[Federal Register Volume 61, Number 199 (Friday, October 11, 1996)]
[Proposed Rules]
[Pages 53574-53589]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-26265]



[[Page 53573]]


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Part V





Department of Agriculture





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Commodity Credit Corporation



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7 CFR Part 1466



Environmental Quality Incentives Program; Proposed Rule

  Federal Register / Vol. 61, No. 199 / Friday, October 11, 1996 / 
Proposed Rules  

[[Page 53574]]



DEPARTMENT OF AGRICULTURE

Commodity Credit Corporation

7 CFR Part 1466

RIN 0578-AA19


Environmental Quality Incentives Program

AGENCY: Commodity Credit Corporation, United States Department of 
Agriculture.

ACTION: Proposed rule with request for comments.

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SUMMARY: The Commodity Credit Corporation (CCC) is issuing a proposed 
rule for the Environmental Quality Incentives Program (EQIP). This 
proposed rule describes how CCC intends to implement EQIP as authorized 
by amendments in the Federal Agriculture Improvement and Reform Act of 
1996 to the Food Security Act of 1985. The United States Department of 
Agriculture (USDA) seeks comments from the public which will be used to 
make revisions, if necessary, that will be issued in a final rule.

DATES: Comments must be received by November 25, 1996.

ADDRESSES: All comments concerning this proposed rule should be 
addressed to Lloyd E. Wright, Director, Conservation and Ecosystems 
Assistance Division, Natural Resources Conservation Service, P.O. Box 
2890, Washington, D.C. 20013-2890. Attention: EQIP. Fax: 202-720-1838. 
This rule may also be accessed, and comments submitted, via Internet. 
Users can access the Natural Resources Conservation Service (NRCS) 
Federal Register homepage and submit comments at http://
astro.itc.nrcs.usda.gov:6500.

FOR FURTHER INFORMATION CONTACT: Jeffrey R. Loser, Conservation and 
Ecosystems Assistance Division, Natural Resources Conservation Service, 
P.O. Box 2890, Washington, D.C. 20013-2890. 202-720-1845. Fax: 202-720-
1838.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    Pursuant to Executive Order 12866 (58 FR 51735, October 4, 1993), 
it has been determined that this proposed rule is an economically 
significant regulatory action because it may result in an annual effect 
on the economy of $100 million or more. The administrative record is 
available for public inspection in Room 6029, South Building, USDA, 
14th and Independence Ave, SW, Washington, D.C.
    Pursuant to Executive Order 12866, NRCS conducted an economic 
analysis of the potential impacts associated with this program, and 
included the analysis as part of a Regulatory Impact Analysis document 
prepared for this rule. The analysis estimates EQIP will have a 
beneficial impact on the adoption of conservation practices and, when 
installed or applied to technical standards, will increase net farm 
income. In addition, benefits would accrue to society for long-term 
productivity maintenance of the resource base, non-point source 
pollution damage reductions, and wildlife enhancements. As a voluntary 
program, EQIP will not impose any obligation or burden upon 
agricultural producers that choose not to participate. The program was 
authorized at $1.3 billion over the seven-year period of FY 1996 
through FY 2002, with annual amounts of $200 million per year after the 
initial transition year of $130 million.
    NRCS estimates that 37 million acres of agricultural land would be 
treated over the seven years of the program, including 19 million acres 
of cropland, 4 million acres of pasture, and 14 million acres of 
rangeland. Of the 37 million acres treated, an estimated 31.5 million 
acres are expected to be within priority areas. The projected national 
impact on participants' net farm income ranges from increases of $155 
to $500 million per year, with a medium impact estimate of $310 million 
per year. These positive returns come from the incentive payments, on-
site benefits to the land and crops, and lower operation and repair 
costs attributable to the conservation practices. NRCS estimates that 
an additional $49 to $166 million annually, with a medium impact 
estimate of $117 million annually on-site benefits will accrue to 
participants from the enhanced productivity associated with long-term 
maintenance of their soil resource base. Estimated total on-site 
returns are between $204 million and $666 million annually, with a 
medium impact estimate of $247 million annually.
    The environmental benefits off-site are projected to be between 
$247 and $417 million annually, with a medium impact estimate of $336 
million annually. Some of the off-site environmental benefits are 
attributable to improvements made to enhance freshwater and marine 
water quality and fish habitat, improved aquatic recreation 
opportunities, reduced sedimentation of reservoirs, streams, and 
drainage channels, reduced flood damages. Additional benefits are from 
reduced pollution of surface and groundwater from agrochemical, 
improvements in air quality by reducing wind erosion, and enhancements 
to wildlife habitat.
    The total monetary benefits from full implementation of EQIP are 
therefore estimated to be $763 million per year. Providing for an 
allowance for the accrual of treated acreage over time and adjusting to 
an annual basis (at a 3% interest rate), the annualized net benefits 
are estimated to be $439 million over the life of the program. The 
capitalized Federal cost of the program is about $195 million per year 
(at a 3% interest rate). EQIP participants incur costs associated with 
their share of cost-share contracts and the operation and maintenance 
of conservation practices, and these costs are reflected in the net 
benefits estimate. A copy of this analysis is available upon request 
from Jeffrey R. Loser, Conservation and Ecosystems Assistance Division, 
Natural Resources Conservation Service, P.O. Box 2890, Washington, D.C. 
20013-2890.
    NRCS will revise and enhance this analysis for the final rule. 
Future quantitative work will seek to estimate the amount of farmland 
in different areas by type of agricultural operation where farmers are 
likely to adopt the conservation measures expected to be profitable in 
the baseline, i.e. if the program were not to be implemented. As part 
of this estimate, NRCS will also seek to assess the extent to which 
other programs are affecting the adoption of conservation measures and 
reflect this in the baseline. Future analysis will seek to disaggregate 
point source and nonpoint source treatments in the program, and the 
impacts of each will be estimated independently. To the extent 
possible, alternative allocations of program dollars across different 
conservation practices will be quantified and their impacts estimated.
    To better implement the program to maximize environmental benefits 
per dollar expended, as required by the Federal Agriculture Improvement 
and Reform Act of 1996 to the Food Security Act of 1985, NRCS seeks 
public comment, data, or references that can quantitatively or 
qualitatively enhance its analytical efforts. NRCS especially welcomes 
comments or data on levels or trends in conservation technology 
adoption, the on- and off-site returns to various conservation 
practices, and other literature about incentive schemes for technology 
adoption.

Regulatory Flexibility Act

    The Regulatory Flexibility Act is not applicable to this rule 
because CCC is not required by 5 U.S.C. 533 or any other provision of 
law to publish a

[[Page 53575]]

notice of proposed rulemaking with respect to the subject matter of 
this rule.

Environmental Analysis

    It has been determined through an Environmental Assessment (EA) 
that the issuance of this proposed rule will not have a significant 
effect on the human environment. Copies of the EA and finding of no 
significant impact may be obtained from Jeffrey R. Loser, Conservation 
and Ecosystems Assistance Division, Natural Resources Conservation 
Service, P.O. Box 2890, Washington, D.C. 20013-2890.

Paperwork Reduction Act

    This proposed rule sets forth procedures for implementing EQIP. CCC 
needs certain information from potential applicants, in order to carry 
out the requirements of the program. CCC submitted the information 
collection requirements in this proposed rule to the Office of 
Management and Budget (OMB) for approval under the Paperwork Reduction 
Act, 44 U.S.C. 3501 et seq. CCC prepared an Information Collection 
Request (ICR) document; the public may obtain a copy of this request 
from Jeffrey R. Loser, Conservation and Ecosystems Assistance Division, 
Natural Resources Conservation Service, P.O. Box 2890, Washington, D.C. 
20013-2890.
    Title: Environmental Quality Incentives Program, Wildlife Habitat 
Improvement Program, and Farmland Protection Program.
    OMB Control Number: 0560-0174.
    Expiration Date of Approval: Three years from OMB approval.
    Type of Request: Revision.
    Abstract: The Federal Agriculture Improvement and Reform Act of 
1996, Pub. L. 104-127, authorized USDA to implement the Environmental 
Quality Incentives Program, the Wildlife Habitat Incentives Program 
(WHIP), and the Farmland Protection Program (FPP). This rule sets forth 
the procedures for producers to apply and participate in the 
Environmental Quality Incentives Program. Pursuant to Sec. 1466.20, 
producers may file an application for EQIP participation at a USDA 
service center. NRCS will collect information from a participant on the 
resource problems to be addressed, evaluate the information, and, 
working with the participant, develop a conservation plan that 
describes the needed practices or land management changes. This plan 
becomes a part of the EQIP contract, and CCC will make payments to 
producers as the producers carry out the provisions of the contract. 
USDA submitted to OMB proposed forms that CCC will use for the 
application, the contract, and for the NRCS collection of information 
related to resource needs.
    Estimate of Burden: CCC estimates the public reporting for the 
information collection associated with EQIP forms is an average of 90 
minutes per applicant.
    Respondents: Agricultural producers who wish to participate in 
EQIP.
    Estimated Number of Respondents: 15,000.
    Estimated Number of Responses per Respondent: 6.
    Estimated Total Annual Burden on Respondents: 23,700 hours.
    Additionally, CCC shall utilize information supplied by local work 
groups to designate particular geographic areas as priority areas for 
program funding, under EQIP. Staff from State and local governments 
shall comprise part of these local work groups, and thus information 
collected from these groups is governed under the Paperwork Reduction 
Act.
    For the local work groups, the annualized cost to EQIP respondents 
is $4,200,000. This figure is based on 300,000 burden hours times an 
average wage of $14.00 per hour (wages for State and local agency staff 
average approximately $14 an hour).
    There also exists a burden associated with development of 
conservation plans and follow-up verification of the conservation 
practices adopted pursuant to the EQIP conservation plan. For the 
collection of information resulting from the development of 
conservation plans and subsequent verification of practices, the 
annualized cost to respondents is $1,440,000. This figure is based on 
120,000 burden hours times the wage of $12.00 per hour.
    CCC requests comments regarding: (a) Whether the collection of 
information is necessary for the proper performance of the functions of 
the agency, including whether the information will have practical 
utility; (b) the accuracy of the agency's estimate of burden including 
the validity of the methodology and assumptions used; (c) ways to 
enhance the quality, utility, and clarity of the information to be 
collected; (d) ways to minimize the burden of the collection of 
information on those who are to respond, including through the use of 
appropriate automated, electronic, mechanical, or other technological 
collection techniques or other forms of information technology.
    USDA will accept comments on this information collection at: Desk 
Officer for Agriculture, Office of Information and Regulatory Affairs, 
Office of Management and Budget, Washington, D.C. 20503, and to Jeffrey 
R. Loser, Conservation and Ecosystems Assistance Division, Natural 
Resources Conservation Service, P.O. Box 2890, Washington, D.C. 20013-
2890. USDA will incorporate all comments as part of the public record.
    The Paperwork Reduction Act requires OMB to make a decision 
concerning the collection(s) of information contained in this proposed 
rule between 30 and 60 days after publication of this document in the 
Federal Register. Therefore, a comment to OMB is best assured of having 
its full effect if OMB receives it within 30 days of publication. This 
does not affect the deadline for the public to comment to USDA on the 
proposed regulations. CCC submitted the information collection 
requirements to OMB, totaling 443,700 burden hours.

Executive Order 12788

    This proposed rule has been reviewed in accordance with Executive 
Order 12778. The provisions of this proposed rule are not retroactive. 
Furthermore, the provisions of this proposed rule preempt State and 
local laws to the extent such laws are inconsistent with this proposed 
rule. Before an action may be brought in a Federal court of competent 
jurisdiction, the administrative appeal rights afforded persons at 7 
CFR parts 614, 780 and 11 must be exhausted.

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

    Pursuant to section 304 of the Department of Agriculture 
Reorganization Act of 1994, Pub. L. 104-354, USDA classified this 
proposed rule as major and CCC conducted a risk analysis. The risk 
analysis establishes that the EQIP proposed rule will produce benefits 
and reduce risks to human health, human safety, and the environment in 
a cost-effective manner. A copy of the risk analysis is available upon 
request from Jeffrey R. Loser, Conservation and Ecosystems Assistance 
Division, Natural Resources Conservation Service, P.O. Box 2890, 
Washington, D.C. 20013-2890.

Unfunded Mandates Reform Act of 1995

    Pursuant to Title II of the Unfunded Mandates Reform Act of 1995, 
Pub. L. 104-4, CCC assessed the effects of this rulemaking action on 
State, local, and tribal governments, and the public. This action does 
not compel the expenditure of $100 million or more by any State, local, 
or tribal governments, or anyone in the private sector; therefore a 
statement under section 202 of the Unfunded Mandates Reform Act of 1995 
is not required.

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Discussion of Program

    The Federal Agriculture Improvement and Reform Act of 1996 (the 
1996 Act) (Pub. L. 104-127, April 4, 1996) amended the Food Security 
Act of 1985 (the 1985 Act) (16 U.S.C. 3801 et seq.) to re-authorize the 
Environmental Conservation Acreage Reserve Program as the umbrella 
conservation program encompassing the Conservation Reserve Program 
(CRP) (16 U.S.C. 3831-3836), the Wetlands Reserve Program (WRP) (16 
U.S.C. 3837 et seq.), and the newly created Environmental Quality 
Incentives Program (16 U.S.C. 3840). Under the Environmental 
Conservation Acreage Reserve Program, the Secretary of Agriculture may 
designate areas as conservation priority areas to assist landowners to 
meet nonpoint source pollution requirements, other Federal and State 
environmental laws, and to meet other conservation needs.
    The Environmental Quality Incentives Program (EQIP) combines into 
one program the functions of several conservation programs administered 
by the Secretary of Agriculture, including the Agricultural 
Conservation Program, the Agricultural Water Quality Incentives 
Program, the Colorado River Salinity Control Program, and the Great 
Plains Conservation Program, which are rescinded by the 1996 Act. 
Through EQIP, CCC provides flexible technical, financial, and 
educational assistance to farmers and ranchers who face serious threats 
to soil, water, and related natural resources on their land, including 
grazing lands, wetlands, forest land, and wildlife habitat. 
Participation in the program is voluntary. Under EQIP, CCC will provide 
assistance in a manner that maximizes environmental benefits per dollar 
expended, helps producers comply with the eligibility provisions of the 
1985 Act, and helps farmers and ranchers meet Federal and State 
environmental requirements. CCC will use a consolidated and simplified 
conservation planning process to reduce any administrative burdens that 
would otherwise be placed on producers.
    The 1996 Act provides that funds of the CCC will be used to fund 
the assistance provided under EQIP. For fiscal year 1996, $130 million 
was made available to administer an interim program; a minimum of $200 
million is to be made available for each of fiscal years 1997 through 
2002. Fifty percent of the funding available for the program will be 
targeted at practices relating to livestock production.

I. Priority Area Designation

    CCC will primarily offer the program in priority areas throughout 
the Nation, using the services of the Natural Resources Conservation 
Service (NRCS), county and state committees of the Farm Services Agency 
(FSA), and the Cooperative State Research, Education, and Extension 
Service (CSREES). CCC will designate certain watersheds, regions, or 
areas of special environmental sensitivity or having significant soil, 
water, or related natural resource concerns as priority areas. Unlike 
some prior conservation programs that provided program assistance to 
virtually all agricultural locations in the Nation, EQIP will place an 
emphasis on priority areas that are selected because of the natural 
resource and environmental concerns. The emphasis of priority areas 
helps assure that the most environmentally sensitive areas are 
considered and funds are directed to the areas in most need. The use of 
the priority area concept focuses assistance on those areas that pose 
the most serious threats to soil, water, and related natural resources. 
Implementation of conservation measures will be accelerated in these 
areas. Past experience has shown that by focusing assistance, greater 
environmental benefits are derived.
    When considering where the program would be delivered, several 
alternatives were considered. One alternative was to have priority 
areas selected at the national level based on analysis of existing 
scientific data characterizing natural resource problems and existing 
environmental assessments. This approach would provide a consistent and 
dominant role for national-level resource concerns and selection 
options. However, it would lack State and local buy-in by individuals, 
producers, landusers, and groups which have vested interests in the 
resolution of natural resource problems.
    Another alternative was to utilize a partnership process with 
States, other Federal agencies, and local work groups providing input 
and recommendations for selecting priority areas. In this alternative 
the NRCS national office will provide national guidance which is used 
by NRCS State conservationists, in consultation with State technical 
committees, to select priority areas from proposals submitted by local 
work groups. This locally-led conservation effort would likely include 
the State and local buy-in that is missing in the first alternative. 
This alternative was selected.
    The 1996 Act does not restrict EQIP to only priority area; 
therefore, another alternative was considered and selected to make the 
program available for EQIP purposes that are outside of funded priority 
areas. A primary issue with this alternative was the amount of funds to 
be made available for this purpose. In considering this issue, it was 
concluded that providing assistance to producers located outside of 
funded priority areas should be limited through the allocation process. 
Not allowing any assistance outside of funded priority areas would fail 
to address significant statewide natural resource concerns that may be 
widespread geographically. This approach would enable serious natural 
resource concerns to be addressed regardless of their location. At the 
same time, the basic intent to focus the program in priority areas 
would require a limitation on the amount of EQIP funds for assistance 
outside funded priority areas.
    CCC seeks comments regarding the process for designating priority 
areas and the development of ranking criteria for both priority areas 
and significant statewide natural resource concerns.
A. Development of Guidance for Designation of Priority Areas
    To establish these priority areas, the NRCS national office in 
consultation with other Federal partners, will develop through national 
guidance an identification and rating process that will seek to 
maximize the environmental benefit per dollar expended. That process 
will give weight to considerations such as the:
     Special environmental sensitivity or degradation in an 
area, and the expected environmental benefit from the program;
     Extent and scope of State, local, and other non-Federal 
contributions;
     Expected impact of the program on a participant's ability 
to satisfy nonpoint source requirements and other Federal and State 
environmental laws;
     Federal cost; and
     Ways to measure performance and success.
    The NRCS State conservationist will use the national guidance, with 
advice of the State technical committee on adapting the guidance to 
State and local conditions, for the selection of priority areas, and to 
make other decisions. The guidance will address: interpretations of 
what factors create the serious threats to soil, water, and related 
resources; natural resource quality criteria which describe the 
treatment level for identified natural resource concerns for a 
particular area; eligible agricultural land, including crop history and 
livestock production activities; and other relevant information. NRCS 
Regional conservationists will coordinate guidance for multi-state 
areas and regions.

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    The State technical committee will also advise the State 
conservationist on developing, within national guidelines, ranking 
criteria that consider such factors as: condition of the natural 
resources and significance of the concern; impact the program could 
have on the natural resource concern; existence of programs and/or 
projects already implemented; financial incentives from other sources; 
technical support from other agencies; importance in meeting State and 
local environmental laws; commitment of local producers to implement 
the program; and evidence that producers in critical areas will 
participate. CCC will give special consideration to priority areas that 
contain multiple-conservation benefits. CCC will also give special 
consideration in the ranking process to other agency or conservation 
group participation, such as providing technical, educational, or 
financial assistance. This participation will lessen the requirement 
for Federal assistance and will strengthen the Federal, State, and 
local partnership.
B. Needs Assessment and Selecting Priority Areas
    The process for selecting the priority areas will begin with the 
local conservation district(s) convening local work groups to advise 
NRCS in various conservation issues. These local work groups consist of 
representatives of the conservation district, NRCS, FSA, FSA county 
committee, CSREES, and other Federal, State or local agencies, 
including Tribes, as needed with expertise in natural resources. CCC 
encourages, therefore, State and local agency representatives to 
participate in these local work groups. State and local agency 
representatives can contact the NRCS State Conservationist for more 
information about these local work groups in their area.
    Local work groups, under local conservation district leadership, 
will use the national and State guidance to develop comprehensive 
conservation needs assessments of the natural resource conditions in a 
locality. The public is welcome to provide information related to such 
natural resources conditions to the local work group. Through the needs 
assessment, the local work group will, among other things, identify 
natural resource concerns and goals, expected outcomes, means for 
measuring and evaluating achievement of these outcomes, and solutions 
to resource problems. NRCS will incorporate the local conservation 
needs assessment into the agency's State, regional, and national 
natural resources strategic plans, thus aiding in program decision-
making.
    The local work group will provide and use the information contained 
in the needs assessment to develop proposals for priority areas, 
suggest ranking criteria for the CCC to prioritize producer's 
applications, and provide further input. The local work group, through 
the local NRCS representative, will forward the proposals for priority 
areas to the NRCS State conservationist. The NRCS State 
conservationist, with the advice of the State technical committee, will 
periodically approve priority areas in accordance with the priorities 
established for the program. Proposals that are not approved by the 
NRCS State conservationist may be resubmitted for subsequent 
consideration.
    The local work groups serve a valuable function to the overall 
ability of EQIP successfully resolving significant resource concerns. 
While assisting CCC in identifying local concerns and resources, CCC 
believes that the interaction and coordination that will ensue within 
and among these local work groups will help localities to build 
coalitions on a watershed, area, or regional basis, and thus enable 
local residents to find solutions for the environmental problems that 
confront them. NRCS will work with the local work groups to further 
this end. CCC hopes that, by building stronger local coalitions, 
residents will possess the necessary institutions and tools to address 
significant environmental issues that transcend political boundaries. 
Even if CCC does not allocate funds to a particular priority area in 
any given year, these coalitions or groups will be in a position to 
avail themselves of other program assistance outside of EQIP. CCC 
requests comments on the best ways for CCC to utilize these work groups 
and nurture their capacity to address environmental concerns.
    The NRCS State conservationist will periodically submit a funding 
request for highly rated State-approved priority areas to the NRCS 
national office. An interagency team comprised of Federal agencies with 
interests in this program will review and prioritize the submissions 
received from the NRCS State conservationists and, based on national 
program objectives and criteria, make recommendations for funding to 
the Chief of NRCS. The Chief of NRCS, who is a vice-president of the 
CCC, will consider the team's recommendations and decide periodically 
which priority areas will receive funding. FSA must concur with the 
decisions for funding before funds are allocated. Areas to which CCC 
does not allocate funds may be resubmitted for later funding decisions. 
State conservationists can continue current priority area designations 
or redesignate them if circumstances change. For instance, the changes 
may be improvements to the proposal with the addition of new 
information, or environmental conditions or conservation priorities for 
that State may change.
    The Chief may also determine the need for national conservation 
priority areas where eligible producers may receive enhanced program 
assistance from EQIP, WRP, or CRP. If the Chief designates any areas as 
national conservation priority areas, the Chief will also make these 
funding decisions with the concurrence of FSA.
    CCC requests comments as to whether and in what manner the 
conservation priority goals under the Environmental Conservation 
Acreage Reserve Program should be jointly applicable to EQIP, CRP, and 
WRP for the relevant conservation concerns of water quality, wildlife 
habitat, or other concerns. CCC recognizes that the identified 
environmental problems in a geographic area may best be served by only 
one of the programs. In some cases, however, CCC may better address the 
identified environmental problems through the coordinated effort of the 
three programs. CCC may accomplish this through the targeting of funds 
and consolidating the application process, thus offering watershed, 
area, or regional coalitions and producers a greater opportunity for 
more effective and convenient program delivery. Accordingly, CCC seeks 
comments on the most appropriate, cost-effective manner in which to 
consider redesignation of these and other conservation priority areas.
C. Significant Statewide Natural Resource Concerns
    State conservationists, with the advice of the State technical 
committee, may also determine that CCC can maximize environmental 
benefits per dollar by providing program assistance to producers with 
other significant natural resource concerns outside of approved and 
funded priority areas. These significant concerns may be of a similar 
nature as those found within a priority area, but they occur widespread 
and may not be concentrated in a specific geographic location. Upon 
request by a State conservationist, the Chief, with concurrence of FSA, 
may provide EQIP funds for the purpose of funding projects to address 
these identified significant statewide natural resource concerns. The 
Chief will give priority to States that establish programs to 
accelerate adoption of cost-effective,

[[Page 53578]]

special-emphasis practices which address these significant statewide 
natural resource concerns outside of priority areas.

II. Program Administration

A. Conservation Plan and Contract
    Program participation is voluntary. A producer demonstrates 
interest in the program by submitting an application for participation. 
CCC will accept applications throughout the year, but will rank and 
select the offers of producers during designated periods. To rank and 
select the highest priority applicants, NRCS on behalf of CCC will 
evaluate the environmental benefits the producer offers to achieve by 
using the program. The evaluation uses ranking criteria that is based 
on national guidance and developed with the advice of the local work 
group to give a higher priority to projects that maximize environmental 
benefits per dollar expended. The FSA county committee, with NRCS 
concurrence, approves funding for the highest priority applications in 
a particular priority area.
    Approved applicants will assume responsibility for developing and 
submitting a conservation plan that encompasses the producer's farming 
or ranching unit of concern. The producer must implement a conservation 
plan, acceptable to NRCS and approved by the conservation district, 
that protects the soil, water, or related natural resources in a manner 
that meets the purposes of the program. The producer develops a 
conservation plan in cooperation with the local conservation district 
and with the assistance of NRCS or other public and private natural 
resource professionals. The plan becomes part of an EQIP contract.
    The contract specifies the cost-sharing or incentive payments the 
producer will receive from the CCC in return for applying the needed 
conservation practices and land use adjustments within a specified time 
schedule. CCC makes payments to the producer when the NRCS determines 
that the conservation practices specified in the contract are 
satisfactorily established. CCC expenditures under a contract entered 
into during a fiscal year will not be made until the subsequent fiscal 
year.
    CCC's intention is to use this program to provide assistance to 
producers who, in the absence of financial incentives, would not 
otherwise apply conservation practices to address natural resource 
concerns. It is unlikely that without incentives producers would be 
inclined to undertake costly conservation practices to provide 
environmental benefits off their property. The role of EQIP in 
addressing such circumstances is clear. When the benefits accrue to the 
landowner, as well as to off-site areas, the policy question is more 
complicated. The cost benefit analysis discussed earlier estimates that 
participants' on-site benefits would be significant, totaling $427 
million annually, while off-site benefits total $336 million annually. 
CCC seeks ``win-win'' conservation solutions, but recognizes that in 
cases where producers would adopt conservation practices in a timely 
manner without government assistance, then EQIP funds should be 
directed elsewhere. CCC seeks public comment on the role of EQIP in 
funding conservation practices that may be profitable.
    Producers have various reasons to be reluctant to apply certain 
conservation practices, even when there may be financial benefit to 
them in the near or longer term from adopting these practices. CCC 
seeks public comment on what factors contribute to the reluctance of 
producers to adopt conservation practices, even when profitable.
    The initial costs of applying conservation practices can be 
significant. Costs may include the direct costs associated with the 
practice as well as investments in other farm equipment to operate and 
maintain the conservation practice for which EQIP financial assistance 
would not be eligible. Without financial assistance producers cannot 
justify the investment for the expected returns within a relevant time 
frame. This is often the case under some conservation practices, such 
as grazing land management, crop residue management, and nutrient 
management, where it can take several years to realize the profits. CCC 
seeks information and comment on the time frame involved in 
experiencing profits from new conservation technology, and the extent 
to which farmers and ranchers cannot get sufficient credit in current 
markets or through other government programs to convert to more 
profitable conservation practices. CCC seeks public comment on the 
manner in which EQIP will work in the context of other programs that 
can or are supporting the adoption of conservation practices.
    CCC intends to monitor and evaluate the program to assure that 
financial assistance is used in an appropriate way to maximize the 
environmental benefits per dollar it expends, and welcomes public 
comment on how CCC could best carry out this intention.
B. Large Confined Livestock Operations
    The 1996 Act states that a producer who owns or operates a large 
confined livestock operation (as defined by the Secretary) shall not be 
eligible for cost-share payments through EQIP to construct an animal 
waste management facility. The report of the Conference Managers states 
that when determining whether an operation is a large confined 
livestock operation within the meaning of this provision, the Secretary 
will consider various resource and environmental factors, including 
regulations promulgated pursuant to the Clean Water Act (33 U.S.C. 
1251-1387). The Secretary is expected to specify clearly the factors 
and considerations involved in developing the requirements for program 
eligibility and should follow notice and comment procedures. The 
Managers also expect the Secretary to take into account needs for 
maximizing environmental benefits in targeted watersheds affected by 
animal agriculture, the ability of operations to pay for the cost of 
animal waste management facilities, the obligations of operations under 
other environmental authorities, and the particular characteristics of 
modern livestock operations.
    In considering how to define large animal operations, CCC explored 
a number of options. For example, for the National Pollution Discharge 
Elimination System (NPDES) authorized by the Clean Water Act, the 
Environmental Protection Agency (EPA) uses certain criteria when 
considering if a livestock facility is confined or concentrated. The 
facility must stable, confine, and feed or maintain animals for a total 
of 45 days or more in any 12-month period; and not sustain crops, 
vegetation, forage growth, or post-harvest residues within the confined 
area in the normal growing season over any portion of the facility.
    The first part of this definition means that some animals must be 
kept on the lot or facility where waste is generated and/or 
concentrated for a minimum of 45 days. The second part of the 
definition distinguishes feedlots from pasture land, which is not 
subject to the NPDES program. Further, EPA has determined that a 
totally enclosed facility with no discharge (and no anticipated or 
potential discharge) of animal waste to waters of the United States is 
not subject to the NPDES program. CCC proposes to use this definition 
for a confined operation.
    CCC considered using the 1,000 animal unit (AU) equivalents 
threshold, with some exceptions authorized, using the consideration 
elements specified in

[[Page 53579]]

the Conference Manager's report and variable cost-share rates for 
larger operations. This option offers some advantages, because most 
family and small farms are under this threshold and will be eligible 
for cost-sharing. This option would also target more program funds to 
smaller operations, limit funds to large operations, and provide 
flexibility to address State and local environmental needs when 
exceptions are granted. However, this option may not tend to maximize 
the environmental benefits per dollar expended because cost-share 
eligibility would not be based on environmental need and would only be 
indirectly related to the likelihood the landowner would not otherwise 
construct a waste management system. This threshold level may allow 
some major problems to be neglected by producers. While these producers 
may still be eligible for other EQIP assistance, withholding 
eligibility for animal waste management facilities may alienate the 
producers and thus CCC may lose the opportunity to obtain additional 
environmental benefits through other aspects of the program. It would 
exclude sectors of the livestock industry with higher shares of total 
operations above the threshold level, such as broiler operations where 
nearly four percent exceed 1,000 AU, compared to 0.6 percent for dairy 
and beef feedlot operations and 1.2 percent for hog operations. Over 70 
percent of the total beef cattle are on feedlot operations that exceed 
1,000 AU. (Reference: GAO/RCED-95-200BR Animal Waste Management and 
Water Quality Issues; Economic Research Service's analysis of 1992 
Census of Agriculture data. Copies of GAO reports are available from 
the U.S. General Accounting Office, P.O. Box 6015, Gaithersburg, 
Maryland 20884-6015, or by calling (202) 512-6000 or fax (301) 258-
4066.)
    Another option considered by CCC was to base the national 
definition on the amount and environmental threat of manure and other 
animal waste generated in the confined livestock operation. Although 
this option would enable choices more closely related to the 
environmental issues and problems resulting from the animal manure, and 
would enable more operations that produce dry manure (primarily poultry 
and beef feedlots) to be eligible, it would have the disadvantage of 
retarding participation in the less-concentrated livestock sectors 
where a larger percentage of operations would be below the threshold 
level of 1,000 AU. This process also presents a complex and easily 
challenged process of defining thresholds by weight, volume, or 
environmental threat.
    CCC also considered the option to use an economic achievability 
analysis, including the ability to pay for measures to meet 
environmental objectives. One such analysis is that conducted by EPA, 
the ``Economic Impact Analysis of National Nonpoint Source Management 
Measures Affecting Confined Animal Facilities,'' which was completed in 
1995. ``This type of analysis will most likely result in defining 
large'' differently for different animal types. EPA's analysis 
indicates that dairies with 98 or more animal units (AU) can afford to 
implement animal waste runoff and storage systems without cost-shares. 
Thresholds for other animal types, as identified by EPA, are: beef 
feedlots, 300 AU; horse stables, 400 AU; dairies, 98 AU; poultry 
broilers and layers, 150 AU for liquid manure systems, 495 AU for 
continuous overflow watering; turkeys, 2,475 AU; and swine, 80 AU. Like 
the first option, some exceptions could be authorized.
    This option would be most sensitive to a producer's ability to pay 
for needed facilities and would make more program funds available to 
small operations and provide flexibility to address State and local 
environmental needs. However, there are problems inherent in 
translating national level data to State and local conditions. Some 
operations with high potential for environmental benefits would be 
eliminated from program eligibility. It would be more restrictive 
toward poultry, hog, and dairy operations due to the very low threshold 
levels.
    Therefore, having considered all these options, this proposed rule 
states that the State technical committee will advise the NRCS State 
conservationist on criteria to use to determine eligibility for 
receiving cost-share payments for animal waste management facilities. 
The criteria will include consideration of the elements specified in 
the Conference Manager's report cited above. In considering this 
definition, emphasis will be placed on assisting family farmers and 
ranchers, and not meatpackers, processors, and vertical integrators. 
CCC will provide national guidance, developed by NRCS in consultation 
with other national agencies and partners, to the State technical 
committee and NRCS State conservationist to clearly specify the factors 
and considerations involved in developing the requirements for program 
eligibility. The NRCS regional conservationist will provide oversight 
to achieve consistency between States.
    CCC believes that this option provides maximum flexibility for 
State and local decision-makers, where the needs of the environment and 
the livestock operator are best determined, and thus best meets the 
intent of the 1996 Act. This method will provide the program with the 
maximum ability to resolve environmental problems in priority areas. It 
also incorporates the consideration of a person's ability to pay, 
regardless of the size of the operation. This option considers local, 
State, and Federal environmental authorities and requirements, not just 
the Clean Water Act or water quality. It will allow CCC to consider 
modern livestock operation characteristics, which vary depending on 
types of livestock, marketing strategies, geography, and State and 
local economic factors, from a State and local perspective. This 
approach is consistent with recommendations made by the Secretary's 
Advisory Committee on Agricultural Concentration in June, 1996, which 
emphasized the need to help the family farm. A copy of this report is 
available from the Agricultural Marketing Service, P.O. Box 96456, 
Washington, D.C. 20090-6456.
C. Outreach Efforts
    The Administration and USDA endeavor to make Government programs 
accessible to all eligible citizens. In past conservation programs, 
some land was not adequately treated because limited-resource 
producers, small-scale producers, Tribes, Alaska natives, Pacific 
Islanders, and other producers have had low levels of participation for 
various reasons. In some cases, the economies and efficiencies of scale 
weighed against individuals who did not have large tracts of land. 
Additionally, some communities receive the bulk of their information 
from sources other than the traditional media services, and information 
about program benefits often did not reach the widest possible 
audience.
    To address these deficiencies, CCC will establish special program 
outreach activities at the national, State, and local levels in order 
to ensure that producers whose land has environmental problems are 
aware, informed, and know that they are eligible to apply for program 
assistance. In its goal to offer assistance to those unlikely to adopt 
practices without Federal support, CCC will target its efforts to best 
achieve the greatest environment benefit per dollar by additional focus 
on limited resource farmers and others with historically low 
participation rates. CCC is exploring new possibilities to increase its 
outreach to these communities that historically have not participated 
extensively in CCC and other USDA programs. For

[[Page 53580]]

example, CCC is examining options such as permitting flexible schedules 
for limited-resource producers to apply practices and systems; offering 
low-cost conservation practice alternatives; and considering the value 
of a producer's labor as the producer's share of the cost. CCC welcomes 
any suggestions about how the agencies can improve program delivery on 
environmentally sensitive land managed by producers who have not 
participated historically in the conservation programs in order to 
increase the coverage and environmental benefits of the program.
D. Educational Efforts and Technical Assistance
    Section 1240 of the 1985 Act charges the Secretary to implement 
EQIP as an integrated program of education, technical assistance, and 
financial assistance that focuses on targeted environmental and 
conservation issues. The success of EQIP as a conservation program 
depends largely on the quality of decisions made by farmers, ranchers, 
and the public and private providers of technical assistance.
    USDA's development and delivery of high-quality educational 
opportunities to farmers, ranchers, and assistance providers should 
enhance the public's knowledge about the conservation opportunities 
available through EQIP and enhance the overall benefits that will be 
realized through the implementation of EQIP. Appropriate education will 
maximize public benefits by creating a knowledge base (among producers, 
agency staff, and private consultants) that will extend direct EQIP 
benefits beyond the actual acreage and life expectancy of financial and 
technical assistance programs.
    USDA will develop a program education plan, including 
identification of customers and educational needs, development of 
educational goals and objectives, design of appropriate educational 
responses, delivery of educational programs, and evaluation of 
educational outcomes. USDA will extensively utilize existing 
educational materials and programs, and will focus efforts to areas and 
producers where EQIP is implemented. In the development of its program 
education plan, USDA will design a coordinated approach, including 
national, State, and local components, depending on the similar or 
unique educational needs identified.
    CCC will encourage cooperation among education providers as well as 
the use of existing educational resources and programs that deal with 
EQIP-related issues. Although it will require more time initially for 
program planning and coordination, CCC believes that this coordinated 
approach will enable efficient use of resources in meeting broad 
educational needs; provide for local program assessments and 
development; maximize sharing between groups; and provide sufficient 
flexibility to shift educational efforts as priority conservation 
problems are solved and new priorities are identified.
    Section 1240 of the 1985 Act also requires the program to provide 
flexible technical assistance. The quality and availability of 
technical assistance is essential to the successful implementation of 
EQIP because technical assistance contributes to informed decision-
making and the implementation of sound and appropriate practices. Under 
EQIP, CCC will allocate funding to NRCS to provide technical 
assistance, ensure that technical assistance is open to individuals in 
agribusiness, and request the services of other public and private 
entities in the delivery of technical assistance to producers when 
deemed appropriate. NRCS will work directly with producers, local work 
groups, and State technical committees in carrying out their respective 
roles and responsibilities.
    Under EQIP, NRCS will provide technical leadership for conservation 
planning, implementation, and assurance of quality service in the 
delivery of technical assistance. NRCS personnel will work directly 
with producers to help solve their natural resource concerns. NRCS will 
also draw upon the expertise of natural resource professionals in all 
sectors in its delivery of technical assistance to the producer.
    A producer may seek technical assistance from NRCS or from other 
qualified sources. These qualified sources may include agricultural 
producers, certified crop advisors, agricultural cooperatives, and 
other technical consultants. These other sources can help a producer 
develop an EQIP conservation plan or assist with the layout, design, 
and installation of conservation practices. CCC will accept work 
performed by others if the work meets program requirements.
    In this manner, producers have a variety of options available to 
them to address significant natural resource concerns on their farms or 
ranches. CCC shall assure that the quality of the assistance obtained 
from all sources will meet the requirements of the program.
E. Payment Limitations
    The 1996 Act specifies that the total amount of cost-share and 
incentive payment paid to a producer under this chapter may not exceed 
$10,000 for any fiscal year or $50,000 for any multiyear contract. An 
exception to the annual limit is provided to allow payments to exceed 
the limitation on the annual amount of a payment on a case-by-case 
basis if it is determined that a larger payment is essential to 
accomplish the land management practice or structural or vegetative 
practice for which the payment is made and it is consistent with the 
maximization of environmental benefits per dollar expended and the 
purposes of EQIP. The 1996 Act further defines a producer as ``a person 
who is engaged in livestock or agricultural production (as defined by 
the Secretary).''
    Congress, in the EQIP statute, required the maximization of 
environmental benefits per dollar expended, provided for interim 
administration of EQIP pending final regulations, and required that 
payments under an EQIP contract entered into during a fiscal year not 
be made until the subsequent fiscal year.
    CCC reviewed several options for implementing the payment 
limitation provisions of EQIP, including the definition of a person. 
One option considered the use of a definition of landowner that is used 
in the Stewardship Incentives Program for the definition of a person. 
This was not chosen because most producers would have the additional 
burden of submitting additional information to FSA. Other options 
considered limiting the number of contracts a person may enter and 
limiting the number of entities in which an individual may be involved 
and receive payments. These options were not chosen because they 
provided little value or savings to the program but would have 
complicated the administration of the program.
    It is proposed that similar payment limitation provisions as those 
set forth in 7 CFR part 1497 be used for EQIP. These provisions are 
currently used for CRP and Agriculture Market Transition Act 
participants. The consistent use of the provisions in part 1497, will 
result in the least burden to producers and the most fair and equitable 
administration of the program because persons who are currently 
participating, or who have participated in recent years, in the 
commodity program or CRP would not have to complete additional forms 
for payment limitation purposes. Further, in cases where producers may 
enroll in the CRP and EQIP at the same time, the confusion of different 
``person'' definitions would be eliminated.
    Specifically CCC proposes, the provisions in 7 CFR Part 1400 
related to the definition of person and the

[[Page 53581]]

limitation of payments will be used, except that:
    (1) States, political subdivisions, and entities thereof will not 
be persons eligible for payment.
    (2) The provisions in part 1400, subpart C for determining whether 
persons are actively engaged in farming, subpart E for limiting 
payments to certain cash rent tenants, and subpart F for determining 
whether foreign persons are eligible for payment, will not be used as 
they are not consistent with the intent and language of the EQIP 
statute.
    (3) An exemption to the $10,000 fiscal year limitation would apply 
in cases where a producer with a current EQIP contract inherits land 
subject to another contract, because CCC recognizes that with EQIP 
contracts having 5- to 10-year terms, there may be complications when a 
producer already enrolled in EQIP inherits land subject to another EQIP 
contract.
    (4) Payments in excess of the limitation may be made to a tribal 
venture if an official of the Bureau of Indian Affairs or a tribal 
official certifies that no one tribal member directly or indirectly 
will receive more than the limitation.
    CCC welcomes public comment on this proposed manner for addressing 
the payment limitation provisions of the program.

Public Listening Forums

    In April 1996, USDA held nine listening forums to provide 
opportunities for public comment in advance of rulemaking. USDA held 
these forums at Sacramento, California; Longmont, Colorado; Columbus, 
Georgia; Springfield, Illinois; Wyomissing, Pennsylvania; Sioux Falls, 
South Dakota; Abilene, Texas; Spokane, Washington; and Washington, D.C. 
More than 850 people attended these forums, including 206 speakers. In 
addition, USDA accepted written comments. USDA considered these public 
comments in the preparation of this proposed rule. The following is a 
brief summary of the issues raised in these comments and how the agency 
responded to those comments:
    USDA received 357 comments on the roles of NRCS and FSA in 
implementing EQIP. Section 1466.2 of the rule discusses the roles of 
NRCS and FSA in the program.
    USDA received 21 comments expressing general concerns about EQIP. 
Four commenters emphasized that EQIP needs to be flexible in how the 
program is delivered. One of the four said that flexibility will allow 
local people to creatively address conservation problems. A definition 
of technical assistance is provided in Sec. 1466.3.
    USDA received 59 comments on conservation plans under EQIP. Twelve 
commenters favored the whole-farm approach to designing conservation 
plans. Six commenters said that conservation districts should be 
involved in approving conservation plans. Section 1466.6 sets forth 
provisions relating to EQIP and conservation plans.
    USDA received 63 comments about how EQIP funds should be used. Six 
commenters expressed concern that EQIP funds were only available to 
certain parts of the country. Six others wanted to know more about how 
EQIP funds were to be divided between technical assistance and cost 
shares. Section 1466.5 sets forth the manner in which CCC will set 
priorities for funding.
    USDA received 17 comments on EQIP and the support and roles of 
conservation districts. Four commenters expressed support for local 
conservation districts' roles in EQIP. The provisions in Section 1466.3 
address these issues.
    USDA received 12 comments on how EQIP should give greater 
flexibility to State-level USDA managers in managing programs. Six 
commenters stressed the importance of this flexibility. These 
commenters wanted greater flexibility for the State-level managers to 
exercise more creativity in addressing environmental problems; other 
commenters indicated that greater flexibility will allow State-level 
managers to compensate for differences among agricultural operations 
and resource conditions. Section 1466.5 describes the input provided by 
the agency managers at the State and local levels.
    USDA received 23 comments about the roles of State technical 
committees under EQIP. Five commenters suggested that State technical 
committee membership be expanded to include representatives of other 
conservation agencies, managers of resource management projects, and 
private conservation organizations. Section 1466.3 provides that the 
State technical committees are established in 16 U.S.C. 3861 and 
provides additional information about the committees.
    USDA received 13 comments on EQIP contracts. Two commenters felt 
that the contract period set in the authorizing legislation is too 
long. Two others stated that EQIP projects should be based on their 
environmental merits and not on funding equations. Section 1466.21 
addresses requirements for EQIP contracts.
    USDA received 38 comments on EQIP and CRP. Three commenters 
expressed interest in how annual payments for EQIP and CRP should be 
dispersed. Three commenters suggested not allowing early releases on 
land with an erosion index of 15 or greater. Section 1466.23(b)(ii) 
sets forth the statutory requirement that a person cannot receive 
assistance under CRP, WRP, and EQIP for the same tract of land.
    USDA received 36 comments on animal limits under EQIP, specifically 
the provisions in the EQIP legislation that provide that large confined 
livestock operations, as defined by the Secretary, will not be eligible 
for EQIP assistance with respect to waste treatment facilities. Most 
commenters said that herd size limits should be decided at the State 
level of NRCS. Six commenters said that Clean Water Act standards for 
animal waste management structures should apply to EQIP. Two commenters 
expressed concern about how animal limits may effect family farms and 
small operations. Section 1466.7 sets forth how the CCC will address 
size limitations.
    USDA received 37 comments related to EQIP priority areas and 
program prioritization. Thirteen commenters expressed concern that 
equity for EQIP prioritization is needed nationwide. Seven commenters 
stated that conservation districts should play roles in EQIP 
prioritization. Section 1466.5 addresses priority area approval and 
areawide assessment.
    USDA received five comments on EQIP and its relationship to 
wildlife. Three commenters said that the impacts on wildlife must be 
considered at each stage of EQIP's implementation. USDA also received 
seven comments about EQIP and riparian zone protection. Two stated that 
incentives should be provided for riparian zone protection.
    USDA received seven comments on planting trees under EQIP. Three 
commenters suggested that incentives be offered to establish native 
warm-season grasses. Section 1466.4 sets forth eligibility criteria and 
Section 1466.7 sets forth the criteria for eligible practices.

Summary of Provisions

    The rule is organized in three subparts. Subpart A contains general 
provisions related to the program.
    Section 1466.1  sets forth the purpose, scope, and objectives of 
EQIP. The purposes of the program will be achieved by farmers and 
ranchers who voluntary develop conservation plans and enter into 
contracts with CCC to carry out the needed conservation

[[Page 53582]]

practices and land-use adjustments within a specified time schedule.
    Section 1466.2  describes the roles of NRCS, FSA, and other 
agencies.
    Section 1466.3  sets forth definitions for terms used throughout 
the part.
    CCC particularly solicits public comment on the definition of 
``large confined livestock operation.'' Under provisions of the 1996 
Act, producers with large confined livestock operations are not 
eligible for cost-share payments on animal waste management facilities, 
but are eligible for payments on other conservation practices. The 1996 
Act leaves the determination of large confined livestock operation to 
the Secretary. This rule does not establish a specific number of 
livestock as a standard for determining when a livestock operation will 
be regarded as ``large'' for the purpose of exclusion from eligibility 
for cost sharing on animal waste facilities. As discussed above, CCC 
proposes to use State technical committees to advise the State 
conservationist on eligibility criteria for cost-share payments for 
animal waste management facilities. CCC will base the criteria to make 
this decision on several factors. A focus will be placed on the needs 
for maximizing environmental benefits in targeted watersheds affected 
by animal agriculture and the ability of operations to pay for the cost 
of facilities. Other such factors include the requirements of other 
Federal and State laws, producer obligations under environmental 
authorities, and characteristics of modern livestock operations, as 
well as a desire to have a wide distribution of benefits among those 
enterprises that are generally, at least locally, small or medium sized 
operations which presumably may not have the same access to management 
techniques that protect the environment.
    Section 1466.4  sets forth the requirements for participant 
eligibility and eligible land. It also describes the criteria CCC will 
consider in allocating funds for technical assistance.
    Section 1466.5  describes the procedures and criteria for approving 
priority areas. Priority areas are identified through the priority area 
assessment process using local work groups, State technical committees, 
and State conservationists.
    Paragraph (b) addresses providing technical, educational, and 
financial assistance to producers whose land has natural resource 
concerns outside of a priority area. Some EQIP funds will be used 
outside of funded priority areas for significant statewide natural 
resource concerns. Local work groups and State technical committees 
will provide advice to the State conservationist concerning the natural 
resource concerns where program assistance is needed, consistent with 
the advice provided for assistance in priority areas.
    Section 1466.6  describes the requirements of the conservation plan 
that will be the basis of EQIP contracts. Producers will be required to 
develop and apply a conservation plan on the farm or ranch unit that 
addresses natural resource problems. The plan will be reviewed to 
ensure that it includes the most cost-effective conservation practices 
to solve the natural resource concerns and maximize environmental 
benefits per dollar expended in conformity with area-wide planning. CCC 
will provide technical assistance and will encourage producers to use 
the services of qualified personnel of cooperating Federal, State, or 
local agencies, or private entities who can provide technical 
assistance.
    Paragraph (g) lists the components of a conservation plan. At the 
producer's request, the plan may also include other CCC and USDA 
programs, such as CRP, WRP, Wildlife Habitat Incentives Program, Forest 
Stewardship Program, and requirements relating to the highly erodible 
land and wetland conservation provisions of the 1985 Act. A producer 
may also include to the extent possible all other natural resource 
conservation objectives from State and local governments in a single 
conservation plan. Existing plans developed by natural resource 
professionals would not need to be replaced if the resource management 
objectives of EQIP are met and plans are not redundant.
    Section 1466.7  describes eligible practices. Based on guidance 
provided by the Chief of NRCS, NRCS state conservationists, after 
consultation with State technical committees and local work groups, 
will determine which conservation practices should be eligible in the 
State. Designated conservationists will determine which conservation 
practices should be eligible in a priority area or for producers with 
significant statewide natural resource concerns. CCC will encourage the 
use of the most cost-effective conservation practices to solve natural 
resource problems and to encourage widespread adoption of measures that 
maximize environmental benefits per dollar expended. Practices whose 
primary purpose is to enhance productivity would not be eligible, nor 
would practices that the producer has already applied or that the 
producer is likely to apply without EQIP financial assistance.
    Paragraph (a)(3) permits NRCS to approve interim conservation 
practice standards and financial assistance for pilot testing new 
technology or innovations. NRCS will involve other entities in the 
pilot testing, including extension and research agencies and 
institutions, conservation districts, universities, private industry, 
and others to evaluate and assess the practices.
    Paragraph (b) specifies that large confined livestock operations 
are excluded from eligibility for cost-share payments to construct 
animal waste management facilities. As noted above, CCC particularly 
welcomes comments on how to define and implement this requirement of 
the 1996 Act. In the public listening forums that preceded this 
rulemaking, USDA received many comments regarding this topic, most of 
which advised USDA on the importance of making eligible various types 
of enterprises. Few commenters provided suggestions on the number of 
livestock head that should be considered ``large'' for purposes of this 
rule, or provided other suggestions on formulas or other criteria to 
substitute for a specific number. CCC invites comment on making this 
definition more specific or more equitable in the context of the law.
    Section 1466.8  addresses the sources of technical assistance to 
carry out EQIP. CCC will use technical and other assistance from other 
qualified Federal, State, and local agencies and will encourage 
producers to also use the private sector to carry out the program. As 
determined by the State conservationist, CCC may contract with private 
enterprises or enter cooperative agreements with other Federal, State, 
or local entities for services related to EQIP implementation. The vice 
president of CCC, who is the Chief of NRCS, retains the responsibility 
for ensuring that technical program standards are met.
    Subpart B addresses administration of EQIP contracts.
    Section 1466.20  addresses applications for contracts and selecting 
offers from producers. CCC will accept applications for EQIP throughout 
the year but will rank the applications and select the participants 
periodically as determined at the local and/or State level. CCC will 
announce in advance the period to begin evaluation and ranking of 
applications.
    Before evaluating individual applications, the local work group 
will develop ranking criteria to prioritize producer's applications. 
NRCS State staff provides oversight for consistency of ranking 
criteria. The NRCS designated conservationist and FSA county executive 
director will assist the FSA county committee with applying the 
criteria. The FSA county committee,

[[Page 53583]]

with concurrence of NRCS, will approve applications based on the 
developed criteria. Each application will be ranked according to the 
criteria.
    The producer's application will include any structural, vegetative, 
and land management practices proposed under the contract. CCC will 
evaluate applications based on future environmental benefits which are 
expected with the contract and the program payments. CCC will give 
additional consideration if the contract will assist the producer in 
complying with environmental laws.
    Section 1466.21  addresses the requirements for EQIP contracts. 
Only the land that meets the purpose and goals of the program and is to 
be treated under EQIP will be included in the contract, and no tract 
will have more than one EQIP contract at a time.
    Section 1466.22  addresses the participant's responsibility for 
conservation practice operation and maintenance.
    Section 1466.23  addresses rates for cost-share and incentive 
payments. Subject to the national direct Federal funding cap of 75 
percent of the projected cost of a structural or vegetative practice, 
State conservationists, with FSA State committee concurrence and the 
advice of local work groups and the State technical committee, can set 
cost-share rates and incentive payment limits as determined appropriate 
to encourage a producer to perform the land management practice that 
would not otherwise be initiated without such assistance.
    Paragraph (b) of this section addresses payment limitations.
    Section 1466.25  addresses the procedures to be followed for 
contract violations and terminations.
    Subpart C describes administrative remedies available to 
participants, such as appeal rights and provisions for relief if a 
participant relies on advice or action of a CCC representative. It also 
addresses the responsibilities of the participant in obtaining 
necessary easements and complying with other laws and regulations and 
in providing USDA representatives access to land to verify compliance 
with the terms and conditions of a contract.

List of Subjects in 7 CFR part 1466

    Administrative practices and procedures, Conservation, Natural 
Resources, Water Resources, Wetlands, Payment rates.

    Accordingly, Title 7 of the Code of Federal Regulations is amended 
by adding a new part 1466 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  Program requirements.
1466.5  Priority areas and significant statewide natural resource 
concerns.
1466.6  Conservation plan.
1466.7  Conservation practices.
1466.8  Technical and other assistance provided by qualified 
personnel not affiliated with USDA.

Subpart B--Contracts

1466.20  Application for contracts and selecting offers from 
producers.
1466.21  Contract requirements.
1466.22  Conservation practice operation and maintenance.
1466.23  Cost-share and incentive payments.
1466.24  Contract modifications and transfers of land.
1466.25  Contract violations and termination.

Subpart C--Administrative Remedies

1466.30  Appeals.
1466.31  Compliance with regulatory measures.
1466.32  Access to operating unit.
1466.33  Performance based upon advice or action of representatives 
of CCC.

    Authority: 16 U.S.C. 3839aa-3839aa-8.

Subpart A--General Provisions


Sec. 1466.1  Applicability.

    Through the Environmental Quality Incentives Program (EQIP), the 
Commodity Credit Corporation (CCC) provides technical, educational, and 
financial assistance to eligible farmers and ranchers to address soil, 
water, and related natural resources concerns on their lands in an 
environmentally beneficial and cost-effective manner. The purposes of 
the program are achieved through the implementation of structural and 
land management practices on eligible land.


Sec. 1466.2  Administration.

    (a) Administration of EQIP is shared by the Natural Resources 
Conservation Service (NRCS) and the Farm Service Agency (FSA) as set 
forth below.
    (b) NRCS shall:
    (1) Provide overall program management and implementation 
leadership for EQIP;
    (2) Establish policies, procedures, priorities, and guidance for 
program implementation, including determination of priority areas;
    (3) Establish cost-share and incentive payment limits;
    (4) Determine eligibility of practices;
    (5) Provide technical leadership for conservation planning and 
implementation, quality assurance, and evaluation of program 
performance; and
    (6) Make funding decisions and determine allocations of program 
funds.
    (c) FSA shall:
    (1) Be responsible for the administrative processes and procedures 
for applications, contracting, and financial matters, including 
allocation and program accounting; and
    (2) Provide leadership for establishing, implementing, and 
overseeing administrative processes for applications, contracts, 
payment processes, and administrative and financial performance 
reporting.
    (d) NRCS and FSA shall concur in establishing policies, priorities, 
and guidelines related to the implementation of this part.
    (e) No delegation herein to lower organizational levels shall 
preclude the Chief of NRCS, or the Administrator of FSA, or a designee, 
from determining any question arising under this part or from reversing 
or modifying any determination made under this part that is the 
responsibility of their respective agencies.
    (f) CCC may enter into cooperative agreements with other Federal 
agencies, State agencies, conservation districts, units of local 
government, and public and private not for profit organizations to 
assist CCC with implementation of this part.


Sec. 1466.3  Definitions.

    The following definitions shall apply to this part and all 
documents issued in accordance with this part, unless specified 
otherwise:
    Administrator means the Administrator of the FSA, United States 
Department of Agriculture (USDA), or designee.
    Agricultural land means an area on which crops or livestock are 
produced.
    Animal waste management facility means a structural practice used 
for the storage or treatment of animal waste.
    Applicant means a producer who has requested in writing to 
participate in EQIP. Producers who are members of a joint operation 
shall be considered one applicant.
    Chief means the Chief of NRCS, USDA, or designee.
    Confined livestock operation means a livestock facility that 
stables, confines, feeds, or maintains animals for a total of 45 days 
or more in any 12-month period and does not sustain crops, vegetation, 
forage growth, or post-harvest residues within the confined area in the 
normal growing season over any portion of the confinement facility.
    Conservation district means a political subdivision of a State, 
Native American

[[Page 53584]]

Tribe, or territory, organized pursuant to the State or territorial 
soil conservation district law, or Tribal law. The subdivision may be a 
conservation district, soil conservation district, soil and water 
conservation district, resource conservation district, natural resource 
district, land conservation committee, or similar legally constituted 
body.
    Conservation management system (CMS) means any combination of 
conservation practices and management practices that, if applied, will 
protect or improve the soil, water, or related natural resources.
    Conservation plan means a record of a participant's decisions, and 
supporting information, for treatment of a unit of land or water, and 
includes the schedule of operations, activities, and estimated 
expenditures needed to solve identified natural resource problems.
    Conservation practice means a specified treatment, such as a 
structural or vegetative practice or a land management practice, which 
is planned and applied according to NRCS standards and specifications 
as a part of a CMS.
    Contract means a legal document that specifies the rights and 
obligations of any person who has been accepted for participation in 
the program.
    County executive director means the FSA employee responsible for 
directing and managing program and administrative operations in one or 
more FSA county offices.
    Designated conservationist means a NRCS employee whom the State 
conservationist has designated as responsible for administration of 
EQIP. In the case of a priority area or other area that crosses State 
borders, the Chief or the Chief's designee will designate the NRCS 
official responsible for administration of EQIP in the priority area.
    Farm Service Agency county committee means a committee elected by 
the agricultural producers in the county or area, in accordance with 
Section 8(b) of the Soil Conservation and Domestic Allotment Act, as 
amended, or designee.
    Farm Service Agency State committee means a committee in a State or 
the Caribbean Area (Puerto Rico and the Virgin Islands) appointed by 
the Secretary in accordance with Section 8(b) of the Soil Conservation 
and Domestic Allotment Act, as amended.
    Field office technical guide means the official NRCS guidelines, 
criteria, and standards for planning and applying conservation 
treatments and conservation management systems. It contains detailed 
information on the conservation of soil, water, air, plant, and animal 
resources applicable to the local area for which it is prepared.
    Land management practice means conservation practices that 
primarily require site-specific management techniques and methods to 
conserve, protect from degradation, or improve soil, water, or related 
natural resources in the most cost-effective manner. Land management 
practices include, but are not limited to, nutrient management, manure 
management, integrated pest management, integrated crop management, 
irrigation management, tillage or residue management, stripcropping, 
contour farming, grazing management, and wildlife habitat management.
    Life span means the period of time specified in the contract or 
conservation plan during which the conservation management systems or 
component conservation practices are to be maintained and used for the 
intended purpose.
    Livestock means animals produced for food or fiber such as dairy 
cattle, beef cattle, poultry, turkeys, swine, sheep, horses, fish and 
other animals raised by aquaculture, or animals the State 
conservationist identifies in consultation with the State technical 
committee.
    Livestock production means farm and ranch operations involving the 
production, growing, raising, breeding, and reproduction of livestock 
or livestock product.
    Livestock-related natural resource concern means any environmental 
condition, either on-site or off-site, that is directly related to 
livestock activity or to livestock manure or waste.
    Local work group means representatives of FSA, the Cooperative 
State Research, Education, and Extension Service (CSREES), the 
conservation district, and other Federal, State, and local government 
agencies, including Tribes, with expertise in natural resources who 
consult with NRCS on decisions related to EQIP implementation.
    National conservation priority area means a watershed, multi-state 
area, or region of specific environmental sensitivity designated by the 
Chief.
    Operation and maintenance means work performed by the participant 
to keep the applied conservation practice functioning for the intended 
purpose during its life span. Operation includes the administration, 
management, and performance of non-maintenance actions needed to keep 
the completed practice safe and functioning as intended. Maintenance 
includes work to prevent deterioration of the practice, repairing 
damage, or replacement of the practice to its original condition if one 
or more components fail.
    Participant means an applicant who is a party to an EQIP contract.
    Priority area means a watershed, area, or region that is designated 
under this part because of specific environmental sensitivities or 
significant soil, water, or related natural resource concerns.
    Private agribusiness sector means agricultural producers, certified 
crop advisors, professional crop consultants that are certified or 
certified and independent, agricultural cooperatives, integrated pest 
management coordinators and scouts, and other technical consultants.
    Producer means a person who is engaged in livestock or agricultural 
production.
    Regional conservationist means the NRCS employee authorized to 
direct and supervise NRCS activities in a NRCS region.
    Resource management system means a conservation management system 
that, when implemented, achieves sustainable use of the soil, water, 
and related natural resources.
    Secretary means the Secretary of the United States Department of 
Agriculture.
    State conservationist means the NRCS employee authorized to direct 
and supervise NRCS activities in a State, the Caribbean Area, or the 
Pacific Basin Area.
    State executive director means the FSA employee authorized to 
direct and supervise FSA activities in a State or the Caribbean Area 
(Puerto Rico and the Virgin Islands).
    State technical committee means a committee established by the 
Secretary in a State pursuant to 16 U.S.C. 3861.
    Structural practice means a conservation practice which primarily 
involves the establishment, construction, or installation of a site-
specific measure to conserve, protect from degradation, or improve 
soil, water, 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, and capping of abandoned wells.
    Technical assistance means the personnel and support resources 
needed to conduct conservation planning; conservation practice survey, 
layout, design, installation, and certification; training, 
certification, and provide quality assurance for professional 
conservationists; and evaluation and assessment of the program.

[[Page 53585]]

    Unit of concern means a parcel of agricultural land that has 
natural resource conditions that are of concern to the participant.
    Vegetative practice means a conservation practice which primarily 
involves the establishment or planting of a site-specific vegetative 
measure to conserve, protect from degradation, or improve soil, water, 
or related natural resources in the most cost-effective manner. 
Examples include, but are not limited to, contour grass strips, 
filterstrips, critical area plantings, and permanent wildlife habitat.


Sec. 1466.4  Program requirements.

    (a) Program participation is voluntary. The participant, in 
cooperation with the local conservation district, develops a 
conservation plan for the farm or ranching unit of concern. The 
participant's conservation plan serves as the basis for the EQIP 
contract. CCC provides cost-share or incentive payments to apply needed 
conservation practices and land use adjustments within a time schedule 
specified by the conservation plan.
    (b) The Chief determines the funds available to NRCS for technical 
assistance according to the purpose and projected cost for which the 
technical assistance is provided by NRCS or designee in a fiscal year. 
The Chief allocates an amount according to the type of expertise 
required, the quantity of time involved, the timeliness required, the 
technology needed, and other factors as determined appropriate by the 
Chief. Funding shall not exceed the projected cost to NRCS of the 
technical assistance provided in a fiscal year.
    (c) To be eligible to participate in EQIP, an applicant must:
    (1) Be in compliance with the highly erodible land and wetland 
conservation provisions found at part 12 of this title;
    (2) Have control of the land for the life of the proposed contract 
period.
    (i) An exception may be made by the Chief in the case of land 
allotted by the Bureau of Indian Affairs (BIA), tribal land, or other 
instances in which the Chief determines that there is sufficient 
assurance of control and the lack of current control for the full 
contract period is beyond the control of the participant;
    (ii) If the applicant is a tenant of the land involved in 
agricultural production the applicant shall obtain the concurrence of 
the landowner in order to apply a structural or vegetative practice.
    (3) Submit a conservation plan that is acceptable to NRCS and is 
approved by the conservation district and is in compliance with the 
terms and conditions of the program; and
    (4) Comply with the provisions at Sec. 1412.304 of this chapter for 
protecting the interests of tenants and sharecroppers, including 
provisions for sharing, on a fair and equitable basis, payments made 
available under this part, as may be applicable.
    (d) Land used as cropland, rangeland, pasture, forest land, and 
other land on which crops or livestock are produced, including 
agricultural land that NRCS determines poses a serious threat to soil, 
water, or related natural resources by reason of the soil types; 
terrain; climate; soil, topographic, flood, or saline characteristics; 
or other factors or natural hazards, including the existing 
agricultural management practices of the applicant, may be eligible for 
enrollment in EQIP. Land may only be considered for enrollment in EQIP 
if NRCS determines that the land is:
    (1) Privately owned land; or
    (2) Publicly owned land where:
    (i) The land is under private control for the contract period and 
is included in the participant's operating unit;
    (ii) Installation of conservation practices will not primarily 
benefit the government landowner;
    (iii) Conservation practices will benefit nearby natural resources; 
and
    (iv) The participant has written authorization from the government 
landowner to apply the conservation practices.


Sec. 1466.5  Priority areas and significant statewide natural resource 
concerns.

    (a) Consistent with maximizing the overall environmental benefits 
per dollar expended by the program, NRCS may designate a watershed, an 
area, or a region of special environmental sensitivity or having 
significant soil, water, or related natural resource concern as a 
priority area. NRCS shall give special consideration to applicants in 
priority areas who have conservation plans that address the natural 
resource concern(s) for which the priority area was designated.
    (b) CCC may approve technical, educational, and financial 
assistance under this part to participants with significant statewide 
natural resource concerns outside a priority area.
    (c) To be considered for approval of a priority area, a Federal, 
State, or local government agency, working cooperatively with a 
respective local work group and State technical committee, shall make a 
proposal to CCC in the form of a priority area assessment. The priority 
area assessment shall include:
    (1) A description, quantified when possible, of the nature and 
extent of natural resource concerns in the assessment area;
    (2) A description, quantified when possible, of how the proposed 
goals, objectives, and solutions for the natural resource problems 
would maximize the environmental benefits that would be delivered with 
the requested Federal dollars, both within the priority area and as 
part of the overall program provided under this part;
    (3) Background information such as science-based data on 
environmental status and needs, soils information, demographic 
information, and other available technical data that illustrate the 
nature and extent of natural resource concerns in the priority area or 
the appropriateness of the proposed solution to those natural resource 
concerns.
    (4) The existing staff and incentive programs available at the 
Federal, State, and local levels, both public and private, to assist 
with the areawide activities;
    (5) The technical, educational, and financial assistance needed 
from EQIP to help meet the areawide goals and objectives;
    (6) Ways to measure performance and success, quantified where 
possible; and
    (7) An explanation, quantified where possible, of the degree of 
difficulty producers face in complying with environmental laws.
    (d)(1) NRCS State conservationists will base their decisions to 
designate an area as a priority area upon a priority area assessment, 
the significance of the natural resource concern(s) in the proposed 
priority area, and the conservation practices that best address the 
identified concern(s). NRCS shall consider the following factors in 
determining the significance of the natural resource concern:
    (i) Soil types and characteristics;
    (ii) Terrain and topographic features;
    (iii) Climatic conditions;
    (iv) Flood hazards;
    (v) Saline characteristics;
    (vi) Environmental sensitivity of the land, such as wetlands and 
riparian areas;
    (vii) Quality and intended use of the land;
    (viii) Quality and intended use of the receiving waters, including 
fishery habitat;
    (ix) Wildlife and wildlife habitat quality and quantity;
    (x) Quality of the air; or
    (xi) Other natural hazards or factors, including the existing 
agricultural management practices of the producers in the area; and
    (xii) The economic significance of these factors.

[[Page 53586]]

    (2) NRCS will consider the following factors in its allocation of 
funds:
    (i) Condition of the natural resources;
    (ii) Significance of the natural resource concern;
    (iii) Improvements that NRCS expects will result from 
implementation of the conservation plan;
    (iv) Expected number of producers who will participate and the time 
and financial commitment that the producers will provide;
    (v) Estimated program cost to provide technical, educational, and 
financial assistance;
    (vi) Level of support from existing State and local programs;
    (vii) Ways the program can best assist producers in complying with 
Federal and State environmental laws, quantified where possible; and
    (viii) Other factors the NRCS determines will result in 
maximization of environmental benefits.
    (3) A NRCS State conservationist, in consultation with a State 
technical committee and based on recommendations of a local work group, 
may approve an area as a priority area.
    (e) A NRCS State conservationist, in consultation with a State 
technical committee and based on recommendations of a local work group, 
may approve program assistance to participants with significant 
statewide natural resource concerns outside a funded priority area.
    (f)(1) The Chief may designate national conservation priority areas 
using the identified national program objectives and criteria. The 
Chief may consult with other Federal agencies in selecting national 
conservation priority areas. Consistent with maximizing the overall 
environmental benefits per dollar expended by the program, the Chief 
may designate national conservation priority areas under this part to 
provide technical assistance, cost-share payments, incentive payments, 
and education for producers to comply with nonpoint source pollution 
requirements, other Federal, State, or local environmental laws, or to 
meet other conservation needs.
    (2) NRCS will develop criteria to select the national conservation 
priority areas where program assistance will be provided. The criteria 
will consider:
    (i) Condition of the natural resources;
    (ii) Significance of the natural resource concern;
    (iii) Improvements that NRCS expects will result from 
implementation of the conservation plan;
    (iv) Expected number of producers who will participate and the time 
and financial commitment that the producers will provide;
    (v) Estimated program cost to provide technical, educational, and 
financial assistance;
    (vi) Level of support from existing State and local programs;
    (vii) Ways the program can best assist producers in complying with 
Federal and State environmental laws, quantified where possible;
    (viii) The ability to coordinate EQIP with the Conservation Reserve 
Program, Wetland Reserve Program, or other programs in common areas to 
further maximize the environmental benefits per dollar expended in each 
program; and
    (ix) Other factors that will assist CCC in maximizing the overall 
environmental benefit per dollar expended under this part.
    (g) The Chief, with FSA concurrence, will make funding decisions 
for national conservation priority areas, State-approved priority 
areas, and significant statewide natural resource concerns outside a 
funded priority area. The Chief may base funding decisions, after a 
review of priority area assessments, using the criteria developed in 
accordance with paragraphs (d) and (f) of this section, and considering 
other relevant information. The approval of a priority area at the 
State level does not necessarily mean that funds will be allocated to 
that area. Proposals that are not funded may be resubmitted to the 
Chief for subsequent review and consideration to determine if the 
resubmitted proposal meets Federal priorities for funding.


Sec. 1466.6  Conservation plan.

    (a) The participant shall develop and submit a conservation plan 
for the unit of concern that, when implemented, protects the soil, 
water, or related natural resources in a manner that meets the purpose 
of the program and is acceptable to NRCS and is approved by the 
conservation district. This plan forms the basis for an EQIP contract.
    (1) When considering the acceptability of the plan, NRCS will 
consider whether the participant will use the most cost-effective 
conservation practices to solve the natural resource concerns and 
maximize environmental benefits per dollar expended.
    (2) As determined by NRCS, the conservation plan must allow the 
participant to achieve a cost-effective resource management system, or 
some appropriate portion of that system, identified in the applicable 
NRCS field office technical guide, for the priority natural resource 
condition of concern in the priority area or the significant statewide 
natural resource concern outside a funded priority area.
    (b) Upon a participant's request, the NRCS may provide technical 
assistance to a participant. NRCS may utilize the services of qualified 
personnel of cooperating Federal, State, or local agencies, or private 
agribusiness sector or organizations, in performing its 
responsibilities for technical assistance. Participants may, at their 
own cost, use qualified professionals to provide technical assistance. 
NRCS retains approval authority over the technical adequacy of work 
done by non-NRCS personnel for the purpose of determining EQIP contract 
compliance.
    (c) Participants are responsible for implementing the conservation 
plan. A participant may seek additional assistance from other public or 
private organizations or private agribusiness sector as long as the 
activities funded are in compliance with this part.
    (d) All conservation practices scheduled in the conservation plan 
are to be carried out in accordance with the applicable NRCS field 
office technical guide.
    (e) The conservation plan, or supporting documentation, for the 
unit of concern shall include:
    (1) A description of the prevailing farm or ranch enterprises and 
operations that may be relevant to conserving and enhancing soil, 
water, or related natural resources;
    (2) A description of relevant natural resources, including soil 
types and characteristics, rangeland types and conditions, proximity to 
water bodies, wildlife habitat, or other relevant characteristics 
related to the conservation and environmental objectives of the plan;
    (3) A description of specific conservation and environmental 
objectives to be achieved;
    (4) To the extent practicable, the quantitative or qualitative 
goals for achieving the conservation and environmental objectives;
    (5) A description of one or more conservation practices in the 
conservation management system to be implemented to achieve the 
conservation and environmental objectives;
    (6) A description of the schedule for implementing the conservation 
practices, including timing and sequence; and
    (7) Information that will enable evaluation of the effectiveness of 
the plan in achieving the conservation and environmental objectives.
    (f) To simplify the conservation planning process for the 
participant, the conservation plan may be developed, at the request of 
the participant, as a single plan that incorporates, to the extent

[[Page 53587]]

possible, any or all other Federal, State, or local government program 
requirements. Participants do not need to replace existing plans 
developed by natural resource professionals if such plans meet the 
resource management objectives under this part. NRCS may accept an 
existing conservation plan developed and required for participation in 
any other USDA program if the conservation plan otherwise meets the 
requirements of this part. When a participant develops a single 
conservation plan for more than one program, the participant shall 
clearly identify the portions of the plan that are applicable to the 
EQIP contract.


Sec. 1466.7  Conservation practices.

    (a)(1) The NRCS, with FSA consultation, shall provide guidance for 
determining eligible structural, vegetative, and land management 
practices. To be considered as an eligible practice, the practices must 
provide beneficial, cost-effective approaches for participants to 
change or adapt operations to conserve or improve soil, water, or 
related natural resources or to provide for environmental enhancement.
    (2) The designated conservationist, in consultation with the State 
technical committee or local work group, shall determine the eligible 
conservation practices for the priority area or for significant 
statewide natural resource concerns outside a priority area.
    (3) Where new technologies or conservation practices that provide a 
high potential for maximizing the environmental benefits per dollar 
expended have been developed, NRCS may approve interim conservation 
practice standards and financial assistance for pilot work to evaluate 
and assess the performance, efficacy, and effectiveness of the 
technology or conservation practices at maximizing environmental 
benefits per dollars expended. NRCS may involve other entities in the 
pilot testing, including conservation districts, extension and research 
agencies and institutions, private agribusiness sector, and others.
    (b)(1) CCC shall not provide cost-share assistance to construct an 
animal waste management facility on a large confined livestock 
operation. CCC may fund other structural, vegetative, or land 
management practices needed in the conservation management system to 
address the livestock-related natural resource concerns on a large 
confined livestock operation.
    (2) The NRCS State conservationist, in consultation with the State 
technical committee, shall develop criteria to use to define a large 
confined livestock operation. The criteria will consider but not be 
limited to such factors as:
    (i) The cost-effectiveness of the application and its potential to 
maximize environmental benefits per dollar expended;
    (ii) The ability of producers to pay for the cost of animal waste 
management facilities;
    (iii) The significance of the natural resource concern resulting 
from the operation;
    (iv) Regulations promulgated pursuant to the Clean Water Act (33 
U.S.C. 1251 et seq.) and guidance developed under section 6217 of the 
Coastal Zone Act Reauthorization Amendments of 1990 (16 U.S.C. 1455b);
    (v) The obligations of operations under other environmental 
authorities;
    (vi) The particular characteristics of modern livestock operations;
    (vii) Other Federal and State environmental laws, and laws 
affecting the structure of agriculture; and
    (viii) The size of the operation in relation to other confined 
livestock operations in the State or Nation.
    (3) The NRCS State conservationist, in consultation with the State 
technical committee, shall place focus on paragraphs (b)(2)(i) and 
(b)(2)(ii) of this section when developing the criteria to define a 
large confined livestock operation.


Sec. 1466.8  Technical and other assistance provided by qualified 
personnel not affiliated with USDA.

    (a) A NRCS State conservationist may utilize technical and other 
assistance from qualified personnel of other Federal, State, and local 
agencies, and will encourage producers to use the most cost-effective 
technical assistance available, including if appropriate, using the 
services of the private agribusiness sector to carry out the assigned 
responsibilities of the program.
    (b) Technical and other assistance provided by qualified personnel 
not affiliated with USDA may include, but is not limited to: 
conservation planning; conservation practice survey, layout, design, 
installation, and certification; information, education, and training 
for producers; and training, certification, and quality assurance for 
professional conservationists.
    (c) NRCS shall provide technical coordination and leadership for 
the program, regardless of who provides technical and other assistance, 
and shall assure that the quality of the assistance obtained from other 
Federal, State, and local agencies, and the private agribusiness sector 
is acceptable for purposes of this part. Non-NRCS assistance shall not 
be deemed to satisfy an EQIP contract entered into under subpart B of 
this part until the assistance has been approved by NRCS.

Subpart B--Contracts


Sec. 1466.20  Application for contracts and selecting offers from 
producers.

    (a) Any producer who has eligible land may submit an application 
for participation in the EQIP to a USDA service center. Producers who 
are members of a joint operation shall file a single application for 
the joint operation.
    (b) CCC will accept applications throughout the year. NRCS shall 
rank and select the offers of applicants periodically, as determined 
appropriate by NRCS after consultation with the State technical 
committee and on the recommendation of the local work groups.
    (c) The designated conservationist, in consultation with the local 
work group, will develop ranking criteria to prioritize applications 
within a priority area. NRCS shall prioritize applications from the 
same EQIP-funded priority area using the criteria specific to the area. 
The FSA county committee, with the assistance of the designated 
conservationist and the FSA county executive director, shall approve 
for funding the applications in a priority area based on eligibility 
factors of the applicant and the NRCS ranking.
    (d) The NRCS State conservationist, in consultation with the State 
technical committee, and using quality criteria in the NRCS field 
office technical guide, will develop criteria to prioritize 
applications from applicants with significant statewide natural 
resource concerns outside a priority area. The FSA county committee, 
with assistance of the designated conservationist and FSA county 
executive director, shall approve for funding these applications based 
on the eligibility factors of the applicant and the NRCS ranking.
    (e) The designated conservationist will work with the applicant to 
collect the information necessary to evaluate the application using the 
ranking criteria. A participant has the option of offering and 
accepting less than the maximum program payments allowed.
    (f) NRCS will rank all applications using criteria that will 
consider:
    (1) The environmental benefits per dollar expended;
    (2) A reasonable estimate of the cost of the conservation 
practices, the program payments that will be paid to the applicant, and 
other factors for determining which applications will present the least 
cost to the program;
    (3) The environmental benefits that will be derived by applying the

[[Page 53588]]

conservation practices in the conservation plan which will meet the 
purposes of the program;
    (4) The extent to which the contract will assist the applicant in 
complying with Federal, State, or local environmental laws;
    (5) Whether the land in the application is located in a priority 
area and the extent to which the contract will assist the priority area 
goals and objectives.
    (g) If two or more applications have an equal rank, the application 
that will result in the least cost to the program will be given greater 
consideration.


Sec. 1466.21  Contract requirements.

    (a) In order for a participant to receive cost-share or incentive 
payments, the participant shall enter into a contract agreeing to 
implement a conservation plan or portions thereof. FSA shall determine 
the eligibility of participants. The FSA county committee may only 
approve the contract, with NRCS concurrence.
    (b) An EQIP contract shall:
    (1) Incorporate all portions of a conservation plan applicable to 
EQIP;
    (2) Be for a duration of not less than 5 years nor more than 10 
years;
    (3) Include all provisions as required by law or statute;
    (4) Specify the participant's requirements for operation and 
maintenance of the applied conservation practices consistent with the 
provisions of Sec. 1466.22;
    (5) Include participant reporting requirements to determine 
compliance with the contract and program; and
    (6) Any other provision determined necessary or appropriate by CCC.
    (c) The participant must apply a financially assisted practice 
within the first 12 months of signing a contract. If the participant 
does not apply a financially assisted practice within the first 12 
months, CCC may determine that the contract has been breached, 
terminate the contract, and seek appropriate remedies.
    (d) There is a limit of one EQIP contract at any one time for each 
tract of agricultural land, as identified with a FSA tract number, 
determined at the time of the application for EQIP assistance. Subject 
to the payment limitation set out elsewhere in this part, a participant 
may have subsequent EQIP contracts for different natural resource needs 
or concerns following completion of a previous EQIP contract on the 
same tract.


Sec. 1466.22  Conservation practice operation and maintenance.

    The contract shall incorporate the operation and maintenance of 
conservation practices applied under the contract. The participant 
shall operate and maintain the conservation practice for its intended 
purpose for the life span of the conservation practice, as identified 
in the contract or conservation plan, as determined by CCC. 
Conservation practices installed before the execution of a contract, 
but needed in the contract to obtain the environmental benefits agreed 
upon, are to be operated and maintained as specified in the contract.


Sec. 1466.23  Cost-share and incentive payments.

    (a)(1) The maximum direct Federal share of cost-share payments to a 
participant shall not be more than 75 percent of the projected cost of 
a structural or vegetative practice.
    (2) CCC shall provide incentive payments to participants for land 
management practices in an amount and at a rate necessary to encourage 
a participant to perform the land management practice that would not 
otherwise be initiated without government assistance.
    (3) CCC shall set the cost-share and incentive payment limits, as 
determined by:
    (i) The designated conservationist, in consultation with the local 
work group, for a priority area; or
    (ii) The NRCS State conservationist, in consultation with the State 
technical committee, for participants subject to environmental 
requirements or with significant statewide natural resource concerns 
outside a funded priority area.
    (b) Except as provided in paragraph (c) of this section, the total 
amount of cost-share and incentive payments paid to a person under this 
part may not exceed:
    (1) $10,000 for any fiscal year; and
    (2) $50,000 for any multi-year contract.
    (c) CCC shall use the provisions in 7 CFR Part 1400 related to the 
definition of person and the limitation of payments, except that:
    (1) States, political subdivisions, and entities thereof will not 
be persons eligible for payment.
    (2) For purposes of applying the payment limitations provided for 
in this section, the provisions in part 1400, subpart C for determining 
whether persons are actively engaged in farming, subpart E for limiting 
payments to certain cash rent tenants, and subpart F as the provisions 
apply to determining whether foreign persons are eligible for payment, 
will not apply.
    (3)(i) The NRCS State conservationist may authorize, on a case-by-
case basis, payments in excess of $10,000 in any fiscal year, up to the 
$50,000 limitation in paragraph (b) of this section. However, such 
increase in payments for a certain year shall be offset by reductions 
in the payments in subsequent years. CCC will base approval for 
payments in excess of $10,000 in a fiscal year on the NRCS State 
conservationist's determination that the approval is justified because:
    (A) The practices in the system need to be applied at once so that 
the system is fully functioning to resolve the natural resource 
problem;
    (B) The natural resource problem is so severe that resolving the 
problem immediately is needed;
    (C) The producer needs to complete the practices in one year so 
that the farming operation is not interrupted or disturbed by the 
practice installation over a 5-10 year period; or
    (D) The producer can install the practices at a lower total cost 
when installed in one year, thereby reducing the program payments.
    (ii) With respect to land under EQIP contract which is inherited in 
the second and subsequent years of the contract, the $10,000 fiscal 
year limitation shall not apply to the extent that the payments from 
any contracts on the inherited land cause an heir, who was party to an 
EQIP contract on other lands prior to the inheritance, to exceed the 
annual limit.
    (iii) With regard to contracts on tribal land or BIA allotted land, 
payments exceeding one limitation may be made to the tribal venture if 
an official of the BIA or tribal official certifies that no one 
``person'' directly or indirectly will receive more than the 
limitation.
    (4) Any cooperative association of producers that markets 
commodities for producers with respect to the commodities so marketed 
for producers shall not be considered to be a person eligible for 
payment.
    (5) The status of an individual or entity on the date of 
application shall be the basis on which the determination of the number 
of persons involved in the farming operation is made.
    (6) A participant shall not be eligible for cost-share or incentive 
payments for conservation practices on eligible land if the participant 
receives cost-share payments or other benefits for the same land under 
the Conservation Reserve Program (16 U.S.C. 3831-3836) or the Wetlands 
Reserve Program (16 U.S.C. 3837 et seq.).
    (d) The participant and NRCS must certify that a conservation 
practice is completed in accordance with the contract before the CCC 
will approve the payment of any cost-share or incentive payments.

[[Page 53589]]

    (e) CCC expenditures under a contract entered into during a fiscal 
year shall not be made until the subsequent fiscal year.


Sec. 1466.24  Contract modifications and transfers of land.

    (a) The participant and CCC may modify a contract if the 
participant and CCC agree to the contract modification and the 
conservation plan is revised in accordance with NRCS requirements and 
is approved by the conservation district.
    (b) The parties may agree to transfer a contract with the agreement 
of all parties to the contract. The transferee shall assume full 
responsibility under the contract, including operation and maintenance 
of those conservation practices already installed and to be installed 
as a condition of the contract.
    (c) CCC may require all or a portion of any assistance earned under 
EQIP to be refunded if a participant sells or loses control of the land 
under an EQIP contract and the new owner or controller refuses to 
assume responsibility under the contract.


Sec. 1466.25  Contract violations and termination.

    (a)(1) If CCC determines that a participant is in violation of the 
terms of a contract or attachments thereto, CCC shall give the 
participant a reasonable time, as determined by the FSA county 
committee, in consultation with NRCS, to correct the violation and 
comply with the terms of the contract and attachments thereto. If a 
participant continues in violation, the FSA county committee may, in 
consultation with NRCS, terminate the EQIP contract.
    (2) If the FSA county committee determines, in consultation with 
NRCS, that a participant has submitted false information or filed a 
false claim, the FSA county committee may terminate the EQIP contract.
    (b)(1) If FSA terminates a contract, the participant shall forfeit 
all rights for future payments under the contract and shall refund all 
or part of the payments received with interest. The FSA county 
committee, in consultation with NRCS, has the option of requiring only 
partial refund of the payments received if a previously installed 
conservation practice can function independently, are not affected by 
the violation or other conservation practices that would have been 
installed under the contract, and the participant agrees to operate and 
maintain the installed conservation practice for the life span of the 
practice.
    (2) If CCC terminates a contract due to breach of contract or the 
participant voluntarily terminates the contract before any contractual 
payments have been made, the participant shall forfeit all rights for 
further payments under the contract and shall pay such liquidated 
damages as are prescribed in the contract. The FSA county committee, in 
consultation with NRCS, will have the option to waive the liquidated 
damages depending upon the circumstances of the case.
    (3) When making all contract termination decisions, CCC may, in 
addition, give consideration to good faith on the part of the 
participant and hardships that prevent the participant from complying 
with the contract terms that are beyond the participant's control, and 
make additional adjustments accordingly.
    (4) The participant may voluntarily terminate a contract if CCC 
agrees based on CCC's determination that termination is in the public 
interest.

Subpart C--Administrative Remedies


Sec. 1466.30  Appeals.

    (a) A participant in EQIP may obtain a review of a determination 
affecting participation in accordance with parts 11, 614, and 780 of 
this title, except as provided in (b), as appropriate.
    (b) In accordance with the provisions of the Department of 
Agriculture Reorganization Act of 1994, Pub. L. 103-354, the following 
decisions are not appealable:
    (1) Payment rates, payment limits, and cost-share percentages;
    (2) The designation of State-approved priority areas, national 
conservation priority areas, or significant statewide natural resource 
concerns;
    (3) NRCS funding decisions to make allocations to States or 
priority areas;
    (4) Eligible conservation practices; and
    (5) Other matters of general applicability.


Sec. 1466.31  Compliance with regulatory measures.

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


Sec. 1466.32  Access to operating unit.

    Any authorized CCC representative shall have the right to enter an 
operating unit or tract for the purpose of ascertaining the accuracy of 
any representations made in a contract or in anticipation of entering a 
contract, as to the performance of the terms and conditions of the 
contract. Access shall include the right to provide technical 
assistance and inspect any work undertaken under the contract. The CCC 
representative shall make a reasonable effort to contact the 
participant prior to the exercise of this provision.


Sec. 1466.33  Performance based upon advice or action of 
representatives of CCC.

    If a participant relied upon the advice or action of any authorized 
representative of CCC, and did not know or have reason to know that the 
action or advice was improper or erroneous, the Farm Service Agency 
county committee, in consultation with NRCS, may accept the advice or 
action as meeting the requirements of the program and may grant relief, 
to the extent it is deemed desirable by CCC, to provide a fair and 
equitable treatment because of the good-faith reliance on the part of 
the participant.
Thomas A. Weber,
Deputy Vice President, Commodity Credit Corporation.
[FR Doc. 96-26265 Filed 10-9-96; 10:45 am]
BILLING CODE 3410-16-P