Environmental Quality Incentives Program, 2293-2317 [E9-530]

Agencies

• DEPARTMENT OF AGRICULTURE
• Commodity Credit Corporation

[Federal Register Volume 74, Number 10 (Thursday, January 15, 2009)]
[Rules and Regulations]
[Pages 2293-2317]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-530]



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

[[Page 2293]]



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.

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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 https://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 https://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: https://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

[[Page 2294]]

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--https://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.

[[Page 2295]]

    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 outreach-
extension 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: https://www.nrcs.usda.gov/
technical/nri/ceap/. These results are expected to improve the Agency's 
ability to report on long-term 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\;
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    \1\ The ``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.
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     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\
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    \2\ Additional time and resources would be necessary to modify 
the present model to incorporate such shifts in program emphasis.
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     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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     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]
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                                                 2007 EQIP with                                  2007 EQIP with
                                     To not        $1 billion/      2008 Act     Increases with    $1 billion/      2008 Act
        Benefit Category         implement EQIP   year FY 2008-    benefits &     the 2008 Act   year (acres or     (acres or              Unit
                                                     FY 2012          costs                       animal units)   animal units)
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    Animal waste management *..              $0            $554            $816            $262       2,724,000       4,061,000  Animal Units.
    Sheet and rill water                      0           1,948           2,869             920       8,019,000      11,955,000  Acres.
     erosion.
    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  ..............  ..............  .......................
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* 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,

[[Page 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 cost-effectiveness, (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 Sec.  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

[[Page 2298]]

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 
Sec.  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

[[Page 2299]]

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 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.'' 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 ``cost-effectiveness.'' The term 
``cost-effectiveness'' 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 Sec.  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 Sec.  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

[[Page 2300]]

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 Sec.  
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

[[Page 2301]]

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, private-sector 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 Sec.  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 submi