[Federal Register Volume 85, Number 207 (Monday, October 26, 2020)]
[Rules and Regulations]
[Pages 67637-67648]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-23437]



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 Rules and Regulations
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  Federal Register / Vol. 85, No. 207 / Monday, October 26, 2020 / 
Rules and Regulations  

[[Page 67637]]



DEPARTMENT OF AGRICULTURE

Commodity Credit Corporation

7 CFR Part 1466

[Docket ID NRCS-2019-0009]
RIN 0578-AA68


Environmental Quality Incentives Program

AGENCY: Natural Resources Conservation Service (NRCS) and the Commodity 
Credit Corporation (CCC), United States Department of Agriculture 
(USDA).

ACTION: Final rule.

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

SUMMARY: This final rule adopts, with minor changes, an interim rule 
published in the Federal Register on December 17, 2019, that made 
changes to the NRCS's Environmental Quality Incentives Program (EQIP). 
The changes were made to be consistent with the Agriculture Improvement 
Act of 2018 (the 2018 Farm Bill) and implemented administrative 
improvements and clarifications. NRCS received input from 197 
commenters who provided 598 comments in response to the interim rule. 
This final rule makes permanent those changes appearing in the interim 
rule, responds to comments, and makes further adjustments in response 
to some of the comments received.

DATES: Effective: October 26, 2020.

FOR FURTHER INFORMATION CONTACT: Michael Whitt; phone: (202) 690-2267; 
or email: [email protected]. Persons with disabilities who require 
alternative means for communication should contact the USDA Target 
Center at (202) 720-2600 (voice).

SUPPLEMENTARY INFORMATION:

Background

    On December 17, 2019, NRCS published an interim rule with request 
for comments in the Federal Register (84 FR 69272-69293) to implement 
mandatory changes made by the 2018 Farm Bill and administrative 
improvements and clarifications. This final rule adopts, with minor 
changes, the amendments made by the interim rule. These changes are in 
response to public comment as explained in the summary of EQIP comments 
below.

Discussion of EQIP (7 CFR Part 1466)

    Through EQIP, NRCS incentivizes agricultural producers to conserve 
and enhance soil, water, air, plants, animals (including wildlife), 
energy, and related natural resources on their land. EQIP promotes 
agricultural production, forest management, and environmental quality 
as compatible goals, and optimizes environmental benefits by assisting 
producers in addressing resource concerns on their operations. EQIP 
also helps agricultural producers meet Federal, State, and local 
environmental requirements and avoid the need for new requirements.
    Eligible lands include cropland, grassland, rangeland, pasture, 
wetlands, nonindustrial private forest land, and other land on which 
agricultural or forest-related products or livestock are produced and 
natural resource concerns may be addressed. Participation in EQIP is 
voluntary.
    The Secretary of Agriculture delegated authority to the Chief, 
NRCS, to administer EQIP on behalf of CCC.
    The interim rule:
     Incorporated the addition of new or expected resource 
concerns to EQIP program purposes, adapting to and mitigating against 
increasing weather volatility, and drought resiliency measures.
     Amended how EQIP interacts with the Regional Conservation 
Partnership Program (RCPP) since RCPP is now a stand-alone program.
     Amended some definitions and added others to address 
changes made by the 2018 Farm Bill, including--
    [cir] Animal feeding operation (AFO);
    [cir] Eligible land;
    [cir] Estimated income foregone;
    [cir] Forest management plan;
    [cir] High priority area;
    [cir] Incentive practice;
    [cir] Priority resource concern;
    [cir] Semipublic;
    [cir] Soil remediation;
    [cir] Soil testing; and
    [cir] Water management entity (WME).
     Added ``increased weather volatility'' as a resource 
concern under the national priorities identified in the regulation.
     Added to outreach responsibilities the requirement to 
notify historically underserved producers about the availability to 
elect to receive advance payments.
     Addressed EQIP contract provisions associated with WMEs 
and certain water conservation projects.
     Removed the requirement that a participant must implement 
and develop a comprehensive nutrient management plan (CNMP) by the end 
of the contract and replaced it with the following: Any conservation 
practices in the EQIP plan of operation must be implemented consistent 
with a CNMP.
     Incorporated the ability to waive the $450,000 regulatory 
contract limitation and establish a $900,000 regulatory contract 
limitation for certain projects with joint operations, group projects, 
or contracts where NRCS has waived the payment limitation for a WME.
     Increased payment rates for certain high-priority 
practices and increased payment rates for practices that address source 
water protection.
     Updated the statutory payment limitations for general EQIP 
contracts and contracts entered into under the National Organic 
Initiative.
     Clarified provisions related to contract administration, 
including procedures for contract modification and termination.
     Relocated provisions related to administration of 
Conservation Innovation Grants (CIGs) to its own subpart and 
incorporated the addition of On-farm Conservation Innovation Trials 
(On-farm Trial), which include the Soil Health Demonstration (SHD) 
Trial.
     Added a new subpart to address EQIP incentive contracts, 
which are a new enrollment option created by section 2304 of the 2018 
Farm Bill.
     Relocated the General Administration provisions from 
subpart C to a new subpart E and updated language addressing 
environmental markets to reflect changes made by the 2018 Farm Bill.

Summary of EQIP Comments

    The interim rule had a 60-day comment period ending February 18, 
2020. NRCS received 598 comments from 197 commenters in response to the 
rule. In addition, one organization submitted a spreadsheet with 12,852 
comments. NRCS reviewed these comments and categorized and

[[Page 67638]]

summarized them according to the topics identified below. The topics 
that generated the greatest response include conservation practices, 
contract limits, and national priorities.
    In this rule, the comments have been organized in alphabetic order 
by topic. The topics include:
     Administration;
     Advance payments;
     Applicability;
     CIG--On-farm Trials, Other, and SHD Trials;
     Conservation Practices--High Priority Practices, Incentive 
Practices, Other, Prairie Pothole Wildlife Practice, Soil Health, and 
Source Water Protection;
     Contract Administration;
     Contract Limits Unrelated to WMEs;
     Contract Requirements;
     Contracts with WMEs--Adjusted Gross Income (AGI) and 
Payment Limitation Waiver, Land Eligibility Criteria, and Other;
     Definitions--Eligible Land, High Priority Area, Priority 
Resource Concern, Soil Testing, and WMEs;
     Eligibility;
     Environmental Assessment;
     EQIP Plan of Operations--Comprehensive Nutrient Management 
Plan;
     Fund Allocations;
     General;
     Incentive Contracts--Selection Criteria;
     National Priorities;
     Outreach Activities;
     Payment Limits;
     Payment Rates; and
     Ranking.
    Of the 598 comments raised by the 197 commenters, 47 were general 
in nature and most expressed support for EQIP or how EQIP has 
benefitted particular operations. NRCS also received 21 comments that 
were not relevant to the EQIP interim rule. Seven comments criticized 
the regulation for not strengthening EQIP's impact on climate 
resilience or soil health. Six comments requested NRCS technical 
assistance for existing and potential projects. Several of these 
comments conveyed frustration with the process or specific working 
relationships. NRCS is committed to providing the highest quality 
service to its customers and partners, and these comments have been 
forwarded to the appropriate staff.
    In general, comments focusing on topics that were outside the scope 
of the regulation will not be addressed. In response to the request 
that public comment be submitted through email, NRCS reminds the public 
that all comments should be submitted to the agency dockets on 
Regulations.gov and any comments that are received by another method 
will be posted on regulations.gov for public access to all of the 
comments in one place. In following the rulemaking process, NRCS seeks 
to provide equal consideration to all who wish to provide feedback. 
Submission of public comment through Regulations.gov provides a more 
equitable and reliable system by which to collect comments within the 
stated timeframes.
    NRCS also received 24 comments that expressed nonspecific 
dissatisfaction with EQIP or the interim rule and 47 comments that 
supported EQIP or the interim rule. These comments do not include any 
recommendations for change. This final rule responds to the comments 
received by the public comment deadline and makes minor clarifying and 
related changes.

Administration

    Comment: NRCS received comment related to EQIP administration, 
including comment addressing outreach, organic production, input from 
State advisory committees, funding targets, expanding the Working Lands 
for Wildlife model, additional training to employees, and allowing 
grazing on all land uses.
    Response: NRCS appreciates the suggestions for improving outreach 
and operations and will incorporate suggestions when updating outreach 
plans and EQIP policies. No change is being made to the regulation in 
response to this issue.

Advance Payments

    Comment: NRCS received comment recommending making advance payments 
mandatory or changing their timing, including making the advance 
payment when the producer is ready to begin the practice or to begin 
the 90-day clock upon practice installation.
    Response: NRCS built criteria into business tools that must be met 
prior to approving an advance payment, including verification that the 
request is for an immediate need and that a final design has been 
accepted by the participant. NRCS cannot change the start time for the 
90-day clock since statute specifies that the clock starts on the date 
that the advance payment is received by the participant. The 
participant's receipt of the advance payment, and NRCS's expenditure of 
funds, commences the 90-day clock. NRCS offers advance payments to all 
historically underserved producers and records, by contract item, the 
producer decision to receive advance payments on the EQIP schedule of 
operations. No change is being made to the regulation in response to 
this issue.

Applicability

    Comment: NRCS received comment recommending changes to EQIP's 
purpose, scope, and objectives as discussed in the Applicability 
section, Sec.  1466.1, including identifying that EQIP participation 
should also avoid the need for regulatory programs, identifying that 
the EQIP purpose includes financial and technical assistance to organic 
producers, adding that new or expected resource concerns relate also to 
organic producers, and suggesting that assisting producers with 
transitioning from an expiring Conservation Reserve Program (CRP) 
contract should be an EQIP priority in order to keep land in grass and 
maintain financial and resource investments.
    Response: The final rule focuses on the purposes spelled out in 
statute, including referencing assistance related to organic production 
and helping producers transition from CRP and, in doing so, keeping 
land in grass and thereby maintaining financial and resource 
investments. The regulatory text has been modified at Sec.  1466.1(a) 
and Sec.  1466.20(b) to address these concerns. No other changes are 
being made to the regulation in response to this issue.

CIGs

CIG On-Farm Trials

    Comment: NRCS received comment supporting CIG On-farm Trials 
testing of new technologies at the field level, including recommending 
that NRCS clearly state that on-farm conservation research is 
authorized under CIG, and that soil health testing be required of all 
On-farm Trials to determine impacts to soil health.
    Response: On-farm Trials ``facilitate and incentivize 
experimentation and testing of new and innovative conservation 
approaches.'' If research falls within the scope of ``experimentation 
and testing,'' it is an authorized activity for On-farm Trials. Soil 
health testing is not a required part of every On-farm Trials project, 
although NRCS may apply the extent to which an On-farm Trial seeks to 
measure or improve soil health as a ranking consideration in the 
context of funding opportunities. No change is being made to the 
regulation in response to this issue.

Other

    Comment: NRCS received comment recommending changes to other 
aspects of CIG, requesting NRCS waive its one-

[[Page 67639]]

to-one match requirement for grants that assist historically 
underserved producers, reword the 10 percent funding for grants that 
assist historically underserved producers to require that no less than 
10 percent of CIG funding be awarded to historically underserved 
producers, expand the purpose of CIG to specifically mention on-farm 
practical field research as a purpose, and directing a CIG study for 
new and innovative manure management.
    Response: This final rule allows a reduction of match requirements 
for historically underserved producers on a case-by-case basis and sets 
forth the criteria for granting such a match reduction. NRCS has 
consistently met the 10 percent funding goal for historically 
underserved producers and is committed to improving outreach to this 
demographic. No changes are made regarding the funding goal in the 
final rule. This rule is expanding the purposes language in the 
regulation to include practical field research and is continuing to 
work with producers and partners to develop innovative practices for 
manure management through multiple avenues, including CIG.

SHD Trials

    Comment: NRCS received comment recommending that NRCS add language 
to the rule to diversify participation in SHD Trials--for example, by 
farm type, size, location, and underrepresented producers. Comment also 
recommended funding for soil testing.
    Response: The final rule provides for a process that results in 
diverse CIG participation. NRCS is developing a soil test activity 
which could be utilized in CIG contracts with producers. If an SHD 
Trial results in a reliable, efficient, and cost-effective process for 
soil health testing, NRCS will consider it in developing the soil test 
activity noted above. No additional language was added to the 
regulation in response to this issue.

Conservation Practices

High-Priority Practices

    Comment: NRCS received comment recommending specific targets and 
specific habitat and area restoration plans (such as prioritizing 
practices with a high environmental benefit but low adoption rate or 
offering longer contracts with additional payments for foregone income 
for practices that benefit wildlife).
    Response: The EQIP regulation gives States the greatest flexibility 
to adapt to local needs and determine high-priority practices in 
consultation with State technical committees and local working groups. 
States currently have the authority to prioritize practices that have a 
high environmental benefit but low adoption rate to increase practice 
adoption. In addition, EQIP provides the opportunity for producers to 
enter into contracts of up to 10 years, and NRCS currently allows 
States to assign higher significance to wildlife habitat development 
and other natural resource concerns when determining rates for 
estimated foregone income. No change is being made to the regulation in 
response to this issue.

Incentive Practices

    Comment: NRCS received comment recommending prioritizing EQIP 
incentive practices that are compatible with ecosystem services 
markets; prioritizing applications with at least two priority resource 
concerns; allowing EQIP grazing practices on cover crops and other 
grass-based practices that have wildlife benefits; prioritizing 
payments for management practices to encourage long-term, beneficial 
changes to production systems; and using longer-term incentive 
contracts in certain circumstances, such as with wildlife projects.
    Response: Incentive practices are a relatively new area for NRCS, 
and NRCS is continuing to work with State, local, and Tribal groups to 
develop practices that are best suited for incentive payments in each 
high-priority area. As NRCS develops those practices, it is considering 
compatibility with ecosystem services markets, multiplicity of 
benefits, wildlife benefits, long-term benefits, and term length where 
appropriate and within the bounds of statute. No change is being made 
to the regulation in response to this issue.

Other

    Comment: NRCS received comment recommending incorporating new 
technologies and advancements in conservation practice standards, 
creating interim standards where beneficial, and encouraging 
flexibility to better address State and local needs.
    Response: NRCS will continue to adapt and innovate the application 
of science and technology to provide the best resource conservation 
possible through each of its programs, including EQIP. These 
adaptations and innovations will be reflected in future NRCS practice 
standards. No change is being made to the regulation in response to 
this issue.

Prairie Pothole Wildlife Practice

    Comment: NRCS received comment recommending prioritizing longer 
wildlife habitat contracts to benefit such areas as the Prairie Pothole 
Region and rice-producing areas. The EQIP statute (section 
1240B(g)(3)), provides for longer-term (up to 10 year) contracts that 
benefit wildlife and includes postharvest flooding practices or 
practices that maintain the hydrology of temporary and seasonal 
wetlands.
    Response: NRCS recognizes the importance of wildlife protection in 
the Prairie Pothole Region and rice-producing areas. State and regional 
priorities determine how best to implement strategies for ensuring the 
most appropriate contract terms are in place to protect wildlife. No 
change is being made to the regulation in response to this issue.

Soil Health

    Comment: NRCS received comment requesting that NRCS provide more 
soil health practice options, including suites or bundles of soil 
health practices through outreach efforts and asked that NRCS consider 
additional ranking points for applicants using suites or bundles of 
soil health practices. Comment also asked that NRCS develop soil health 
planning protocols for cropland, grazing land, and other agricultural 
lands; that these protocols be widely available through EQIP technical 
and financial assistance; and that soil health testing be required for 
any contract supporting the adoption of soil health practices and that 
grazing of cover crops be permitted to enhance soil health conditions.
    Response: Improving and maintaining soil function is a priority 
for, and a foundation of, NRCS's programs and maintaining or developing 
relevant measures to promote soil health is a focus of the agency.
    Regarding the overall process of additional soil health 
conservation practice options, NRCS follows a formal process to review 
each national conservation practice standard at least once every 5 
years from its date of issuance or review. Interim conservation 
practice standards serve as mechanisms for field testing new 
technology. Interim conservation practices that prove successful are 
either developed into national conservation practice standards or 
incorporated into existing practice standards, as appropriate. States 
may modify national practice standards to meet State or local needs.
    The National Technical Guide Committee publishes a notice in the 
Federal Register requesting comments on all additions or revisions to 
conservation practices in the NRCS National Handbook of Conservation 
Practice Standards. The comment

[[Page 67640]]

period is not less than 30 days from the date of notice publication.
    The NRCS Conservation Practice Standard Cover Crop (Code 340) 
provides guidance for grazing cover crops. Grazing of cover crops may 
be permitted depending on such factors as the soil condition and growth 
state of the cover crop. When addressing conditions such as soil health 
and organic matter content, cover crop species will be selected on the 
basis of producing higher volumes of organic material and root mass to 
maintain or increase soil. Grazing must not cause negative impact to 
the site (for example, erosion or compaction).
    No change is being made to the regulation in response to these 
issues.

Source Water Protection

    Comment: NRCS received comment suggesting that wetland practices, 
such as wetland restoration and buffers, count as source water 
protection practices. Comment noted the importance of involving State 
technical committees in designating source water protection areas and 
eligible source water protection practices.
    Response: NRCS will continue to work closely with State technical 
committees, which are crucial in designating source water protection 
areas and eligible source water protection practices. As determined by 
NRCS in collaboration with the State technical committees, wetland 
restoration and buffers will be source water protection practices. No 
change is being made to the regulation in response to this issue.

Contract Administration

    Comment: NRCS received comment encouraging that NRCS use the 
longest possible contract lengths (up to 10 years) for wildlife 
conservation, especially for wildlife practices that require high 
levels of site preparation and maintenance. Comment also highlighted 
that EQIP requires applicants to obtain the written concurrence of the 
landowner to apply a conservation practice, while Colorado state law 
allows ditch owners to install water pipelines to replace open-air 
ditches without the landowner's consent.
    Response: States already may offer contracts with a term of up to 
10 years with one or more annual management practices to restore, 
develop, protect, and improve wildlife habitat. Regarding the 
difference between State law and Federal regulation, the EQIP 
requirement to obtain landowner permission to apply a conservation 
practice cannot be waived. However, if the holder of the right of way 
has the property rights necessary to install water pipelines without 
consent of the fee title landowner, then NRCS considers the holder of 
the right of way the landowner for consent purposes. No change is being 
made to the regulation in response to this issue.

Contract Limits Unrelated to Water Management Entities

    Comment: NRCS received comment recommending removing joint 
operations and confined animal feed operations (CAFOs) from the list of 
operations for which a waiver can be requested to exceed the $450,000 
contract limit. The specific change requested was to amend the rule by 
striking Sec.  1466.21(e)(1)(ii)(A) and the words or individual member 
thereof from Sec.  1466.6(d)(3)(iii).
    While the higher contract limit does not relate specifically to 
CAFOs, the comment associated CAFOs with joint operations and the 
availability of higher levels of program assistance. Comment also 
recommended that EQIP not fund CAFOs at all.
    Response: By statute, EQIP has an aggregate $450,000 payment 
limitation per person or legal entity, directly or indirectly, for all 
contracts entered into during fiscal years (FYs) 2019 through 2023. The 
overall program payment limitation may not be waived; further, NRCS 
does not have the discretion to automatically disqualify CAFOs from 
EQIP assistance. Under payment limitation requirements that apply to 
NRCS and Farm Service Agency programs, joint operations are able to 
receive a payment up to the maximum amount specified for a person or 
legal entity multiplied by the number of persons or legal entities that 
comprise ownership of that joint operation (see 7 CFR part 1400). When 
a joint operation consisting of two or more members enters into an EQIP 
contract, the EQIP contract with the joint operation may receive 
funding of up to $900,000. Without a contract limit, joint operations 
could receive very large payments under an EQIP contract.
    To address concerns related to large contracts with joint 
operations, NRCS in 2009 imposed a regulatory contract limit that 
corresponded with the EQIP payment limit. The 2009 interim rule did not 
adjust the contract limit for joint operations, and this system was 
maintained in the EQIP regulation through the 2014 Farm Bill. The 
$450,000 limit does not, therefore, represent a change to EQIP brought 
about in the 2019 interim rule.
    To clarify, the overall program payment limitation may not be 
waived. No member of a joint operation may receive more than $450,000 
in payment through EQIP for program years 2019 through 2023. But, when 
a joint operation consisting of two or more members enters into an EQIP 
contract, the EQIP contract with the joint operation may receive 
funding of up to $900,000. EQIP is using this flexibility to help 
streamline contract administration for these types of arrangements. 
Unlike the Conservation Stewardship Program (CSP), EQIP does not 
require enrollment of the entire operation. Each operation may receive 
multiple contracts for EQIP; therefore, the purpose of contract limits 
in EQIP differs from that in CSP.
    No change is being made to the regulation in response to these 
issues.

Contract Requirements

    Comment: NRCS received comment recommending provisions for NRCS to 
incorporate into the EQIP contracts with producers, including requiring 
participants to report EQIP environmental outcomes to NRCS; ensuring 
that the eligibility of irrigation districts for EQIP contracts does 
not alter the annual funding allocation to States; strengthening 
support for best grazing management practices; limiting contracts to 
only 1 year; and requiring consideration as to how irrigation projects 
and practices could inadvertently negatively impact wildlife habitats 
and wetlands and increase water consumption by bringing additional land 
into production or converting land to more water-intensive crops.
    Response: NRCS provides an assessment of resource concerns, 
including impacts to wildlife and water conservation, before a practice 
or activity is implemented, and determines any potential effects and 
expected environmental outcomes through the ranking process prior to 
approving EQIP contracts. In accordance with statutory limitations, 
NRCS does not provide supplemental allocations to States for WME 
projects. Contract terms are up to 10 years with the actual term 
determined by the producer and agreed to by NRCS. No change is being 
made to the regulation in response to this issue.

Contracts With Water Management Entities

Adjusted Gross Income and Payment Limitation Waiver

    Comment: NRCS received comment related to AGI and payment 
limitation waiver criteria with respect to contracts with WMEs, 
including: General support

[[Page 67641]]

for the $900,000 payment limit; support for increasing the payment 
limitation amount to over $900,000 as long as it adheres to specific, 
narrow cases allowed by statute; and support for increasing the payment 
limit to at least 10 times the individual limit (over $4.5 million) to 
address large-scale irrigation infrastructure projects. Other comment 
suggested waiver criteria, such as if the contract addressed multiple 
natural resource concerns outlined in statute, service to multiple farm 
operations, or benefitted historically underserved producers. Some 
comment expressed a desire that individual producers maintain access to 
funds within State EQIP allocations, either by maintaining the $900,000 
payment limit, reducing it to the standard $450,000, by establishing a 
separate national allocation pool for WME projects or continuing to 
fund WMEs thorough RCPP. Other comment recommended separating the AGI 
waiver and payment limitation waiver.
    Response: NRCS appreciates the diverse array of views. When a WME 
establishes through its program application that it deserves an AGI 
waiver using the criteria established in the interim rule (and retained 
in this final rule), it also establishes that it needs an increased 
contract limit. The contract limit of $900,000 is an appropriate size 
to draw a distinction between EQIP and other programs that may protect 
watersheds, such as RCPP or Watershed Operation Assistance under public 
law 83-566. No change is being made to the regulation in response to 
this issue.

Land Eligibility Criteria

    Comment: NRCS received comment expressing general support for 
contracts with WMEs; recommending expanding the definition of adjacent 
land to include lands that create a direct connection between the 
infrastructure under the control of a WME and the producer's land 
(i.e., any land over which the WME holds an easement); limiting the 
scope of adjacent land to land that abuts an EQIP-eligible farm or 
ranch and is necessary for the practice or system being implemented by 
the WME; limiting recipients of EQIP funds to existing agricultural 
producers; and, ensuring that EQIP contracts do not enable water 
spreading, increase consumptive use, or put new land into agricultural 
production.
    Response: The term ``adjacent'' is not defined in the interim rule 
or in this final rule. However, the adjacent land must meet several 
criteria in order to be eligible for enrollment in a contract with a 
WME, including that it must be ``necessary to support the installation 
of a conservation practice or system on eligible land.'' This supports 
an expansive interpretation of ``adjacent'' while ensuring that the 
adjacent land's enrollment supports the installation of a practice or 
system on eligible land. No change is being made to the regulation in 
response to this issue.

Other

    Comment: NRCS received comment supporting the expansion of EQIP 
eligibility to WMEs, including land grant--mercedes, and recommended 
streamlined processes, clarification on eligibility, and guidance for 
WMEs on application.
    Response: Streamlining and clarification will be addressed through 
additional outreach and communication to stakeholders. No change is 
being made to the regulation in response to this issue. The regulation 
in Sec.  1466.6, ``Program requirements,'' includes additional criteria 
for WME eligibility, consistent with statutory direction, to ensure 
water conservation projects typical of land grant--mercedes can be 
considered for assistance.

Definitions

Eligible Land

    Comment: NRCS received comment recommending including reference to 
wildlife under the definition for eligible land to incentivize 
stewardship of land managed for wildlife and expanding the definition 
of associated agricultural lands to include neighboring properties as 
eligible lands to both support agriculture and wildlife habitat.
    Response: NRCS appreciates the interest in EQIP from wildlife and 
conservation stakeholders. The purpose of EQIP is to provide financial 
and technical assistance to agricultural producers on eligible 
agricultural and nonindustrial private forest land. No change is being 
made to the regulation in response to this issue.

High-Priority Area

    Comment: NRCS received comment on the definition of high-priority 
areas, including recommending how to conduct a robust consultation 
process with the State technical committees and other stakeholders, 
selecting areas that cover broad and diverse areas of agricultural 
production and resource concerns, and also selecting areas based on a 
narrower, prioritized implementation approach.
    Response: NRCS will continue to work cooperatively with State 
technical committees through the local working group process to select 
high-priority areas consistent with national, State, and local 
priorities. No change is being made to the regulation in response to 
this issue.

Priority Resource Concern

    Comment: NRCS received comment supporting the local role of the 
State in setting priority resource concerns, including wildlife 
practices and high-priority practices.
    Response: NRCS will continue to work cooperatively with State 
technical committees to select priority resource concerns consistent 
with national, State, and local priorities. No change is being made to 
the regulation in response to this issue.

Soil Testing

    Comment: NRCS received comment that supported identifying 
appropriate soil health testing protocols, requiring the protocols in 
all EQIP contracts related to soil health, and quantifying the 
environmental outcomes of EQIP contracts on soil health.
    Response: NRCS appreciates the attention that the public has given 
to soil health. NRCS continues to develop activities designed around 
soil health and soil testing, which are likely to receive recognition 
in local, State, or national priorities for ranking or other purposes. 
No change is being made to the regulation in response to this issue.

Water Management Entities

    Comment: NRCS received comment recommending that the definition of 
``water management entity'' include mutual ditch, irrigation, and canal 
companies as ``similar entities'' due to their similarities to acequias 
in their purpose, size, legal status, and organizational structure. 
Comment also supported limiting EQIP funding for WMEs to contracts 
where the water users are farmers and ranchers.
    Response: NRCS will keep the current definition of WME in Sec.  
1466.3, since this definition does not exclude ditch and related 
companies. Ditch and related companies may be eligible WMEs if they are 
a semipublic organization with the purpose of assisting private 
agricultural producers manage water distribution or conservation 
systems. No change is being made to the regulation in response to this 
issue.

Eligibility

    Comment: NRCS received comment recommending EQIP eligibility 
language reflect grazing rights on public lands better, make entities 
that do not have direct control of the land and members of Internal 
Revenue Code (IRC) Section

[[Page 67642]]

501(d) religious organizations eligible for participation, and expand 
eligibility for On-farm Trials to organizations that conduct business 
related to conservation on agricultural lands.
    Response: Control of land is a necessary requirement for 
participant eligibility. The participant must be able to implement the 
requirements of the EQIP contract, which is demonstrated through 
control of the land.
    Regarding publicly-owned land, NRCS considers whether the land is 
within the applicant's control (in other words, that the applicant can 
implement the terms of the EQIP contract), whether the land is a 
working component of the producer's agricultural or forestry operation 
(for example, that the producer uses the land for grazing), and whether 
conservation practices to be implemented on the public land are 
necessary and will contribute to an improvement in the identified 
resource concern. If all three criteria are met, the land may be 
eligible.
    Religious organizations are not excluded from eligibility. A legal 
entity organized under IRC Section 501(d) meets the definition of legal 
entity in Sec.  1466.3 provided it owns land or an agricultural 
commodity, product, or livestock or produces an agricultural commodity, 
product, or livestock.
    An eligible entity for the purposes of On-farm Trials includes a 
third-party private entity, the primary business of which is related to 
agriculture. This includes organizations that conduct business related 
to conservation on agricultural lands.
    No change is being made to the regulation in response to this 
issue.

Environmental Assessment

    Comment: NRCS received comment related to the Programmatic 
Environmental Assessment (EA). Comment asserted: The current ``no 
action'' alternative is not a legally permissible outcome; the 
Programmatic EA must indicate which decisions are discretionary or 
mandatory; for discretionary decisions, NRCS must list at least two 
legally permissible alternatives; and because the Programmatic EA is 
insufficient, the Finding of No Significant Impact (FONSI) is also 
insufficient.
    Comment also indicated that data collection is a key input to 
assessing environmental impact, suggesting that NRCS incentivize 
producer participation in third-party data collection services to track 
environmental benefits of conservation practices.
    Response: NRCS prepares its programmatic National Environmental 
Policy Act (NEPA) documents to provide broad-scale analyses to which 
site-specific program actions may tier, when appropriate, for purposes 
of complying with NEPA. NEPA does not require Federal agencies to 
consider alternatives that have substantially similar consequences; 
rather, it is clearly intended to help agencies avoid significant 
adverse impacts. The ``no action'' alternative describes continuation 
of EQIP under its previous regulations. NEPA regulations require 
analysis of a no action alternative for comparative reasons. 
Conservation activities associated with each EQIP contract undergo 
additional site-specific environmental review and analysis designed to 
avoid, minimize, rectify, reduce, eliminate, or compensate for any 
potential adverse impacts. No change is being made to the regulation in 
response to this issue.

EQIP Plan of Operations--Comprehensive Nutrient Management Plan

    Comment: NRCS received comment about progressive implementation of 
a CNMP, asserting that the interim rule only requires development of a 
CNMP and does not require progressive implementation and thus is 
contrary to the intent of Congress.
    Response: NRCS understands these comments to suggest that the 
interim rule is ambiguous regarding CNMP implementation. This rule 
revises the regulation to add clarity. From a practical standpoint, a 
producer implementing EQIP-funded conservation practices consistent 
with CNMP is progressively implementing CNMP. However, some EQIP 
contracts are for development of CNMP as a conservation activity plan 
only. There are no practices to implement progressively under these 
contracts other than the plan itself. In addition, this rule clarifies 
that CNMP will address all ``applicable'' natural resources since 
natural resource issues are site-specific. In this manner, NRCS hopes 
to avoid any confusion about the scope of CNMP while maintaining core 
aspects that have been in the CNMP definition since 2003.

Fund Allocations

    Comment: NRCS received comment recommending that NRCS address the 
funding allocation for wildlife conservation practices, including that 
NRCS: Ensure the 10 percent allocation is a ``floor'' and not a 
``ceiling'' for wildlife practice funding; set the 10 percent 
allocations at the State rather than national level; make a narrower 
list of practices that count toward the 10 percent allocation or 
including State partners in determining which practices should count in 
that State; and exclude EQIP contracts from the 10 percent allocation 
that involve either the Working Lands for Wildlife model or interagency 
cooperation with the U.S. Fish and Wildlife Service. Comment also 
expressed a desire for increased collaboration with State and local 
partners for targeting wildlife habitat and conservation.
    Other comment addressed the funding allocation for livestock 
practices, including disapproval of the statutory change from 60 
percent to 50 percent, opinion that the 50 percent mandate was far too 
high, and request about how the national mandate is implemented on a 
State-by-State basis.
    Comment also addressed other fund allocation topics as follows:
     Concern over whether NRCS was making equitable allocations 
to States by citing a 2017 U.S. Government Accountability Office report 
suggesting that NRCS was using historical allocation data rather than 
seeking to optimize environmental benefits.
     Recommendation to create a national initiative for 
targeted funding for small-scale operations based on existing State-
level initiatives.
     Concern that allocations of funds to WMEs would take 
conservation dollars away from producers, so they requested that NRCS 
add language ensuring that producers would be the ultimate 
beneficiaries of EQIP funding for contracts with WMEs.
     Note that Congress did not want contracts with irrigation 
districts to adjust State funding allocations.
     Suggestion that contracts with WMEs should increase 
allocations for western States.
     Request that NRCS link funding allocations to 
accountability mechanisms so that activities with limited conservation 
benefits are not funded.
    Response: NRCS will consider these comments in its allocation 
process. The breadth and depth of these comments indicate the 
importance of fund allocations to EQIP stakeholders and partners. EQIP 
implementation, including the allocation of funding, is complex in 
nature because the statute provides for multiple goals and 
requirements. All statutory goals must be addressed even though some 
desired outcomes are difficult or impossible to quantify given current 
information availability. Through local input, combined with the use of 
the Conservation Effect Assessment Project (CEAP) and other important 
data, USDA seeks to enable program managers and

[[Page 67643]]

leaders to achieve the most effective and efficient program outcomes 
across the entire range of statutory goals.
    State technical committees and local work groups, with the 
knowledge and expertise of their members, also provide additional 
sources of data and information. Their membership includes leaders in 
agriculture, conservation, producers, and other stakeholders and their 
input provides a means of ensuring EQIP allocations are made according 
to the resource concern, targeted to the local conditions, and relevant 
to and contributing to national resource priorities. These State and 
local sources provide valuable information and data on environmental 
concerns not otherwise available, thus giving allocation decisions far 
more depth and granularity. The State technical committee regulation 
and standard operating procedures address this process and thus no 
change is being made to the EQIP regulation in response to this issue.

General

    Comment: NRCS received comment requesting a modification to how the 
changes made by the 2018 Farm Bill appear in the interim rule preamble.
    Response: The interim rule preamble provides a summary and is not 
intended to represent a comprehensive description of the 2018 Farm Bill 
changes. NRCS encourages reviewers to read the 2018 Farm Bill if 
additional perspective is sought. No change is being made to the 
regulation in response to this issue.

Incentive Contracts--Selection Criteria

    Comment: NRCS received comment recommending NRCS modify the 
incentive contract selection criteria, giving priority to applications 
aiming to make the participant eligible for CSP at the end of the 
contract period.
    Response: Incentive contracts are designed to serve as a bridge 
between EQIP and CSP. State technical committees and other local 
stakeholders designate priority resource concerns and high-priority 
areas and assist in determining priority resource concerns for CSP. The 
final rule maintains language in the interim rule to maximize local 
control over what EQIP practices are best suited for the applicant to 
transition to CSP. No change is being made to the regulation in 
response to this issue.

National Priorities

    Comment: NRCS received comment recommending the addition of soil 
health, climate resilience, and drought resiliency to the list of 
national priorities in Sec.  1466.4(a), indicating that Congress made 
soil testing and soil health planning qualified activities for EQIP 
support in the 2018 Farm Bill, and that Congress spoke to the need to 
focus on climate resilience by making addressing weather variability 
and drought resilience new purposes for EQIP.
    Response: Rather than increasing the number of national priorities 
from 8 to 10, this rule adds concepts of soil health and climate 
resiliency to existing national priorities. In particular NRCS 
incorporates concepts of climate resiliency through the addition of the 
language ``increased resilience against drought and weather 
volatility'' in Sec.  1466.4(a)(4) and incorporates ``improvement of 
soil health'' in Sec.  1466.4(a)(6).

Outreach Activities

    Comment: NRCS received comment recommending a variety of different 
actions with respect to its outreach activities, including: Requesting 
a focus on the conservation benefits of wildlife practices; targeting 
diverse farming operations; additional outreach at the local level; 
adding information on advance payment options in outreach to 
historically underserved producers to increase EQIP participation; and 
using USDA and other data to inform producers of the potential economic 
impact of adopting conservation practices. Comment recommended that 
NRCS track and provide annual information to the public on the results 
of the allocations for wildlife practices and the use of native plants. 
Other comment offered general support for NRCS activities.
    Response: NRCS is committed to providing high-quality service 
across the Nation. Outreach strategies and efforts are in place at the 
national, State, and local levels, with those at the State and local 
level tailored to the needs of the specific area. In addition, targeted 
outreach efforts are underway for historically underserved producers 
and Tribes. In the regulation, Sec.  1466.5 contains special outreach 
authorization for historically underserved producers and a paragraph 
including outreach and documentation to historically underserved 
producers pertaining to advance payments. Regarding economic impacts, 
NRCS considers estimated economic impact in its conservation planning 
process, including in the development of conservation practice 
standards. The 2018 Farm Bill also requires the Secretary to identify 
available data sets within USDA that link the use of conservation 
practices to farm and ranch profitability (including crop yields, soil 
health, and other risk-related factors).
    NRCS tracks EQIP investment and performance. In addition to the 
2018 Farm Bill's emphasis on reporting EQIP outcomes, the agency has an 
interest in understanding the impact of the statutory increase of the 
wildlife allocation from 5 to 10 percent. Regarding publicly available 
reports, the Soil and Water Resources Conservation Act (RCA) provides 
broad natural resource strategic assessment and planning authority for 
USDA. Information about NRCS's conservation programs at the State, 
regional, and national level, is available on the RCA interactive data 
viewer (https://www.nrcs.usda.gov/wps/portal/nrcs/detail/national/technical/nra/rca/ida/).
    No changes have been made to the regulation in response to these 
comments.

Payment Limits

    Comment: NRCS received comment related to payment limits, including 
opposition to the increased payment limit for participants in the 
organic initiative, request for removal of the $200,000 payment limit 
for incentive contracts, and support for keeping the aggregate payment 
limit of $450,000.
    Response: NRCS provides financial and technical assistance, through 
the National Organic Initiative, to help organic or transitioning-to-
organic producers. In the interim rule, in Sec.  1466.24, NRCS updated 
the payment limitations for organic production from annual limits to an 
aggregate limit from FY 2019 through 2023, as required by the 2018 Farm 
Bill. Economic analysis indicates little impact as organic initiative 
contracts are usually well below the multiyear payment limit of $80,000 
previously set by the 2014 Farm Bill. In the past, organic participants 
who exceed the organic initiative payment limit use other EQIP funding 
mechanisms. With the increased limit, more organic applicants will be 
able to make use of the organic initiative and consequently need only 
compete with other organic operations for funding.
    The 2018 Farm Bill's introduction of EQIP incentive contracts 
provides a new option for participation. In Sec.  1466.44 of the 
interim rule NRCS established criteria for incentive payments, 
including establishing a regulatory $200,000 payment limit similar to 
CSP, and ensuring that incentive contracts support a participant's 
ability to transition to CSP eligibility. While there were no comments 
submitted that opposed the $200,00 payment limit in this section, NRCS 
may consider setting

[[Page 67644]]

a contract limit on EQIP incentive contracts in the future.
    No change is being made to the regulation in response to this 
issue.

Payment Rates

    Comment: NRCS received comment on the topic of payment rates, 
including adding the cost of third-party measurement of environmental 
benefits of adopted practices to payment rates as well as soil testing 
and data collection costs associated with using emerging sustainability 
tools and platforms and emerging ecosystem markets; using additional 
financial incentives (for example, through increased foregone income 
payments or higher cost-share percentages for high-priority practices) 
to meet the funding goal for wildlife practices; concern that payments 
received by participants may exceed the actual costs associated with 
the practice; and recommending that States, not regions, set payment 
rates, as project costs can vary widely from State to State.
    Response: NRCS follows a methodical approach and will consider each 
comment in developing payment schedules. The 2018 Farm Bill authorized 
increased payment rates for certain high-priority practices and for 
practices that address source water protection. Further, States can 
designate high-priority practices that will be eligible for higher 
payment rate at the State level. Policy requires soliciting input from 
State technical committees and the posting of payment schedules on a 
public website. In addition, as NRCS develops the functionality of 
digital tools, such as the Conservation Assessment and Ranking Tool 
(CART), the process of determining payment rate alignment with 
statutory factors will be refined. NRCS incorporates all statutory 
payment factors into regulations and ensures that payment rates are 
consistent between EQIP and CSP. No change is being made to the 
regulation in response to this issue.

Ranking

    Comment: NRCS received comment recommending criteria changes to 
ranking and the weighting of ranking factors including that: Ranking 
focus on the net benefit to stream flows; preference be given to 
operators who have demonstrated ``best practices'' (with a focus on 
nonpoint source pollution); accountability mechanisms be built to 
ensure practices are achieving the maximum benefit; States prioritize 
practices addressing multiple resource concerns; and priority for EQIP 
enrollment be provided to land transitioned through the CRP Transition 
Incentive Program (CRP-TIP) (see 16 U.S.C. 3835(f)(1)(E)).
    Response: NRCS will continue to work cooperatively with its State 
and local partners to develop ranking criteria that fit national, 
State, and local priorities. These priorities may include net benefit 
to stream flows, nonpoint source pollution, the feasibility of 
requiring accountability mechanisms in contract implementation, or 
multiplicity of conservation benefits. However, NRCS is not requiring 
these specific ranking factors in every situation.
    State Conservationists, in consultation with State technical 
committees, determine how many extra points to provide CRP-TIP in 
ranking. NRCS is committed to protecting CRP-TIP land in transition to 
a covered farmer or rancher and has incorporated this statutory 
priority in this final rule by adding language to Sec. Sec.  1466.1 and 
1466.20(b). No other changes are made to the regulation in response to 
this issue.

Paperwork Reduction Act and Effective Date

    In general, the Administrative Procedure Act (APA) (5 U.S.C. 553) 
requires that a notice of proposed rulemaking be published in the 
Federal Register and interested persons be given an opportunity to 
participate in the rulemaking through submission of written data, 
views, or arguments with or without opportunity for oral presentation, 
except when the rule involves a matter relating to public property, 
loans, grants, benefits, or contracts. This rule involves matters 
relating to benefits and therefore is exempt from the APA requirements. 
Further, the regulations to implement the programs of chapter 58 of 
title 16 of the U.S. Code, as specified in 16 U.S.C. 3846, and the 
administration of those programs, are--
     To be made as an interim rule effective on publication, 
with an opportunity for notice and comment,
     Exempt from the Paperwork Reduction Act (44 U.S.C. ch. 
35), and
     To use the authority under 5 U.S.C. 808 related to 
Congressional review.
    Consistent with the use of the authority under 5 U.S.C. 808 related 
to Congressional review for the immediate effect date of the interim 
rule, this rule is also effective on the date of publication in the 
Federal Register.

Executive Orders 12866, 13563, 13771, and 13777

    Executive Order 12866, ``Regulatory Planning and Review,'' and 
Executive Order 13563, ``Improving Regulation and Regulatory Review,'' 
direct agencies to assess all costs and benefits of available 
regulatory alternatives and, if regulation is necessary, to select 
regulatory approaches that maximize net benefits (including potential 
economic, environmental, public health and safety effects, distributive 
impacts, and equity). Executive Order 13563 emphasized the importance 
of quantifying both costs and benefits, reducing costs, harmonizing 
rules, and promoting flexibility. The requirements in Executive Orders 
12866 and 13573 for the analysis of costs and benefits apply to rules 
that are determined to be significant. Executive Order 13777, 
``Enforcing the Regulatory Reform Agenda,'' established a Federal 
policy to alleviate unnecessary regulatory burdens on the American 
people.
    The Office of Management and Budget (OMB) designated this rule as 
economically significant under Executive Order 12866, and therefore, 
OMB has reviewed this rule. The costs and benefits of this rule are 
summarized below in the next section of this rule. The full regulatory 
impact analysis is available on https://www.regulations.gov/.
    Executive Order 13771, ``Reducing Regulation and Controlling 
Regulatory Costs,'' requires that, to manage the private costs required 
to comply with Federal regulations for every new significant or 
economically significant regulation issued, the new costs must be 
offset by the savings from deregulatory actions. This rule involves 
transfer payments and is not required to comply with Executive Order 
13771.
    In general response to the requirements of Executive Order 13777, 
USDA created a Regulatory Reform Task Force, and USDA agencies were 
directed to remove barriers, reduce burdens, and provide better 
customer service both as part of the regulatory reform of existing 
regulations and as an on-going approach. NRCS reviews regulations and 
makes changes to improve any provision that was determined to be 
outdated, unnecessary, or ineffective.

Cost Benefit Analysis

    Most of this rule's impacts consist of transfer payments to 
producers for completed conservation practices under EQIP contracts. 
There are also costs and benefits, which are described after a 
discussion of the transfers. The 2018 Farm Bill increases EQIP funding 
over 2014 Farm Bill funding by 15 percent on average to $1.84 billion 
per year. From FY 2014 through 2018, EQIP was authorized at $8.0 
billion, but annual funding restrictions resulted in actual authority 
being $7.51 billion, for an

[[Page 67645]]

annual average amount of $1.50 billion. In contrast, the authorized 
level for EQIP for FY 2019 through 2023 is $9.18 billion (assuming 
future funding is set at authorized amounts). Additionally, EQIP funds 
remain available until expended, meaning that any unobligated balance 
at the end of a fiscal year is available for obligation in the 
subsequent year.
    NRCS recognizes that a participant incurs costs in gaining access 
to EQIP. These costs are in addition to the participant's share of the 
cost of implementing conservation activities under EQIP. NRCS estimates 
the total cost of accessing the program over 5 years to be $17.7 
million. The cost to participants of implementing conservation 
practices over 5 years is estimated at $4.46 billion and total 
transfers (NRCS funds) over 5 years are estimated at $9.18 billion. 
Given a 3 percent discount rate, this translates into a projected 
annualized real cost to producers for implementing conservation 
practices of $855.10 million and projected annualized real transfers of 
$1.76 billion (Table 1). In addition, participants incur $3.5 million 
in access costs in nominal terms.

        Table 1--Annual Estimated Costs, Benefits, and Transfers
------------------------------------------------------------------------
                        Category                         Annual estimate
------------------------------------------------------------------------
Participant costs:
  Access a.............................................      $3,549,676.
  Implementation b.....................................     855,100,000.
Benefits...............................................     Qualitative.
Transfers c............................................  $1,760,000,000.
------------------------------------------------------------------------
a All estimates are discounted at 3 percent to 2019 $ except for the
  participant access cost, which is nominal.
b Imputed cost of applicant time to gain access to EQIP.
c Participant share of the cost of implementing conservation practices
  under EQIP.

    The costs associated with this rule consist of the administrative 
costs of applying for EQIP funding and are described in the full 
regulatory impact analysis. The benefits of this rule are the 
environmental improvements that are due to the increased conservation 
practices over and above those that farmers privately undertake. 
Conservation practices funded through EQIP will continue to: Contribute 
to improvements in soil health and reductions in water and wind erosion 
on cropland, pasture and rangeland; reduce nutrient losses to streams, 
rivers, lakes and estuaries; increase wildlife habitat; and provide 
other environmental benefits. Further, continued implementation of 
practices which treat and manage animal waste through EQIP will 
directly contribute to improvements in water quality and improvements 
in air quality (such as reduced risk of algal blooms or reduction in 
methane emissions, respectively). NRCS estimates that the expenditures, 
from both public and private sources, of implementing EQIP conservation 
practices will be $13.6 billion dollars (FY 2019 through 2023), 
assuming a historical average participant cost of 40 percent and a 
technical assistance share of 27 percent.
    Changes in funding levels for EQIP livestock and wildlife practices 
will alter to a minor extent the types of conservation practices that 
are funded. From FY 2014 through 2018, wildlife practices accounted for 
7.6 percent of EQIP funds through wildlife and landscape initiatives 
and 16 designated wildlife conservation practices. The 2.4 percent 
increase in funding for wildlife to meet the new 10 percent level will 
likely occur through greater support for existing wildlife initiatives 
and may target additional wildlife habitat development efforts through 
new initiatives. With respect to livestock, over 60 percent of EQIP 
funds went to livestock-related practices during FY 2014 through 2018, 
but the 2018 Farm Bill reduced this target to 50 percent for each of 
fiscal years 2019 through 2023. With greater EQIP funding overall, the 
amount of funding being provided for the implementation of livestock 
conservation practices should not change significantly.
    To address increasing demands on the nation's water supply, the 
2018 Farm Bill expands EQIP eligibility to WMEs like irrigation 
districts, ground water management districts, and acequias, along with 
providing the Secretary with the authority to waive AGI and payment 
limits to encourage continued efforts in agricultural water 
conservation. In some states, particularly in the West, these WMEs may 
increase competition for funding and enhance conservation benefits per 
dollar spent. The impacts, however, on the allocation of EQIP funding 
will be limited. The 2018 Farm Bill directs NRCS to maintain current 
funding allocations to states, limiting the impact nationally. Also, 
NRCS in the interim rule established a payment limit of $900,000 on all 
contracts with WMEs.
    The 2018 Farm Bill establishes conservation incentive contracts to 
address up to three priority resource concerns for each land use within 
a given watershed, or other region, or area. Contracts will range from 
a minimum of 5 years to up to 10 years in length and provide an annual 
payment and incentive practice payments. NRCS has established a payment 
limit of $200,000 to align with CSP. The impact of these new 
conservation incentive contracts is uncertain, particularly regarding 
benefits per dollar. Overall, given the current demand for regular 
enrollment in EQIP, and the currently uncertain impacts that 
conservation incentive contracts will have, the aggregate benefits from 
these new conservation incentive contracts may be limited.
    Increasing the payment limit for participants in the organic 
initiative to $140,000 over the period FY 2019 through 2023, will 
likely have little impact on EQIP performance. This is because existing 
organic initiative contracts are usually well below the existing multi-
year payment limit of $80,000 set by 2014 Farm Bill. Currently, organic 
participants who exceed the organic initiative payment limit use other 
EQIP funding mechanisms. The increase in the organic initiative limit 
to $140,000 may attract producers who have higher organic practice 
costs or perhaps larger operations, and EQIP participants may make 
greater use of the organic initiative and designated funding pool.

Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601-612), as amended by 
the Small Business Regulatory Enforcement Fairness Act of 1996 
(SBREFA), generally requires an agency to prepare a regulatory analysis 
of any rule whenever an agency is required by APA or any other law to 
publish a proposed rule, unless the agency certifies that the rule will 
not have a significant economic impact on a substantial number of small 
entities. This rule is not subject to the Regulatory Flexibility Act 
because this rule is exempt from notice and comment rulemaking 
requirements of the APA and no other law requires that a proposed rule 
be published for this rulemaking initiative.

Environmental Review

    The environmental impacts of this rule have been considered in a 
manner consistent with the provisions of NEPA (42 U.S.C. 4321-4347), 
the regulations of the Council on Environmental Quality (40 CFR 1500 
through 1508), and the NRCS regulations for compliance with NEPA (7 CFR 
part 650). NRCS conducted an analysis of the EQIP interim rule, which 
determined there will not be a significant impact to the human 
environment and as a result, an environmental impact statement (EIS) is 
not required to be prepared (40 CFR 1508.1(l)). The 2018 Farm Bill 
requires minor changes to NRCS conservation programs, and there are no

[[Page 67646]]

changes to the basic structure of the programs. The analysis has 
determined there will not be a significant impact to the human 
environment and as a result, an EIS is not required to be prepared (40 
CFR 1508.1(l)). While OMB has designated this rule as ``economically 
significant'' under Executive Order 12866, ``. . . economic or social 
effects are not intended by themselves to require preparation of an 
environmental impact statement'' (40 CFR 1502.16(b)), when not 
interrelated to natural or physical environmental effects. The EA and 
FONSI were available for review and comment for 30 days from the date 
of publication of the interim rule in the Federal Register. NRCS 
considered this input and updated the EA and FONSI with information 
relevant to environmental concerns and bearing on the proposed action.

Executive Order 12372

    Executive Order 12372, ``Intergovernmental Review of Federal 
Programs,'' requires consultation with State and local officials that 
would be directly affected by proposed Federal financial assistance. 
The objectives of the Executive Order are to foster an 
intergovernmental partnership and a strengthened Federalism, by relying 
on State and local processes for State and local government 
coordination and review of proposed Federal financial assistance and 
direct Federal development. For reasons specified in the final rule-
related notice regarding 7 CFR part 3015, subpart V (48 FR 29115, June 
24, 1983), the program and activities in this rule are excluded from 
the scope of Executive Order 12372.

Executive Order 12988

    This rule has been reviewed under Executive Order 12988, ``Civil 
Justice Reform.'' This rule will not preempt State or local laws, 
regulations, or policies unless they represent an irreconcilable 
conflict with this rule. Before any judicial actions may be brought 
regarding the provisions of this rule, the administrative appeal 
provisions of 7 CFR part 11 are to be exhausted.

Executive Order 13132

    This rule has been reviewed under Executive Order 13132, 
``Federalism.'' The policies contained in this rule do not have any 
substantial direct effect on 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, except as 
required by law. Nor does this rule impose substantial direct 
compliance costs on State and local governments. Therefore, 
consultation with the States is not required.

Executive Order 13175

    This rule has been reviewed in accordance with the requirements of 
Executive Order 13175, ``Consultation and Coordination with Indian 
Tribal Governments.'' Executive Order 13175 requires federal agencies 
to consult and coordinate with Tribes on a Government-to-Government 
basis on policies that have Tribal implications, including regulations, 
legislative comments or proposed legislation, and other policy 
statements or actions that have substantial direct effects on one or 
more Indian Tribes, on the relationship between the Federal Government 
and Indian Tribes, or on the distribution of power and responsibilities 
between the Federal Government and Indian Tribes.
    The USDA's Office of Tribal Relations (OTR) has assessed the impact 
of this rule on Indian Tribes and determined that this rule does not, 
to their knowledge, have Tribal implication that require Tribal 
consultation under Executive Order 13175. Tribal consultation for this 
rule was included in the two 2018 Farm Bill Tribal consultations held 
on May 1, 2019, at the National Museum of the American Indian, in 
Washington, DC, and on June 26-28, 2019, in Sparks, NV. For the May 1, 
Tribal consultation, the portion of the Tribal consultation relative to 
this rule was conducted by Bill Northey, USDA Under Secretary for the 
Farm Production and Conservation mission area, as part of the Title II 
session. There were no specific comments from Tribes on the EQIP rule 
during the Tribal consultation. If a Tribe requests consultation, NRCS 
will work with OTR to ensure meaningful consultation is provided where 
changes, additions, and modifications identified here in this rule are 
not expressly mandated by legislation. OTR has determined that Tribal 
consultation for this rule is not required at this time.
    Separate from Tribal consultation, communication, and outreach 
efforts are in place to assure that all producers, including Tribes (or 
their members), are provided information about the regulation changes. 
Specifically, NRCS obtains input through Tribal Conservation Advisory 
Councils. A Tribal Conservation Advisory Council may be an existing 
Tribal committee or department and may also constitute an association 
of member Tribes organized to provide direct consultation to NRCS at 
the State, regional, and national levels to provide input on NRCS 
rules, policies, programs, and impacts on Tribes. Tribal Conservation 
Advisory Councils provide a venue for agency leaders to gather input on 
Tribal interests. Additionally, NRCS held several sessions with Indian 
Tribes and Tribal entities across the country in FY 2019 to describe 
the 2018 Farm Bill changes to NRCS conservation programs, obtain input 
about how to improve Tribal and Tribal member access to NRCS 
conservation assistance, and make any appropriate adjustments to the 
regulations that will foster such improved access. NRCS will continue 
to conduct these sessions with Indian Tribes and Tribal entities.

Unfunded Mandates

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) (Pub. 
L. 104-4), requires federal agencies to assess the effects of their 
regulatory actions on State, local, and Tribal Governments or the 
private sector. Agencies generally must prepare a written statement, 
including cost-benefits analysis, for proposed and final rules with 
Federal mandates that may result in expenditures of $100 million or 
more in any 1 year 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. 
Therefore, this rule is not subject to the requirements of UMRA.

Federal Assistance Programs

    The title and number of the Federal Domestic Assistance Programs in 
the Catalog of Federal Domestic Assistance to which this rule applies:
    10.912--Environmental Quality Incentives Program.

E-Government Act Compliance

    NRCS and CCC are committed to complying with the E-Government Act, 
to promote the use of the internet and other information technologies 
to provide increased opportunities for citizen access to Government 
information and services, and for other purposes.

List of Subjects in 7 CFR Part 1466

    Administrative practice and procedure, Animal welfare, Natural 
resources, Soil conservation, Water resources.
    Accordingly, for the reasons stated above, the interim rule 
amending 7 CFR part 1466, which was published at 84

[[Page 67647]]

FR 69272 on December 17, 2019, is adopted as final 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; and 16 U.S.C. 3839aa-3839-8.


0
2. Amend Sec.  1466.1 by revising paragraphs (a)(2) through (4) to read 
as follows:


Sec.  1466.1  Applicability.

    (a) * * *
    (2) Through EQIP, NRCS provides technical and financial assistance 
to eligible agricultural producers, including nonindustrial private 
forest (NIPF) landowners and Indian Tribes, to help implement 
conservation practices that address resource concerns related to 
organic production; soil, water, and air quality; wildlife habitat; 
nutrient management associated with crops and livestock; pest 
management; ground and surface water conservation; irrigation 
management; drought resiliency measures; adapting to and mitigating 
against increasing weather volatility; energy conservation; and related 
resource concerns.
    (3) EQIP's financial and technical assistance helps:
    (i) Producers comply with environmental regulations and enhance 
agricultural and forested lands in a cost-effective and environmentally 
beneficial manner; and
    (ii) To the maximum extent practicable, avoid the need for resource 
and regulatory programs.
    (4) The purposes of EQIP are achieved by planning and implementing 
conservation practices on eligible land to address identified, new, or 
expected resource concerns, including such resource concerns related to 
lands enrolled under a Conservation Reserve Program contract that are 
transitioning into production as specified in 16 U.S.C. 3835(f).
* * * * *

0
3. Amend Sec.  1466.3 by revising the definition for ``Comprehensive 
nutrient management plan (CNMP)'' to read as follows:


Sec.  1466.3  Definitions.

* * * * *
    Comprehensive nutrient management plan (CNMP) means a conservation 
plan that is specifically for an AFO. A CNMP identifies conservation 
practices and management activities that, when implemented as part of a 
conservation system, will manage sufficient quantities of manure, waste 
water, or organic by-products associated with a waste management 
facility. A CNMP incorporates practices to use animal manure and 
organic by-products as a beneficial resource while protecting all 
applicable natural resources including water and air quality associated 
with an AFO. A CNMP is developed to assist an AFO owner or operator in 
meeting all applicable local, Tribal, State, and Federal water quality 
goals or regulations. For nutrient-impaired stream segments or water 
bodies, additional management activities or conservation practices may 
be required by local, Tribal, State, or Federal water quality goals or 
regulations.
* * * * *

0
4. Amend Sec.  1466.4 by revising paragraph (a) to read as follows:


Sec.  1466.4  National priorities.

    (a) The national priorities in paragraphs (a)(1) through (8) of 
this section, consistent with statutory resources concerns, include 
soil quality, water quality and quantity, plants, energy, wildlife 
habitat, air quality, increased weather volatility, and related natural 
resource concerns, that may be used in EQIP implementation are:
    (1) Reductions of nonpoint source pollution, such as nutrients, 
sediment, pesticides, or excess salinity in impaired watersheds 
consistent with total maximum daily loads (TMDL) where available;
    (2) The reduction of ground and surface water contamination;
    (3) The reduction of contamination from agricultural sources, such 
as animal feeding operations;
    (4) Conservation of ground and surface water resources, including 
improvement of irrigation efficiency and increased resilience against 
drought and weather volatility;
    (5) Reduction of emissions, such as particulate matter, nitrogen 
oxides, volatile organic compounds, and ozone precursors and depleters 
that contribute to air quality impairment violations of the National 
Ambient Air Quality Standards;
    (6) Reduction in soil erosion and sedimentation from unacceptable 
levels and improvement of soil health on eligible land;
    (7) Promotion of at-risk species habitat conservation including 
development and improvement of wildlife habitat; and
    (8) Energy conservation to help save fuel, improve efficiency of 
water use, maintain production, and protect soil and water resources by 
more efficiently using fertilizers and pesticides.
* * * * *

0
5. Amend Sec.  1466.6 by revising paragraph (d)(1) to read as follows:


Sec.  1466.6  Program requirements.

* * * * *
    (d) * * *
    (1) Notwithstanding paragraphs (b) and (c) of this section, NRCS 
may enter into an EQIP contract with a water management entity provided 
the criteria in paragraphs (d)(1)(i), (ii), and (iii) of this section 
can be met:
    (i) The entity is a public or semipublic agency or organization,
    (ii) Its purpose is to assist private agricultural producers manage 
water distribution or conservation systems, and
    (iii) The water conservation or irrigation practices support a 
water conservation project under Sec.  1466.20(c) that will effectively 
conserve water, provide fish and wildlife habitat, or provide for 
drought-related environmental mitigation, as determined by the Chief.
* * * * *

0
6. Amend Sec.  1466.7 by revising paragraph (d) to read as follows:


Sec.  1466.7  EQIP plan of operations.

* * * * *
    (d) If an EQIP plan of operations includes an animal waste storage 
or treatment facility to be implemented on an AFO, the participant must 
agree to:
    (1) Develop a CNMP by the end of the contract period; and
    (2) Implement any applicable conservation practices in the EQIP 
plan of operation consistent with an approved CNMP.
* * * * *

0
7. Amend Sec.  1466.20 as follows:
0
a. In paragraph (b)(2)(viii), remove the word ``and'';
0
b. Add paragraph (b)(2)(ix); and
0
c. Redesignate paragraph (b)(2)(xi) as paragraph (b)(2)(x).
    The addition reads as follows:


Sec.  1466.20  Application for contracts and selecting applications.

* * * * *
    (b) * * *
    (2) * * *
    (ix) The land is enrolled under a CRP contract transitioning to a 
covered farmer or rancher as specified in 16 U.S.C. 3835(f); and
* * * * *

0
8. Amend Sec.  1466.31 by revising paragraph (a) to read as follows:

[[Page 67648]]

Sec.  1466.31  Purpose and scope.

    (a) The purpose of Conservation Innovation Grants (CIG) is to 
stimulate the development and adoption of innovative conservation 
approaches and technologies, including field research, while leveraging 
Federal investment in environmental enhancement and protection in 
conjunction with agricultural production. Notwithstanding any 
limitation of this part, NRCS administers CIG in accordance with this 
subpart. Unless otherwise provided for in this subpart, grants under 
CIG are subject to the provisions of 2 CFR part 200, Uniform 
Administrative Requirements, Cost Principles, and Audit Requirements 
for Federal Awards.
* * * * *

0
9. Amend Sec.  1466.32 by redesignating paragraphs (c) and (d) as 
paragraphs (d) and (e), respectively, and by adding a new paragraph (c) 
to read as follows:


Sec.  1466.32  Conservation innovation grant funding.

* * * * *
    (c) Authority to reduce matching requirement. The Chief may reduce 
the matching requirements of paragraphs (b)(1) and (2) of this section, 
provided that the applicant is:
    (1) An historically underserved producer;
    (2) A community-based organization comprised of, representing, or 
exclusively working with historically underserved producers on a CIG 
project;
    (3) Developing an innovative conservation approach or technology 
specifically targeting historically underserved producers' unique needs 
and limitations; or
    (4) An 1890 or 1994 land grant institution (7 U.S.C. 3222 et seq.), 
Hispanic-serving institution (20 U.S.C. 1101a), or other minority-
serving institution, such as an historically Black college or 
university (20 U.S.C. 1061), a tribally controlled college or 
university (25 U.S.C. 1801), or Asian American and Pacific Islander-
serving institution (20 U.S.C. 1059g).
* * * * *

Kevin Norton,
Acting Chief, Natural Resources Conservation Service.
Robert Stephenson,
Executive Vice President, Commodity Credit Corporation.
[FR Doc. 2020-23437 Filed 10-23-20; 8:45 am]
BILLING CODE 3410-16-P