[Federal Register Volume 70, Number 7 (Tuesday, January 11, 2005)]
[Rules and Regulations]
[Pages 1789-1792]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-511]



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  Federal Register / Vol. 70, No. 7 / Tuesday, January 11, 2005 / Rules 
and Regulations  

[[Page 1789]]



DEPARTMENT OF AGRICULTURE

Commodity Credit Corporation

7 CFR Part 1466


Environmental Quality Incentives Program; Conservation Innovation 
Grants

AGENCY: Natural Resources Conservation Service, Commodity Credit 
Corporation, U.S. Department of Agriculture (USDA).

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: In this document, the Natural Resources Conservation Service 
(NRCS) affirms, with changes, the provisions of an interim final rule 
that added provisions regarding Conservation Innovation Grants (CIG) to 
the Environmental Quality Incentives Program (EQIP). The regulations 
implement statutory provisions designed to provide competitive grants 
to eligible Indian Tribes; State or local units of government; non-
governmental organizations; and individuals. The purpose of CIG is to 
stimulate the development and adoption of innovative conservation 
approaches and technologies while leveraging the Federal investment in 
environmental enhancement and protection, in conjunction with 
agricultural production.

DATES: Effective date: January 11, 2005.

FOR FURTHER INFORMATION CONTACT: Kari Cohen, Natural Resources 
Conservation Service, 14th and Independence Avenue SW., Room 5239-S, 
Washington, DC 20250. Phone: (202) 720-2335; facsimile: (202) 720-4265. 
Send e-mail to: [email protected]. Persons with disabilities who 
require alternative means for communication (Braille, large print, 
audio tape, etc.) should contact the USDA TARGET Center at (202) 720-
2600.

SUPPLEMENTARY INFORMATION: In this document, the Natural Resources 
Conservation Service (NRCS) affirms, with changes, the provisions of an 
interim final rule that was published in the Federal Register on March 
29, 2004 (69 FR 16392). The interim final rule added provisions 
regarding Conservation Innovation Grants (CIG) to the regulations for 
the administration of the Environmental Quality Incentives Program 
(EQIP). The added regulations implement statutory provisions designed 
to provide competitive grants to eligible Indian Tribes; State or local 
units of government; non-governmental organizations; and individuals to 
stimulate the development and adoption of innovative conservation 
approaches and technologies while leveraging the Federal investment in 
environmental enhancement and protection, in conjunction with 
agricultural production.
    The interim final rule provided a 60-day public comment period that 
closed on May 28, 2004. NRCS received seven submissions that raised 
issues discussed below. Based on the rationale set forth in the interim 
final rule and this document, NRCS adopts as a final rule the 
provisions of the interim final rule that appeared in the Federal 
Register on March 29, 2004, except the NRCS makes a few modifications 
to those provisions and describes those changes below. You may access 
this final rule via the Internet through the NRCS home page at http://www.nrcs.usda.gov. Select ``Farm Bill.''

CIG Program

    Of the nearly 1.4 billion acres of private land in the United 
States, 931 million acres, or roughly 70 percent, are in agricultural 
use. The activities on these lands have a direct effect on soil, water, 
air, plant, and animal resources, as well as the social, cultural, and 
economic condition of U.S. communities, towns, and counties. Regional 
and local differences in farm structure, farm practices, and farm 
products make delivering innovative agricultural conservation technical 
assistance a challenge. National agricultural research and development 
may not always have the capacity to develop, test, and transfer new or 
innovative conservation technologies and approaches rapidly or 
effectively to account for regional variances in the agricultural 
industry. Consequently, there is a need to develop, test, implement, 
and transfer innovative farm and ranch conservation technologies and 
approaches for adoption in the largest applicable market.
    To address this need, Section 1240H of the Food Security Act of 
1985, 16 U.S.C. 3839aa-8, was added by section 2301 of the Farm 
Security and Rural Investment Act of 2002 (Pub. L. 107-171), and 
established CIG as part of EQIP. Through CIG, the Secretary of 
Agriculture may pay the costs of competitive grants to carry out 
projects that stimulate innovative approaches to leveraging the Federal 
investment in environmental enhancement and protection in conjunction 
with agricultural production.
    The Secretary of Agriculture delegated the authority for the 
administration of EQIP, including CIG, to the Chief of NRCS, who is a 
vice president of the Commodity Credit Corporation (CCC). EQIP is 
administered using the funds, facilities, and authorities of the CCC.
    CIG is administered using a two-tiered approach. Grants may be 
awarded through both National and State-level competitions. Funding 
availability for the CIG National component will be announced in the 
Federal Register through a Request for Proposals (RFP). In addition, 
the Chief may provide each NRCS State Conservationist with the 
discretion to implement a separate State-level component of CIG.
    The Chief will determine the funding level for the National 
component on an annual basis. CIG funds for the National component will 
be designated from the National EQIP allocation. Funding availability 
for State-level competitions will be announced through public notices, 
separately from the National program. Applications will be solicited 
from eligible governmental and non-governmental organizations and 
individuals for single or multi-year projects.

Comments

Project Eligibility

    The provisions of Sec.  1466.27(b)(4) state that ``Technologies and 
approaches that are eligible for funding in the project's geographic 
area through EQIP are not eligible for CIG funding.'' Commenters 
expressed concern that this sentence would be broadly interpreted to 
exclude

[[Page 1790]]

innovation associated with established technologies and approaches. 
This was not intended. Therefore, NRCS changed paragraph (b)(4) to 
clarify that the quoted provisions do not prohibit funding of 
technologies and approaches that are similar to established 
technologies and approaches as long as the project includes significant 
innovative differences.
    With respect to project eligibility, the interim final rule stated 
that all agricultural producers participating in a CIG project must 
meet the basic eligibility requirements for EQIP. This was not intended 
to impose the eligibility requirements on individuals or entities not 
receiving direct or indirect payments, such as an organization locating 
an innovative technology on a producer's property without providing a 
payment. Accordingly, we clarified the regulations to state that all 
agricultural producers receiving a direct or indirect payment through 
participation in a CIG project must meet the eligibility requirements.
    One commenter urged NRCS to ensure that CIG-funded projects would 
include a broad spectrum of agricultural operations, large and small, 
crop and livestock, etc. One commenter expressed concern that the 
language in the interim final rule favored grant applications from 
individuals over applications from non-profit organizations and units 
of government. NRCS made no changes based on these comments. Consistent 
with the statutory authority at 16 U.S.C. 3844, the CIG rule contains 
special provisions for limited resource farmers or ranchers that would 
constitute a small portion of CIG grant awards. Otherwise, the National 
and State-level competitions under CIG are designed to minimize any 
bias in favor of a class of applicants.
    One commenter urged NRCS to set aside CIG funds for Latina women 
farmers and ranchers. NRCS made no changes based on this comment. NRCS 
has no authority to make awards based on gender or race.

Identification of Natural Resource Concerns

    Under the provisions of Sec.  1466.27(d), CIG applications must 
address natural resource conservation concerns that are identified by 
the Chief of NRCS and published in the RFP. Also, under the provisions 
of Sec.  1466.27(d), the natural resource concerns may change each 
year. The RFP for FY 2004 identified five resource concerns with more 
specific subtopics. One commenter asserted that this listing of natural 
resource concerns is too broad, and that only two or three natural 
resource priorities should be identified each year. Additionally, a 
number of commenters made suggestions as to what natural resource 
concerns should be identified in the RFP. NRCS made no changes based on 
these comments. As explained in the preamble to the interim final rule, 
NRCS has designed a protocol for soliciting input on which natural 
resource concerns should be identified in an RFP. NRCS will consider 
the suggestions of commenters when compiling the natural resource 
concerns to be listed in the next RFP. The number and scope of the 
natural resource concerns will be based on the funding available to 
meet the needs identified by interested stakeholders.

Funding

    For CIG, NRCS established two types of grants for funding projects, 
one awarded at the National level and one awarded at the State level. 
For FY 2004, the Chief established a maximum funding limit of $1 
million per project for the National competition. Also, under Sec.  
1466.27(h)(3), the maximum funding limit per project awarded at the 
State-level competition may not exceed $75,000.
    The provisions of Sec.  1466.27(c) state that the Chief of NRCS (or 
his or her designee) will determine the funding level for the National 
component of CIG on an annual basis from the total funding available 
for EQIP. One commenter recommended that these provisions be changed to 
provide that National CIG funding be a set percentage of EQIP, such 
as10 percent. One commenter recommended that NRCS State 
Conservationists be allowed to designate up to 10 percent of their EQIP 
allocation for the State component of CIG. Another commenter 
recommended that the funding for CIG be a minimum of $50 million 
annually. NRCS made no changes based on these comments. As stated in 
the preamble to the interim final rule, provisions regarding the 
funding level for CIG provide the decision maker ``with maximum 
flexibility to adjust to changing levels of available funds and program 
conditions'' (69 FR 16394).
    With respect to the National competition, one commenter asserted 
that the $1 million project cap was adequate and another commenter 
asserted the $1 million project cap would be insufficient for large 
trading programs. NRCS made no changes based on these comments. Funding 
limits for the National competition will be announced in each RFP based 
on overall EQIP funding.
    With respect to the State-level competition, one commenter 
recommended that NRCS raise the cap from $75,000 to $450,000. NRCS made 
no changes based on this comment. The State-level competition was 
designed to target CIG funds to individual producers and smaller 
organizations that would have difficulty generating the 50 percent 
required match for large awards. NRCS also believes that there should 
be some distinction between the National and State competitions. 
Proposals larger in scope and funding should be submitted to the 
National competition. Smaller proposals should be submitted at the 
State level.
    One commenter suggested that instead of utilizing all available CIG 
funds on natural resource concerns identified in the RFP, NRCS should 
reserve a portion of the funds for exceptional applications that 
address natural resource concerns not identified in the RFP. NRCS made 
no changes based on this comment. The adoption of this suggestion would 
place undue emphasis on funding approaches or technologies that would 
not address the most critical natural resource concerns.

Ranking

    The interim final rule provides for applications to be evaluated 
and ranked by a peer review panel. The interim final rule then provides 
for the proposal rankings to be forwarded to the Grant Review Board to 
make funding recommendations to the Chief. The interim final rule 
further provides that the peer review panel will consist of Federal and 
non-Federal technical advisers who posses specified qualifications and 
that the Grant Review Board will consist of five NRCS officials. One 
commenter recommended that NRCS expand the Grant Review Board to 
include at least two members outside of government agencies. NRCS made 
no changes based on this comment. NRCS has been delegated authority to 
administer the CIG program and believes that the members of the Grant 
Review Board have sufficient expertise to make funding recommendations 
to the Chief.
    One respondent recommended that NRCS provide greater weight to 
projects that address multiple natural resource concerns. NRCS made no 
changes based on this comment. Grants for CIG should be awarded based 
on the quality of the proposal and not on the number of natural 
resources concerns addressed.

Evaluating Performance

    One commenter asserted that for grants exceeding $250,000, the 
grantee should be required to establish a

[[Page 1791]]

monitoring plan with up to 5% or the total grant amount reserved for 
evaluating performance. The commenter also asserted that for grants of 
lower amounts, NRCS should provide simple on-line tools for evaluating 
performance. We made no changes based on these comments. The CIG 
program already has provisions for evaluating performance. As stated in 
the ``Notice of request for proposals,'' an application for CIG must 
``Describe the methodology or procedures to be followed to evaluate the 
project, determine the technical feasibility, and quantify the results 
of the project for the final report (69 FR 16403).'' The notice further 
states that ``Grant recipients will be required to provide a quarterly 
report of progress and a final project report to NRCS (69 FR 16403).'' 
These provisions do not require the grantee to set aside a specific 
percentage of the grant award, but do require the grantee to allocate 
sufficient resources to evaluate project results.

Effective Date

    This document makes non-substantive changes and makes changes that 
lessen restrictions. Accordingly, this document is made effective on 
publication in the Federal Register.

Executive Order 12866

    The CIG program was authorized as part of EQIP, with an unspecified 
annual funding level from FY2003 through FY2007. This rule has been 
reviewed under USDA procedures and Executive Order 12866 on Regulatory 
Planning and Review. The Office of Management and Budget (OMB) has 
determined that this interim final rule is not a significant rulemaking 
action. Therefore, completion of a benefit-cost assessment of potential 
impacts is not necessary. An economic evaluation was completed, 
however, because of the aid that such an evaluation provides to the 
rulemaking process. A copy of this document is available upon request 
from: Kari Cohen, Natural Resources Conservation Service, 14th and 
Independence Avenue SW., Room 5239-S, Washington, DC 20250. Phone: 
(202) 720-2335; facsimile: (202) 720-4265.

Regulatory Flexibility Act

    The Regulatory Flexibility Act is not applicable to this rule 
because NRCS 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 Evaluation

    Promulgation of this rule does not authorize any activities that 
will affect the human environment. This rule establishes the policies 
and procedures that will be used to award Conservation Innovation 
Grants. The grants awarded under this rule are for innovative projects; 
therefore, NRCS has a limited ability to predict the types of actions 
that may be carried out during a CIG project. Any attempt to analyze 
the effects of proposed actions would be speculative. Accordingly, 
neither an Environmental Assessment (EA) nor an Environmental Impact 
Statement (EIS) has been prepared at this time. Instead, the 
environmental effects of each CIG proposal will be evaluated on a case-
by-case. As a part of the evaluation, CIG applicants are required to 
submit an environmental profile as part of their application. These 
profiles will be used to determine whether an EA or EIS is needed for 
any given project, prior to the awarding of grant funds.

Paperwork Reduction Act

    Section 2702(b)(1)(A) of the 2002 Act provides that the 
promulgation of rules and the administration of title II of the Act 
shall be made without regard to chapter 35 of title 44 of the United 
States Code, the Paperwork Reduction Act. Accordingly, these rules and 
the forms, and other information collection activities needed to 
administer the program authorized by this rule, are not subject to 
provisions of the Paperwork Reduction Act, including review by the 
Office of Management and Budget.

Government Paperwork Elimination Act

    NRCS is committed to compliance with the Government Paperwork 
Elimination Act (GPEA) and with the Freedom to E-File Act, which 
require Government agencies in general, and NRCS in particular, to 
provide the public the option of submitting information or transacting 
business electronically to the maximum extent possible.

Executive Order 12998

    This rule has been reviewed in accordance with Executive Order 
12988, Civil Justice Reform. The provisions of this rule are not 
retroactive. The provisions of this rule preempt State and local laws 
to the extent that such laws are inconsistent with this rule. Before an 
action may be brought in a Federal court of competent jurisdiction, the 
administrative appeal rights afforded persons at 7 CFR parts 614, 780, 
and 11 must be exhausted.

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

    Pursuant to Section 304 of the Federal Crop Insurance Reform and 
Department of Agriculture Reorganization Act of 1994 (Pub. L. 104-354), 
NRCS did not classify this rule as major and, therefore, NRCS did not 
conduct a risk analysis. A risk analysis was completed on the EQIP 
program, establishing that EQIP will produce benefits and reduce risks 
to human health, human safety, and the environment in a cost-effective 
manner. A copy of the EQIP risk analysis is available on request from 
Harry Slawter, Environmental Improvement Programs Branch Chief, Natural 
Resources Conservation Service, 14th and Independence Avenue, SW., Room 
5239-S, Washington, DC 20250, and electronically at http://www.nrcs.usda.gov/programs/Env_Assess/EQIP/EQIP_RA_121002.pdf.

Unfunded Mandates Reform Act of 1995

    NRCS assessed the effects of this rulemaking action on local, 
State, and Tribal governments, and the public. This action does not 
compel the expenditure of $100 million or more by any local, State, or 
tribal governments, or anyone in the private sector; therefore, a 
statement under section 202 of the Unfunded Mandates Reform Act of 1995 
is not required.

List of Subjects in 7 CFR Part 1466

    Conservation, Grant Review Board, Grants, Innovation, Natural 
Resources, Peer Review Panel.

0
For the reasons stated in the preamble, the Commodity Credit 
Corporation adopts as final the interim rule published at 69 FR 16392 
on March 29, 2004, with the following changes:

PART 1466--ENVIRONMENTAL QUALITY INCENTIVES PROGRAM

0
1. The authority citation for part 1466 continues to read as follows:

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


0
2. In Sec.  1466.27, paragraphs (b)(4) and (e)(2) are revised to read 
as follows:


Sec.  1466.27  Conservation Innovation Grants (CIG).

* * * * *
    (b) * * *
    (4) Program focus. Applications for CIG should demonstrate the use 
of innovative approaches and technologies to leverage Federal 
investment in environmental enhancement and protection, in conjunction 
with agricultural production. CIG will fund

[[Page 1792]]

projects that promote innovative on-the-ground conservation, including 
pilot projects and field demonstrations of promising approaches or 
technologies. CIG projects are expected to lead to the transfer of 
conservation technologies, management systems, and innovative 
approaches (such as market-based systems) into NRCS technical manuals 
and guides, or to the private sector. Technologies and approaches 
eligible for funding in a project's geographic area through EQIP are 
not eligible for CIG funding except where the use of those technologies 
and approaches demonstrates clear innovation. The burden falls on the 
applicant to sufficiently describe the innovative features of the 
proposed technology or approach.
* * * * *
    (e) * * *
    (2) Project eligibility. To be eligible, projects must involve 
landowners who meet the eligibility requirements of Sec.  1466.8(b)(1) 
through (3) of this part. Further, all agricultural producers receiving 
a direct or indirect payment through participation in a CIG project 
must meet those eligibility requirements.
* * * * *

    Signed in Washington, DC, on January 3, 2005.
Bruce I. Knight,
Vice President, Commodity Credit Corporation, Chief, Natural Resources 
Conservation Service.
[FR Doc. 05-511 Filed 1-10-05; 8:45 am]
BILLING CODE 3410-16-P