Environmental Quality Incentives Program (EQIP), 73953-73976 [2014-28941]

Agencies

• DEPARTMENT OF AGRICULTURE
• Commodity Credit Corporation

[Federal Register Volume 79, Number 239 (Friday, December 12, 2014)]
[Rules and Regulations]
[Pages 73953-73976]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-28941]



[[Page 73953]]

Vol. 79

Friday,

No. 239

December 12, 2014

Part II





Department of Agriculture





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Commodity Credit Corporation





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7 CFR Part 1466





 Environmental Quality Incentives Program (EQIP); Final Rule

Federal Register / Vol. 79 , No. 239 / Friday, December 12, 2014 / 
Rules and Regulations

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DEPARTMENT OF AGRICULTURE

Commodity Credit Corporation

7 CFR Part 1466

[Docket No. NRCS-2014-0007]
RIN 0578-AA62


Environmental Quality Incentives Program (EQIP)

AGENCY: Natural Resources Conservation Service and the Commodity Credit 
Corporation, United States Department of Agriculture.

ACTION: Interim rule with request for comment.

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SUMMARY: This interim rule with request for comment amends the existing 
Environmental Quality Incentives Program (EQIP) regulation to 
incorporate programmatic changes as authorized by amendments in the 
Agricultural Act of 2014 (2014 Act).

DATES: Effective Date: This rule is effective December 12, 2014.
    Comment Date: Submit comments on or before February 10, 2015.

ADDRESSES: You may submit comments using one of the following methods:
     Federal eRulemaking Portal: https://www.regulations.gov. 
Follow the instructions for submitting comments for Docket No. NRCS-
2014-0007.
     U.S. mail or hand delivery: Public Comments Processing, 
Attn: Docket No. NRCS-2014-0007, Regulatory and Agency Policy Team, 
Strategic Planning and Accountability, U.S. Department of Agriculture, 
Natural Resources Conservation Service, 5601 Sunnyside Avenue, Building 
1-1112D, Beltsville, MD 20705.
    NRCS will post all comments on: https://www.regulations.gov. 
Personal information provided with comments will be posted. If your 
comment includes your address, phone number, email address, or other 
personal identifying information, please be aware that your entire 
comment, including this personal information, will be made publicly 
available. Do not include personal information with your comment 
submission if you do not wish for it to be made public.

FOR FURTHER INFORMATION CONTACT: Mark Rose, Director, Financial 
Assistance Programs Division, U.S. Department of Agriculture, Natural 
Resources Conservation Service, P.O. Box 2890, Washington, DC 20013-
2890; telephone: (202) 720-1845; Fax: (202) 720-4265.
    Persons with disabilities who require alternate means for 
communication (Braille, large print, audio tape, etc.) should contact 
the USDA TARGET Center at: (202) 720-2600 (voice and TDD).

SUPPLEMENTARY INFORMATION:

Regulatory Certifications

Executive Order 12866 and 13563

    Executive Order 12866, ``Regulatory Planning and Review,'' and 
Executive Order 13563, ``Improving Regulation and Regulatory Review,'' 
directs agencies to assess all costs and benefits of available 
regulatory alternatives and, if regulation is necessary, to select 
regulatory approaches that maximize net benefits (including potential 
economic, environmental, public health and safety effects, distributive 
impacts, and equity). Executive Order 13563 emphasizes the importance 
of quantifying both costs and benefits, of reducing costs, of 
harmonizing rules, and of promoting flexibility. Upon implementation of 
this rule the Natural Resources Conservation Service intends to conduct 
a retrospective review of this rule with the purpose of improving 
program performance, and better understanding the longevity of 
conservation implementation.
    The Office of Management and Budget (OMB) designated this interim 
rule with request for comment a significant regulatory action. The 
administrative record is available for public inspection at the U.S. 
Department of Agriculture, Natural Resources Conservation Service, Room 
5831 South Building, 1400 Independence Avenue SW., Washington, DC 
20250-2890. 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 
the regulatory certifications section of this preamble, and a copy of 
the analysis is available upon request from the Director, Financial 
Assistance Programs Division, U.S. Department of Agriculture, Natural 
Resources Conservation Service, 1400 Independence Avenue SW., Room 5237 
South Building, Washington, DC 20250-2890 or electronically at: https://www.nrcs.usda.gov/programs/eqip/ under the EQIP Rules and Notices with 
Supporting Documents title.
    Executive Order 12866, as supplemented by Executive Order 13563, 
requires each agency to write all rules in plain language. In addition 
to your substantive comments on this interim rule, we invite your 
comments on how to make the provisions easier to understand. For 
example:
     Are the requirements in the rule clearly stated? Are the 
scope and intent of the rule clear?
     Does the rule contain technical language or jargon that is 
not clear?
     Is the material logically organized?
     Would changing the grouping or order of sections or adding 
headings make the rule easier to understand?
     Could we improve clarity by adding tables, lists, or 
diagrams?
     Would more, but shorter, sections be better? Are there 
specific sections that are too long or confusing?
     What else could we do to make the rule easier to 
understand?

Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601-612) (RFA) generally 
requires an agency to prepare a regulatory flexibility analysis of any 
rule subject to notice and comment rulemaking requirements under the 
Administrative Procedure Act or any other statute. NRCS did not prepare 
a regulatory flexibility analysis for this rule because NRCS is not 
required by 5 U.S.C. 553, or any other provision of law, to publish a 
notice of proposed rulemaking with respect to the subject matter of 
this rule. Even so, NRCS has determined that this action, while mostly 
affecting small entities, will not have a significant economic impact 
on a substantial number of these small entities. NRCS made this 
determination based on the fact that this regulation only impacts those 
who choose to participate in the program. Small entity applicants will 
not be affected to a greater extent than large entity applicants.

Congressional Review Act

    Section 1246(c) of the Food Security Act of 1985 (the 1985 Act), as 
amended by Section 2608 of the Agricultural Act of 2014, requires that 
the Secretary use the authority in section 808(2) of title 5, United 
States Code, which allows an agency to forego Congressional Review Act 
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 under Title XII of the 1985 Act, in effect as 
soon as possible. NRCS also determined it has good cause to forgo 
delaying the effective date given the critical need to let agricultural 
producers know what programmatic changes are being made so that they 
can make financial plans accordingly prior to planting season. For

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these reasons, this rule is effective upon publication in the Federal 
Register.

Environmental Analysis

    NRCS has prepared a programmatic Environmental Assessment (EA) in 
association with the EQIP rulemaking to aid in its compliance with the 
National Environmental Policy Act when implementing site-specific 
actions with EQIP funds (40 CFR 1501.3(b)). 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 1508.13). The 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. A copy of the EA and FONSI may be obtained from the 
following Web site: https://www.nrcs.usda.gov/ea. A hard copy may also 
be obtained in one of the following ways: (1) Send an email to 
andree.duvarney@wdc.usda.gov with ``Request for EA'' in the subject 
line, or (2) mail a written request to: National Environmental 
Coordinator, Natural Resources Conservation Service, Ecological 
Sciences Division, P.O. Box 2890, Washington, DC 20013-2890. Comments 
on the environmental analysis from the public should be specific and 
reference that comments provided are on the EQIP EA and FONSI. Public 
comment on the environmental analysis only may be submitted by any of 
the following means: (1) Email comments to 
andree.duvarney@wdc.usda.gov, (2) go to https://www.regulations.gov and 
follow the instructions for submitting comments for Docket No. NRCS-
2014-0007, or (3) mail written comments to: National Environmental 
Coordinator, Natural Resources Conservation Service, Ecological 
Sciences Division, P.O. Box 2890, Washington, DC 20013-2890.

Civil Rights Impact Analysis

    NRCS has determined through a Civil Rights Impact Analysis that the 
interim rule discloses no disproportionately adverse impacts for 
minorities, women, or persons with disabilities. The national target of 
setting aside 5 percent of EQIP funds for socially disadvantaged 
farmers or ranchers and an additional 5 percent of EQIP funds for 
beginning farmers or ranchers; and prioritizing veterans that are 
socially disadvantaged farmers or ranchers and beginning farmer or 
ranchers is expected to increase participation among these groups.
    The data presented in the Civil Rights Impact Analysis indicate 
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 EQIP will continue to be administered in a 
nondiscriminatory 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 U.S. Department of 
Agriculture (USDA) programs. NRCS conservation programs apply to all 
persons equally regardless of their race, color, national origin, 
gender, sex, or disability status. Therefore, this interim rule 
portends no adverse civil rights implications for women, minorities, 
and persons with disabilities.

Paperwork Reduction Act

    Section 1246 of the Food Security Act of 1985 (the 1985 Act), as 
amended by the Agricultural Act of 2014 (2014 Act), requires that 
implementation of programs authorized by Title XII of the 1985 Act be 
made without regard to the Paperwork Reduction Act of 1995 (44 U.S.C. 
3501 et seq.). Therefore, NRCS is not reporting recordkeeping or 
estimated paperwork burden associated with this interim rule.

Government Paperwork Elimination Act

    NRCS is committed to compliance with the Government Paperwork 
Elimination Act and the Freedom to E-File Act, which require 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 13175

    This interim rule has been reviewed in accordance with the 
requirements of Executive Order 13175, Consultation and Coordination 
with Indian Tribal Governments. Executive Order 13175 requires Federal 
agencies to consult and coordinate with Tribes on a government-to-
government basis on policies that have Tribal implications, including 
regulations, legislative comments or proposed legislation, and other 
policy statements or actions that may have substantial direct effects 
on: (1) One or more Indian Tribes, (2) the relationship between the 
Federal Government and Indian Tribes, or (3) the distribution of power 
and responsibilities between the Federal Government and Indian Tribes. 
NRCS has assessed the impact of this interim rule on Indian Tribes and 
determined that this rule does not have Tribal implications that 
require Tribal consultation under E.O. 13175. The rule neither imposes 
substantial direct compliance costs on Tribal governments nor preempts 
Tribal law. The agency has developed an outreach/collaboration plan 
that it will implement as it develops its Farm Bill policy. If a Tribe 
requests consultation, NRCS will work with the USDA Office of Tribal 
Relations to ensure meaningful consultation is provided where changes, 
additions, and modifications identified herein are not expressly 
mandated by Congress.

Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) (2 
U.S.C. 1531-1538) requires Federal agencies to assess the effects of 
their regulatory actions on State, local, and Tribal governments or the 
private sector of $100 million or more in any one year. When such a 
statement is needed for a rule, section 205 of the UMRA requires 
agencies to prepare a written statement, including a cost benefit 
assessment, for proposed and final rules with ``Federal mandates'' that 
may result in such expenditures 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 the UMRA, for State, local, and Tribal governments or the private 
sector. Therefore, a statement under section 202 of the UMRA is not 
required.

Executive Order 13132

    NRCS has considered this interim rule in accordance with Executive 
Order 13132, issued August 4, 1999. NRCS has determined that the 
interim rule conforms with the Federalism principles set out in this 
Executive Order; would not impose any compliance costs on the States; 
and would not have substantial direct effects on the States, on the 
relationship between the Federal Government and

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the States, or on the distribution of power and responsibilities among 
the various levels of government. Therefore, NRCS concludes that this 
interim rule does not have Federalism implications.

Federal Crop Insurance Reform and Department of Agriculture 
Reorganization Act of 1994

    Pursuant to section 304 of the Federal Crop Insurance Reform Act of 
1994 (Pub. L. 103-354), USDA has estimated that this regulation will 
not have an annual impact on the economy of $100,000,000 in 1994 
dollars, and therefore, is not a major regulation. Therefore, a risk 
analysis was not conducted.

Executive Order 13211

    This rule is not a significant regulatory action subject to 
Executive Order 13211, Energy Effects.

Registration and Reporting Requirements of the Federal Funding and 
Transparency Act of 2006

    OMB published two regulations, codified at 2 CFR part 25 and 2 CFR 
part 170, to assist agencies and recipients of Federal financial 
assistance in complying with the Federal Funding Accountability and 
Transparency Act of 2006 (FFATA) (Pub. L. 109-282, as amended). Both 
regulations have implementation requirements effective as of October 1, 
2010.
    The regulations at 2 CFR part 25 require, with some exceptions, 
recipients of Federal financial assistance to apply for and receive a 
Dun and Bradstreet Universal Numbering Systems (DUNS) number and 
register in the Central Contractor Registry (CCR). The regulations at 2 
CFR part 170 establish new requirements for Federal financial 
assistance applicants, recipients, and subrecipients. The regulation 
provides standard wording that each agency must include in its awarding 
of financial assistance that requires recipients to report information 
about first-tier subawards and executive compensation under those 
awards.
    NRCS has determined that 2 CFR part 25 and 2 CFR part 170 applies 
to EQIP financial assistance provided to entities. Therefore, NRCS has 
incorporated, by reference, these registration and reporting 
requirements into the EQIP regulations and will continue to include the 
requisite provisions as part of its financial assistance contracts.

Regulatory Impact Analysis--Executive Summary

    Pursuant to Executive Order 12866, Regulatory Planning and Review, 
NRCS has conducted a Regulatory Impact Analysis (RIA) of the 
Environmental Quality Incentives Program (EQIP) as pursuant to the 
changes of the 2014 Act.
    In considering alternatives for implementing EQIP, USDA followed 
the legislative intent to maximize beneficial conservation impacts, 
address natural resource concerns, establish an open participatory 
process, and provide flexible assistance to producers who apply 
appropriate conservation measures to comply with Federal State, and 
Tribal 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 $8 billion over the 5-year period 
beginning in fiscal years (FY) 2014 through 2018, with annual amounts 
of $1.35 billion in FY 2014, $1.60 billion in FY 2015, $1.65 billion in 
FY 2016, $1.65 billion in FY 2017, and $1.75 billion in FY 2018. The 
program had been previously authorized with annual amounts of $1.200 
billion for FY 2008, $1.337 billion in FY 2009, $1.450 billion in FY 
2010, $1.589 billion in FY 2011, and $1.750 billion in FY 2012 through 
FY 2014. Despite this authorization EQIP received only $6.2 billion in 
funding over the five-year period from FY2009-FY2013. Funds received 
annually over this period were $1.05 billion in FY 2009, $1.18 billion 
in FY 2010, $1.24 billion in FY 2011, $1.38 billion in FY 2012 and 
$1.29 billion in FY 2013. The 1985 Act, as amended by 2014 Act, makes 
several changes to EQIP. Please note, since EQIP is funded with CCC 
funds and not appropriated funds, NRCS uses the term ``obligational 
cap'' in the Regulatory Analysis to identify the funding limits that 
were placed on EQIP imposed by various appropriations acts.
    The changes include consolidating elements of the former Wildlife 
Habitat Incentives Program (WHIP) into EQIP, expanding participation 
among military veteran farmers or ranchers, requiring that funds 
provided in advance that are not expended during the 90-day period 
beginning on the date of receipt of funds be returned, establishing an 
overall payment limitation over fiscal years 2014-2018 of $450,000, 
providing that EQIP funding authorized by the 2014 Act remains 
available until expended, and requiring that at least 5 percent of 
available EQIP funds to be targeted for wildlife conservation practices 
for each fiscal year 2014-2018. This 5 percent for wildlife habitat 
practices is based upon the total EQIP funding allocated as financial 
assistance available nationally for producer contracts. Based upon 
historical expenditures of wildlife-related practices in both WHIP and 
EQIP, and with emphasis to prioritize funding applications that address 
wildlife resource concerns, the agency anticipates that the actual 
funding associated with developing wildlife habitat through EQIP will 
exceed the 5 percent national target mandated by statute. NRCS monitors 
this funding target throughout the fiscal year and will reallocate 
funding if determined necessary to ensure the mandatory target is met. 
There are 7 percent of EQIP funds also available for eligible Regional 
Conservation Partnership Program (RCPP) contracts. Additional 
explanation regarding funding pools and EQIP program priorities is 
provided in the ``Background'' section of the Preamble.
    EQIP technical and financial assistance facilitates the adoption of 
conservation practices that address natural resource concerns. Those 
practices improve on-site resource conditions and produce offsite 
environmental benefits for the public. Water erosion conservation 
practices reduce the flow of pollutants off of fields, thus improving 
freshwater and marine water quality including protecting fish habitat, 
enhancing aquatic recreation opportunities, and reducing sedimentation 
of reservoirs, streams, and drainage channels. More efficient 
irrigation practices conserve scarce water, making it available for 
other uses. Wind erosion control practices improve air quality, and 
some practices increase carbon in the soil profile. Wildlife habitat 
conservation practices increase wildlife habitat, enhance scenic value, 
and provide opportunities for recreation. NRCS has added and adopted a 
definition for habitat development to encompass the conservation 
practices that support the wildlife habitat activities authorized by 
Section 1240B(g) by the 2014 Act. The term, originally defined in the 
WHIP regulation, is added to EQIP at 1466.3 ``Definitions''. The 
definition, consistent with the EQIP authority to assist with 
implementation of conservation practices which include the specific 
technical purpose of habitat development, provides for the conservation 
of wildlife species.
    Other impacts of conservation practices may accrue to the producer. 
For example, the maintenance of the long-term productivity of the land, 
improved irrigation efficiency, improved grazing productivity, more 
efficient crop use of animal waste and fertilizer, and increased 
profits from energy conservation.
    Most of this rule's impacts consist of transfer payments from the 
Federal

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government to producers. While those transfers create incentives that 
very likely cause changes in the way society uses its resources, we 
lack data with which to quantify the resulting social costs or 
benefits. Given the existing limitation and lack of data, NRCS will 
investigate ways to quantify the incremental benefits obtained from 
this program. Despite the limitations on our ability to quantify and 
estimate the value of social costs or benefits from the implementation 
of conservation practices, EQIP as amended under the 2014 Act is 
expected to positively affect natural resources and mitigate 
environmental degradation. Results from the national Conservation 
Effects Assessment Project conducted by NRCS demonstrate that 
implementation of the types of conservation practices funded under EQIP 
reduce sediment and nutrient loss from agricultural fields and improve 
water quality nationwide. Because data is limited on the natural 
resource impact from the EQIP program, NRCS seeks public comment on how 
the agency should estimate the public value of conservation resulting 
from assistance provided through EQIP.
    The Agriculture Act of 2014 increases EQIP funding over the amount 
appropriated by Congress over the previous five-year period from FY 
2009-FY2013 by 29 percent to $8.0 billion. It is estimated that the 
conservation practices implemented with this funding will continue to 
contribute to reductions of water erosion and wind erosion on cropland, 
pasture and rangeland, reduce nutrient losses to streams, rivers, lakes 
and estuaries increase wildlife habitat, and provide other private and 
public environmental benefits. It is also expected that continued 
implementation of practices which treat and manage animal waste through 
EQIP will directly contribute to improvements in water quality and 
associated improvements in air quality, for example, from reduction in 
emissions such as methane. These and other practices include secondary 
benefits that help sequester carbon and capture greenhouse gases which 
contribute to climate change. NRCS estimates that the cost,\1\ from 
both public and private sources, of implementing the conservation 
practices with EQIP funding will be $11.9 billion dollars (FY 2014-FY 
2018). Cost estimates are presented in Table 1 below.
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    \1\ Public costs include total technical assistance (TA) and 
financial assistance (FA) funds outlined in the Congressional Budget 
Office's (CBO) scoring of the 2014 Act. Private costs are out-of-
pocket costs paid voluntarily by participants.

               Table 1--Projected Technical Assistance and Transfer Payments, FY 2014-FY 2018 \1\
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                                       NRCS
                                     technical       Transfer      Public costs    Private costs    Total costs
                                    assistance        payment       (million $)     (million $)     (million $)
                                    (million $)     (million $)
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FY 2014.........................           364.5           985.5         1,350.0           657.4         2,007.4
FY 2015.........................           432.0         1,168.0         1,600.0           779.2         2,379.2
FY 2016.........................           445.5         1,204.5         1,650.0           803.6         2,453.6
FY 2017.........................           445.5         1,204.5         1,650.0           803.6         2,453.6
FY 2018.........................           472.5         1,277.5         1,750.0           852.2         2,602.2
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    Total.......................         2,160.0         5,840.0         8,000.0         3,896.0        11,896.0
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\1\ Based on a historical average participant cost share of 40 percent and a historical average technical
  assistance share of 27 percent.

RIA Conclusions

    Program features of EQIP except for the increase in wildlife focus 
remain essentially unchanged from the 2008 Farm Bill. The increased 
funding over the period of FY 2014 to FY 2018 will increase the amount 
of conservation applied by agricultural producers to support continued 
improvement in the natural resource base--soil, water, air, and 
wildlife; and mitigate agriculture's potentially adverse effects on the 
environment. The statutory requirement that at least 5 percent of 
available EQIP funding be targeted to practices which address wildlife 
habitat will be met by focusing a portion of the funding on 
applications that address wildlife resource concerns.

Comments Invited

    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 statutory language. All 
comments received on or before the closing date for comments will be 
considered. This regulation may be changed because of the comments 
received. The docket and associated comments, including any personal 
information provided, will be made available for public inspection at: 
www.regulations.gov.

Background

    The Agricultural Act of 2014 (2014 Act) has reauthorized and 
amended the Environmental Quality Incentives Program (EQIP). EQIP 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 agricultural producers to 
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.
    The information below demonstrates how NRCS provides assistance 
through EQIP to enhance natural resources. The type of assistance NRCS 
provides includes:
     Technical and financial assistance to help producers 
change tillage practices that enhance soil resources by sustaining 
tilth, moisture control, nutrients and overall soil health.
     assistance to replace or improve the management of 
irrigation systems to conserve scarce water resources. EQIP is also 
used to help producers manage nutrient applications to protect water 
quality.
     assistance with managing grazing to assure adequate forage 
is available and to sustain plant biodiversity and protect rare 
species. These practices help

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maintain watershed health and enhance water quality.
     assistance to help producers apply energy efficient 
practices that reduce energy consumption (e.g., reduced tillage 
conserves fuel, energy efficient lighting).
     assistance to help producers implement conservation 
practices that sequester carbon or capture methane emissions and 
greenhouse gases which contribute to climate change.
     assistance to help producers implement over 160 
conservation practices on their land to sustain and improve the health 
of natural resources and provide public benefits.
    Under EQIP, NRCS provides technical and financial assistance to 
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 anticipated effects 
of treatment in comparison to existing or benchmark conditions. 
Differences may be expressed by narrative, quantitative, visual, or 
other means. Estimated or projected impacts are used as a basis for 
making informed conservation decisions by applicants and NRCS to help 
determine which projects to approve for EQIP assistance. While NRCS 
currently lacks data with which to quantify the impacts, it will 
investigate ways to quantify the incremental benefits obtained from 
this program.
    NRCS first allocated $130 million in EQIP funds in 1996. Since the 
program began through fiscal year (FY) 2013, NRCS has entered into 
559,275 contracts to provide over $9.8 billion in financial assistance 
to help agricultural producers apply conservation practices. The agency 
has evaluated 18 years of program implementation and has assessed 
opportunities to improve program administration. The changes in this 
interim rule are the result of this evaluation and the statutory 
changes authorized by the 2014 Act.
    Section 2203 of the 2014 Act consolidated the Wildlife Habitat 
Incentive Program (WHIP) purposes into EQIP by revising section 
1240B(f) and (g) of the EQIP statute to authorize at least 5 percent of 
program payments for practices targeted to benefit wildlife habitat, 
including conservation practices that support the restoration, 
development, and improvement of wildlife habitat on eligible land.
    The EQIP statute requires the agency to the greatest extent 
practicable, to group applications of similar crop or livestock 
operations for evaluation purposes or otherwise evaluate applications 
relative to other applications for similar farming operations. NRCS 
utilizes funding pools to meet this requirement and to target EQIP 
funding to priority resource concerns such as for the development of 
wildlife habitat or for water quality issues associated with animal 
feeding operations. Based upon priorities 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, State Conservationists allocate available funds to a funding 
pool where applications from eligible producers compete.
    Each application submitted for consideration in a given funding 
pool is ranked using evaluation criteria which provide a relative score 
that reflects the expected environmental benefit of the proposed 
project. State Conservationists also 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 cut-off 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 address identified resource priorities, have 
multiple applicants to compete for limited funding, and meet 
legislative intent to address priority issues in a cost effective 
process. Each fiscal year, State Conservationists publish program 
priorities, available funding pools and associated ranking criteria to 
State program Web sites available at: https://www.nrcs.usda.gov/wps/portal/nrcs/sitenav/national/states/. State Conservationists are 
required to allocate funds to each application pool and may adjust 
funding between pools to address shortages or to redistribute surplus 
funds. Legislatively created funding levels such as the requirement to 
provide at least 60% of the funding for livestock and 5% of the funding 
for wildlife, are met as national goals through funding pool 
opportunities established by State Conservationists.
    The changes made by the 2014 Act include, but are not limited to:
     Eliminating the requirement that contract must remain in 
place for a minimum of one year after last practice implemented, but 
keeps the requirement that the contract term is not to exceed ten 
years;
     Consolidating elements of WHIP into EQIP and repeals WHIP 
authority, and establishing for each year of FY 2014 to FY 2018 that at 
least 5 percent of available EQIP funds will be targeted for wildlife-
related conservation practices;
     Replacing rolling six-year payment limitation with payment 
limitation for FY 2014 to FY 2018;
     Requiring Conservation Innovation Grants (CIG) reporting 
no later than December 31, 2014, and every two years thereafter;
     Establishing the payment limitation at $450,000 and 
eliminates the payment limitation waiver authority;
     Modifying the special rule for foregone income payments 
for certain associated management practices and resource concern 
priorities;
     Increasing the advance payments available to eligible 
historically underserved participants to purchase material or contract 
services from 30 percent to up to 50 percent;
     Providing flexibility for repayment of advance payment if 
not expended within 90 days;
     Authorizing funding for EQIP at:
    [cir] $1,350,000,000 for FY 2014
    [cir] $1,600,000,000 for FY 2015
    [cir] $1,650,000,000 for FY 2016
    [cir] $1,650,000,000 for FY 2017
    [cir] $1,750,000,000 for FY 2018
     Providing that EQIP funding remains available until 
expended.
    The fundamental purpose of the program, assisting agricultural 
producers to implement conservation practices to provide environmental 
benefits, has not changed. Revisions to the program have focused 
primarily on expanding participation among historically underserved 
populations, including special priority for beginning agricultural 
producers and socially disadvantaged producers with preference provided 
under these special priorities for individuals who are veteran farmers 
or ranchers. 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.

Summary of Changes to EQIP Made by the 2014 Act

    The regulation is organized into three subparts: Subpart A--General 
Provisions; Subpart B--Contracts; and

[[Page 73959]]

Subpart C--General Administration. The basic structure of the 
regulation has not changed; however, NRCS is moving the sections 
related to conservation practices and technical service providers (TSP) 
to Subpart A from Subpart B. Below is a summary of the changes made to 
each subpart based on the changes made to EQIP by the 2014 Act.

Part 1466, Subpart A--General Provisions

    Section 1466.1, ``Applicability,'' sets forth the purpose, scope, 
and objectives of EQIP. Pursuant to section 2208 of the 2014 Act, the 
interim rule updates Sec.  1466.1 to clarify those eligible program 
applicants and applicable regulations for contracts enrolled in EQIP 
prior to the effective date of the 2014 Act are not impacted by changes 
made by the act.
    Section 1466.2, ``Administration,'' describes the roles of NRCS, 
State Technical Committees, and local working groups. The 2014 Act 
amendments did not affect the regulatory provisions at Sec.  1466.2. 
However, NRCS added reference to Tribal Conservation Advisory Councils 
as a contributor to the locally led conservation effort.
    The 2014 Act identifies EQIP as a covered program under the 
Regional Conservation Partnership Program (RCPP) authorized by Subtitle 
I of Title XII of the 1985 Act and authorizes the Chief to waive 
nonstatutory discretionary provisions and operational procedures where 
the Chief determines the waiver will further the purposes of EQIP. RCPP 
operates through the authority of other NRCS conservation programs and 
provides specific authority for NRCS to adjust nonstatutory 
discretionary provisions. Therefore, NRCS is adding language to this 
section of the CFR to incorporate these changes. This language is 
needed to facilitate RCPP implementation using EQIP in RCPP partner 
project areas.
    Section 1466.3, ``Definitions,'' sets forth definitions for terms 
used throughout this regulation. NRCS is amending several definitions 
to conform to the 2014 Act amendments, including the consolidation of 
WHIP, and to address other administrative matters. Specifically, this 
interim rule amends Sec.  1466.3 by adding or modifying the following 
definitions: ``Conservation benefit'' means ``the improved condition of 
a natural resource concern resulting from the implementation of a 
conservation practice.''
    NRCS amends the definitions of ``producer'' and ``applicant'' to 
remove an incorrect citation. In the interim rule published January 15, 
2009, NRCS amended the definition of ``applicant'' to include the Food, 
Conservation, and Energy Act of 2008's (2008 Act) terminology but kept 
the reference to an ``agricultural or forestry operation as defined in 
part 1400 of this chapter.'' The definition of ``producer'' is 
clarified and revised to remove reference to 7 CFR part 1400.
    ``Producer'' means a person, legal entity, Indian Tribe, or joint 
operation who NRCS determines is engaged in agricultural production or 
forestry management on the agricultural operation.
    ``Applicant'' means a producer who has requested in writing to 
participate in EQIP.
    NRCS amends the definition of ``at-risk species'' to incorporate 
the definition used in the WHIP regulation at 7 CFR 636.3.
    NRCS adds and defines the new term, ``veteran farmer or rancher,'' 
consistent with the definition in section 2501(e) of the Food, 
Agriculture, Conservation, and Trade Act of 1990 (7 U.S.C. 2279(e)).
    NRCS amends the term ``National Organic Program'' to include the 
reference to the Organic Foods Production Act of 1990 (7 U.S.C. 6501 et 
seq.). The 2014 Act combined the statutory definition of the National 
Organic Program into the statutory definition of ``organic system 
plan'' by adding the statutory reference to the definition of ``organic 
system plan'' and removing the separate definition. NRCS maintains the 
separate definition for the National Organic Program in the regulation 
for clarification purposes.
    NRCS amends the term ``organic system plan'' to incorporate the 
statutory reference to the Organic Foods Production Act of 1990 (7 
U.S.C. 6501 et seq.). The organic system plan 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 also adds a definition for ``wildlife habitat'' to more fully 
incorporate WHIP purposes into EQIP implementation. This new definition 
corresponds with the definition of ``wildlife habitat'' used at 7 CFR 
part 636.
    Section 1466.6, ``Program Requirements,'' (previously numbered 
Sec.  1466.8) sets forth land and applicant eligibility and the amount 
of EQIP funding to be used for livestock production and historically 
underserved producers. NRCS updates Sec.  1466.6 consistent with the 
updates made to the definitions at Sec.  1466.3.
    Paragraphs (d) and (e), which address funding thresholds, have been 
removed. The funding threshold that at least 60 percent of EQIP 
assistance be targeted to conservation practices related to livestock 
production and the 5 percent funding pool for beginning farmers or 
ranchers and socially disadvantaged farmers or ranchers are established 
by statute and are binding requirements upon the NRCS. Agency policy 
requires NRCS State Conservationists to establish at least one funding 
pool for eligible beginning farmers or ranchers and one funding pool 
for socially disadvantaged farmers or ranchers. This allows applicants 
meeting these requirements to compete for EQIP funds separately from 
all other program opportunities. Thus, regulatory provisions are not 
necessary in order to give these provisions effect. Similarly, the 2014 
Act requires that at least 5 percent of EQIP assistance be targeted 
towards conservation practices with a specific purpose related to 
wildlife habitat. NRCS will track this new funding requirement by 
identifying in its contract data base those conservation practices 
where wildlife habitat is the primary purposes. Out of more than 160 
existing conservation practice standards, 16 have wildlife habitat as a 
primary purpose and approximately another 45 standards are often used 
to benefit wildlife. Examples of standards with a primary wildlife 
focus include:
     Early Successional Habitat Development/Management--used 
for early successional species such as the Golden Winged Warbler or New 
England Cottontail. This practice standard includes planting and 
vegetation management.
     Wetland Restoration--used to develop habitat for the 
variety of wetland-dependent species, from amphibians to migratory 
waterbirds. This practice standard includes structural, grading, 
planting, and water management.
     Stream Habitat Improvement and Management--used for many 
aquatic species, including salmon. This practice standard includes 
instream work such as building redds, pools and riffles, establishing 
woody debris, and vegetation management.
     Upland Wildlife Habitat Management--used often in a system 
of practices for a wide variety of terrestrial species. Often, NRCS 
adds this conservation practice to a conservation plan to ensure other 
practices (e.g., fence) are wildlife-friendly.
    Additionally, other practices are used in certain situations to 
accomplish

[[Page 73960]]

specific wildlife objectives. Reducing sedimentation often improves 
aquatic habitat. Pasture and hay land planting, fencing, and ponds can 
provide recreational benefits (Smith, 1996). The NRCS Prescribed 
Grazing (528) conservation practice standard is essential in 
facilitating the development and maintenance of habitat to benefit the 
lesser prairie-chicken, and the Gunnison sage grouse, both listed as 
threatened under the Endangered Species Act. Every plan developed by 
NRCS under either the Lesser Prairie Chicken Initiative or the Sage 
Grouse Initiative, where grazing will occur, requires the use of 
Prescribed Grazing. To accommodate situations such as this, the Chief 
may also evaluate additional conservation practices related to NRCS 
landscape wildlife initiatives in determining whether 5 percent of EQIP 
funding was used to benefit wildlife. State Conservationists have 
authority to focus EQIP to meet locally established priorities to 
target at-risk species and listed species based upon input from 
technical committees and to determine the specific context or scenarios 
under which the practices must be applied to achieve the desired 
wildlife benefits.
    Due to other changes in the interim rule, the provisions related to 
the EQIP plan of operations section that previously appeared at Sec.  
1466.9 now appear at Sec.  1466.7. Section 1466.7 now describes the 
requirements of the EQIP plan of operations, which is a component of 
the EQIP contract. Section 2204 of the 2014 Act replaced the term 
``environmental benefits'' with ``conservation benefits.'' Therefore, 
NRCS amends the provisions to replace the term ``environmental 
objectives'' with the term ``conservation objectives'' every place it 
occurs in the section.
    Due to other changes in the interim rule, the provisions related to 
the EQIP plan of operations section that previously appeared at Sec.  
1466.10 now appear at Sec.  1466.8. Section 1466.8, ``Conservation 
practices,'' now describes how NRCS determines eligible conservation 
practices. NRCS makes a minor editorial change in paragraph (a) to 
clarify that the term ``practice'' used in the second sentence means 
``conservation practice'' as defined in Sec.  1466.3. Additionally, 
NRCS amends paragraph (d) to reference ``conservation benefits'' 
instead of ``environmental benefits'' consistent with the statutory 
change made by section 2204 of the 2014 Act. Finally, NRCS adds a new 
paragraph (e) to ensure that State Conservationists target EQIP funds 
to wildlife habitat consistent with the additional wildlife habitat 
purposes incorporated into EQIP by section 2203 of the 2014 Act. 
Technical Service Providers (TSP) provisions previously numbered Sec.  
1466.11 are now at located at Sec.  1466.9.

Part 1466, Subpart B--Contracts

    Section 1466.20, ``Application for contracts and selecting 
applications,'' addresses how producer applications are submitted and 
selected for funding. NRCS updates the language throughout Sec.  
1466.20 to reference ``conservation benefits'' instead of 
``environmental benefits,'' consistent with the amendment made by 
section 2204 of the 2014 Act. NRCS also updates the terms used 
throughout Sec.  1466.20 to correspond to the updates to the terms in 
Sec.  1466.3 Definitions. To reduce administrative burden and improve 
timely delivery of program benefits, NRCS also removes the nonstatutory 
requirement in Sec.  1466.20(b)(5) that EQIP applications $150,000 or 
greater require the review and approval of the Regional 
Conservationist. Since the term Regional Conservationist is not used in 
any other section of this rule other than in regards to the above 
requirement to be removed, the definition is also removed from Sec.  
1466.3.
    Section 1466.21, ``Contract requirements,'' identifies elements 
contained within an EQIP contract and the responsibilities of the 
participant who is party to the EQIP contract. This section also 
addresses EQIP contract funding limitations. To receive payment, an 
applicant must enter into an EQIP contract. The EQIP contract 
identifies all financially supported conservation practices to be 
implemented, their timing and sequence, and the operation and 
maintenance (O&M) needed to maintain the conservation practice for its 
intended lifespan. NRCS amends paragraph (b)(2) to change the duration 
of the term of an EQIP contract to correspond with the change to the 
length of the contract term made by section 2203 of the 2014 Act. In 
particular, an EQIP contract will have a term for no more than ten 
years. Since EQIP only makes payment for the implementation of 
conservation practices, and does not provide annual or rental payments, 
EQIP contracts are not renewed. NRCS amends this section by replacing 
``within the agricultural or forestry operation'' with ``on the 
enrolled land'' consistent with the change made by section 2205 of the 
2014 Act that replaced ``farm, ranch, or forest'' with ``enrolled'' at 
section 1240D of the EQIP statute.
    NRCS continues to use a contract funding limitation to manage 
program payment limitations. Consistent with statutory payment 
limitation requirements, NRCS retains the administrative authority to 
limit the maximum contract amount to equal the person/legal entity 
payment limitation. Specific payment limitations are addressed in Sec.  
1466.24, EQIP Payments.
    Section 1466.22, ``Conservation practice operation and 
maintenance,'' addresses the participant's responsibility for 
conservation practice operation and maintenance. NRCS replaces the term 
``environmental benefits'' with ``conservation benefits'' consistent 
with section 2204 of the 2014 Act.
    Section 1466.23, ``Payment rates,'' addresses payment rates and 
payment eligibility. NRCS replaces the reference to ``environmental 
benefits'' with ``conservation benefits'' at paragraph (a)(4), 
consistent with section 2204 of the 2014 Act. Section 2203 of the 2014 
Act revises the list of factors that NRCS may consider significant when 
determining the amount and rate of payment for income foregone to: Soil 
health; water quality and quantity improvement; nutrient management; 
pest management; air quality improvement; wildlife habitat development, 
including pollinator habitat; and invasive species management. NRCS 
revises this section to incorporate these changes made by section 2203.
    For participants who NRCS identifies meet the definition of 
historically underserved producers, in accordance with Sec.  1466.3, 
NRCS may award the applicable payment rate and an additional payment 
rate that is not less than 25 percent above the applicable payment 
rate, provided this increase does not exceed 90 percent of the 
estimated incurred costs and 100 percent of income foregone associated 
with the conservation practice. NRCS amends this section to clarify 
that veteran farmers or ranchers may also be awarded the special 
payment rate for historically underserved producers consistent with the 
addition of veteran farmers and ranchers by section 2203 of the 2014 
Act.
    NRCS also revises this section to clarify that NRCS will reduce the 
applicable payment rate to which a producer is entitled if the producer 
receives financial contributions for the implementation of a 
conservation practice from other USDA sources. The 2008 Act had revised 
section 1240B(d)(5) of the 1985 Act to specify that any non-Federal 
assistance that a producer receives should not impact the level of 
financial assistance a producer receives for EQIP participation. The 
January 2009 interim final rule had not

[[Page 73961]]

updated this; therefore, NRCS is making the adjustment in this interim 
rule.
    Section 1466.24, ``EQIP payments,'' provides direction on payment 
eligibility and payment limitations. Section 2206 of the 2014 Act 
amended section 1240G of the 1985 Act to replace the current $300,000 
payment limitation with a $450,000 payment limitation and to apply the 
new payment limitation for a specific time period of FY 2014 through FY 
2018, replacing the rolling 6-year period. NRCS amends paragraph (a) to 
incorporate this specific payment limitation for EQIP payments received 
during FY 2014 through FY 2018. The 2014 Act did not change the payment 
limitations associated with EQIP support of organic operations or those 
transitioning to organic production per section 1240(B) of the 1985 Act 
($20,000 per year or $80,000 during any six year period). Therefore, 
the Agency will enforce both payment limitations applicable to all 
program participants as cited in Sec.  1466.24.
    Section 1466.24 is also to use simplified regulatory references, 
such as replacing ``part 1400 of this chapter'' with ``7 CFR part 
1400.'' Paragraph (c)(10) incorporates the flexibility provided by the 
amendments made by section 2203 of the 2014 Act to how advance payments 
may be made to historically underserved producers. In particular, 
advance funds paid to program participants must be expended within 90 
days from receipt of funds or returned to NRCS within a reasonable time 
as determined by NRCS and eligibility for advance payment is contingent 
upon the participant obtaining an NRCS approved practice design.
    Section 1466.27, ``Conservation Innovation Grants,'' sets forth the 
policies and procedures related to awarding grants under the CIG 
provision at section 1240H of the 1985 Act. Section 2207 of the 2014 
Act added a reporting requirement for NRCS. In particular, NRCS must 
report not later than December 31, 2014, and every two years 
thereafter, to the Committee on Agriculture, Nutrition, and Forestry of 
the Senate and the Committee on Agriculture of the House of 
Representatives a report on the status of projects funded under the 
section, including funding awarded; project results; and incorporation 
of project findings, such as new technology and innovative approaches, 
into NRCS conservation efforts. A new paragraph has been added at Sec.  
1466.27(j) to address this reporting requirement.

Part 1466, Subpart C--General Administration

    Subpart C of the EQIP regulation 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 
2014 Act changes do not impact the regulatory provisions at Subpart C.

Summary of Changes to EQIP for Administrative Clarification and 
Reducing Administrative Complexity

    NRCS is clarifying a few administrative provisions. Additionally, 
NRCS is simplifying the administrative complexity of the EQIP rule by 
clarifying and streamlining the regulation to focus upon only those 
provisions that relate to conservation program participants rights and 
responsibilities under the programs. Topics are organized below in 
alphabetical order.

Animal Feeding Operations (AFOs) (Sec. Sec.  1466.3, 1466.7, and 
1466.21)

    Section 1240E(a)(3) of the 1985 Act authorizes payments for AFOs 
provided that the producer submits a plan of operations that provides 
for development and implementation of a comprehensive nutrient 
management plan (CNMP), if applicable. The 2002 Act removed an existing 
restriction for EQIP to provide assistance to large confined livestock 
feeding operations. Neither the 2008 Act nor the 2014 Act made 
modifications to these provisions. However, to improve the clarity of 
the regulation regarding AFO CNMP requirements, NRCS is updating the 
EQIP rule to incorporate a definition for AFOs and is revising the 
definition of CNMP to state that these are conservation plans developed 
specifically for an AFO.
    Consistent with these updates, NRCS is revising Sec.  1466.7, EQIP 
plan of operations, to clarify that if an EQIP plan of operations 
includes an animal waste storage or treatment facility to be 
implemented on an AFO, the participant must agree to develop and 
implement a CNMP by the end of the contract period which will be 
verified by NRCS. Finally, Sec.  1466.21, Contract requirements, is 
being updated to state that a CNMP should be implemented when an EQIP 
contracts includes an animal waste facility on an AFO.

Conservation Innovation Grants (Sec.  1466.27)

    The CIG component of EQIP stimulates the development and adoption 
of innovative conservation approaches and technologies while leveraging 
Federal investment in environmental enhancement and protection in 
conjunction with agricultural production. The regulations for CIG are 
found at 7 CFR 1466.27. CIG grants are administered in accordance with 
Departmental and government-wide requirements for financial assistance 
awards.
    NRCS is adding a definition for cooperative agreement to clarify 
that both grant agreements and cooperative agreements may be used. NRCS 
is also removing the provisions at 7 CFR 1466.27(c)(1) and 1466.27(f) 
that require CIG funding opportunities to be published in the Federal 
Register. Since this provision was first incorporated, the Federal 
Government adopted the Grants.gov portal through which funding 
opportunities are announced. Therefore, such announcements are no 
longer required to be published in the Federal Register. NRCS has also 
made several adjustments to this section to explain the financial 
responsibilities of a grantee. NRCS also deleted paragraphs (h)(5) and 
(6) referring to internal agency processes for state-level grants. 
Subsections (j) and (k), related to patents and inventions and 
violations, were struck because the matter discussed is covered in 
other parts of the CFR.

Consultation With Conservation Districts (Sec.  1466.26)

    Section 1466.26 authorizes NRCS to consult with conservation 
districts in contract termination decisions. However, section 1619 of 
the 2008 Act imposes limitations on the disclosure of certain types of 
information provided by an agriculture producer. Therefore, this 
section has been removed though NRCS will continue to work closely with 
its conservation district partners in the implementation of EQIP and 
its other conservation programs.

Definition of Terms (Sec.  1466.3)

    The definition of ``beginning farmer or rancher'' has been revised 
to reflect the authority of the Food Security Act of 1985 and amendment 
from the 2008 Act which added nonindustrial private forest land (NIPF) 
as specifically eligible for EQIP. The revision is also consistent with 
Departmental regulation. The revised definition now reads as:
    Beginning farmer or rancher means a person or legal entity who:
    (1) Has not operated a farm or ranch, or NIPF, or who has operated 
a farm, ranch, or NIPF for not more than 10 consecutive years. This 
requirement applies to all members of an entity who

[[Page 73962]]

will materially and substantially participate in the operation of the 
farm or ranch.
    (2) In the case of a contract with an individual, individually, or 
with the immediate family, material and substantial participation 
requires that the individual provide substantial day-to-day labor and 
management of the farm or ranch consistent with the practices in the 
county or State where the farm is located.
    (3) In the case of a contract with an entity or joint operation, 
all members must materially and substantially participate in the 
operation of the farm or ranch. Material and substantial participation 
requires that each of the members provide some amount of the 
management, or labor and management necessary for day-to-day 
activities, such that if each of the members did not provide these 
inputs, operation of the farm or ranch would be seriously impaired.
    Conservation practice:
    NRCS has amended the definition of conservation practice to clarify 
that approved conservation practices are listed in the NRCS Field 
Office Technical Guide.
    Estimated income foregone:
    For clarification, NRCS has expanded the definition to clarify the 
elements that are used in its calculation. Therefore, the definition 
now reads: ``Estimated income foregone means an estimate of the net 
income loss associated with the adoption of a conservation practice. 
Along with other estimated incurred costs, foregone income is one of 
the costs associated with practice implementation as recorded in a 
payment schedule. NRCS calculates foregone income as the average annual 
net income ($/unit/year) lost from implementing a conservation practice 
which results in a change in land use or land taken out of production 
or the opportunity cost associated with the adoption of a conservation 
practice. Foregone income will not include losses of income due to 
disaster or other events unrelated to the conservation practice such as 
risk associated with agricultural production.''

Environmental Credits (Sec.  1466.36)

    NRCS recognizes the increased interest among agricultural producers 
to be able to participate in environmental service markets. The policy 
in this section is not new. Minor editorial changes are made to Sec.  
1466.36.

Irrigation History Requirement (Sec.  1466.8--as Renumbered)

    NRCS has received numerous comments since publication of the EQIP 
interim final rule in January 2009 related to the topic of irrigation. 
These comments have focused upon the irrigation history requirement in 
EQIP that is used to determine whether proposed irrigation related 
practices will result in water conservation or water savings.
    A requirement of EQIP is to provide a positive conservation benefit 
to address a resource concern, which for the purpose of a cropland 
irrigation practice, is water conservation. Whether water conservation 
objectives have been achieved is often determined through a calculation 
of water savings based upon the difference in amount of water used 
before and after implementation of the irrigation practice, thus 
providing an estimate of water saved or conserved.
    Without evidence of existing irrigation, it is difficult to justify 
funding to implement a water conservation practice if there is no 
documentation of past water use and therefore savings. Funding 
practices to facilitate new irrigation practices that do not currently 
exist would use more water than previously and tend to defeat the 
purpose of the program to provide a conservation benefit.
    Historically, USDA and NRCS conservation programs have received 
overall support for the rule and policy requirements to provide 
evidence that land has been irrigated 2 of the past 5 years to ensure 
that both a natural resource concern will be addressed by EQIP 
assistance and that EQIP assistance does not result in adverse impacts 
to aquifer depletion or surface streams experiencing decreased flow. 
However, the strict irrigation history requirement may have 
inadvertently disadvantaged some individuals or groups and there may be 
specific situations where adjustment of the requirement may be 
appropriate.
    Some producers, especially limited resource and socially 
disadvantaged producers, cannot benefit fully from EQIP assistance 
because of difficulty meeting this irrigation history requirement for 
reasons beyond their control. There are situations where producers 
cannot document historical use of irrigation on some lands, such as 
Tribal lands, and therefore, cannot meet or document the irrigation 
history requirement. Additionally, producers who do not have extensive 
structural irrigation delivery systems use non-mechanized irrigation 
methods and do not maintain records for these irrigation applications.
    Between October 2010 and January 2011, NRCS participated in seven 
Interagency Tribal consultation meetings held across the nation. The 
effort was coordinated by the USDA Office of Tribal Relations and 
provided an opportunity for Tribal leaders to comment in person on the 
programs authorized by the Food, Conservation, and Energy Act of 2008. 
NRCS staff presented program overviews to attending Tribal 
Representatives that provided them with a better understanding of 
program details.
    The EQIP irrigation history requirement was among the top ten 
issues raised by the Tribal representatives during the Interagency 
Tribal consultation meetings. The Tribal representatives identified 
that the irrigation history requirement raised barriers to Tribal 
participation in EQIP due to drought, incomplete irrigation pipelines, 
or loss of water use rights or access to water.
    Therefore, NRCS is modifying the EQIP regulation to address the 
irrigation history requirement through introduction of a waiver 
provision. In particular, NRCS has determined that it is appropriate, 
pursuant to the Secretary's authority under 16 U.S.C. 3844 to address 
barriers to participation by historically underserved producers, to 
incorporate a limited waiver to the irrigation history requirement 
under the EQIP regulation.
    NRCS believes that a narrowly-tailored waiver provision will 
address these participation barriers in a manner that ensures EQIP 
continues to meet its statutory purposes through fully addressing 
natural resource concerns on eligible land. The new waiver provision 
will address two different circumstances described more fully below: 
(1) one circumstance is particular to limited resource and socially 
disadvantaged producers, including individual Indian producers; and (2) 
one circumstance is particular to Indian lands, as defined by the EQIP 
regulation, that have been designated as ``permanently irrigable'' ``by 
the Bureau of Indian Affairs.
    For circumstances related to limited resource and socially-
disadvantaged producers, this rule provides that the NRCS Chief may 
waive the irrigation history requirement where, for reasons beyond the 
control of the producer, the producer could not irrigate the land but 
there exists an identified natural resource concern. More specifically, 
the water-conservation or irrigation-related conservation practice must 
address the natural resource concern through the successful and cost-
effective implementation of other practices that address soil quality 
and erosion resource concerns, and all other program requirements can 
be met.
    The waiver authority will only be available to limited resource and

[[Page 73963]]

socially-disadvantaged producers, including individual Indian tribal 
producers, who wish to install an efficient irrigation system as a 
means to assist with the adoption of sustainable agricultural 
production methods, as determined by the Chief, and such adoption will 
not adversely impact limited surface water or groundwater supplies. 
Sustainable production methods may include the establishment of cover 
crops and irrigation water management as part of no-till production or 
organic production systems needed to ensure a positive trend in the 
soil condition index. To ensure that the waiver does not result in 
converting land into more intensive uses such as converting pasture to 
cropland, this rule also provides that a producer who seeks a waiver 
must also be able to establish that the land has been in active 
agricultural production (cropped, hayed, or grazed) four of the last 
six years.
    NRCS establishes these limitations for availability of the waiver 
based on several reasons. First, EQIP eligibility requires that any 
practice funded will address identified natural resource concerns 
related to agricultural production. Therefore, absent documentation of 
irrigation history, the proposed irrigation practice must directly 
facilitate the successful implementation of a practice that addresses 
an identified natural resource concern (such as soil quality 
improvements or erosion control) as part of a resource management 
system.
    To minimize any potential negative impacts upon surface and ground 
water supplies, NRCS will evaluate the impact of granting a waiver, 
both individually and cumulatively, prior to approval and incorporate 
any necessary limitations to ensure that such impact is minimized. 
Criteria used to evaluate the potential impact of a waiver on existing 
water supplies will be developed by NRCS, and the agency is using this 
rulemaking as an opportunity to obtain public input on the availability 
of a waiver and the criteria for granting and evaluating the impact of 
such waivers.
    For example, the impacts upon water supplies could be based on, but 
not necessarily limited to, the following sample criteria:
     For groundwater systems, the aquifer must not be declining 
in elevation or in yield;
     For surface water diversions east of the 100th meridian, a 
legal right to use surface water must be in possession of the 
applicant. The surface water source would need to be documented as 
meeting all other legal water rights 8 out of 10 of the last years; and
     For surface water diversions west of the 100th meridian, 
the surface water source must be shown to have met all state-designated 
beneficial uses for which legal rights are held 5 out of the last 10 
years.
    Waivers will not be granted in areas that have been subject to 
water shortages. Additional criteria may include the extent of the 
acreage being placed under irrigation, and NRCS seeks specific public 
comment about whether acreage limitations should also be amongst the 
criteria applied to limit the potential impact to existing water 
supplies. For example, NRCS could limit its approval of waivers to 
where less than 50 acres of cropland are to be irrigated with an 
efficient irrigation system meeting NRCS practice standards. The 50-
acre limitation criteria would be based upon the standard field size 
that can be irrigated with a center pivot.
    Finally, NRCS establishes the four of the last six years 
agricultural production history as a means to ensure that land is not 
converted into more intensive uses that significantly impact water 
resources, and is patterned after recognized statutory cropping history 
requirements under the Conservation Reserve and Conservation 
Stewardship Programs.
    Additionally, NRCS may also authorize a waiver of the irrigation 
history requirement for circumstances faced by federally recognized 
Indian Tribes. The Bureau of Indian Affairs (BIA) has categorized 
various Tribal lands as ``permanently irrigable.'' These lands include 
lands that were known historically to be previously irrigated, or where 
there were plans to establish irrigation facilities though approved 
projects that were never constructed. Another situation is that the 
planned irrigation practices were constructed, but were inappropriate 
for the associated management practices or were not finished 
completely, and thus were not utilized for the intended purpose or 
need.
    In some circumstances, these lands were previously irrigated, but 
for various reasons, deteriorated where irrigation delivery became 
unfeasible or resulted in litigation concerning water rights which 
prevented the Indian tribe's lands from actually being irrigated. 
Often, affected producers on these Tribal lands are required to and 
continue to pay operation and maintenance fees for the irrigation 
delivery facilities even when no irrigation water is being delivered. 
These lands, once water rights and delivery issues have been resolved, 
can and likely will be under irrigation production and meet the intent 
of statute to conserve and efficiently use available water.
    Again, to minimize any potential increased negative impact upon 
surface and groundwater water supplies, NRCS will evaluate the impact 
of granting a waiver, both individually and cumulatively, prior to 
approval and incorporate any necessary limitations to ensure that such 
impact is minimized. Criteria used to evaluate the potential impact of 
a waiver on existing water supplies will be developed by NRCS, and the 
agency is using this rulemaking as an opportunity to obtain public 
input on the availability of a waiver and the criteria for granting and 
evaluating the impact of such waivers. Waivers will not be granted in 
areas that have been subject to water shortages during the previous 
full irrigation season.
    When a waiver is being considered for land proposed for the EQIP 
program that has been designated permanently irrigable by the BIA, the 
impacts upon water supplies could be based on, but not necessarily 
limited to, the following sample criteria:
     Whether water rights are secured and legal;
     For sources of irrigation from groundwater, the aquifer is 
not declining in either elevation or yield. There may be situations 
where although there is a declining aquifer, a Tribal entity has a 
water right that is senior to many of the other groundwater rights. 
These cases will be evaluated individually; and
     For surface water sources, the Tribal water rights are 
such that they would have resulted in full-volume delivery 5 out of the 
last 10 years.
    Such criteria may also include the extent of the acreage being 
placed under irrigation, and NRCS also seeks specific public comment 
about whether acreage limitations should also be amongst the criteria 
applied to evaluating whether a waiver on Tribal land is appropriate. 
For example, NRCS could limit the waiver to 200 acres/Tribe, basing the 
200-acre limitation upon allowance of four of the standard 50-acre 
fields that can be irrigated with a center pivot. NRCS believes that 
such criteria could focus EQIP assistance to Tribal operations that do 
not have the financial resources necessary to implement water 
conservation measures on their own and thus EQIP assistance is needed.
    EQIP's water conservation purposes can be furthered by granting a 
waiver for irrigation-related assistance on Indian lands classified as 
permanently irrigable with existing irrigation-related facilities, and 
where the producer has been paying

[[Page 73964]]

operation and maintenance fees for irrigation water delivery.
    NRCS believes the new waiver with these two categories of producers 
will balance the need for EQIP assistance by producers who have not 
been able to establish an irrigation history with ensuring that 
implementation of a waiver does not have an unintended consequence of 
increasing depletion of limited surface or groundwater resources. NRCS 
requests public comment on the availability of a waiver and the 
criteria for granting such waivers. This rulemaking amends the EQIP 
regulation by incorporating a waiver provision at 7 CFR 1466.8(c).

Outreach (Sec.  1466.5--as Renumbered)

    To improve clarity of this interim rule, NRCS has amended the 
language in Sec.  1466.5 (as renumbered) to read as follows:
    ``NRCS will establish program outreach activities at the national, 
State, Tribal, and local levels in order to ensure that producers whose 
land has environmental problems and priority resource concerns are 
aware and informed that they may be eligible to apply for program 
assistance. Special outreach will be made to eligible producers with 
historically low participation rates, including but not restricted to, 
limited resource, socially disadvantaged, small-scale, or beginning 
farmers or ranchers, veteran farmers or ranchers, Indian Tribes, Alaska 
Natives, and Pacific Islanders. NRCS provides outreach so as not to 
limit producer participation because of size or type of operation or 
production system, including small-scale, specialty crop and organic 
production.''
    NRCS provides further guidance in agency policy that special 
emphasis will be made in all information activities to provide 
conservation assistance, program outreach, and access to limited 
resource farmers or ranchers, socially disadvantaged farmers or 
ranchers, small-scale farmers or ranchers, beginning farmers or 
ranchers, Tribal members, Alaska Natives, Pacific Islanders, producers 
with disabilities, veteran farmers or ranchers, and other producers 
with historically low participation rates in conservation programs. 
Procedures will adhere to national outreach policy guidance in GM Title 
230 Part 406. Special emphasis outreach efforts could include, but not 
be limited to:
    (a) Establishing special outreach activities at the national, 
State, Tribal, and local levels; and
    (b) Providing special accommodations, to the extent possible, to 
assure that producers are aware, informed, and have access to 
information and assistance, such as:
    (1) Using language spoken by the intended audience;
    (2) Using appropriate media sources to reach the intended audience; 
and
    (3) Partnering with nongovernmental organizations to assist in 
reaching more potential applicants.

Practice Costs, Payment Rates, and Payment Schedules (Sec.  1466.23)

    The process for documenting estimated incurred costs for 
conservation practices implemented through program support is an 
iterative process that begins with technical requirements of the 
practice standard, development of geographically based regional 
scenarios, identification of associated components and costs, and a 
quality control process for review and publication of resulting payment 
schedules used to support final payment rates. The process for 
documentation of estimated costs in payment schedules provides the 
following benefits to ensure accurate and timely delivery of program 
benefits:
    (i) Provide transparency and timely payment rate information to 
program applicants and agency partners,
    (ii) Ensure that payment schedules are consistent with program 
authority,
    (iii) Provide a consistent, reliable, and defensible method for 
documenting eligible costs,
    (iv) Provide flexibility which reflects cost variation across the 
Nation,
    (v) Uses established and accepted economic geographic areas aligned 
with States and regions based on farm employment data, crop costs, and 
other economic factors,
    (vi) Ensure payment rates and financial assistance are consistent 
with the definition, purpose, and requirements of approved conservation 
practice technical standards,
    (vii) Provide producers, through use of standardized cost estimates 
rather than detailed invoicing, simpler program application, contract 
administration, and request for program payments, and
    (viii) Support agency efforts to reduce State and field staff 
workload associated with administrative matters allowing more time for 
conservation planning, technical assistance, and practice 
implementation.
    NRCS believes that payment rates are best established through a 
nationally guided payment schedule process with State Conservationists, 
in consultation with the State Technical Committee, Tribal Conservation 
Advisory Council, and local working groups setting payment percentages 
which determine the final payment rate. The current regulation provides 
that ``Practice payment rates greater than 50 percent for estimated 
costs incurred . . . are to be approved by the Chief or designee.'' 
This provision related directly to previous statutory authority to make 
cost-share and incentive program payments. The 2008 Farm Bill 
eliminated authority for cost-share and incentive payments and 
established maximum payment limitations of 75 percent of estimated 
incurred costs and up to 90 percent of estimated incurred costs for 
historically underserved participant program payments. As a result the 
need for establishing cost-share percentages to calculate contract 
payments was eliminated. The nationally guided payment schedule process 
establishes controls to assure that these payment limitations are not 
exceeded in determination of program payment rates and therefore the 
need for agency review of these percentages are no longer needed.
    NRCS makes a revision to the rule to clarify when payment rates may 
be reduced as a result of the agency entering into a formal agreement 
with a partner who provides payments to producers participating in 
EQIP. Section 1466.23(b)(4) is added as follows: ``When the agency 
enters into a formal agreement with partners who provide financial 
support to help implement program initiatives, the Chief must adjust 
NRCS program payment percentages to provide practice payment rates to 
an amount such that the total financial assistance to the participant 
from NRCS and the partner does not exceed the amount needed to 
encourage voluntary adoption of the practice.''
    NRCS makes a technical correction in its cross-reference in Sec.  
1466.24(c)(1) to cite correctly to subparts in 7 CFR part 1400.

State Technical Committee as Identified in the EQIP Rule (Sec.  1466.2)

    In order to clarify the role of the State Technical Committee and 
further align the EQIP rule with the State Technical Committee rule (7 
CFR part 610), NRCS has revised Sec.  1466.2(b).

Technical Service Providers as Appearing in the EQIP Rule (Sec.  
1466.9--as Renumbered)

    NRCS is making several adjustments to ensure that its references to 
TSPs in the EQIP regulation are consistent with the TSP regulation at 7 
CFR part 652 by stating examples of eligible services. Additionally, 
due to other changes in the interim rule, the provisions that 
previously appeared at Sec.  1466.11 regarding TSPs will now appear at

[[Page 73965]]

Sec.  1466.9. NRCS also changed the definition of TSPs to clarify the 
process of becoming a TSP.

Transparency (Sec.  1466.20)

    Government transparency is furthered by public access to various 
government documents and information. NRCS supports open government to 
the extent authorized by law. Several statutory provisions limit the 
disclosure of Federal information where the release of such information 
may adversely affect an individual's privacy or other confidential 
matters. In particular, release of EQIP documents is governed by the 
Freedom of Information Act (FOIA), the Privacy Act, section 1619 of the 
2008 Act, and section 1244 of the 1985 Act. NRCS will provide as much 
transparency as possible concerning funding usage while adhering to the 
FOIA and Privacy Act requirements. Section 1619 of the 2008 Act 
prohibits NRCS from releasing any information specific to a producer's 
operation, practice, or the land itself in order to participate in USDA 
programs. NRCS will continue to aggregate information about EQIP 
including kinds of practices and extent and funding associated with 
contacts at the State and national levels. Section 1466.20(b)(6) of the 
EQIP rule specifies that NRCS will make available to the public all 
information regarding priority resource concerns, the list of eligible 
practices, payment rates, and how EQIP is implemented in a State. At 
the national level, NRCS posts information concerning EQIP at: 
www.nrcs.usda.gov/programs/EQIP.

Tribal Issues (Sections Throughout Interim Rule)

    Between October 2010 and January 2011, NRCS participated in seven 
interagency Tribal consultation meetings held across the Nation. The 
effort was coordinated by the USDA Office of Tribal Relations and 
provided an opportunity for Tribal leaders to comment in person on the 
2008 Act programs. NRCS participated again in Tribal consultation 
meetings in April 2014.
    In response, NRCS has made several adjustments to the EQIP rule. 
The term Tribal Conservation Advisory Council was added wherever 
applicable to more accurately portray relationships of these bodies in 
providing advice to the State Conservationist. The term Indian Tribes 
and Tribal were included throughout the regulation to ensure clarity in 
program delivery, and language was added to ensure more clarity 
concerning NRCS' relationship with the Bureau of Indian Affairs (BIA) 
at Sec.  1466.6(b)(3). NRCS has also incorporated provisions to clarify 
to that payment and contract limitations do not apply to Indian Tribes 
but apply to individual Tribal member(s) at Sec.  1466.24(a). The 
removal of the maximum limitation for contracts with Indian Tribes 
facilitates the ability of NRCS to address the natural resource 
concerns faced by Indian producers on tribal lands by allowing the 
larger Tribal parcels with multiple producers to be administered under 
a single contract. NRCS anticipates removal of this barrier will 
improve efficiency and delivery of program benefits to Tribes.

Other EQIP Adjustments

    The following changes to Sec.  1466.3 definitions were made to 
clarify program administration and ensure consistency in program 
implementation:
     Indian Tribe: NRCS has included the word ``pueblo'' in the 
definition of Indian tribe. Although pueblo is encompassed in the term 
other organized group or community, NRCS is adding the term to provide 
additional clarity to the interim rule that pueblos are included as one 
of these recognized communities consistent with Departmental 
regulation.
     Limited resource farmer or rancher: NRCS amends the term, 
``limited resource farmer or rancher,'' by replacing the reference to 
``$155,200'' with ``the current indexed value.'' Using data provided by 
the various Federal agencies, NRCS establishes the value used for 
determining limited resource farmer and rancher which is calculated 
each fiscal year to reflect inflation, income, agricultural prices, 
poverty levels, and other factors. Details regarding the kind of data 
used and formula calculations are found at https://www.lrftool.sc.egov.usda.gov/About.aspx. NRCS adjusts the EQIP 
definition to correspond with the definition used more widely 
throughout the Department. NRCS also adds clarity by identifying when a 
legal entity or joint operation meets the requirements to be considered 
a limited resource farmer or rancher.
     Priority resource concern: NRCS revises the term 
``priority resource concern'' to align program terminology with other 
conservation programs administered by NRCS by clarifying that a 
priority resource concern is a ``natural'' resource concern.
     Resource concern: In order to be consistent with other 
NRCS financial assistance programs, NRCS has amended the definition for 
resource concern.
    NRCS makes the following additional administrative changes:

National Priorities--Sec.  1466.4

    Section 1466.4 National Priorities, identifies the national 
priorities for program implementation. Prior to the publication of the 
January 2009 interim final rule, NRCS identified these national 
priorities through public feedback in order to ensure that the stated 
national priorities reflected the most pressing natural resource needs. 
NRCS makes three minor adjustments to Sec.  1466.4. The first is to add 
energy conservation as one of the resource concerns addressed through 
EQIP which was not specifically addressed in the January 2009 interim 
rule. Although energy conservation was included as a purpose for EQIP 
in the 2008 Act, at the time, neither the agency nor industry had 
developed the tools needed to develop plans and practices which address 
this concern. Pursuant to the 2008 Act's authorization of the use of 
EQIP to address on-farm energy conservation benefits, NRCS has 
implemented the ``EQIP On-Farm Energy Initiative'' to enable a producer 
to identify ways to conserve energy on the farm through an Agricultural 
Energy Management Plan, also known as an on-farm energy audit, and by 
providing financial and technical assistance to help the producer 
implement various measures and practices recommended in an on-farm 
energy audit. The other two changes are to replace ``resource concern'' 
with ``natural resource concern'' and clarifying that promotion of at-
risk species habitat conservation includes the development and 
improvement of wildlife habitat. NRCS has established the national 
priorities to address natural resource concerns associated with 
enhancements to soil quality, water quality and quantity, plant health, 
energy conservation, wildlife habitat, air quality, and related 
resource concerns, that may be addressed through EQIP.

National and State Allocation Management Sections--Sec. Sec.  1466.5 
and 1466.6

    NRCS is removing these two sections as they relate to internal fund 
allocation management which are internal agency administrative 
procedures and do not affect the rights and responsibilities of EQIP 
participants. NRCS has utilized a formula for allocation of EQIP funds 
to States based upon factors established at Sec.  1466.5. Based upon 
both internal and external comment, NRCS recognized that the existing 
process did not adequately identify priority resource needs, the 
locally led process, or information available at the State level which 
could provide more

[[Page 73966]]

comprehensive data to make allocation decisions. In FY 2011, the agency 
developed a new allocation process based upon State-generated 
assessments of priority natural resource needs and associated work 
necessary to address identified resource concerns. These State-
developed assessments, following national guidance to assure accuracy 
and consistency, were reviewed with partners, stakeholders, other 
agencies, and others to quantify resource needs, priorities, agency 
goals, workload and available resources, and program opportunities to 
support direct requests from State Conservationists. These requests 
were submitted to agency leadership for review, and final EQIP 
allocations were based upon all requests and needs. This approach 
provides flexibility to address nationally and locally important 
natural resource concerns and provides a more reliable and accurate 
estimate of each State's needs, which in turn can be used to better 
inform the allocation process. The Agency will use a nationally 
consistent method to document resource needs and provide a foundation 
for establishing priorities within States. Inputs may include National 
Resources Inventory (NRI) land use data, NRI soil erosion estimates, 
NRI Rangeland Resource Assessment rangeland health data, NRI CEAP soil 
organic carbon data, and various attributes from the Soil Survey 
Geographic (SSURGO) database. These and other data layers maybe used to 
calculate critical acres by State and identified natural resource 
concerns.

Sec. Sec.  1466.8 Through 1466.11

    These sections are re-numbered in this interim rule to reflect the 
changes made by the removal of the administrative allocation sections. 
The provisions that previously appeared at Sec. Sec.  1466.8 through 
1466.11 are now found at Sec. Sec.  1466.6 through 1466.9.

Conservation Practice Operation and Maintenance--Sec.  1466.22

    In order to clarify NRCS operating procedures, NRCS has amended 
Sec.  1466.22(c) to state as follows: ``Conservation practices 
installed before the contract execution, but included in the contract 
to obtain the conservation benefits agreed upon, must be operated and 
maintained as specified in the contract and [Operation and Maintenance] 
agreement.''
    Finally, throughout 7 CFR part 1466, NRCS simplifies the regulatory 
cross-references by replacing language such as ``part 1400 of this 
chapter'' with ``7 CFR part 1400.''

Summary of Request for Comments

    NRCS seeks general comments related to how to make the provisions 
easier to understand. In addition, NRCS seeks public comment related to 
the changes made to the EQIP regulation by this interim rule, including 
seeking comment:
     As identified in the Executive Summary, on how the agency 
should estimate the public value of conservation resulting from 
assistance provided through EQIP;
     as set out in Section 1466.3, on the definition of 
conservation benefits; and
     about the irrigation waiver requirement, and, about 
whether acreage limitations should also be amongst the criteria applied 
to limit the potential impact to existing water supplies, whether 
acreage limitations should also be amongst the criteria applied to 
evaluating whether a waiver on Tribal land is appropriate, and on the 
availability of granting such a waiver under certain conditions.

List of Subjects in 7 CFR Part 1466

    Agricultural operations, Conservation practices, Conservation 
payments, Natural resources, Payment rates, Contract, Animal feeding 
operations, Soil and water conservation, Soil quality, Water quality 
and water conservation, Wildlife, and Forestry management.

Regulatory Changes

0
For the reasons stated in the preamble, the Natural Resources 
Conservation Service and the Commodity Credit Corporation revise part 
1466 of Title 7 of the Code of Federal Regulations (CFR) to read as 
follows:

PART 1466--ENVIRONMENTAL QUALITY INCENTIVES PROGRAM

Subpart A--General Provisions
Sec.
1466.1 Applicability.
1466.2 Administration.
1466.3 Definitions.
1466.4 National priorities.
1466.5 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.
Subpart B--Contracts and Payment
1466.20 Applications for contracts and selecting applications.
1466.21 Contract requirements.
1466.22 Conservation practice operation and maintenance.
1466.23 Payment rates.
1466.24 EQIP payments.
1466.25 Contract modifications and transfers of land.
1466.26 Contract violations and terminations.
1466.27 Conservation Innovation Grants.
Subpart C--General Administration
1466.30 Appeals.
1466.31 Compliance with regulatory measures.
1466.32 Access to operating unit.
1466.33 Equitable relief.
1466.34 Offsets and assignments.
1466.35 Misrepresentation and scheme and device.
1466.36 Environmental credits for conservation improvements.

    Authority: 15 U.S.C. 714b and 714c; 16 U.S.C. 3839aa-3839-8.

Subpart A--General Provisions


Sec.  1466.1  Applicability.

    (a) The purposes of the Environmental Quality Incentives Program 
(EQIP) are to promote agricultural production, forest management, and 
environmental quality as compatible goals, and to optimize 
environmental benefits. Through EQIP, NRCS provides technical and 
financial assistance to eligible agricultural producers, including 
nonindustrial private forest landowners (NIPF) and Indian Tribes, to 
help implement conservation practices which address soil, water, and 
air quality; wildlife habitat; surface and groundwater conservation; 
energy conservation; and related resource concerns. EQIP's financial 
and technical assistance helps producers comply with environmental 
regulations and enhance agricultural and forested lands in a cost-
effective and environmentally beneficial manner. The purposes of the 
program are achieved by planning and implementing conservation 
practices on eligible land.
    (b) EQIP is available in any of the 50 States, District of 
Columbia, Commonwealth of Puerto Rico, Guam, Virgin Islands of the 
United States, American Samoa, and Commonwealth of the Northern Mariana 
Islands.
    (c) Contracts enrolled into EQIP prior to February 7, 2014, are 
subject to the regulations in effect the date prior to February 7, 
2014.


Sec.  1466.2  Administration.

    (a) The funds, facilities, and authorities of the CCC are available 
to NRCS for carrying out EQIP. Accordingly, where NRCS is mentioned in 
this part, it also refers to the CCC's funds, facilities, and 
authorities where applicable.
    (b) NRCS supports locally-led conservation by soliciting input from 
the State Technical Committee and the Tribal Conservation Advisory 
Council at the State level, and local working

[[Page 73967]]

groups at the county, parish, or Tribal level to advise NRCS on issues 
relating to EQIP implementation. Recommendations from the State 
Technical Committee and the Tribal Conservation Advisory Council may 
include but are not limited to:
    (1) Recommendation for program priorities and criteria;
    (2) Identification of priority resource concerns;
    (3) Recommendation of which conservation practices will be 
effective to treat identified priority resource concerns; and
    (4) Recommendation of program payment percentages for payment 
schedules.
    (c) No delegation in the administration of this part to lower 
organizational levels will preclude the Chief from making any 
determinations under this part, re-delegating to other organizational 
levels, or from reversing or modifying any determination made under 
this part. The Chief may modify or waive a discretionary provision of 
this part with respect to contracts entered into under the Regional 
Conservation Partnership Program (RCPP), if the Chief determines that 
such an adjustment is necessary to achieve the purposes of EQIP. 
Consistent with section 1271C(c)(3) of the 2014 Act, the Chief may also 
waive the applicability of the Adjusted Gross Income (AGI) limitation 
in section 1001D(b)(2) of the Food Security Act of 1985 for program 
participants if the Chief determines that the waiver is necessary to 
fulfill RCPP objectives.
    (d) NRCS may enter into agreements with other Federal or State 
agencies, Indian Tribes, conservation districts, units of local 
government, public or private organizations, and individuals to assist 
NRCS with implementation of the program in this part.


Sec.  1466.3  Definitions.

    The following definitions will apply to this part and all documents 
issued in accordance with this part, unless specified otherwise:
    Agricultural land means cropland, grassland, rangeland, pasture, 
and other agricultural land, on which agricultural and forest-related 
products or livestock are produced and resource concerns may be 
addressed. Other agricultural lands include cropped woodland, marshes, 
incidental areas included in the agricultural operation, and other 
types of agricultural land used for production of livestock.
    Agricultural operation means a parcel or parcels of land whether 
contiguous or noncontiguous, which the producer is listed as the 
operator or owner/operator in the Farm Service Agency (FSA) record 
system, which is under the effective control of the producer at the 
time the producer applies for a contract, and which is operated by the 
producer with equipment, labor, management, and production, forestry, 
or cultivation practices that are substantially separate from other 
operations.
    Animal feeding operation (AFO) means an agricultural operation 
where animals are kept and raised in confined situations. AFOs 
congregate animals, feed, manure, dead animals, and production 
operations on a small land area. Feed is brought to the animals rather 
than the animals grazing or otherwise seeking feed in pastures, fields, 
or on rangeland. An AFO is a lot or facility (other than an aquatic 
animal production facility) where the following conditions are met:
    (1) Animals have been, are, or will be stabled or confined and fed 
or maintained for a total of 45 days or more in any 12-month period; 
and
    (2) Crops, vegetation, forage growth, or post-harvest residues are 
not sustained in the normal growing season over any portion of the lot 
or facility.
    Animal waste storage or treatment facility means a structural 
conservation practice, implemented on an AFO consistent with the 
requirements of a Comprehensive Nutrient Management Plan (CNMP) and 
Field Office Technical Guide (FOTG), which is used for storing, 
treating, or handling animal waste or byproducts, such as animal 
carcasses.
    Applicant means a producer who has requested in writing to 
participate in EQIP.
    At-risk species means any plant or animal species listed as 
threatened or endangered; proposed or candidate for listing under the 
Endangered Species Act; a species listed as threatened or endangered 
under State law or Tribal law on Tribal land; State or Tribal land 
species of conservation concern; or other plant or animal species or 
community, as determined by the State Conservationist, with advice from 
the State Technical Committee or Tribal Conservation Advisory Council, 
that has undergone, or is likely to undergo, population decline and may 
become imperiled without direct intervention.
    Beginning farmer or rancher means a person, Indian Tribe, Tribal 
corporation,, or legal entity who:
    (1) Has not operated a farm or ranch, or NIPF, or who has operated 
a farm, ranch, or NIPF for not more than ten consecutive years. This 
requirement applies to all members of an entity, who will materially 
and substantially participate in the operation of the farm or ranch.
    (2) In the case of a contract with an individual, individually, or 
with the immediate family, material and substantial participation 
requires that the individual provide substantial day-to-day labor and 
management of the farm or ranch, consistent with the practices in the 
county or State where the farm is located.
    (3) In the case of a contract with an entity or joint operation, 
all members must materially and substantially participate in the 
operation of the farm or ranch. Material and substantial participation 
requires that each of the members provide some amount of the 
management, or labor and management necessary for day-to-day 
activities, such that if each of the members did not provide these 
inputs, operation of the farm or ranch would be seriously impaired.
    Chief means the Chief of NRCS, United States Department of 
Agriculture (USDA), or designee.
    Comprehensive Nutrient Management Plan means a conservation plan 
that is specifically for an AFO. A CNMP identifies conservation 
practices and management activities which, when implemented as part of 
a conservation system, will manage sufficient quantities of manure, 
waste water, or organic by-products associated with a waste management 
facility. A CNMP incorporates practices to use animal manure and 
organic by-products as a beneficial resource while protecting all 
natural resources including water and air quality associated with an 
AFO. A CNMP is developed to assist an AFO owner/operator in meeting all 
applicable local, Tribal, State, and Federal water quality goals or 
regulations. For nutrient impaired stream segments or water bodies, 
additional management activities or conservation practices may be 
required by local, Tribal, State, or Federal water quality goals or 
regulations.
    Conservation benefit means the improved condition of a natural 
resource concern resulting from the implementation of a conservation 
practice.
    Conservation district means any district or unit of State, Tribal, 
or local government formed under State, Tribal, or territorial law for 
the express purpose of developing and carrying out a local soil and 
water conservation program. Such district or unit of government may be 
referred to as a ``conservation district,'' ``soil conservation 
district,'' ``soil and water conservation district,'' ``resource 
conservation district,'' ``land

[[Page 73968]]

conservation committee,'' ``natural resource district,'' or similar 
name.
    Conservation Innovation Grants (CIG) means competitive grants made 
under EQIP to individuals, Indian Tribes, and governmental and 
nongovernmental organizations to stimulate and transfer innovative 
technologies and approaches, to leverage Federal funds, and to enhance 
and protect the environment in conjunction with agricultural production 
and forest management.
    Conservation practice means one or more conservation improvements 
and activities, including structural practices, land management 
practices, vegetative practices, forest management practices, and other 
improvements that achieve the program purposes, including such items as 
CNMPs, agricultural energy management plans, dryland transition plans, 
forest management plans, integrated pest management, and other plans or 
activities determined acceptable by the Chief. Approved conservation 
practices are listed in the NRCS FOTG.
    Contract means a legal document that specifies the rights and 
obligations of any participant accepted into the program. An EQIP 
contract is a binding agreement for the transfer of assistance from 
USDA to the participant to share in the costs of implementing 
conservation practices.
    Cost-effectiveness means the least costly option for achieving a 
given set of conservation objectives to address a resource concern.
    Enrolled land means the land area identified and included in the 
program contract at the time when funds have been obligated.
    EQIP plan of operations means the document that identifies the 
location and timing of conservation practices that the participant 
agrees to implement on eligible land enrolled in the program in order 
to address the priority resource concerns, optimize environmental 
benefit, and address program purposes as defined in Sec.  1466.1. The 
EQIP plan of operations is part of the EQIP contract.
    Estimated income foregone means an estimate of the net income loss 
associated with the adoption of a conservation practice. Along with 
other estimated incurred costs, foregone income is one of the costs 
associated with practice implementation as recorded in a payment 
schedule. NRCS calculates foregone income as the average annual net 
income ($/unit/year) lost from implementing a conservation practice 
which results in a change in land use or land taken out of production 
or the opportunity cost associated with the adoption of a conservation 
practice. Foregone income will not include losses of income due to 
disaster or other events unrelated to the conservation practice such as 
risk associated with agricultural production.
    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.
    Forest management plan means a site-specific plan that is prepared 
by a professional resource manager, in consultation with the 
participant, and is approved by the State Conservationist. Forest 
management plans may include a forest stewardship plan, as specified in 
section 5 of the Cooperative Forestry Assistance Act of 1978 (16 U.S.C. 
2103a); another practice plan approved by the State Forester or Indian 
Tribe; or another plan determined appropriate by the State 
Conservationist. The plan is intended to comply with Federal, State, 
Tribal, and local laws, regulations, and permit requirements.
    Habitat development means the application of conservation practices 
to establish, improve, protect, enhance, or restore the conditions of 
the land for the specific purpose of improving conditions for fish and 
wildlife.
    Historically underserved producer means a person, joint operation, 
legal entity, or Indian Tribe who is a beginning farmer or rancher, 
socially disadvantaged farmer or rancher, or limited resource farmer or 
rancher.
    Indian land means:
    (1) Land held in trust by the United States for individual Indians 
or Indian Tribes; or
    (2) Land, the title to which is held by individual Indians or 
Indian Tribes subject to Federal restrictions against alienation or 
encumbrance; or
    (3) Land which is subject to rights of use, occupancy and/or 
benefit of certain Indian Tribes; or
    (4) Land held in fee title by an Indian, Indian family, or Indian 
Tribe.
    Indian Tribe means any Indian Tribe, band, nation, pueblo, or other 
organized group or community, including any Alaska Native village or 
regional or village corporation as defined in or established pursuant 
to the Alaska Native Claims Settlement Act (43 U.S.C. 1601 et seq.) 
which is recognized as eligible for the special programs and services 
provided by the United States to Indians because of their status as 
Indians.
    Integrated pest management means a sustainable approach to managing 
pests by combining biological, cultural, physical, and chemical tools 
in a way that minimizes economic, health, and environmental risks.
    Joint operation means, as defined in part 7 CFR 1400, a general 
partnership, joint venture, or other similar business organization in 
which the members are jointly and severally liable for the obligations 
of the organization.
    Legal entity means, as defined in 7 CFR 1400, an entity created 
under Federal or State law that:
    (1) Owns land or an agricultural commodity, product, or livestock; 
or
    (2) Produces an agricultural commodity, product, or livestock.
    Lifespan means the period of time during which a conservation 
practice or activity should be maintained and used for the intended 
purpose.
    Limited resource farmer or rancher means either:
    (1) Individual Producer:
    (i) A person with direct or indirect gross farm sales not more than 
the current indexed value in each of the previous two fiscal years 
(adjusted for inflation using Prices Paid by Farmer Index as compiled 
by National Agricultural Statistical Service), and
    (ii) Has a total household income at or below the national poverty 
level for a family of four, or less than 50 percent of county median 
household income in each of the previous two years (to be determined 
annually using Commerce Department Data), or
    (2) A legal entity or joint operation if all individual members 
independently qualify under paragraph (1) of this definition.
    Liquidated damages means a sum of money stipulated in the EQIP 
contract that the participant agrees to pay NRCS if the participant 
fails to adequately complete the terms of the contract. The sum 
represents an estimate of the technical assistance expenses incurred to 
service the contract, and reflects the difficulties of proof of loss 
and the inconvenience or nonfeasibility of otherwise obtaining an 
adequate remedy.
    Livestock means all domesticated animals produced on farms or 
ranches, as determined by the Chief.
    Livestock production means farm or ranch operations involving the 
production, growing, raising, or reproduction of domesticated livestock 
or livestock products.
    Local working group means the advisory body as defined in part 610 
of this title.
    National Organic Program means the national program established 
under the

[[Page 73969]]

Organic Foods Production Act of 1990 (7 U.S.C. 6501 et seq.), 
administered by the Agricultural Marketing Service, which regulates the 
standards for any farm, wild crop harvesting, or handling operation 
that wants to sell an agricultural product as organically produced.
    National priorities means resource issues identified by the Chief, 
with advice from other Federal agencies, Indian Tribes, and State 
Conservationists, which will be used to determine the distribution of 
EQIP funds and guide local EQIP implementation.
    Natural Resources Conservation Service is an agency of USDA, which 
has responsibility for administering EQIP using the funds, facilities, 
and authorities of the CCC.
    Nonindustrial private forest land means rural land, as determined 
by the Secretary, that has existing tree cover or is suitable for 
growing trees; and is owned by any nonindustrial private individual, 
group, association, corporation, Indian Tribe, or other private legal 
entity that has definitive decision-making authority over the land.
    Operation and maintenance (O&M) means work performed by the 
participant to keep the applied conservation practice functioning for 
the intended purpose during the conservation practice lifespan. 
Operation includes the administration, management, and performance of 
nonmaintenance actions needed to keep the completed practice 
functioning as intended. Maintenance includes work to prevent 
deterioration of the practice, repairing damage, or replacement of the 
practice to its original condition if one or more components fail.
    O&M agreement means the document that, in conjunction with the EQIP 
plan of operations, specifies the operation and maintenance 
responsibilities of the participant for conservation practices 
installed with EQIP assistance.
    Organic system plan (OSP) means a management plan for organic 
production or for an organic handling operation that has been agreed to 
by the producer or handler and the certifying agent. The OSP includes 
all written plans that govern all aspects of agricultural production or 
handling as required under the Organic Foods Production Act of 1990 (7 
U.S.C. 6501 et seq.).
    Participant means an applicant that has entered into an EQIP 
contract who incurs the cost of practice implementation, will receive 
payment or is responsible for implementing the terms and conditions of 
an EQIP contract.
    Payment means financial assistance provided to the participant 
based on the estimated costs incurred in performing or implementing 
conservation practices, including costs for: planning, design, 
materials, equipment, installation, labor,, management, or training, as 
well as the estimated income foregone by the producer for designated 
conservation practices.
    Person means, as defined in 7 CFR part 1400, an individual, natural 
person, and does not include a legal entity.
    Priority resource concern means a natural resource concern that is 
identified by the State Conservationist, in consultation with the State 
Technical Committee or Tribal Conservation Advisory Council, as a 
priority for a State, Tribal, local, geographic area, or watershed 
level.
    Producer means a person, legal entity, Indian Tribe, or joint 
operation who NRCS determines is engaged in agricultural production or 
forestry management on the agricultural operation.
    Resource concern means a specific natural resource problem that 
represents a significant concern in a State or region and is likely to 
be addressed through the implementation of conservation practices or 
activities by producers according to NRCS technical standards.
    Socially disadvantaged farmer or rancher means a producer who is a 
member of a group whose members have been subjected to racial or ethnic 
prejudices without regard to its members' individual qualities. For an 
entity, at least 50 percent ownership in the business entity must be 
held by socially disadvantaged individuals.
    State Conservationist means the NRCS employee authorized to 
implement EQIP and direct and supervise NRCS activities in a State, 
Caribbean Area, or Pacific Island Areas.
    State Technical Committee means a committee established by NRCS in 
a State pursuant to 7 CFR part 610, subpart C.
    Structural practice means a conservation practice, including a 
vegetative practice, that involves establishing, constructing, or 
installing a site-specific measure to conserve and protect a resource 
from degradation, or improve soil, water, air, or related natural 
resources in the most cost-effective manner. Examples include, but are 
not limited to, animal waste management facilities, terraces, grassed 
waterways, tailwater pits, livestock water developments, contour grass 
strips, filter strips, critical area plantings, tree plantings, 
establishment or improvement of wildlife habitat, and capping of 
abandoned wells.
    Technical assistance means technical expertise, information, 
training, education, and tools necessary for a producer to be able to 
successfully implement, operate, and maintain conservation practices to 
ensure the conservation of natural resources on land active in 
agricultural, forestry, or related uses. These technical services 
include the following:
    (1) Technical services provided directly to farmers, ranchers, 
Indian Tribes, and other eligible entities, such as conservation 
planning, technical consultation, and assistance with design and 
implementation of conservation practices; and
    (2) Technical infrastructure, including activities, processes, 
tools, and agency functions needed to support delivery of technical 
services, such as technical standards, resource inventories, training, 
education, data, technology, monitoring, and effects analyses.
    Technical service provider (TSP) means an individual, private-
sector entity, Indian Tribe, or public agency either:
    (1) Certified by NRCS pursuant to 7 CFR part 652 and placed on the 
approved list to provide technical services to participants; or
    (2) Selected by the Department to assist the Department in the 
implementation of conservation programs covered by this part through a 
procurement contract, contributions agreement, or cooperative agreement 
with the Department.
    Tribal Conservation Advisory Council means, in lieu of or in 
addition to forming a Tribal conservation district, an Indian Tribe may 
elect to designate an advisory council to provide input on NRCS 
programs and the conservation needs of the Tribe and Tribal producers. 
The 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, and programs 
and their impacts on Tribes.
    Veteran farmer or rancher means a producer who meets the definition 
in section 2501(e) of the Food, Agriculture, Conservation, and Trade 
Act of 1990, as amended (7 U.S.C. 2279(e)).
    Wildlife means non-domesticated birds, fishes, reptiles, 
amphibians, invertebrates, and mammals.
    Wildlife habitat means the aquatic and terrestrial environments 
required for fish and wildlife to complete their life cycles, providing 
air, food, cover, water, and spatial requirements.

[[Page 73970]]

Sec.  1466.4  National priorities.

    (a) The following national priorities, consistent with statutory 
resources concerns that include soil quality, water quality and 
quantity, plants, energy, wildlife habitat, air quality, and related 
natural resource concerns, may be used in EQIP implementation:
    (1) Reductions of nonpoint source pollution, such as nutrients, 
sediment, pesticides, or excess salinity in impaired watersheds 
consistent with total maximum daily loads (TMDL) where available; the 
reduction of surface and groundwater contamination; and the reduction 
of contamination from agricultural sources, such as animal feeding 
operations;
    (2) Conservation of ground and surface water resources;
    (3) Reduction of emissions, such as particulate matter, nitrogen 
oxides, volatile organic compounds, and ozone precursors and depleters 
that contribute to air quality impairment violations of National 
Ambient Air Quality Standards;
    (4) Reduction in soil erosion and sedimentation from unacceptable 
levels on agricultural land;
    (5) Promotion of at-risk species habitat conservation including 
development and improvement of wildlife habitat; and
    (6) Energy conservation to help save fuel, improve efficiency of 
water use, maintain production, and protect soil and water resources by 
more efficiently using fertilizers and pesticides.
    (b) In consultation with other Federal agencies and Indian Tribes, 
NRCS may undertake periodic reviews of the national priorities and the 
effects of program delivery at the State and local levels to adapt the 
program to address emerging resource issues. NRCS may:
    (1) Use the national priorities to guide the allocation of EQIP 
funds to the NRCS State offices;
    (2) Use the national priorities in conjunction with State, Indian 
Tribes, and local priorities to assist with prioritization and 
selection of EQIP applications; and
    (3) Periodically review and update the national priorities 
utilizing input from the public, Indian Tribes, other Federal and State 
agencies, and affected stakeholders to ensure that the program 
continues to address priority resource concerns.


Sec.  1466.5  Outreach activities.

    NRCS will establish program outreach activities at the national, 
State, Tribal, and local levels in order to ensure that producers whose 
land has environmental problems and priority resource concerns are 
aware and informed that they may be eligible to apply for program 
assistance. Special outreach will be made to eligible producers with 
historically low participation rates, including but not restricted to, 
limited resource, socially disadvantaged, small-scale, or beginning 
farmers or ranchers, veteran farmers or ranchers, Indian Tribes, Alaska 
Natives, and Pacific Islanders. NRCS provides outreach so as not to 
limit producer participation because of size or type of operation, or 
production system, including small-scale, specialty crop, and organic 
production.


Sec.  1466.6  Program requirements.

    (a) Program participation is voluntary. An applicant must develop 
an EQIP plan of operations for the eligible land to be treated that 
serves as the basis for the EQIP contract. Under EQIP, NRCS provides 
its participants with technical assistance and payments to plan and 
apply needed conservation practices.
    (b) To be eligible to participate in EQIP, an applicant must:
    (1) Be in compliance with the highly erodible land and wetland 
conservation provisions found at part 12 of this title;
    (2) Must be a producer as determined by NRCS;
    (3) Have control of the land for the term of the proposed contract 
unless an exception is made by the Chief in the case of land 
administered by the Bureau of Indian Affairs (BIA), Indian lands, or 
other instances in which the Chief determines that there is sufficient 
assurance of control;
    (i) The Chief may determine that land administered by BIA, Indian 
land, or other such circumstances provides sufficient assurance of 
control, and
    (ii) If the applicant is a tenant of the land involved in 
agricultural production or forestry management, the applicant will 
provide the Chief with the written concurrence of the landowner in 
order to apply a structural practice;
    (4) Agree to implement the EQIP plan of operations according to the 
provisions and conditions established in the EQIP contract, including 
the EQIP contract appendix;
    (5) Submit an EQIP plan of operations or plan developed for the 
purposes of acquiring an air or water quality permit, provided these 
plans contain elements equivalent to those elements required by an EQIP 
plan of operations and are acceptable to NRCS as being consistent with 
the purposes of the program;
    (6) Supply information, as required by NRCS, to determine 
eligibility for the program, including but not limited to, information 
to verify the applicant's status as a limited resource, beginning 
farmer or rancher, and payment eligibility as established by 7 CFR part 
1400;
    (7) Comply with applicable registration and reporting requirements 
of the Federal Funding Accountability and Transparency Act of 2006 
(Pub. L. 109-282, as amended), and 2 CFR parts 25 and 170; and
    (8) Provide a list of all members of the legal entity and embedded 
entities along with members' tax identification numbers and percentage 
interest in the entity.
    (c) Eligible land includes cropland, grassland, rangeland, pasture, 
NIPF, and other land on which agricultural products, livestock, or 
forest-related products are produced and resource concerns may be 
addressed. Other agricultural lands include cropped woodland, marshes, 
incidental areas included in the agricultural operation, and other 
types of agricultural land used for production of livestock. However, 
land may be considered for enrollment in EQIP only if NRCS determines 
that the land is:
    (1) Privately owned land; or
    (2) Publicly owned land where:
    (i) The land is a working component of the participant's 
agricultural and forestry operation,
    (ii) The participant has control of the land for the term of the 
contract, and
    (iii) The conservation practices to be implemented on the public 
land are necessary and will contribute to an improvement in the 
identified resource concern; or
    (3) Indian land.


Sec.  1466.7  EQIP plan of operations.

    (a) All conservation practices in the EQIP plan of operations must 
be approved by NRCS and developed and carried out in accordance with 
the applicable NRCS planning and FOTG technical requirements.
    (b) The participant is responsible for implementing the EQIP plan 
of operations according to the approved implementation schedule.
    (c) The EQIP plan of operations must include:
    (1) A description of the participant's specific conservation 
objectives to be achieved;
    (2) To the extent practicable, the quantitative or qualitative 
goals for achieving the participant's conservation and natural resource 
objectives;
    (3) A description of one or more conservation practices in the 
conservation management system, including conservation planning, 
design, or installation activities to be implemented to achieve the 
conservation objectives;
    (4) A description of the schedule for implementing the conservation

[[Page 73971]]

practices, including timing, sequence, operation, and maintenance; and
    (5) Information that will enable evaluation of the effectiveness of 
the plan in achieving the conservation objectives.
    (d) If an EQIP plan of operations includes an animal waste storage 
or treatment facility to be implemented on an AFO, the participant must 
agree to develop and implement a CNMP by the end of the contract 
period.
    (e) If an EQIP plan of operations includes conservation practices 
that address forest land related resource concerns, the participant 
must develop and implement a forest management plan by the end of the 
contract period.
    (f) A participant may receive assistance to implement an EQIP plan 
of operations which includes irrigation related practices to address a 
water conservation resource concern only if the 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 the State Conservationist, which 
will effectively conserve water in accordance with Sec.  1466.20.


Sec.  1466.8  Conservation practices.

    (a) NRCS will determine the conservation practices for which 
participants may receive program payments. NRCS will provide a list of 
eligible practices to the public as approved in the NRCS FOTG.
    (b) Payment will not be made to a participant for conservation 
practice that:
    (1) Either the applicant or another producer has initiated or 
implemented prior to application for the program; or
    (2) Has been initiated or implemented prior to contract approval, 
unless a waiver was granted by the Chief prior to the practice 
implementation.
    (c) A participant will be eligible for payments for water 
conservation and irrigation related conservation practices only on land 
that has been irrigated for 2 of the last 5 years prior to application 
for assistance. This irrigation history requirement may be waived for 
circumstances as determined by the Chief.
    (d) Where new technologies or management approaches that provide a 
high potential for optimizing conservation benefits have been 
developed, NRCS may approve interim conservation practice standards 
that incorporate the new technologies and provide financial assistance 
for pilot work to evaluate and assess the performance, efficiency, and 
effectiveness of the new technology or management approach.
    (e) NRCS will at least annually consult with State Technical 
Committees, Tribal Conservation Advisory Councils, local work groups, 
and other stakeholders to identify conservation practices with 
appropriate purposes and the criteria for their application to address 
priorities to establish wildlife habitat including:
    (1) Upland wildlife habitat;
    (2) Wetland wildlife habitat;
    (3) Habitat for threatened and endangered species;
    (4) Fish habitat;
    (5) Habitat on pivot corners and other irregular areas of a field, 
and
    (6) Other types of wildlife habitat, as determined by NRCS.


Sec.  1466.9  Technical services provided by qualified personnel not 
affiliated with USDA.

    (a) NRCS may use the services of qualified third party technical 
service providers in its delivery of EQIP technical assistance in 
accordance with 7 CFR part 652.
    (b) Participants may obtain technical services from certified 
technical service providers in accordance with 7 CFR part 652.
    (c) NRCS retains approval authority of work done by non-NRCS 
personnel for the purpose of approving EQIP payments.

Subpart B--Contracts and Payment


Sec.  1466.20  Application for contracts and selecting applications.

    (a) In evaluating EQIP applications, NRCS, with advice from the 
State Technical Committee, Tribal Conservation Advisory Council, or 
local working group takes into account the following guidelines:
    (1) Any producer who has eligible land may submit an application 
for participation in EQIP. Applications may be accepted on a continuous 
basis throughout the year. Producers who are members of a joint 
operation may file a single application for ranking purposes for the 
joint operation.
    (2) NRCS, to the greatest extent practicable, will group 
applications of similar crop, forestry, and livestock operations for 
evaluation purposes.
    (b) In selecting EQIP applications, NRCS, with advice from the 
State Technical Committee, Tribal Conservation Advisory Council, or 
local working group, may establish ranking pools to address a specific 
resource concern, geographic area, or agricultural operation type or 
develop a ranking process to prioritize applications for funding that 
address national, State, and local priority resource concerns, taking 
into account the following guidelines:
    (1) NRCS will periodically select the highest ranked applications 
for funding based on applicant eligibility, fund availability, and the 
NRCS ranking process. NRCS will rank all applications according to the 
following factors related to conservation benefits to address 
identified resource concerns through implementation of conservation 
practices:
    (i) The degree of cost-effectiveness of the proposed conservation 
practices,
    (ii) The magnitude of the expected conservation benefits resulting 
from the conservation treatment and the priority of the resource 
concerns that have been identified at the local, State, and national 
levels,
    (iii) How effectively and comprehensively the project addresses the 
designated resource concern or resource concerns,
    (iv) Use of conservation practices that provide long-term 
conservation enhancements,
    (v) Compliance with Federal, State, Tribal, or local regulatory 
requirements concerning soil, water, and air quality; wildlife habitat; 
and ground and surface water conservation,
    (vi) Willingness of the applicant to complete all conservation 
practices in an expedited manner,
    (vii) The ability to improve existing conservation practices or 
systems which are in place at the time the application is accepted, or 
that complete a conservation system, and
    (viii) Other locally defined pertinent factors, such as the 
location of the conservation practice, the extent of natural resource 
degradation, and the degree of cooperation by local producers to 
achieve environmental improvements.
    (2) For applications that include water conservation or irrigation-
related practices, and consistent with State law in which the 
applicant's eligible land is located, NRCS may give priority to those 
applications that:
    (i) Result in a reduction in water use in the agricultural 
operation, or
    (ii) Include an agreement by the applicant not to use any 
associated water savings to bring new land (other than incidental land 
needed for efficient operations) under irrigation production unless the 
producer is participating in a watershed-wide project that will 
effectively conserve water. NRCS may designate eligible watershed-wide 
projects that effectively conserve water, using the following criteria:
    (A) The project area has a current, comprehensive water resource 
assessment,

[[Page 73972]]

    (B) The project plan has demonstrated effective water conservation 
management strategies, and
    (C) The project sponsors have consulted relevant State and local 
agencies.
    (3) If NRCS determines that the conservation benefits of two or 
more applications for payments are comparable, NRCS may not assign a 
higher priority to the application solely because it would present the 
least cost to the program.
    (4) The ranking score may not give preferential treatment to 
applications based on size of the operation, income generated from the 
operation, type of operation, or other factors not related to 
conservation benefits to address a resource concern unless authorized 
in this rule.
    (5) The ranking process will determine the order in which 
applications will be selected for funding. The approving authority for 
EQIP contracts will be NRCS.
    (6) NRCS will make available to the public all information 
regarding priority resource concerns, the list of eligible practices, 
payment rates, and how EQIP is implemented in a State.


Sec.  1466.21  Contract requirements.

    (a) In order for a participant to receive payments, the participant 
must enter into a contract agreeing to implement one or more 
conservation practices. Payment for technical services may be included 
in the contract pursuant to requirements of this part.
    (b) An EQIP contract will:
    (1) Identify all conservation practices to be implemented, the 
timing of practice installation, the operation and maintenance 
requirements for the practices, and applicable payments allocated to 
the practices under the contract;
    (2) Have a term for not more than 10 years;
    (3) Incorporate all provisions as required by law or statute, 
including requirements that the participant will:
    (i) Not implement any practices on the enrolled land that would 
defeat the program's purposes,
    (ii) Refund any program payments received with interest, and 
forfeit any future payments under the program, on the violation of a 
term or condition of the contract, consistent with the provisions of 
Sec.  1466.26,
    (iii) Refund all program payments received on the transfer of the 
right and interest of the producer in land subject to the contract, 
unless the transferee of the right and interest agrees to assume all 
obligations, including operation and maintenance of the EQIP contract's 
conservation practices, consistent with the provisions of Sec.  
1466.25,
    (iv) Develop and implement a CNMP when the EQIP contract includes 
an animal waste management facility on an AFO by the end of the 
contract period,
    (v) Implement a forest management plan when the EQIP plan of 
operations includes forest-related practices that address resource 
concerns on NIPF,
    (vi) Supply information as may be required by NRCS to determine 
compliance with contract and program requirements, and
    (vii) Specify the participant's responsibilities for operation and 
maintenance of the applied conservation practices, consistent with the 
provisions of Sec.  1466.22; and
    (4) Specify any other provision determined necessary or appropriate 
by NRCS to achieve the technical requirements of a practice or purposes 
of the program.
    (c) The participant must start at least one financially assisted 
practice within the first 12 months of signing a contract. If a 
participant, for reasons beyond their control, is unable to start 
conservation practice within the first year of the contract, the 
participant can request a modification from NRCS.
    (d) Each contract will be limited to no more than $450,000, unless 
the contract is with an Indian Tribe. Contracts related to organic 
operations are also subject to payment limitations pursuant to Sec.  
1466.24(b).


Sec.  1466.22  Conservation practice operation and maintenance (O&M).

    (a) The contract will incorporate the O&M agreement that addresses 
the operation and maintenance of conservation practices applied under 
the contract.
    (b) NRCS expects the participant to operate and maintain each 
conservation practice installed under the contract for its intended 
purpose for the conservation practice lifespan as specified in the O&M 
agreement.
    (c) Conservation practices installed before the contract execution, 
but included in the contract to obtain the conservation benefits agreed 
upon, must be operated and maintained as specified in the contract and 
O&M agreement.
    (d) NRCS may periodically inspect the conservation practice during 
the contract duration as specified in the O&M agreement to ensure that 
operation and maintenance requirements are being carried out and that 
the conservation practice is fulfilling its intended objectives.
    (e) If NRCS finds during the contract that a participant is not 
operating and maintaining practices in an appropriate manner, NRCS may 
terminate and request a refund of payments made for that conservation 
practice under the contract.


Sec.  1466.23  Payment rates.

    (a) NRCS will develop a list of conservation practices eligible for 
payment under the program, which considers:
    (1) The conservation practice cost-effectiveness, implementation 
efficiency, and innovation;
    (2) The degree and effectiveness in treating priority resource 
concerns;
    (3) The number of resource concerns the practice will address;
    (4) The longevity of the practice's conservation benefit;
    (5) The conservation practice's ability to assist producers in 
meeting regulatory requirements; and
    (6) Other pertinent local considerations.
    (b) The Chief will determine the process and methodology used for 
development, review, and approval of payment schedules to support 
accurate and cost-effective delivery of program benefits, including 
determination of estimated incurred costs and income foregone 
associated with implementation of all financially-supported 
conservation practices or activities.
    (1) A payment to a participant for performing a practice may not 
exceed, as determined by NRCS, the following maximum payment 
percentages:
    (i) Estimated costs of 75 percent incurred by implementing the 
conservation practice,
    (ii) Estimated income foregone is 100 percent, or
    (iii) Both conditions in paragraphs (b)(1)(i) and (ii) of this 
section, where a producer incurs costs in implementing a conservation 
practice and foregoes income related to that practice implementation, 
and
    (iv) In determining the amount and rate of estimated income 
foregone, NRCS may assign higher significance to conservation practices 
which promote:
    (A) Soil health;
    (B) Water quality and quantity improvement;
    (C) Nutrient management;
    (D) Pest management;
    (E) Air quality improvement;
    (F) Wildlife habitat development, including pollinator habitat;
    (G) Invasive species management; and
    (H) Other natural resource concerns of regional or national 
significance, as determined by NRCS.
    (2) Notwithstanding paragraph (b)(1) of this section, a participant 
that meets the definition of a veteran farmer or

[[Page 73973]]

rancher or the definition a historically underserved producer under 
Sec.  1466.3 may be awarded the applicable payment rate and an 
additional rate that is not less than 25 percent above the applicable 
rate, provided this increase does not exceed 90 percent of the incurred 
costs estimated for the conservation practice.
    (3) The payments to a participant through EQIP will be reduced 
proportionately below the contracted payment rate established by the 
Chief, so that the total combined payments for a conservation practice 
from EQIP and other USDA sources will not exceed 100 percent of the 
estimated costs incurred for implementing or performing the 
conservation practice.
    (4) When the agency enters into a formal agreement with partners 
who provide financial support to help implement program initiatives, 
the Chief must adjust NRCS program payment percentages to provide 
practice payment rates to an amount such that the total financial 
assistance to the participant from NRCS and the partner does not exceed 
the amount needed to encourage voluntary adoption of the practice. The 
formal agreement must be approved by NRCS prior to announcement of the 
program initiative and adjusted payment rates.
    (5) NRCS may provide payments for conservation practices on some or 
all of the operations of a participant related to organic production 
and the transition to organic production. Payments may not be provided 
for any costs associated with organic certification, enterprise costs 
associated with transition to organic production, or for practices or 
activities that are eligible for financial assistance under the 
National Organic Program (7 U.S. C. 6523).


Sec.  1466.24  EQIP payments.

    (a) Except for contracts entered into prior to February 7, 2014, 
which are subject to regulations and contract requirements in effect 
prior to February 7, 2014, or as provided in paragraph (b) of this 
section, the total amount of payments paid to a person or legal entity 
under this part may not exceed an aggregate of $450,000, directly or 
indirectly, for all contracts entered into during fiscal years 2014 
through 2018. Payments received for technical assistance will be 
excluded from this limitation. The limitation in this subsection cannot 
be waived.
    (b) Payments for conservation practices related to organic 
production to a person or legal entity, directly or indirectly, may not 
exceed in aggregate $20,000 per fiscal year or $80,000 during any 6-
year period.
    (c) To determine eligibility for payments, NRCS will use the 
following criteria:
    (1) The provisions in 7 CFR part 1400, Payment Limitation and 
Payment Eligibility.
    (2) States, political subdivisions, and entities thereof are not 
considered to be producers eligible for payment.
    (3) To be eligible to receive an EQIP payment, all legal entities 
or persons applying, either alone or as part of a joint operation, must 
provide a tax identification number and percentage interest in the 
legal entity. In accordance with 7 CFR part 1400, an applicant applying 
as a joint operation or legal entity must provide a list of all members 
of the legal entity and joint operation and associated embedded 
entities, along with the members' social security numbers and 
percentage interest in the joint operation or legal entity.
    (4) Contracts with Indian Tribes are not subject to payment or 
contract limitations. Indian Tribes will certify in writing that no one 
individual, directly or indirectly, will receive more than the payment 
limitation. Certification provided at the time of enrollment will cover 
the entire contract period. The Tribal entity must also provide, upon 
request from NRCS, a listing of individuals and payment made, by Social 
Security number or other unique identification number, during the 
previous year for calculation of overall payment limitations.
    (i) Payment limitations apply to individual Tribal member(s) when 
applying and subsequently being granted a contract as an individual(s). 
American Indians, Alaska Natives, and Pacific Islanders may use another 
unique identification number for each individual eligible for payment.
    (ii) Any individual Tribal member that is identified utilizing a 
unique identification number as an alternative to a tax identification 
number will utilize only that identifier for all contracts to which the 
individual Tribal member receives a payment directly or indirectly.
    (5) To be eligible to receive a payment, all legal entities or 
persons applying, either alone or as part of a joint operation, must 
provide a tax identification number and percentage interest in the 
legal entity. In accordance with 7 CFR part 1400, an applicant applying 
as a joint operation or legal entity must provide a list of all members 
of the legal entity and joint operation and associated embedded 
entities, along with the members' Social Security numbers and 
percentage of interest in the joint operation or legal entity.
    (6) Any cooperative association of producers that markets 
commodities for producers will not be considered to be a person 
eligible for payment.
    (7) Eligibility for payments in accordance with part 7 CFR part 
1400, average adjusted gross income limitation, will be determined 
prior to contract approval.
    (8) To be eligible for payments for conservation practices related 
to organic production or the transition to organic production:
    (i) Participants who are USDA certified organic producers will 
implement conservation practices that are consistent with an approved 
organic system plan (OSP), and
    (ii) Participants who are transitioning to organic production 
(including participants who are exempt from certification as defined by 
the Organic Foods Production Act of 1990) will develop an OSP and 
implement conservation practices that are consistent with OSP 
requirements and purposes of the program.
    (9) A participant will not be eligible for payments for 
conservation practices on eligible land if the participant receives 
payments or other benefits for the same practice to address the same 
resource concern on the same land under any other conservation program 
administered by USDA.
    (10) NRCS may issue advance payments to participants that are 
historically underserved producers up to 50 percent of the anticipated 
amount of the costs incurred for the purpose of purchasing materials or 
services to implement a conservation practice. Eligibility for advance 
payment is contingent upon the requirement that the participant must 
obtain an NRCS approved practice design prior to approval of the 
advance payment. Advance funds paid to program participants must be 
expended within 90 days from receipt of funds or returned to NRCS 
within a reasonable time as determined by NRCS.
    (11) Before NRCS will approve and issue any EQIP payment, the 
participant must certify that the conservation practice has been 
completed in accordance with contract requirements, and NRCS or an 
approved TSP must certify that the practice has been carried out in 
accordance with the applicable NRCS FOTG technical standards.


Sec.  1466.25  Contract modifications and transfers of land.

    (a) The participant and NRCS may modify a contract if both parties 
agree to the contract modification, the

[[Page 73974]]

contract continues to meet the purposes of the program, and the 
contract modification is approved by NRCS.
    (b) It is the participant's responsibility to notify NRCS when the 
participant anticipates either the voluntary or involuntary loss of 
control of the land covered by an EQIP contract.
    (c) The participant and NRCS may agree to transfer a contract to 
another party.
    (1) To receive an EQIP payment, the transferee must be determined 
by NRCS to be eligible to participate in EQIP and must assume full 
responsibility under the contract, including the O&M agreement for 
those conservation practices already installed and those conservation 
practices to be installed as a condition of the contract.
    (2) If the transferee is ineligible or refuses to accept future 
payments, NRCS will terminate the contract and may require the 
transferor to refund or forfeit all payments received.
    (d) NRCS may require a participant to refund all or a portion of 
any financial assistance provided under EQIP if the participant sells 
or loses control of the land covered by an EQIP contract and the new 
owner or controller is not eligible to participate in the program or 
refuses to assume responsibility under the contract.
    (e) In the event a conservation practice fails through no fault of 
the participant, NRCS may issue payments to re-establish the practice, 
at the rates established in accordance with Sec.  1466.23, provided 
such payments do not exceed the payment limitation requirements as set 
forth Sec.  1466.24.


Sec.  1466.26  Contract violations and terminations.

    (a) NRCS may terminate a contract:
    (1) Without the consent of the participant where it determines that 
the participant violated the contract; or
    (2) With the consent of the participant if NRCS determines that the 
termination is in the public interest.
    (b) NRCS may allow a participant in a contract terminated in 
accordance with the provisions of paragraph (a) to retain a portion of 
any payments received appropriate to the effort the participant has 
made to comply with the contract, or in cases of hardship, where forces 
beyond the participant's control prevented compliance with the 
contract. The condition that is the basis for the participant's 
inability to comply with the contract must not have existed at the time 
the contract was executed by the participant. If a participant believes 
that such a hardship condition exists, the participant may submit a 
request with NRCS for relief pursuant to this paragraph and any such 
request must contain documentation sufficient for NRCS to make a 
determination that this hardship condition exists.
    (c) If NRCS determines that a participant is in violation of the 
terms of a contract, O&M agreement, or documents incorporated by 
reference into the contract, NRCS may give the participant a period of 
time, as determined by NRCS, to correct the violation and comply with 
the terms of the contract and attachments thereto. If a participant 
continues to be in violation, NRCS may terminate the EQIP contract in 
accordance with Sec.  1466.26(e).
    (d) Notwithstanding the provisions of paragraph (c) of this 
section, a contract termination will be effective immediately upon a 
determination by NRCS that the participant:
    (1) Has submitted false information or filed a false claim;
    (2) Engaged in any act, scheme, or device for which a finding of 
ineligibility for payments is permitted under the provisions of Sec.  
1466.35, or
    (3) Incurred a violation of the contract provisions that cannot be 
corrected in a timeframe established by NRCS.
    (e) If NRCS terminates a contract due to breach of contract, the 
participant will forfeit all rights to future payments under the 
contract, pay liquidated damages, and refund all or part of the 
payments received, plus interest.
    (1) NRCS may require a participant to provide only a partial refund 
of the payments received if a previously installed conservation 
practice can function independently and is not adversely affected by 
the violation or the absence of other conservation practices that would 
have been installed under the contract.
    (2) NRCS may reduce or waive the liquidated damages depending upon 
the circumstances of the case.
    (3) When terminating a contract, NRCS may reduce the amount of 
money owed by the participant by a proportion that reflects the good 
faith effort of the participant to comply with the contract or the 
existence of hardships beyond the participant's control that have 
prevented compliance with the contract.
    (f) NRCS may terminate a contract that provides payments to a 
participant for conservation practices related to organic production, 
if NRCS determines that the participant is not implementing practices 
according to provisions of the contract agreement or does not meet 
provisions of this part.


Sec.  1466.27  Conservation Innovation Grants.

    (a) In addition to the terms defined in Sec.  1466.3, the following 
definitions will be applicable to this section:
    (1) EQIP eligible means any farming entity, land, and practice that 
meets the definitions of EQIP as defined in 7 CFR part 1466.
    (2) Grant agreement means a document describing a relationship 
between NRCS and a State or local government, or other recipient 
whenever the principal purpose of the relationship is the transfer of a 
thing of value to a recipient in order to accomplish a public purpose 
of support or stimulation authorized by Federal law and substantial 
Federal involvement is not anticipated.
    (3) Grant Review Board consists of representatives of NRCS staff as 
determined by the Chief.
    (4) Technical Peer Review Panel means a panel consisting of Federal 
and non-Federal technical advisors who possess expertise in a 
discipline or disciplines deemed important to provide a technical 
evaluation of project proposals submitted under the funding opportunity 
announcement.
    (5) Project means the activities as defined within the scope of the 
grant agreement or cooperative agreement.
    (6) Project director means the individual responsible for the 
technical direction and management of the project as designated in the 
application.
    (7) On-farm conservation research means an investigation conducted 
to answer a specified conservation-related question using a 
statistically valid design, while employing farm scale equipment on 
farm fields.
    (b) Purpose and scope. (1) The purpose of Conservation Innovation 
Grants (CIG) is to stimulate the development and adoption of innovative 
conservation approaches and technologies while leveraging Federal 
investment in environmental enhancement and protection in conjunction 
with agricultural production. Notwithstanding any limitation of this 
part, NRCS will administer CIG in accordance with this section. Unless 
otherwise provided for in this section, grants under CIG are subject to 
the provisions of 2 CFR 200, Uniform Administrative Requirements, Cost 
Principles, and Audit Requirements for Federal Awards.
    (2) Applications for CIG are accepted from the 50 States, District 
of Columbia, Caribbean Area (Puerto Rico and Virgin Islands of the 
United States), and Pacific Islands Area (Guam, American Samoa, and 
Commonwealth of the Northern Mariana Islands).

[[Page 73975]]

    (3) Grants will be awarded using a two-tiered process. A nationwide 
grants competition will be announced in grants.gov or successor Federal 
grants portal. In addition, at the Chief's discretion, each State may 
implement a separate State-level component of CIG.
    (4) Applications for CIG should demonstrate the use of innovative 
approaches and technologies to leverage Federal investment in 
environmental enhancement and protection, in conjunction with 
agricultural production. CIG will fund projects that promote innovative 
on-the-ground conservation, including pilot projects and field 
demonstrations of promising approaches or technologies. CIG projects 
are expected to lead to the transfer of conservation technologies, 
management systems, and innovative approaches (such as market-based 
systems) into NRCS technical manuals and guides or to the private 
sector. Technologies and approaches eligible for funding in a project's 
geographic area through EQIP are not eligible for CIG funding except 
where the use of those technologies and approaches demonstrates clear 
innovation. The burden falls on the applicant to sufficiently describe 
the innovative features of the proposed technology or approach.
    (5) For the purposes of CIG, the proposed innovative project or 
activity must promote environmental protection or natural resources 
enhancement, and encompass development and pilot field testing, on-farm 
research and demonstration, evaluation, and/or implementation of:
    (i) Conservation adoption incentive systems, including market-based 
systems, or
    (ii) Promising conservation technologies, practices, systems, 
procedures, or approaches.
    (6) Projects or activities under CIG must comply with all Federal, 
State, and local regulations throughout the duration of the project 
and:
    (i) Make use of proven technology or a technology that has been 
studied sufficiently to indicate a high probability for success,
    (ii) Demonstrate, evaluate, or verify environmental (soil, water, 
air, plants, energy and animal) effectiveness, utility, affordability, 
and usability of conservation technology in the field,
    (iii) Adapt conservation technologies, management, practices, 
systems, procedures, approaches, and incentive systems to improve 
performance, and encourage adoption,
    (iv) Introduce conservation systems, approaches, and procedures 
from another geographic area or agricultural sector, or
    (v) Demonstrate transferability of knowledge.
    (c)(1) CIG funding will be available for single-or multi-year 
projects. Funding for CIG will be announced in grants.gov or a Federal 
grant portal through an Announcement for Program Funding (APF). The 
Chief will determine the funding level for CIG on an annual basis. 
Funds for CIG are derived from funds made available for EQIP. The Chief 
may establish funding limits for individual grants.
    (2) Selected applicants may receive grants or cooperative 
agreements of up to 50 percent of the total project cost not to exceed 
the Federal project cap. Applicants must provide non-Federal funding 
equal to the amount of Federal funds requested. Non-Federal funds must 
be derived from cash and/or in-kind sources.
    (3) CIG is designed to provide financial assistance to grantees. 
Procurement of any technical assistance required to carry out a project 
is the responsibility of the grantee. Technical oversight for grant 
projects will be provided by a Federal technical representative who 
will be designated by NRCS.
    (d) CIG applications must describe the use of innovative approaches 
or technologies to address a natural resource conservation concern or 
concerns. The resource concerns for CIG will be identified by the Chief 
and may change each year. The resource concerns will be published in 
the APF.
    (e)(1) To be eligible, CIG applicants must be an Indian Tribe, 
State or local unit of government, nongovernmental organization, or 
individual.
    (2) To be eligible, projects must involve landowners who meet the 
eligibility requirements of Sec.  1466.6(b)(1) through (3). All 
agricultural producers receiving a direct or indirect payment through 
participation in a CIG project must meet those eligibility 
requirements.
    (3) Up to 10 percent of the total funds available for CIG may be 
set aside for applications from historically underserved producers or 
veteran farmers or ranchers, or a community-based organization 
comprised of or representing these entities. Funds not awarded from the 
set-aside pool will revert back into the general CIG funding pool.
    (f) The CIG APF will contain guidance on how to apply for the 
grants competition. CIG will be advertised through the NRCS Web site 
and grants.gov or other Federal grants portal. Grant applications will 
be available on the NRCS Web site or by contacting NRCS at the address 
provided in the APF. CIG grant applications will consist of standard 
cover sheet and budget forms, in addition to a narrative project 
description and required legal declarations and certifications.
    (g) Complete applications will be evaluated by a peer review panel 
based on the application evaluation criteria identified in the APF. 
Application evaluations will be forwarded to a Grant Review Board. The 
Grant Review Board will make recommendations for awards to the Chief, 
and the final selections will be made by the Chief. Grant or 
cooperative agreement awards will be made by the NRCS national office 
after selection of the grantees is made and after the grantee agrees to 
the terms and conditions of the NRCS Grant or cooperative agreement 
document.
    (h)(1) NRCS has the option of implementing a State-level CIG 
component. A State program will follow the requirements of this 
section, except for those features described in this subsection.
    (2) Funding availability, application, and submission information 
for State competitions will be announced through public notices 
(grants.gov or a successor Federal grants portal and on the State NRCS 
Web site), separately from the national program. The State component 
will emphasize projects that cover limited geographic areas including 
individual farms, multi-county areas, or small watersheds.
    (3) The State Conservationist will determine the funding level for 
the state CIG competition, with individual grants not to exceed 
$75,000.
    (4) NRCS may choose to adhere to the CIG national resource concerns 
for a state or may select a subset of those concerns that more closely 
match the resource concerns of the State.
    (i) Allocation of rights to patents and inventions shall be in 
accordance with 7 CFR 3019.36. This regulation provides that small 
businesses normally may retain the principal worldwide patent rights to 
any invention developed with USDA support. In accordance with 7 CFR 
3019.2, this provision will also apply to commercial organizations for 
the purposes of CIG. USDA receives a royalty-free license for Federal 
Government use, reserves the right to require the patentee to license 
others in certain circumstances, and requires that anyone exclusively 
licensed to sell the invention in the United States must normally 
manufacture it domestically.

Subpart C--General Administration


Sec.  1466.30  Appeals.

    A participant may obtain administrative review of an adverse

[[Page 73976]]

decision under EQIP in accordance with parts 11 and 614 of this title. 
Determination in matters of general applicability, such as payment 
rates, payment limits, the designation of identified priority resource 
concerns, and eligible conservation practices are not subject to 
appeal.


Sec.  1466.31  Compliance with regulatory measures.

    Participants who carry out conservation practices will be 
responsible for obtaining the authorities, rights, easements, permits, 
or other approvals necessary for the implementation, operation, and 
maintenance of the conservation practices in keeping with applicable 
laws and regulations. Participants will be responsible for compliance 
with all laws and for all effects or actions resulting from the 
participant's performance under the contract.


Sec.  1466.32  Access to operating unit.

    Any authorized NRCS representative will have the right to enter an 
agricultural operation or tract for the purposes of determining 
eligibility and for ascertaining the accuracy of any representations 
related to contract performance. Access will include the right to 
provide technical assistance, determine eligibility, inspect any work 
undertaken under the contract, and collect information necessary to 
evaluate the conservation practice performance specified in the 
contract. The NRCS representative will make an effort to contact the 
participant prior to the exercising this provision.


Sec.  1466.33  Equitable relief.

    (a) If a participant relied upon the advice or action of any 
authorized NRCS representative and did not know, or have reason to 
know, that the action or advice was improper or erroneous, NRCS may 
accept the advice or action as meeting program requirements and may 
grant relief, to the extent it is deemed desirable by NRCS, to provide 
a fair and equitable treatment because of the good-faith reliance on 
the part of the participant. The financial or technical liability for 
any action by a participant that was taken based on the advice of a 
NRCS certified non-USDA TSP is the responsibility of the certified TSP 
and will not be assumed by NRCS when NRCS authorizes payment. Where a 
participant believes that detrimental reliance on the advice or action 
of a NRCS representative resulted in an ineligibility or program 
violation, but the participant believes that a good faith effort to 
comply was made, the participant may request equitable relief under 
Sec.  635.3 in chapter VI of this title.
    (b) If, during the term of an EQIP contract, a participant has been 
found in violation of a provision of the EQIP contract, the O&M 
agreement, or any document incorporated by reference through failure to 
fully comply with that provision, the participant may be eligible for 
equitable relief under Sec.  635.4 in chapter VI of this title.


Sec.  1466.34  Offsets and assignments.

    (a) Except as provided in paragraph (b) of this section, any 
payment or portion thereof to any person, joint venture, legal entity, 
or Tribe will be made without regard to questions of title under State 
law and without regard to any claim or lien against the crop, or 
proceeds thereof, in favor of the owner or any other creditor except 
agencies of the United States Government. The regulations governing 
offsets and withholdings found at part 1403 of this chapter will be 
applicable to contract payments.
    (b) EQIP participants may assign any payments in accordance with 
part 1404 of this chapter.


Sec.  1466.35  Misrepresentation and scheme or device.

    (a) A person, joint operation, legal entity, or Indian Tribe that 
is determined to have erroneously represented any fact affecting a 
program determination made in accordance with this part will not be 
entitled to contract payments and must refund to NRCS all payments, 
plus interest, determined in accordance with 7 CFR part 1403.
    (b) A producer who is determined to have knowingly:
    (1) Adopted any scheme or device that tends to defeat the purpose 
of the program;
    (2) Made any fraudulent representation;
    (3) Adopted any scheme or device for the purpose of depriving any 
tenant or sharecropper of the payments to which such person would 
otherwise be entitled under the program; or
    (4) Misrepresented any fact affecting a program determination, will 
refund to NRCS all payments, plus interest, determined in accordance 
with 7 CFR part 1403, received by such producer with respect to all 
contracts. The producer's interest in all contracts will be terminated.


Sec.  1466.36  Environmental credits for conservation improvements.

    (a) A participant in EQIP may achieve environmental benefits that 
may qualify for environmental credits under an environmental credit-
trading program. NRCS asserts no direct or indirect interest on these 
credits. However, NRCS retains the authority to ensure that EQIP 
purposes are met. In addition, any requirements or standards of an 
environmental market program in which an EQIP participant 
simultaneously enrolls to receive environmental credits must be 
compatible with the purposes and requirements of the EQIP contract and 
with this part.
    (b) The participant must meet all O&M requirements for EQIP-funded 
activities, consistent with Sec.  1466.21 and Sec.  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 Sec.  1466.25, provided the modification meet EQIP 
purposes and is in compliance with this part.
    (c) EQIP participants may not use EQIP funds to implement 
conservation practices and activities that the participant is required 
to establish as a result of a court order. EQIP funds may not be used 
to satisfy any mitigation requirement for which the EQIP participant is 
responsible.

    Signed this 4th day of December 2014, in Washington, DC.
Jason A. Weller,
Vice President, Commodity Credit Corporation and Chief, Natural 
Resources Conservation Service.
[FR Doc. 2014-28941 Filed 12-11-14; 8:45 am]
BILLING CODE 3410-16-P