Source: https://www.federalregister.gov/documents/2019/12/17/2019-26872/environmental-quality-incentives-program
Timestamp: 2020-02-25 00:41:13
Document Index: 697556000

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A Rule by the Commodity Credit Corporation on 12/17/2019
Effective: December 17, 2019.
69272-69293 (22 pages)
Docket ID NRCS-2019-0009
0578-AA68
NRCS-2019-0009
Environmental Quality Incentives Program (EQIP) Changes
USDA Farm Bill Listening Session
Summary of Key Changes to EQIP Regulations
Changes to Sections in Subpart A—General Provisions
§ 1466.1 Applicability
§ 1466.2 Administration
§ 1466.3 Definitions
§ 1466.4 National Priorities
§ 1466.5 Outreach Activities
§ 1466.6 Program Requirements
§ 1466.7 EQIP Plan of Operations
§ 1466.8 Conservation Practices
§ 1466.9 Technical Services Provided by Qualified Personnel Not Affiliated With USDA
Changes to Sections in Subpart B—Contracts
§ 1466.20 Application for Contracts and Selecting Applications
§ 1466.21 Contract Requirements
§ 1466.22 Conservation Practice Operation and Maintenance (O&M)
§ 1466.23 Payment Rates
§ 1466.24 EQIP Payments
§ 1466.25 Contract Modifications and Transfers of Contract Rights
§ 1466.26 Contract Violations and Terminations
Changes to Sections in Subpart C—Conservation Innovation
§ 1466.30 Definitions
§ 1466.31 Purpose and Scope
§ 1466.32 Conservation Innovation Grant Funding
§ 1466.33 Conservation Innovation Grant Administration
§ 1466.34 Award Determinations
§ 1466.35 State-Level Conservation Innovation Grant Component
§ 1466.36 Intellectual Property
§ 1466.37 On-farm Conservation Innovation Trials (OFCIT)
§ 1466.38 Soil Health Demonstration (SHD) Trial
Sections in new Subpart D—Incentive Contracts
§ 1466.40 High Priority Areas
§ 1466.41 Incentive Contract Selection
§ 1466.42 Incentive Contract Requirements
§ 1466.43 Incentive Contract Period
§ 1466.44 Incentive Payment Rates and Restrictions
New Subpart E—General Administration
https://www.federalregister.gov/d/2019-26872 https://www.federalregister.gov/d/2019-26872
Start Preamble Start Printed Page 69272
The Agriculture Improvement Act of 2018 (the 2018 Farm Bill) made changes to the Environmental Quality Incentives Program (EQIP). This interim rule makes conforming changes to EQIP policies and procedures in the regulations. NRCS has responsibility for administering EQIP using funding, facilities, and authorities of the CCC. EQIP helps agricultural producers conserve and enhance soil, water, air, plants, animals (including wildlife), energy, 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 or livestock are produced and natural resource concerns may be addressed. Participation in the program is voluntary.
Comment date: Submit comments on or before February 17, 2020.
Comment date for Environmental Review: Submit comments on the draft Environmental Analysis (EA) and Finding of No Significant Impact (FONSI) on or before 16, 2020.
We invite you to submit comments on this document. In your comments, include the date, volume, and page number of this issue of the Federal Register, and the title of this document. You may submit comments by the following method:
Federal eRulemaking Portal: Go to http://www.regulations.gov and search for Docket ID NRCS-2019-0009. Follow the online instructions for submitting comments.
A copy of the draft Environmental Assessment (EA) and Finding of No Significant Impact (FONSI) may be obtained from either of the following websites: www.regulations.gov or https://www.nrcs.usda.gov/​wps/​portal/​nrcs/​detail/​national/​programs/​farmbill/​?cid=​nrcseprd1504015. A hard copy may also be requested in one of the following ways:
Donna Hopwood; phone: (202) 720-0675; or email: donna.hopwood@usda.gov. Persons with disabilities who require alternative means for communication should contact the USDA Target Center at (202) 720-2600 (voice).
The Agriculture Improvement Act of 2018 (2018 Farm Bill) has reauthorized and amended EQIP. EQIP is implemented under the general supervision and direction of the Chief of the Natural Resources Conservation Service (NRCS).
The information below demonstrates how NRCS provides technical and financial assistance to producers through EQIP to—
Change tillage practices to enhance soil resources by sustaining tilth, moisture control, nutrients, and overall soil health;
Replace or improve the management of irrigation systems to conserve scarce water resources. EQIP is also used to manage nutrient applications to protect water quality;
Manage grazing to sustain plant biodiversity and protect rare species and to assure adequate forage is available, thus helping to maintain watershed heath and enhance water quality;
Apply energy efficient practices that reduce energy consumption (e.g., reduced tillage conserves fuel, energy efficient lighting);
Implement conservation practices that sequester carbon or capture methane emissions and greenhouse gases which contribute to climate change;
Implement conservation practices specific to producers' resource needs, from over 160 available conservation practices, to sustain and improve the health of natural resources on the land and provide public benefits;
Implement conservation practices in a manner that promotes agricultural production, forest management, and environmental quality as compatible goals;
Optimize conservation benefits; and
Help agricultural producers meet Federal, State, and local environmental requirements.
Conservation benefits are reflected in the differences between effects of treatment in comparison to existing or benchmark conditions. Differences may be expressed by reduced nutrients, improved water quality, and reduced soil erosion based upon scientific, quantitative, visual, or other means. NRCS assesses resource conditions through scientifically developed assessment tools and guides that may use client input, planner observation, procedural and deductive methods, and predictive methods. These assessment tools and guides include, but are not limited to, soil erosion prediction tools, wildlife habitat assessment tools, rangeland health assessments, and soil health assessments.
Estimated or projected impacts are used as a basis for applicants to make informed conservation decisions and to help NRCS determine which projects to approve for EQIP assistance.
EQIP was first authorized in 1996, with an initial allocation of $130 million. Since then, through fiscal year (FY) 2018, NRCS has entered into hundreds of thousands of contracts and provided over $15 billion in financial assistance to help agricultural producers apply conservation practices. The agency has evaluated 22 years of program implementation and has assessed opportunities to improve program administration. The changes in this rule are the results of this evaluation and the statutory changes authorized by the 2018 Farm Bill.
NRCS uses a competitive process to achieve the greatest conservation benefits in coordination with EQIP statutory priorities. NRCS establishes National, State, and local priorities and uses scientifically-based ranking tools to assess and rank applications, against these priorities to determine which applications are to be funded. NRCS in the National Office establishes national priorities, and States must incorporate these national priorities along with State and local priorities into the ranking tool used at the State level. These priorities are established with recommendations by State technical committees, priorities identified in State, regional, or national plans and initiatives, and from reports of at-risk wildlife species and designations of threatened or endangered species. NRCS also utilizes funding pools to target EQIP funding to priority resource concerns, such as for the development of wildlife habitat or Start Printed Page 69273for water quality issues associated with animal feeding operations.
Each application submitted for consideration in a given funding pool is ranked using scientifically-based assessment evaluation criteria and tools which provide a relative score that reflects the expected conservation benefit of the proposed project. State Conservationists have the authority to prioritize applications for ranking, which results in only the highest priority applications being ranked and considered for funding. Applications are accepted from producers on a continuous basis; however, NRCS announces funding cutoff deadlines where all ranked applications within a funding pool are considered for funding based upon the ranking scores and availability of funds. Nearly all funding pools are established each fiscal year to ensure environmentally and economically effective distribution of funding through a process of fair and open competition that addresses priority resource concerns.
Each fiscal year, State Conservationists:
Publish program priorities;
Allocate available funds to State funding pools;
Publish associated ranking criteria to State program websites available at: http://www.nrcs.usda.gov/​wps/​portal/​nrcs/​sitenav/​national/​states/​;​ and
Allocate funds to each application pool and adjust funding between pools to address shortages or to redistribute surplus funds, if needed. Statutory allocation levels, such as the requirement to provide at least 50 percent of the funding for livestock and 10 percent of the funding for wildlife, are met as national goals through funding pool opportunities established by State Conservationists.
The statutory changes made by the 2018 Farm Bill include, but are not limited to—
Expanding the EQIP purpose to include new or expected resource concerns, adapting to, and mitigating against, increasing weather volatility, and addressing drought resiliency measures;
Changing advance payments from “not more than” to “at least 50 percent” of all costs related to purchasing materials or contracting with a requirement for producers to be notified at the time of enrollment of the advance payment option with respect to each practice that has such costs, and that the producer's decision be documented;
Adding a new provision for increased payments for high-priority practices, which provides the State Conservationist the option to designate up to 10 practices to be eligible for increased payments, not to exceed 90 percent of the costs associated with planning, design, materials, equipment, installation, labor, management, maintenance, or training;
Decreasing the livestock funding minimum from 60 percent to 50 percent for FY 2019 through 2023;
Increasing the wildlife funding minimum from 5 percent to 10 percent for FY 2019 through 2023;
Providing a maximum term of 10 years for contracts entered into solely for the establishment of wildlife management practices;
Authorizing certain entities (including a State, irrigation district, groundwater management district, acequia, land-grant mercedes, or similar entity) which are not producers to be eligible to enter into an EQIP contract for implementation of water conservation or irrigation efficiency practices, and, authorizing the Secretary of Agriculture to waive the adjusted gross income (AGI) and EQIP payment limitations for those contracts. If a waiver is authorized, the Secretary may establish a separate payment limitation for the contract to which the waiver applies;
Introducing new EQIP Incentive Contracts, which can address up to three priority resource concerns for each of the relevant land uses within State-identified watersheds or other areas of high priority;
Encouraging streamlined and coordinated procedures between EQIP and Conservation Stewardship Program (CSP), including applications, contracting, conservation planning, conservation practices, and related administrative procedures;
○ $1,750 million for FY 2019
○ $1,750 million for FY 2020
○ $1,800 million for FY 2021
○ $1,850 million for FY 2022
○ $2,025 million for FY 2023
The Farm Production and Conservation (FPAC) Mission Area hosted a listening session on February 26, 2019, to obtain initial input on 2018 Farm Bill implementation. USDA sought public input regarding changes to programs implemented by the Farm Service Agency, the Risk Management Agency (RMA), and NRCS. NRCS considered stakeholder input when making discretionary decisions regarding program implementation. In addition to encouraging oral testimony, FPAC also encouraged submission of written comments and the comments received have been made available on http://www.regulations.gov.
NRCS received 35 comments regarding the need to evaluate the impact of water conservation and irrigation efficiency projects on grasslands, fish and wildlife habitat, wetlands, and ground water recharge. Some comments recommended the prioritization of projects that improve agricultural water delivery, limit the expansion of irrigated land, and ensure more water conservation. Others pushed for watershed-wide projects, oversight mechanisms to track fund spending and outcomes, and implementation of an effective project rating system. A few requested additional funding for Western producers who are facing water challenges.
NRCS received 26 comments that underscored the importance of State wildlife funding pools to ensure that EQIP funds are used for species and habitats identified as priorities in State, regional, and national wildlife plans. Some recommended the immediate implementation of the 10-percent-funding increase and using the funds to consider wildlife coexistence practices. Others advocated longer-term contracts, additional wildlife-specific technical assistance, landscape-scale project areas, and fund oversight tools, such as public annual reports.
NRCS received 11 comments on wildlife habitat contracts. The comments pushed for prioritizing longer-term wildlife contracts and ensuring that these contracts only fund practices designed to deliver wildlife habitat benefits. Others recommended working with third parties, such as nongovernmental organizations, to coordinate projects and promote short-term contracts to enhance program outcomes.
NRCS received 16 comments related to administration and program delivery. Many recommended streamlining the program application process, providing additional guidance and information on high priority resource concerns, rankings, and practices, and ensuring fair access for most producers to EQIP funds (i.e., property of producers with heirs, Indian Tribes). Other comments urged stricter enforcement of EQIP statutory requirements, use of EQIP funds for oyster restoration, and prioritization of contracts that implement nutrient management and improve habitat and water resources.
Additionally, support for wildlife habitat projects received the majority of the comments related to the new conservation incentive contracts. NRCS received 11 comments supporting the identification of wildlife habitat as a Start Printed Page 69274priority resource concern and prioritizing practices related to grazing management and those that can deliver considerable environmental benefits. Others recommended mechanisms to coordinate resource concerns and to determine incentive practice eligibility and proper payment options.
NRCS received 11 comments that advocated for outreach and education for organic producers regarding the new EQIP payments for organic initiatives. Some recommended the development of a funding allocation similar to CSP and the consideration of existing organic management plans. Other comments emphasized additional payments during the transition period (from traditional to organic), helpful tools and resources showing how EQIP practices support organic agriculture, and strong support for smaller organic projects.
NRCS received nine comments mostly supporting the Soil Health Demonstration Trial for EQIP projects. Others called for better soil health planning standards, utilization of existing resources (i.e., Soil Health Partnership and the Operational Tillage Information System), and evaluation tools to determine project rating, economic outcomes, and public benefits.
NRCS received seven comments focusing on increased payments for high-priority practices. Most comments underlined the inclusion of practices that address the goals of State wildlife action plans and other State and local plans involving watershed rehabilitation and drought management. Others recommended careful implementation of the increased payment provision to ensure adequate funding for other EQIP contracts.
NRCS received three comments that recommend ending funding support for the expansion of large livestock operations, and instead, focusing on grazing systems and practices that can benefit wildlife and water quality.
NRCS received three comments pushing for broader producer outreach and immediate implementation of the EQIP advanced payment option. These comments emphasized that outreach needs to include beginning, veteran, and socially disadvantaged producers.
Finally, NRCS received a comment that recommended using the new EQIP provision on precision conservation and agriculture for practice installment and annual payments.
NRCS evaluated the changes made by the 2018 Farm Bill and the comments received during the listening session and is hereby promulgating this interim rule to incorporate the 2018 Farm Bill changes to EQIP program administration. The interim rule adjusts the program regulations to correspond to new statutory language. It also includes changes to streamline program implementation and make the participant's contract responsibilities clearer and more transparent. NRCS is also removing definitions for terms that are not used in the regulation and making other editorial adjustments to improve readability.
The regulation has long been organized into three subparts: (1) Subpart A—General Provisions, (2) Subpart B—Contracts, and (3) Subpart C—General Administration. To improve the readability and clarity of the regulations, NRCS has moved the provisions in § 1466.27, the section addressing administration of the Conservation Innovation Grants (CIG), to subpart C, and moved the sections related to General Administration to a new subpart E, with redesignation of sections appropriate to such a change. To incorporate regulations necessary to implement the new Incentive Contracts under EQIP, NRCS has added a new subpart D. Below is a summary of the changes made to each subpart based on the changes made to EQIP by the 2018 Farm Bill.
Section 1466.1 sets forth the purpose, scope, and objectives of EQIP. Pursuant to changes made by § 2302 of the 2018 Farm Bill, the interim rule updates § 1466.1 to reiterate the updated statutory language. The interim rule also changes the effective date of this section to acknowledge that each EQIP contract is subject to the regulations that are in effect at the time the EQIP contract is enrolled. EQIP's fundamental purpose—assisting agricultural producers with implementing conservation practices to provide environmental benefits and to comply with or avoid environmental regulation—has been broadened to add specifically addressing new or expected resource concerns, adapting to and mitigating against increasing weather volatility, and drought resiliency measures.
Section 1466.2 describes the roles of NRCS, State technical committees, and local working groups. The 2018 Farm Bill amends how EQIP interacts with the Regional Conservation Partnership Program (RCPP) authorized by Subtitle I of Title XII of the Food Security Act of 1985 (known as the 1985 Farm Bill). The 2014 Farm Bill identified EQIP as a covered program under RCPP and authorized the Chief to waive nonstatutory, discretionary provisions and operational procedures under EQIP contracts where EQIP was being implemented through RCPP. However, since the 2018 Farm Bill no longer requires that RCPP be implemented through EQIP or the other covered programs, NRCS removed the regulatory language to this section that addressed EQIP implementation under RCPP. NRCS retains the authority for the Chief to waive nonstatutory, discretionary provisions where the application of that provision to a particular limited situation to be inappropriate and inconsistent with the purposes of the program.
Section 1466.3 sets forth definitions for terms used throughout this regulation. NRCS is amending several definitions to conform to the 2018 Farm Bill amendments and to address other administrative matters. Specifically, this interim rule amends § 1466.3 by adding or modifying the following definitions:
Animal feeding operation (AFO);
Eligible land;
Estimated income foregone;
Incentive practice;
Priority resource concern;
Semi-public;
Soil testing; and
Water management entity.
Given the overlap between the definition for the term “eligible lands” and “agricultural lands,” NRCS has removed the definition for “agricultural lands” to reduce confusion.
Section 1466.4 establishes a list of priorities, consistent with the statute, that describes the types of resource concerns that NRCS has determined to be the greatest opportunity for natural resource conservation. In addition, it allows for change and adaptation to this listing as new information comes to light. The 2018 Farm Bill added “increased weather volatility” as a specific resource concern, and this rulemaking incorporates that change. NRCS made other minor editorial changes to improve style and clarity.
Section 1466.5 generally establishes the basis for NRCS to market EQIP's resource conservation benefits and its Start Printed Page 69275subcomponents to producers so that they are aware of the program's potential to assist them with resource concerns on their operations. This section contains special outreach authorization for historically underserved producers. In addition to several minor stylistic edits to improve clarity, this rulemaking has added a paragraph specifically including messaging related to advance payments and subsequent election as examples of special outreach.
To help producers understand conservation opportunities, the 2018 Farm Bill requires that NRCS establish and maintain a publicly available conservation practice database that provides a compilation and analysis of effective conservation practices and a list of recommended new and effective conservation practices. The 2018 Farm Bill also requires the Secretary to identify available data sets within the Department of Agriculture regarding the use of conservation practices and the effect of such practices on farm and ranch profitability (including such effects relating to crop yields, soil health, and other risk-related factors). NRCS considers estimated economic impact in its conservation planning process, including in the development of conservation practice standards. Since producers must consider the potential estimated economic impact to their particular operation when choosing whether to voluntarily adopt conservation practices through EQIP, NRCS is taking this opportunity to request public comment on how NRCS can best assist producers to understand the potential estimated economic impact of conservation practice adoption to inform their program decisions.
Section 1466.6 lays out the general scope of what EQIP is and does. It sets forth criteria for applicant eligibility, including that the applicant must have control of the land on which EQIP practices are to be implemented. The 2018 Farm Bill also expanded eligibility regarding with whom NRCS can enter into an EQIP contract. In particular, NRCS may enter into EQIP contracts with a State, irrigation district, groundwater management district, acequia, land grant-merced, or similar entity under a streamlined contracting process to implement water conservation or irrigation practices under a watershed-wide project that will effectively conserve water, provide fish and wildlife habitat, or provide for drought-related environmental mitigation, as determined by the Secretary. NRCS has defined these entities as “water management entities.”
NRCS added provisions related to entering contracts with water management entities to implement water conservation or irrigation practices in certain circumstances.
NRCS introduced criteria for approving waivers and applying a different payment limitation to ensure the focus of EQIP assistance remains on practices that directly benefit producers with resource concerns on their operations. Additionally, the criteria help specify how this provision will be implemented, especially since water management entities can apply to RCPP as an eligible partner for irrigation-related infrastructure projects and that these types of projects are also eligible for assistance under the Watershed Protection and Flood Prevention Act.
Therefore, NRCS incorporated into this interim rule criteria for approving payment and AGI waivers, including the number of producers benefitted, whether the project is in conjunction with EQIP assistance being provided to identified producers who require the project in order for the overall project to be successful, and the establishment of a new payment limitation that ensures that such contracts address more site-specific concerns rather than systemic upgrade requirements. More particularly, NRCS has decided to limit these projects by authorizing a new payment limitation for contracts entered into by these specific entities at $900,000 between FY 2019 through FY 2023 if the projects qualify for a payment and AGI waiver. This new payment limitation for these entity-irrigation contracts is twice the payment limitation established for payments under contracts to individual producers.
Since the interim rule authorizes a waiver of the aggregate payment limitation for contracts with water management entities under this section, NRCS specifically requests comments on how this waiver should operate and whether the $900,000 payment limitation has been established at an appropriate level. NRCS believes that this new authority to enter into an EQIP contract directly with water management entities should not conflict or compete with other NRCS assistance opportunities. Additionally, related to identifying the situations where NRCS should provide assistance to these projects, NRCS specifically requests public comment about whether additional parameters are needed for identifying “adjacent lands” eligible for such projects.
Other changes were made to improve style and clarity.
This section describes the requirements of the EQIP plan of operations, which is a component of the EQIP contract. Section 1240E(a)(3) as amended by the 2018 Farm Bill inserted the term “progressive” to describe the implementation of a comprehensive nutrient management plan (CNMP). Therefore, NRCS amends the regulatory provisions to remove the requirement that a participant must have implemented a developed CNMP by the end of the contract but requires that any conservation practices in the EQIP plan of operation must be implemented consistent with a CNMP. Language regarding irrigation-related practices and water conservation was also slightly modified for clarity.
This section describes how NRCS determines eligible conservation practices. NRCS made several minor edits for clarity.
This section describes the use of technical services providers (TSPs). NRCS incorporates use of the TSP acronym to this section.
This section addresses how producer applications are submitted and selected for funding. NRCS makes several minor edits for clarity.
This section identifies elements contained within an EQIP contract and the responsibilities of the participant who is party to the EQIP contract. Also, it addresses EQIP contract funding limitations. To receive payment, an applicant must enter into an EQIP contract. The EQIP contract identifies all financially supported conservation practices to be implemented, their timing and sequence, and the operation and maintenance needed to maintain the conservation practice for its intended lifespan. NRCS amends CNMP language to include “progressive” implementation by removing the requirement that the CNMP must be implemented by the end of the contract and clarifies the timeline parameters for EQIP contract implementation and the consequences for not complying with those parameters. NRCS also incorporates language to waive the Start Printed Page 69276$450,000 contract limitation and establish a $900,000 contract limitation for certain projects with joint operations, group projects, or contracts where NRCS has waived the payment limitation for a water management entity. NRCS also included language to specify that NRCS may decline an application for water conservation and irrigation efficiency projects with water management entities if that project would be better suited with another NRCS program.
This section addresses the participant's responsibility for conservation practice O&M. NRCS makes only slight grammatical corrections.
This section addresses payment rates and payment eligibility. Section 1240B as amended by the 2018 Farm Bill authorized increased payment rates for certain high-priority practices. The 2018 Farm Bill also authorized increased payment rates for practices that address source water protection. NRCS incorporates these changes by adding a new paragraph authorizing such increased payments.
The 2018 Farm Bill revised section 1240B(d)(7) of the 1985 Farm Bill to authorize States to designate high priority practices that will be eligible for higher payment rates, subject to approval from the Secretary. NRCS at the State level will provide notice of the high priority practices for which a higher payment rate is available based on the criteria identified in section 1240B(d)(7).
This section provides direction on payment eligibility and payment limitations. Due to the change to § 1466.1 noted above, the language regarding date of contract was removed. As stated, any changes made to this section only affect future contracts. Removal of that language reduces wordiness and improves clarity. NRCS updated the payment limitations for organic production from annual limits to an aggregate limit from FY 2019 through FY 2023. NRCS modified the regulatory levels allowed for advance payments to account for changes made in Section 1240B(d)(4)(B) of the 1985 Farm Bill. NRCS made other organizational and editorial adjustments that did not affect the substance of the provisions.
This section sets forth the procedures for when and how an EQIP contract can be modified and sets out the process and consequences of a transfer of land during the term of an EQIP contract. NRCS made several stylistic and organizational changes to improve clarity. NRCS added a paragraph to clarify how NRCS will treat the implementation of conservation practices during any period in which a parcel has been transferred, but contract transfer has not yet been approved. These changes align EQIP transfer provisions more closely with similar CSP provisions.
This section sets forth the policies and procedures for contract termination when the participant violates the terms of an EQIP contract. NRCS clarified that certain violations may place a participant into suspension or debarment. NRCS will follow suspension and debarment requirements at 7 CFR part 1407, including providing any such participant due process prior to suspending or debarring the participant from future eligibility.
Subpart C is revised by moving its provisions to a new subpart E and incorporating provisions addressing the Conservation Innovation Grants (CIG) administration at § 1466.27 as new sections under subpart C.
In addition to organizing the CIG provisions into several sections, this subpart addresses administration of the On-farm Conservation Innovation Trials (OFCIT), which includes the Soil Health Demonstration (SHD) Trial.
The CIG section (formerly 1466.27) has been reorganized into the following six sections, as set forth below.
This section, the former § 1466.27(a), sets forth the definitions of terms to be used consistently throughout this subpart. The term “EQIP eligible” was removed from the definitions section as the term was not used anywhere else in the regulation.
This section, the former § 1466.27(b), sets out the broad policy objectives and criteria for implementing CIG and its related components. NRCS has modified references to the use of online methods to award grants to clarify that there may be multiple competitions each fiscal year. NRCS made various changes to improve the section's structure and style without affecting its substance.
This section, the former § 1466.27(c), sets out how CIG is funded and what payment limitations may apply. The set-aside of up to 10 percent of total CIG funds for historically underserved or veteran farmers or ranchers or community-based organizations has been moved here. NRCS incorporated other edits to improve clarity.
This section, the former § 1466.27(d) through (f), provides the framework for how NRCS administers CIG, including policies and procedures related to awarding CIG grants. Paragraph (a) of this section now identifies that applications should address national or State program priorities as published by NRCS. Paragraph (b) of this section clarifies that any individual or non-federal entity may be eligible for a CIG payment, provided that the payment either directly or indirectly benefits a producer who is eligible for EQIP participation. NRCS adds a paragraph (c) to identify that NRCS will publish annually detailed guidance on how to apply for the grants competitions to address announced national or State program priorities.
This section, the former § 1466.27(g), explains the criteria that NRCS will consider when determining award grantees and award amounts. NRCS made minor changes to the style and structure of the language to set out each step in the awards determination process.
This section, the former § 1466.27(h), details the use of State-level use and distribution of CIG resources. Paragraph (d) clarifies that each State may elect to focus on priority resource concerns for that State.
This section, formerly § 1466.27(i), establishes guidelines for intellectual property rights for any newly patented technology developed under this subpart. NRCS has made minor edits to improve readability.Start Printed Page 69277
This section implements and develops OFCIT to test new and innovative approaches to conservation.
This section of focus for OFCIT addresses the ability of soil health strategies to capture and retain carbon.
This section sets out the process and requirements for high priority areas within each State that form the backdrop for the new incentive contracts.
This section specifies how the incentive contract process will deviate from the standard EQIP contract selection process. In particular, NRCS will identify which practices qualify as incentive practices for each land use within each high priority area based on the priority resource concern(s) identified for that land use. Thus, there is no standard list of practices that will universally apply. It will depend on future determinations by State Conservationist with input from the State Technical Committees as to what the high priority areas are and what the (up to) three priority resource concerns are for each land use within each high priority area. NRCS does maintain a database of practices that apply to resource concerns within each land use, but which of those practices will be high priority will vary based on determinations within each State.
This section lists all the terms and conditions that are required components of an incentive contract. Many of these terms and conditions are similar to those terms and conditions included in a standard EQIP contract; the most notable distinctions are differences to the contract period and payment rates, which are covered in separate sections below.
This section highlights the criteria for setting the term for an incentive contract. Incentive contracts will be for a period from 5 to 10 years.
This section sets the parameters for incentive payments. In addition to the payment for practice implementation, which is similar to the standard EQIP implementation payment, incentive contracts offer annual payments to address operations and maintenance costs as well as income foregone. NRCS also established in this interim rule an aggregate payment limitation of $200,000 for a person or legal entity to conform incentive contract implementation to contracts entered into under the CSP, thus ensuring that the new enrollment option supports a participant's ability to transition to CSP eligibility.
Subpart E of the EQIP regulation was formerly subpart C, and it addresses a participant's responsibility to comply with regulatory measures, to provide NRCS access to lands enrolled in the program for compliance monitoring during the term of the contract, and other general program matters. The 2018 Farm Bill changes do not impact the regulatory provisions at subpart E.
In general, the Administrative Procedure Act (APA, 5 U.S.C. 553) requires that a notice of proposed rulemaking be published in the Federal Register and interested persons be given an opportunity to participate in the rulemaking through submission of written data, views, or arguments with or without opportunity for oral presentation, except when the rule involves a matter relating to public property, loans, grants, benefits, or contracts. This rule involves matters relating to benefits and therefore is exempt from the APA requirements. Further, the regulations to implement the programs of chapter 58 of title 16 of the U.S. Code, as specified in 16 U.S.C. 3846, and the administration of those programs, are:
For major rules, the Congressional Review Act requires a delay in the effect date of 60-days after publication to allow for Congressional Review. This rule is major under the Congressional Review Act, as defined by 5 U.S.C. 804(2). The authority in 5 U.S.C. 808 provides that when an agency finds for good cause that notice and public procedure are impracticable, unnecessary, or contrary to the public interest, that the rule may take effect at such time as the agency determines. Due to the nature of the rule, the mandatory requirements of the 2018 Farm Bill, and the need to implement the regulations expeditiously to provide assistance to producers, NRCS and CCC find that notice and public procedure are contrary to the public interest. Therefore, even though this rule is a major rule for purposes of the Congressional Review Act of 1996, NRCS and CCC are not required to delay the effective date for 60 days from the date of publication to allow for Congressional review. Therefore, this rule is effective on the date of publication in the Federal Register.
NRCS invites interested persons to participate in this rulemaking by submitting written comments or views about the changes made by this interim rule. The most helpful comments reference a specific portion of the regulation, explain the reason for any recommended changes, and include supporting data and references to relevant section of either the 2018 Farm Bill or the 1985 Farm Bill. All comments received on or before the closing date for comments will be considered. NRCS will review and respond to the public comments in the EQIP final rule.
The Office of Management and Budget (OMB) designated this rule as economically significant under Start Printed Page 69278Executive Order 13563, “Regulatory Planning and Review,” and therefore, OMB has reviewed this rule. The costs and benefits of this rule are summarized below. The full cost benefit analysis is available on https://www.regulations.gov/​.
Executive Order 13771, “Reducing Regulation and Controlling Regulatory Costs,” requires that in order to manage the private costs required to comply with federal regulations for every new significant or economically significant regulation issued, the new costs must be offset by the elimination of at least two prior regulations. OMB guidance in M-17-21, dated April 5, 2017, specifies that “transfer rules” are not covered by Executive Order 13771, “Reducing Regulation and Controlling Regulatory Costs.” Transfer rules are Federal spending regulatory actions that cause only income transfers between taxpayers and program beneficiaries. Therefore, this is considered a transfer rule and is not covered by Executive Order 13771.
The 2018 Farm Bill makes several changes to EQIP. The changes include:
Making a State, irrigation district, groundwater management district, acequia, land grant-mercedes, or similar entity eligible for EQIP payments,
Requiring targeting of at least 10 percent of EQIP funds to wildlife conservation practices,
Reducing EQIP funds targeted for livestock to 50 percent, and
Creating various incentives to address resource concerns in identified watersheds and other high priority areas.
Most of this rule's impacts consist of transfer payments to producers for completed conservation practices under EQIP contracts. The 2018 Farm Bill increases EQIP funding over 2014 Farm Bill funding by 22 percent on an annualized basis to $1.84 billion per year. From FY2014-2018, EQIP was authorized at $8.0 billion, but annual funding restrictions resulted in actual authority being $7.51 billion, for an annualized amount of $1.50 billion. In contrast, the authorized level for EQIP for FY2019-2023 is $9.18 billion [1] (assuming future funding caps are set at authorized amounts). Additionally, EQIP funds remain available until expended, meaning that any unobligated balance at the end of a fiscal year is available for obligation in the subsequent year.
Conservation practices funded through EQIP will continue to:
Contribute to improvements in soil health and reductions in water and wind erosion on cropland, pasture and rangeland;
Reduce nutrient losses to streams, rivers, lakes and estuaries;
Increase wildlife habitat; and
Further, continued implementation of practices that treat and manage animal waste through EQIP will directly contribute to improvements in water quality and associated improvements in air quality (such as from reduction in methane emissions or reduced risk of algal blooms). NRCS estimates that the cost,[2] from both public and private sources, of implementing EQIP conservation practices will be $13,640.2 million dollars (FY2019-2023), assuming a historical average participant cost of 40 percent and a technical assistance share of 27 percent.
Changes in funding levels for EQIP livestock and wildlife practices will alter to a minor extent the types of conservation practices that are funded. From FY 2014-2018, wildlife practices accounted for 7.6 percent of EQIP funds through wildlife and landscape initiatives and 16 designated wildlife conservation practices. The remaining 2.4 percent increase in funding to wildlife needed to meet the new 10 percent level will likely occur through greater support for existing wildlife initiatives and potentially target additional wildlife habitat development efforts through new initiatives. With respect to livestock, over 60 percent of EQIP funds went to livestock-related practices during FY 2014 through 2018, but the 2018 Farm Bill reduced the target to 50 percent for each of fiscal years 2019 through 2023. With greater EQIP funding overall, the amount of funding being provided for the implementation of livestock conservation practices should not change significantly.
To address increasing demands on the nation's water supply, the 2018 Farm Bill expands EQIP eligibility to water management entities like irrigation districts, ground water management districts, and acequias, along with providing the Secretary with the authority to waive adjusted gross income, contract, and payment limits to encourage continued efforts in agricultural water conservation. In some states, particularly in the West, these water management entities may increase competition for funding and enhance conservation benefits per dollar spent. The impacts, however, on the allocation of EQIP funding will be limited. The 2018 Farm Bill directs NRCS to maintain current funding allocations to states, limiting the impact nationally. Also, NRCS proposes in this rule establishing a payment limit of $900,000 on all contracts with water management entities.
The 2018 Farm Bill establishes incentive contracts to address up to three priority resource concerns for a given watershed, or other region, or area. Contracts will range from a minimum of 5 up to 10 years in length and provide an annual payment and an incentive practice payment. The impact of these new incentive contracts is uncertain, particularly regarding benefits per dollar. Overall, given the current demand for regular enrollment in EQIP, and the currently uncertain impacts that incentive contracts will have, the aggregate benefits from these new incentive contracts may be limited.
Increasing the payment limit for participants in the organic initiative to $140,000 over the period FY 2019 through 2023, will likely have little impact on EQIP program performance. This is because existing organic initiative contracts are usually well below the multi-year payment limit of $80,000 previously set by 2014 Farm Bill. Currently, organic participants who exceed the organic initiative payment limit use other EQIP funding mechanisms. With the increase in the organic initiative limit to $140,000, more organic applicants will be able to make use of the organic initiative and consequently need only compete with other organic operations for funding.
Could we improve clarity by adding tables, lists, or diagrams?Start Printed Page 69279
The Regulatory Flexibility Act (5 U.S.C. 601-612), as amended by the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA), generally requires an agency to prepare a regulatory analysis of any rule whenever an agency is required by APA or any other law to publish a proposed rule, unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. This rule is not subject to the Regulatory Flexibility Act because no law requires that a proposed rule be published for this rulemaking initiative. Despite the Regulatory Flexibility Act not applying to this rule, the action only affects those entities who voluntarily participate in EQIP and in doing so receive its benefits. Compliance with the provisions of EQIP regulations is only required for those entities who choose to participate in this voluntary program.
The environmental impacts of this rule have been considered in a manner consistent with the provisions of the National Environmental Policy Act (NEPA, 42 U.S.C. 4321-4347), the regulations of the Council on Environmental Quality (40 CFR parts 1500-1508), and the NRCS regulations for compliance with NEPA (7 CFR part 650). The 2018 Farm Bill requires minor changes to NRCS conservation programs, and there are no changes to the basic structure of the programs. The analysis has determined there will not be a significant impact to the human environment and as a result, an environmental impact statement (EIS) is not required to be prepared (40 CFR 1508.13). While OMB has designated this rule as “economically significant” under Executive Order 12866, “. . . economic or social effects are not intended by themselves to require preparation of an environmental impact statement” (40 CFR 1508.14), when not interrelated to natural or physical environmental effects. The Environmental Assessment (EA) and Finding of No Significant Impact (FONSI) are available for review and comment for 30 days from the date of publication of this interim rule in the Federal Register. NRCS will consider this input and determine whether there is any new information provided that is relevant to environmental concerns and bearing on the proposed action or its impacts that warrant supplementing or revising the current available draft of the EQIP EA and FONSI.
The USDA's Office of Tribal Relations (OTR) has assessed the impact of this rule on Indian Tribes and determined that this rule may have substantial direct Tribal implication that may require Tribal consultation under Executive Order 13175. Tribal consultation for this rule was included in the two 2018 Farm Bill Tribal consultation held on May 1, 2019, at the National Museum of the American Indian, in Washington, DC, and on June 26-28, 2019, in Sparks, NV. For the May 1, Tribal consultation, the portion of the Tribal consultation relative to this rule was conducted by Bill Northey, USDA Under Secretary for the Farm Production and Conservation mission area, as part of the Title II session. There were no specific comments from Tribes on the EQIP rule during the Tribal consultation. If a tribe requests additional consultation, NRCS will work with OTR to ensure meaningful consultation is provided where changes, additions, and modifications identified in this rule are not expressly mandated by legislation.
Separate from Tribal consultation, communication, and outreach efforts are in place to assure that all producers, including Tribes (or their members), are provided information about the regulation changes. Specifically, NRCS obtains input through Tribal Conservation Advisory Councils. A Tribal Conservation Advisory Council may be an existing Tribal committee or department and may also constitute an association of member Tribes organized to provide direct consultation to NRCS at the State, regional, and national levels to provide input on NRCS rules, policies, programs, and impacts on Tribes. Tribal Conservation Advisory Councils provide a venue for agency leaders to gather input on Tribal interests. Additionally, NRCS will be holding several sessions with Indian Tribes and Tribal entities across the country in fiscal year 2019 to describe the 2018 Farm Bill changes to NRCS conservation programs, obtain input about how to improve Tribal and Tribal member access to NRCS conservation assistance, and make any appropriate adjustments to the regulations that will foster such improved access.
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA, Pub. L. 104-4), requires federal agencies to assess the effects of their regulatory Start Printed Page 69280actions on State, local, and Tribal Governments or the private sector. Agencies generally must prepare a written statement, including cost benefits analysis, for proposed and final rules with federal mandates that may result in expenditures of $100 million or more in any 1 year for State, local or Tribal Governments, in the aggregate, or to the private sector. UMRA generally requires agencies to consider alternatives and adopt the more cost-effective or least burdensome alternative that achieves the objectives of the rule. This rule contains no federal mandates, as defined under Title II of UMRA, for State, local, and Tribal Governments or the private sector. Therefore, this rule is not subject to the requirements of UMRA.
The title and number of the Federal Domestic Assistance Programs in the Catalog of Federal Domestic Assistance to which this rule applies:
The CCC revises 7 CFR part 1466 to read as follows:
Conservation practice operations and maintenance (O&M).
EQIP payment restrictions and exceptions.
Contract modifications and transfers of contract rights.
Conservation innovation grant funding.
Conservation innovation grant administration.
State-level conservation innovation grant component.
On-Farm Conservation Innovation Trials.
Soil Health Demonstration trial.
Incentive contract selection.
Incentive contract requirements.
Incentive contract period.
Incentive payment rates and restrictions.
(e) Scope of agreement authority. NRCS may enter into agreements with Start Printed Page 69281other Federal or State agencies, Indian Tribes, conservation districts, units of local government, public or private organizations, acequias, and individuals to assist NRCS with implementation of the program in this part.
EQIP plan of operations means the document that identifies the location, timing, and extent of conservation practices that the participant agrees to implement on eligible land enrolled in the program 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 Start Printed Page 69282associated with the adoption of a conservation practice. Along with other estimated incurred costs, income foregone is one of the costs associated with practice implementation as recorded in a payment schedule.
Field Office Technical Guide (FOTG) means the official local NRCS source of resource information and interpretations of guidelines, criteria, and requirements for planning and implementation of conservation practices. It contains detailed information on the quality standards to achieve conservation of soil, water, air, plant, energy, and animal resources applicable to the local area for which it is prepared. (See https://www.nrcs.usda.gov/​wps/​portal/​nrcs/​main/​national/​technical/​fotg/​ to access your State FOTG.)
O&M agreement means the document that, in conjunction with the EQIP plan of operations, specifies the O&M responsibilities of the participant for Start Printed Page 69283conservation practices installed with EQIP assistance.
(1) Reductions of nonpoint source pollution, such as nutrients, sediment, pesticides, or excess salinity in impaired watersheds consistent with Start Printed Page 69284total maximum daily loads (TMDL) where available;
(d) NRCS will notify historically underserved producers, at the time of enrollment in the program, of the option to receive advance payments under § 1466.24 of this part and document the election of each of these producers.
(c) Consideration for enrollment of eligible land. Eligible land, as defined in § 1466.3, may be considered for enrollment in EQIP only if NRCS determines that the land is—
(3)(i) The Chief may waive the average adjusted gross income limitation set forth in 7 CFR part 1400 or the aggregate payment limitation set forth in § 1466.24 of this part for a contract under paragraph (d)(1) of this section if the Chief determines that the waiver is necessary to fulfill the objectives of the project.
(D) The extent to which the project involves progressive implementation of conservation practices; andStart Printed Page 69285
(f) NRCS may provide a participant with assistance to implement an EQIP plan of operations which includes irrigation-related practices to address a water conservation resource concern only if the participant establishes through documented evidence, including irrigation history, that such assistance will facilitate a reduction in ground or surface water use on the agricultural operation, unless the producer is participating in a watershed-wide project, as approved by NRCS, which will effectively conserve water in accordance with § 1466.20 of this part.
(vi) Willingness of the applicant to complete all conservation practices in an expedited manner;Start Printed Page 69286
(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 O&M of the EQIP contract's conservation practices, consistent with the provisions of § 1466.25,
(vii) Specify the participant's responsibilities for the O&M of the applied conservation practices, consistent with the provisions of § 1466.22; and
(d) Contract limitation. Each contract will be limited to no more than $450,000, unless the contract is with an Indian Tribe or the Chief grants a waiver. Contracts related to organic operations are also subject to payment limitations pursuant to § 1466.24(b).
(f) Water conservation and irrigation efficiency projects with water management entities. NRCS may decline to select an EQIP application from a legal entity who is otherwise eligible under § 1466.6(d) if NRCS Start Printed Page 69287determines that the project is better suited to be implemented under the Regional Conservation Partnership Program or 7 CFR part 622.
(3) Notwithstanding paragraph (b)(1) of this section, a participant that meets the definition of a historically underserved producer under § 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 estimated costs incurred for implementing the conservation practice.
(2) Except as otherwise provided in § 1466.6, the limitation in paragraph (a)(1) of this section cannot be waived.
(b) Organic production aggregate payment limitation. Payments for conservation practices related to organic production to a person or legal entity, directly or indirectly, during the period of fiscal years 2019 through 2023, may not exceed an aggregate of $140,000.Start Printed Page 69288
(g) In the event a conservation practice fails through no fault of the participant, NRCS may issue payments to reestablish the practice, at the rates established in accordance with § 1466.23, provided such payments do not exceed the payment limitation requirements as set forth in § 1466.24.
(2) Make any payments due under this part pursuant to guidance under applicable provisions of 7 CFR parts 707 and 1400 (including payment to successor(s)); orStart Printed Page 69289
(2) If a participant continues to be in violation after such reasonable time, NRCS may terminate the EQIP contract in accordance with § 1466.26(f).
(2) 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 addition to the terms defined in § 1466.3, the definitions in this section apply to this subpart:
(3) Lead to the transfer of conservation technologies, management systems, and innovative approaches (such as market-based systems) into Start Printed Page 69290NRCS technical manuals and guides or to the private sector.
§ 1466.37
(2) The quantity and quality of experience the organization has working with agricultural producers; orStart Printed Page 69291
(d) Innovation determinations. Notwithstanding any limitation in § 1466.31(f) of this subpart, when determining whether to approve of a proposed conservation approach as new or innovative, NRCS may consider multiple factors including—
(4) The land subject to the project proposal meets the definition of eligible land under § 1466.3.
(j) Absence of payment limitation. Neither the contract payment limitation set forth in § 1466.22 nor the aggregate payment limitation set forth in § 1466.24 shall apply to OFCIT agreements.
§ 1466.38
(a) The Soil Health Demonstration (SHD) shall make use of the OFCIT process, including eligibility requirements, and funding set forth in § 1466.37 to provide incentives to producers to implement conservation practices that improve soil health, increase carbon levels in the soil, or both.
§ 1466.40
§ 1466.41
(a) NRCS will give priority to applications that address eligible priority resource concerns identified under § 1466.40.
(c) NRCS shall not select an application for an incentive contract that does not contain at least one qualifying incentive practice as identified under § 1466.40.
§ 1466.42
(2) Payment for technical services may be included in the contract pursuant to requirements of this part.Start Printed Page 69292
(2) Have a period as set forth in § 1466.43;
(c) Termination of the incentive contract. NRCS may terminate an incentive contract consistent with the provisions of § 1466.26.
§ 1466.43
§ 1466.44
(a) Aggregate payment limitation. (1) Notwithstanding the payment limitation in § 1466.24, the total amount of payments paid to a person or legal entity under this subpart, during the period of fiscal years 2019 through 2023, may not exceed an aggregate of $200,000, directly or indirectly.
(b) Restrictions and exceptions. Except as otherwise indicated in paragraph (a) of this section, incentive contracts are subject to the payment restrictions and exceptions as set forth in § 1466.24.
(c) Implementation payments. The payment rates for implementation of incentive practices shall be identical to the payment rates for practice implementation as set forth in § 1466.23.
§ 1466.50
§ 1466.51
§ 1466.52
§ 1466.53
§ 1466.54
§ 1466.55
(3) Adopted any scheme or device for the purpose of depriving any tenant or sharecropper of the payments to which Start Printed Page 69293such person would otherwise be entitled under the program; or
§ 1466.56
(b) The participant must meet all O&M requirements for EQIP-funded activities, consistent with §§ 1466.21 and 1466.22. Where activities required under an environmental credit agreement may affect the land and conservation practices under an EQIP contract, NRCS recommends that EQIP participants request assistance with the development of a compatibility assessment prior to entering into any credit agreement. The EQIP contract may be modified in accordance with policies outlined in § 1466.25, provided the modification meets EQIP purposes and is in compliance with this part.
1. Includes the $1.75 billion authorized level in the 2018 Farm Bill for FY 2019 even though the amount was reduced by the sequester and other transfers to $1.61 billion.
2. Public costs include total technical assistance and financial assistance funds. Private costs are out-of-pocket costs paid voluntarily by participants.
[FR Doc. 2019-26872 Filed 12-16-19; 8:45 am]