[Federal Register Volume 62, Number 99 (Thursday, May 22, 1997)]
[Rules and Regulations]
[Pages 28258-28292]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-13534]



[[Page 28257]]

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Part X





Department of Agriculture





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Commodity Credit Corporation



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7 CFR Parts 1466



Environmental Quality Incentives Program; Rule

  Federal Register / Vol. 62, No. 99 / Thursday, May 22, 1997 / Rules 
and Regulations  

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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: Final rule.

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SUMMARY: The Commodity Credit Corporation (CCC) is issuing a final rule 
for the Environmental Quality Incentives Program (EQIP). CCC published 
a proposed rule for EQIP in the Federal Register on October 11, 1996 
(61 FR 53574) and solicited comments from the public. This final rule 
establishes the process by which CCC will administer EQIP, responds to 
comments received from the public during the 45-day comment period, and 
incorporates clarifications to improve implementation of the program.

EFFECTIVE DATE: May 22, 1997.

ADDRESSES: This final rule may be accessed via Internet. Users can 
access the Natural Resources Conservation Service (NRCS) homepage at 
http://www.ftw.nrcs.usda.gov; select the 1996 Farm Bill Conservation 
Programs from the menu.

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

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    Pursuant to Executive Order 12866, Regulatory Planning and Review 
(58 FR 51735, October 4, 1993), the Office of Management and Budget 
(OMB) has determined that this final 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 interim year of $130 million. During the interim administration 
period in FY 1996 authorized by 16 U.S.C. 3839aa-8, the CCC used the 
$130 million to continue implementation of the terms and conditions of 
the superseded programs to the extent that such terms and conditions 
were consistent with the statutory provisions of EQIP.
    In considering alternatives for implementing the program, NRCS 
followed the legislative intent to maximize environmental benefits per 
dollar expended, address natural resource problems and concerns, 
establish an open participatory process that emphasizes priority areas, 
and provide flexible assistance to producers who apply appropriate 
conservation measures while complying with Federal, State, and tribal 
environmental laws. The baseline alternative recognizes that the four 
former conservation programs--the Agricultural Conservation Program 
(ACP), Water Quality Incentives Program (WQIP), Great Plains 
Conservation Program (GPCP), and Colorado River Basin Salinity Control 
Program (CRSCP)--ceased to exist on April 4, 1996, with the passage of 
the authorized amendments in the Federal Agriculture Improvement and 
Reform Act of 1996 (the 1996 Act) to the Food Security Act of 1985 (the 
1985 Act); an interim program extended until October 4, 1996. The 
baseline assumes that no new program would replace the former programs, 
resulting in a substantial decrease in funding for USDA conservation 
efforts. It is recognized that some conservation adoption by 
agricultural producers would continue in the absence of these programs 
(e.g., up to 20 percent of producers according to Cooper and Keim's 
assessment of WQIP). (Reference: Cooper, J.C., R.W. Keim. ``Incentive 
Payments to Encourage Farmer Adoption of Water Quality Protection 
Practices.'' American Journal of Agricultural Economics, Volume 78 
(February 1996), pages 54-64.) The baseline alternative further 
recognizes that several other Federal conservation programs will be 
implemented which will generate environmental benefits. The 
Conservation Reserve Program (CRP), Wetland Reserve Program (WRP) and 
the recently established Wildlife Habitat Incentive Program (WHIP) will 
be implemented during the same time period as authorized for EQIP. The 
highly erodible land and wetland conservation compliance requirements 
will continue to be in effect.
    Based on the economic analysis, assuming the level of funding 
authorized by the 1996 Act, an estimated 35.7 million acres of 
agricultural land would be treated over the seven years of the program, 
including 18.5 million acres of cropland, 3.7 million acres of pasture, 
and 13.5 million acres of rangeland. Of the total agricultural land 
treated, an estimated 26.8 million acres are expected to be in priority 
areas. In regards to livestock operations needing assistance with 
animal waste management facilities, NRCS estimates that over 10,000 
small- to medium-sized livestock operations will be assisted with EQIP; 
65 percent are expected to be in priority areas.
    The off-farm public benefits associated with on-farm conservation 
efforts are directly dependent upon the on-farm treatment needs and 
associated benefits. In the case of non-point source pollution from 
agricultural sources, for instance, public benefits are not achieved 
until private landuser behavior changes and on-site conservation 
measures are applied. Some of the off-site 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, and 
reduced flood damages. Additional benefits are from reduced pollution 
of surface and groundwater from agrochemical management, improvements 
in air quality by reducing wind erosion, and enhancements to wildlife 
habitat. EQIP encourages participants to adopt a comprehensive approach 
to solving natural resource and environmental concerns. The program is 
designed to take full advantage of the relationships among and between 
conservation practices and the natural resources they are designed to 
protect. Unlike CRP and WRP, EQIP provides for treatment of natural 
resource concerns while enabling the land to be used for the production 
of food and fiber. Furthermore, by replacing the four former 
conservation

[[Page 28259]]

programs, the single program will reduce the administrative costs for 
both farmers or ranchers and the Federal government.
    In addition to the expected disbursements for cost-share and 
incentive payments, EQIP costs include staff costs for actual delivery 
of technical assistance for practice application and educational 
assistance to agricultural producers on appropriate conservation 
methods. Technical assistance costs will vary according to the type of 
expertise required, the complexity and scope of the natural resource 
concerns being addressed, and the objectives of the landowner. 
Technical assistance services are also needed to help producers install 
conservation practices that may be partially supported by EQIP, other 
Federal programs, and by State or local government, or private 
financial assistance programs. In terms of public and private 
investment, USDA experience indicates that private landuser costs per 
acre for conservation nearly equal Federal costs when analyzed on a 
consistent basis. Private landuser costs per year for conservation 
averaged about $10 per acre nationally, according to a 1995-96 
evaluation NRCS conducted for its conservation technical assistance and 
watershed protection program activities.
    Total discounted benefits on cropland for EQIP are estimated at 
$1651 million. This includes on-site production benefits of $544 
million, other reduced input benefits (such as irrigation savings) of 
$181 million, and off-site benefits of $924 million. This compares to 
estimates of $504 million and $410 million for federal and private 
costs, respectively.
    Total discounted benefits for pasture are estimated at $324 
million. These benefits compare to Federal and private costs of $51 
million and $63 million, respectively. Total discounted benefits for 
rangeland are estimated at $438 million, compared to Federal and 
private costs of $204 million and $83 million, respectively.
    The total discounted present value of benefits for EQIP (excluding 
any benefits from conservation practices for treatment of animal waste) 
amount to $2.41 billion while the present value of total discounted 
costs, both public and private, are estimated at $1.65 billion. The net 
benefits (estimated benefits less all costs) amount to $759 million 
expressed in discounted present value dollars. Providing for an 
allowance for the accrual of treated acreage over time and adjusting to 
an annual basis (at a 3 percent interest rate), the annualized net 
benefits are estimated to be $76 million, of which 62%, or $47 million, 
are on-site benefits. Other studies have determined off-site benefits 
as approximately 2 to 3 times the amount of on-site benefits (Resources 
Conservation Act, USDA, 1989). Assuming the net off-site benefits are a 
medium level of 2.5 times that of on-site benefits, then net off-site 
benefits will be $118.3 million annually, for a total on-and off-site 
benefits of $165.6 million annually.
    The overall benefit to cost ratio is estimated to be 1.46, even 
though off-site benefits for pasture and rangeland and total benefits 
for animal waste management were not estimated due to unavailability of 
data. The benefit to cost ratios for the major land types are: 
cropland, 1.81; pasture, 2.84; and rangeland, 1.52. Cropland treatment 
will produce the largest on-site and off-site benefits. The on-site 
benefit to private cost ratios for cropland, pasture, and range are 
1.77, 5.12, and 5.25 respectively.
    A copy of this analysis is available upon request from Jeffrey R. 
Loser, Conservation Operations Division, Natural Resources Conservation 
Service, P.O. Box 2890, Washington, D.C. 20013-2890.

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

Environmental Analysis

    CCC has determined through an amendment to the ``Environment 
Assessment for the Environmental Quality Incentives Program, August 1, 
1996'' that the issuance of this final rule will not have a significant 
effect on the human environment. Copies of the Environmental 
Assessment, the amendment, and the finding of no significant impact may 
be obtained from Jeffrey R. Loser, Conservation Operations Division, 
Natural Resources Conservation Service, P.O. Box 2890, Washington, D.C. 
20013-2890.

Paperwork Reduction Act

    No substantive changes have been made in this final rule which 
affect the recordkeeping requirements and estimated burdens previously 
reviewed and approved under OMB control number 0560-0174.

Executive Order 12998

    This final rule has been reviewed in accordance with Executive 
Order 12998. The provisions of this final rule are not retroactive. 
Furthermore, the provisions of this final rule preempt State and local 
laws to the extent such laws are inconsistent with this final 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 and 11 must be exhausted.

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

    Pursuant to Sec. 304 of the Department of Agriculture 
Reorganization Act of 1994, Pub. L. 103-354, USDA classified this final 
rule as major and CCC conducted a risk assessment. Available upon 
request is an environmental risk assessment including a comparison of 
the relative risks managed by EQIP and other programs in the Department 
which address similar risks resulting from comparable activities. One 
year after the final rule is promulgated, the economic analysis based 
on a risk management assessment will address the costs associated with 
implementation and compliance of the regulation and qualitative and 
quantitative benefits of the regulation. A copy of the risk assessment 
is available upon request from Jeffrey R. Loser, Conservation 
Operations 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 government, or the private sector; therefore a statement 
under Sec. 202 of the Unfunded Mandates Reform Act of 1995 is not 
required.

Small Business Regulatory Enforcement Fairness Act of 1996

    Pursuant to 5 U.S.C. Sec. 808 of the Small Business Regulatory 
Enforcement Fairness Act of 1996, it has been determined by CCC that it 
is impracticable, unnecessary, and contrary to the public interest to 
delay the effective date of this rule. Making this final rule effective 
immediately will permit CCC to offer the public timely, reliable 
information about funding for conservation practices as early before 
the start of the spring 1997 planting season as possible. Information 
about the availability of the program for establishing conservation 
practices may

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influence planting decisions and should, therefore, be disseminated to 
producers before planting decisions are made. Failure to provide this 
information in a timely manner may mean that the realization of 
important conservation benefits available under EQIP may be delayed for 
another year before the start of another planting season. Further, 
since the four former conservation programs ceased to exist on April 4, 
1996, and the temporary or interim authority to administer EQIP ended 
on October 4, 1996, there is no program in operation nationally that 
provides technical, financial, and educational assistance of this kind 
to producers for natural resource conservation purposes. Accordingly, 
this rule is effective upon publication in the Federal Register.

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 (EQIP) (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.
    EQIP combines into one program the functions of several 
conservation programs administered by the Secretary of Agriculture, 
including the Agricultural Conservation Program (ACP), the Agricultural 
Water Quality Incentives Program, the Colorado River Salinity Control 
Program (CRSCP), and the Great Plains Conservation Program (GPCP), 
which are rescinded by the 1996 Act. Through EQIP, flexible technical, 
financial, and educational assistance is provided 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. 
The assistance is provided 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. A consolidated and 
simplified conservation planning process will be used to reduce any 
administrative burdens that would otherwise be placed on producers.
    The 1985 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.
    The CCC is a government-owned and operated corporation, chartered 
in the 1930's to help stabilize and support farm prices and income, and 
to maintain balanced supplies and orderly distribution of agricultural 
commodities. The 1996 Act expanded the mission of the CCC to include 
the power to carry out conservation or environmental programs 
authorized by law.
    The CCC is run by a Board of Directors, and the Secretary of 
Agriculture serves as the Chairman of the Board. The Administrator of 
Farm Service Agency (FSA) and the Chief of NRCS serve as officers of 
the corporation. The CCC does not have its own operating personnel, and 
all work done on behalf of the CCC is performed by personnel of 
agencies within USDA. Pursuant to CCC bylaws, the NRCS Chief and the 
FSA Administrator, as officers of the corporation, may use NRCS and FSA 
personnel, respectively, to conduct work for CCC.
    EQIP is a CCC-funded program, as reflected by the placement of this 
regulation with other CCC program regulations and the designation of 
CCC throughout the regulation itself. On behalf of the CCC, the NRCS 
and FSA share administration of EQIP. Where appropriate, this final 
regulation describes the CCC responsibilities performed by personnel 
from the two respective agencies.
    On October 11, 1996, CCC published a proposed rule with request for 
comments. The proposed rule described the program requirements, 
administrative processes, and eligibility criteria that CCC would use 
in implementation of EQIP. The proposed rule also described how 
priority areas and significant statewide natural resource concerns for 
program funding would be designated and what information would be 
considered in making those designations. Over 800 separate responses 
containing about 2500 specific comments were received during the 45-day 
comment period: 360 responses from farmers, ranchers, and other 
individuals, 121 from agricultural and rural community organizations, 
49 from environmental organizations, 111 from conservation districts 
and related groups, 66 from business entities, and 109 from State and 
local agencies.
    Additional responses were received from Federal agencies and 
employees; their comments are not included in the following analysis of 
public comments. These responses were treated as inter-and intra-agency 
comments and considered along with the public comments where 
appropriate.
    All comments received are available for review in Room 6032-S, 
South Building, 14th and Independence Ave., S.W., Washington, D.C., 
during regular business hours (8 a.m. to 5 p.m.) Monday through Friday.

Analysis of Public Comment

    Overall, almost all respondents expressed appreciation for the 
opportunity to comment on the EQIP proposed rule. Many offered valuable 
suggestions for improving or clarifying specific sections of the 
proposed rule. Some of these suggestions were group efforts, where 
individual responses used similar or identical language to identify and 
describe their interests, concerns, and recommended modifications to 
the proposed rule.
    The majority of comments centered on six major issues in the 
proposed rule: definition of large confined livestock operation; 
focusing the program in priority areas; local work groups; requirement 
for a conservation plan and long-term contract; roles of agencies; and 
delayed payments in the first fiscal year of a contract. Several 
comments either commended or criticized specific statutory 
requirements. These comments were considered as part of the rulemaking 
record to the extent that they were relevant to the provisions of the 
rulemaking. Numerous minor editorial and other changes in the text were 
suggested; these comments are not included in the following analysis 
but all were considered and many of the minor technical changes were 
included in the final rule.
    To implement the final rule, NRCS will, with concurrence from FSA, 
be responsible for establishing and documenting in program guidance the 
overall policies, priorities, procedures, and guidelines for EQIP. NRCS 
will seek the review and input by other Federal agencies, as 
appropriate, when developing the guidance document.

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General Comments on 7 CFR Part 1466

    Under the proposed rule, CCC would set out EQIP regulations in 7 
CFR part 1466. The following summarizes general comments received on 
the proposed rule and CCC's response to them.

1. The 1996 Act

    Support for the introduction of EQIP and the proposed method for 
implementing its provisions was expressed in 78 comments. An additional 
29 comments express general disagreement with the introduction of a new 
program, its proposed method for implementation, and the elimination of 
programs such as the ACP that have been in existence for many years. 
The Department recognizes that EQIP provides a new direction for 
natural resources conservation programs and, as such, may create 
concern among those familiar with former programs. However, Congress 
established EQIP to combine into a single program the functions of the 
former programs and to carry out the single program in a manner that 
maximizes environmental benefits per dollar expended, and the 
Department is required to administer the laws as passed by Congress.

2. Preamble Language in the Proposed Rule

    Nineteen comments concern the length of the public comment period. 
Twelve comments request an extension of the comment period by at least 
30 to 45 days. Seven of the comments appreciate the opportunity given 
for input and the varied mediums by which comments would be accepted. 
Over 800 responses were received from a range of interested parties 
from across the Nation. CCC believes that a sufficient length of time 
was provided and it has received sufficient input to proceed to a final 
rule.
    Five comments concern the benefit cost assessment conducted 
pursuant to Executive Order 12866. These comments suggest that most 
environmental benefits occur off-site, recognize the difficulty in 
quantifying off-site environmental benefits, and support Federal 
incentives for producers to adopt on-site practices. The comments were 
considered along with other information and data to finalize the 
benefit cost assessment.
    The preamble to the proposed rule included a discussion of the 
efforts being made to improve program outreach to all eligible citizens 
and solicited suggestions regarding how program delivery can be 
improved on environmentally sensitive land managed by producers who 
have not participated historically in the Department's conservation 
programs. There were 25 comments received in response to this request. 
Five comments express general support for USDA outreach efforts. Nine 
comments express concern that EQIP will primarily benefit large 
agricultural operations to the detriment of smaller, family-run 
operations. One comment states that it appeared the midwestern farmers 
would benefit to a greater extent than those in the southeast and 
recommends the program provide equal benefits all over the country. 
Several other miscellaneous comments were received on outreach.
    Seven comments made specific recommendations for increasing USDA's 
outreach efforts. These recommendations include: permit flexible 
schedules for applying practices and systems; offer low-cost 
conservation practice alternatives; consider the value of a producer's 
labor as the producer's share of the cost; utilize local cooperative 
extension service agencies in the education efforts; conduct a survey 
of producers who do not normally participate and ask them the reasons 
for their non-participation; provide flexibility regarding the control 
of land for American Indians and others; and, coordinate the various 
conservation programs such as CRP, WRP, and EQIP. Several comments 
suggest Amish and Old Order Mennonite producers, Tribes, and Pacific 
Islanders are groups that have not participated historically and USDA 
should encourage greater participation. The Department remains 
dedicated to increasing program availability to all eligible citizens. 
The recommendations made in the public comments have been incorporated 
in the final rule where applicable or will be included in program 
guidance and delivery activities.

Section-by-Section Comments on 7 CFR Part 1466

Section 1466.1  Applicability

    The proposed rule indicated that farmers and ranchers could receive 
program assistance to address soil, water and related natural resources 
concerns. There were 44 comments expressing support for wildlife 
habitat concerns receiving program assistance on par with soil and 
water issues and many of these comments wanted the final rule to 
reflect the emphasis on wildlife issues to a greater extent. Three 
comments voice concern that a balance should be attempted among soil 
conservation, water quality, and other natural resource concerns; one 
commenter believes EQIP should not be targeted as an environmental 
program; and seven commenters identify particular natural resource 
concerns that EQIP should encompass. EQIP shall be implemented in a 
balanced manner in accordance with the statutory purposes for which 
EQIP was established, including the statutory admonition to achieve 
environmental benefits in a cost-effective manner. The proposed rule 
contained broad language to facilitate the identification of a broad 
range of natural resource concerns at the local level and the 
Department still believes that this is the appropriate approach. 
Therefore, no change is made in this section's language related to 
natural resource concerns. The final rule now contains, however, a new 
definition for ``related natural resources'' to help clarify the broad 
range of natural resource concerns that are intended.
    Seven comments support cost-share assistance for the implementation 
of profitable practices. Several of these comments indicate that a 
practice may prove profitable for a producer to implement in the long 
term but the initial cost of installation may limit the extent of its 
adoption. These commenters suggest that EQIP should provide cost-share 
to off-set the initial outlay. Three commenters specifically indicate 
that cost-share assistance should not be provided for practices that 
are locally accepted as being sound and necessary components of a 
profitable agricultural operation. EQIP assistance is not to assist 
producers in the performance of normal or routine farming operations, 
but to encourage the adoption of practices which address particular 
natural resource concerns. During program implementation, the 
Department will scrutinize the profitability of certain practices, 
ascertain whether such practices would likely be adopted absent program 
assistance, and direct program assistance accordingly. Even though EQIP 
assistance may not be available for a practice determined to be a 
``profitable practice,'' other Federal, State, tribal, or local 
programs may provide credit or other types of assistance to producers 
for initial outlay costs. Producers can obtain information regarding 
other USDA program assistance from their local USDA service center.
    Five comments suggest the rule and the processes for implementation 
of EQIP should be simplified, but gave no further specific examples of 
how this could be accomplished. The Department will evaluate on a 
continuing basis ways to improve program delivery, including making the 
application process simpler

[[Page 28262]]

and removing unnecessary administrative steps for the participant.

Section 1466.2  Administration

    In this section, the respective roles of the NRCS and FSA were 
identified, and provided for other agencies to assist NRCS and FSA with 
implementing EQIP. Five comments express approval of the roles outlined 
for the two agencies. Three comments express specific disapproval of 
NRCS and FSA sharing responsibility for program implementation and 3 
comments believe that such an arrangement would prove cumbersome. Two 
comments express the importance that the agencies administer the 
program in a simple and coordinated manner. Four comments desire 
further clarification of the respective roles of the agencies. One 
comment notes that successful program implementation requires the 
agencies to train their personnel. USDA believes that it is important 
for both NRCS and FSA to share in administrative responsibilities for 
the program and that the respective roles of each agency are 
satisfactorily identified. The proposed arrangement takes advantage of 
the proven expertise of both NRCS and FSA. USDA established the 
respective roles for NRCS and FSA and continues to find this shared 
responsibility for program implementation to be an effective 
utilization of Department resources. Training of NRCS, FSA, and 
cooperating agency employees will be conducted to ensure that employees 
can perform their jobs in a highly skilled, quality manner. 
Accordingly, no change has been made in the final rule concerning the 
shared responsibilities of NRCS and FSA.
    Fifteen comments concern NRCS leadership of the program. Ten of the 
comments support the NRCS State conservationist making local program 
and funding decisions. One comment supports NRCS making funding 
decisions and allocation determinations with FSA concurrence as 
proposed in the rule. Two comments urge that FSA should not be involved 
at all except for administrative purposes. Two comments state that FSA 
should not be involved in the program because of the different missions 
between NRCS and FSA.
    There were 45 comments regarding the roles of FSA and FSA county 
committees in the program. Twenty-six comments favor the administration 
of the program should be fully carried out by FSA county committees. 
Nine comments state that the program should be fully carried out 
through the FSA. Eight comments suggest that FSA continue to perform 
their same duties as in the former ACP, with NRCS providing technical 
assistance only. Two comments state that FSA and FSA county committees 
should administer EQIP due to the cost-effectiveness of the CRP and the 
ACP.
    The Department believes that the framework identified for delivery 
of the program utilizes the proven expertise of NRCS and FSA to the 
fullest extent possible. This framework identifies the primary role of 
NRCS to be the Department's primary agency for natural resource 
conservation on private lands. It also meets a basic intent of the 
Department to simplify delivery of programs and improve their 
flexibility and efficiency with both agencies playing a major role in 
their delivery. EQIP places a much stronger emphasis on long-term 
natural resource planning and assessment than was emphasized under ACP. 
The core elements of the program require a higher level of technical 
expertise on a broader scale than performed under previous conservation 
programs. NRCS has the technical capability to meet these strengthened 
technical assistance requirements and FSA can provide efficient 
administrative expertise to support the program. No change was made in 
the final rule concerning the roles of the agencies in the program.
    Two comments make the suggestion that NRCS attempt to 
quantitatively evaluate each contract, within the context of its 
watershed, in order to fulfill its responsibility to evaluate program 
success. One comment notes that the benefits of the conservation 
practices may be much greater off-site and NRCS should consider such 
benefits when evaluating the success of a particular contract. NRCS 
will evaluate the program's performance at the farm and ranch, priority 
area, State, regional, and national levels to: ensure that the program 
purposes are met; evaluate the net benefits of different conservation 
practices; and, understand ways to improve performance of the program. 
The program evaluation and assessment process will include, but not be 
limited to: determination of benchmark or baseline natural resource 
conditions; establishment of performance indicators; measurement of 
conservation effects and outcomes; determination of financial 
investment; and, compilation of program accomplishments. National 
program assessments will be done by aggregating assessments, data, and 
information from the farm/ranch, priority area, State, and regional 
levels.
    In regards to funding decisions in paragraph 1466.2(b)(6), 52 
comments suggest that FSA county committees should have authority to 
make all funding and allocation determinations. Twelve comments support 
NRCS having authority to make funding and allocation decisions. One 
comment suggests that NRCS and FSA should share responsibility for 
making funding decisions and allocation determinations. One comment 
states that site-specific funding decisions and ranking producer 
applications are the sole responsibility of NRCS and FSA county 
committees must fund ranked plans. The framework that the Secretary 
approved for delivery of the program provides for an adequate 
concurrence mechanism regarding funding and allocation determinations 
between NRCS and FSA. NRCS, as the lead agency, is in the best position 
to make initial funding recommendations and then work closely with FSA 
to obtain necessary concurrence. No change was made in the final rule 
regarding these comments.
    There were 31 comments on paragraph 1466.2(c) regarding the use of 
the local, county, and State committees established under section 8(b) 
of the Soil Conservation and Domestic Allotment Act of 1936 in 
administering subtitle III conservation programs. The commenters 
suggest the Secretary should provide the FSA committees with the same 
authorities as under the former conservation programs. The Department 
believes that the local, county, and State committees are being used in 
a manner that is consistent with section 8(b) of the Soil Conservation 
and Domestic Allotment Act of 1936. The committees have specified 
responsibilities on local work groups or State technical committees, 
and in administrative processes and procedures for applications, 
contracting, and financial matters. Additionally, USDA believes that 
the FSA county committee system will continue to serve a vital role by 
representing the resource concerns of their production agriculture 
constituents. FSA county committees have built a foundation of trust 
over the years with many farmers and ranchers throughout the Nation. As 
a full partner on the local work groups the FSA county committees will 
be able to gain the involvement of and acceptance by the farmers and 
ranchers whom they represent in the locally-led conservation effort. 
FSA county committees are an integral component of the local work group 
and their input and judgment is important to the effort. All members of 
the local work group will need to create working relationships with 
others so that the collaborative efforts of the group will result in a 
successful

[[Page 28263]]

program. No change was made in the final rule concerning the roles of 
FSA county committees.
    In reference to paragraph 1466.2(f), nineteen comments want the 
State FSA Committees to have approval authority for all applications 
and cooperative agreements with other entities. Eight comments support 
the proposed rule language that provides for cooperative agreements 
with other entities, believing that such arrangements could improve 
delivery of the program and address natural resource concerns in 
coordination with others. Four comments express support for the 
agencies to incorporate local information and to utilize existing state 
and local coalitions and partnerships. Two comments indicate that CCC 
should provide funding to partnering agencies. Ten comments express 
concern that such arrangements would increase the administrative costs 
of the program and thus result in less conservation on the ground. The 
Department believes that the opportunity to work with other Federal 
agencies, local and State partners, including those in the private 
sector, will improve delivery of the program and is essential to the 
successful resolution of an area's natural resource concerns. The 
Department currently uses cooperative agreements and other instruments 
for activities other than EQIP which involve both financial and in-kind 
service considerations. Such partnerships have proven to be cost-
effective. Both NRCS and FSA may enter into cooperative agreements with 
others to assist with implementation of the program elements for which 
the respective agency has principal responsibility. The final rule 
language has not been changed regarding cooperative agreements.
    A general comment recommends the dissemination of information 
regarding EQIP through regular channels now in existence and via the 
Internet. The commenter proposes that an Internet homepage be developed 
and be placed on-line within 3 months of approval of the final rule. 
The homepage would contain a copy of the final rule, National and 
regional points of contact, a list of the priority areas, a list of 
innovative practices and technologies in use and a point of contact for 
more information, a list of NRCS offices and links to State NRCS web 
sites. USDA and NRCS currently have home pages where information can be 
obtained. NRCS currently has the EQIP proposed rule and several EQIP 
fact sheets available, along with a list of NRCS State offices and 
links to NRCS State web sites. NRCS plans to use all available avenues 
of media, including the Internet, to provide the final rule, lists of 
priority areas, the EQIP guidance documents, and other information to 
the general public. The USDA homepage can be accessed at http://
www.usda.gov. The NRCS homepage can be accessed at http://
www.ftw.nrcs.usda.gov. No change has been made to the final rule 
concerning this comment.

Section 1466.3  Definitions

Agricultural Land

    Two comments on this definition: one comment suggests that the term 
should mean an area on which crops or livestock are intensively 
produced, while the other comment suggests including the examples given 
in paragraph 1466.4(d). The definition has been modified in the final 
rule to be consistent with the examples given in paragraph 1466.4(d).

Confined Livestock Operation

    Three comments on this definition: one comment supports the 
definition as proposed; one comment suggests that a size element be 
included in the definition; the remaining comment suggests that the 
days of confinement be extended from 45 days to 60 days. A definition 
of confined livestock operation has been included in the final rule. It 
includes the parameters regarding ``confinement'' that were included in 
the proposed rule. The 45 days included in the definition is unchanged 
so that it is consistent with a definition for confinement used in the 
Clean Water Act. This definition is commonly understood and accepted. 
The Department does not desire to create another definition that may 
cause confusion or unnecessary administrative burdens on producers. 
Section 1466.7 addresses how the Department intends to administer large 
confined livestock operations in the program.

Conservation District

    One comment suggests the term ``Native American Tribe'' not be used 
in the definition but be replaced with ``Indian Tribe'' according to 
the Indian Self-Determination and Education Assistance Act of 1975. The 
Department agrees with the suggestion on Indian tribes and has 
incorporated the change in the final rule. A definition of Indian tribe 
has also been included in the final rule.

Conservation Management System

    One comment requests this definition be clarified in order to 
distinguish a conservation management system from a resource management 
system. A resource management system is a conservation management 
system that achieves or exceeds a sustainable treatment level for the 
natural resources. Conservation management systems include other 
systems that do not achieve sustainability for one or all the natural 
resources. The definition has been clarified in the final rule.

Conservation Plan

    Six comments on this definition suggest the phrase ``record of a 
participant's decisions...for treatment of a unit of land or water'' 
unduly limits the nature and purpose of a conservation plan. Some of 
these comments state that a conservation plan consists of more than a 
record of decisions and that the definition should include language 
such as: identified natural resource problems; a participant's own 
goals; alternative solutions considered to reach those goals; and, 
selected solutions to achieve cost-effective environmental management. 
Additionally, the comments suggest the concept of whole-farm planning 
be added. The Department believes that these concerns are addressed 
adequately in Sec. 1466.6 which describes the purposes and requirements 
of a conservation plan in greater detail and provides for the broader 
goals expressed in the comments. No change has been made to the 
definition.

Conservation Practice

    One comment suggests this definition be expanded to include 
integrated pest management (IPM) and that IPM should include integrated 
weed management. Since the definition for conservation practice 
includes reference to a land management practice, and the definition of 
land management practice includes IPM, the definition of conservation 
practice includes IPM. The Department believes that IPM includes 
integrated weed management and further definition is unnecessary. The 
definition is intended to be generic in nature and reference to 
specific practices was not intended. Therefore, the definition for 
conservation practice remains as proposed.

Land Management Practice

    Fifty-two comments suggest changes to this definition. Thirteen 
comments request ``irrigation management'' should be included under the 
definition of land management practice. Efficient irrigation practices 
are supported in 36 comments and most of these comments suggest the 
term ``efficient irrigation'' be added to the description of eligible 
conservation practices. The proposed

[[Page 28264]]

rule included irrigation management under this definition. The 
Department has modified this in the final rule by referring to 
``irrigation water management'' which better describes the intent of 
the practices and incorporates the concept of efficient irrigation.
    The other comments request additions to the example practices 
listed under land management practices: two comments suggest adding 
tree planting and one comment suggests adding wellhead protection, crop 
rotation, cover crop management, and numerous other practices. One 
comment suggests adding ``including grazing lands, wetlands, and 
wildlife habitat'' after ``related natural resource concern.'' The 
practices listed in the definition are illustrative and not intended to 
be exhaustive. Tree planting is a vegetative practice and has been 
included in that definition. A definition of ``related natural 
resource'' has been included in the final rule. The Department believes 
that the definition of ``land management practice'', as proposed, 
encompassed the suggested concepts adequately and does not require 
changes.

Livestock, Livestock Production, and Livestock-related Natural Resource 
Concern

    One comment suggests the definition of livestock should include 
honeybees. One comment on livestock production suggests rotational 
grazing, fencing, and water development practices should be included in 
the definition. One comment on livestock-related natural resource 
concern suggests the spread of noxious weeds via animal waste from 
confined feeding operations should meet the requirements of this 
definition. The Department believes that honeybees should not be 
considered as livestock but honey is an agricultural food product, thus 
honeybee keepers are eligible agricultural producers. The other 
specific suggestions are best left to the NRCS State conservationist in 
consultation with the State technical committee. No changes have been 
made to the subject definitions in the final rule.

Local Work Group

    Forty comments concern this definition. Most of the comments 
request the membership of the local work groups be expanded to others 
outside of government and provide excellent reasons why certain 
individuals and organizations could provide information and ideas that 
would be valuable to the program and the responsibility of the local 
work groups. Membership of the local work groups is limited to Federal, 
State, Indian Tribe, and local government representatives because of 
restrictions applicable to private advisory panels by the Federal 
Advisory Committee Act (FACA). Given that almost 3500 separate local 
work groups are estimated to be established to advise on the 
implementation of the program, the Department felt that it was 
unfeasible and burdensome to fulfill possible FACA requirements when 
establishing each local work group. The Department expects and 
anticipates that these various representatives who serve on the local 
work group will request and receive ample information and ideas from 
the public and their respective constituents. Therefore, no changes are 
made to this definition.

Private Agribusiness Sector

    Five comments suggest the term ``agricultural input retail 
dealers'' should be included in the definition since this term was used 
in the statute. One comment recommends a very broad interpretation of 
``agribusiness.'' The Department intends to have a broad interpretation 
of this definition so that the largest number of private sector 
professionals may provide services for the program. The final rule has 
been changed to include ``agricultural input retail dealers.''

Resource Management System

    Two comments request this definition include grazing lands, 
wetlands, and wildlife habitat. The term ``related natural resources,'' 
which has been included in the final rule, includes these concerns and 
further inclusion in the definition of resource management system would 
be redundant. Therefore, no changes were made to this definition.

State Technical Committee

    Six comments concern representation on the State technical 
committee and guidelines concerning the structure and operation of such 
committees. NRCS intends to publish a rule on the structure and purpose 
of the State technical committee in a separate rulemaking, and shall 
consider these recommendations regarding committee representation and 
guidelines as it develops that rule.

Structural Practice

    Four comments recommend this definition include specific mention of 
``irrigation water, conveyance, and application equipment'' as examples 
of structural practices. The practices listed in the definition are 
illustrative and not intended to be exhaustive. The Department believes 
that the definition as proposed encompassed the suggested concepts 
adequately and does not require changes.

Unit of Concern

    Eight comments request clarification of this definition, one of 
which expresses concern that the definition had no limits, three of 
which recommend inserting the concept of whole-farm planning, and the 
remaining four of which recommend limiting the definition to the 
portion of the property upon which the conservation practice will 
occur. The Department believes that a unit of concern can vary 
depending on the natural resource concerns and the objectives of the 
participant. A unit of concern can be a whole farm or a portion 
thereof. The conservation plan must address the conditions that cause 
or influence the natural resource concern for which the plan is being 
developed. Therefore, information from outside the defined unit of 
concern may be considered where it is necessary to develop the best 
strategy for meeting the producer's objectives and resolving the 
natural resource concern. No changes have been made in the final rule 
for this definition.

Vegetative Practice

    Four comments concern the examples used to describe vegetative 
practices, one of which recommends deleting permanent wildlife habitat 
as an example and the remaining three of which recommend including tree 
planting as an example. The practices listed in the definition are 
illustrative and not intended to be exhaustive. Tree planting has been 
added as an example in the final rule. Permanent wildlife habitat was 
listed as an example in the statute and has been retained in the final 
rule.

New Definitions

    Several commenters suggest new definitions be included in the final 
rule, including: agricultural producer (2 comments); cost-share and 
incentive payments (4 comments); environmental benefits index (1 
comment); Indian tribe (1 comment); Indian trust lands (2 comments); 
and liquidated damages (1 comment). The Department will include a 
procedure in its program guidance for determining an eligible 
agricultural producer. The term ``environmental benefits index'' is not 
used in the final rule and, therefore, has not been defined. 
Definitions for cost-share payments, incentive payments, Indian tribe, 
Indian trust lands, and liquidated damages have been included in the 
final rule.

[[Page 28265]]

Section 1466.4  Program Requirements

    Four comments support the voluntary aspect of the program. No 
change was made in the final rule concerning the voluntary aspect of 
the program.
    One commenter suggests the wording of the second sentence in 
paragraph 1466.4(a) should be changed to indicate a participant should 
develop a conservation plan ``in accordance with'' the local 
conservation district, instead of ``in cooperation with.'' As provided 
in 1466.6(a), USDA agrees that the conservation plan should be approved 
by the local conservation district, but the plan must also meet the 
purpose of the program and be acceptable to NRCS. The Department 
believes the phrase ``in cooperation with'' better reflects the role of 
the local conservation district. No change was made in the final rule 
regarding this comment.
    There were 37 comments regarding the use of EQIP funds for 
providing technical assistance. Although not included in the proposed 
rule, 21 comments recommend an unspecified maximum cap be established 
for the use of program funds for technical assistance, one commenter 
suggests a 10 percent cap, and eight commenters suggest a 5 percent cap 
to be consistent with the former ACP. One comment supports funds for 
technical assistance but recommended that FSA committees should 
determine the amount. One comment said that no funds should go to 
technical assistance but it should all go to farmers. Four comments 
support the use of funds for technical assistance noting that without 
sufficient technical assistance funding it will be difficult for 
farmers to satisfactorily perform the conservation work. One commenter 
suggests the cooperative extension service should receive EQIP 
technical assistance funding for personnel who are providing assistance 
to producers. USDA believes that voluntary conservation programs are 
most successful when sufficient amounts of technical assistance, 
educational assistance, and financial assistance are provided to 
producers to aid them in natural resource conservation activities. The 
1996 Act amended the 1985 Act to provide that the Secretary of 
Agriculture is authorized to provide technical, educational, and 
financial assistance to eligible farmers and ranchers using EQIP. The 
1996 Act further stated that the amount of technical assistance 
provided should be in an amount according to the type of expertise 
needed, the quantity of time involved, and other factors as determined 
appropriate by the Secretary. USDA believes that EQIP will require a 
greater level of technical assistance than the former ACP because EQIP 
will be dealing with a broader array and more difficult natural 
resource concerns. Unlike ACP, EQIP will also include conservation 
plans and long-term contracts for all participants. The 5 percent 
reimbursement in ACP was not intended to reflect the actual cost for 
technical assistance. Further, the former GPCP and CRSCP, which were 
also replaced by EQIP, required technical assistance levels in excess 
of 5 percent to attain the conservation purposes of the programs. The 
former conservation programs have shown USDA that a specified rate of 
technical assistance funding should not be established by rule because 
natural resource conditions and concerns change over time and the 
Department needs the ability to adapt to those changing conditions and 
concerns. USDA believes that NRCS, which will deliver much of the 
technical assistance in EQIP, should determine the amount of funds 
needed for this purpose. When making this determination, NRCS will 
consider its available resources from all programs, and those of other 
public and private sources of technical assistance. Paragraph 1466.4(b) 
has not been changed in the final rule.
    Two comments were received regarding control of land as provided in 
paragraph 1466.4(c)(2)(i). One comment suggests a separate paragraph 
should be added concerning ``Indian trust land'' because the proposed 
rule does not clearly show that Indian tribes are among the eligible 
parties. Another commenter suggests ``communal land'' ownership and 
leasing arrangements in the Pacific Basin should be eligible for EQIP, 
including those cultural situations where land assignments are given 
without written leases. Program guidance will identify the type of 
evidence needed to show that an applicant has an adequate control of 
land. Written leases may be one of the types of evidence, as will 
historical use of the land and other evidence. Paragraph 1466.4(d) has 
been amended to clearly show that tribal, allotted, and Indian trust 
lands are eligible lands.
    One comment states it is burdensome for tribal governments 
responsible for a vast and complex system of agricultural lands to be 
required to list all lands under their control, and requests the 
informational requirements should be lessened for tribes. The 
Department believes this comment concerned the requirement for listing 
agricultural lands so that it can determine if an applicant is in 
compliance with the highly erodible land and wetland conservation 
provisions. All applicants must comply with these provisions to be 
eligible for EQIP, including Tribes that receive certain Departmental 
benefits. However, the Department will work with Tribes to develop 
processes which minimize the administrative burden while meeting the 
requirements for eligibility. For example, an authorized representative 
of the Tribe or Bureau of Indian Affairs may certify compliance with 
the highly erodible land and wetland conservation provisions on behalf 
of the entire Tribe.
    Five commenters express concern that EQIP does not appear to 
include forest lands. Two comments state a concern that tree planting 
will not be eligible for program assistance. The Department believes 
that forest land, like all other eligible land, must have natural 
resource problems or pose a threat to natural resources to be eligible 
for EQIP assistance. Tree planting and other forest land-related 
conservation practices are eligible for EQIP assistance if they are 
used to address or resolve the identified natural resource concern. 
Paragraph 1466.4(d) of the final rule states that forest land may be 
eligible for enrollment in EQIP; this has not been changed from the 
proposed rule.
    The Department received 13 comments about the targeting of 50 
percent of EQIP funds to livestock-related natural resource concerns. 
Four comments support this targeting level. One comment urges that 
funding should be targeted to conservation practices other than 
expensive animal waste management facilities. One comment suggests the 
funds should not be targeted to livestock but should be targeted toward 
encouraging new methods of crop production that reduce soil erosion and 
improve water quality. One comment encourages a minimum level of $50 
million annually be targeted to conservation on private grazing land. 
One comment recommends the 50 percent level be distributed and measured 
at the state level, not at the national or local level. Six comments 
note that only the preamble to the proposed rule mentioned the 50 
percent target level and the final rule should clarify the targeting of 
funds toward livestock-related natural resource concerns. The 1996 Act 
requires that 50 percent of available funds be targeted to conservation 
practices related to livestock production. The final rule has been 
clarified by adding paragraph 1466.4(e) which addresses the targeting 
of available EQIP funds to livestock-related natural resource concerns, 
including concerns on grazing lands and other lands directly 
attributable to livestock. The target of 50 percent of the funds will 
be measured at the national

[[Page 28266]]

level since livestock-related natural resource concerns are not evenly 
distributed in States or at the local level. USDA believes that some 
priority areas may have none or little natural resource concerns 
related to livestock production, while other priority areas may have 
significant concerns related to livestock production. For that reason, 
no further targeting of funds will be made such as the suggestion to 
target $50 million to grazing land management. Conservation practices 
that could be eligible to address livestock-related natural resource 
concerns include, but are not limited to, grazing land management, 
livestock exclusion, animal waste management facilities, nutrient 
management, and streambank and riparian area protection. Consistent 
with the overall goal of maximization of environmental benefits per 
dollar expended, the Department will place emphasis on low-cost 
measures which result in the highest benefits; higher cost practices, 
such as animal waste management facilities, will be eligible if the 
investment yields substantially high environment benefits.
    Four comments concerned paragraph 1466.4(d)(2) which places 
restrictions on the eligibility of publicly owned land. One commenter 
supports the provisions in the rule because it would allow ranchers to 
use EQIP to apply conservation practices on leased public grazing 
lands. One commenter suggests publicly owned school land should be 
eligible if leased to farmers. One commenter suggests that sentence 
1466.4(d)(2)(ii) of the proposed rule should not restrict practices 
which will primarily benefit the government landowner but should permit 
funding of practices that are consistent with management plans of the 
public landowner. One commenter suggests that sentence 
1466.4(d)(2)(iii) should be rewritten to ``conservation practices will 
contribute to an improvement in the identified natural resource 
concern.'' The Department believes that the program should be used to 
benefit the environment, including those instances where producers use 
publically owned land. The proposed rule sentence stating that 
government landowners should not be primary beneficiaries of the 
program has been deleted in the final rule. Paragraph 1466.4(d)(2) 
allows ranchers who lease public grazing lands and producers who lease 
public school land to use EQIP on the publicly owned land if the stated 
criteria are met. Sentence 1466.4(d)(2)(ii) has been rewritten in the 
final rule to ``conservation practices will contribute to an 
improvement in the identified natural resource concern.'' USDA believes 
the provision in sentence 1466.4(d)(2)(iii) requiring written 
authorization from the government landowner enables the government 
landowner to ensure the conservation practices are consistent with 
public land management plans; this sentence has not been changed in the 
final rule.

Section 1466.5  Priority Areas and Significant Statewide Natural 
Resource Concerns.

    USDA received 27 comments in support of focusing the program in 
priority areas. One statement that typifies the comments said this 
focus ``reinforces the concept these are not ``entitlement'' dollars 
but funds intended to meet Congressional articulated goals of improved 
water quality and natural resource conservation.'' Thirty-eight 
comments disagree with the focus of the program in priority areas 
mostly because it will restrict availability of funds to the specific 
priority areas. Eighteen comments indicate support to continue ACP or 
to use the ACP process of allocating funds to all counties to, as one 
commenter stated, ``ensure that every county gets a piece of the pie.'' 
USDA believes that primarily offering the program in priority areas 
throughout the Nation is needed to help 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, including wildlife habitat and 
natural resources on grazing land and wetlands, and to make 
environmental enhancements. The program will also provide the most 
important natural resource benefits in a cost-effective manner. 
Implementation of conservation measures will be accelerated in these 
areas. Past experience has shown that by focusing program assistance, 
greater environmental benefits are derived. Providing program 
assistance to significant statewide natural resource concerns outside 
of funded priority areas will result in widespread eligibility of 
producer. No change was made in the final rule concerning the focusing 
of the program in priority areas.
    One comment indicates natural resources that are shared by multiple 
counties and States merit special consideration in the program. USDA 
agrees with this comment. This was addressed in large by defining 
priority areas as watersheds, regions, or areas of special 
environmental sensitivity or having significant soil, water, or related 
natural resource concerns. Using environmental and natural resource 
concerns means that political boundaries should be ignored. The NRCS 
Regional conservationists will coordinate guidance for multi-state 
areas and regions. No change was made in the final rule concerning 
natural resources that are shared by multiple counties and states.
    Several comments suggest specific natural resource concerns should 
have higher priority or consideration when determining priority areas. 
Five comments favor water quality. Six comments favor wildlife habitat 
with one commenter suggesting that wildlife should be a required 
concern in all priority areas. Urban-influenced or non-agricultural 
areas are favored by three comments. Pollution prevention is favored by 
two comments in lieu of clean-up or corrective measures to existing 
problems. Three comments favor a balanced, comprehensive approach to 
natural resource concerns instead of solely addressing water quality. 
The Department believes that a balanced, comprehensive approach should 
be used to address natural resource concerns to provide the greatest 
net benefits to society. Soil, water, air, grazing land, wetland, 
forest land, wildlife habitat, and other related natural resources are 
given equal initial consideration for treatment in the program. A 
definition of ``related natural resources'' has been added in the final 
rule. The final rule has also been changed in several areas to better 
clarify this equality of natural resource concerns.
    Five comments concern the coordination of priority areas in EQIP, 
the CRP, WRP, and other programs. Two of these comments recommend a 
consolidated or uniform selection process for priority areas in these 
programs. One comment suggests these programs should be leveraged 
together to ensure successful implementation of priority areas. Two 
comments said it would be beneficial if each program had its own 
priority areas. USDA agrees with aspects of each of these comments. 
Close coordination of priority areas in these various program is very 
important. The programs can be used collectively, but without 
duplication, in certain priority areas to successfully achieve the 
goals of the priority area. Likewise, certain priority areas may only 
need one of the individual programs. The locally led conservation 
efforts will advise and assist the Department with identifying how and 
where the various conservation programs can be utilized best. USDA is 
working on the development of a single, coordinated, and consistent 
process for

[[Page 28267]]

selection of priority areas for each of the USDA conservation programs. 
Included in this process will be the ability to have specific priority 
areas for each program. Therefore, no change has been made to the final 
rule concerning coordination of priority areas in EQIP, CRP, WRP, and 
other programs.
    Two comments suggest the priority area designation process is too 
encumbered, subject to too many layers and reviews, and should be 
streamlined. The hallmark of the process for selection of priority 
areas is the locally led conservation effort which features the 
involvement of local work groups and State technical committees 
providing advice and recommendations to the Department. This process 
may include several layers of review and recommendations, but the 
Department believes this process will result in the greatest possible 
involvement of local and State stakeholders and flexible assistance to 
farmers and ranchers. Further streamlining of the process may result in 
a less localized decision-making process with most decisions made at 
the national level. No changes have been made in the final rule 
concerning the priority area designation process.
    USDA received 14 comments suggesting local work groups need to have 
more involvement by producers, producer organizations, the private 
agribusiness sector, and other stakeholders at the local level. USDA 
agrees that involvement of producers, producer organizations, the 
private agribusiness sector, and other stakeholders at the local level 
is important for the local work group to effectively provide advice and 
recommendations concerning the program. USDA believes, however, this 
involvement and input can be better achieved with local conservation 
districts leading the groups which include FSA county committees. Local 
work groups will be able to work efficiently as they consider the 
public input and provide information to the Department and others. Some 
members of the local work group already are farmers and ranchers. The 
public, including producers, producer organizations, the private 
agribusiness sector, and other stakeholders at the local level, are 
encouraged to provide input and information to the local work group. 
The final rule has been changed to encourage the public to provide 
input and information to the local work group.
    One comment asks if priority areas will change each year or if they 
are established through fiscal year 2002. Another comment states there 
should be a procedure for refining or terminating a priority area. USDA 
believes priority areas can have various periods of time that they will 
be designated and funded. Some priority areas may need only one to 
three years to accept a sufficient number of contracts that, when fully 
implemented, will achieve the natural resource goals identified for the 
area, while other priority areas with extensive or complex concerns may 
require a longer period to enter into contracts to achieve the natural 
resource goals. Nevertheless, it is expected that EQIP assistance to a 
priority area should be limited to a reasonable number of years to 
enter into contracts to achieve the natural resource goals. This will 
enable other priority areas to be designated and funded in a more 
timely manner. The final rule has been changed to clarify that funding 
may be approved for one or more years. Program guidance will be 
developed on terminating or ceasing funding to a priority area.
    One comment urges the Department to reconsider the maximum area to 
be included in a priority area. The commenter notes that the North 
Dakota prairie pothole region is a large area of the state and would 
not qualify as a priority area under the proposed rule. USDA had not 
specified a maximum or minimum size constraint for a priority area in 
the proposed rule. USDA does not believe a rigid size constraint should 
be incorporated in the rule because natural resource concerns vary 
significantly in scope and extent. Program guidance will be developed 
for priority areas concerning size or scope, however, so that natural 
resource goals of the priority area are measurable and achievable in a 
reasonable period of time. No addition was made in the final rule 
concerning maximum or minimum size of priority areas.
    One comment suggests the ``shall'' in the second sentence of 
paragraph 1466.5(a) be changed to ``may.'' This would then indicate 
that NRCS may 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. USDA believes 
that providing special consideration to applicants that address the 
natural resource concern(s) for which a priority area was designated is 
consistent with Sec. 1240C of the 1985 Food Security Act, as amended by 
the 1996 Act, which states ``the Secretary shall accord a higher 
priority to assistance and payments that (1) Are provided in 
conservation priority areas.'' Providing special consideration to 
applicants that address the natural resource concern(s) for which a 
priority area was designated will enable the natural resource goals in 
the priority area to be achieved. No change was made in the final rule 
concerning the suggested comment.
    Six comments support the provision in paragraph 1466.5(b) which 
allows the use of program assistance to address significant statewide 
natural resource concerns that are outside of priority areas. No change 
was made to the final rule concerning program assistance to address 
significant statewide natural resource concerns. 
    The Department received 36 comments that support the use of local 
work groups and the locally led conservation activities as described in 
paragraph 1466.5(c). Most comments note that identification of natural 
resource concerns and priorities is done best at the local, grass-roots 
level. Two comments suggest the local FSA county committees should be 
equal partners and have input in determining priority areas. Nine 
additional comments disagree with the locally-led process. Two of these 
commenters disagree because they believe the decisions should be made 
at the state level; two said there are too many players or layers of 
bureaucracy involved; one said that FSA county committees should make 
the decisions. The Department believes that locally led conservation 
efforts, including those which involve local work groups, are very 
important to the success of program. Local work groups provide 
information to the Department on EQIP-related items and on other 
conservation programs and activities. FSA county committees are equal 
members of the local work group and, as such, will have input in 
developing and recommending priority area proposals. This process may 
include several layers of review and recommendations, but the 
Department believes this process will result in the greatest possible 
involvement of local and State stakeholders and flexible assistance to 
farmers and ranchers. Further streamlining of the process may result in 
a less localized decision-making process with most decisions made at 
the national level. The roles of the local work group have been 
retained in the final rule. 
    Three comments concern the designation of the chair of the local 
work group. One comment favors NRCS chairing the group and two comments 
disagree with this approach, suggesting the local work group should 
select the chair. The Department has decided that NRCS should not be 
required to be the chair of the local work group and the members of the 
local work group should decide who should be the chair, if one is 
needed.

[[Page 28268]]

    One comment suggests that because conservation districts will be 
organizing local stakeholder groups to guide the delivery of Federal 
conservation programs at the local level, the name of the group which 
will advise USDA should be called the ``USDA Local Farm Bill Team.'' 
This would help to differentiate the two groups and should help dispel 
the perception that the new programs, including EQIP, will not be as 
locally driven as Congress intended. The Department applauds the 
efforts of conservation districts to organize local stakeholder groups 
to provide input into the locally led conservation effort but does not 
believe the use of the term local work group will create a 
misunderstanding at the local level. The local work groups may advise 
the Department on EQIP-related items and on other conservation programs 
and activities. They may also choose to advise other organizations and 
government agencies. No change was made in the final rule concerning 
this comment.
    One commenter notes that conservation districts are not organized 
in all areas of the Nation and that provisions should be made for 
another agency or group to lead and coordinate the local work group in 
the absence of a conservation district. Program guidance will include a 
provision whereby NRCS shall convene the local work group in the 
absence of a conservation district.
    USDA received one comment that recommends that entities other than 
a Federal, State, or local government agency should be able to make a 
proposal for a priority area. Paragraph 1466.5(c) in the final rule has 
been modified to enable private entities to identify a priority area to 
the local work group.
    USDA received three comments suggesting that working procedures for 
local work groups should be clarified. The Department does not believe 
that working procedures need to be included in the final rule. Working 
procedures and other suggestions for effective organization and 
operation will be provided in guidance documents.
    Three comments encourage multi-county local work groups for multi-
county priority areas. One commenter supports the designation of a lead 
NRCS conservationist to coordinate activities between the local work 
groups in a multi-county priority area. The Department agrees with 
these comments and will incorporate these recommendations in program 
guidance.
    One comment recommends that conservation districts should provide 
public notice of intent to organize a local work group. Due to the 
membership of the local work group, publishing a public notice of 
intent to organize a local work group is not required by Federal law. 
Conservation districts, as subdivisions of State governments, may need 
to consider this recommendation if required by a State law. Also, 
conservation districts may chose to publish public notices even if not 
required by law but the district decides this is the best way to 
proceed.
    USDA received one comment suggesting that because Indian tribes are 
sovereign governments, they should be on local work groups. The 
definition of local work groups in the proposed rule identified Indian 
tribes as members and this definition has been retained in the final 
rule. A definition of Indian tribes has been included in Sec. 1466.3 of 
the final rule.
    Twelve comments concerned the priority area assessment. Two 
comments said the assessment will be too troublesome and time-
consuming. Seven comments suggest the use of existing natural resource 
assessments, studies, data, and plans to avoid duplication of work and 
to increase credibility of the priority area assessment. Two commenters 
ask if demographic information on population meant that EQIP would 
favor an area with greater population instead of selecting areas 
because of environmental conditions. One comment suggests the 
assessment described in paragraph 1466.5(c) should have quantified 
information ``when and where possible'' and that the ways ``and means'' 
to measure performance should be included. The final rule refers to 
priority area ``proposals'' (instead of assessments) to better reflect 
the nature of the item and to reduce confusion with other natural 
resource assessments. USDA believes the proposals are needed to 
adequately and correctly designate an area as a priority area, and 
agrees that existing natural resource assessments, studies, data, and 
plans should be incorporated into the proposal. Environmental and 
natural resource conditions, as described in paragraph 1466.5(d)(1), 
are the principal factors which will be considered when designating a 
priority area. The recommended language change concerning use of 
quantified information and ways and means to measure performance have 
been included in the final rule.
    Six comments suggest NRCS, State technical committees, and local 
work groups should closely coordinate the process to assess natural 
resource concerns and identify priority areas with existing efforts at 
the local and state level. Such efforts may be water resource planning 
activities, nutrient and manure management programs, or state 
agricultural conservation programs. The Department agrees with the 
recommendation and such guidance will be incorporated in guidance 
documents being developed to assist the local work groups.
    One comment suggests paragraph 1466.5(c)(4) be modified to read 
``The existing staff and incentive, education, and on-farm research 
programs available at the Federal, State, and local levels, both public 
and private, to assist with the areawide activities.'' The suggestion 
has been included in the final rule.
    USDA received 25 comments in support of the State technical 
committee making recommendations and the decisionmaking role of NRCS 
State conservationists. Three comments disagree with the roles of the 
State technical committee and the NRCS State conservationist, 
suggesting the decisions should be made at the national level. USDA 
believes the roles of the State technical committee and the NRCS State 
conservationist are best performed at the state level and not at the 
national level. No change was made in the final rule concerning these 
comments.
    One comment suggests the State technical committee should develop 
guidance to local work groups on natural resource information, data, 
and priorities. State technical committees and State conservationists 
may develop guidance to assist local work groups. This will be set 
forth in program guidance.
    USDA received two comments suggesting the State technical committee 
and State conservationist should ``concur as much as possible'' with 
the input from local work groups on designations of priority areas. 
Paragraph 1466.5(d) of the final rule identifies how and on what the 
NRCS State conservationists shall base their decisions to designate 
priority areas. State conservationists will base decisions on the 
recommendation of the local work group and State technical committee, 
among other factors. Only after considering the various criteria and 
factors identified in this paragraph, and determining that a proposed 
priority area is worthy of program assistance, will a State 
conservationist designate a priority area for EQIP assistance.
    Several comments address State technical committees issues that are 
not EQIP-related, including: one comment suggests the ``consensus 
process'' is unrealistic and that voting should be used instead; one 
comment states the State technical committee should have

[[Page 28269]]

Indian tribe representation; and, three comments offer procedural and 
membership suggestions for State technical committees. The Department 
will consider these comments in the rulemaking process for State 
technical committees.
    One comment recommends State governments should be allowed to 
designate their own priority areas. The Department believes that the 
final rule provides State governments with the ability to make 
proposals for priority areas and no further change has been made to the 
final rule.
    One comment supports the provision in per paragraph 1466.5(d)(1) 
that enables NRCS to consider wildlife and wildlife habitat quality and 
quantity in determining the significance of natural resource concerns 
in a priority area. No change has been made to the final rule 
concerning this comment.
    Two comments suggest paragraph 1466.5(d) should state ``NRCS will 
give special consideration to priority areas that contain multiple 
conservation benefits.'' USDA believes that multiplicity of 
conservation benefits alone does not justify special treatment. The 
priority area, whether achieving a single conservation benefit or a 
range of benefits, must result in significant environmental benefits to 
justify the expenditure of EQIP funds. The final rule includes a 
sentence reflecting this consideration.
    One comment suggests 1466.5(d)(1)(v) should recognize the 
importance of saline characteristics of land and water. USDA agrees 
with the comment and the final rule has been revised to ``(v) Saline 
characteristics of land or water.''
    One comment suggests 1466.5(d)(1)(viii) should state ``Quality and 
intended use of the receiving waters, including fishery habitat and 
source of drinking water supply.'' USDA agrees with the comment and the 
final rule has been revised as suggested.
    One comment suggests 1466.5(d)(1)(xi) should indicate that natural 
hazards may include pest problems which threaten natural resources. 
USDA agrees with the comment and the final rule has been revised to 
``(xi) Other natural hazards or other factors, including the existing 
agricultural management practices of the producers in the area or pest 
problems which may threaten natural resources.''
    Five comments refer to consideration of the coordination with and 
level of support from other programs when allocating funds to priority 
areas. One comment supports the consideration of the level of support 
from other State or local programs. One suggests better coordination 
effort between programs is needed so that taxpayer's money is not 
wasted. One suggests EQIP funds will be most effectively spent in areas 
that have no other funding sources. Two suggest funding sources such as 
from private programs should be considered. One comment suggests both 
direct and in-kind contributions should be considered. The Department 
believes that Federal program funds can be effectively spent in areas 
where other sources of funding are also available, thus allowing both 
the Federal and other funding sources to be stretched and made 
available in other areas. It also agrees that coordination between 
Federal, State, and local programs is important, and that private 
funding sources, direct, and in-kind contributions should be 
considered. Paragraphs 1466.5(d)(2)(vi) and 1466.5(f)(2)(vi) have been 
revised in the final rule to reflect these recommendations.
    One comment suggests EQIP should be used to assist producers in 
complying with Tribal environmental laws as well as with Federal and 
State environmental laws. USDA agrees with the comment and has included 
the suggestion in 1466.5(d)(2)(vii) and 1466.5(f)(2)(vii) of the final 
rule.
    USDA received several other comments concerning the criteria or 
factors which should be used to select or fund priority areas, 
including national conservation priority areas. Two comments suggest 
that clear, minimum criteria should be established to assist with the 
selection process. One comment suggests the criteria should include 
soil quality. One comment recommends that existence of education, 
research, and demonstration farm plans should be part of the criteria. 
One comment recommends that existence of monitoring and evaluation 
plans be included. The Department suggested criteria or factors in the 
proposed rule language in paragraphs 1466.5(d)(2) and 1466.5(f)(2) to 
facilitate a broad range of considerations and still believes that this 
is the appropriate approach. The specific recommendations of the 
commenters will be included as illustrations of ``other factors'' in 
the guidance being developed for the program. No change has been made 
in the final rule to address the comments.
    USDA received comments on paragraph 1466.5(e) concerning the 
approval of significant statewide natural resource concerns. One 
comment suggests using criteria such as adjacency to a public natural 
resource, site characteristics that will affect the likelihood of 
achieving conservation objectives, and cost to achieve the benefits. 
One comment suggests that wellhead protection and capping abandoned 
wells would be good examples of significant statewide natural resource 
concerns. The Department agrees with the concepts suggested in the 
comments and will include this information in program guidance. Actual 
determinations of significant statewide natural resource concerns are 
made by the NRCS State conservationist, in consultation with a State 
technical committee. No change has been made in the final rule to 
address the comments. 
    In regards to national conservation priority areas in 1466.5(f), 
two comments specifically favor the designation process described in 
the proposed rule. One comment disagrees with the process, preferring 
that all decisions should be made at the state level. One comment 
received by USDA said that the process for identifying national 
priorities is in part only ``lip service'' to certain groups. The 
commenter finds the proposed rule lacking as to the significance of 
national conservation priority area designation and suggests that the 
designation should result in additional funds to the area. The 
Department believes the process described in the proposed rule is 
appropriate, has value, and will result in greater emphasis for 
assistance being placed in the designated area(s). Areas of national 
significance should be designated at the national level. No change has 
been made in the final rule to address the comments.
    USDA received three comments which suggest use of a national 
technical committee is needed to ensure participation by national level 
partners. Eleven comments suggest or nominate specific areas as 
national conservation priority areas, including: Colorado River basin 
(5 comments), Great Lakes basin (2), Illinois River basin (2), 
Chesapeake Bay basin (1), Devil's Lake basin, ND (1), Hudson River 
basin (1), California pilot recharge program (1). USDA does not believe 
that a national technical committee is needed to ensure participation 
of national level partners. The Department has made effective use of 
interagency teams throughout the development of the EQIP program and 
other conservation programs and believes that an interagency team 
consisting of Federal agency partners will ensure national level 
participation. The Department will consider the suggestions made when 
designating national conservation priority areas. Paragraph 
1466.5(f)(1) has been changed in the final rule to enable nominations 
for designating national

[[Page 28270]]

conservation priority areas to be made to the Chief from Federal, 
State, tribal, or local government agencies, or from private groups or 
entities. 
    USDA received two comments recommending that the national 
conservation priority area designations should be subject to formal 
rulemaking procedures with public input to assure that the designations 
have merit. The Department believes the process established in the 
final rule will assure that the public has the opportunity to provide 
input into the designation and that the designations have merit. No 
change has been made in the final rule to address the comments.
    Concerning the criteria to be considered when selecting national 
conservation priority areas, several comments were received. One 
comment suggests environmental significance and multi-state natural 
resource concerns should be primary selection criteria. Two comments 
recommend a greater emphasis on international, interstate, or regional 
concerns, such as migratory bird habitat, be considered. These comments 
are consistent with the national program objectives and criteria that 
the Department intends to use when designating national conservation 
priority areas. These suggestions will be incorporated in national 
guidance developed for the program. No change has been made in the 
final rule to address the comments.
    Twenty comments support the educational assistance to be provided 
in the program. Of these comments, two also note that the proposed rule 
did not include specific mention of how the education assistance would 
be provided. Seven of the comments state the Extension system should be 
the primary delivery mechanism for the educational needs. Three of the 
comments state the Extension system and other public and private 
education providers should be involved. One of the comments suggests 
wellhead protection should be the topic of education and another 
comment suggests education on control of noxious weeds. 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, 
will aid in implementing their conservation plans, and enhance the 
overall benefits that will be realized through the implementation of 
the program. 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. The final rule includes specific direction for the delivery 
of education assistance in paragraph 1466.5(h). The provision specifies 
that NRCS will develop an education plan for a State or priority area. 
The plan will include, among other things, a description of who will be 
the education providers. While USDA expects the Extension system to 
play a significant role in developing the education plans and 
delivering educational assistance, other public and private education 
providers are also expected to have significant roles where 
appropriate. Thus the need for cooperation and coordination among all 
education providers. The Department believes there are many important 
topics that can be the focus of educational efforts, including wellhead 
protection and control of noxious weeds in an environmentally sound 
manner, but the specific education topics should be determined at the 
State and local level.
    USDA received numerous comments concerning the funding decisions 
for EQIP. Two comments support the need for fund decisions at the 
national level. One comment suggests the NRCS Regional conservationist 
should make the funding decisions. Eight comments recommend the funding 
decisions be made at the state level and twelve comments suggest that 
all funding decisions should be made at the local level. The Department 
has revised the provisions for funding decisions in paragraph 1466.5(i) 
to clarify how these decisions will be made to meet the purposes and 
intents of the program. USDA believes EQIP must be administered 
differently than the programs it replaces, including the methods for 
making funding decisions.
    The Department is committed to making funding decisions based on: 
The environmental needs and natural resource concerns; the need to 
maximize environmental benefits per dollar expended; the capability of 
the partners involved in the proposal to provide flexible technical, 
educational, and financial assistance; the conservation needs of 
farmers and ranchers in complying with the highly erodible land and 
wetland conservation provisions of part 12 of this title and Federal, 
State, and tribal environmental laws; the opportunity for encouraging 
environmental enhancement; the anticipated or proven performance of the 
partners involved in the proposal in delivering the program; and, other 
relevant information. Funding proposals for State-level approved 
priority areas are reviewed and competitively ranked in consultation 
with the State technical committee.
    The State technical committee is comprised of professional natural 
resource managers who represent a variety of disciplines in soil, 
water, wetlands, plants, wildlife management, and related natural 
resource and environmental sciences. Members come from agencies such 
as: NRCS, FSA, Forest Service, CSREES, U.S. Fish and Wildlife Service, 
Environmental Protection Agency, and other Federal agencies; State 
agencies responsible for fish and wildlife, forestry, water resources, 
agriculture, soil and water conservation, and conservation districts; 
private groups, organizations, or individuals representing agriculture, 
commodities, agribusiness, environment, land and water management; and, 
persons knowledgeable about economic and environmental impacts.
    After the NRCS State conservationist approves the priority areas, 
the regional and National levels review the proposals to verify that 
they meet program guidance and will meet program goals and objectives. 
A national-level interagency team representing Federal agencies with 
appropriate expertise and information assists the Chief by reviewing 
the submitted proposals and making recommendations on adequacy of 
proposals. The Chief determines funding levels to be allocated to the 
States, with the concurrence of the FSA Administrator, considering such 
information as: the environmental and natural resource conditions 
across the Nation; the interagency team recommendations; 
recommendations from NRCS Regional conservationists and staff; the 
funding proposals; and other information identified above in this 
response. The Chief will also allocate some funds each year using a 
performance-based incentive reward for the anticipated or proven 
performance of the partners involved in a proposal in delivering the 
program in an exceptional manner, and for issues or concerns determined 
to be of national importance.
    After funds are allocated to the NRCS State conservationist, the 
State technical committee is again consulted on which State-approved 
priority areas that meet program guidance should be funded and in what 
amount. The consultation process with the State technical committee in 
the proposal-approval stage and the funding decision stage helps to 
ensure that the best proposals are selected and funded.
    Twenty-six comments disagree with priority areas receiving the

[[Page 28271]]

predominance of funds, but did not recommend a funding level. Five 
believe priority areas should receive 75 percent of the funds with the 
remaining 25 percent to significant statewide natural resource concerns 
outside of priority areas. Three comments suggest a 60 percent priority 
area to 40 percent outside priority area split. Nine comments favor a 
55 percent priority area to 45 percent outside priority area split. 
Seven comments support a 50 percent priority area to 50 percent outside 
priority area split. Nine comments favor a 25 percent priority area to 
75 percent outside priority area split. Five comments suggest a phase-
in approach, starting with more funds to outside priority area and 
progressively reaching the 75 percent to priority areas in three years. 
Seven comments suggest no funding percentage should be used to allocate 
funds but all decisions should be based on environmental need. Two 
comments suggest each state should receive at least a $2 million base 
level for work throughout the state. USDA believes that primarily 
offering the program in priority areas throughout the Nation is needed 
to help 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, 
including wildlife habitat and natural resources on grazing land and 
wetlands, and to make environmental enhancements.
    The Department intends to provide more funds where the natural 
resource and environmental need is greatest but does not intend on 
having a prescribed percentage or formula published in the final rule 
because this will limit the Department's ability to respond to changing 
conditions and needs. However, for FY 1997, at least 65 percent of the 
available funds nationally will be used in priority areas. To meet 
future needs, the Department will move to have more funds, perhaps 75 
percent or more, directed to priority areas. Providing program 
assistance to significant statewide natural resource concerns outside 
of funded priority areas will result in widespread eligibility of 
producers on the most important natural resource concerns. No change 
was made in the final rule concerning the focusing of the program in 
priority areas.
    One comment requests that USDA honor all existing commitments to 
Indian tribes under the former Great Plains Conservation Program. All 
contractual commitments to Indian tribes and other contract holders 
under the former Great Plains Conservation Program, Colorado River 
Salinity Control Program, Agricultural Conservation Program, and the 
Water Quality Incentives Program will be honored by USDA. No change was 
made in the final rule concerning the comment. 
    Four comments request that funds should be provided to conservation 
districts for the administrative work they perform associated with the 
local work group and other program aspects. The final rule does not 
require conservation districts to perform administrative duties in the 
program. Most of the administrative work will be performed by FSA and 
the FSA county committees. The final rule enables, but does not 
require, conservation districts to participate on local work groups and 
to approve conservation plans which will be used as the basis for EQIP 
contracts. This is done to meet the spirit of the Congressional 
Conference Managers who wrote in their Conference Report ``In 
particular, Congress intends for the Secretary to acknowledge and 
maintain the historic role of conservation districts in assessing 
natural resource priorities, approving site-specific conservation 
plans, and coordinating the delivery of federal conservation programs 
at the local level.'' The Department does not intend to reimburse 
conservation districts for their involvement on local work groups or 
their approval of conservation plans. No change was made in the final 
rule concerning the comments.
    One comment suggests the Chief should reject or not approve funding 
to any State-approved priority area, statewide concern, or national 
conservation priority area that fails to target efforts to the most 
pressing environmental problems. The Department agrees with the comment 
and intends on providing program funds where the natural resource and 
environmental need is greatest and where the program can be used most 
cost-effectively. No change was made in the final rule concerning the 
comment.
    USDA also received six comments on miscellaneous aspects of fund 
management that were not described in the proposed rule or its 
preamble. USDA will consider these comments as it develops its program 
guidance documents.

Section 1466.6  Conservation Plan

    USDA received nine comments supporting the development and use of 
conservation plans as described in the proposed rule. One comment 
opposes the development of plans as a program requirement. The 1996 Act 
requires program participants to implement a plan in order to receive 
program assistance. This provision was incorporated in the proposed 
rule and no change was made in the final rule concerning the comments.
    Two comments suggest the final rule should include more precise 
criteria and definitions concerning the acceptability of conservation 
plans. The Department will incorporate criteria concerning 
acceptability of conservation plans in its program guidance documents. 
No change was made in the final rule concerning the comments. 
    USDA received one comment requesting NRCS to develop all 
conservation plans after a producer applies for the program. Another 
comment states a farmer who must hire someone to write a detailed plan 
should have some assurance they will be considered for program 
payments. The 1996 Act requires program participants to submit to the 
Secretary for approval a plan that incorporates conservation practices 
and is based on such principles as the Secretary considers necessary to 
carry out the program. Additionally, the 1996 Act requires the 
Secretary to ensure that the processes of writing and developing 
proposals and plans for contracts are open to individuals in the 
agribusiness sector. These provisions were incorporated in the proposed 
rule and the Department believes that requiring all conservation plans 
to be developed by NRCS would be inconsistent with the statute. NRCS 
will, however, be available to provide an eligibility assessment of the 
farming or ranching operation of the producer as a basis for developing 
the plan. Additionally, NRCS will be available to assist producers 
develop conservation plans if requested. No changes were made in the 
final rule concerning the comment.
    One comment suggests the plans should be called ``EQIP plans.'' The 
term ``conservation plan'' is used to reinforce the concept of a single 
plan for all natural resource conservation activities on a farm or 
ranch unit of concern. In the past, specific program plans have been 
developed on the same farm or ranch and, occasionally, the specific 
plans were in conflict or confusing to the producer. A single 
conservation plan, if requested by a producer, will help to reduce the 
potential conflicts and confusion, and will reduce the administrative 
burdens on the producer. No changes were made in the final rule 
concerning the comment. 
    Two comments suggest the use of the term ``unit of concern'' was 
confusing. One of these commenters recommended

[[Page 28272]]

revising the wording in paragraphs 1466.6(a) and 1466.6(e) to read 
``for the farm or ranch unit of concern.'' USDA agrees with the 
comments and have changed paragraphs 1466.6(a) and 1466.6(e) in the 
final rule.
    USDA received one comment recommending a provision be made for a 
participant to revise a conservation plan (and contract) if necessary 
to reflect changes in the farm or ranch operation, conservation needs, 
or schedule of implementation. The recommended provision is commonly 
provided for in all Departmental conservation program guidance and will 
be included in the program guidance documents for EQIP. No changes were 
made in the final rule concerning the comment.
    USDA received three comments concerning the role of conservation 
districts in approving conservation plans. Two comments express 
appreciation for conservation districts approving all conservation 
plans used in the program. One comment opposes the conservation 
district role of approving conservation plans. One comment suggests 
conservation districts should have a role in approving revisions to 
conservation plans and should have a role in the event a plan is 
appealed by a participant at a later date. The Department believes the 
provision for conservation districts approving conservation plans as a 
part of the program maintains the historic role of conservation 
districts approving site-specific conservation plans. Conservation 
districts will also approve revisions to conservation plans. Roles of 
agencies during the appeal by a participant of a determination 
affecting participation are identified in parts 11 and 614 of this 
title. In its role during appeals, NRCS may consult with the 
conservation district. No changes were made in the final rule 
concerning the comments.
    USDA received one comment suggesting paragraph 1466.6(a)(1) be 
revised to indicate that natural resource concerns will include crop 
pest concerns. Another comment suggests paragraph 1466.6(a)(2) be 
revised to indicate that that resource management systems will include 
pest management systems. USDA does not believe the suggested revisions 
are needed. While EQIP will not fund normal and routine farming 
practices which simply protect crop production, crop pest concerns may 
create natural resource concerns which EQIP may appropriately address. 
Likewise, pest management systems, such as integrated pest management, 
may be considered a resource management system where the adoption of 
such system would not likely occur absent program assistance and its 
implementation could yield significant environment benefits. Therefore, 
the Department did not make changes to the final rule concerning these 
comments.
    USDA received two comments suggesting paragraph 1466.6(a) should 
include the words ``including grazing lands, wetlands, or wildlife 
habitat'' to further describe the related natural resources. USDA added 
a definition of ``related natural resources'' which incorporates the 
suggested words and believes this adequately addresses the comments.
    USDA received one comment suggesting a provision in paragraph 
1466.6(a)(2) to allow conservation plans to vary from the NRCS field 
office technical guide as needed to foster higher value wildlife 
habitats. A conservation plan submitted by a participant may foster 
higher value wildlife habitats or other resource management system, or 
some portion of that system, than identified in the applicable NRCS 
field office technical guide. NRCS, as provided in paragraph 
1466.6(a)(1), will consider whether the participant will use the most 
cost-effective conservation practices to maximize the environmental 
benefits. No change has been made to the final rule concerning this 
comment.
    USDA received numerous comments concerning the level of treatment 
that should be required in the program. Three comments suggest total 
resource management systems be required. Three comments oppose a 
requirement for total resource management systems. Five comments 
support encouragement to achieve a resource management system and use 
of a flexible, progressive planning approach. The Department believes 
that the program should provide flexibility to participants who desire 
to implement one or more conservation practices which impact a range of 
natural resource concerns. The program has been designed to encourage, 
but not require, the voluntarily implementation of a total resource 
management system. However, the number of natural resource concerns 
incorporated into a conservation plan will not, in and of itself, 
justify special priority treatment. The conservation plan, whether 
addressing a single natural resource concern or several, must result in 
significant environmental benefits to justify the expenditure of EQIP 
funds. No change has been made to the final rule concerning these 
comments.
    One comment recommends conservation plans should not focus 
exclusively on the priorities identified in a priority area or on the 
significant statewide natural resource concerns, but other concerns 
should also be addressed. To meet the purpose and intent of the 
program, the Department believes the conservation plans submitted by 
participants must address the priority natural resource concern in the 
priority area or the significant statewide natural resource concern 
outside a funded priority area if natural resource conservation goals 
and objectives in a priority area, a State, or the Nation are to be 
achieved. Directing program funds to address other concerns will divert 
funds from higher priority natural resource concerns. No change has 
been made to the final rule concerning this comment.
    A tiered, multi-level approach to financial assistance is suggested 
in two comments. This approach would establish a lesser amount of 
payments (i.e. up to $5,000 per year) for participants who develop a 
conservation plan with one or two practices to address a single 
concern. The second level would allow more payments (i.e. up to $7,500 
per year) for participants who develop a whole farm conservation plan 
with resource management systems to address multiple concerns. The 
highest level would allow the maximum payments (up to $10,000 per year) 
for using the second level plan plus incorporating a well-designed, on-
farm demonstration or research project. The Department believes the 
suggestion is a creative manner of providing financial assistance that 
encourages increased level of treatment to address priority natural 
resource concerns. The suggestion, however, provides for payment 
restrictions that are not supported by the 1996 Act, nor do they relate 
to the actual cost of implementing conservation practices. The 
Department believes that the proposed rule also provides for voluntary 
encouragement for increased level of treatment to address priority 
natural resource concerns without restricting payments arbitrarily. The 
concept of the suggestion will be incorporated in the program guidance 
documents. No change has been made to the final rule concerning these 
comments.
    USDA received numerous comments concerning the use of whole farm or 
ranch plans. Ten comments suggest that whole farm or ranch plans should 
be required to be eligible for the program. One comment suggests whole 
farm and ranch planning should be the focus of plans for the program 
or, at the least, to reward participants who develop whole farm or 
ranch plans. Eleven comments oppose requiring whole farm or ranch

[[Page 28273]]

plans. Seven comments suggest the program should be used to encourage, 
but not to require, the development of whole farm or ranch plans by 
providing a higher ranking to applications, payments for developing 
such a plan, or providing higher payments to implement the plan. The 
1996 Act enables a participant to implement one conservation practice 
using EQIP. The Department believes that in order to meet this 
statutory requirement a whole farm or ranch plan should not be 
required. However, the program has been designed by the Department to 
provide for flexibility in carrying out the program. Participants will 
be encouraged, but not be required, to voluntarily develop a whole farm 
or ranch plan. The conservation plan will address the conditions that 
cause or influence the natural resource concern for which the plan is 
being developed. Therefore, even when a whole farm or ranch plan is not 
developed, information from outside the defined unit of concern may be 
considered where it is necessary to develop the best strategy for 
meeting the producer's objectives and resolving the natural resource 
concern. Participants who submit a whole farm or ranch plan that 
maximizes environmental benefits per dollar expended will likely be 
assigned a higher priority for a contract than would participants who 
do not submit such a plan. The likelihood of being assigned a higher 
priority depends on whether the plan will result in significant 
environmental benefits to justify its priority.
    Ten comments concerned who may provide technical assistance to a 
participant for the purposes of developing a conservation plan. Nine of 
the comments support the latitude given to participants to select the 
service provider. Several of these comments also suggest specific 
service providers, such as professional foresters, certified crop 
advisors, and other qualified organizations. One comment states no plan 
should utilize the products or services sold or owned by the private 
agribusiness developer of the plan to avoid bias in the plan. The 
Department believes that the provisions in paragraph 1466.6(b) of the 
proposed rule provide the flexibility that the participant needs to 
select a service provider that is qualified. The provision refers to 
cooperating agencies, private agribusinesses, and other organizations, 
and the Department believes that more specific identification is not 
required. The Department further believes that the program will have 
sufficient safeguards and oversight so that any bias that may be 
created by private agribusinesses or other organizations providing 
technical assistance services will not cause a misuse of program funds. 
No change was made in the final rule concerning these comments.
    One comment states paragraph 1466.6(b) implies that producers must 
submit a plan in order to receive technical assistance, and this should 
be removed. The first sentence of paragraph 1466.6(b) of the proposed 
rule stated ``Upon a participant's request, the NRCS may provide 
technical assistance to a participant.'' The Department does not intend 
to imply that a producer must first submit a plan to receive technical 
assistance. A participant must request NRCS to provide the technical 
assistance, including the development of a conservation plan, if that 
is the desire of the participant. No change was made in the final rule 
concerning this comment.
    One comment suggests the final rule provide more clarity on the 
procedures NRCS will use to address private sector requirements and 
approval of assistance. Due to the varying complexities of the 
technical assistance services that may be provided by non-NRCS 
personnel, the Department does not believe that program regulations are 
the most appropriate way to establish these procedures. The program 
guidance document being developed by the Department will include 
guidance concerning acceptance of conservation plans, requirements of 
the private sector and other service providers, and approval of the 
technical adequacy of work done by non-NRCS personnel. No change was 
made in the final rule concerning this comment.
    USDA received several comments concerning the use of NRCS field 
office technical guides (FOTG) for conservation practices. Four 
comments support the use of the FOTG for conservation practices and 
methods. Nine comments state the FOTG's are either too narrow in scope 
or require updating and revising in a timely manner to reflect current 
conservation practices and technologies, and one of these commenters 
suggest NRCS should use other documents or references which provide 
more up-to-date information. Two comments suggest NRCS should assure 
that FOTG information is shared and consistent across state lines and 
the NRCS Regional conservationists could be used to assure this 
happens. Two comments promote involvement of private industry, State, 
and Federal agencies in the development of FOTG information. One 
comment asks what standards are used to determine if a natural resource 
has been protected or improved. The NRCS FOTG is a dynamic technical 
document. The FOTG contains the standards for the conservation 
practices which may be funded in the program. It also includes a 
section containing many references and documents published by non-NRCS 
sources, including private agribusinesses and research institutions. 
NRCS intends to review, on a regular basis, the content of the FOTG to 
assure that they include the most current elements of conservation 
practices, including innovations and new technologies. To assist with 
maintaining the most current elements of conservation practices, 
including innovations and new technologies, NRCS welcomes the 
information and input from producers, natural resource conservation 
professionals, scientists, and the private agribusiness sector. This 
review, update, and revision is a part of the overall conservation 
technical assistance activities of NRCS and is not specific to EQIP. In 
recognition of the rapid change of technology, paragraph 1466.7(a)(3) 
of the rule provides for pilot work using new technologies or 
conservation practices. No changes were made to the final rule 
concerning these comments.
    Ten comments concern the contents of a conservation plan. Two of 
the comments support the list of conservation plan contents. Two 
comments suggest the landowner's primary and secondary objectives 
should be included. One comment states forest types should be included 
in the plan. Five comments suggest monitoring and evaluation mechanisms 
must be components of each plan so that outputs can be measured. The 
Department believes that an evaluation mechanism is needed so that the 
outputs and outcomes of each conservation plan, each priority area and 
natural resource concern, and the entire program can be measured. Each 
conservation plan will contain information which can be used in the 
evaluation mechanism. NRCS and FSA will each be using automated data 
collection systems to assist in the evaluation of the program at all 
levels. The natural resources identified in sentence 1466.6(e)(2) are 
intended to be illustrative and are not all-inclusive. Sentences 
1466.6(e) (3) and (4) have been amended in the final rule to identify 
the objectives as those of the participant.
    On the subject of a simplified conservation planning process, seven 
comments support the proposed rule provision for a single conservation 
plan. One comment suggest the single plan could include government 
regulatory

[[Page 28274]]

requirements. Another comment suggest that the process should assure 
participants that the single plan will be recognized by other Federal 
regulatory agencies. One comment encourages the use of broad-scale 
planning efforts so that a separate individual plan development and 
approval process would not be needed when the individual plan is 
consistent with the broad-scale plan. The Department will work with 
Federal regulatory agencies to provide a mechanism for a single 
conservation plan which they will recognize for their purposes. USDA 
agrees that the conservation plan development and approval process can 
be further simplified where broad-scale plans have been developed and 
is using its conservation programs to encourage the development of such 
plans. The final rule has been amended to indicate that a single 
conservation plan could contain government regulatory requirements, to 
the extent possible.
    One comment suggests paragraph 1466.6(f) be amended to indicate 
that a single conservation plan could incorporate tribal program 
requirements. The Department agrees and has incorporated the suggestion 
in the final rule.
    Twelve comments state the conservation plan and supporting 
documentation must be considered as confidential information. Without 
confidentiality of the records producers will be reluctant to 
participate in the program. CCC has determined that conservation plans 
and certain supporting documentation developed or submitted for EQIP 
purposes are Federal records and, as such, are subject to the Freedom 
of Information Act, 5 U.S.C. 552, and the Privacy Act of 1974, 5 U.S.C. 
552a. Requests for records will be reviewed under normal rules that 
apply to such information, with all due concern given to the desire for 
confidentiality. No amendment was made to the final rule concerning 
these comments.

Section 1466.7  Conservation Practices

    USDA received 13 comments in support of providing financial 
assistance for needed conservation practices. Another comment supports 
financial assistance for upgrading or enhancing existing practices used 
by participants. A participant may receive financial assistance for 
enhancing an existing practice if the existing practice has exceeded 
its useful life span or if the enhancement provides for substantive 
improvement in the practice so that it provides a greater impact on the 
natural resource concern and maximizes environmental benefits per 
dollar expended. The program guidance document will incorporate this 
provision and no change has been made to the final rule concerning 
these comments.
    One comment opposes providing financial assistance for vegetative 
practices. The 1996 Act provides for cost-share assistance for 
``structural'' practices which includes vegetative practices. The 
Department believed it was confusing to describe vegetative practices 
as ``structural'' and incorporated a definition of both structural 
practice and vegetative practice in the proposed rule. The Department 
believes the 1996 Act intended to authorize financial assistance for 
vegetative practices and, therefore, included this provision in the 
proposed rule. Vegetative practices often provide the most cost-
effective conservation alternative to address certain environmental 
concerns and many structural practices, such as grassed waterways and 
terraces, incorporate vegetative treatment in the practice. No change 
has been made in the final rule concerning this comment.
    Seventeen comments express support for financial assistance for 
various conservation practices, including: water storage pits, pipeline 
installation, cross-fencing in pastures, vegetative buffers, 
conservation tillage, livestock watering facilities, pest management, 
noxious weed management, riparian area protection, wellhead protection 
and sealing, terraces, controlled drainage, agricultural chemical 
mixing and storage facilities, oil recycling, tile set-backs, precision 
farming, fuel storage containment dikes, forage storage leachate 
control, waste utilization and composting equipment, composting, 
sustainable farming practices, and grassed waterways. USDA believes 
these are examples of conservation practices which may be eligible in 
EQIP where they provide environmental benefits. To be eligible, the 
practice must provide the most beneficial, cost-effective approaches 
for participants to change or adapt operations to conserve or improve 
natural resources or to provide for environmental enhancement. 
Conservation practices must meet NRCS standards in accordance with the 
applicable NRCS field office technical guide. No change has been made 
in the final rule concerning the eligibility of conservation practices.
    USDA received two comments in support of practices that were 
eligible under the former USDA conservation programs. Conservation 
practices eligible in the program to address the natural resource 
concerns will be identified at the local and State level. Conservation 
practices which were eligible in the former USDA conservation programs 
may be eligible if determined to be appropriate to address the priority 
natural resource concerns. No change has been made in the final rule 
concerning eligibility of conservation practices.
    USDA received 85 comments which oppose financial assistance for 
construction of animal waste storage facilities. Most of these comments 
oppose financial assistance specifically to open lagoons citing 
problems with odors and leaks. These include 33 comments which oppose 
funding lagoons for large confined livestock operations but express 
support for funding other livestock-related conservation practices, 
such as composting, nutrient management, rotational grazing, pasture 
management, nutrient testing, and riparian area protection. Three 
comments agree that financial assistance should be used for 
construction of animal waste storage facilities, including lagoons. One 
comment opposes providing 100 percent of the cost to construct manure 
handling systems. One comment suggests reduced cost-share rates should 
be given to manure storages as compared to other practices. The 1996 
Act did not limit financial assistance for construction of animal waste 
management facilities, except for those constructed by a producer who 
owns or operates a large confined livestock operation. However, the 
Department believes that placing an emphasis on low-cost practices 
which yield significant environmental benefits will better achieve the 
statutory goal of maximization of environmental benefits per dollar 
expended than a focus on high-cost practices. The Department believes 
animal waste management facilities are viable conservation practices 
that, when used in combination of other conservation practices, such as 
nutrient management, can provide the most cost-effective system for 
managing animal wastes to address natural resource concerns. Neither 
the proposed or final rule provides financial assistance of up to 100 
percent of the cost of animal waste management facilities but limits 
the cost-share rate at 75 percent. No change has been made in the final 
rule concerning these comments.
    USDA received 28 comments in support of manure and nutrient 
management systems and other livestock-related conservation practices 
in lieu of providing cost-sharing for manure storages such as lagoons. 
Twenty-seven comments express support for financial assistance for

[[Page 28275]]

conservation practices relating to wildlife habitat, including eleven 
in support of native plants to aid with wildlife habitat. USDA received 
19 comments in support of tree planting, reforestation, or other 
forestland management measures as eligible conservation practices and 
another 22 comments were in support of windbreaks and shelterbelts. The 
proposed rule provides for land management practices, such as nutrient 
management, manure management, and wildlife habitat management, for 
incentive payments, and for cost-sharing of vegetative practices for 
critical area plantings and permanent wildlife habitat. NRCS vegetative 
practice standards provide for use of native plants. The conservation 
practices listed in the rule are for illustrative purposes only and are 
not intended to be an exhaustive list of eligible practices. 
Conservation practices eligible in the program to address the natural 
resource concerns will be identified at the local and State level. 
Conservation practices may be eligible if determined to be appropriate 
to address the priority natural resource concerns. Tree planting is a 
vegetative practice and has been included in that definition. No 
further changes were made in the final rule concerning these comments.
    Seven comments support the proposed rule process for determining 
conservation practice eligibility, especially involving State technical 
committees and local work groups. No changes were made to the final 
rule concerning these comments.
    One comment expresses the need to have public comment, through a 
public notice procedure, on proposed eligible practices in a priority 
area or state. Another comment expressed the need to involve private 
agribusinesses in this process. The public and private agribusinesses 
will have the opportunity to provide input to the local work group on 
eligible conservation practices. No changes were made to the final rule 
concerning these comments.
    Twenty-four comments express support for the proposed pilot work 
for new technologies and practices. Of these comments, three indicate 
support for the involvement of others in the pilot testing, such as 
wildlife specialists, private agribusinesses, producers, and producer 
organizations. Four commenters indicate alternative livestock 
practices, pilot programs and on-farm research and demonstration 
components should be used in EQIP as a means to encourage the use of 
innovative conservation practices. Two comments express the need to 
expedite the approval procedure for interim conservation practice 
standards used on pilot activities. One comment suggests incentives 
should be provided to users of environmental assessment tools, such as 
Farm*A*Syst. Another commenter stresses a key to successful 
implementation of EQIP is flexibility in terms of allowing participants 
and conservation partners to develop and implement unconventional 
methods or practices that could spark enthusiasm for the program. No 
change has been made in the final rule. NRCS will approve interim 
conservation practice standards used for pilot work in a manner that 
allows for timely implementation. The use of environmental assessment 
tools are encouraged by the Department as a part of the conservation 
planning process for EQIP, other conservation programs, and 
conservation planning in general. NRCS State conservationists, using 
the advice of State technical committees, will determine which 
conservation practices are needed and are eligible for program 
payments.
    USDA received the most comments concerning the issue of defining 
large confined livestock operations for the purposes of providing cost-
share payments for construction of an animal waste management facility.
    USDA received 161 comments in favor of a national definition of 
large confined livestock operations of 1,000 animal unit (AU) 
equivalents. These commenters favor this option primarily because it 
will provide greater funds to small and moderate farms and ranches and 
it is consistent with the size requirements for non-point discharge 
elimination system permits. Six of the commenters also suggest NRCS 
State conservationists should be encouraged to lower the size limit to 
fit circumstances in the state, such as State regulations. Three of the 
commenters suggest the size limit should be less than 1,000 AU in many 
circumstances.
    USDA received several comments which suggest a variety of size 
limits be established as the national definition. One comment suggests 
limits of 400 beef cattle, 280 dairy cattle, 40,000 poultry, and 1,000 
hogs. One comment favored a 500 beef cattle and 250 hog limit. One 
comment suggests a 800 beef cattle and 1,000 hog limit. One comment 
favors a 2,000 hog limit. One favors a single national definition but 
offers no suggestion on what the definition should be.
    Two comments suggest the aggregate total of animals owned by a 
farmer or rancher at all locations should be the basis for defining a 
large livestock operation.
    USDA received 22 comments which suggest no program funds should go 
to ``publicly-held'' or ``investor-owned'' corporations. Program 
funding to only small and moderate farms and ranches is favored by 63 
comments.
    USDA received 22 comments that state NRCS State conservationists 
could not or should not decide the definition. A variety of reasons 
were given in these comments, including five comments about the 
pressure that would come from inappropriate lobbying by livestock 
producers; four comments thought the NRCS State conservationist was a 
State government official; three comments express concern that unfair 
competition will be created between States due to different 
definitions; and three comments oppose different definitions in each 
State.
    USDA received 29 comments which favor the proposed rule procedure 
for defining large confined livestock operation. One of the commenters 
also recommends allowing exceptions to the State-level definition. One 
of the commenters suggests the State conservationist could decide up to 
a limit of 8,000 animals (animal type was not stated). One of the 
comments also suggests that no more that 20 percent of the livestock 
operations in a State should exceed the defined limit. Two of the 
commenters suggest a gross income level of $2 million be used to 
determine large.
    USDA also received 32 comments which favor no size limits be 
established for large confined livestock operations. Most of these 
comments recommend the program emphasize environmental benefits rather 
than size when deciding who should receive payments.
    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 technical 
assistance on these facilities and program assistance on other 
conservation practices. The 1996 Act leaves the determination of 
``large confined livestock operation'' to the Secretary. In considering 
how to define large livestock operations, CCC considered the public and 
agency comments and explored a number of options.
    CCC considered establishing a national 1,000 AU threshold, with 
some exceptions authorized, using the consideration elements specified 
in the Conference Manager's report. The 1,000-AU threshold was 
considered because it is employed in the National Pollution Discharge 
Elimination System (NPDES), authorized by the Clean Water

[[Page 28276]]

Act, and used by the Environmental Protection Agency (EPA). This option 
offers some advantages, because it is consistent with the NPDES, and 
most family and small-to moderate-size farms are under this threshold 
and will be eligible for cost-sharing. This option would target more 
program funds to smaller operations, reduce funds to large operations, 
and provide flexibility to address State and local environmental needs 
when exceptions are granted. However, CCC believes this option lacks 
sufficient flexibility to address State and local variations in 
operations, creates an exaggerated discrepancy between the 
implementation of this provision with the overall program goal to 
maximize environmental benefits per dollar expended, and relates only 
indirectly to the likelihood that the livestock producer would not 
otherwise construct a waste management system.
    Another option considered 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 allow choices more closely related to the environmental issues 
and problems resulting from the animal manure, it also uses a complex 
and easily challenged process of defining thresholds by weight, volume, 
or environmental threat.
    A third option considered was the use of an economic achievability 
analysis, which considers 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 the 
term ``large'' differently for different animal types. EPA's analysis 
indicates that dairies with 98 AU or more can generally 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; poultry broilers and layers, 
150 AU for liquid manure systems, 495 AU for continuous overflow 
watering; turkeys, 2,475 AU; and swine, 80 AU. 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. It would 
also 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 hog and dairy 
operations because of the very low threshold levels. If EPA's analysis 
were used as the basis for determining eligibility, an estimated 45 
percent of dairy farms and 20 percent of hog farms would not be 
eligible. Another problem with this approach is that producers would be 
required to provide financial records or other evidence of their 
inability to pay without financial assistance.
    A fourth option considered was that an operation would not be 
eligible for program cost-share funds if the animal waste management 
facility requires a NPDES permit. No exceptions to this limit would be 
authorized because its proponents believe that the necessity for a 
permit is all the incentive that a producer needs to install an animal 
waste management facility. This option was not accepted because it 
would provide no flexibility to address State and local environmental 
needs. Further, EPA has determined that a totally enclosed animal waste 
management 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. This would make certain ``large'' 
operations eligible for cost-shares, regardless of a person's ability 
to pay.
    Therefore, having considered all these options and the comments 
received on the proposed rule, CCC has chosen to not use a hard and 
fast animal unit number nationally to define a large livestock 
operation. CCC will consider producers with 1,000 AU or less as 
eligible for financial assistance for animal waste management 
facilities if otherwise eligible based on the intent of the program to 
maximize environmental benefits for dollars spent. The NRCS State 
conservationist, in consultation with the State technical committee, 
may develop criteria to use when defining a large confined livestock 
operation. This State-level definition will be used to determine 
eligibility for receiving cost-share payments for animal waste 
management facilities. CCC will provide national guidance, developed by 
NRCS in consultation with other Federal agencies, to NRCS State 
conservationists to clearly specify the factors and considerations 
involved in developing the requirements for program eligibility. The 
criteria will provide consideration of the elements specified in the 
Conference Manager's report cited above, including the cost-
effectiveness of the application, the ability of producers to pay for 
such facilities without financial assistance, the significance of the 
natural resource concerns resulting from the operation, and the 
prevailing State, tribe or local implementation of environmental laws, 
such as the Clean Water Act. In considering this definition, priority 
emphasis will be placed on assisting family farmers and ranchers, 
especially small- and medium-scale producers, and not meatpackers, 
processors, and vertical integrators. Small- and medium-scale family 
farms and ranches that have contracts with meatpackers, processors, and 
vertical integrators would be eligible. A variable cost-share rate 
could be considered at the State level, so that limited resource 
farmers and small-scale operations would receive a higher Federal cost-
shares.
    The NRCS State conservationist's definitions must be approved by 
the Chief, who will consider the justification of the definition and 
consistency in the definitions, to the greatest extent possible, used 
between and among States.
    All participants who receive cost-shares to install animal waste 
management facilities must follow an approved animal waste management 
plan in accordance with NRCS conservation practice standards, which may 
require the use of a nutrient management plan, including the 
satisfactory use, treatment, or disposal of animal wastes. When 
determining the number of livestock in the participant's operation for 
eligibility purposes, the total number of animals confined at all 
locations of the participant's livestock operation will be used, not 
just the animals at the site of the proposed animal waste management 
facility. The average annual number of livestock in the operation, for 
the 12-month period before making application, will be used for this 
calculation. This places an emphasis on the economic factors associated 
with the livestock enterprise, especially reflecting the ability to pay 
for the conservation practice. Also, guidance will be provided on using 
EQIP funds to cost share animal waste management facilities for 
expanding and new livestock operations. While such use of funds would 
be permitted, guidance will emphasize that NRCS State conservationists 
should place the highest priority on the most significant natural 
resource concerns and that they have the flexibility to place higher 
priority on assistance to existing livestock operations. Livestock 
operations that expand to the level contained in the State-defined 
definition of a large confined livestock operation would not be 
eligible for cost-

[[Page 28277]]

 share assistance for the animal waste management facility. The Chief 
will report to the Secretary periodically on the implementation of this 
policy, especially on the impact that may be occurring to the 
environment and to the structure of livestock agriculture. The report, 
submitted to the Secretary every six months for the first two years the 
program is implemented, will be based on information received from the 
NRCS Regional and State conservationists, and from other sources.
    CCC believes this option provides significant 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 and other 
locations where the program is delivered. It also incorporates the 
consideration of a person's ability to pay, regardless of the size of 
the operation. This option considers prevailing State or local 
implementation of various Federal, State, and tribal environmental 
authorities and requirements, including the Clean Water Act and other 
water quality authorities. 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.

Section 1466.8  Technical and Other Assistance Provided by Qualified 
Personnel Not Affiliated With USDA

    USDA received 16 comments that express support for allowing the use 
of technical and other assistance from entities outside of USDA. Two 
comments suggest the use of planning grants as a means to obtain 
assistance from other entities and one comment suggests a finder's fee 
be available for any assistance provided for the identification of 
potential program participants. Six additional comments urge USDA to 
include specific mention of particular qualified personnel or agencies 
available to provide technical assistance, such as mention of tribal 
agencies, agriculture input retail dealers, biologists, and qualified 
individuals. USDA believes flexibility for technical assistance will 
increase the utility of the program for addressing natural resource 
concerns. USDA does not have the authority to make planning grants or 
provide finder's fees. USDA utilized broad language in the proposed 
rule to increase the flexibility of the program and believes that 
mention of particular entities is unnecessary. No changes have been 
made in the final rule concerning these comments.
    USDA received fourteen comments that suggest the participant's cost 
for technical assistance from non-USDA sources be paid with EQIP funds. 
Four additional comments indicate USDA should reflect the reduced 
agency costs in overhead resulting from the use of non-USDA sources of 
technical assistance. One comment states EQIP funds should not be used 
for the technical assistance provided by non-USDA sources. Six comments 
request USDA provide funding for the services provided in EQIP by 
conservation districts and four comments simply request USDA explain in 
greater detail how it will contract to pay for technical assistance 
provided by non-USDA sources. USDA encourages the use of non-USDA 
sources of technical assistance, including private sources, but does 
not agree that EQIP technical assistance funds should be provided to 
participants who chose to use technical assistance provided by non-USDA 
sources. Participants have the flexibility to use the services provided 
by private sources, NRCS, conservation districts, State and local 
government agencies, and other qualified natural resource 
professionals. Many of these sources of assistance provide the 
technical assistance using other forms of tax-payer support. USDA does 
not agree that conservation districts should be paid with EQIP funds 
for administrative or planning services provided as a member of the 
local work group. In those instances where NRCS is requested by a 
participant to provide technical assistance, and NRCS is unable to 
provide that technical assistance, NRCS has the ability to use 
qualified non-USDA personnel through contracts with private sources or 
through cooperative agreements with other Federal, State, or local 
government agencies as authorized in Sec. 1466.6(b). No changes have 
been made in the final rule concerning these comments.
    The Department received 16 comments regarding the standards it will 
use to assess the quality of technical and other assistance provided by 
outside sources. The breakdown of these 16 comments is as follows: 2 
comments expressly support NRCS oversight of the technical assistance 
provided by outside sources; 2 comments suggest the conservation 
district should assume that responsibility; 4 comments recommend 
Certified Crop Advisors should be authorized to submit field and whole 
farm nutrient and pest management plans for EQIP; 1 comment states 
``certification, benchmark standards or other additional demonstrations 
of knowledge'' do not belong in USDA rules and procedures; 2 comments 
suggest the final rule provide greater clarity about any qualifications 
that NRCS will require; 3 comments suggest NRCS establish a 
certification process or conduct qualification workshops; and 1 comment 
states technically qualified organizations should be qualified as 
organizations eligible to provide technical assistance. NRCS intends to 
hold personnel from non-USDA agencies and private sources of technical 
and other assistance to the same standards or criteria it expects from 
USDA employees. At this time, since adequate certification programs are 
available from other sources, NRCS does not intend to establish a 
certification process and generally will accept the certification 
provided to professional conservationists by other organizations. 
Qualified personnel from agencies and groups not affiliated with USDA 
will be expected to have knowledge of how the program works and the 
requirements of the program. NRCS may provide training to personnel 
from other agencies and groups about the program and its requirements 
either individually or in workshops. No changes have been made in the 
final rule concerning these comments.

Section 1466.20  Application for Contracts and Selecting Offers From 
Producers

    USDA received one comment which suggests that ``shall'' be replaced 
with ``may'' throughout this section. USDA believes the agencies have 
sufficient discretion to administer EQIP in a flexible manner to meet 
varied resource needs, and, therefore, sees no need to replace the word 
``shall'' with ``may'' in Sec. 1466.20.
    USDA received six comments regarding the submission of 
applications. Of these six comments, one comment supports the ability 
to sign up at the USDA service center, three support the continuous 
sign-up process, one comment requests USDA clarify how often the 
agencies will rank applications, and one comment inquires when the 
continuous sign-up would commence. USDA believes the announcement of 
sign-up periods, the timing, and frequency of application ranking is 
contingent on the specific logistical requirements of each approved 
priority area and significant statewide natural resource concern. It is 
imperative that enough flexibility be in place to address varying 
farming and ranching regimes throughout the

[[Page 28278]]

country. No changes have been made in the final rule concerning these 
comments.
    USDA received 13 comments regarding the application process. Of 
these 13 comments, 10 raise questions and concerns regarding any 
proposed ``bidding'' process, including whether there would be bidding. 
Two comments raise concern regarding the length of the application and 
ranking process and urge timely approval be given. One comment 
indicates a producer does not become a participant until the 
application has been approved, yet it is unclear at what time a 
producer assumes rights and obligations under a contract. Section 
1466.20(a) indicates that any producer with eligible land may submit an 
application for participation in the program. The Department expects to 
receive far more applications for participation than existing funding 
levels can accommodate. Therefore, the Department will select projects 
through a competitive process, though not necessarily a bidding 
process. Applications are ranked on a number of factors, cost being 
only one of the factors considered. Because the competitive process 
aims to achieve maximization of environmental benefits per dollar 
expended, an applicant can improve the attractiveness of the proposed 
project by electing to accept lower program payments than authorized or 
by developing a management system that increases the project's 
environmental benefits.
    It is not USDA's intention to create a process that will take an 
excessive amount of time from date of application to the commencement 
of work on a project. However, all practices and conservation plans are 
different; some practices require an extensive investment of time in 
planning, designing, and engineering a structural practice, e.g. animal 
waste management structure. NRCS may contract for technical services if 
the workload is such that timely approval is not otherwise possible. 
The producer is a participant and has legally enforceable rights and 
responsibilities under an EQIP contract when the contract is executed 
by the producer and the USDA. No changes have been made in the final 
rule concerning these comments.
    USDA received three comments regarding the role of the State 
technical committee in the ranking process. Of the three comments, one 
comment supports the involvement of the State technical committee, one 
comment disagrees, and the third comment requests any advice provided 
by the State technical committee be available for public comment. USDA 
intends to allow State technical committees to recommend to NRCS State 
conservationists guidelines for developing ranking criteria for 
evaluating applications that are consistent with the criteria set forth 
under Sec. 1466.20. Local work groups will develop additional criteria 
within these statewide parameters to address local natural resource 
concerns. Guidelines developed at the state and local level will be 
available for public review and opportunities will be available for 
pubic input. No changes have been made in the final rule concerning 
these comments.
    USDA received five comments regarding the role of the local work 
groups in the development of ranking criteria. Of these five, two 
comments requests clarification regarding the actual role of the local 
work groups and three comments request local work groups apply ranking 
criteria in addition to developing the criteria. USDA feels the current 
language adequately addresses the commenter's concerns. The local work 
groups and their members recommend ranking criteria but do not have a 
vote in the approval process. The FSA county committee, with assistance 
of the NRCS designated conservationist and the FSA county executive 
director, shall use the ranking criteria and grant final approval for a 
contract.
    USDA received 48 comments regarding the respective roles of the 
agencies in the ranking and application approval process. Of these 48 
comments, 45 comments express concern that the FSA county committees 
were merely a rubber stamp and 3 comments recommend the county 
committee system be utilized greater in concert with the NRCS ranking 
system. The administration of USDA conservation programs has moved 
beyond the traditional FSA committee system of approvals due to the 
implementation of the 1996 Act which folded the functions of the 
existing conservation programs into EQIP. USDA believes all of the 
agencies and committees with roles in the program have important 
responsibilities in line with their expertise, and the language in the 
proposed rule adequately defines the roles of the respective agencies. 
No changes have been made in the final rule concerning these comments.
    USDA received 14 comments regarding the ranking criteria for the 
selection of applications. Of these 14 comments, seven comments 
recommend particular factors that a ranking system should address. In 
particular, comments suggest including evaluating off-site and on-site 
benefits, credit for applicants who have installed practices under 
different programs, and applications that address several natural 
resource concerns receiving a higher ranking against those that address 
only one natural resource concern. Five comments discuss an 
environmental benefit index, including four comments which express 
support for the concept but caution against a national index, and one 
comment which did not support the concept. The two remaining comments 
ask how the agencies would determine cost and express the opinion that 
cost was an arbitrary factor to base acceptance upon. USDA believes it 
is important to allow flexibility in the selection of ranking factors, 
both on the State and local level, to best address local natural 
resource needs, and does not intend to establish national level ranking 
factors. Ranking factors will vary between approved priority areas and 
significant statewide natural resource concerns. The cost of a 
conservation practice will be estimated by NRCS using knowledge of 
local practice costs collected and provided by FSA. National level 
direction will place emphasis on developing ranking criteria which 
presents the least cost to the program since the maximization of 
environmental benefits per dollar expended is an integral facet of the 
program and is clearly articulated in the statute. No changes have been 
made in the final rule concerning these comments.
    USDA received 26 comments regarding the impact the ranking criteria 
will have upon participation by tribal, minority, and limited resource 
farmers. Of these 26 comments, 19 comments specifically state the 
application and ranking process will discriminate against minority and 
limited resource farmers. A different comment recommends that potential 
discrimination could be avoided by assuring that limited resource 
farmers had a voice on the local work groups. One comment states the 
process was unduly burdensome upon tribal governments because of the 
requirement to list all lands under their control. Three comments raise 
concern that the emphasis upon cost could discourage limited resource 
farmers from participating because wealthier applicants would rank 
higher on that factor alone, regardless of which applicant has the more 
critical resource concern. The statute mandates that USDA achieve the 
greatest environmental benefit per federal dollar expended. This does 
not translate into a simple calculation that applicants

[[Page 28279]]

who contribute more towards the cost of a practice will rank higher. 
USDA focuses upon the environmental benefits achieved in the most cost-
efficient manner. An applicant can improve the cost-efficiency of the 
proposed project in several ways, including filing a joint application 
with similarly situated individuals, providing like-kind services, and 
focusing upon an appropriately scaled solution to any given concern. 
USDA intends to provide guidance in program guidance documents that 
stresses the need to apply all program elements and activities in a 
manner that does not discriminate against any farmer or rancher who are 
potential participants in the program. No changes have been made in the 
final rule concerning these comments.
    One comment states producers who do not have bank accounts would be 
excluded from EQIP participation due to the electronic funds deposit 
policy of the 1996 Act and alternative methods of issuing checks should 
be provided as a options. In accordance with the Debt Collection 
Improvement Act of 1996 (Pub. L. 104-134), payments made in Federal 
programs will be disbursed by electronic funds transfer (EFT). 
Recipients of Federal payments must provide financial institution 
information necessary to receive payment via EFT. Waiver of the EFT 
requirement may be granted by FSA through December 31, 1998, if the 
recipient provides a written certification that the recipient does not 
have an account with a financial institution or an authorized payment 
agent. No change was made in the final rule concerning this comment.

Section 1466.21  Contract Requirements

    Of the various contract requirements outlined in Sec. 1466.21, USDA 
received the greatest number of comments regarding the statutory 
requirement that EQIP contracts be for not less than five years and not 
more than 10 years. Of the 32 comments received on this subject, six 
comments express support for the 5 to 10 year contract duration. One 
comment suggests no contract at all should be required for cost-share 
assistance. Three comments recommend a specific shorter duration, such 
as 3-10 years or on an emergency basis. Twenty-two comments state 
producers would not be receptive to 5-10 year contracts based on the 
assumption that long-term contracts are cumbersome, five-year minimum 
contracts are unnecessary to address single natural resource concerns, 
and the duration of contracts are detrimental to small-scale and 
limited resource farmers. The 1996 Act requires that payments be made 
to participants through an EQIP contract, and the contracts be a 
minimum of 5 years and a maximum of 10 years. The Department cannot 
modify these requirements. EQIP did not combine the functions of 
emergency conservation programs from either FSA or NRCS into its 
programs. The emergency conservation program and the emergency 
watersheds program will likely continue in some form to address these 
emergency situations. No changes have been made in the final rule 
concerning these comments.
    USDA received eight comments that state EQIP plans should be 
limited to those practices being implemented for which cost-share is 
received. USDA believes some conservation plans do require 
implementation of non-cost-shared conservation practices or operations 
in order to ensure that cost-shared practices are functional and 
accomplishing the plan's stated goals in addressing the identified 
natural resource concerns. No changes have been made in the final rule 
concerning these comments.
    One comment states controlling noxious weeds should be added to the 
list of contract requirements. Control of noxious weeds is frequently a 
requirement of State or local laws and those laws can be enforced in 
the normal manner. No changes have been made in the final rule 
concerning this comment. 
    USDA received 18 comments regarding the role of FSA county 
committees, seventeen of which suggest the rule explicitly state that 
FSA county committees may either approve or disapprove contracts. The 
remaining comment recommends county offices should have authority to 
modify contracts in order to transfer money from one contract to 
another to balance contract cost overruns with shortfalls on other 
contracts. USDA feels the current language is sufficient and in 
accordance with the reorganization decisions made within the Department 
in the last two years. Program guidance will specify how unused funds 
may be used. No changes have been made in the final rule concerning 
these comments. 
    USDA received three comments regarding the limitation of one EQIP 
contract at any one time for each tract of agricultural land. Of these, 
one comment proposes allowing the local work group flexibility to 
define areas of natural resource concerns, one comment proposes all 
properties owned by a single person be counted as one, and the third 
comment expresses the concern that this requirement would create a 
paperwork nightmare. USDA believes the current FSA method used to 
classify farm and tracts should be used to monitor where EQIP 
contractual activities are undertaken as it is with other USDA 
conservation programs. FSA has an existing database that will enable 
this requirement to be easily tracked, thus avoiding a paperwork 
burden. No changes have been made in the final rule concerning these 
comments.
    One comment requests CCC to commit the funds up-front that will be 
needed for a 5-year contract and that such funds would be unavailable 
for other purposes. When contracts are agreed to by CCC, payments 
become an obligation of the CCC for the full contract period within the 
limits of the CCC's borrowing authority which is fully expected to be 
sufficient to cover all obligations. There is no provision in the law 
specifying a special priority for EQIP, or other claims, over other 
legitimate claims on CCC funds. Accordingly, it was determined that the 
portion of this comment to prioritize EQIP over other uses should not 
be adopted. No changes have been made in the final rule concerning 
these comments.
    USDA received five comments requesting Sec. 1466.21(c) be revised 
to allow for a producer to complete the first practice of the contract 
to be completed within 24 to 36 months, instead of 12 months. USDA 
believes it is in the best interest of the program to obtain tangible 
conservation benefits as soon as possible during contract periods, and 
to be assured the participant intends to comply with the contract. The 
best way to achieve this is to actually install or implement 
conservation practices in the beginning of the contract period. No 
changes have been made in the final rule concerning these comments.

Section 1466.22  Conservation Practice Operation and Maintenance

    A commenter inquires if the lifespan of a conservation practice is 
greater than 10 years, how will USDA ensure the participant will 
continue to operate and maintain the practice in accordance with this 
section. Another comment states this section should be more explanatory 
in regards to participant accountability and follow-up of EQIP 
contracts to ensure that taxpayer resources are accomplishing the 
objectives in the contracts. Section 1466.22 has been revised in the 
final rule to state that CCC may periodically inspect the conservation 
practices with life spans that exceed the contract

[[Page 28280]]

period to ensure that operation and maintenance is occurring. 
    One commenter requests ``unless a catastrophic event occurs'' be 
added to the end of the second sentence in Sec. 1466.22. Paragraph 
1466.25(b)(3) of the proposed rule enables CCC to give consideration to 
hardships that prevent the participant from complying with the contract 
terms that are beyond the participant's control. USDA believe this 
adequately addresses the comment and no change has been made to the 
final rule concerning this comment.

Section 1466.23  Cost-Share and Incentive Payments

    Two comments stress financial incentives are an important part in 
encouraging farmers to adopt practices that work best on their land 
which will provide off-site environmental benefits. Another comment 
states incentives need to provide incentives for all stakeholders in a 
watershed, not just the ones involved in traditional agricultural 
occupations. Seven comments indicate support of EQIP payments to 
livestock producers and increasing the amount of cost-share funds a 
participant can receive in a multi-year contract. Four comments are 
critical of EQIP concluding that small and family farmers and ranchers 
will not be able to provide funds for their portion of a multi-year 
contract, profitability for the family farmer is overlooked because 
there is no way they can possibly comply with various environmental 
regulations even with cost-share programs and a proposal to eliminate 
cost-sharing for animal waste management facilities by placing the 
responsibility for clean up of these problems with the State and local 
government. One commenter states many tribal farmers are limited 
resource farmers that should receive at least 75 percent cost-share and 
also have available low-cost conservation practice alternatives. USDA 
agrees that financial incentives encourage farmers to adopt 
conservation practices that result in both on-and off-site benefits. 
The flexibility of EQIP allows for the establishment of rates that best 
address local situations. Special rates can be established to ensure 
adoption of conservation practices.
    Two comments suggest providing incentives to participants who 
participate in educational programs. The Department will offer 
information, education, and training at no cost to farmers and ranchers 
to aid in implementing their conservation plan. Paragraph 1466.5(h) has 
been added to the final rule concerning this educational assistance.
    One comment suggests low or no-interest loans should be made 
instead of payments. The 1996 Act authorizes cost-share and incentive 
payments, not loans, to program participants. Other programs with these 
options are available and information about them can be obtained at 
local USDA service centers. No change has been made to the final rule 
concerning these comments.
    Two comments encourage the use of EQIP payments with State cost-
share programs if available. The Department believes a valuable way to 
maximize environmental benefits per dollar expended is to encourage co-
cost-share arrangements with other State and local, public and private, 
funding sources. The proposed rule contained several references to 
considering support provided by State and local programs when 
designating priority areas and national conservation priority areas. 
This encouragement also will be incorporated in the program guidance 
documents. No change has been made to the final rule concerning these 
comments.
    Two comments urge USDA to clarify in the final rule that the 25 
percent cost-share simply must be a non-federal match, which could 
include assistance by a non-governmental organization (NGO) or a State 
agency. USDA will provide administrative policy in the program guidance 
documents concerning situations where special interest groups or a 
State agency contributes to the cost of a practice. The final rule has 
been amended to indicate that the Federal share of cost-share payments 
will be reduced to the extent total financial contributions from all 
public and NGO sources exceed 100 percent.
    Several comments address payment rates. One comment suggests the 
payment rates used in prior conservation programs be re-evaluated in 
regard to the policies being established for EQIP. Another commenter 
encourages the use of a variable-rate incentive program for EQIP. 
Another commenter states that, to be advantageous for a participant, a 
realistic range of $1-4 per acre, rather than 25-50 cents per acre 
should be used. The Department will estimate the local costs of 
conservation practices and inform producers of the maximum payments 
that will be allowed with EQIP. Rates used in a locale in a prior 
conservation program should be re-evaluated and adjusted, as needed, to 
reflect current conditions and needs. Variable rates may be selected 
for use in a given locale. No change has been made to the final rule 
concerning these comments. 
    Forty-three comments were received which request the following 
practices be eligible for cost-share or incentive payments: riparian 
zone protection, fencing to restrict livestock from sensitive wildlife 
habitat areas, vegetated ditch banks, chemical free insect control, 
recycling, waste utilization, fire and grazing management, precision 
agriculture or variable technology services, system soil testing, 
terraces, waste oil recycling, controlled drainage, tile set backs, 
rinse pads, solids testing, capping abandoned wells, shelterbelts, 
split application of nutrients, buffer zones around ponds or lakes for 
citrus enterprises, on-farm containment dikes, fuel storage management, 
and permeable mates for tree planting, efficient irrigation practices, 
irrigation wheel lines, and conservation tillage including no-till. 
USDA believes these are examples of some practices which may be 
eligible in EQIP when used for natural resource conservation purposes. 
To be eligible, the practice must provide beneficial, cost-effective 
approaches for participants to change or adapt operations to conserve 
or improve natural resources or to provide for environmental 
enhancement. Conservation practices must meet NRCS standards and 
specifications set forth in the FOTG. No change has been made in the 
final rule concerning the eligibility of conservation practices.
    One comment suggests that urbanization of agricultural land causes 
environmental problems that should be addressed with EQIP. The statute 
does not give the Department the authority to use EQIP to address 
problems caused by the conversion of agricultural land to urban uses. 
    One commenter favors conservation tillage and suggests grants be 
given to conservation districts to lease or buy equipment that could be 
rented to producers at a discounted rate to encourage producers to try 
the no-till method of farming. Another commenter favors program 
payments for research and development. The 1996 Act does not authorize 
the Secretary to use EQIP funds for grants, nor for research and 
development. No change has been made to the final rule concerning these 
comments. However, paragraph 1466.7(a)(3) of the final rule describes 
how EQIP may be used to provide financial assistance where new 
technologies or conservation practices provide a high potential for 
maximizing environmental benefits per dollar expended.

[[Page 28281]]

    One commenter states the language in paragraph 1466.23(a)(2) 
concerning incentive payments ``at a rate necessary to encourage'' 
should take into consideration the total conservation plan and the 
number of natural resource concerns or practices as a total package 
when developing the rate structure. The 1996 Act authorized the 
Secretary to make incentive payments in an amount and at a rate to be 
necessary to encourage a producer to perform one or more land 
management practices. The Department will provide guidance concerning 
incentive payments in program guidance documents. No change has been 
made to the final rule concerning this comment.
    A commenter states EQIP would be more effective if incentives were 
more broadly applied to farm management rather than targeting cost-
share for manure structures. Another comment expresses no one hog 
producer should be allowed to receive more than $10,000 in cost-share. 
The Department agrees incentives for management practices are effective 
and intends on encouraging the use of incentive payments of land 
management practices, which generally maximize environmental benefits 
per dollar expended when compared to many structural conservation 
practices. The Department will provide guidance concerning incentive 
payments in program guidance documents. Cost-share and incentive limits 
for conservation practices will be determined at the State or local 
level. No change has been made to the final rule concerning these 
comments.
    Four commenters state there is a need to clarify that cost-share 
payments are related to the installation of both structural and 
vegetative practices, that incentive payments are related to the 
development and/or maintenance of land management practices. As the 
commenters suggest, cost-share payments are for establishing structural 
or vegetative conservation practices, and incentive payments are to 
encourage producers to adopt land management practices. USDA has 
clarified and made the distinction between cost-share and incentive 
payments in Sec. 1466.3 of the final rule and has added paragraph 
1466.23(a)(4) in the final rule stating that both cost-share and 
incentive payments may be received under the same contract.
    Two commenters state FSA county committees should also help 
establish the cost-share and incentive payment rates by practice within 
the maximum payment limitations set by law and approve contracts. FSA 
State and county committees will help to establish payment rates by 
their participation on State technical committees or local work groups 
which will consult with NRCS when setting payment limits. State and 
county FSA offices will continue to gather supporting data for 
determining cost-share rates and for establishing cost-share levels 
with limitations.
    A recommendation by one commenter states that paragraph 
1466.23(a)(3)(i) should be revised to add the words ``and the State 
technical committee'' after ``local work group.'' USDA agrees with the 
comment and has included the revision in the final rule.
    A proposal by a commenter states that the words ``total amount'' in 
paragraph 1466.23(b) be deleted and the words ``Federal share'' be 
inserted. The language used in the proposed rule is consistent with the 
1996 Act. In its entirety, the paragraph reads ``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: * * 
* '' (Emphasis added.) The Department believes the phrase ``under this 
part'' provides the clarity being suggested by the comment and has made 
no change in the final rule concerning this comment.
    Two comments indicate the payment limitations are not workable and 
limiting a producer to $10,000 per year will delay the installation of 
some practices. USDA disagrees as paragraph 1466.23(c)(3)(i) allows for 
the $10,000 yearly limit to be exceeded on a case-by-case basis. No 
change was made in the final rule concerning these comments.
    A comment states that it is unclear whether the $50,000 limitation 
is a total project limit per landowner or a cap on Federal 
participation per project. The commenter suggests that it be the cap on 
federal participation per project, thus encouraging participants to 
seek the additional funding from other non-Federal sources for the more 
expensive but cost effective projects, and resulting in more cost-
effective projects from the Federal perspective. Three additional 
comments state there should be waiver provisions for those 
comprehensive planning efforts to exceed the $50,000 payment limitation 
in order that the program can realize maximization of environmental 
benefits. The 1996 Act established the $50,000 limit on a multi-year 
contract. This limit refers to the maximum program payments that may be 
made on any multi-year contract, not to a cap on the total cost of a 
project. Contracts are commonly for one or more conservation practices 
to address the natural resource concerns on a farm or ranch unit of 
concern. The limit will have the effect of placing a cap on the program 
payments made on a ``project.'' However, a person may enter more than 
one contract, thus having the ability to receive more that $50,000 from 
EQIP. The proposed rule establishes a limit of one contract at any one 
time for each tract as identified with a FSA tract number. A 
participant may have subsequent EQIP contracts for different natural 
resource needs or concerns following completion of a previous contract 
on the same tract. No change was made in the final rule concerning this 
comment.
    Two comments favor the $50,000 contract limitation with a 
suggestion that there be a non-regulatory, incentive-based approach for 
conservation of wildlife and wildlife habitat. The Department has 
developed EQIP as a voluntary natural resource conservation program 
that will provide financial incentives for concerns such as wildlife 
and wildlife habitat. No change was made in the final rule concerning 
these comments.
    Another comment states that $50,000 will only pay for one-third to 
one-half of the investment cost for a livestock animal waste facility. 
The 1996 Act limits the cost-share payments for structural practices to 
not more than 75 percent of the projected cost of the practice. The 
1996 Act does not provide a guarantee that the program payment will be 
75 percent of the projected cost of the practice. No change was made in 
the final rule concerning this comment.
    A statement from a commenter expresses that the proposed rule does 
not clearly define who is eligible for EQIP funds. The proposed rule 
does provide eligibility rules which will apply to define who is 
eligible for EQIP funds. No change was made in the final rule 
concerning this comment.
    Six comments concern payment limitations and how ``person'' is 
defined for EQIP. One comment suggests the use of social security 
numbers rather than allowing producers to receive payments from 3 
entities. One comment recommends USDA make sure all sites owned by a 
single person are counted as one entity. Three of the comments state 
that any recipient of EQIP funds should be actively engaged in farming. 
One comment states that cash rent tenants should be exempt from payment 
limitations and one commenter states that cash rent tenants should not 
be exempt from payment limitations. One commenter indicates it is not 
surprising that the rule proposes to use the same ``loophole-laden'' 
payment limitation and person definitions used by FSA for commodity 
programs and CRP. However, the commenter expresses outrage that the 
rule would go beyond

[[Page 28282]]

those ``weak standards'' and actually delete major payment limitation 
provisions from applicability to EQIP. USDA believes that it is 
important to have EQIP payment limitation provisions consistent with 
other major agricultural programs to reduce paperwork burdens on the 
applicant and the Department, and to reduce confusion on the part of 
the producer and USDA employees that different program provisions would 
create. The major provisions in 7 CFR Part 1400 being applied for EQIP 
are consistent with the regulations of the Conservation Reserve Program 
(CRP) and with those regulations for producers receiving production 
flexibility contract payments. Moreover, CCC feels that program 
administration will be eased by the fact that many producers are aware 
of these provisions, have paperwork already on file that will suffice 
for EQIP, and are accustomed with dealing with reporting and filing 
requirements. CCC has periodically revised the provisions in 7 CFR Part 
1400 to close loopholes when they are discovered and will continue to 
do so in the future. CCC will not apply 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 because those provisions were 
developed to limit payments to persons without regard to environmental 
or natural resource conditions. EQIP is primarily concerned with 
addressing significant environmental and natural resource concerns and 
CCC believes the stated provisions would limit its ability to address 
those concerns. No change was made in the final rule concerning these 
comments.
    Six comments request paragraph 1466.23(c)(1) be revised to indicate 
that States, political subdivisions, and entities thereof, be permitted 
to receive payments. One comment states this paragraph excludes school 
land leased to farmers and state-enabled public corporations, such as 
drainage or irrigation districts, from receiving payment; the commenter 
states these entities should be eligible. Another comment states 
payments should be made to these entities only if they are directly and 
financially involved with an EQIP project established around a weed 
management area as defined in the guidelines for coordinated management 
of noxious weeds in the Greater Yellowstone area. CCC believes that 
excluding States, political subdivisions, and agencies thereof, from 
receiving payments will make more funding available for private 
producers that generally do not have the financial resources that 
governmental entities have. Paragraph 1466.4(d)(2) of the proposed rule 
enables publicly owned land to be eligible if the land is under private 
control for the contract period and is included in the participant's 
operating unit; the conservation practices will contribute to an 
improvement in the identified natural resource concerns; and the 
participant has written authorization from the government landowner to 
apply the conservation practices. CCC believes this provision meets the 
intent of several of the comments. No change was made in the final rule 
concerning these comments.
    Three commenters express support for the language in paragraph 
1466.23(c)(3)(i) which authorizes the NRCS State conservationist to 
exceed the $10,000 annual limitation when it is necessary to meet the 
conservation objectives of the participant's plan. One of the above 
commenters urges broad interpretation of the criteria necessary to be 
met in order to exceed the limitation to provide cost-effective 
salinity control. Two other comments state the authority to exceed the 
annual limitation of $10,000 should be given to the local level for 
their determination. Another comment states it is important that 
authorization of larger payments in a shorter time period should be 
given as an option to the State conservationist as accelerated 
disbursement of funds within one to two years is needed to provide the 
most cost-effective assistance to participants. CCC believes that these 
annual payment limitation waivers are best made on a case-by-case basis 
by the State conservationist considering the input and recommendations 
received from the local level. CCC believes the language in the 
proposed rule provides for sufficient latitude and flexibility that 
waivers may be granted, when justified, that will enable payments up to 
the contract limits. A provision of the EQIP contract is to provide the 
most cost-effective conservation assistance. No change was made in the 
final rule. Program guidance will be developed concerning justification 
of the annual limitation waiver.
    Three commenters state support for the proposed rule provision for 
a payment limit exemption for tribal ventures, one noting that an 
Indian tribe may be the beneficial owner of hundreds of thousands of 
acres of agricultural lands held in trust status by the United States. 
The vast majority of tribal agricultural lands could be excluded from 
financial assistance programs unless tribes are exempted from funding 
ceilings. Another comment suggests paragraph 1466.23(c)(3)(iii) should 
specify that the payment limitations do not apply to contracts on 
tribal land or BIA allotted lands. The Department must adhere to the 
EQIP payment limitation as set by statute. To accommodate the unique 
situation of tribal, allotted, and Indian trust lands, the regulation 
provides that a tribal venture can receive payments in excess of the 
limitations if an official of the Bureau of Indian Affairs and/or a 
tribal official can certify that no one person, as defined in 7 CFR 
Part 1400, will receive in excess of the limitations.
    One comment supports the exception to the payment limitation 
included in the proposed rule for a producer with a current EQIP 
contract who inherits land subject to another EQIP contract. No change 
was made in the final rule concerning the comment.
    A recommendation by a commenter states a producer should be 
eligible for EQIP payments during the last 2 years of a CRP contract to 
allow the CRP participant to implement a conservation practice in 
advance of returning the CRP land to production, thereby maintaining 
the maximum environmental benefit achieved under the CRP contract. The 
1996 Act states that a producer shall not be eligible for cost-share 
payments for structural practices if the producer receives cost-share 
payments or other benefits for the same land under CRP or the Wetlands 
Reserve Program (WRP). However, there is nothing that precludes a 
producer from beginning the planning and paperwork process for EQIP 
while the land is still under CRP or WRP contract. The EQIP contract 
would not be approved and considered binding until such time as the 
land was no longer covered by either CRP or WRP contractual authority. 
No change was made in the final rule concerning the comment.
    Three comments recommend EQIP participants should be given the 
option of being paid as the practice is being implemented, with as much 
as one-half of the payment being made following the technical 
certification that the project has been completed. The program guidance 
documents will detail procedures for making partial payments to 
participants. Partial payments for completion of part of a conservation 
practice may be made if the participant will complete the entire 
practice, with or without EQIP assistance, within the time prescribed 
by the FSA county committee, with NRCS concurrence. No change was made 
in the final rule concerning these comments.

[[Page 28283]]

    One hundred and four comments express that paragraph 1466.23(e) 
needs to be changed to provide payments as soon as the conservation 
practice is complete and technically certified. Two of the commenters 
ask whether the deferred payment is referring to the calendar year or 
the fiscal year. Paragraph 1466.23(e) of the proposed rule indicates 
that payments will not be made until the fiscal year following the 
fiscal year in which the contract was entered into. For illustration 
purposes, a contract entered into from October 1, 1996 through 
September 30, 1997 cannot have payments made on completed practices 
until after October 1, 1997, the beginning of the next fiscal year. 
Except for payments earned during the first fiscal year of the 
contract, all other payments will be made after the practice is 
certified to be in accordance with technical specifications. This 
provision is based on the 1996 Act and the Department cannot change 
this provision, thus no change was made in the final rule concerning 
these comments.

Section 1466.24  Contract Modifications and Transfers of Land

    Four comments concern contract modifications. One comment states 
this section must provide provisions for reasonable modification of 
contracts. A second comment indicates concern that a producer will not 
have enough flexibility in a long-term contract in order to be 
permitted to modify a contract several years into its implementation. 
Another comment proposes the local NRCS district conservationist should 
be allowed to modify the contract if a planned practice is not 
practical. One comment suggests the local work group should be able to 
approve or deny contract modifications, in accordance with NRCS 
requirements, because requiring CCC approval of every modification may 
result in unnecessary administrative delays. The contract modification 
provisions for EQIP are similar to those in other USDA conservation 
programs, including the former programs which EQIP replaces. The 
program guidance documents will provide procedural guidance for 
modifying contracts, and will have the flexibility that will enable a 
participant to apply to modify a contract several years into its 
implementation as long as the conservation plan is revised in 
accordance with NRCS requirements and approved by the conservation 
district. Local work groups are advisory bodies and cannot approve/
disapprove contracts or contract modifications. Approval/disapproval of 
contract modifications will be done in the same manner as contracts; 
FSA and NRCS will serve as representatives of CCC at the local level. 
It is not anticipated that requests for contract modifications will 
result in unnecessary delays. No change was made in the final rule 
concerning these comments.
    One comment states paragraph 1466.24(c) should have the words 
``loses control of the land'' removed. The commenter believes that if a 
producer loses control through bankruptcy, it would be unfair to 
require repayment of cost-share funds. CCC disagrees with the comment. 
If a participant loses control of the land, through bankruptcy or other 
manner, and cannot complete the contract, the environmental benefits 
that had been expected using program assistance may not be achieved. No 
change was made in the final rule concerning this comment.

Section 1466.25  Contract Violations and Termination

    Five comments suggest the local conservation district should be 
involved in the consultation process referred to in Sec. 1466.25. CCC 
agrees with this suggestion because of the role conservation districts 
have on the local work group and in approving conservation plans used 
as the basis for program contracts. The final rule has been amended to 
enable NRCS to consult with the local conservation district.
    Three comments concern the time a participant should be given if 
they are found to be violating the terms of the contract. One comment 
recommends that ``reasonable time'', used in paragraph 1466.25(a)(1), 
should be defined in Sec. 1466.3 Definitions. Another comment 
recommends all violations be corrected as soon as possible with a 
maximum of one year to get back into compliance with the terms of the 
EQIP contract. Another comment suggests a waiver process be provided 
for those participants who cannot meet the time requirements of an EQIP 
plan. CCC does not agree that the term ``reasonable time'' needs to be 
defined in regulation, nor that a maximum of one year should be 
regulated. Establishing a specific amount of time does not permit 
flexibility for the implementation of locally guided conservation 
measures. Depending on the circumstances of the situation, a reasonable 
time in one instance may be unreasonable in another instance. The FSA 
county committee, in consultation with NRCS and the local conservation 
district, are in the best position to determine what is reasonable. The 
program guidance documents being developed will indicate that, 
generally, a participant should be given one year, or some other 
reasonable time, to correct the violation and comply with the terms of 
the contract. No change was made in the final rule concerning these 
comments.
    One comment suggests language should be added to protect producers 
from being considered to be in noncompliance if problems are discovered 
during a technical assistance visit by NRCS, similar to provisions 
relating to highly erodible land compliance. CCC does not agree with 
this suggestion since EQIP is entirely a voluntary program. Program 
participants voluntarily request program assistance to implement 
conservation practices according to a conservation plan and schedule 
that the producer develops. CCC believes that Sec. 1466.25 of the 
proposed rule provides sufficient flexibility to enable a participant 
who is found to be in violation of a contract to again comply with the 
contract and to achieve the expected environmental benefits. No change 
was made in the final rule concerning this comment.
    Several comments concern specific, hypothetical examples of 
potential violations of contracts. One comment asks if soil, water or 
other natural resources are not protected in a cost-effective manner, 
will the participant be subject to breach of contract. Another example 
relates to a participant who appeals a determination that the goals and 
objectives were not achieved, will payments be withheld pending a 
review of the appeal. All applicants are required to submit a 
conservation plan that is acceptable to NRCS and approved by the 
conservation district. NRCS will likely find the plan unacceptable if 
it is not cost-effective or does not achieve the goal and objectives. 
Therefore, the applicant will need to revise the plan to make it 
acceptable. Once a plan is acceptable and a participant has a contract, 
the participant will be in compliance with the contract as long as the 
conservation practices are being established, operated, and maintained 
in accordance with the contract. No change was made in the final rule 
concerning these comments.
    One comment states the penalties and/or repayment obligations for a 
participant who is in violation of a contract should be included in the 
rule. Another comment states violators of compliance ``must'' be 
penalized, not ``may'' be as the proposed rule states, otherwise EQIP 
will lose its credibility and effectiveness. A third comment states the 
penalties for noncompliance should be proportional to the degree of 
violation. CCC believes the proposed

[[Page 28284]]

rule language in paragraphs 1466.25(b) (1) and (2) satisfactorily 
provides for the assessment of repayment obligations and liquidated 
damages, and provides for flexibility in determining the amount of 
repayment or liquidated damages, considering the degree of the 
violation. No change was made in the final rule concerning these 
comments.
    Four comments concern good faith and hardship considerations. One 
comment states no penalty should be assessed for conservation practices 
already completed in a contract if a good faith effort can be 
determined. Two other comments express an opposite point of view and 
request the good faith and hardship clause should be eliminated. These 
commenters suggest if an applicant is unable to carry out a 
conservation plan, that should be determined before a contract is 
commenced and participation in EQIP should be denied. One comment 
states that hardship criteria should be provided in this section. USDA 
has knowledge and experience from administering other conservation 
programs that there are many factors which can alter a participant's 
ability to implement a long-term contract that are not known at the 
time of application. Factors such as natural disasters, economic 
hardship, or a producer's ill-health, all of which may be beyond the 
participant's control, may necessitate the need to determine good faith 
efforts in order to make appropriate contract adjustments. The criteria 
for determining hardship and its applicability will be provided in the 
program guidance documents. Paragraph 1466.25(b)(3) provides sufficient 
latitude in regard to determining good faith effort for all contract 
decisions. No change was made in the final rule concerning these 
comments.
    One comment states there should be an ``escape clause'' for a 
participant to withdraw from a contract for reasons beyond their 
control. CCC feels that the language in paragraph 1466.25(b)(4) of the 
proposed rule is adequate to enable a participant to voluntarily 
terminate a contract if CCC agrees. No change was made in the final 
rule concerning this comment.

Section 1466.32  Access to Operating Unit

    A commenter asks if NRCS will need access to the farm to obtain the 
necessary resources inventory information or will the property owner be 
permitted to bring that information to the NRCS office. The commenter 
has the impression NRCS will collect data for the whole farm and is 
opposed to this approach. The final rule provides that a participant 
shall develop and submit a conservation plan for the farm or ranch unit 
of concern. An inventory of natural resource conditions is a component 
of the conservation plan. The participant may use technical assistance 
from NRCS or other government or private agribusiness sector qualified 
professionals to develop the conservation plan. If NRCS provides the 
technical assistance, it will inventory the natural resources only to 
the extent it is needed to determine the natural resource concerns and 
their causes for the farm or ranch unit of concern. If the producer 
requests a whole farm or ranch assessment, NRCS will collect the 
resource inventory information for the entire farm or ranch. NRCS may 
need to have access to the farm or ranch to determine the acceptability 
of the conservation plan submitted by a participant. The final rule 
clarifies in paragraph 1466.21(b)(3)(iv) that, in addition to access, 
the producer is required to supply information needed to determine 
compliance with the program.
    One comment asks who will be considered an authorized CCC 
representative for the purposes of having access to an operating unit 
or tract. NRCS, FSA, and the FSA county committee will serve as the 
authorized representatives of CCC at the local level for the purposes 
of this section. No change was made in the final rule concerning this 
comment.
    Two comments concern the notification of the participant prior to 
gaining access to a farm or ranch. One comment states there is no 
reason for an inspection without the participant first being notified, 
therefore the language ``make a reasonable effort'' should be removed. 
Another comment suggests new language for this section, stating ``a 
participant must be notified 30 days prior to inspection is mandatory 
by CCC.'' CCC believes there are numerous cases where a participant may 
be absent from the property for a lengthy period of time, or the 
participant is an absentee landowner or tenant who may not be easily 
contacted. In order to conduct its business in a timely manner in these 
cases, USDA believes that CCC should make a reasonable effort to 
contact the participant prior to accessing the property to enable the 
participant to attend at the same time. The program guidance documents 
will stipulate that the CCC representatives must document in the 
participant's file the efforts made to notify the participant before 
accessing the operating unit. It will be suggested in the guidance that 
the CCC representative begin efforts to contact the participant no 
later than 15 days before making the planned visit. No change was made 
in the final rule concerning these comments.

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--General Administration

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.
1466.34  Offsets and assignments.
1466.35  Misrepresentation and scheme or device.

    Authority: 15 U.S.C. 714b and 714c; 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, and to encourage 
environmental enhancements, on their lands in an environmentally 
beneficial and cost-effective manner. The purposes of the program are 
achieved through the implementation of structural, vegetative,

[[Page 28285]]

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 or 
State agencies, Indian tribes, 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 cropland, rangeland, pasture, forest land, 
and other land on which crops or livestock are produced.
    Animal unit means 1,000 pounds of live weight of any given 
livestock species or any combination of livestock species.
    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, 
Indian 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. A CMS 
may treat one or all of the natural resources to the sustainable level, 
or to a greater or lesser extent than the sustainable level.
    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.
    Cost-share payment means the monetary or financial assistance from 
CCC to the participant to share the cost of installing a structural or 
vegetative practice.
    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.
    Incentive payment means the monetary or financial assistance from 
CCC to the participant in an amount and at a rate determined 
appropriate to encourage the participant to perform a land management 
practice that would not otherwise be initiated without program 
assistance.
    Indian tribe means any Indian tribe, band, nation, or other 
organized group or community, including any Alaska Native village or 
regional or village corporation as defined in or established pursuant 
to the Alaska Native Claims Settlement Act (43 U.S.C. 1601 et seq.) 
which is recognized as eligible for the special programs and services 
provided by the United States to Indians because of their status as 
Indians.
    Indian trust lands means real property in which:
    (1) The United States holds title as trustee for a Indian or tribal 
beneficiary, or
    (2) A Indian or tribal beneficiary holds title and the United 
States maintains a trust relationship.
    Land management practice means conservation practices that 
primarily require site-specific management techniques and methods to 
conserve,

[[Page 28286]]

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 water 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.
    Liquidated damages means a sum of money stipulated in the contract 
which the participant agrees to pay if the participant breaches the 
contract. The sum represents an estimate of the anticipated or actual 
harm caused by the breach, and reflects the difficulties of proof of 
loss and the inconvenience or nonfeasibility of otherwise obtaining an 
adequate remedy.
    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 and Resource Conservation and Development 
councils, 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, agricultural input retail dealers, 
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.
    Related natural resources means those natural resources that are 
associated with soil and water, including air, plants, and animals, and 
the land or water on which they may occur, including grazing land, 
wetland, forest land, and wildlife habitat.
    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.
    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, tree planting, 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

[[Page 28287]]

Chief determines that there is sufficient assurance of control;
    (ii) If the applicant is a tenant of the land involved in 
agricultural production the applicant shall provide CCC with the 
written concurrence of the landowner in order to apply a structural or 
vegetative practice.
    (3) Submit a conservation plan that is acceptable to NRCS, is 
approved by the conservation district, and is in compliance with the 
terms and conditions of the program;
    (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; and
    (5) Supply information as required by CCC to determine eligibility 
for the program.
    (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. Additionally, land may only be considered for 
enrollment in EQIP if NRCS determines that the land is:
    (1) Privately owned land;
    (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) Conservation practices will contribute to an improvement in 
the identified natural resource concern; and
    (iii) The participant has provided CCC with written authorization 
from the government landowner to apply the conservation practices; or
    (3) Tribal, allotted, or Indian trust land.
    (e) Fifty percent of available EQIP funds will be targeted to 
livestock-related natural resource concerns, including concerns on 
grazing lands and other lands directly attributable to livestock, 
measured at the national level.


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

    (a)(1) Consistent with maximizing the overall environmental 
benefits per dollar expended by the program, NRCS may:
    (i) 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 and give special 
consideration to applicants who have conservation plans that address 
the natural resource concern(s) for which the priority area was 
designated;
    (ii) Designate national conservation priority areas where the 
nature or scope of a natural resource concern necessitates greater 
coordination of efforts across boundaries; and
    (iii) Identify significant statewide natural resource concerns 
outside a priority area.
    (2) In addition to other factors identified in this section, 
priority areas, national conservation priority areas, and significant 
statewide natural resource concerns shall emphasize off-site benefits 
to the environment and coordination with other Federal and non-Federal 
conservation programs, including the Conservation Reserve Program and 
the Wetlands Reserve Program.
    (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, Indian tribe, or a private group or 
entity shall work cooperatively with a respective local work group and 
State technical committee in identifying potential priority areas. The 
local work group shall obtain input from private individuals, groups, 
and organizations when considering and identifying potential priority 
areas. Proposals developed at the local level shall be reviewed by the 
State technical committee which makes a recommendation to the NRCS 
State conservationist. The priority area proposal shall include:
    (1) A description, quantified when and where possible, of the 
nature and extent of natural resource concerns in the proposed area;
    (2) A description, quantified when and where 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 human resources, incentive programs, education 
programs, and on-farm research programs available at the Federal, 
State, Indian tribe, 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 and means to measure performance and success, quantified 
when and where possible, and plans to use existing or obtain additional 
science-based information; and
    (7) An explanation, quantified when and where possible, of the 
degree of difficulty producers face in complying with environmental 
laws.
    (d) The NRCS State conservationist, in consultation with the State 
technical committee and based on recommendations of local work groups, 
will approve the designation of a priority areas and make funding 
recommendations to the Chief. NRCS will evaluate proposals for priority 
area designations according to natural resource and environmental 
factors as identified in paragraph (d)(1) of this section, the economic 
significance of the factors, the incorporation of conservation 
practices that best address the factors, and the ability to obtain 
multiple conservation benefits relative to the significance of these 
natural resource factors.
    (1) NRCS shall consider the following factors in determining the 
significance of the natural resource concern(s) identified in the 
proposal:
    (i) Soil types and characteristics;
    (ii) Terrain and topographic features;
    (iii) Climatic conditions;
    (iv) Flood hazards;
    (v) Saline characteristics of land or water;
    (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 and source of drinking water supply;
    (ix) Wildlife and wildlife habitat quality and quantity;
    (x) Quality of the air; or
    (xi) Other natural hazards or other factors, including the existing 
agricultural management practices of the producers in the area or pest 
problems which may threaten natural resources.

[[Page 28288]]

    (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 coordination with and support from existing Federal, 
State, tribal, and local programs, including private sources, and both 
direct and in-kind contributions;
    (vii) Ways the program can best assist producers in complying with 
Federal, State, and tribal environmental laws, quantified where 
possible; and
    (viii) Other factors the NRCS determines will result in 
maximization of environmental benefits per dollar expended.
    (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 receive nominations from Federal, State, or local government 
agencies, Indian tribes, or private groups or entities, and 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, tribal or local environmental laws, or to meet other 
conservation needs.
    (2) NRCS will consider the following factors in deciding whether to 
designate a national conservation priority area in which program 
assistance will be provided:
    (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 coordination with and support from existing State and 
local programs, including private sources, and both direct and in-kind 
contributions;
    (vii) Ways the program can best assist producers in complying with 
Federal, State, and tribal environmental laws, quantified where 
possible; and
    (viii) Other factors that will assist CCC in maximizing the overall 
environmental benefit per dollar expended under this part.
    (g) NRCS will establish program outreach activities at the 
national, State, and local levels in order to ensure that producers 
whose land has environmental problems and natural resource concerns are 
aware, informed, and know that they may be eligible to apply for 
program assistance. Special outreach will be made to eligible producers 
with historically low participation rates, including but not restricted 
to limited resource producers, small-scale producers, Indian tribes, 
Alaska natives, and Pacific Islanders.
    (h) NRCS State conservationists shall develop an education plan 
that describes the educational assistance that will be provided to 
enhance program participant's knowledge about conservation 
opportunities, will aid in implementing their conservation plan, and 
enhance environmental benefits that will be realized through 
implementation of the program. In the development of the education 
plan, NRCS will design a coordinated approach, including national, 
State, and local components depending on the similar or unique 
education needs identified. NRCS will encourage cooperation among 
education providers, such as the Extension system, conservation 
districts, State agencies, and other public and private education 
providers, as well as the use of existing educational resources, 
material, or programs that deal with natural resource related issues.
    (i) 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.
    (1) After review of funding requests, the Chief may base funding 
decisions on an allocation process which considers:
    (i) The significance of the environmental and natural resources 
conditions;
    (ii) Factors used and considered in accordance with paragraphs (d) 
and (f) of this section;
    (iii) The need to maximize environmental benefits per dollar 
expended;
    (iv) The capability of the partners involved in the proposal to 
provide flexible technical, educational, and financial assistance;
    (v) The conservation needs of farmers and ranchers in complying 
with the highly erodible land and wetland conservation provisions of 
part 12 of this title and Federal, State, and tribal environmental 
laws;
    (vi) The opportunity for encouraging environmental enhancement;
    (vii) The anticipated or proven performance of the partners 
involved in the proposal in delivering the program; and
    (viii) Other relevant information to meet the purposes of the 
program as found in this part.
    (2) In evaluating the considerations described in paragraph (i)(1) 
of this section, the Chief may consult other Federal agencies with the 
appropriate expertise and information.
    (3) The approval of a priority area at the State level does not 
necessarily mean that funds will be allocated to that area. Funding may 
be allocated to a priority area for one or more years. 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 farm or ranch unit of concern that, when implemented, protects 
the soil, water, or related natural resources in a manner that meets 
the purpose of the program, 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

[[Page 28289]]

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, Indian 
tribes, or private agribusiness sector or organizations, in performing 
its responsibilities for technical assistance. Participants may use the 
services of qualified non-NRCS 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 
farm or ranch 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 the participant's specific conservation and 
environmental objectives to be achieved;
    (4) To the extent practicable, the quantitative or qualitative 
goals for achieving the participant's 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 
possible, any or all other Federal, State, tribal, or local government 
program or regulatory 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. It is the responsibility of the 
participant to ascertain and comply with any and all applicable program 
or regulatory requirements, and the NRCS development or approval of a 
conservation plan shall not be deemed to constitute compliance with 
program or regulatory requirements administered or enforced by another 
agency.


Sec. 1466.7  Conservation practices.

    (a)(1) The NRCS, with FSA consultation, shall provide guidance for 
determining structural, vegetative, and land management practices 
eligible for program payments. To be considered as an eligible 
conservation 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 
conservation practices eligible for program payments 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 cannot 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. Except as provided by paragraph (b)(2) of 
this section, CCC will consider a producer with confined livestock 
operations of more than 1,000 animal unit equivalents to be a large 
confined livestock operation and ineligible for financial assistance 
for construction of an animal waste management facility. When 
determining the number of livestock in the participant's operation for 
eligibility purposes, the total number of animals confined at all 
locations of the participant's livestock operation will be used.
    (2) The NRCS State conservationist may develop a definition for a 
large confined livestock operation as it applies to that particular 
State using criteria recommended by the State technical committee. The 
criteria will consider but not be limited to such factors as:
    (i) The cost-effectiveness of the facility and its potential to 
maximize environmental benefits per dollar expended;
    (ii) The ability of the producer to pay for the cost of animal 
waste management facilities;
    (iii) The significance of the natural resource concern resulting 
from the operation;
    (iv) The prevailing State, Tribe, or local implementation of 
various Federal, Tribal, and State environmental laws and regulations, 
including regulations promulgated pursuant to the Clean Water Act (33 
U.S.C. 1251 et seq.) and guidance developed under Sec. 6217 of the 
Coastal Zone Act Reauthorization Amendments of 1990 (16 U.S.C. 1455b);
    (v) The particular characteristics of modern livestock operations; 
and
    (vi) The size of the operation in relation to other confined 
livestock operations in the State or region.
    (3) The NRCS State conservationist, in consultation with the State 
technical committee, shall place emphasis on the considerations 
contained in paragraphs (b)(2)(i) and (b)(2)(ii) of this section when 
developing the criteria to define a large confined livestock operation.
    (4) The definitions developed by NRCS State conservationists must 
be approved by the Chief, who will also provide oversight on their

[[Page 28290]]

implementation. In approving the definitions the Chief will consider:
    (i) The justification for the definition; and
    (ii) The need for consistency in the definitions used between and 
among States, to the greatest extent possible.
    (5) The Chief will report semiannually to the Secretary during the 
first two years of the program on the implementation of paragraph (b) 
of this section, including the impact that may have occurred to the 
environment and to the structure of livestock agriculture.


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, or Indian tribes, 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, Indian tribes, 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 
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, tribal, 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, with NRCS 
concurrence, shall use the NRCS ranking consistent with the provisions 
of Sec. 1466.20 and grant final approval of a contract.
    (b) An EQIP contract shall:
    (1) Incorporate by reference 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) Incorporate all provisions as required by law or statute, 
including participant requirements to:
    (i) Not conduct any practices on the farm or ranch unit of concern 
that would tend to defeat the purposes of the contract;
    (ii) Refund any program payments received with interest, and 
forfeit any future payments under the program, on the violation of a 
term or condition of the contract, consistent with the provisions of 
Sec. 1466.25;
    (iii) Refund all program payments received on the transfer of the 
right and interest of the producer in land subject to the contract, 
unless the transferee of the right and interest agrees to assume all 
obligations of the contract, consistent with the provisions of 
Sec. 1466.24; and
    (iv) Supply information as required by CCC to determine compliance 
with the contract and requirements of the program.
    (4) Specify the participant's requirements for operation and 
maintenance of the applied conservation practices consistent with the 
provisions of Sec. 1466.22; and
    (5) 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.
    (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

[[Page 28291]]

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. NRCS may periodically inspect the 
conservation practice during the life span of the practice as specified 
in the contract to ensure that operation and maintenance is occurring.


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. The direct Federal share of cost-
share payments to a participant shall be reduced proportionately below 
75 percent, or the cost-share limit as set in paragraph (a)(3) of this 
section, to the extent that total financial contributions for a 
structural or vegetative practice from all public and private entity 
sources exceed 100 percent of the projected cost of the practice.
    (2) CCC shall provide incentive payments to participants for a land 
management practice 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 and State technical committee, 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.
    (4) Cost-share payments and incentive payments may both be included 
in a contract.
    (5) Cost-share and incentive payments will not be made to a 
participant who has applied or initiated the application of a 
conservation practice prior to approval of the contract.
    (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) To determine eligibility for payments, 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. A decision to approve payments in 
excess of the annual limit will consider whether:
    (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 or 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, Indian trust 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 in writing that no one person directly or indirectly will 
receive more than the limitation.
    (4) Any cooperative association of producers that markets 
commodities 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.
    (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 must be determined by 
CCC to be eligible and 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 a participant to refund all or a portion of any 
assistance earned under EQIP if the participant sells or loses control 
of the land under an EQIP contract and the new owner or controller is 
not eligible to participate in the program or refuses to assume 
responsibility under the contract.


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 documents incorporated by reference into the 
contract, 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) Notwithstanding the provisions of paragraph (a)(1) of this 
section, a

[[Page 28292]]

contract termination shall be effective immediately upon a 
determination by the FSA county committee, in consultation with NRCS, 
that the participant has submitted false information or filed a false 
claim, or engaged in any act for which a finding of ineligibility for 
payments is permitted under the provisions of Sec. 1466.35, or in a 
case in which the actions of the party involved are deemed to be 
sufficiently purposeful or negligent to warrant a termination without 
delay.
    (b)(1) If CCC 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, plus interest determined in 
accordance with part 1403 of this chapter. 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 reduce 
the amount of money owed by the participant by a proportion which 
reflects the good faith effort of the participant to comply with the 
contract, or the hardships beyond the participant's control that have 
prevented compliance with the contract.
    (4) The participant may voluntarily terminate a contract if CCC 
agrees based on CCC's determination that termination is in the public 
interest.
    (5) In carrying out its role in this section, NRCS may consult with 
the local conservation district.

Subpart C--General Administration


Sec. 1466.30  Appeals.

    (a) A participant may obtain administrative review of an adverse 
decision under EQIP in accordance with parts 11 and 614 of this title, 
except as provided in paragraph (b) of this section.
    (b) 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 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 FSA 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.


Sec. 1466.34  Offsets and assignments.

    (a) Except as provided in paragraph (b) of this section, any 
payment or portion thereof to any person shall be made without regard 
to questions of title under State law and without regard to any claim 
or lien against the crop, or proceeds thereof, in favor of the owner or 
any other creditor except agencies of the U.S. Government. The 
regulations governing offsets and withholdings found at part 1403 of 
this chapter shall be applicable to contract payments.
    (b) Any producer entitled to any payment may assign any payments in 
accordance with regulations governing assignment of payment found at 
part 1404 of this chapter.


Sec. 1466.35  Misrepresentation and scheme or device.

    (a) A producer who is determined to have erroneously represented 
any fact affecting a program determination made in accordance with this 
part shall not be entitled to contract payments and must refund to CCC 
all payments, plus interest determined in accordance with part 1403 of 
this chapter.
    (b) A producer who is determined to have knowingly:
    (1) Adopted any scheme or device that tends to defeat the purpose 
of the program;
    (2) Made any fraudulent representation; or
    (3) Misrepresented any fact affecting a program determination, 
shall refund to CCC all payments, plus interest determined in 
accordance with part 1403 of this chapter, received by such producer 
with respect to all contracts. The producer's interest in all contracts 
shall be terminated.
Paul W. Johnson,
Vice President, Commodity Credit Corporation.
[FR Doc. 97-13534 Filed 5-20-97; 11:39 am]
BILLING CODE 3410-16-P