation and or documentation 

from the BIA. The BIA may assist NRCS 

with acquiring the appropriate 

authorization from the ‘‘certified’’ 

owners. 

Within paragraph (c), the term, 

‘‘operating unit’’ is replaced with the 

term, ‘‘agricultural operation,’’ and the 

term, ‘‘natural,’’ was eliminated in an 

effort to create consistent terminology 

among the conservation programs 

administered by NRCS. 

Paragraph (e) has been inserted to 

ensure that five percent of the funds 

will be allocated to assist socially 

disadvantaged farmers or ranchers and 

an additional five percent of the funds 

will be allocated to assist beginning 

farmers or ranchers. In implementing 

the statutory change, NRCS considered 

three ways to allocate funds to meet the 

2008 Act’s requirements: (1) Issuing the 

allocations at the National level to 

defined geographic areas, where such 

groups are prevalent; (2) issuing the 

allocations to each State; or (3) 

establishing a national target that 

conforms to the statutory language, but 

providing States flexibility to designate 

money to each specified group based on 

potential demand in a given State. 

Under Option 3, NRCS pools the money 

and establishes a ten percent target for 

each State, enabling State 

Conservationists to designate money to 

the specified groups based on potential 

demand. NRCS has selected Option 3 to 

ensure that nationwide these groups of 

producers will benefit from EQIP 

assistance. Similar to EQIP’s national 

livestock target, overall State-level 

percentages will be tracked at the 

national level to ensure that the 

amended national goals are met. 

The effect of allocating the funds at 

the State level, with the targets being 

monitored at the national level will be 

threefold: (1) Funds will be provided to 

applicants who may be in the greatest 

need for additional assistance; (2) 

priority resource concerns may be better 

addressed; and (3) NRCS will assure 

that the national targets for these groups 

are met. 

Section 1466.9, ‘‘EQIP plan of 

operations,’’ describes the requirements 

of the EQIP plan of operations, which is 

a component of the EQIP contract. 

Producers will be required to develop 

and apply a plan of operations that 

addresses identified priority resource 

concerns. The producer develops the 

plan of operations with the assistance of 

NRCS or other public or private 

technical service providers. The 

majority of this section has remained 

the same, with the following exceptions: 

Paragraph (a) is revised to 

accommodate for the expansion of the 

term, ‘‘conservation practice,’’ which 

includes conservation planning 

activities. All conservation practices 

must be carried out in accordance with 

NRCS technical guidance. This 

technical guidance includes, but is not 

limited to, the NRCS FOTG, National 

Planning Procedures Handbook, General 

Manual 180, Part 409, Conservation 

Planning Policy, and other appropriate 

technical guidance as determined by the 

State Conservationist or designated 

conservationist. 

Paragraph (c)(2) is revised by adding 

the term, ‘‘natural resource,’’ when 

listing a participant’s potential 

objectives. Specifically (c)(2) is revised 

as follows: ‘‘To the extent practicable, 

the quantitative or qualitative goals for 

achieving the participant’s conservation, 

natural resource, and environmental 

objectives.’’ 

Paragraph (d) of the former program 

regulation is moved to paragraph (b) of 

this interim final rule to clarify the 

participant’s responsibilities as they 

relate to the EQIP plan of operations. 

Paragraph (b) states that it is the 

participant’s responsibility to 

implement the EQIP plan of operations. 

Paragraph (c) details the elements 

required in an EQIP plan of operations. 

Paragraph (c)(3) is also revised to 

accommodate the expansion of the term 

‘‘conservation practice’’ by the 2008 Act 

amendments, which now includes 

activities such as conservation planning, 

design, and installation. An EQIP plan 

of operations may be made up of one or 

more conservation practices such as 

those activities listed above, in addition 

to structural, land management, 

vegetative, and forestry practices. 

Paragraph (c)(4) is revised to clarify that 

the EQIP plan of operations must 

include operation and maintenance, as 

well as timing and sequence of 

conservation practices. 

Paragraph (e) is added to ensure that 

producers who address forestland in 

their EQIP plan of operations develop 

and implement a forest management 

plan that is approved by the State 

Conservationist. As defined in § 1466.3, 

a forest management plan is a sitespecific plan that is compatible with the 

participant’s objectives and identifies 

and describes actions to be taken by the 

participant to conserve and enhance 

soil, water, air, fish, and wildlife 

resources on such land. The forest 

management plan should be developed 

to comply with Federal, State, Tribal, 

and local laws, regulations, and permit 

requirements. 

NRCS inserts paragraph (f) to specify 

criteria to evaluate acceptable 

watershed-wide projects for the 

purposes of implementing water 

conservation or irrigation practices on 

newly irrigated lands, in accordance 

with section 1240B(h) of the 1985 Act. 

In determining an acceptable watershedwide project, the State Conservationist 

will ensure: 

• The project area has a current, 

comprehensive water resource 

assessment; 

• The project plan has demonstrated 

effective water conservation and 

management strategies; and 

• The project sponsors have 

consulted with relevant State, Tribal, 

and local agencies. 

NRCS proposes to use the watershed 

assessments and State, Tribal, and local 

agency consultation in order to ensure 

that conservation practices 

implemented under EQIP are not in 

conflict with Federal, State, Tribal, and 

local water laws. The additional criteria 

also help to ensure that conservation 

practices are not applied to the 

detriment of other resource concerns 

within that watershed. For example, 

additional criteria may include, but is 

not limited to: Concurrence by State and 

local water management agencies that 

the anticipated activities will not be a 

detriment to existing resources; 

concurrence from State fish and wildlife 

agencies that the land can be irrigated 

with no detriment to in-stream flow for 

aquatics; and verification that the 

appropriate water permits have been 

acquired. NRCS is interested in 

comments on the criteria for 

determining acceptable watershed-wide 

projects, particularly with respect to 

what should be included in a 

comprehensive water resource 

assessment and what should be 

considered in determining effective 

water conservation and management 

strategies at the watershed scale. 

Section 1466.10, ‘‘Conservation 

practices,’’ describes how NRCS 

determines eligible conservation 

practices. The State Conservationist 

determines which conservation 

practices are eligible for payment and 

the maximum payment rates in the 

State. The State Conservationist may 

limit practice eligibility in some 

localities depending on the resource 

concerns. Throughout this section, to 

reflect statutory changes, NRCS replaces 

terms, such as ‘‘structural and land 

management practices,’’ and ‘‘cost-share 

and incentive payments,’’ with more 

inclusive terms, like ‘‘conservation 

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practices’’ and ‘‘payments,’’ 

respectively. 

NRCS deletes the former program 

regulation’s paragraph (b), which 

prohibits payments for practices applied 

before application for participation has 

been made and combines it with 

paragraph (c), since a practice applied 

prior to application is a practice applied 

prior to contract approval. Payments 

will not be made for a conservation 

practice that was applied prior to 

program application or contract 

approval, unless a waiver is granted by 

the State Conservationist or designated 

conservationist prior to implementation 

of the conservation practice. 

In paragraph (c), NRCS adds the term, 

‘‘water conservation,’’ to clarify EQIP’s 

purposes, as follows: ‘‘A participant will 

be eligible for payments for water 

conservation and irrigation related 

conservation practices only on land that 

has been irrigated for two of the last five 

years prior to application for 

assistance.’’ 

To reflect the 2008 Act’s expansion of 

the term, ‘‘conservation practices,’’ 

NRCS includes the term, ‘‘management 

approaches,’’ in paragraph (d). NRCS 

revises paragraph (d) as follows: ‘‘Where 

new technologies or management 

approaches that provide a high potential 

for optimizing environmental benefits 

have been developed, NRCS may 

approve interim conservation practice 

standards that incorporate new 

technologies and provide financial 

assistance for pilot work to evaluate and 

assess the performance, efficacy, and 

effectiveness of the new technology or 

management approach.’’ 

Section 1466.11, ‘‘Technical services 

provided by qualified personnel not 

affiliated with USDA,’’ was added in the 

2003 final rule to address technical 

assistance provided by non-USDA 

personnel. NRCS is authorized to use 

Federal, State, or local agencies, or 

private entities to provide technical 

assistance. As determined by the State 

Conservationist, NRCS may contract 

with private vendors or enter 

cooperative agreements with other 

Federal, State, or local entities for 

services related to EQIP 

implementation. 

Throughout this section, the term, 

‘‘technical services,’’ replaces the 

phrase, ‘‘and other assistance,’’ to make 

this regulation consistent with the 2008 

Act’s amendment that added the 

definition of ‘‘technical services.’’ 

Section 1201(a)(25) of the 1985 Act, as 

amended by Section 2001 of the 2008 

Act, defines ‘‘technical services’’ as 

‘‘conservation planning, technical 

consultation, and assistance with design 

and implementation of conservation 

practices.’’ In light of this statutory 

change, § 1466.11(b) is revised as 

follows: ‘‘Participants may use technical 

services from qualified personnel of 

other Federal, State, and local agencies, 

Indian tribes, or individuals who are 

certified as TSPs by NRCS.’’ 

Using the same rationale as applied to 

paragraph (b), paragraph (c) is revised as 

follows: ‘‘Technical services provided 

by qualified personnel not affiliated 

with USDA may include, but are not 

limited to: Conservation planning; 

conservation practice survey, layout, 

design, installation, and certification; 

information, education; and training for 

producers.’’ 

Subpart B—Contracts and Payments 

Section 1466.20, ‘‘Application for 

contracts and selecting offers from 

producers,’’ is revised to split into two 

separate paragraphs, (a) ‘‘application 

acceptance’’ and (b) ‘‘selecting offer,’’ to 

better clarify these policies. The 

revisions to this section are a result of 

both statutory and streamlining changes. 

Paragraph (a) clarifies that EQIP 

applications will be accepted 

throughout the year, with the State 

Conservationist or designated 

conservationist ranking applications at 

selected times throughout the year. 

Paragraphs (a)(2) and (3) have been 

inserted to enable the State 

Conservationist to group and rank 

applications that share similar resource 

objectives, economic status, cultural, or 

sociological backgrounds. In the case of 

paragraph (a)(2), the 2008 Act 

amendment requires the State 

Conservationist or designated 

conservationist, where practicable, to 

group applications based on the type of 

agricultural operation and rank 

accordingly. NRCS may extend this idea 

beyond agricultural operations to 

encourage the State Conservationist or 

designated conservationist to establish 

Statewide, area-wide, or local ranking 

pools. Applications may be grouped 

within ranking pools, which may be 

created to address a specific resource 

concern, a specific geographic area, a 

specific type of agricultural operation, 

or a specific group of applications that 

complete conservation systems. 

Spatially, ranking pools may be 

centered around a wildlife migration 

corridor, watershed, airshed, or other 

area of special significance. In the case 

of ranking pools, applications that meet 

the criteria established by the State 

Conservationist or designated 

conservationist, with advice from the 

State Technical Committee and local 

working group, where appropriate, will 

be evaluated against other applications 

that meet the same criteria. Each 

application will be ranked accordingly 

within that ranking pool or grouping of 

applications. 

The ranking pools streamline 

conservation program delivery, enabling 

producers to receive conservation 

assistance in a more expedited manner. 

For example, the State Conservationist 

may announce an initiative to protect a 

specific at-risk species or a resource, 

such as a municipal water supply, and 

designate a specified funding amount 

available to producers within the State 

or a designated region. Applicants may 

apply by proposing specific 

conservation practices that would create 

habitat for this at-risk species or protect 

the drinking water source. Applications 

that address this specific resource 

concern within the State or region 

would be evaluated against other 

applications and funded accordingly. 

Paragraph (b) details how applications 

will be prioritized. When selecting EQIP 

applications, the State Conservationist 

or designated conservationist, with 

advice from the State Technical 

Committee or local working group, 

respectively, will develop a ranking 

process to prioritize applications for 

funding that addresses national, State, 

Tribal, and local priority resource 

concerns. NRCS will select applications 

that fulfill the program purposes, 

address the priority resource concern 

and offer significant environmental 

benefit. In developing this ranking 

process, NRCS will expand its focus to 

include energy conservation, in addition 

to the traditional resource concerns that 

include: Soil, water and air quality; 

wildlife habitat; and surface and 

groundwater conservation. To reflect the 

statutory intent and ensure both timely 

and effective conservation 

improvements, NRCS has expanded the 

selection criteria to give priority to 

applications that: 

• Indicate a willingness by the 

applicant to complete all conservation 

practices in an expedited manner; 

• Effectively and comprehensively 

address the designated resource concern 

or resource concerns; and 

• Improve existing conservation 

practices or improve and complete a 

conservation system. To be eligible for 

higher ranking for this criterion, these 

existing practices or systems shall be in 

place at the time the contract offer is 

accepted. 

For applications that include water 

conservation or irrigation efficiency 

conservation practices, the 2008 Act 

amendment also requires NRCS to give 

priority to applications that demonstrate 

a reduction in water use by the 

agricultural operation. As a condition of 

receiving a higher ranking within the 

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grouping of water conservation 

applications, the producer agrees not to 

use any associated water savings to 

bring new land under irrigation 

production, excluding incidental land 

needed for efficient operations. A 

producer who brings new land under 

irrigation production may be excluded 

from this condition, if the producer is 

participating in a watershed-wide 

project that will effectively conserve 

water. In evaluating whether a 

watershed-wide project is acceptable, 

the State Conservationist will ensure 

that: 

• The project area has a current, 

comprehensive water resource 

assessment; 

• The project plan has demonstrated 

effective water management strategies; 

and 

• The project sponsors have 

consulted relevant State, Tribal, and 

local agencies. 

The ultimate fate of associated water 

savings from water conservation or 

irrigation efficiency conservation 

practices depend on State water laws. 

NRCS does not have authority over State 

water rights and laws. The saved water 

could remain in the stream, provide 

aquifer recharge, or be utilized by 

another agricultural producer with more 

junior water rights. In essence, once the 

water leaves the agricultural operation, 

overall in-stream flow or aquifer 

recharge may be impacted by other 

sources. 

Section 1466.20 also addresses 

contract approval authority. NRCS is 

revising § 1466.20 to require the 

appropriate Regional Assistant Chief to 

approve all contracts that exceed 

$150,000 and are up to $300,000. 

Section 1466.21, ‘‘Contract 

requirements,’’ identifies elements 

contained within an EQIP contract and 

the responsibilities of the participant 

who is party to the EQIP contract. This 

section also addresses EQIP contract 

funding limitations. To receive 

payment, an applicant must enter into 

an EQIP contract. Generally, the EQIP 

contract identifies all conservation 

practices to be implemented, their 

timing and sequence, and the operation 

and maintenance needed to maintain 

the conservation practice for its 

lifespan. As a condition of receiving 

EQIP payments for forestry-related 

practices, the 2008 Act amendments 

require a participant to have a forest 

management plan. To address this 

requirement, NRCS revises paragraph 

(b) to state that the participant must 

implement a forest management plan 

when the EQIP plan of operations 

addresses nonindustrial private forest 

land. The forest management plan will 

be developed in accordance with the 

NRCS FOTG requirements and will 

comply with Federal, State, Tribal, and 

local laws, regulations, and permits. 

NRCS continues to use a contract 

funding limitation to manage the 

program. In the past, NRCS has limited 

the contract amount to reflect the 

person/legal entity payment limitation. 

Prior to the 2008 Act, the contract and 

payment limitations were each 

$450,000. NRCS retains the practice of 

limiting the contract amount to the 

person/legal entity payment limitation 

for ease in recordkeeping and for 

facilitating situations where a waiver up 

to $450,000 may be granted. As required 

by the 2008 Act, paragraph (d) is revised 

to reduce the contract funding 

limitation from $450,000 to $300,000. 

NRCS also specifies in paragraph (d) 

that this contract funding limitation 

may be waived for projects of special 

environmental significance. Projects of 

special environmental significance must 

meet the following criteria, as 

determined by the Chief: 

• Site-specific evaluation documents 

have been completed, documenting that 

the project will have substantial positive 

impacts on critical resources in or near 

the project area (e.g., impaired water 

bodies, at-risk species, drinking water 

supplies, or air quality attainment); 

• The project clearly addresses a 

national priority and State, Tribal, or 

local priorities; and 

• The project assists the participant 

in complying with Federal, State, Tribal, 

and local regulatory requirements. 

NRCS is also extending the policy of 

establishing a contract funding 

limitation to organic contracts. 

Participants who wish to enter into 

‘‘organic-only’’ contracts are subject to a 

statutory annual payment limitation of 

$20,000 per year or $80,000 during any 

six-year period. These contract 

limitations will be instituted for ease in 

recordkeeping. However, participants 

who operate both organic and nonorganic operations will be encouraged to 

have separate contracts for their nonorganic and organic operations. 

Producers wanting to implement 

practices outside of their organic 

operations may enter into another 

contract, but will be subject to the 

overall $300,000 person or legal entity 

payment limitation for all EQIP 

contracts. Both certified organic 

producers and those transitioning to an 

organic production system will have 

equal access for priority assistance. 

NRCS will encourage applicants to 

consolidate those conservation practices 

most directly related to organic 

production into a single contract to 

optimize the use of funding within both 

the annual and six-year payment limits. 

Section 1466.22, ‘‘Conservation 

practice operation and maintenance,’’ 

addresses the participant’s 

responsibility for conservation practice 

operation and maintenance. Paragraphs 

(a) through (e) are revised to clarify that 

the O&M agreement is part of the EQIP 

contract. The O&M agreement specifies 

the terms and conditions under which 

the participant must operate and 

maintain the conservation practices 

installed with EQIP assistance. This 

section also clarifies that NRCS may 

periodically inspect conservation 

practices to ensure they are being 

maintained for the conservation practice 

lifespan as detailed in the O&M 

agreement. In the event that NRCS finds 

that a participant is not operating and 

maintaining practices for the specified 

lifespan during the contract duration, 

NRCS may request a refund of payments 

in accordance with the EQIP contract. If 

a conservation practice is continuing to 

function for the conservation purposes 

for which it was installed, NRCS may 

choose to not request a payment refund. 

NRCS has created an O&M agreement to 

articulate the Agency’s expectation that 

the participant is responsible for 

maintaining each conservation practice. 

NRCS has developed this O&M 

agreement for two reasons: (1) To 

increase the transparency of a 

participant’s contract responsibilities; 

(2) to ensure these conservation 

practices are maintained for the length 

of time for which they were designed 

and created. 

Section 1466.23, ‘‘Payment rates and 

levels,’’ formerly addressed cost-share 

rates, incentive payment levels, and 

payment eligibility. Incentive payments 

have been removed in accordance with 

the 2008 Act amendments. In the place 

of incentive payments, participants will 

receive payments for estimated costs 

incurred or income foregone in 

implementing a practice. The terms 

‘‘cost-share payments’’ and ‘‘incentive 

payments’’ have been replaced 

throughout this section with the more 

inclusive term, ‘‘payments.’’ 

Specifically, NRCS has revised the 

following paragraphs: 

The original paragraph (c) becomes 

paragraph (a); as a result, paragraphs are 

realigned accordingly. NRCS revises 

paragraph (a) to clarify how eligible 

conservation practices will be selected. 

In developing a list of conservation 

practices eligible for payment, the State 

Conservationist, in consultation with 

the State Technical Committee, will 

examine the cost-effectiveness, 

implementation efficiency, and 

longevity of the conservation practice. 

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NRCS will select a conservation practice 

based on the number of resource 

concerns the conservation practice will 

address or how comprehensively the 

conservation practice will address the 

resource concern and its ability to assist 

producers in meeting regulatory 

requirements. 

NRCS revises paragraph (b) to specify 

that payment rates will be established 

by the State Conservationist or designee, 

with advice from the State Technical 

Committee or local working group. In 

determining the payment rate, NRCS 

will use the guidance found in 

paragraph (c), in addition to examining 

the cost of implementing a practice. 

Paragraphs (c)(1) and (2) are revised to 

allow participants to receive: (i) Up to 

75 percent of the estimated costs 

incurred by implementing a 

conservation practice, (ii) up to 100 

percent of the estimated income 

foregone by participant for 

implementing a practice, or both (i) and 

(iii) where a producer incurs both costs 

in implementing a conservation practice 

and foregoes income related to practice 

implementation. When determining 

estimated income foregone, the State 

Conservationist, as specified in section 

1240B(d)(3) of the 1985 Act, may 

provide a higher payment rate, provided 

the rate does not exceed 100 percent, to 

the following conservation practices: 

residue management, nutrient 

management, air quality management, 

invasive species management, pollinator 

habitat, animal carcass management 

technology, or pest management. In 

accordance with this paragraph, a 

producer simultaneously may receive 

payments for performing a practice, as 

well as income foregone for 

implementing such a practice. 

For participants who are identified as 

historically underserved producers, in 

accordance with § 1466.3, NRCS may 

award the applicable payment rate and 

an additional payment rate that is not 

less than 25 percent above the 

applicable payment rate, provided this 

increase does not exceed 90 percent of 

the estimated incurred costs associated 

with the conservation practice. 

NRCS also revises paragraph (c)(3) to 

clarify that payments made to a 

participant will be reduced 

proportionately below the rate 

established by the State Conservationist 

or designated conservationist to the 

extent that the total financial 

contributions for a conservation practice 

from other sources exceed 100 percent 

of the estimated costs incurred for 

implementing or performing the 

conservation practice. 

Paragraph (c)(4) is inserted to reflect 

Congress’s intent to provide payments 

for conservation practices that assist 

producers in organic production or 

transition to organic production. 

Paragraph (c)(4) also clarifies that 

payments may not be made to cover the 

costs associated with acquiring the 

actual organic certification. 

NRCS removes the former program 

regulations’ reference to NRCS 

providing incentive payments, in 

accordance with the 2008 Act, which 

also removed references to incentive 

payments. NRCS will reimburse 

participants for estimated costs incurred 

and income foregone in accordance with 

§ 1466.23(c). 

NRCS adds paragraph (e) to enable 

NRCS to adjust payment for 

conservation practices scheduled after 

the year of contract obligation. Inflation, 

higher fuel costs, and increased labor 

impact the cost of implementing a 

conservation practice. This provision 

provides the Agency flexibility to 

compensate participants based on the 

increased costs. 

Section 1466.24, ‘‘EQIP payments,’’ 

provides direction on payment 

eligibility and payment limitations. 

Section 1240G of the 1985 Act, as 

amended by Section 2508 of the 2008 

Act limits payments to persons, joint 

operations, or legal entities to $300,000 

during any six-year period, except for 

projects having special environmental 

significance. For projects of special 

environmental significance, payments 

will be limited to $450,000 (during any 

six-year period). In order to ensure that 

no individual will receive more than 

$300,000 (unless a waiver up to 

$450,000 is granted), NRCS will track all 

EQIP funds paid and attributable to any 

individual by the social security 

identification number or unique 

identification number. To participate in 

EQIP, the person or legal entity’s 

application must contain all members or 

beneficiaries, their tax identification 

numbers, and the percentage interest of 

each member or beneficiary. The BIA, as 

a fiduciary, may assist NRCS in 

distributing funds to individual Indians 

or Indian tribes. With regard to contracts 

on Indian land, payments exceeding the 

payment limitation may be made to the 

Tribal participant if an official of BIA or 

a Tribal official certifies in writing that 

no one individual, directly or indirectly, 

will receive more than the limitation. 

For the purposes of applying the 

payment limitation and in accordance 

with the 2008 Act, the six-year period 

will include those payments made in 

fiscal years 2009 through 2014. NRCS 

will honor payment and contract limits 

that exceed $300,000 for those persons, 

joint operations, and legal entities that 

entered into a contract with NRCS prior 

to October 1, 2008. Contracts entered 

into prior to October 1, 2008, are 

governed by the payment limitations 

contained within the 2002 Act. The 

2002 Act limited payments and 

contracts to $450,000. The 2008 Act 

reduced the payment limit to $300,000. 

NRCS will apply these new statutory 

and regulatory limitations, beginning 

with fiscal year 2009 contracts and will 

ensure that no new participants exceed 

the $300,000 limit during the 

effectiveness of the 2008 Act. Contracts 

entered into prior to October 1, 2008 are 

not affected by the revision in payment 

limitation. Specifically, the following 

provisions have been changed in this 

section. 

Paragraph (a) is revised to reduce the 

person, joint operation, or legal entity 

payment limitation from $450,000 to 

$300,000. This payment limitation 

applies to the six-year period, following 

a participant entering into a contract 

with NRCS, starting the year the 

contract is signed. Payments received 

for technical assistance shall be 

excluded from this limitation. The 

person, joint operation, or legal entity 

payment limitation may be waived for 

projects of special environmental 

significance. Projects of special 

environmental significance must meet 

the following criteria, as determined by 

the Chief: 

• The project will have substantial 

positive impacts on critical resources in 

or near the project area (e.g., impaired 

water bodies, at-risk species, or air 

quality attainment); 

• The project clearly addresses a 

national and State, Tribal, or local 

priorities; and 

• The project assists the participant 

in complying with Federal, State, or 

local regulatory requirements. 

Paragraph (c) is inserted to reflect the 

2008 Act’s limitation on payments to a 

person or legal entity, directly or 

indirectly, for conservation practices 

related to organic production. Payments 

for practices related to organic 

production shall not exceed $20,000 per 

year or $80,000 during any six-year 

period. This limitation excludes 

payments related to technical assistance 

and pertains only to conservation 

practices applied related to organic 

production. A producer may receive 

additional payments and is not subject 

to the organic payment limitation for 

conservation practices performed 

outside of those related to organic 

production, provided the sum total of 

all payments received does not exceed 

$300,000 (unless a waiver is granted for 

an environmentally significant project). 

NRCS revises paragraph (d) to reflect 

the statutory requirement that 

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2306 Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Rules and Regulations 

participants who wish to receive 

payments for conservation practices 

related to organic production or the 

transition to organic production must 

carry out an organic system plan, as 

defined in section 1466.3, or develop 

and implement conservation practices 

for certified organic production that are 

consistent with an organic system plan 

and with EQIP’s purposes. NRCS will 

offer conservation planning assistance 

to producers with an interest in organic 

production as authorized in section 

1240B(i) of the 1985 Act, as amended by 

section 2503 of the 2008 Act. 

Paragraph (d) is further revised to 

enable the Agency to provide advance 

payments to historically underserved 

producers, as provided in the 2008 Act 

amendments. Prior to this revision, 

EQIP policy required a participant to 

certify that a conservation practice had 

been completed before NRCS approved 

or issued payments. However, due to 

financial hardship by some applicants, 

the 1985 Act has been amended to 

enable ‘‘historically underserved 

producers’’ to receive advance payments 

up to 30 percent of the amount needed 

to implement a conservation practice for 

the purpose of purchasing needed 

materials or services. The advance 

payments will assist participants who 

lack financial resources to participate in 

the program. 

Paragraph (d)(6) addresses the 

provisions related to the Adjusted Gross 

Income Limitation as it applies to 

conservation programs. Section 1001D 

of the Food Security Act of 1985, as 

amended by section 1604 of the 2008 

Act, provides that a person, joint 

operation, or legal entity shall not be 

eligible to receive any payments from 

conservation programs under Title XII 

of the 1985 Act and section 524(b) of the 

Federal Crop Insurance Act (7 U.S.C. 

1524(b)), which includes EQIP, during a 

crop, fiscal, or program year, if the 

average adjusted gross income of the 

individual, joint operation, or legal 

entity exceeds $1,000,000, unless not 

less than 66.66 percent of the average 

adjusted gross income of the person, 

joint operation, or legal entity is average 

adjusted gross farm income. This 

provision of the 1985 Act will be 

implemented in accordance with part 

1400 of this chapter. 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 part 1400 of this 

chapter. These limitations do not extend 

to federally recognized Indian tribes. 

Paragraph (d)(12) is revised to reflect 

the expansion of the term ‘‘conservation 

practice.’’ NRCS or other Technical 

Service Providers must certify that the 

conservation practice has been carried 

out in accordance with NRCS technical 

guidance. This technical guidance 

includes, but is not limited to, the NRCS 

FOTG, National Planning Procedures 

Handbook, General Manual 180, Part 

409, ‘‘Conservation Planning Policy,’’ 

and other technical guidance as 

determined by the State Conservationist 

or designated conservationist. 

Section 1466.24(d)’s provisions 

related to depriving tenants and 

sharecroppers of EQIP payments is 

moved to § 1466.35, since the provision 

pertains directly to misrepresentation, 

scheme, and device, which is addressed 

in § 1466.35. 

Section 1466.25, ‘‘Contract 

modifications and transfers of land,’’ is 

revised to clarify the participant’s 

contract responsibilities as they relate to 

loss of control of the land and the 

obligations incurred by the transferee. In 

detailing these obligations, NRCS also 

states that the participant and transferee 

assume the obligations not only of the 

contract, but also the O&M agreement. 

This section also promulgates NRCS’s 

pre-existing policy by adding paragraph 

(e), which specifies that if a 

conservation practice fails through no 

fault of the participant, the State 

Conservationist may issue payments to 

re-establish the practice. 

Section 1466.26, ‘‘Contract violations 

and termination,’’ addresses the 

procedures that NRCS should take when 

a violation has occurred or a contract 

termination is needed. Specifically, 

§ 1466.26 is revised as follows: 

Paragraph (a) has been inserted to 

promulgate existing contract 

requirements and specify that the State 

Conservationist may terminate a 

contract when it is in the public 

interest, when the participant fails or 

refuses to correct a contract violation, or 

when a termination is needed as a result 

of conditions beyond the participant’s 

control. The State Conservationist may 

unilaterally terminate an agreement 

when a termination is in the public 

interest, the participant refuses to 

correct a violation, or the participant is 

unable to comply with the contract 

terms. In the event a contract is 

terminated, the State Conservationist 

has the ability to retrieve all or a 

proportion of the payments. When a 

participant claims that the reason for the 

violation is a form of hardship, the 

claim must be documented and have 

existed after the participant entered into 

the contract. When a participant makes 

a hardship claim, the participant will 

provide documentation that details the 

hardship and for how long the hardship 

has existed and why the hardship has 

prevented fulfilling requirements of the 

contract. Examples of hardship include: 

Natural disasters, major illness, farm or 

ranch building destruction, bankruptcy, 

and public interest (e.g., military 

service, public utilities’ easement or 

condemnation of land, or environmental 

and archeological concerns). 

Paragraph (e) notifies potential EQIP 

participants that NRCS has the ability to 

collect liquidated damages. Paragraph 

(e) also gives notice to the public that 

participants who violate EQIP contracts 

may be determined ineligible for future 

NRCS-administered conservation 

program funding. For clarity, the 

following provisions are moved to 

paragraph (e), ‘‘If NRCS terminates a 

contract, the participant will forfeit all 

rights for future payments under the 

contract and may be required to pay 

liquidated damages as prescribed in the 

contract, and refund all or part of the 

payments received, plus interest.’’ 

NRCS also revises paragraph (e)(2) to 

provide flexibility to either reduce or 

waive the amount of liquidated 

damages. 

NRCS adds paragraph (e)(2)(i) to 

clarify that proof of hardship must be 

documented, and such hardship must 

have occurred after the contract was 

signed by both parties. 

NRCS adds paragraph (f) to provide 

that a contract, under which a producer 

is receiving payments for conservation 

practices related to organic production, 

may be terminated, if the State 

Conservationist, in consultation with 

the State Technical Committee, 

determines that the producer is not 

pursuing organic certification or is 

decertified. 

Section 1466.27, ‘‘Conservation 

Innovation Grants,’’ is amended to 

stipulate that NRCS will not reimburse 

the grantee for indirect costs. The bulk 

of CIG’s policies and procedures were 

revised on January 3, 2005, and 

promulgated in § 1466.27. To locate 

information about this program, consult 

the NRCS Web site at: http:// 

www.nrcs.usda.gov/programs/cig/. 

Subpart C—General Administration 

Section 1466.31, ‘‘Compliance with 

regulatory measures,’’ is revised by 

adding the term, ‘‘permits,’’ to clarify 

that it is the participant’s responsibility 

to obtain necessary permits before 

commencing or carrying out 

conservation practices. 

Section 1466.32, ‘‘Access to operating 

unit,’’ is revised to notify potential EQIP 

applicants that an authorized NRCS 

representative may enter an operating 

unit or tract for the purpose of 

confirming compliance with program 

requirements during the term of the 

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Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Rules and Regulations 2307 

contract. NRCS will continue to provide 

the participant with notice, prior to 

entering the property. 

Section 1466.33, ‘‘Equitable relief,’’ 

remains unchanged. 

Section 1466.34 is revised to add the 

term, ‘‘legal entity,’’ to clarify that legal 

entities shall be subject to the same 

provisions as persons. 

Section, 1466.35, ‘‘Misrepresentation 

and scheme or device,’’ is revised to 

insert the following clause from 

§ 1466.24, ‘‘Adopted any scheme or 

device for the purpose of depriving any 

tenant or sharecropper of the payments 

to which such person would otherwise 

be entitled under the program.’’ 

Section 1466.36, ‘‘Environmental 

Credits for Conservation 

Improvements,’’ is added to clarify 

NRCS’s interest in environmental 

credits. NRCS recognizes that 

environmental benefits will be achieved 

by implementing conservation practices 

funded through EQIP, and that 

environmental credits may be gained as 

a result of implementing activities 

compatible with the purposes of an 

EQIP contract. NRCS asserts no direct or 

indirect interest in these credits. 

However, NRCS retains the authority to 

ensure that operation and maintenance 

requirements for EQIP-funded 

improvements are met, consistent with 

§ 1466.21 and § 1466.22. Where 

activities may impact the land under an 

EQIP contract, participants are highly 

encouraged to request an O&M 

compatibility determination from NRCS 

prior to entering into any credit 

agreements. 

Section 2708, ‘‘Compliance and 

Performance’’, of the 2008 Act added a 

paragraph to section 1244(g) of the 1985 

Act entitled, ‘‘Administrative 

Requirements for Conservation 

Programs,’’ which states the following: 

‘‘(g) Compliance and performance.— 

For each conservation program under 

Subtitle D, the Secretary shall develop 

procedures— 

‘‘(1) To monitor compliance with 

program requirements; 

‘‘(2) To measure program 

performance; 

‘‘(3) To demonstrate whether longterm conservation benefits of the 

program are being achieved; 

‘‘(4) To track participation by crop 

and livestock type; and 

‘‘(5) To coordinate activities described 

in this subsection with the national 

conservation program authorized under 

section 5 of the Soil and Water 

Resources Conservation Act of 1977 (16 

U.S.C. 2004).’’ 

This new provision presents in one 

place the accountability requirements 

placed on the Agency as it implements 

conservation programs and reports on 

program results. The requirements 

apply to all programs under Subtitle D, 

including the Wetlands Reserve 

program, the Conservation Security 

Program, the Conservation Stewardship 

Program, The Farm and Ranch Lands 

Protection Program, the Grassland 

Reserve Program, the Environmental 

Quality Incentives Program (including 

the Agricultural Water Enhancement 

Program), the Wildlife Habitat Incentive 

Program, and the Chesapeake Bay 

Watershed initiative. These 

requirements are not directly 

incorporated into these regulations, 

which set out requirements for program 

participants. However, certain 

provisions within these regulations 

relate to elements of section 1244(g) of 

the 1985 Act and the Agency’s 

accountability responsibilities regarding 

program performance. NRCS is taking 

this opportunity to describe existing 

procedures that relate to meeting the 

requirements of section 1244(g) of the 

1985 Act, and Agency expectations for 

improving its ability to report on each 

program’s performance and 

achievement of long-term conservation 

benefits. Also included is reference to 

the sections of these regulations that 

apply to program participants and that 

relate to the Agency accountability 

requirements as outlined in section 

1244(g) of the 1985 Act. 

Monitor compliance with program 

requirements. NRCS has established 

application procedures to ensure that 

participants meet eligibility 

requirements, and follow-up procedures 

to ensure that participants are 

complying with the terms and 

conditions of their contractual 

arrangement with the government and 

that the installed conservation measures 

are operating as intended. These and 

related program compliance evaluation 

policies are set forth in Agency 

guidance (M_440_512 and M_440_515 

(http://directives.sc.egov.usda.gov/). 

The program requirements applicable 

to participants that relate to compliance 

are set forth in these regulations in 

§ 1466.8, ‘‘Program Requirements,’’ 

§ 1466.9, ‘‘EQIP Plan of Operations,’’ 

§ 1466.21, ‘‘Contract requirements,’’ and 

§ 1466.22, ‘‘Conservation practice 

operation and maintenance.’’ These 

sections make clear the general program 

eligibility requirements, participant 

obligations for implementing an EQIP 

plan of operations, participant 

contractual obligations, and 

requirements for operating and 

maintaining EQIP-funded conservation 

improvements. 

Measure program performance. 

Pursuant to the requirements of the 

Government Performance and Results 

Act of 1993 (Pub. L. 103–62, Sec. 1116) 

and guidance provided by OMB Circular 

A–11, NRCS has established 

performance measures for its 

conservation programs. Program-funded 

conservation activity is captured 

through automated field-level business 

tools and the information is made 

publicly available at: http:// 

ias.sc.egov.usda.gov/PRSHOME/. 

Program performance also is reported 

annually to Congress and the public 

through the annual performance budget, 

annual accomplishments report, and the 

USDA Performance Accountability 

Report. Related performance 

measurement and reporting policies are 

set forth in Agency guidance 

(GM_340_401 and GM_340_403 (http:// 

directives.sc.egov.usda.gov/)). 

The conservation actions undertaken 

by participants are the basis for 

measuring program performance— 

specific actions are tracked and reported 

annually, while the effects of those 

actions relate to whether the long-term 

benefits of the program are being 

achieved. The program requirements 

applicable to participants that relate to 

undertaking conservation actions are set 

forth in these regulations in § 1466.9, 

‘‘EQIP Plan of Operations,’’ § 1466.21, 

‘‘Contract requirements,’’ and § 1466.22, 

‘‘Conservation practice operation and 

maintenance.’’ These sections make 

clear participant obligations for 

implementing, operating, and 

maintaining EQIP-funded conservation 

improvements, which in aggregate result 

in the program performance that is 

reflected in Agency performance 

reports. 

Demonstrate whether long-term 

conservation benefits of the program are 

being achieved. Demonstrating the longterm natural resource benefits achieved 

through conservation programs is 

subject to the availability of needed 

data, the capacity and capability of 

modeling approaches, and the external 

influences that affect actual natural 

resource condition. While NRCS 

captures many measures of ‘‘output’’ 

data, such as acres of conservation 

practices, it is still in the process of 

developing methods to quantify the 

contribution of those outputs to 

environmental outcomes. 

NRCS currently uses a mix of 

approaches to evaluate whether longterm conservation benefits are being 

achieved through its programs. Since 

1982, NRCS has reported on certain 

natural resource status and trends 

through the National Resources 

Inventory (NRI), which provides 

statistically reliable, nationally 

consistent land cover/use and related 

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2308 Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Rules and Regulations 

3The exception to this is the Conservation 

Reserve Program; since 1987 the NRI has reported 

acreage enrolled in CRP. 

4Soil and Water Conservation Society. 2006. 

Final Report from the Blue Ribbon Panel 

Conducting an External Review of the U.S. 

Department of Agriculture Conservation Effects 

Assessment Project. Ankeny, IA: Soil and Water 

Conservation Society. This review is available at 

http://www.nrcs.usda.gov/technical/NRI/ceap/. 

natural resource data. However, lacking 

has been a connection between these 

data and specific conservation 

programs.3 In the future, the interagency 

Conservation Effects Assessment Project 

(CEAP), which has been underway since 

2003, will provide nationally consistent 

estimates of environmental effects 

resulting from conservation practices 

and systems applied. CEAP results will 

be used in conjunction with 

performance data gathered through 

Agency field-level business tools to help 

produce estimates of environmental 

effects accomplished through Agency 

programs, such as EQIP. In 2006 a Blue 

Ribbon panel evaluation of CEAP 4

strongly endorsed the project’s purpose 

but concluded ‘‘CEAP must change 

direction’’ to achieve its purposes. In 

response, CEAP has focused on 

priorities identified by the Panel and 

clarified that its purpose is to quantify 

the effects of conservation practices 

applied on the landscape. Information 

regarding CEAP, including reviews and 

current status, is available at http:// 

www.nrcs.usda.gov/technical/NRI/ 

ceap/. Since 2004 and the initial 

establishment of long-term performance 

measures by program, NRCS has been 

estimating and reporting progress 

toward long-term program goals. Natural 

resource inventory and assessment, and 

performance measurement and 

reporting policies set forth in Agency 

guidance (GM_290_400; GM_340_401; 

GM_340_403)) (http:// 

directives.sc.egov.usda.gov/).) 

Demonstrating the long-term 

conservation benefits of conservation 

programs is an Agency responsibility. 

Through CEAP, NRCS is in the process 

of evaluating how these long-term 

benefits can be achieved through the 

conservation practices and systems 

applied by participants under the 

program. The program requirements 

applicable to participants that relate to 

producing long-term conservation 

benefits are described previously under 

‘‘measuring program performance,’’ i.e., 

§ 1466.9, ‘‘EQIP Plan of Operations,’’ 

§ 1466.21, ‘‘Contract requirements,’’ and 

§ 1466.22, ‘‘Conservation practice 

operation and maintenance.’’ 

Track participation by crop and 

livestock type. NRCS’s automated fieldlevel business tools capture participant, 

land, and operation information. This 

information is aggregated in the 

National Conservation Planning 

database and is used in a variety of 

program reports, for example in 

validating the program requirement for 

ensuring that 60 percent of funds are 

directed toward conservation practices 

related to livestock production. 

Additional reports will be developed to 

provide more detailed information on 

program participation to meet 

congressional needs. These and related 

program management procedures 

supporting program implementation are 

set forth in Agency guidance 

(M_440_512 and M_440_515). 

The program requirements applicable 

to participants that relate to tracking 

participation by crop and livestock type 

are put forth in these regulations in 

§ 1466.8, ‘‘Program Requirements,’’ 

which makes clear program eligibility 

requirements, including eligible land 

and relationship to the production of 

agricultural, livestock, or forest-related 

products. 

Coordinate these actions with the 

national conservation program 

authorized under the Soil and Water 

Resources Conservation Act (RCA). The 

2008 Act reauthorized and expanded on 

a number of elements of the RCA related 

to evaluating program performance and 

conservation benefits. Specifically, the 

2008 Farm Bill added a provision 

stating, 

‘‘Appraisal and inventory of resources, 

assessment and inventory of conservation 

needs, evaluation of the effects of 

conservation practices, and analyses of 

alternative approaches to existing 

conservation programs are basic to effective 

soil, water, and related natural resources 

conservation.’’ 

The program, performance, and 

natural resource and effects data 

described previously will serve as a 

foundation for the next RCA, which will 

also identify and fill, to the extent 

possible, data and information gaps. 

Policy and procedures related to the 

RCA are set forth in Agency guidance 

(GM_290_400; M_440_525; 

GM_130_402) 

(http://directives.sc.egov.usda.gov/). 

The coordination of the previously 

described components with the RCA is 

an Agency responsibility and is not 

reflected in these regulations. However, 

it is likely that results from the RCA 

process will result in modifications to 

the program and performance data 

collected, to the systems used to acquire 

data and information, and potentially to 

the program itself. Thus, as the 

Secretary proceeds to implement the 

RCA in accordance with the statute, the 

approaches and processes developed 

will improve existing program 

performance measurement and outcome 

reporting capability and provide the 

foundation for improved 

implementation of the program 

performance requirements of section 

1244(g) of the 1985 Act. 

List of Subjects in 7 CFR Part 1466 

Agricultural operations, Conservation 

practices, Conservation payments, 

Natural resources, Payment rates, 

Contract, Animal feeding operations, 

Soil and water conservation, Soil 

quality, Water quality and water 

conservation, Wildlife, Forestry 

management. 

■ For the reasons stated in the preamble, 

the Commodity Credit Corporation 

amends Part 1466 of Title 7 of the Code 

of Federal Regulations as follows: 

PART 1466—ENVIRONMENTAL 

QUALITY INCENTIVES PROGRAM 

■ 1. The authority citation for part 1466 

continues to read as follows: 

Authority: 15 U.S.C. 714b and 714c; 16 

U.S.C. 3839aa–3839aa–8. 

■ 2. Subpart A, consisting of §§ 1466.1 

through 1466.9, is revised to read as 

follows: 

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. 

Subpart A—General Provisions 

§ 1466.1 Applicability. 

(a) The purposes of the Environmental 

Quality Incentives Program (EQIP) are to 

promote agricultural production, forest 

management, and environmental quality 

as compatible goals, and to optimize 

environmental benefits. Through EQIP, 

the Natural Resources Conservation 

Service (NRCS) provides assistance to 

eligible farmers and ranchers to address 

soil, water, and air quality, wildlife 

habitat, surface and groundwater 

conservation, energy conservation, and 

related natural resource concerns. 

EQIP’s financial and technical 

assistance helps producers comply with 

environmental regulations and enhance 

agricultural and forested lands in a costeffective and environmentally beneficial 

manner. The purposes of the program 

are achieved by planning and 

implementing conservation practices on 

eligible land. 

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(b) EQIP is available in any of the 50 

States, the District of Columbia, the 

Commonwealth of Puerto Rico, Guam, 

the Virgin Islands of the United States, 

American Samoa, and the 

Commonwealth of the Northern Mariana 

Islands. 

§ 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 supports ‘‘locally led 

conservation’’ by using State Technical 

Committees at the State level and local 

working groups at the county or parish 

level to advise NRCS on issues relating 

to the EQIP implementation such as: 

(1) Identification of priority resource 

concerns; 

(2) Identification of which 

conservation practices should be 

eligible for financial assistance; and 

(3) Establishment of payment rates. 

(c) No delegation in this Part to lower 

organizational levels shall preclude the 

Chief from making any determinations 

under this Part, or from reversing or 

modifying any determination made 

under this Part. 

(d) NRCS may enter into agreements 

with other Federal or State agencies, 

Indian tribes, conservation districts, 

units of local government, public or 

private organizations, and individuals to 

assist NRCS with implementation of the 

program in this Part. 

§ 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, 

grassland, rangeland, pasture, and other 

agricultural land, on which agricultural 

and forest-related products, or livestock 

are produced and resource concerns 

may be addressed. Other agricultural 

lands include cropped woodland, 

marshes, incidental areas included in 

the agricultural operation, and other 

types of agricultural land used for 

production of livestock. 

Agricultural operation means a parcel 

or parcels of land whether contiguous or 

noncontiguous, which the producer is 

listed as the operator or owner/operator 

in the Farm Service Agency (FSA) 

record system, which is under the 

effective control of the producer at the 

time the producer applies for a contract, 

and which is operated by the producer 

with equipment, labor, management, 

and production, forestry, or cultivation 

practices that are substantially separate 

from other operations. 

Animal waste management facility 

means a structural conservation 

practice, implemented in the context of 

a Comprehensive Nutrient Management 

Plan and consistent with the Field 

Office Technical Guide, which is used 

for storing, treating, or handling animal 

waste or byproducts, such as animal 

carcasses. 

Applicant means a person, legal 

entity, joint operation, or tribe that has 

an interest in an agricultural operation, 

as defined in part 1400 of this chapter, 

who has requested in writing to 

participate in EQIP. 

At-risk species means any plant or 

animal species as determined by the 

State Conservationist, with advice from 

the State Technical Committee, to need 

direct intervention to halt its population 

decline. 

Beginning Farmer or Rancher means a 

person or legal 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, who will materially and 

substantially participate in the 

operation of the farm or ranch. 

(2) 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 dayto-day labor and management of the 

farm or ranch, consistent with the 

practices in the county or State where 

the farm is located. 

(3) In the case of a contract with an 

entity or joint operation, 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, 

United States Department of Agriculture 

(USDA), or designee. 

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 

byproducts 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. 

Conservation district means any 

district or unit of State, Tribal, or local 

government formed under State, Tribal, 

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 referred to as a ‘‘conservation 

district,’’ ‘‘soil conservation district,’’ 

‘‘soil and water conservation district,’’ 

‘‘resource conservation district,’’ ‘‘land 

conservation committee,’’ ‘‘natural 

resource district,’’ or similar name. 

Conservation Innovation Grants 

means competitive grants made under 

EQIP to individuals and governmental 

and non-governmental organizations to 

stimulate and transfer innovative 

technologies and approaches, to 

leverage Federal funds, and to enhance 

and protect the environment, in 

conjunction with agricultural 

production and forest management. 

Conservation practice means one or 

more conservation improvements and 

activities, including structural practices, 

land management practices, vegetative 

practices, forest management practices, 

and other improvements that achieve 

the program purposes, including such 

items as CNMPs, agricultural energy 

management plans, dryland transition 

plans, forest management plans, 

integrated pest management, and other 

plans determined acceptable by the 

Chief. 

Contract means a legal document that 

specifies the rights and obligations of 

any participant accepted into the 

program. An EQIP contract is a binding 

agreement for the transfer of assistance 

from USDA to the participant to share 

in the costs of applying conservation 

practices. 

Cost-effectiveness means the least 

costly option for achieving a given set 

of conservation objectives. 

Designated conservationist means an 

NRCS employee whom the State 

Conservationist has designated as 

responsible for EQIP administration in a 

specific area. 

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EQIP plan of operations means the 

document that identifies the location 

and timing of conservation practices 

that the participant agrees to implement 

on eligible land in order to address the 

priority resource concerns, optimize 

environmental benefits, and address 

program purposes as defined in 

§ 1466.1. The EQIP plan of operations is 

part of the EQIP contract. 

Estimated income foregone means an 

estimate of the net income loss 

associated with the adoption of a 

conservation practice, including from a 

change in land use or land taken out of 

production or the opportunity cost 

associated with the adoption of a 

conservation practice. This shall not 

include losses of income due to disaster 

or other events unrelated to the 

conservation practice. 

Field office technical guide (FOTG) 

means the official local NRCS source of 

resource information and interpretations 

of guidelines, criteria, and requirements 

for planning and applying conservation 

practices 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. 

Forest management plan means a sitespecific plan that is prepared by a 

professional resource manager, in 

consultation with the participant, and is 

approved by the State Conservationist. 

Forest management plans may include a 

forest stewardship plan, as specified in 

section 5 of the Cooperative Forestry 

Assistance Act of 1978 (16 U.S.C. 

2103a); another practice plan approved 

by the State Forester; or another plan 

determined appropriate by the State 

Conservationist. The plan is intended to 

comply with Federal, State, tribal, and 

local laws, regulations, and permit 

requirements. 

Historically underserved producer 

means an eligible person, joint 

operation, or legal entity who is a 

beginning farmer or rancher, socially 

disadvantaged farmer or rancher, or 

limited resource farmer or rancher. 

Indian land means: 

(1) Land held in trust by the United 

States for individual Indians or Indian 

tribes; or 

(2) Land, the title to which is held by 

individual Indians or Indian Tribes 

subject to Federal restrictions against 

alienation or encumbrance; or 

(3) Land which is subject to rights of 

use, occupancy and/or benefit of certain 

Indian Tribes; or 

(4) Land held in fee title by an Indian, 

Indian family or Indian Tribe. 

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.) 

which is recognized as eligible for the 

special programs and services provided 

by the United States to Indians because 

of their status as Indians. 

Integrated Pest Management means a 

sustainable approach to managing pests 

by combining biological, cultural, 

physical, and chemical tools in a way 

that minimizes economic, health, and 

environmental risks. 

Joint operation means, as defined in 

part 1400 of this chapter, a general 

partnership, joint venture, or other 

similar business organization in which 

the members are jointly and severally 

liable for the obligations of the 

organization. 

Legal entity means, as defined in part 

1400 of this chapter, an entity created 

under Federal or State law that: 

(1) Owns land or an agricultural 

commodity, product, or livestock; or 

(2) Produces an agricultural 

commodity, product, or livestock. 

Lifespan means the period of time 

during which a conservation practice 

should 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 $155,200 

in each of the previous two years 

(adjusted for inflation using Prices Paid 

by Farmer Index as compiled by 

National Agricultural Statistical 

Service), 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 in 

each of the previous two years (to be 

determined annually using Commerce 

Department Data). 

Liquidated damages means a sum of 

money stipulated in the EQIP contract 

that the participant agrees to pay NRCS 

if the participant fails to adequately 

complete the terms of the contract. The 

sum represents an estimate of the 

technical assistance expenses incurred 

to service the contract, and reflects the 

difficulties of proof of loss and the 

inconvenience or non-feasibility of 

otherwise obtaining an adequate 

remedy. 

Livestock means all animals produced 

on farms or ranches, as determined by 

the Chief. 

Livestock production means farm or 

ranch operations involving the 

production, growing, raising, or 

reproduction of livestock or livestock 

products. 

Local Working Group means the 

advisory body as defined in part 610 of 

this title. 

National measures mean measurable 

criteria identified by the Chief, with the 

advice of other Federal agencies and 

State Conservationists, to help EQIP 

achieve the national priorities and 

statutory requirements. 

National Organic Program means the 

national program, administered by the 

Agricultural Marketing Service, which 

regulates the standards for any farm, 

wild crop harvesting, or handling 

operation that wants to sell an 

agricultural product as organically 

produced. 

National priorities means resource 

issues identified by the Chief, with 

advice from other Federal agencies and 

State Conservationists, which will be 

used to determine the distribution of 

EQIP funds and guide local EQIP 

implementation. 

Natural Resources Conservation 

Service is an agency of the USDA, 

which has responsibility for 

administering EQIP using the funds, 

facilities, and authorities of the CCC. 

Nonindustrial private forest land 

means rural land, as determined by the 

Secretary, that has existing tree cover or 

is suitable for growing trees; and is 

owned by any nonindustrial private 

individual, group, association, 

corporation, Indian Tribe, or other 

private legal entity that has definitive 

decision-making authority over the 

land. 

Operation and maintenance means 

work performed by the participant to 

keep the applied conservation practice 

functioning for the intended purpose 

during the conservation practice 

lifespan. Operation includes the 

administration, management, and 

performance of non-maintenance 

actions needed to keep the completed 

practice 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. 

Operation and maintenance (O&M) 

agreement means the document that, in 

conjunction with the EQIP plan of 

operations, specifies the operation and 

maintenance responsibilities of the 

participant for conservation practices 

installed with EQIP assistance. 

Organic System Plan means a 

management plan for organic 

production or for an organic handling 

operation that has been agreed to by the 

producer or handler and the certifying 

agent. The Organic System Plan 

includes all written plans that govern all 

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aspects of agricultural production or 

handling. 

Participant means a person, legal 

entity, joint operation, or tribe that is 

receiving payment or is responsible for 

implementing the terms and conditions 

of an EQIP contract. 

Payment means financial assistance 

provided to the participant based on the 

estimated costs incurred in performing 

or implementing conservation practices, 

including costs for: planning, design, 

materials, equipment, installation, labor, 

maintenance, management, or training, 

as well as the estimated income 

foregone by the producer for designated 

conservation practices. 

Person means, as defined in part 1400 

of this chapter, an individual, natural 

person, and does not include a legal 

entity. 

Priority resource concern(s) means a 

resource concern that is identified by 

the State Conservationist, in 

consultation with the State Technical 

Committee, as a priority for a State, 

geographic area, or watershed level. 

Producer means a person, legal entity, 

or joint operation who has an interest in 

the agricultural operation, according to 

part 1400 of this chapter, or who is 

engaged in agricultural production or 

forestry management. 

Regional Assistant Chief means the 

NRCS employee authorized to direct 

and supervise NRCS activities in an 

NRCS region. 

Resource Concern means a specific 

natural resource problem that represents 

a significant concern in a State or 

region, and is likely to be addressed 

successfully through the 

implementation of the conservation 

activities by producers. 

Secretary means the Secretary of the 

USDA. 

Socially disadvantaged farmer or 

rancher means a farmer or rancher who 

has been subjected to racial or ethnic 

prejudices because of their identity as a 

member of a group without regard to 

their individual qualities. 

State Conservationist means the 

NRCS employee authorized to 

implement EQIP and direct and 

supervise NRCS activities in a State, the 

Caribbean Area, or the Pacific Island 

Area. 

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, including a 

vegetative practice, that involves 

establishing, constructing, or installing a 

site-specific measure to conserve and 

protect a resource from degradation, or 

improve soil, water, air, or related 

natural resources in the most costeffective 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 plantings, establishment or 

improvement of wildlife habitat, and 

capping of abandoned wells. 

Technical assistance means technical 

expertise, information, and tools 

necessary for the conservation of natural 

resources on land active in agricultural, 

forestry, or related uses. The term 

includes the following: 

(1) Technical services provided 

directly to farmers, ranchers, and other 

eligible entities, such as conservation 

planning, technical consultation, and 

assistance with design and 

implementation of conservation 

practices; and 

(2) Technical infrastructure, including 

activities, processes, tools, and agency 

functions needed to support delivery of 

technical services, such as technical 

standards, resource inventories, 

training, data, technology, monitoring, 

and effects analyses. 

Technical Service Provider (TSP) 

means an individual, private-sector 

entity, or public agency certified by 

NRCS to provide technical services to 

program participants, in lieu of or on 

behalf of NRCS. 

Wildlife means non-domesticated 

birds, fishes, reptiles, amphibians, 

invertebrates, and mammals. 

§ 1466.4 National priorities. 

(a) The following national priorities, 

consistent with statutory resource 

concerns that include soil, water, 

wildlife, air quality, and related 

resource concerns, will be used in EQIP 

implementation: 

(1) Reductions of nonpoint source 

pollution, such as nutrients, sediment, 

pesticides, or excess salinity in 

impaired watersheds consistent with 

total maximum daily loads (TMDLs) 

where available; the reduction of surface 

and groundwater contamination; and 

the reduction of contamination from 

agricultural point sources, such as 

concentrated animal feeding operations; 

(2) Conservation of ground and 

surface water resources; 

(3) Reduction of emissions, such as 

particulate matter, nitrogen oxides, 

volatile organic compounds, and ozone 

precursors and depleters that contribute 

to air quality impairment violations of 

National Ambient Air Quality 

Standards; 

(4) Reduction in soil erosion and 

sedimentation from unacceptable levels 

on agricultural land; and 

(5) Promotion of at-risk species 

habitat conservation. 

(b) In consultation with other Federal 

agencies, NRCS will undertake periodic 

reviews of the national priorities and 

the effects of program delivery at the 

State and local level 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 

NRCS State offices, 

(2) Use the national priorities in 

conjunction with State and local 

priorities to assist with prioritization 

and selection of EQIP applications, 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 priority resource concerns. 

§ 1466.5 National allocation and 

management. 

The Chief allocates EQIP funds to the 

State Conservationists to implement 

EQIP at the State and local level. In 

order to optimize the overall 

environmental benefits over the 

program duration, the Chief will: 

(a) Use an EQIP fund allocation 

formula that reflects national priorities 

and that uses available natural resource 

and resource concerns data to distribute 

funds to the State 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 they become available. 

(b) Provide a performance incentive to 

NRCS in States that demonstrate a high 

level of program accomplishment in 

implementing EQIP. The Chief shall 

consider factors such as strategically 

planning EQIP implementation, 

effectively addressing national priorities 

and measures, State and local resource 

concerns, the program delivery 

effectiveness, the use of TSPs, and the 

number of contracts with historically 

underserved producers. 

(c) Establish State level EQIP 

performance goals based on national, 

regional, and State priorities. 

(d) Ensure that national, State and 

local level information regarding 

program implementation such as 

resource priorities, eligible practices, 

ranking processes, payment schedules, 

fund allocation, and program 

achievements are made available to the 

public. 

(e) Consult with other Federal 

agencies with the appropriate expertise 

and information when evaluating the 

considerations described in this section. 

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(f) Authorize the State 

Conservationist, with advice from the 

State Technical Committee and local 

working groups, to determine how 

funds will be used and how the program 

will be administered to achieve national 

priorities in each State. 

(g) Utilize assessment, evaluation, and 

accountability procedures based on 

actual natural resource and 

environmental outcomes and results. 

§ 1466.6 State allocation and management. 

The State Conservationist will: 

(a) Identify State priority resource 

concerns, with the advice of the State 

Technical Committee, which directly 

contribute toward meeting national 

priorities and measures, and will use 

NRCS’s accountability system and other 

accountability tools to establish local 

level 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 EQIP and how to 

allocate funds within a State: 

(1) The nature and extent of priority 

resource concerns at the State and local 

level; 

(2) The availability of human 

resources, incentive programs, 

educational programs, and on-farm 

research programs from public, private, 

and Tribal sources, to assist with the 

activities related to the priority resource 

concerns; 

(3) The existence of multi-county and/ 

or multi-State collaborative efforts to 

address regional priority resource 

concerns; 

(4) Program performance and results; 

(5) The degree of difficulty that 

producers face in complying with 

environmental laws; and 

(6) The presence of additional priority 

resource concerns and specialized 

farming operations, including but not 

limited to, specialty crop producers, 

organic producers, and small-scale 

farms. 

§ 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 resource concerns are 

aware and informed 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, socially 

disadvantaged, small-scale, or beginning 

farmers or ranchers, Indian Tribes, 

Alaska Natives, and Pacific Islanders. 

§ 1466.8 Program requirements. 

(a) Program participation is voluntary. 

The applicant must develop an EQIP 

plan of operations for the agricultural or 

nonindustrial private forest land to be 

treated that serves as the basis for the 

EQIP contract. NRCS provides 

participants with technical assistance 

and payments to plan and apply needed 

conservation practices. 

(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 part 12 of this title; 

(2) Have an interest in the agricultural 

operation as defined in part 1400 of this 

chapter; 

(3) Have control of the land for the 

term of the proposed contract period; 

(i) The Chief may determine that land 

administered by the Bureau of Indian 

Affairs (BIA), Indian land, or other such 

circumstances provides sufficient 

assurance of control, 

(ii) If the applicant is a tenant of the 

land involved in agricultural production 

or forestry management, the applicant 

shall provide the Chief with the written 

concurrence of the landowner in order 

to apply a structural conservation 

practice, 

(4) Submit an EQIP plan of operations 

or plan developed for the purposes of 

acquiring an air or water quality permit, 

provided these plans contain elements 

equivalent to those elements required by 

an EQIP plan of operations and are 

acceptable to the State Conservationist 

as being consistent with the purposes of 

the program; 

(5) Supply information, as required by 

NRCS, to determine eligibility for the 

program, including but not limited to, 

information to verify the applicant’s 

status as a limited resource, beginning 

farmer or rancher, and payment 

eligibility as established by part 1400 of 

this chapter; and 

(6) Provide a list of all members of the 

legal entity and embedded entities along 

with members’ tax identification 

numbers and percentage interest in the 

entity. Where applicable, American 

Indians, Alaska Natives, and Pacific 

Islanders may use another unique 

identification number for each 

individual eligible for payment. 

(c) Eligible land includes agricultural 

land and nonindustrial private forest 

land, and other land on which 

agricultural products, livestock, or 

forest-related products are produced 

and resource concerns may be 

addressed. Other agricultural lands 

include cropped woodland, marshes, 

incidental areas included in the 

agricultural operation, and other types 

of agricultural land used for production 

of livestock. 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 a working component 

of the participant’s agricultural and 

forestry operation, and 

(ii) The participant has control of the 

land for the term of the contract, and 

(iii) The conservation practices to be 

implemented on the public land are 

necessary and will contribute to an 

improvement in the identified resource 

concern that is on private land; or 

(3) Indian 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. 

(e) NRCS will establish a national 

target to set aside five percent of EQIP 

funds for socially disadvantaged farmers 

or ranchers and an additional five 

percent of EQIP funds for beginning 

farmers or ranchers. 

§ 1466.9 EQIP plan of operations. 

(a) All conservation practices in the 

EQIP plan of operations must be 

approved by NRCS and developed and 

carried out in accordance with the 

applicable NRCS technical guidance. 

(b) The participant is responsible for 

implementing the EQIP plan of 

operations. 

(c) 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, 

natural resource, and environmental 

objectives; 

(3) A description of one or more 

conservation practices in the 

conservation management system, 

including conservation planning, 

design, or installation activities, to be 

implemented to achieve the 

conservation and environmental 

objectives; 

(4) A description of the schedule for 

implementing the conservation 

practices, including timing, sequence, 

operation, and maintenance; and 

(5) Information that will enable 

evaluation of the effectiveness of the 

plan in achieving the environmental 

objectives. 

(d) If an EQIP plan of operations 

includes an animal waste storage or 

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treatment facility, the participant must 

agree to develop and implement a 

CNMP or demonstrate to the satisfaction 

of the designated conservationist that a 

CNMP has been implemented. 

(e) If an EQIP plan of operations 

addresses forestland, the participant 

must develop and implement a forest 

management plan. 

(f) A participant may receive 

assistance to implement an EQIP plan of 

operations for water conservation only if 

the assistance will facilitate a reduction 

in ground and surface water use on the 

agricultural operation, unless the 

producer is participating in a 

watershed-wide project, as approved by 

the State Conservationist, which will 

effectively conserve water in accordance 

with § 1466.20. 

■ 3. In subpart B, §§ 1466.10 through 

1466.26 are revised to read as follows. 

Subpart B—Contracts and Payments 

Sec. 

1466.10 Conservation practices. 

1466.11 Technical services provided by 

qualified personnel not affiliated with 

USDA. 

1466.20 Application for contracts and 

selecting applications. 

1466.21 Contracts requirements. 

1466.22 Conservation practice operation 

and maintenance. 

1466.23 Payment rates. 

1466.24 EQIP payments. 

1466.25 Contract modifications and 

transfers of land. 

1466.26 Contract violations and 

terminations. 

* * * * * 

§ 1466.10 Conservation practices. 

(a) NRCS will determine the 

conservation practices for which 

participants may receive program 

payments. A list of eligible practices 

will be available to the public. 

(b) Payments will not be made to a 

participant for a conservation practice 

that either the applicant or another 

producer has applied prior to 

application for the program. Payments 

will not be made for a conservation 

practice that has been initiated or 

implemented prior to contract approval, 

unless a waiver was granted by the State 

Conservationist or designated 

conservationist prior to the practice 

implementation. 

(c) A participant will be eligible for 

payments for water conservation and 

irrigation related conservation practices 

only on land that has been irrigated for 

two of the last five years prior to 

application for assistance. 

(d) Where new technologies or 

management approaches that provide a 

high potential for optimizing 

environmental benefits have been 

developed, NRCS may approve interim 

conservation practice standards that 

incorporate the new technologies and 

provide financial assistance for pilot 

work to evaluate and assess the 

performance, efficiency, and 

effectiveness of the new technology or 

management approach. 

§ 1466.11 Technical services provided by 

qualified personnel not affiliated with 

USDA. 

(a) NRCS may use the services of 

qualified TSPs in performing its 

responsibilities for technical assistance. 

(b) Participants may use technical 

services from qualified personnel of 

other Federal, State, and local agencies, 

Indian Tribes, or individuals who are 

certified as TSPs by NRCS. 

(c) Technical services provided by 

qualified personnel not affiliated with 

USDA may include, but are not limited 

to: conservation planning; conservation 

practice survey, layout, design, 

installation, and certification; and 

information; education; and training for 

producers. 

(d) NRCS retains approval authority of 

work done by non-NRCS personnel for 

the purpose of approving EQIP 

payments. 

§ 1466.20 Application for contracts and 

selecting applications. 

(a) In evaluating EQIP applications, 

the State Conservationist or designated 

conservationist, with advice from the 

State Technical Committee or local 

working group, takes into account the 

following guidelines: 

(1) Any producer who has eligible 

land may submit an application for 

participation in EQIP. Applications are 

accepted throughout the year. Producers 

who are members of a joint operation 

may file a single application for the joint 

operation. 

(2) The State Conservationist, to the 

greatest extent practicable, will group 

applications of similar crop, forestry, 

and livestock operations for evaluation 

purposes. 

(3) The State Conservationist will 

evaluate applications within each 

established grouping. 

(b) In selecting EQIP applications, the 

State Conservationist or designated 

conservationist, with advice from the 

State Technical Committee or local 

working group, may establish ranking 

pools to address a specific resource 

concern, geographic area, or agricultural 

operation type or develop a ranking 

process to prioritize applications for 

funding that address national, State, and 

local priority resource concerns, taking 

into account the following guidelines: 

(1) The State Conservationist or 

designated conservationist will 

periodically select the highest ranked 

applications for funding based on 

applicant eligibility, fund availability, 

and the NRCS ranking process. The 

State Conservationist or designated 

conservationist will rank all 

applications according to the following 

factors: 

(i) The degree of cost-effectiveness of 

the proposed conservation practices; 

(ii) The magnitude of the expected 

environmental benefits resulting from 

the conservation treatment and the 

priority of the resource concerns that 

have been identified at the local, State, 

and national levels; 

(iii) How effectively and 

comprehensively the project addresses 

the designated resource concern or 

resource concerns; 

(iv) Use of conservation practices that 

provide long-term environmental 

enhancements; 

(v) Compliance with Federal, State, 

Tribal, or local regulatory requirements 

concerning soil, water and air quality; 

wildlife habitat; and ground and surface 

water conservation; 

(vi) Willingness of the applicant to 

complete all conservation practices in 

an expedited manner; 

(vii) The ability to improve existing 

conservation practices or systems, 

which are in place at the time the 

application is accepted, or that complete 

a conservation system; 

(viii) 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. 

(2) For applications that include water 

conservation or irrigation efficiency 

practices, the State Conservationist will 

give priority to those applications 

where: 

(i) Consistent with State law in which 

the producer’s eligible land is located, 

there is a reduction in water use in the 

agricultural operation, or where the 

producer agrees not to use any 

associated water savings to bring new 

land under irrigation production, other 

than incidental land needed for efficient 

operations. 

(ii) A producer who brings new land 

under irrigated production may be 

excluded from this latter condition if 

the producer is participating in a 

watershed-wide project that will 

effectively conserve water. The State 

Conservationist will designate eligible 

watershed-wide projects that effectively 

conserve water, using the following 

criteria: 

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(A) The project area has a current, 

comprehensive water resource 

assessment; 

(B) The project plan has demonstrated 

effective water conservation 

management strategies; and 

(C) The project sponsors have 

consulted relevant State and local 

agencies. 

(3) If the State Conservationist 

determines that the environmental 

values of two or more applications for 

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. 

(4) The ranking will not give 

preferential treatment to applications 

based on size of the operation. 

(5) The ranking process will 

determine the order in which 

applications will be selected for 

funding. The approving authority for 

EQIP contracts will be the State 

Conservationist or designee, except that 

the approving authority for any EQIP 

contract greater than $150,000 and up to 

$300,000 will be the appropriate NRCS 

Regional Assistant Chief. 

(6) The State Conservationist will 

make available to the public all 

information regarding priority resource 

concerns, the list of eligible practices, 

payment rates, and how the EQIP 

program is implemented in the State. 

§ 1466.21 Contract requirements. 

(a) In order for a participant to receive 

payments, the participant must enter 

into a contract agreeing to implement 

one or more conservation practices. 

Technical services may be included in 

the contract. 

(b) An EQIP contract will: 

(1) Identify all conservation practices 

to be implemented, the timing of 

practice installation, the operation and 

maintenance requirements for the 

practices, and applicable payments 

allocated to the practices under the 

contract; 

(2) Be for a minimum duration of one 

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 implement any practices 

within the agricultural or forestry 

operation that would defeat the 

program’s purposes; 

(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 § 1466.26; 

(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, including operation and 

maintenance of the EQIP contract’s 

conservation practices, consistent with 

the provisions of § 1466.25; 

(iv) Implement a comprehensive 

nutrient management plan when the 

EQIP contract includes an animal waste 

management facility; 

(v) Implement a forest management 

plan when the EQIP plan of operations 

addresses nonindustrial private forest 

land; 

(vi) Supply information as may be 

required by NRCS to determine 

compliance with the contract and 

program requirements; 

(vii) Specify the participant’s 

responsibilities for operation and 

maintenance of the applied 

conservation practices, consistent with 

the provisions of § 1466.22; and 

(4) Specify any other provision 

determined necessary or appropriate by 

NRCS. 

(c) The participant must start at least 

one financially assisted practice within 

the first 12 months of signing a contract. 

If a participant, for reasons beyond their 

control, is unable to start conservation 

practice within the first year of the 

contract, the participant can request a 

waiver from the State Conservationist. 

(d) Each contract will be limited to no 

more than $300,000. The Chief may 

waive this contract limitation to allow 

up to $450,000 for projects of special 

environmental significance that include 

methane digesters, other innovative 

technologies, and projects that will 

result in significant environmental 

improvements. Projects of special 

environmental significance must meet 

the following criteria, as determined by 

the Chief: 

(1) Site-specific evaluation documents 

have been completed, documenting that 

the project will have substantial positive 

impacts on critical resources in or near 

the project area (e.g., impaired water 

bodies, at-risk species, drinking water 

supplies, or air quality attainment); 

(2) The project clearly addresses a 

national priority and State, Tribal, or 

local priority resource concerns, as 

applicable; and 

(3) The project assists the participant 

in complying with Federal, State, and 

local regulatory requirements. 

§ 1466.22 Conservation practice operation 

and maintenance. 

(a) The contract will incorporate the 

O&M agreement that addresses the 

operation and maintenance of 

conservation practices applied under 

the contract. 

(b) NRCS expects the participant to 

operate and maintain each conservation 

practice installed under the contract for 

its intended purpose for the 

conservation practice lifespan as 

specified in the O&M agreement. 

(c) Conservation practices installed 

before the contract execution, but 

included in the contract to obtain the 

environmental benefits agreed upon, 

must be operated and maintained as 

specified in the contract and O&M 

agreement. 

(d) NRCS may periodically inspect the 

conservation practice during the 

contract duration as specified in the 

O&M agreement to ensure that operation 

and maintenance requirements are being 

carried out, and that the conservation 

practice is fulfilling its intended 

objectives. 

(e) If NRCS finds during the contract 

that a participant is not operating and 

maintaining practices in an appropriate 

manner, NRCS may terminate and 

request a refund of payments made for 

that conservation practice under the 

contract. 

§ 1466.23 Payment rates. 

(a) The State Conservationist or 

designated conservationist will develop 

a list of conservation practices, eligible 

for payment under the program, which 

considers: 

(1) The conservation practice costeffectiveness, implementation 

efficiency, and innovation, 

(2) The degree and effectiveness in 

treating priority resource concerns, 

(3) The number of resource concerns 

the practice will address, 

(4) The longevity of the practice’s 

environmental benefits, 

(5) The conservation practice’s ability 

to assist producers in meeting regulatory 

requirements, and 

(6) Other pertinent local 

considerations. 

(b) Payment rates will be established 

by the State Conservationist or 

designated conservationist, with advice 

from the State Technical Committee and 

local working groups. 

(c) Determining payment rates. (1) A 

payment to a producer for performing a 

practice may not exceed, as determined 

by the State or designated 

conservationist: 

(i) 75 percent of the estimated costs 

incurred by implementing the 

conservation practice; 

(ii) 100 percent of the estimated 

income foregone; or 

(iii) Both conditions in paragraphs 

(c)(1)(i) and (ii) of this section, where a 

producer incurs costs in implementing 

a conservation practice and foregoes 

income related to that practice 

implementation. 

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Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Rules and Regulations 2315 

(iv) When determining payments for 

income foregone, the State 

Conservationist may give higher priority 

to the following conservation practices: 

(A) Residue management; 

(B) Nutrient management; 

(C) Air quality management; 

(D) Invasive species management; 

(E) Pollinator habitat development or 

improvement; 

(F) Animal carcass management 

technology; or 

(G) Pest management. 

(2) Notwithstanding paragraph 

(c)(1)(ii) of this section, a farmer or 

rancher meeting the historically 

underserved producer designation in 

§ 1466.3 may be awarded the applicable 

payment rate and an additional rate that 

is not less than 25 percent above the 

applicable rate, provided this increase 

does not exceed 90 percent of the 

incurred costs estimated for the 

conservation practice. 

(3) The payments to a participant will 

be reduced proportionately below the 

rate established by the State 

Conservationist or designated 

conservationist, to the extent that total 

financial contributions for a 

conservation practice from other sources 

exceed 100 percent of the estimated 

costs incurred for implementing or 

performing the conservation practice. 

(4) The State Conservationist shall 

provide payments for conservation 

practices on some or all of the 

operations of a producer related to 

organic production and the transition to 

organic production. Payments may not 

be made to cover the costs associated 

with organic certification or for 

practices that are eligible for cost-share 

payments under the National Organic 

Program (7 U.S.C. 6523). 

(d) Practice payment rates greater than 

50 percent for estimated costs incurred, 

excluding those described in paragraph 

(c)(2) of this section, are to be approved 

by the Chief. 

(e) Subject to fund availability, the 

payment rates for conservation practices 

scheduled after the year of contract 

obligation may be adjusted to reflect 

increased costs. 

§ 1466.24 EQIP payments. 

(a) Except for contracts entered into 

prior to October 1, 2008, or as provided 

in paragraph (b) of this section, the total 

amount of payments paid to a person, 

joint operation, or legal entity under this 

part may not exceed an aggregate of 

$300,000, directly or indirectly, for all 

contracts, including prior year contracts, 

entered into during any 6-year period. 

For purpose of applying this 

requirement, the 6-year period will 

include those payments made in fiscal 

years 2009–2014. Payments received for 

technical assistance shall be excluded 

from this limitation. 

(b) The Chief may waive the $300,000 

payment limitation, allowing up to 

$450,000 per person, joint operation, or 

legal entity for projects of special 

environmental significance, as defined 

in § 1466.21(d). 

(c) Payments for conservation 

practices related to organic production 

to a person, joint operation, or legal 

entity, directly or indirectly, may not 

exceed in aggregate $20,000 per year or 

$80,000 during any 6-year period. 

Payments received for technical 

assistance shall be excluded from this 

limitation. 

(d) To determine eligibility for 

payments, NRCS will use the following 

criteria: 

(1) The provisions in part 1400 of this 

chapter, Payment Limitation and 

Payment Eligibility, subparts A and G. 

(2) States, political subdivisions, and 

entities thereof will not be considered to 

be persons or legal entities eligible for 

payment. 

(3) To be eligible to receive an EQIP 

payment, all legal entities or persons 

applying, either alone or as part of a 

joint operation, must provide a tax 

identification number and percentage 

interest in the legal entity. In 

accordance with 7 CFR 1400, an 

applicant applying as a joint operation 

or legal entity must provide a list of all 

members of the legal entity and joint 

operation and associated embedded 

entities, along with the members’ social 

security numbers and percentage 

interest in the joint operation or legal 

entity. Where applicable, American 

Indians, Alaska Natives, and Pacific 

Islanders may use another unique 

identification number for each 

individual eligible for payment. 

(4) With regard to contracts with 

Indian tribes or Indians represented by 

BIA, payments exceeding the payment 

limitation may be made to the Tribal 

participant if a BIA or Tribal official 

certifies in writing that no one 

individual, directly or indirectly, will 

receive more than the payment 

limitation. The Tribal entity must also 

provide, annually, a listing of 

individuals and payments made, by 

social security or tax identification 

number or other unique identification 

number, during the previous year for 

calculation of overall payment 

limitations. The BIA or Tribal entity 

must also produce, at the request of 

NRCS, proof of payments made to the 

person or legal entity that incurred costs 

or sacrificed income related to 

conservation practice implementation. 

(5) Any cooperative association of 

producers that markets commodities for 

producers will not be considered to be 

a person eligible for payment. 

(6) Eligibility for payments in 

accordance with part 1400, subpart G of 

this chapter, average adjusted gross 

income limitation, will be determined 

prior to contract approval. 

(7) To be eligible for payments for 

conservation practices related to organic 

production or the transition to organic 

production, a participant will develop 

and implement an organic system plan 

as defined in § 1466.3. 

(8) Eligibility for higher payments in 

accordance with paragraph (b) of this 

section will be determined at the time 

of contract approval. 

(9) Any participant that utilizes a 

unique identification number as an 

alternative to a tax identification 

number will utilize only that identifier 

for any and all other EQIP contracts to 

which the participant is a party. 

Violators will be considered to have 

provided fraudulent representation and 

be subject to full penalties of § 1466.35. 

(10) A participant will not be eligible 

for payments for conservation practices 

on eligible land if the participant 

receives payments or other benefits for 

the same practice on the same land 

under any other conservation program 

administered by USDA. 

(11) The State Conservationist may 

issue advance payments to historically 

underserved producers up to 30 percent 

of the anticipated amount of the costs 

incurred for the purpose of purchasing 

materials or services to implement a 

conservation practice. 

(12) Before NRCS will approve and 

issue final payment, the participant 

must certify that the conservation 

practice has been completed in 

accordance with the contract, and 

NRCS, or an approved TSP, must certify 

that the practice has been carried out in 

accordance with the applicable NRCS 

technical guidance. 

§ 1466.25 Contract modifications and 

transfers of land. 

(a) The participant and NRCS may 

modify a contract if both parties agree 

to the contract modification, the EQIP 

plan of operations is revised in 

accordance with NRCS requirements, 

and the contract is approved by the 

designated conservationist. 

(b) It is the participant’s responsibility 

to notify NRCS when he/she either 

anticipates the voluntary or involuntary 

loss of control of the land covered by an 

EQIP contract. 

(c) The participant and NRCS may 

agree to transfer a contract to another 

party. 

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2316 Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Rules and Regulations 

(1) To receive an EQIP payment, the 

transferee must be determined by NRCS 

to be eligible to participate in EQIP and 

must assume full responsibility under 

the contract, including the O&M 

agreement for those conservation 

practices already installed and those 

conservation practices to be installed as 

a condition of the contract. 

(2) If the transferee is ineligible or 

refuses to accept future payments, NRCS 

will terminate the contract and may 

require the transferor to refund and/or 

forfeit all payments received. 

(d) NRCS may require a participant to 

refund all or a portion of any financial 

assistance earned under EQIP if the 

participant sells or loses control of the 

land covered by an EQIP contract and 

the new owner or controller is not 

eligible to participate in the program or 

refuses to assume responsibility under 

the contract. 

(e) In the event a conservation 

practice fails through no fault of the 

participant, the State Conservationist 

may issue payments to re-establish the 

practice, at the rates established in 

accordance with § 1466.23, provided 

such payments do not exceed the 

payment limitation requirements as set 

forth § 1466.24. 

§ 1466.26 Contract violations and 

terminations. 

(a) The State Conservationist may 

terminate, or by mutual consent with 

the parties, terminate the contract 

where: 

(1) The parties to the contract are 

unable to comply with the terms of the 

contract as the result of conditions 

beyond their control; 

(2) Termination of the contract would, 

as determined by the State 

Conservationist, be in the public 

interest; or 

(3) A participant fails to correct a 

contract violation within the time 

period defined by NRCS. 

(b) If a contract is terminated in 

accordance with the provisions of 

paragraphs (a)(1) and (a)(2) of this 

section, the State Conservationist may 

allow the participant to retain a portion 

of any payments received appropriate to 

the effort the participant has made to 

comply with the contract, or, in cases of 

hardship, where forces beyond the 

participant’s control prevented 

compliance with the contract. If a 

participant claims hardship, such 

claims must be clearly documented and 

cannot have existed when the applicant 

applied for participation in the program. 

(c) If NRCS determines that a 

participant is in violation of the terms 

of a contract, O&M agreement, or 

documents incorporated by reference 

into the contract, NRCS shall give the 

participant a period of time, as 

determined by NRCS, to correct the 

violation and comply with the terms of 

the contract and attachments thereto. If 

a participant continues in violation, 

NRCS may terminate the EQIP contract 

in accordance with § 1466.26(e). 

(d) Notwithstanding the provisions of 

paragraph (c) of this section, a contract 

termination shall be effective 

immediately upon a determination by 

NRCS that the participant has submitted 

false information or filed a false claim, 

or engaged in any act, scheme, or device 

for which a finding of ineligibility for 

payments is permitted under the 

provisions of § 1466.35, or in a case in 

which the actions of the party involved 

are deemed to be sufficiently purposeful 

or negligent to warrant a termination 

without delay. 

(e) If NRCS terminates a contract due 

to breach of contract, the participant 

will forfeit all rights to future payments 

under the contract, pay liquidated 

damages, and refund all or part of the 

payments received, plus interest. 

Participants violating EQIP contracts 

may be determined ineligible for future 

NRCS-administered conservation 

program funding. 

(1) NRCS may require a participant to 

provide only a partial refund of the 

payments received if a previously 

installed conservation practice can 

function independently, is not adversely 

affected by the violation or the absence 

of other conservation practices that 

would have been installed under the 

contract. 

(2) The State Conservationist will 

have the option to reduce or waive the 

liquidated damages, depending upon 

the circumstances of the case. 

(i) When terminating a contract, NRCS 

may reduce the amount of money owed 

by the participant by a proportion that 

reflects the good faith effort of the 

participant to comply with the contract 

or the existence of hardships beyond the 

participant’s control that have 

prevented compliance with the contract. 

If a participant claims hardship, that 

claim must be well documented and 

cannot have existed when the applicant 

applied for participation in the program. 

(ii) In carrying out its role in this 

section, NRCS may consult with the 

local conservation district. 

(f) The State Conservationist, in 

consultation with the State Technical 

Committee, may terminate a contract 

whereby a producer is receiving 

payments for conservation practices 

related to organic production, if the 

designated conservationist determines 

that the producer is not pursuing 

organic certification, or has been 

decertified. 

■ 4. In subpart B, § 1466.27 is amended 

by revising paragraph (c)(4) to read as 

follows: 

§ 1466.27 Conservation Innovation Grants 

(CIG). 

* * * * * 

(c) * * * 

(4) There are some costs that grantees 

may not cover using CIG funds, such as 

costs incurred prior to the effective date 

of the grant, entertainment costs, any 

indirect cost exceeding fifteen percent, 

or renovation or refurbishment of 

facilities. A detailed list of costs not 

allowed will be published in the 

Request for Proposals. 

* * * * * 

■ 5. Subpart C, consisting of §§ 1466.30 

through 1466.36, is revised to read as 

follows: 

Subpart C—General Administration 

Sec. 

1466.30 Appeals. 

1466.31 Compliance with regulatory 

measures. 

1466.32 Access to operating unit. 

1466.33 Equitable relief. 

1466.34 Offsets and assignments. 

1466.35 Misrepresentation and scheme and 

device. 

1466.36 Environmental credits for 

conservation improvements. 

Subpart C—General Administration 

§ 1466.30 Appeals. 

A participant may obtain 

administrative review of an adverse 

decision under EQIP in accordance with 

parts 11 and 614 of this title. 

Determination in matters of general 

applicability, such as payment rates, 

payment limits, the designation of 

identified priority resource concerns, 

and eligible conservation practices are 

not subject to appeal. 

§ 1466.31 Compliance with regulatory 

measures. 

Participants who carry out 

conservation practices shall be 

responsible for obtaining the authorities, 

rights, easements, permits, or other 

approvals necessary for the 

implementation, operation, and 

maintenance of the conservation 

practices in keeping with applicable 

laws and regulations. Participants shall 

be responsible for compliance with all 

laws and for all effects or actions 

resulting from the participant’s 

performance under the contract. 

§ 1466.32 Access to operating unit. 

Any authorized NRCS representative 

shall have the right to enter an 

agricultural operation or tract for the 

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Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Rules and Regulations 2317 

purposes of determining eligibility and 

for ascertaining the accuracy of any 

representations related to contract 

performance. Access shall include the 

right to provide technical assistance, 

determine eligibility, inspect any work 

undertaken under the contract, and 

collect information necessary to 

evaluate the conservation practice 

performance, specified in the contract. 

The NRCS representative shall make an 

effort to contact the participant prior to 

the exercising this provision. 

§ 1466.33 Equitable relief. 

(a) If a participant relied upon the 

advice or action of any authorized NRCS 

representative and did not know, or 

have reason to know, that the action or 

advice was improper or erroneous, 

NRCS may accept the advice or action 

as meeting program requirements and 

may grant relief, to the extent it is 

deemed desirable by NRCS, to provide 

a fair and equitable treatment because of 

the good-faith reliance on the part of the 

participant. The financial or technical 

liability for any action by a participant 

that was taken based on the advice of a 

NRCS certified non-USDA TSP is the 

responsibility of the certified TSP and 

will not be assumed by NRCS when 

NRCS authorizes payment. Where a 

participant believes that detrimental 

reliance on the advice or action of a 

NRCS representative resulted in an 

ineligibility or program violation, but 

the participant believes that a good faith 

effort to comply was made, the 

participant may request equitable relief 

under § 635.3 in chapter VI of this title. 

(b) If, during the term of an EQIP 

contract, a participant has been found in 

violation of a provision of the EQIP 

contract, the O&M agreement, or any 

document incorporated by reference 

through failure to fully comply with that 

provision, the participant may be 

eligible for equitable relief under § 635.4 

in chapter VI of this title. 

§ 1466.34 Offsets and assignments. 

(a) Except as provided in paragraph 

(b) of this section, any payment or 

portion thereof to any person, joint 

venture, legal entity or tribe shall be 

made without regard to questions of title 

under State law and without regard to 

any claim or lien against the crop, or 

proceeds thereof, in favor of the owner 

or any other creditor except agencies of 

the U.S. Government. The regulations 

governing offsets and withholdings 

found at part 1403 of this chapter shall 

be applicable to contract payments. 

(b) EQIP participants may assign any 

payments in accordance with part 1404 

of this chapter. 

§ 1466.35 Misrepresentation and scheme 

or device. 

(a) A person, joint venture, legal 

entity or tribe that is determined to have 

erroneously represented any fact 

affecting a program determination made 

in accordance with this Part shall not be 

entitled to contract payments and must 

refund to NRCS all payments, plus 

interest determined in accordance with 

part 1403 of this chapter. 

(b) A producer who is determined to 

have knowingly: 

(1) Adopted any scheme or device 

that tends to defeat the purpose of the 

program; 

(2) Made any fraudulent 

representation; 

(3) Adopted any scheme or device for 

the purpose of depriving any tenant or 

sharecropper of the payments to which 

such person would otherwise be 

entitled under the program; or 

(4) Misrepresented any fact affecting a 

program determination, shall refund to 

NRCS all payments, plus interest 

determined in accordance with 7 CFR 

1403, received by such producer with 

respect to all contracts. The producer’s 

interest in all contracts shall be 

terminated. 

(c) In accordance with § 1466.26(e), 

NRCS may determine the producer 

ineligible for future conservation 

programs funding. 

§ 1466.36 Environmental credits for 

conservation improvements. 

NRCS recognizes that environmental 

benefits will be achieved by 

implementing conservation practices 

funded through EQIP, and 

environmental credits may be gained as 

a result of implementing activities 

compatible with the purposes of an 

EQIP contract. NRCS asserts no direct or 

indirect interest on these credits. 

However, NRCS retains the authority to 

ensure that operation and maintenance 

(O&M) requirements for EQIP-funded 

improvements are met, consistent with 

§§ 1466.21 and 1466.22. Where 

activities may impact the land under an 

EQIP contract, participants are highly 

encouraged to request an O&M 

compatibility determination from NRCS 

prior to entering into any credit 

agreements. 

Signed in Washington, DC, on January 8, 

2009. 

Arlen L. Lancaster, 

Vice President, Commodity Credit 

Corporation and Chief, Natural Resources 

Conservation Service. 

[FR Doc. E9–530 Filed 1–14–09; 8:45 am] 

BILLING CODE 3410–16–P 

DEPARTMENT OF AGRICULTURE 

Commodity Credit Corporation 

7 CFR Part 1467 

RIN 0578–AA47 

Wetlands Reserve Program 

AGENCY: Natural Resources 

Conservation Service and Commodity 

Credit Corporation, United States 

Department of Agriculture. 

ACTION: Interim final rule with request 

for comment. 

SUMMARY: The Wetlands Reserve 

Program (WRP) assists owners of 

eligible land in restoring and protecting 

wetlands. This interim final rule sets 

forth how the Natural Resources 

Conservation Service (NRCS), an agency 

of the U.S. Department of Agriculture 

(USDA), using the funds, facilities, and 

authorities of the Commodity Credit 

Corporation (CCC), will implement WRP 

in response to changes made to the 

program by the Food, Conservation, and 

Energy Act of 2008. In addition, this 

interim final rule incorporates other 

changes to the regulation for 

clarification or program administration 

improvement. 

DATES: Effective Date: The rule is 

effective January 15, 2009. 

Comment Date: Submit comments on 

or before March 16, 2009. 

ADDRESSES: You may send comments 

(identified by Docket Number NRCS– 

IFR–08013) using any of the following 

methods: 

• Government-wide rulemaking Web 

site: Go to http://www.regulations.gov 

and follow the instructions for sending 

comments electronically. 

• Mail: Easements Programs Division, 

Natural Resources Conservation Service, 

Wetlands Reserve Program Comments, 

P.O. 2890, Room 6819–S, Washington, 

DC 20013. 

• Fax: 1–202–720–9689. 

• Hand Delivery: Room 6819–S of the 

USDA South Office Building, 1400 

Independence Avenue, SW., 

Washington, DC 20250, between 9 a.m. 

and 4 p.m., Monday through Friday, 

except Federal Holidays. Please ask the 

guard at the entrance to the South Office 

Building to call 202–720–4527 in order 

to be escorted into the building. 

• This interim final rule may be 

accessed via Internet. Users can access 

the NRCS homepage at http:// 

www.nrcs.usda.gov/; select the Farm 

Bill link from the menu; select the 

Interim final link from beneath the Final 

and Interim Final Rules Index title. 

Persons with disabilities who require 

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