[Federal Register Volume 74, Number 232 (Friday, December 4, 2009)]
[Rules and Regulations]
[Pages 63537-63541]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-29001]



Natural Resources Conservation Service

7 CFR Part 662

RIN 0578-AA44

Regional Equity

AGENCY:  Natural Resources Conservation Service, United States 
Department of Agriculture.

ACTION: Final rule.


SUMMARY: The Natural Resources Conservation Service (NRCS) is issuing a 
final rule on the procedures for implementing the Regional Equity 
provision of section 1241(d) of the Food Security Act of 1985, 16 
U.S.C. 3841(d). The Regional Equity provision ensures that each State 
receives a $15 million minimum annual aggregate level of conservation 
program funding. NRCS published an interim final rule for Regional 
Equity in the Federal Register on January 13, 2009, with request for 
public comment. This final rule responds to comments received on the 
January 13, 2009, interim final rule, and makes minor adjustments to 
the Regional Equity regulation at 7 CFR part 662 in response to these 

DATES:  Effective December 4, 2009.

FOR FURTHER INFORMATION CONTACT:  Geno Bulzomi, Acting Team Leader, 
Program Allocations and Management Support Team, Department of 
Agriculture, Natural Resources Conservation Service, 1400 Independence 
Avenue, SW., Room 5208 South Building, Washington, DC 20250; telephone 
(202) 690-0547; e-mail: [email protected], Attention: Regional Equity.
    Persons with disabilities who require alternative means for 
communication (Braille, large print, audiotape, etc.) should contact 
the USDA Target Center at (202) 720-2600 (voice and TDD).


Regulatory Certifications

Executive Order 12866

    The Office of Management and Budget (OMB) has determined that this 
rule is not significant and will not be reviewed by OMB under Executive 
Order 12866.

Regulatory Flexibility Act

    It has been determined that the Regulatory Flexibility Act is not 
applicable to this final rule because NRCS is not required by 5 U.S.C. 
553, or any other provision of law, to publish a notice of final 
rulemaking with respect to the subject matter of this rule.

Civil Rights Assessment

    NRCS has determined through a Civil Rights Impact Analysis that the 
issuance of this final rule discloses no disproportionately adverse 
impact for minorities, women, or persons with disabilities. The data 
presented indicates producers who are members of the historically 
underserved groups have participated in NRCS programs at parity with 
other producers. Extrapolating from historical participation data, it 
is reasonable to conclude that NRCS programs, including Regional 
Equity, will continue to be administered in a non-discriminatory 
manner. Outreach and communication strategies are in place to ensure 
all producers will be provided the same information to allow them to 
make informed compliance decisions regarding the use of their lands 
that will affect their participation in the Department of Agriculture 
(USDA) programs. Regional Equity funding applies to all persons equally 
regardless of their race, color, national origin, gender, sex, or 
disability status. Therefore, the Regional Equity rule portends no 
adverse civil rights implications. Copies of the Civil Rights Impact 
Analysis may be obtained from Geno Bulzomi, Acting Team Leader, Program 
Allocations and Management Support Team, Department of Agriculture, 
Natural Resources Conservation Service, 1400 Independence Avenue, SW., 
Room 5208 South Building, Washington, DC 20250.

Environmental Analysis

    The Regional Equity final rule establishes procedures for 
implementing this provision at part 662 of this title and will not 
directly impact the environment. This rule falls within the categories 
of activities that have been determined not to have a significant 
individual or cumulative effect on the human environment and are 
excluded from the preparation of an environmental assessment or 
environmental impact statement as set forth in the USDA National 
Environmental Policy Act regulations in 7 CFR part 1b.3. Regional 
Equity is an administrative function that relates to the funding of 
programs and fund disbursements. These activities are categorically 
excluded based upon 7 CFR 1b.3(a)(1) and 7 CFR 1b.3(a)(2) of USDA 

Paperwork Reduction Act

    Section 2904 of the Food, Conservation, and Energy Act of 2008 
(2008 Act) requires that implementation of programs authorized by Title 
II of the

[[Page 63538]]

2008 Act be made without regard to the Paperwork Reduction Act of 1995 
(44 U.S.C. 3501 et seq.). Therefore, NRCS is not reporting 
recordkeeping or estimated paperwork burden associated with this rule.

Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public 
Law 104-4, requires Federal agencies to assess the effects of their 
regulatory actions on State, local, and Tribal governments or the 
private sector of $100 million or more in any one year. When such a 
statement is needed for a rule, section 205 of UMRA requires NRCS to 
prepare a written statement, including a cost benefit assessment, for 
proposed and final rules with ``Federal mandates'' that may result in 
such expenditures for State, local, or Tribal governments, in the 
aggregate, or to the private sector. UMRA generally requires agencies 
to consider alternatives and adopt the more cost effective or least 
burdensome alternative that achieves the objectives of the rule.
    This rule contains no Federal mandates, as defined under Title II 
of UMRA, for State, local, and Tribal governments or the private 
sector. Thus, this rule is not subject to the requirements of sections 
202 and 205 of the UMRA.

Executive Order 12988

    This final rule has been reviewed in accordance with Executive 
Order 12988. The provisions of this rule are not retroactive. 
Furthermore, the provisions of this final rule preempt State and local 
laws to the extent such laws are inconsistent with the rule.

Executive Order 13132

    NRCS has considered this final rule in accordance with Executive 
Order 13132, issued August 4, 1999. NRCS has determined that the rule 
conforms to the Federalism principles set out in this Executive Order; 
would not impose any compliance costs on the States; and would not have 
substantial direct effects on the States, on the relationship between 
the Federal Government and the States, or on the distribution of power 
and responsibilities among the various levels of government. Therefore, 
NRCS concludes that this rule does not have Federalism implications.

Executive Order 13175

    This final rule has been reviewed in accordance with the 
requirements of Executive Order 13175, Consultation and Coordination 
with Indian Tribal governments. USDA has assessed the impact of this 
final rule on Indian Tribal governments and has concluded that this 
final rule will not negatively affect communities of Indian Tribal 
governments. The rule will neither impose substantial direct compliance 
costs on Tribal governments, nor preempt Tribal law.

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

    Pursuant to section 304 of the Department of Agriculture 
Reorganization Act of 1994, Public Law 104-354, USDA classified this 
final rule as ``not major.''


    NRCS is issuing a final rule on the Regional Equity provision, 
implementing section 1241(d) of the Food Security Act of 1985, as 
amended, (16 U.S.C. 3841(d)) that requires minimum annual levels of 
conservation program funding to each State. Section 2703 of the 2008 
Act amended the Regional Equity provision by: Increasing the minimum 
annual aggregate funding level from $12 million to $15 million; 
establishing new conservation programs that are subject to the Regional 
Equity provision (Agricultural Water Enhancement Program, Chesapeake 
Bay Watershed Initiative, Conservation Stewardship Program, and 
Voluntary Public Access and Habitat Incentive Program); and requiring 
consideration of the respective demand in each Regional Equity State.
    On January 13, 2009, NRCS published an interim final rule setting 
forth how it intended to implement the Regional Equity provision. Under 
the Regional Equity regulation at 7 CFR part 662, NRCS identifies the 
States that will not receive through the normal program allocation 
process a minimum aggregate level of funding of $15 million, known as 
``Regional Equity States,'' and also identifies programs that will 
contribute funds to meeting this threshold known as ``contribution 
programs.'' NRCS then establishes program-specific drawing accounts for 
each contribution program sufficient to bring all Regional Equity 
States to an allocation of $15 million. A Regional Equity State can 
request funds from the program-specific drawing accounts after the 
State has obligated at least 90 percent of its initial allocation for 
that program. The Chief, however, has the discretion to waive this 
requirement to meet the specific need of a particular program.
    This process enables NRCS to monitor the use of drawing account 
funds and ensure that funds are used in the most effective and timely 
manner. NRCS used a similar funding allocation procedure in fiscal year 
(FY) 2008, when some Regional Equity States were unable to use all of 
their Regional Equity funding. By holding Regional Equity funds in 
program-specific drawing accounts, NRCS reallocated these funds earlier 
in the fiscal year than the statutory April 1 deadline and identified 
States that could obligate the funds toward high-priority needs. NRCS 
believes this approach positions the agency to ensure that program 
funds are directed to the highest-ranked applications.
    Under the interim final rule, NRCS identified that it considers the 
respective demand in each Regional Equity State in each program by 
having State Conservationists in Regional Equity States cooperatively 
determine the funding opportunity for each State's program-specific 
drawing account. State Conservationists consult with their respective 
State Technical Committees in evaluating the demand in their State for 
funding from the drawing accounts. In evaluating the demand for 
Regional Equity funding opportunities, State Conservationists consider 
how applications address national program priorities, historic trends 
in program interest, and the State's priority natural resource 
concerns. This process enables additional funds to be allocated in a 
way that meets the natural resource conservation needs of each State's 
producers, meets the demand of each State's program needs, and ensures 
that States do not receive additional funding when there is 
insufficient demand.

Public Comments and Agency Response

    NRCS published the Regional Equity interim final rule on January 
13, 2009, and invited public comment on the rule as well as on any 
economic or environmental impacts that might result from implementation 
of the regulation. The deadline for comments was March 16, 2009. NRCS 
received 7 responses containing more than 20 comments.
    After consideration of those comments, as described herein, NRCS is 
issuing this final rule to establish consistency and certainty in 
implementation procedures for the Regional Equity provision.

The Allocation Process

    Comment. Although most respondents were supportive of the general 
approach and most of the specific implementation measures, one 
respondent objected to the process of giving initial threshold 
allocations based on a formula allocating shares across States. The 
respondent argued that time is lost by insisting on an initial 
allocation of funds to States that cannot

[[Page 63539]]

spend the full amount, and recommended that States able to use larger 
allocations should get access to the money well before the end of the 
fiscal year.
    Response. Regional Equity for all States is a statutory 
requirement. However, NRCS is taking measures, as detailed above, to 
ensure that funds are available in a timely manner to other States when 
a Regional Equity State does not use its available allocation. By 
establishing program-specific drawing accounts for each covered 
program, NRCS is able to monitor the use of drawing account funds, 
determine early whether a Regional Equity State is able to use all its 
Regional Equity funding, and reallocate funds in a timely manner to 
other States with high-priority needs.
    Comment. One respondent submitted two comments recommending that 
NRCS establish a single conservation drawing account rather than 
program-specific accounts, thus allowing each State Conservationist, 
with input from the State Technical Committee, to choose the mix of 
program funding for itself as well as to indicate early how much of a 
particular program allocation it would not use. The amount of program 
funding ``turned back'' would then be credited to the State's drawing 
    Response. Currently, NRCS receives a separate fund apportionment 
for each conservation program, which it tracks and reports separately. 
NRCS then allocates funding to the States for each program through a 
formula based upon natural resource and performance criteria. States 
work within the program-specific available funding. NRCS is working to 
simplify the apportionment process and allow for better management of 
the NRCS workforce.
    Comment. Two respondents expressed explicit support for the 
allocation formula process identified above, but requested that the 
formulas include a monitoring and evaluation component to determine how 
well State projects or programs were meeting State and national 
priorities, goals, and objectives.
    Response. This comment is not specific to the Regional Equity 
regulation, and thus no change is made in the Regional Equity final 
rule. The allocation formula is not a monitoring tool, but the formula 
includes performance factors including whether States are meeting 
national priorities.

Determination of Contribution Programs

    Comment. NRCS received two responses regarding the discretion given 
to the Chief in Sec.  662.2 of the interim final rule to determine 
which potential conservation programs will be considered ``contribution 
programs'' in any given year. The respondents recommended that the 
Chief's annual determination be made ``on the basis of the respective 
demand for each program in Regional Equity States.''
    Response. Since NRCS uses an allocation formula based upon natural 
resource and performance criteria, Regional Equity allocation 
determinations based solely on the demand for each program would 
disproportionately reduce access by non-Regional Equity States to 
funding they earn on the basis of the allocation formula. Regional 
Equity States have the opportunity to work with other Regional Equity 
States for the funding that best addresses their needs, thus increasing 
their flexibility in accessing funds. In exercising discretion with 
respect to determining the contribution programs, the Chief is limited 
by which programs have sufficient available funding in any given year 
and the fact that some programs are restricted by legislative intent 
(e.g., specific geographic area or specific resource concern). 
Moreover, not all Regional Equity programs are administered by NRCS. 
For example, the Voluntary Access and Habitat Incentive Program is 
administered by the Farm Service Agency.
    Comment. In determining ``respective demand,'' State 
Conservationists should rely on more than the three criteria detailed 
in the interim final rule: program applications and how they address 
national program priorities, historic trends in program interest, and 
State priority natural resource concerns (see Sec.  662.4(c)(2)(i)). In 
particular, the respondents identified additional criteria they believe 
should be added, including: (1) The need in each State to address gaps 
in participation in specific programs by Federally recognized Indian 
Tribes and socially disadvantaged and historically underserved 
producers; and (2) the degree to which a State has implemented 
initiatives and demonstrated results with respect to such populations. 
The respondents recommended that these criteria be applied both in the 
determination of respective demand and in the exercise of the Chief's 
discretion in Sec.  662.4(f) with respect to reallocation decisions.
    Response. Regional Equity funds must be obligated in the same 
manner as normal allocations, and thus all policy and statutory 
requirements for ensuring equal access for historically underserved 
producers (limited resource farmers and ranchers, beginning farmers and 
ranchers, and socially disadvantaged producers) remain in effect. There 
is no need for additional criteria for Regional Equity funds, and thus 
no change is made in this rule.

Obligation Threshold

    Comment. Two respondents proposed reducing the 90 percent 
obligation threshold in Sec.  662.4(e) of the interim final rule to 75 
percent and giving the Chief discretion to reduce further the 
obligation threshold. Under the interim final rule, once a Regional 
Equity State has obligated 90 percent of its original allocation, it 
may request access to its portion of the Regional Equity drawing 
account for that program. However, the funds are only available until 
April 1 of each fiscal year, after which they may be reallocated at the 
discretion of the Chief. The respondents argued that meeting this 90 
percent threshold by April 1 will be difficult for all programs in 
years when the congressional budget process runs late, and will be 
difficult for some programs in any year because of the particular 
requirements that some programs must meet before they can obligate 
    Response. The purpose of the high threshold requirement is for 
Regional Equity States to demonstrate their capacity to obligate their 
funding. However, NRCS agrees that for some programs, this may be a 
difficult level of obligation to attain in a timely manner because of a 
particular program's internal requirements. Therefore, NRCS amended the 
language in Sec.  662.4(e) of this final rule to give the Chief the 
ability to waive the threshold requirement with respect to specific 

April 1 Deadline

    Comment. The April 1 deadline elicited two kinds of comments: (1) A 
request that NRCS commit to reallocating funds in response to State 
requests within 60 days after April 1, and (2) a request for 
clarification that the Chief has discretion to extend the April 1 
deadline in order to provide States with access to the drawing account 
even after that date.
    Response. The Chief has the discretion to extend the April 1 
deadline, as indicated in the regulation in Sec.  662.4(e). The Chief 
may reallocate funds not obligated, but does not require such 
reallocation. NRCS recognizes that the Federal appropriations process 
can be unpredictable and may leave NRCS unable to provide initial 
allocations early in the fiscal year. Thus, NRCS cannot commit to a 
firm timeline for the reallocation of Regional Equity funding. The 
Chief has the discretion to extend

[[Page 63540]]

the April 1 date to accommodate such delays in the appropriation 
process or other circumstances that might make it difficult for States 
to meet the date. In FY 2009, the Chief extended the deadline to August 
15 when a continuing resolution left NRCS uncertain about what the 
funding levels would be for various programs. No further rule change is 

List of Subjects in 7 CFR Part 662

    Administrative practice and procedure, Agriculture, and Soil 

For the reasons stated in the preamble, NRCS revises part 662 in 
chapter VI of Title 7 of the CFR to read as follows:


662.1 General.
662.2 Definitions.
662.3 Applicability.
662.4 Regional Equity implementation procedure.

    Authority: 16 U.S.C. 3841(d).

Sec.  662.1  General.

    This part sets forth the procedures that NRCS will use to implement 
the Regional Equity provision of the Food Security Act of 1985, 16 
U.S.C. 3841(d).

Sec.  662.2  Definitions.

    The following definitions are applicable to this part:
    Chief means the Chief of NRCS or the person delegated authority to 
act on behalf of the Chief.
    Contribution programs means Regional Equity programs that 
contribute funding to Regional Equity States, as determined by the 
Chief each fiscal year, consistent with the limitations established in 
16 U.S.C. 3841(d).
    Drawing account means the aggregated amount of contribution program 
funds required to bring all States to the Regional Equity threshold.
    Funding opportunity means the amount of funding needed to bring a 
State to the $15,000,000 Regional Equity threshold for the aggregate of 
Regional Equity programs.
    Initial allocation means the amount of conservation program 
allocation funding provided to all States through a merit-based, 
natural resource focused process.
    Obligated means a specific binding agreement, in writing, for the 
purpose authorized by law and executed while the funding is available.
    Regional Equity programs mean conservation programs under Subtitle 
D (excluding the Conservation Reserve Program, Wetlands Reserve 
Program, and the Conservation Security Program) of the Food Security 
Act of 1985. These programs include: Conservation Stewardship Program, 
Farm and Ranch Lands Protection Program, Grassland Reserve Program, 
Environmental Quality Incentives Program, Conservation Innovation 
Grants, Agricultural Water Enhancement Program, Conservation of Private 
Grazing Land, Wildlife Habitat Incentive Program, Grassroots Source 
Water Protection Program, Great Lakes Basin Program, Chesapeake Bay 
Watershed Initiative, and the Voluntary Public Access and Habitat 
Incentive Program. Regional Equity programs will be aggregated to 
determine whether a State meets the $15,000,000 Regional Equity 
threshold. However, not all Regional Equity programs will be considered 
contribution programs.
    Regional Equity provision means the statutory requirement to give 
priority funding before April 1 for approved applications for specific 
programs within States that have not received a $15,000,000 aggregate 
level of funding.
    Regional Equity States means any State not meeting the Regional 
Equity threshold of $15,000,000 through the initial allocation for 
Regional Equity programs.
    Regional Equity threshold means the $15,000,000 minimum aggregate 
amount of Regional Equity program funds.
    Respective demand means the mix of contribution program funds that 
each State Conservationist in a Regional Equity State requests to fill 
that State's funding opportunity.
    State means all 50 States, the District of Columbia, Commonwealth 
of Puerto Rico, Guam, Virgin Islands, American Samoa, Commonwealth of 
the Northern Mariana Islands, and the Freely Associated States.
    State Conservationist means the NRCS employee authorized to 
implement Regional Equity programs and direct and supervise NRCS 
activities in a State, the Caribbean Area, or the Pacific Islands Area.

Sec.  662.3  Applicability.

    The regulation in this part sets forth the policies and procedures 
for the Regional Equity provision as administered by the NRCS. This 
regulation applies to the Regional Equity programs defined in this 
part. The Chief will implement the Regional Equity provision by 
identifying programs that contribute to the establishment of program-
specific drawing accounts for priority funding in Regional Equity 

Sec.  662.4  Regional Equity implementation procedure.

    The following procedures will implement the Regional Equity 
    (a) Determine initial allocations. NRCS will determine initial 
conservation program funding levels for each State through a merit-
based, natural resource focused allocation process as determined by the 
    (b) Determine the funding opportunity. The combined initial 
allocation funding level for Regional Equity programs, by State, will 
be compared to the Regional Equity threshold to determine each Regional 
Equity State's funding opportunity.
    (c) Establish contribution program fund levels. Subject to 
availability of funds, contribution program fund levels are determined 
    (1) Identifying which programs contribute funds, as determined by 
the Chief, consistent with the limitations established in 16 U.S.C. 
3841(d); and
    (2) Each State's respective demand.
    (i) State Conservationists in Regional Equity States, in 
consultation with State Technical Committees, will evaluate and 
determine their respective program demands based on the following 
    (A) Program applications and how they address national program 
    (B) Historic trends in program interest; and
    (C) State priority natural resource concerns.
    (ii) The State Conservationist's identified respective demand will 
assist the Chief in determining the composition of contribution program 
funds within the established drawing account.
    (d) Establish the drawing account. NRCS will establish a drawing 
account for each contribution program, as determined in paragraphs 
(c)(1) and (c)(2) of this section, and will give priority before April 
1 of each fiscal year for such funds to be used to fund applications in 
Regional Equity States sufficient to bring each of the Regional Equity 
States to the Regional Equity threshold of $15,000,000.
    (e) Access the drawing account. State Conservationists in Regional 
Equity States may request access to that State's assigned portion of 
the drawing account once that State has obligated at least 90 percent 
of its initial allocation for that same program. The Chief may waive 
the 90 percent threshold requirement for a specific program in response 
to specific program needs.
    (f) Re-allocation of funds. The program-specific drawing accounts 

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Regional Equity States will be available until April 1 of each fiscal 
year, after which date the remaining funds may be re-allocated at the 
discretion of the Chief.

    Signed this 30th day of November, 2009, in Washington, DC.
Dave White,
Chief, Natural Resources Conservation Service.
[FR Doc. E9-29001 Filed 12-3-09; 8:45 am]