Agricultural Conservation: USDA Should Improve Its Management of 
Key Conservation Programs to Ensure Payments Promote		 
Environmental Goals (17-JAN-07, GAO-07-370T).			 
                                                                 
The Environmental Quality Incentives Program (EQIP) and the	 
Conservation Security Program (CSP), administered by the U.S.	 
Department of Agriculture's (USDA) Natural Resources Conservation
Service (NRCS), are designed to promote conservation goals. In	 
recently issued reports on these programs, GAO assessed (1)	 
NRCS's process for allocating EQIP funds to the states to	 
optimize environmental benefits, (2) NRCS's measures to monitor  
EQIP's performance, and (3) the legislative and regulatory	 
measures available to prevent duplication between CSP and other  
conservation programs, such as EQIP.				 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-07-370T					        
    ACCNO:   A64918						        
  TITLE:     Agricultural Conservation: USDA Should Improve Its       
Management of Key Conservation Programs to Ensure Payments	 
Promote Environmental Goals					 
     DATE:   01/17/2007 
  SUBJECT:   Agricultural programs				 
	     Conservation					 
	     Conservation programs				 
	     Federal aid to states				 
	     Funds management					 
	     Performance measures				 
	     Program evaluation 				 
	     Program management 				 
	     Farmers						 
	     Farmland						 
	     Conservation Security Program			 
	     Environmental Quality Incentives Program		 

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GAO-07-370T

   

     * [1]NRCS's Process for Allocating EQIP Funds to the States Does

          * [2]NRCS Does Not Have A Documented Rationale for Formula Factor
          * [3]Financial Assistance Formula Relies on Some Questionable and

     * [4]NRCS Has Begun to Develop More Outcome-Oriented Performance
     * [5]Legislative and Regulatory Measures Reduce the Potential for
     * [6]Contact and Staff Acknowledgments
     * [7]Appendix I: Description of Key USDA Conservation Programs

          * [8]Order by Mail or Phone

Testimony

Before the Committee on Agriculture, Nutrition, and Forestry, U.S. Senate

United States Government Accountability Office

GAO

For Release on Delivery Expected at 9:30 a.m. EST

Wednesday, January 17, 2007

AGRICULTURAL CONSERVATION

USDA Should Improve Its Management of Key Conservation Programs to Ensure
Payments Promote Environmental Goals

Statement of Lisa Shames, Acting Director Natural Resources and
Environment

GAO-07-370T

Mr. Chairman and Members of the Committee:

I am pleased to be here today to discuss the U.S. Department of
Agriculture's (USDA) management of two of its agricultural conservation
programs--the Environmental Quality Incentives Program (EQIP) and the
Conservation Security Program (CSP). Because farmers and ranchers own and
manage about 940 million acres, or about half of the continental United
States' land area, they are among the most important stewards of our soil,
water, and wildlife habitat. EQIP and CSP, administered by USDA's Natural
Resources Conservation Service (NRCS), are designed to encourage and
reward activities that promote conservation goals. EQIP provides
assistance to farmers and ranchers to take new actions aimed at addressing
identified conservation problems, whereas CSP rewards farmers and ranchers
who already meet very high standards of conservation and environmental
management in their operations.

We at GAO are anxious to assist the 110th Congress in meeting its
oversight agenda. To that end, we have recommended that ensuring the
integrity and equity of existing farm programs is a key area needing
congressional oversight.1 The Farm Security and Rural Investment Act of
20022 (2002 farm bill) authorized funding for several agricultural
conservation programs, among them EQIP and CSP, estimated by the
Congressional Budget Office to be $20.8 billion for fiscal years 2002
through 2007. In fiscal year 2006 alone, EQIP and CSP provided about $1
billion and $260 million, respectively, in financial and technical
assistance to farmers and ranchers. Given the size and significance of
these programs in protecting rural areas from land degradation, diminished
water and air quality, and loss of wildlife habitat, it is essential that
they be managed effectively and efficiently. Appendix I provides
information on authorized funding for these and other key USDA
conservation programs.

My testimony today is based on our recent reports evaluating NRCS's
implementation of EQIP3 and CSP.4 I will focus on three primary issues
discussed in these two reports: (1) NRCS's process for allocating EQIP
funds to the states to optimize environmental benefits, (2) NRCS's
measures to monitor EQIP performance, and (3) the legislative and
regulatory measures available to prevent duplication between CSP and other
USDA conservation programs and the duplication that has occurred. To
perform this work, we reviewed relevant statutory provisions, NRCS
regulations, program documentation, and guidelines for implementing EQIP
and CSP and spoke with NRCS officials. Our work was conducted in
accordance with generally accepted government auditing standards.

1GAO, Suggested Areas for Oversight for the 110th Congress, [9]GAO-07-235R
(Washington, D.C.: Nov. 17, 2006).

2Pub. L. No. 107-171, 116 Stat. 134 (2002).

3GAO, Agricultural Conservation: USDA Should Improve Its Process for
Allocating Funds to States for the Environmental Quality Incentives
Program, [10]GAO-06-969 (Washington, D.C.: Sept. 22, 2006).

In summary, we reported that NRCS's process for allocating EQIP funds to
the states does not clearly link to the program's purpose of optimizing
environmental benefits; as such, NRCS may not be directing EQIP funds to
states with the most significant environmental concerns arising from
agricultural production. We also reported that NRCS has developed
long-term, outcome-oriented measures to assess changes to the environment
resulting from EQIP practices as part of its 2005 strategic planning
effort. These measures could help the agency refine its process for
allocating funds to the states through its financial assistance formula by
directing funds toward areas of the country that need the most
improvement. However, at the time of our report, NRCS had not yet done so.
Finally, with respect to CSP, we reported that despite provisions in the
2002 farm bill and NRCS regulations and procedures designed to reduce the
potential for duplication between CSP and other conservation programs,
duplicate payments for the same conservation practice or activity on the
same land have occurred. On the basis of these findings, we made
recommendations to improve USDA's process for allocating EQIP funds to the
states and to develop a process to preclude and identify duplicate
payments between CSP and other conservation programs.

4GAO, Conservation Security Program: Despite Cost Controls, Improved USDA
Management Is Needed to Ensure Proper Payments and Reduce Duplication with
Other Programs, [11]GAO-06-312 (Washington, D.C.: April 28, 2006).

NRCS's Process for Allocating EQIP Funds to the States Does Not Link to the
Program's Purpose of Optimizing Environmental Benefits

NRCS's process for providing EQIP funds to the states is not clearly
linked to the program's purpose of optimizing environmental benefits. In
particular, NRCS's general financial assistance formula, which accounts
for approximately two-thirds of funding provided to the states, does not
have a documented rationale for each of the formula's factors and weights,
which are used to determine the allocation of funds to the states to
address environmental issues. Thus, it is not always clear whether the
formula factors and weights direct funds to the states as effectively as
possible. In addition, the financial assistance formula relies on some
questionable and outdated data. As a result, NRCS may not be directing
EQIP funds to states with the most significant environmental concerns
arising from agricultural production.

NRCS Does Not Have A Documented Rationale for Formula Factors and Weights

In fiscal year 2006, approximately 65 percent of EQIP funds were
considered general financial assistance--funds for installing conservation
practices--and were allocated using a general financial assistance
formula. This formula contains 31 factors related to the availability of
natural resources and the presence of environmental concerns or problems.
For example, factors in the formula measure acres of wetlands and at-risk
species habitat, pesticide and nitrogen runoff, and the ratio of
commercial fertilizers to cropland. NRCS assigns each of the formula's
factors a weight that determines the funds to be allocated to states based
on that factor. For example, factors with the highest weights include
acres of highly erodible cropland, acres of fair and poor rangeland, the
quantity of livestock, and the quantity of animal waste generated. A
state's total allocation is composed of the funds it receives for each of
the 31 factors.

NRCS has periodically modified factors and weights to emphasize different
national priorities, most recently in fiscal year 2004, following the
passage of the 2002 farm bill. However, NRCS has not documented the basis
for its decisions regarding the formula factors and weights nor explained
how they achieve the program's purpose of optimizing environmental
benefits. Thus, it is not always clear whether the formula factors and
weights help direct funds to the states as effectively as possible.

For example, NRCS has not demonstrated that it has the most appropriate
water quality factors in its formula. Specifically, the formula includes a
factor addressing impaired rivers and streams but no factor for impaired
lakes and other bodies of water. Moreover, it is not certain whether the
impaired rivers and streams factor results in funds being awarded on the
basis of general water quality concerns or water pollution specifically
caused by agricultural production. As a result, it was not certain whether
the formula allocates funds as effectively as possible to states with
water quality concerns arising from agricultural production.

While the factors in the EQIP general financial assistance formula
determine what resource and environmental characteristics are considered
when allocating funds, the weights associated with the factors directly
affect how much total funding is provided for each factor and, thus, the
amount of money each state receives. Small differences in the factor
weights can shift the amount of financial assistance directed at a
particular resource concern. For example, in 2006, if the weight of any of
the 31 factors had increased by 1 percent, $6.5 million would have been
allocated on the basis of that factor at the expense of one or more other
factors. Such a shift could affect the amount of financial assistance
received by each state. The potential for the weights to significantly
affect the amount of funding a state receives underscores the importance
of having a well-founded rationale for assigning them.

Some stakeholders we spoke with questioned NRCS's assignment of weights to
certain factors in the financial assistance formula because they did not
believe NRCS's formula adequately reflected the states' environmental
priorities. For example, the formula allocates 6.3 percent of EQIP funds
to the states on the basis of factors specifically associated with animal
feeding operations. However, states have spent more than 6.3 percent of
their EQIP funding on conservation practices related to animal feeding
operations. For example, in fiscal year 2005, states spent a total of 11
percent of EQIP financial assistance, or $91.1 million, on just one such
practice--the construction of animal waste storage facilities. This
discrepancy suggests that the weights in the formula may not reflect
states' priorities.

Financial Assistance Formula Relies on Some Questionable and Outdated Data

Weaknesses in the financial assistance formula are compounded by NRCS's
use of questionable and outdated data as they apply to the formula.
Accurate data are key to ensuring that funds are distributed to states as
intended. However, we identified several methodological weaknesses in the
data sources: (1) data that were used more than once in the formula, (2)
data sources whose accuracy could not be verified, and (3) data that were
not as current as possible.

First, 5 of the 29 data sources in the financial assistance formula were
used more than once for separate factors, potentially causing NRCS to
overemphasize some environmental concerns at the expense of others. For
example, NRCS uses the same data--data estimating the potential for
pesticide and nitrogen runoff from agricultural land--for two factors in
the formula intended to represent unique environmental concerns. Using the
same data for multiple factors may result in more emphasis being placed on
certain environmental concerns than intended. Furthermore, using data
created for one factor for a second factor also makes the formula less
transparent and potentially less reliable for allocating state funding.

Second, NRCS could not confirm the source of data used in 10 factors in
the formula; as such, we could not determine the accuracy of the data,
verify how NRCS generated the data, or fully understand the basis on which
the agency allocates funding. For example, we could not verify how NRCS
generated data for factors measuring the quantities of livestock and
animal waste. NRCS said it had not retained documentation on how the data
for these factors were calculated. As a result, it was uncertain whether
NRCS had chosen the most appropriate data as its basis for allocating
funds to states with pollution problems from livestock or whether the data
were accurately calculated.

Third, NRCS does not use the most current data for six factors in the
formula. For example, according to NRCS, the source of data on the ratio
of commercial fertilizers to cropland was a 1995 report by the Association
of American Plant Food Control Officials. We found a 2005 version of the
same report with more current data. The absence of the most recent data
for these six factors raises questions about whether the formula allocates
funds to areas of the country that currently have the greatest
environmental needs, because recent changes in a state's agricultural or
environmental status may not be reflected.

Because of our concerns about the general financial assistance formula, we
recommended that NRCS ensure its rationale for the factors and weights was
documented and addressed program priorities, and the data sources used in
the formula were accurate and current. In responding to our report, USDA
agreed that the EQIP formula needed review but did not agree with our
assessment that NRCS's funding process lacked a clear link to the
program's purpose of optimizing environmental benefits. We continue to
believe, however, that the weaknesses we identified in the general
financial assistance formula lessen its ability to optimize environmental
benefits. Additional information describing its reasons for including or
excluding factors in the formula would help ensure that EQIP's purpose of
optimizing environmental benefits is more evident.

NRCS Has Begun to Develop More Outcome-Oriented Performance Measures for EQIP,
but Has Not Yet Linked Them to the Funding Allocation Process

NRCS has begun to develop more long-term, outcome-oriented performance
measures to assess changes to the environment resulting from EQIP
practices. In addition to providing information to better gauge program
performance, these measures could also help NRCS refine its funding
allocation process to the states by directing funds to areas of the
country that need the most improvement. However, at the time of our
report, NRCS did not yet have any plans to link these performance measures
to the EQIP funding allocation process.

In 2000, we reported that performance measures tied to outcomes would
better communicate the results NRCS intended its conservation programs to
achieve and would be more useful in judging NRCS's performance in carrying
out its mission.5 In 2002, NRCS established annual performance measures
for EQIP. However, they were primarily program outputs--the number and
type of conservation practices installed--and as such provided limited
information for decision makers.

Subsequently, as part of its 2005 strategic planning effort, NRCS
developed long-term, outcome-oriented performance measures to assess
changes to the environment resulting from the installation of EQIP
conservation practices. These measures include such things as reducing
sediment runoff from farms, improving soil condition on working cropland,
and increasing water conservation. They also include proposed targets for
each measure to be achieved by 2010, such as reducing sediment runoff by
18.5 million tons annually. According to NRCS, it has developed baselines
for these performance measures, and plans to assess and report on them
once computer models and other data collection methods that estimate
environmental change are completed.

According to the Director of NRCS's Strategic Planning and Performance
Division, NRCS expects to assess and report on the status of all measures
by 2010 but will be able to assess the results of some measures sooner,
such as improved soil condition on working cropland. In the meantime, the
agency will continue to use its existing annual measures to assess
performance. The director acknowledged that the outcome-oriented measures
were not as comprehensive as needed but represented measures

5GAO, Natural Resources Conservation Service: Additional Actions Needed to
Strengthen Program and Financial Accountability, [12]GAO/RCED-00-83
(Washington, D.C.: April 7, 2000).

NRCS could reasonably assess using modeling and data collection methods
that would soon become available. NRCS plans to continue to improve its
performance measures.

Although we did not assess the comprehensiveness of the EQIP performance
measures, the additional information they provide about the results of
EQIP outcomes should allow NRCS to better gauge program performance. As a
next step, such information could also help the agency refine its process
for allocating funds to the states through its general financial
assistance formula by directing funds toward practices that address
unrealized performance targets and areas of the country that need the most
improvement. The Chief of NRCS's Environmental Improvement Programs Branch
agreed that information about program performance might eventually be
linked to the EQIP funding allocation process. However, at the time of our
report, the agency did not have plans to make this linkage.

We recommended that the Secretary of Agriculture direct NRCS to continue
to analyze current and newly developed outcome-oriented performance
measures for EQIP and use this information to make any further revisions
to the financial assistance formula to ensure funds are directed to areas
of highest priority. In its response, NRCS stated that the current
measures have been revised to reflect the most recent results of its
effort to track and report program performance.

Legislative and Regulatory Measures Reduce the Potential for Duplication between
CSP and Other Programs, but the Potential Remains for Duplicate Payments, and
Such Payments Have Occurred

A number of legislative and regulatory actions have been taken that reduce
the potential for duplication between CSP and other USDA conservation
programs, such as EQIP. For example, the 2002 farm bill provides that CSP
may reward producers for maintaining conservation practices that they have
already undertaken, whereas other programs generally provide assistance to
encourage producers to take new actions to address conservation problems
on working lands or to idle or retire environmentally sensitive land from
agricultural production. In addition, the 2002 farm bill explicitly
prohibits duplicate payments under CSP and other conservation programs for
the same practice on the same land. It also prohibits CSP payments for
certain activities that can be funded under other conservation programs,
such as the construction or maintenance of animal waste storage or
treatment facilities.

In addition, CSP regulations, promulgated by USDA, were designed to
prevent duplication between CSP and other conservation programs. For
example, the regulations establish higher minimum eligibility standards
for CSP than for other programs, which help to differentiate the applicant
pool for CSP from the potential applicants for these other programs. The
regulations also encourage CSP participants to implement conservation
actions, known as enhancements, to achieve a level of treatment that
generally exceeds the level required by other USDA conservation programs.

Despite these actions, the potential for duplicate payments still exists
because of similarities in conservation actions financed through CSP and
other programs, and our analysis has revealed that duplicate payments have
occurred. Our analysis of 2004 payments data showed that 172 (or 8
percent) of the 2,180 producers who received a CSP payment in 2004 also
received an EQIP payment that year. Among the 172 producers, we identified
72 who received a total of 121 payments that appeared to be for similar or
related conservation actions. We then selected 11 of these producers, who
received a total of 12 payments under each program, for more detailed
analysis and found that in 8 cases duplicate payments had occurred. For
example, four of these duplicate payments were made to producers who
received a CSP enhancement payment and an EQIP payment for conservation
actions that appeared to be similar. In one of these cases, a producer
received a CSP pest management enhancement payment of $9,160 for
conservation crop rotation and, on the same parcel of land, an EQIP
payment of $795 for the same conservation action--conservation crop
rotation.

NRCS state officials agreed that the payments made in these four cases
were duplicates. They stated that they were unaware that such duplication
was occurring and that they would inform their district offices of it.
NRCS headquarters officials stated that the agency lacks a comprehensive
process to either preclude duplicate payments or identify them after a
contract has been awarded. Instead, these officials said, as a guard
against potential duplication, NRCS relies on the institutional knowledge
of its field staff and the records they keep.

NRCS has the authority to recover duplicate payments. CSP contracts, by
way of reference, include a clause stating that CSP participants cannot
receive duplicate payments. Under a CSP contract, as required in the 2002
farm bill, a producer agrees that on violation of any term or condition of
the contract to refund payments and forfeit all rights to receive payments
or to refund or accept adjustments to payments, depending on whether the
Secretary of Agriculture determines that termination of the contract is or
is not warranted, respectively.

Duplicate payments reduce program effectiveness and, because of limited
funding, may result in some producers not receiving program benefits for
which they are otherwise eligible. For these reasons, we recommended that
the Secretary of Agriculture direct the Chief of NRCS to (1) develop a
comprehensive process, such as an automated system, to review CSP contract
applications to ensure that CSP payments, if awarded, would not duplicate
payments made by other USDA conservation programs; and (2) develop a
process to efficiently review existing CSP contracts to identify cases
where CSP payments duplicate payments made under other programs and take
action to recover appropriate amounts and to ensure that these duplicate
payments are not repeated in fiscal year 2006 and beyond.

Regarding the first recommendation, in July 2006, NRCS said it had created
an automated system within its contracting software to conduct a
comparison between existing contracts for EQIP and other conservation
programs and new CSP applications to reveal potential areas of overlapping
practices. In addition, NRCS indicated that for the fiscal year 2006 CSP
sign-up, it would require applicants to complete a form that asks an
applicant to certify whether or not they are receiving payments from
another conservation program on any of the land being offered for
enrollment in CSP. These actions appear to be steps in the right
direction, but we have not assessed their effectiveness. Regarding the
second recommendation, NRCS indicated that all identified duplicate
payments would be dealt with according to the NRCS contracting manual. We
do not know the extent to which NRCS has identified and recovered
duplicate payments.

In conclusion, EQIP and CSP are key agricultural conservation programs
that can play an invaluable role in encouraging farmers and ranchers to
act as stewards of the nation's natural resources. However, the weaknesses
we identified in the management of EQIP and CSP funds may lessen these
programs' effectiveness. Refining the EQIP allocation formula to ensure
funds are provided to states in a manner that optimizes environmental
benefits, continuing to develop outcome-oriented performance measures to
help refine its funding allocation process, and developing processes
designed to eliminate duplicate payments between CSP and other programs
would enhance the programs' ability to effectively promote conservation
among U.S. agricultural producers. Furthermore, oversight of these
programs, such as today's hearing, helps ensure funds are spent as
economically, efficiently and effectively as possible and benefit the
agricultural sector as intended. Such oversight is especially critical in
light of the nation's current deficit and growing long-term fiscal
challenges.

Mr. Chairman, this concludes my prepared statement. I would be pleased to
respond to any questions that you or other Members of the Committee may
have.

Contact and Staff Acknowledgments

Contact points for our Offices of Congressional Relations and Public
Affairs may be found on the last page of this statement. For further
information about this testimony, please contact Lisa Shames, Acting
Director, Natural Resources and Environment, (202) 512-3841 or
[email protected] . Key contributors to this statement were James R.
Jones, Jr., Assistant Director; Gary Brown; Thomas Cook; Paige Gilbreath;
and Carol Herrnstadt Shulman.

Appendix I: Description of Key USDA Conservation Programs

Dollars in millions 
                                                         Total authorization, 
                                                            fiscal years 2002 
Program             Description                               through 2007 
Conservation        Provides annual rental payments                $11,118 
Reserve Program     and cost-share and technical                           
                       assistance to establish permanent                      
                       vegetative land cover in exchange                      
                       for taking environmentally                             
                       sensitive cropland out of                              
                       production for 10 to 15 years.                         
                       Most program lands are enrolled                        
                       through the use of contracts and                       
                       competitive bidding during                             
                       designated sign-ups. Some                              
                       economic uses of enrolled land                         
                       are allowed with a reduction of                        
                       annual rental payments, such as                        
                       the installation of wind turbines                      
                       and managed haying and grazing.                        
                       Up to 39.2 million acres may be                        
                       enrolled at any one time.                              
Conservation        Offers various payments and                          a 
Security Program    technical assistance to support                        
                       ongoing stewardship of                                 
                       agricultural land through 5- to                        
                       10-year contracts to promote                           
                       conservation and the improvement                       
                       of soil, water, air, energy, and                       
                       plant and animal life on private                       
                       and tribal agricultural lands.                         
                       Unlike other USDA conservation                         
                       programs that provide assistance                       
                       to take new actions aimed at                           
                       addressing identified                                  
                       conservation problems, CSP                             
                       rewards farmers and ranchers who                       
                       already meet very high standards                       
                       of conservation and environmental                      
                       management in their operations.                        
Environmental       Offers incentive and cost-share                  5,800 
Quality Incentives  payments and technical assistance                      
Program             through 1- to 10-year contracts                        
                       to implement structural and land                       
                       management practices or to                             
                       develop a comprehensive nutrient                       
                       management plan. At least 60                           
                       percent of annual funds made                           
                       available for cost-share and                           
                       incentive payments are required                        
                       to be targeted at practices                            
                       relating to livestock production.                      
Farmland Protection Purchases easements or other                       597 
Program             interests in eligible land (up to                      
                       50 percent of fair market value)                       
                       for the purpose of protecting                          
                       topsoil by limiting                                    
                       nonagricultural uses of the land.                      
                       Eligible land means land on a                          
                       farm or ranch that is subject to                       
                       a pending offer for purchase from                      
                       an eligible entity and that has                        
                       prime, unique, or other                                
                       productive soil or that contains                       
                       historical or archeological                            
                       resources. Eligible land includes                      
                       cropland, rangeland, grassland,                        
                       pastureland, and forestland that                       
                       is an incidental part of the                           
                       agricultural operation.                                
Grassland Reserve   Offers permanent and 30-year                       254 
Program             easements and 10- to 30-year                           
                       rental agreements to grassland                         
                       owners to assist owners in                             
                       restoring and conserving eligible                      
                       land.b Up to 2 million acres may                       
                       be enrolled.                                           
Wetlands Reserve    Targets restoration of                           1,506 
Program             prior-converted and farmed                             
                       wetlands to a wetland condition.                       
                       Acreage can be enrolled in the                         
                       program through the use of                             
                       permanent easements, 30-year                           
                       easements, and restoration                             
                       cost-share agreements. Program                         
                       lands may be used for compatible                       
                       economic uses such as hunting,                         
                       fishing, or limited timber                             
                       harvests. Up to 2.275 million                          
                       acres may be enrolled.                                 
Wildlife Habitat    Offers cost-share payments                         360 
Incentives Program  through 5- to 10-year agreements                       
                       to develop and protect and                             
                       restore wildlife habitat. Allows                       
                       up to 15 percent of funds each                         
                       year to be used for increased                          
                       cost-share assistance to                               
                       producers who enter into 15-year                       
                       agreements.                                            

Sources: GAO analysis of U.S. Department of Agriculture and Congressional
Budget Office information and the 2002 farm bill.

aCongress authorized the Conservation Security Program without placing
limits on either its funding or the number of acres enrolled, although at
times Congress has capped its funding in other legislation.

bIn states that impose a maximum duration for easements, the Secretary of
Agriculture can use an easement for the maximum duration allowed under
state law.

(360790)

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Highlights of [20]GAO-07-370T , testimony before the Committee on
Agriculture, Nutrition, and Forestry, U.S. Senate

January 2007

AGRICULTURAL CONSERVATION

USDA Should Improve Its Management of Key Conservation Programs to Ensure
Payments Promote Environmental Goals

The Environmental Quality Incentives Program (EQIP) and the Conservation
Security Program (CSP), administered by the U.S. Department of
Agriculture's (USDA) Natural Resources Conservation Service (NRCS), are
designed to promote conservation goals. In recently issued reports on
these programs, GAO assessed (1) NRCS's process for allocating EQIP funds
to the states to optimize environmental benefits, (2) NRCS's measures to
monitor EQIP's performance, and (3) the legislative and regulatory
measures available to prevent duplication between CSP and other
conservation programs, such as EQIP.

[21]What GAO Recommends

GAO recommended that NRCS (1) ensure that the factors and weights used in
EQIP's general financial assistance formula are documented and linked to
program priorities, and data sources are accurate and current, (2)
continue to analyze and use information from its performance measures to
revise the financial assistance formula, and (3) develop a comprehensive
process to preclude and identify duplicate payments between CSP and other
conservation programs. USDA agreed that the EQIP financial assistance
formula needed review and said it has improved oversight to cross-check
payments to determine if duplicate payments have been made. USDA did not
agree that the EQIP funding process lacked a clear link to the program's
purpose.

Because farmers and ranchers own and manage about 940 million acres, or
about half of the continental United States' land area, they are among the
most important stewards of our soil, water, and wildlife habitat. EQIP
provides assistance to farmers and ranchers to take new actions aimed at
addressing identified conservation problems, whereas CSP rewards farmers
and ranchers who already meet very high standards of conservation and
environmental management on their operations. In fiscal year 2006, EQIP
and CSP provided about $1 billion and $260 million, respectively, in
financial and technical assistance to farmers and ranchers. Efficient and
effective management of these programs by NRCS is especially important in
light of the nation's current deficit and growing long-term fiscal
challenges. GAO found the following weaknesses in the management of EQIP
and CSP:

           o NRCS's process for providing EQIP funds to states is not clearly
           linked to the program's purpose of optimizing environmental
           benefits; as such, NRCS may not be directing funds to states with
           the most significant environmental concerns arising from
           agricultural production. To allocate most EQIP funds, NRCS uses a
           general financial assistance formula that consists of 31 factors
           and weights. However, NRCS does not have a documented rationale
           for how each factor contributes to accomplishing the program's
           purpose. In addition, some data that NRCS uses in applying the
           formula are questionable or outdated.

           o NRCS has begun to develop long-term, outcome-oriented
           performance measures for EQIP. Such measures can provide
           information to better gauge program performance and also help NRCS
           refine its process for allocating funds to the states by directing
           funds to areas of the country that need the most improvement.
           However, NRCS did not have plans to link these measures to the
           EQIP funding allocation process.

           o Despite legislative and regulatory provisions, it is still
           possible for producers to receive duplicate payments through CSP
           and other USDA conservation programs because of similarities in
           the conservation actions financed through these programs. However,
           NRCS did not have a comprehensive process to preclude or identify
           such duplicate payments. In reviewing NRCS's payments data, GAO
           found a number of examples of duplicate payments.

Ensuring the integrity and equity of existing farm programs is a key area
needing enhanced congressional oversight. Such oversight can help ensure
that conservation programs, such as EQIP and CSP, benefit the agricultural
sector as intended and protect rural areas from land degradation,
diminished water and air quality, and loss of wildlife habitat.

References

Visible links

   9. http://www.gao.gov/cgi-bin/getrpt?GAO-07-235R
  10. http://www.gao.gov/cgi-bin/getrpt?GAO-06-969
  11. http://www.gao.gov/cgi-bin/getrpt?GAO-06-312
  12. http://www.gao.gov/cgi-bin/getrpt?GAO/RCED-00-83  
  20. http://www.gao.gov/cgi-bin/getrpt?GAO-07-370T
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