Environmental Quality Incentives Program

 
CONTENT
Federal Register, Volume 84 Issue 242 (Tuesday, December 17, 2019)
[Federal Register Volume 84, Number 242 (Tuesday, December 17, 2019)]
[Rules and Regulations]
[Pages 69272-69293]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-26872]
[[Page 69271]]
Vol. 84
Tuesday,
No. 242
December 17, 2019
Part IV
Department of Agriculture
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Commodity Credit Corporation
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7 CFR Part 1466
Environmental Quality Incentives Program; Final Rule
Federal Register / Vol. 84 , No. 242 / Tuesday, December 17, 2019 /
Rules and Regulations
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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.
ACTION: Interim rule.
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SUMMARY: The Agriculture Improvement Act of 2018 (the 2018 Farm Bill)
made changes to the Environmental Quality Incentives Program (EQIP).
This interim rule makes conforming changes to EQIP policies and
procedures in the regulations. NRCS has responsibility for
administering EQIP using funding, facilities, and authorities of the
CCC. EQIP helps agricultural producers conserve and enhance soil,
water, air, plants, animals (including wildlife), energy, and related
natural resources on their land. Eligible lands include cropland,
grassland, rangeland, pasture, wetlands, nonindustrial private forest
land, and other agricultural land on which agricultural or forest-
related products or livestock are produced and natural resource
concerns may be addressed. Participation in the program is voluntary.
DATES:
    Effective: December 17, 2019.
    Comment date: Submit comments on or before February 17, 2020.
    Comment date for Environmental Review: Submit comments on the draft
Environmental Analysis (EA) and Finding of No Significant Impact
(FONSI) on or before 16, 2020.
ADDRESSES: We invite you to submit comments on this document. In your
comments, include the date, volume, and page number of this issue of
the Federal Register, and the title of this document. You may submit
comments by the following method:
     Federal eRulemaking Portal: Go to http://www.regulations.gov and search for Docket ID NRCS-2019-0009. Follow the
online instructions for submitting comments.
    All written comments received will be publicly available on
www.regulations.gov.
    A copy of the draft Environmental Assessment (EA) and Finding of No
Significant Impact (FONSI) may be obtained from either of the following
websites: www.regulations.gov or https://www.nrcs.usda.gov/wps/portal/nrcs/detail/national/programs/farmbill/?cid=nrcseprd1504015. A hard
copy may also be requested in one of the following ways:
     Via mail: [email protected] with ``Request for EA'' in
the subject line; or
     A written request: Karen Fullen, Environmental Compliance
Specialist, Natural Resources Conservation Service, 9173 W Barnes Dr.,
Suite C, Boise, ID 83709.
FOR FURTHER INFORMATION CONTACT: Donna Hopwood; phone: (202) 720-0675;
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
    The Agriculture Improvement Act of 2018 (2018 Farm Bill) has
reauthorized and amended EQIP. EQIP is implemented under the general
supervision and direction of the Chief of the Natural Resources
Conservation Service (NRCS).
    The information below demonstrates how NRCS provides technical and
financial assistance to producers through EQIP to--
     Change tillage practices to enhance soil resources by
sustaining tilth, moisture control, nutrients, and overall soil health;
     Replace or improve the management of irrigation systems to
conserve scarce water resources. EQIP is also used to manage nutrient
applications to protect water quality;
     Manage grazing to sustain plant biodiversity and protect
rare species and to assure adequate forage is available, thus helping
to maintain watershed heath and enhance water quality;
     Apply energy efficient practices that reduce energy
consumption (e.g., reduced tillage conserves fuel, energy efficient
lighting);
     Implement conservation practices that sequester carbon or
capture methane emissions and greenhouse gases which contribute to
climate change;
     Implement conservation practices specific to producers'
resource needs, from over 160 available conservation practices, to
sustain and improve the health of natural resources on the land and
provide public benefits;
     Implement conservation practices in a manner that promotes
agricultural production, forest management, and environmental quality
as compatible goals;
     Optimize conservation benefits; and
     Help agricultural producers meet Federal, State, and local
environmental requirements.
    Conservation benefits are reflected in the differences between
effects of treatment in comparison to existing or benchmark conditions.
Differences may be expressed by reduced nutrients, improved water
quality, and reduced soil erosion based upon scientific, quantitative,
visual, or other means. NRCS assesses resource conditions through
scientifically developed assessment tools and guides that may use
client input, planner observation, procedural and deductive methods,
and predictive methods. These assessment tools and guides include, but
are not limited to, soil erosion prediction tools, wildlife habitat
assessment tools, rangeland health assessments, and soil health
assessments.
    Estimated or projected impacts are used as a basis for applicants
to make informed conservation decisions and to help NRCS determine
which projects to approve for EQIP assistance.
    EQIP was first authorized in 1996, with an initial allocation of
$130 million. Since then, through fiscal year (FY) 2018, NRCS has
entered into hundreds of thousands of contracts and provided over $15
billion in financial assistance to help agricultural producers apply
conservation practices. The agency has evaluated 22 years of program
implementation and has assessed opportunities to improve program
administration. The changes in this rule are the results of this
evaluation and the statutory changes authorized by the 2018 Farm Bill.
    NRCS uses a competitive process to achieve the greatest
conservation benefits in coordination with EQIP statutory priorities.
NRCS establishes National, State, and local priorities and uses
scientifically-based ranking tools to assess and rank applications,
against these priorities to determine which applications are to be
funded. NRCS in the National Office establishes national priorities,
and States must incorporate these national priorities along with State
and local priorities into the ranking tool used at the State level.
These priorities are established with recommendations by State
technical committees, priorities identified in State, regional, or
national plans and initiatives, and from reports of at-risk wildlife
species and designations of threatened or endangered species. NRCS also
utilizes funding pools to target EQIP funding to priority resource
concerns, such as for the development of wildlife habitat or
[[Page 69273]]
for water quality issues associated with animal feeding operations.
    Each application submitted for consideration in a given funding
pool is ranked using scientifically-based assessment evaluation
criteria and tools which provide a relative score that reflects the
expected conservation benefit of the proposed project. State
Conservationists have the authority to prioritize applications for
ranking, which results in only the highest priority applications being
ranked and considered for funding. Applications are accepted from
producers on a continuous basis; however, NRCS announces funding cutoff
deadlines where all ranked applications within a funding pool are
considered for funding based upon the ranking scores and availability
of funds. Nearly all funding pools are established each fiscal year to
ensure environmentally and economically effective distribution of
funding through a process of fair and open competition that addresses
priority resource concerns.
    Each fiscal year, State Conservationists:
     Publish program priorities;
     Allocate available funds to State funding pools;
     Publish associated ranking criteria to State program
websites available at: http://www.nrcs.usda.gov/wps/portal/nrcs/sitenav/national/states/; and
     Allocate funds to each application pool and adjust funding
between pools to address shortages or to redistribute surplus funds, if
needed. Statutory allocation levels, such as the requirement to provide
at least 50 percent of the funding for livestock and 10 percent of the
funding for wildlife, are met as national goals through funding pool
opportunities established by State Conservationists.
    The statutory changes made by the 2018 Farm Bill include, but are
not limited to--
     Expanding the EQIP purpose to include new or expected
resource concerns, adapting to, and mitigating against, increasing
weather volatility, and addressing drought resiliency measures;
     Changing advance payments from ``not more than'' to ``at
least 50 percent'' of all costs related to purchasing materials or
contracting with a requirement for producers to be notified at the time
of enrollment of the advance payment option with respect to each
practice that has such costs, and that the producer's decision be
documented;
     Adding a new provision for increased payments for high-
priority practices, which provides the State Conservationist the option
to designate up to 10 practices to be eligible for increased payments,
not to exceed 90 percent of the costs associated with planning, design,
materials, equipment, installation, labor, management, maintenance, or
training;
     Decreasing the livestock funding minimum from 60 percent
to 50 percent for FY 2019 through 2023;
     Increasing the wildlife funding minimum from 5 percent to
10 percent for FY 2019 through 2023;
     Providing a maximum term of 10 years for contracts entered
into solely for the establishment of wildlife management practices;
     Authorizing certain entities (including a State,
irrigation district, groundwater management district, acequia, land-
grant mercedes, or similar entity) which are not producers to be
eligible to enter into an EQIP contract for implementation of water
conservation or irrigation efficiency practices, and, authorizing the
Secretary of Agriculture to waive the adjusted gross income (AGI) and
EQIP payment limitations for those contracts. If a waiver is
authorized, the Secretary may establish a separate payment limitation
for the contract to which the waiver applies;
     Introducing new EQIP Incentive Contracts, which can
address up to three priority resource concerns for each of the relevant
land uses within State-identified watersheds or other areas of high
priority;
     Encouraging streamlined and coordinated procedures between
EQIP and Conservation Stewardship Program (CSP), including
applications, contracting, conservation planning, conservation
practices, and related administrative procedures;
     Authorizing funding for EQIP at:
[cir] $1,750 million for FY 2019
[cir] $1,750 million for FY 2020
[cir] $1,800 million for FY 2021
[cir] $1,850 million for FY 2022
[cir] $2,025 million for FY 2023
USDA Farm Bill Listening Session
    The Farm Production and Conservation (FPAC) Mission Area hosted a
listening session on February 26, 2019, to obtain initial input on 2018
Farm Bill implementation. USDA sought public input regarding changes to
programs implemented by the Farm Service Agency, the Risk Management
Agency (RMA), and NRCS. NRCS considered stakeholder input when making
discretionary decisions regarding program implementation. In addition
to encouraging oral testimony, FPAC also encouraged submission of
written comments and the comments received have been made available on
http://www.regulations.gov.
    NRCS received 35 comments regarding the need to evaluate the impact
of water conservation and irrigation efficiency projects on grasslands,
fish and wildlife habitat, wetlands, and ground water recharge. Some
comments recommended the prioritization of projects that improve
agricultural water delivery, limit the expansion of irrigated land, and
ensure more water conservation. Others pushed for watershed-wide
projects, oversight mechanisms to track fund spending and outcomes, and
implementation of an effective project rating system. A few requested
additional funding for Western producers who are facing water
challenges.
    NRCS received 26 comments that underscored the importance of State
wildlife funding pools to ensure that EQIP funds are used for species
and habitats identified as priorities in State, regional, and national
wildlife plans. Some recommended the immediate implementation of the
10-percent-funding increase and using the funds to consider wildlife
coexistence practices. Others advocated longer-term contracts,
additional wildlife-specific technical assistance, landscape-scale
project areas, and fund oversight tools, such as public annual reports.
    NRCS received 11 comments on wildlife habitat contracts. The
comments pushed for prioritizing longer-term wildlife contracts and
ensuring that these contracts only fund practices designed to deliver
wildlife habitat benefits. Others recommended working with third
parties, such as nongovernmental organizations, to coordinate projects
and promote short-term contracts to enhance program outcomes.
    NRCS received 16 comments related to administration and program
delivery. Many recommended streamlining the program application
process, providing additional guidance and information on high priority
resource concerns, rankings, and practices, and ensuring fair access
for most producers to EQIP funds (i.e., property of producers with
heirs, Indian Tribes). Other comments urged stricter enforcement of
EQIP statutory requirements, use of EQIP funds for oyster restoration,
and prioritization of contracts that implement nutrient management and
improve habitat and water resources.
    Additionally, support for wildlife habitat projects received the
majority of the comments related to the new conservation incentive
contracts. NRCS received 11 comments supporting the identification of
wildlife habitat as a
[[Page 69274]]
priority resource concern and prioritizing practices related to grazing
management and those that can deliver considerable environmental
benefits. Others recommended mechanisms to coordinate resource concerns
and to determine incentive practice eligibility and proper payment
options.
    NRCS received 11 comments that advocated for outreach and education
for organic producers regarding the new EQIP payments for organic
initiatives. Some recommended the development of a funding allocation
similar to CSP and the consideration of existing organic management
plans. Other comments emphasized additional payments during the
transition period (from traditional to organic), helpful tools and
resources showing how EQIP practices support organic agriculture, and
strong support for smaller organic projects.
    NRCS received nine comments mostly supporting the Soil Health
Demonstration Trial for EQIP projects. Others called for better soil
health planning standards, utilization of existing resources (i.e.,
Soil Health Partnership and the Operational Tillage Information
System), and evaluation tools to determine project rating, economic
outcomes, and public benefits.
    NRCS received seven comments focusing on increased payments for
high-priority practices. Most comments underlined the inclusion of
practices that address the goals of State wildlife action plans and
other State and local plans involving watershed rehabilitation and
drought management. Others recommended careful implementation of the
increased payment provision to ensure adequate funding for other EQIP
contracts.
    NRCS received three comments that recommend ending funding support
for the expansion of large livestock operations, and instead, focusing
on grazing systems and practices that can benefit wildlife and water
quality.
    NRCS received three comments pushing for broader producer outreach
and immediate implementation of the EQIP advanced payment option. These
comments emphasized that outreach needs to include beginning, veteran,
and socially disadvantaged producers.
    Finally, NRCS received a comment that recommended using the new
EQIP provision on precision conservation and agriculture for practice
installment and annual payments.
    NRCS evaluated the changes made by the 2018 Farm Bill and the
comments received during the listening session and is hereby
promulgating this interim rule to incorporate the 2018 Farm Bill
changes to EQIP program administration. The interim rule adjusts the
program regulations to correspond to new statutory language. It also
includes changes to streamline program implementation and make the
participant's contract responsibilities clearer and more transparent.
NRCS is also removing definitions for terms that are not used in the
regulation and making other editorial adjustments to improve
readability.
Summary of Key Changes to EQIP Regulations
    The regulation has long been organized into three subparts: (1)
Subpart A--General Provisions, (2) Subpart B--Contracts, and (3)
Subpart C--General Administration. To improve the readability and
clarity of the regulations, NRCS has moved the provisions in Sec.
1466.27, the section addressing administration of the Conservation
Innovation Grants (CIG), to subpart C, and moved the sections related
to General Administration to a new subpart E, with redesignation of
sections appropriate to such a change. To incorporate regulations
necessary to implement the new Incentive Contracts under EQIP, NRCS has
added a new subpart D. Below is a summary of the changes made to each
subpart based on the changes made to EQIP by the 2018 Farm Bill.
Changes to Sections in Subpart A--General Provisions
Sec.  1466.1 Applicability
    Section 1466.1 sets forth the purpose, scope, and objectives of
EQIP. Pursuant to changes made by Sec.  2302 of the 2018 Farm Bill, the
interim rule updates Sec.  1466.1 to reiterate the updated statutory
language. The interim rule also changes the effective date of this
section to acknowledge that each EQIP contract is subject to the
regulations that are in effect at the time the EQIP contract is
enrolled. EQIP's fundamental purpose--assisting agricultural producers
with implementing conservation practices to provide environmental
benefits and to comply with or avoid environmental regulation--has been
broadened to add specifically addressing new or expected resource
concerns, adapting to and mitigating against increasing weather
volatility, and drought resiliency measures.
Sec.  1466.2 Administration
    Section 1466.2 describes the roles of NRCS, State technical
committees, and local working groups. The 2018 Farm Bill amends how
EQIP interacts with the Regional Conservation Partnership Program
(RCPP) authorized by Subtitle I of Title XII of the Food Security Act
of 1985 (known as the 1985 Farm Bill). The 2014 Farm Bill identified
EQIP as a covered program under RCPP and authorized the Chief to waive
nonstatutory, discretionary provisions and operational procedures under
EQIP contracts where EQIP was being implemented through RCPP. However,
since the 2018 Farm Bill no longer requires that RCPP be implemented
through EQIP or the other covered programs, NRCS removed the regulatory
language to this section that addressed EQIP implementation under RCPP.
NRCS retains the authority for the Chief to waive nonstatutory,
discretionary provisions where the application of that provision to a
particular limited situation to be inappropriate and inconsistent with
the purposes of the program.
Sec.  1466.3 Definitions
    Section 1466.3 sets forth definitions for terms used throughout
this regulation. NRCS is amending several definitions to conform to the
2018 Farm Bill amendments and to address other administrative matters.
Specifically, this interim rule amends Sec.  1466.3 by adding or
modifying the following definitions:
     Animal feeding operation (AFO);
     Eligible land;
     Estimated income foregone;
     Forest management plan;
     High priority area;
     Incentive practice;
     Priority resource concern;
     Semi-public;
     Soil remediation;
     Soil testing; and
     Water management entity.
    Given the overlap between the definition for the term ``eligible
lands'' and ``agricultural lands,'' NRCS has removed the definition for
``agricultural lands'' to reduce confusion.
Sec.  1466.4 National Priorities
    Section 1466.4 establishes a list of priorities, consistent with
the statute, that describes the types of resource concerns that NRCS
has determined to be the greatest opportunity for natural resource
conservation. In addition, it allows for change and adaptation to this
listing as new information comes to light. The 2018 Farm Bill added
``increased weather volatility'' as a specific resource concern, and
this rulemaking incorporates that change. NRCS made other minor
editorial changes to improve style and clarity.
Sec.  1466.5 Outreach Activities
    Section 1466.5 generally establishes the basis for NRCS to market
EQIP's resource conservation benefits and its
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subcomponents to producers so that they are aware of the program's
potential to assist them with resource concerns on their operations.
This section contains special outreach authorization for historically
underserved producers. In addition to several minor stylistic edits to
improve clarity, this rulemaking has added a paragraph specifically
including messaging related to advance payments and subsequent election
as examples of special outreach.
    To help producers understand conservation opportunities, the 2018
Farm Bill requires that NRCS establish and maintain a publicly
available conservation practice database that provides a compilation
and analysis of effective conservation practices and a list of
recommended new and effective conservation practices. The 2018 Farm
Bill also requires the Secretary to identify available data sets within
the Department of Agriculture regarding the use of conservation
practices and the effect of such practices on farm and ranch
profitability (including such effects relating to crop yields, soil
health, and other risk-related factors). NRCS considers estimated
economic impact in its conservation planning process, including in the
development of conservation practice standards. Since producers must
consider the potential estimated economic impact to their particular
operation when choosing whether to voluntarily adopt conservation
practices through EQIP, NRCS is taking this opportunity to request
public comment on how NRCS can best assist producers to understand the
potential estimated economic impact of conservation practice adoption
to inform their program decisions.
Sec.  1466.6 Program Requirements
    Section 1466.6 lays out the general scope of what EQIP is and does.
It sets forth criteria for applicant eligibility, including that the
applicant must have control of the land on which EQIP practices are to
be implemented. The 2018 Farm Bill also expanded eligibility regarding
with whom NRCS can enter into an EQIP contract. In particular, NRCS may
enter into EQIP contracts with a State, irrigation district,
groundwater management district, acequia, land grant-merced, or similar
entity under a streamlined contracting process to implement water
conservation or irrigation practices under a watershed-wide project
that will effectively conserve water, provide fish and wildlife
habitat, or provide for drought-related environmental mitigation, as
determined by the Secretary. NRCS has defined these entities as ``water
management entities.''
    NRCS added provisions related to entering contracts with water
management entities to implement water conservation or irrigation
practices in certain circumstances.
    NRCS introduced criteria for approving waivers and applying a
different payment limitation to ensure the focus of EQIP assistance
remains on practices that directly benefit producers with resource
concerns on their operations. Additionally, the criteria help specify
how this provision will be implemented, especially since water
management entities can apply to RCPP as an eligible partner for
irrigation-related infrastructure projects and that these types of
projects are also eligible for assistance under the Watershed
Protection and Flood Prevention Act.
    Therefore, NRCS incorporated into this interim rule criteria for
approving payment and AGI waivers, including the number of producers
benefitted, whether the project is in conjunction with EQIP assistance
being provided to identified producers who require the project in order
for the overall project to be successful, and the establishment of a
new payment limitation that ensures that such contracts address more
site-specific concerns rather than systemic upgrade requirements. More
particularly, NRCS has decided to limit these projects by authorizing a
new payment limitation for contracts entered into by these specific
entities at $900,000 between FY 2019 through FY 2023 if the projects
qualify for a payment and AGI waiver. This new payment limitation for
these entity-irrigation contracts is twice the payment limitation
established for payments under contracts to individual producers.
    Since the interim rule authorizes a waiver of the aggregate payment
limitation for contracts with water management entities under this
section, NRCS specifically requests comments on how this waiver should
operate and whether the $900,000 payment limitation has been
established at an appropriate level. NRCS believes that this new
authority to enter into an EQIP contract directly with water management
entities should not conflict or compete with other NRCS assistance
opportunities. Additionally, related to identifying the situations
where NRCS should provide assistance to these projects, NRCS
specifically requests public comment about whether additional
parameters are needed for identifying ``adjacent lands'' eligible for
such projects.
    Other changes were made to improve style and clarity.
Sec.  1466.7 EQIP Plan of Operations
    This section describes the requirements of the EQIP plan of
operations, which is a component of the EQIP contract. Section
1240E(a)(3) as amended by the 2018 Farm Bill inserted the term
``progressive'' to describe the implementation of a comprehensive
nutrient management plan (CNMP). Therefore, NRCS amends the regulatory
provisions to remove the requirement that a participant must have
implemented a developed CNMP by the end of the contract but requires
that any conservation practices in the EQIP plan of operation must be
implemented consistent with a CNMP. Language regarding irrigation-
related practices and water conservation was also slightly modified for
clarity.
Sec.  1466.8 Conservation Practices
    This section describes how NRCS determines eligible conservation
practices. NRCS made several minor edits for clarity.
Sec.  1466.9 Technical Services Provided by Qualified Personnel Not
Affiliated With USDA
    This section describes the use of technical services providers
(TSPs). NRCS incorporates use of the TSP acronym to this section.
Changes to Sections in Subpart B--Contracts
Sec.  1466.20 Application for Contracts and Selecting Applications
    This section addresses how producer applications are submitted and
selected for funding. NRCS makes several minor edits for clarity.
Sec.  1466.21 Contract Requirements
    This section identifies elements contained within an EQIP contract
and the responsibilities of the participant who is party to the EQIP
contract. Also, it addresses EQIP contract funding limitations. To
receive payment, an applicant must enter into an EQIP contract. The
EQIP contract identifies all financially supported conservation
practices to be implemented, their timing and sequence, and the
operation and maintenance needed to maintain the conservation practice
for its intended lifespan. NRCS amends CNMP language to include
``progressive'' implementation by removing the requirement that the
CNMP must be implemented by the end of the contract and clarifies the
timeline parameters for EQIP contract implementation and the
consequences for not complying with those parameters. NRCS also
incorporates language to waive the
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$450,000 contract limitation and establish a $900,000 contract
limitation for certain projects with joint operations, group projects,
or contracts where NRCS has waived the payment limitation for a water
management entity. NRCS also included language to specify that NRCS may
decline an application for water conservation and irrigation efficiency
projects with water management entities if that project would be better
suited with another NRCS program.
Sec.  1466.22 Conservation Practice Operation and Maintenance (O&M)
    This section addresses the participant's responsibility for
conservation practice O&M. NRCS makes only slight grammatical
corrections.
Sec.  1466.23 Payment Rates
    This section addresses payment rates and payment eligibility.
Section 1240B as amended by the 2018 Farm Bill authorized increased
payment rates for certain high-priority practices. The 2018 Farm Bill
also authorized increased payment rates for practices that address
source water protection. NRCS incorporates these changes by adding a
new paragraph authorizing such increased payments.
    The 2018 Farm Bill revised section 1240B(d)(7) of the 1985 Farm
Bill to authorize States to designate high priority practices that will
be eligible for higher payment rates, subject to approval from the
Secretary. NRCS at the State level will provide notice of the high
priority practices for which a higher payment rate is available based
on the criteria identified in section 1240B(d)(7).
Sec.  1466.24 EQIP Payments
    This section provides direction on payment eligibility and payment
limitations. Due to the change to Sec.  1466.1 noted above, the
language regarding date of contract was removed. As stated, any changes
made to this section only affect future contracts. Removal of that
language reduces wordiness and improves clarity. NRCS updated the
payment limitations for organic production from annual limits to an
aggregate limit from FY 2019 through FY 2023. NRCS modified the
regulatory levels allowed for advance payments to account for changes
made in Section 1240B(d)(4)(B) of the 1985 Farm Bill. NRCS made other
organizational and editorial adjustments that did not affect the
substance of the provisions.
Sec.  1466.25 Contract Modifications and Transfers of Contract Rights
    This section sets forth the procedures for when and how an EQIP
contract can be modified and sets out the process and consequences of a
transfer of land during the term of an EQIP contract. NRCS made several
stylistic and organizational changes to improve clarity. NRCS added a
paragraph to clarify how NRCS will treat the implementation of
conservation practices during any period in which a parcel has been
transferred, but contract transfer has not yet been approved. These
changes align EQIP transfer provisions more closely with similar CSP
provisions.
Sec.  1466.26 Contract Violations and Terminations
    This section sets forth the policies and procedures for contract
termination when the participant violates the terms of an EQIP
contract. NRCS clarified that certain violations may place a
participant into suspension or debarment. NRCS will follow suspension
and debarment requirements at 7 CFR part 1407, including providing any
such participant due process prior to suspending or debarring the
participant from future eligibility.
Changes to Sections in Subpart C--Conservation Innovation
    Subpart C is revised by moving its provisions to a new subpart E
and incorporating provisions addressing the Conservation Innovation
Grants (CIG) administration at Sec.  1466.27 as new sections under
subpart C.
    In addition to organizing the CIG provisions into several sections,
this subpart addresses administration of the On-farm Conservation
Innovation Trials (OFCIT), which includes the Soil Health Demonstration
(SHD) Trial.
    The CIG section (formerly 1466.27) has been reorganized into the
following six sections, as set forth below.
Sec.  1466.30 Definitions
    This section, the former Sec.  1466.27(a), sets forth the
definitions of terms to be used consistently throughout this subpart.
The term ``EQIP eligible'' was removed from the definitions section as
the term was not used anywhere else in the regulation.
Sec.  1466.31 Purpose and Scope
    This section, the former Sec.  1466.27(b), sets out the broad
policy objectives and criteria for implementing CIG and its related
components. NRCS has modified references to the use of online methods
to award grants to clarify that there may be multiple competitions each
fiscal year. NRCS made various changes to improve the section's
structure and style without affecting its substance.
Sec.  1466.32 Conservation Innovation Grant Funding
    This section, the former Sec.  1466.27(c), sets out how CIG is
funded and what payment limitations may apply. The set-aside of up to
10 percent of total CIG funds for historically underserved or veteran
farmers or ranchers or community-based organizations has been moved
here. NRCS incorporated other edits to improve clarity.
Sec.  1466.33 Conservation Innovation Grant Administration
    This section, the former Sec.  1466.27(d) through (f), provides the
framework for how NRCS administers CIG, including policies and
procedures related to awarding CIG grants. Paragraph (a) of this
section now identifies that applications should address national or
State program priorities as published by NRCS. Paragraph (b) of this
section clarifies that any individual or non-federal entity may be
eligible for a CIG payment, provided that the payment either directly
or indirectly benefits a producer who is eligible for EQIP
participation. NRCS adds a paragraph (c) to identify that NRCS will
publish annually detailed guidance on how to apply for the grants
competitions to address announced national or State program priorities.
Sec.  1466.34 Award Determinations
    This section, the former Sec.  1466.27(g), explains the criteria
that NRCS will consider when determining award grantees and award
amounts. NRCS made minor changes to the style and structure of the
language to set out each step in the awards determination process.
Sec.  1466.35 State-Level Conservation Innovation Grant Component
    This section, the former Sec.  1466.27(h), details the use of
State-level use and distribution of CIG resources. Paragraph (d)
clarifies that each State may elect to focus on priority resource
concerns for that State.
Sec.  1466.36 Intellectual Property
    This section, formerly Sec.  1466.27(i), establishes guidelines for
intellectual property rights for any newly patented technology
developed under this subpart. NRCS has made minor edits to improve
readability.
[[Page 69277]]
Sec.  1466.37 On-farm Conservation Innovation Trials (OFCIT)
    This section implements and develops OFCIT to test new and
innovative approaches to conservation.
Sec.  1466.38 Soil Health Demonstration (SHD) Trial
    This section of focus for OFCIT addresses the ability of soil
health strategies to capture and retain carbon.
Sections in new Subpart D--Incentive Contracts
    Subpart D is a new subpart and addresses the new enrollment option,
EQIP incentive contracts, as created by section 2304 of the 2018 Farm
Bill. This new subpart has the following sections:
Sec.  1466.40 High Priority Areas
    This section sets out the process and requirements for high
priority areas within each State that form the backdrop for the new
incentive contracts.
Sec.  1466.41 Incentive Contract Selection
    This section specifies how the incentive contract process will
deviate from the standard EQIP contract selection process. In
particular, NRCS will identify which practices qualify as incentive
practices for each land use within each high priority area based on the
priority resource concern(s) identified for that land use. Thus, there
is no standard list of practices that will universally apply. It will
depend on future determinations by State Conservationist with input
from the State Technical Committees as to what the high priority areas
are and what the (up to) three priority resource concerns are for each
land use within each high priority area. NRCS does maintain a database
of practices that apply to resource concerns within each land use, but
which of those practices will be high priority will vary based on
determinations within each State.
Sec.  1466.42 Incentive Contract Requirements
    This section lists all the terms and conditions that are required
components of an incentive contract. Many of these terms and conditions
are similar to those terms and conditions included in a standard EQIP
contract; the most notable distinctions are differences to the contract
period and payment rates, which are covered in separate sections below.
Sec.  1466.43 Incentive Contract Period
    This section highlights the criteria for setting the term for an
incentive contract. Incentive contracts will be for a period from 5 to
10 years.
Sec.  1466.44 Incentive Payment Rates and Restrictions
    This section sets the parameters for incentive payments. In
addition to the payment for practice implementation, which is similar
to the standard EQIP implementation payment, incentive contracts offer
annual payments to address operations and maintenance costs as well as
income foregone. NRCS also established in this interim rule an
aggregate payment limitation of $200,000 for a person or legal entity
to conform incentive contract implementation to contracts entered into
under the CSP, thus ensuring that the new enrollment option supports a
participant's ability to transition to CSP eligibility.
New Subpart E--General Administration
    Subpart E of the EQIP regulation was formerly subpart C, and it
addresses a participant's responsibility to comply with regulatory
measures, to provide NRCS access to lands enrolled in the program for
compliance monitoring during the term of the contract, and other
general program matters. The 2018 Farm Bill changes do not impact the
regulatory provisions at subpart E.
Effective Date, Notice and Comment, and Paperwork Reduction Act
    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 and any potential delay in the effective date.
    For major rules, the Congressional Review Act requires a delay in
the effect date of 60-days after publication to allow for Congressional
Review. This rule is major under the Congressional Review Act, as
defined by 5 U.S.C. 804(2). The authority in 5 U.S.C. 808 provides that
when an agency finds for good cause that notice and public procedure
are impracticable, unnecessary, or contrary to the public interest,
that the rule may take effect at such time as the agency determines.
Due to the nature of the rule, the mandatory requirements of the 2018
Farm Bill, and the need to implement the regulations expeditiously to
provide assistance to producers, NRCS and CCC find that notice and
public procedure are contrary to the public interest. Therefore, even
though this rule is a major rule for purposes of the Congressional
Review Act of 1996, NRCS and CCC are not required to delay the
effective date for 60 days from the date of publication to allow for
Congressional review. Therefore, this rule is effective on the date of
publication in the Federal Register.
    NRCS invites interested persons to participate in this rulemaking
by submitting written comments or views about the changes made by this
interim rule. The most helpful comments reference a specific portion of
the regulation, explain the reason for any recommended changes, and
include supporting data and references to relevant section of either
the 2018 Farm Bill or the 1985 Farm Bill. All comments received on or
before the closing date for comments will be considered. NRCS will
review and respond to the public comments in the EQIP final rule.
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, of reducing costs, of
harmonizing rules, and of promoting flexibility. 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
[[Page 69278]]
Executive Order 13563, ``Regulatory Planning and Review,'' and
therefore, OMB has reviewed this rule. The costs and benefits of this
rule are summarized below. The full cost benefit analysis is available
on https://www.regulations.gov/.
    Executive Order 13771, ``Reducing Regulation and Controlling
Regulatory Costs,'' requires that in order 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 elimination of at least two prior regulations. OMB
guidance in M-17-21, dated April 5, 2017, specifies that ``transfer
rules'' are not covered by Executive Order 13771, ``Reducing Regulation
and Controlling Regulatory Costs.'' Transfer rules are Federal spending
regulatory actions that cause only income transfers between taxpayers
and program beneficiaries. Therefore, this is considered a transfer
rule and is not covered by Executive Order 13771.
Cost Benefit Analysis
    The 2018 Farm Bill makes several changes to EQIP. The changes
include:
     Making a State, irrigation district, groundwater
management district, acequia, land grant-mercedes, or similar entity
eligible for EQIP payments,
     Requiring targeting of at least 10 percent of EQIP funds
to wildlife conservation practices,
     Reducing EQIP funds targeted for livestock to 50 percent,
and
     Creating various incentives to address resource concerns
in identified watersheds and other high priority areas.
    Most of this rule's impacts consist of transfer payments to
producers for completed conservation practices under EQIP contracts.
The 2018 Farm Bill increases EQIP funding over 2014 Farm Bill funding
by 22 percent on an annualized basis to $1.84 billion per year. From
FY2014-2018, EQIP was authorized at $8.0 billion, but annual funding
restrictions resulted in actual authority being $7.51 billion, for an
annualized amount of $1.50 billion. In contrast, the authorized level
for EQIP for FY2019-2023 is $9.18 billion \1\ (assuming future funding
caps are 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.
---------------------------------------------------------------------------
    \1\ Includes the $1.75 billion authorized level in the 2018 Farm
Bill for FY 2019 even though the amount was reduced by the sequester
and other transfers to $1.61 billion.
---------------------------------------------------------------------------
    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 that treat and
manage animal waste through EQIP will directly contribute to
improvements in water quality and associated improvements in air
quality (such as from reduction in methane emissions or reduced risk of
algal blooms). NRCS estimates that the cost,\2\ from both public and
private sources, of implementing EQIP conservation practices will be
$13,640.2 million dollars (FY2019-2023), assuming a historical average
participant cost of 40 percent and a technical assistance share of 27
percent.
---------------------------------------------------------------------------
    \2\ Public costs include total technical assistance and
financial assistance funds. Private costs are out-of-pocket costs
paid voluntarily by participants.
---------------------------------------------------------------------------
    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 2014-2018, wildlife practices accounted for 7.6
percent of EQIP funds through wildlife and landscape initiatives and 16
designated wildlife conservation practices. The remaining 2.4 percent
increase in funding to wildlife needed to meet the new 10 percent level
will likely occur through greater support for existing wildlife
initiatives and potentially 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 the 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 water management entities
like irrigation districts, ground water management districts, and
acequias, along with providing the Secretary with the authority to
waive adjusted gross income, contract, and payment limits to encourage
continued efforts in agricultural water conservation. In some states,
particularly in the West, these water management entities 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
proposes in this rule establishing a payment limit of $900,000 on all
contracts with water management entities.
    The 2018 Farm Bill establishes incentive contracts to address up to
three priority resource concerns for a given watershed, or other
region, or area. Contracts will range from a minimum of 5 up to 10
years in length and provide an annual payment and an incentive practice
payment. The impact of these new 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 incentive contracts will have, the aggregate benefits from
these new 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 program performance. This is because
existing organic initiative contracts are usually well below the multi-
year payment limit of $80,000 previously set by 2014 Farm Bill.
Currently, organic participants who exceed the organic initiative
payment limit use other EQIP funding mechanisms. With the increase in
the organic initiative limit to $140,000, more organic applicants will
be able to make use of the organic initiative and consequently need
only compete with other organic operations for funding.
Clarity of the Regulation
    Executive Order 12866, as supplemented by Executive Order 13563,
requires each agency to write all rules in plain language. In addition
to your substantive comments on this rule, we invite your comments on
how to make the rule easier to understand. For example:
     Are the requirements in the rule clearly stated? Are the
scope and intent of the rule clear?
     Does the rule contain technical language or jargon that is
not clear?
     Is the material logically organized?
     Would changing the grouping or order of sections or adding
headings make the rule easier to understand?
     Could we improve clarity by adding tables, lists, or
diagrams?
[[Page 69279]]
     Would more, but shorter, sections be better? Are there
specific sections that are too long or confusing?
     What else could we do to make the rule easier to
understand?
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 no law requires that a proposed rule be published for this
rulemaking initiative. Despite the Regulatory Flexibility Act not
applying to this rule, the action only affects those entities who
voluntarily participate in EQIP and in doing so receive its benefits.
Compliance with the provisions of EQIP regulations is only required for
those entities who choose to participate in this voluntary program.
Environmental Analysis
    The environmental impacts of this rule have been considered in a
manner consistent with the provisions of the National Environmental
Policy Act (NEPA, 42 U.S.C. 4321-4347), the regulations of the Council
on Environmental Quality (40 CFR parts 1500-1508), and the NRCS
regulations for compliance with NEPA (7 CFR part 650). The 2018 Farm
Bill requires minor changes to NRCS conservation programs, and there
are no 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 environmental impact statement (EIS) is
not required to be prepared (40 CFR 1508.13). 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
1508.14), when not interrelated to natural or physical environmental
effects. The Environmental Assessment (EA) and Finding of No
Significant Impact (FONSI) are available for review and comment for 30
days from the date of publication of this interim rule in the Federal
Register. NRCS will consider this input and determine whether there is
any new information provided that is relevant to environmental concerns
and bearing on the proposed action or its impacts that warrant
supplementing or revising the current available draft of the EQIP EA
and FONSI.
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 programs 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 may have
substantial direct Tribal implication that may require Tribal
consultation under Executive Order 13175. Tribal consultation for this
rule was included in the two 2018 Farm Bill Tribal consultation 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 additional
consultation, NRCS will work with OTR to ensure meaningful consultation
is provided where changes, additions, and modifications identified in
this rule are not expressly mandated by legislation.
    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 will be holding several sessions
with Indian Tribes and Tribal entities across the country in fiscal
year 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.
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
[[Page 69280]]
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.
    The CCC revises 7 CFR part 1466 to read as follows:
PART 1466--ENVIRONMENTAL QUALITY INCENTIVES PROGRAM
Subpart A--General Provisions
Sec.
1466.1 Applicability.
1466.2 Administration.
1466.3 Definitions.
1466.4 National priorities.
1466.5 Outreach activities.
1466.6 Program requirements.
1466.7 EQIP plan of operations.
1466.8 Conservation practices.
1466.9 Technical services provided by qualified personnel not
affiliated with USDA.
Subpart B--Contracts and Payment
1466.20 Application for contracts and selecting applications.
1466.21 Contract requirements.
1466.22 Conservation practice operations and maintenance (O&M).
1466.23 Payment rates.
1466.24 EQIP payment restrictions and exceptions.
1466.25 Contract modifications and transfers of contract rights.
1466.26 Contract violations and terminations.
Subpart C--Conservation Innovation
1466.30 Definitions.
1466.31 Purpose and scope.
1466.32 Conservation innovation grant funding.
1466.33 Conservation innovation grant administration.
1466.34 Award determinations.
1466.35 State-level conservation innovation grant component.
1466.36 Intellectual property.
1466.37 On-Farm Conservation Innovation Trials.
1466.38 Soil Health Demonstration trial.
Subpart D--Incentive Contracts
1466.40 High priority areas.
1466.41 Incentive contract selection.
1466.42 Incentive contract requirements.
1466.43 Incentive contract period.
1466.44 Incentive payment rates and restrictions.
Subpart E--General Administration
1466.50 Appeals.
1466.51 Compliance with regulatory measures.
1466.52 Access to operating unit.
1466.53 Equitable relief.
1466.54 Offsets and assignments.
1466.55 Misrepresentation and scheme or device.
1466.56 Environmental credits for conservation improvements.
    Authority: 15 U.S.C. 714b and 714c; and 16 U.S.C. 3839aa--3839-
8.
Subpart A--General Provisions
Sec.  1466.1   Applicability.
    (a) Purposes. (1) The purposes of the Environmental Quality
Incentives Program (EQIP) are to promote agricultural production,
forest management, and environmental quality as compatible goals, and
to optimize environmental benefits.
    (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 which address soil, water, and air quality;
wildlife habitat; nutrient management associated with crops and
livestock; pest management; surface and groundwater 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 producers
comply with environmental regulations and enhance agricultural and
forested lands in a cost-effective and environmentally beneficial
manner.
    (4) The purposes of the program are achieved by planning and
implementing conservation practices on eligible land to address
identified, new, or expected resource concerns.
    (b) Availability. EQIP is available in any of the 50 States,
District of Columbia, Commonwealth of Puerto Rico, Guam, Virgin Islands
of the United States, American Samoa, and Commonwealth of the Northern
Mariana Islands.
    (c) Applicability. Each contract enrolled into EQIP, is subject to
the regulations in effect on the date it is enrolled.
Sec.  1466.2   Administration.
    (a) The Commodity Credit Corporation (CCC) funds, facilities,
authorities. Because the funds, facilities, and authorities of the CCC
are available to NRCS for carrying out EQIP, each reference to NRCS in
this part also refers to the CCC's funds, facilities, and authorities
where applicable.
    (b) Locally-led conservation. (1) NRCS supports locally-led
conservation by soliciting input from the State Technical Committee and
the Tribal Conservation Advisory Council at the State level, and local
working groups at the county, parish, or Tribal level to advise NRCS on
issues relating to EQIP implementation.
    (2) Recommendations from the State Technical Committee and the
Tribal Conservation Advisory Council may include but are not limited
to:
    (i) Recommendations for program priorities and criteria;
    (ii) Identification of priority resource concerns;
    (iii) Recommendations about which conservation practices will be
effective to treat identified priority resource concerns; and
    (iv) Recommendations of program payment rates for payment
schedules.
    (c) Delegations. No delegation in the administration of this part
to lower organizational levels will preclude the Chief from making any
determinations under this part, redelegating to other organizational
levels, or from reversing or modifying any determination made under
this part.
    (d) Waiver. The Chief may modify or waive a nonstatutory,
discretionary provision of this part if the Chief determines the
application of that provision to a particular limited situation to be
inappropriate and inconsistent with the purposes of the program;
    (e) Scope of agreement authority. NRCS may enter into agreements
with
[[Page 69281]]
other Federal or State agencies, Indian Tribes, conservation districts,
units of local government, public or private organizations, acequias,
and individuals to assist NRCS with implementation of the program in
this part.
Sec.  1466.3   Definitions.
    The definitions in this section apply to this part and all
documents issued in accordance with this part, unless specified
elsewhere in this part:
    Agricultural operation means a parcel or parcels of land whether
contiguous or noncontiguous, which is under the effective control of
the producer at the time the producer applies for a contract, and which
is operated by the producer with equipment, labor, management, and
production, or cultivation practices that are substantially separate
from other operations.
    Animal feeding operation (AFO) means a lot or facility (other than
an aquatic animal production facility) where the conditions in this
definition are met:
    (1) Animals have been, are, or will be stabled or confined and fed
or maintained for a total of 45 days or more in any 12-month period;
and
    (2) Crops, vegetation, forage growth, or post-harvest residues are
not sustained in the normal growing season over any portion of the lot
or facility.
    Animal waste storage or treatment facility means a structural
conservation practice, implemented on an AFO consistent with the
requirements of a comprehensive nutrient management plan (CNMP) and
Field Office Technical Guide (FOTG), which is used for storing,
treating, or handling animal waste or by-products, such as animal
carcasses.
    Applicant means a producer who has requested in writing to
participate in EQIP.
    At-risk species means any plant or animal species listed as
threatened or endangered; proposed or candidate for listing under the
Endangered Species Act; a species listed as threatened or endangered
under State law or Tribal law on Tribal land; State or Tribal land
species of conservation concern; or other plant or animal species or
community, as determined by the State Conservationist, with advice from
the State Technical Committee or Tribal Conservation Advisory Council,
that has undergone, or is likely to undergo, population decline and may
become imperiled without direct intervention.
    Beginning farmer or rancher means a person, Indian Tribe, Tribal
corporation, or legal entity who:
    (1) Has not operated a farm or ranch, or NIPF, or who has operated
a farm, ranch, or NIPF for not more than 10 consecutive years. This
requirement applies to all members of an entity who will materially and
substantially participate in the operation of the farm or ranch.
    (2) In the case of a contract with an individual, individually, or
with the immediate family, material and substantial participation
requires that the individual provide substantial day-to-day labor and
management of the farm or ranch, consistent with the practices in the
county or State where the farm is located.
    (3) In the case of a contract with an entity or joint operation,
all members must materially and substantially participate in the
operation of the farm or ranch. Material and substantial participation
requires that each of the members provide some amount of the
management, or labor and management necessary for day-to-day
activities, such that if each of the members did not provide these
inputs, operation of the farm or ranch would be seriously impaired.
    Chief means the Chief of NRCS, U.S. Department of Agriculture
(USDA), or designee.
    Comprehensive nutrient management plan (CNMP) means a conservation
plan that is specifically for an AFO. A CNMP identifies conservation
practices and management activities which, 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
natural resources including water and air quality associated with an
AFO. A CNMP is developed to assist an AFO owner/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.
    Conservation benefit means the improved condition of a natural
resource concern resulting from the implementation of a conservation
practice.
    Conservation district means any district or unit of State, Tribal,
or local government formed under State, Tribal, or territorial law for
the express purpose of developing and carrying out a local soil and
water conservation program. Such district or unit of government may be
referred to as a ``conservation district,'' ``soil conservation
district,'' ``soil and water conservation district,'' ``resource
conservation district,'' ``land conservation committee,'' ``natural
resource district,'' or similar name.
    Conservation practice means one or more conservation improvements
and activities, including structural practices, land management
practices, vegetative practices, forest management practices, and other
improvements that achieve the program purposes, including such items as
CNMPs, agricultural energy management plans, dryland transition plans,
forest management plans, soil testing, soil remediation, integrated
pest management, and other plans or activities determined acceptable by
the Chief. Approved conservation practices are listed in the NRCS FOTG.
    Contract means a legal document that specifies the rights and
obligations of any participant accepted into the program. An EQIP
contract is a binding agreement for the transfer of assistance from
USDA to the participant to share in the costs of implementing
conservation practices.
    Cost-effectiveness means the least costly option for achieving a
given set of conservation objectives to address a resource concern.
    Eligible land means land on which agricultural commodities,
livestock, or forest-related products are produced, and specifically
includes:
    (1) Cropland;
    (2) Grassland;
    (3) Rangeland;
    (4) Pasture land;
    (5) Nonindustrial private forest land; and
    (6) Other agricultural land (including cropped woodland, marshes,
environmentally sensitive areas as identified by NRCS, and agricultural
land used for the production of livestock) on which identified or
expected resource concerns related to agricultural production that may
be addressed by a contract under EQIP as determined by the Chief.
    Enrolled land means the land area identified and included in the
program contract at the time when funds have been obligated.
    EQIP plan of operations means the document that identifies the
location, timing, and extent of conservation practices that the
participant agrees to implement on eligible land enrolled in the
program in order to address the priority resource concerns, optimize
environmental benefits, and address program purposes as defined in
Sec.  1466.1. The EQIP plan of operations is part of the EQIP contract.
    Estimated income foregone means an estimate of the net income loss
[[Page 69282]]
associated with the adoption of a conservation practice. Along with
other estimated incurred costs, income foregone is one of the costs
associated with practice implementation as recorded in a payment
schedule.
    Field Office Technical Guide (FOTG) means the official local NRCS
source of resource information and interpretations of guidelines,
criteria, and requirements for planning and implementation of
conservation practices. It contains detailed information on the quality
standards to achieve conservation of soil, water, air, plant, energy,
and animal resources applicable to the local area for which it is
prepared. (See https://www.nrcs.usda.gov/wps/portal/nrcs/main/national/technical/fotg/ to access your State FOTG.)
    Forest management plan means a site-specific plan that is prepared
according to NRCS criteria by a professional resource manager, in
consultation with the participant, and is approved by NRCS. Forest
management plans may include a forest stewardship plan, as specified in
section 5 of the Cooperative Forestry Assistance Act of 1978 (16 U.S.C.
2103a); another plan approved by the State forester or Indian Tribe; or
another plan determined appropriate by NRCS. The plan is intended to
comply with Federal, State, Tribal, and local laws, regulations, and
permit requirements.
    Habitat development means the application of conservation practices
to establish, improve, protect, enhance, or restore the conditions of
the land for the specific purpose of improving conditions for fish and
wildlife.
    High priority area means a watershed (or other appropriate region
or area within a State) wherein the Chief, in consultation with the
State Technical Committee, has identified one or more priority resource
concerns.
    Historically underserved producer means a person, joint operation,
legal entity, or Indian Tribe who is a beginning farmer or rancher,
socially disadvantaged farmer or rancher, limited resource farmer or
rancher, or veteran farmer or rancher.
    Incentive practice means a practice or set of practices approved by
the Chief that, when implemented and maintained on eligible land,
address one or more priority resource concerns under a contract entered
into under subpart D of this part.
    Indian land means:
    (1) Land held in trust by the United States for individual Indians
or Indian Tribes;
    (2) Land, the title to which is held by individual Indians or
Indian Tribes subject to Federal restrictions against alienation or
encumbrance;
    (3) Land which is subject to rights of use, occupancy or benefit of
certain Indian Tribes; or
    (4) Land held in fee title by an Indian, Indian family, or Indian
Tribe.
    Indian Tribe means any Indian Tribe, band, nation, pueblo, or other
organized group or community, including any Alaska Native village or
regional or village corporation as defined in or established pursuant
to the Alaska Native Claims Settlement Act (43 U.S.C. 1601 et seq.)
which is recognized as eligible for the special programs and services
provided by the United States to Indians because of their status as
Indians.
    Integrated pest management means a sustainable approach to managing
pests by combining biological, cultural, physical, and chemical tools
in a way that minimizes economic, health, and environmental risks.
    Joint operation means, as defined in 7 CFR part 1400, a general
partnership, joint venture, or other similar business organization in
which the members are jointly and severally liable for the obligations
of the organization.
    Legal entity means, as defined in 7 CFR part 1400, an entity
created under Federal or State law that:
    (1) Owns land or an agricultural commodity, product, or livestock;
or
    (2) Produces an agricultural commodity, product, or livestock.
    Lifespan means the period of time during which a conservation
practice or activity should be maintained and used for the intended
purpose.
    Limited resource farmer or rancher means either:
    (1) Individual producer:
    (i) A person with direct or indirect gross farm sales not more than
the current indexed value in each of the previous 2 fiscal years
(adjusted for inflation using Prices Paid by Farmer Index as compiled
by National Agricultural Statistical Service), and
    (ii) Has a total household income at or below the national poverty
level for a family of four, or less than 50 percent of county median
household income in each of the previous 2 years (to be determined
annually using Commerce Department Data); or
    (2) A legal entity or joint operation if all individual members
independently qualify under paragraph (1) of this definition.
    Liquidated damages means a sum of money stipulated in the EQIP
contract that the participant agrees to pay NRCS if the participant
fails to adequately complete the terms of the contract. The sum
represents an estimate of the technical assistance expenses incurred to
service the contract and reflects the difficulties of proof of loss and
the inconvenience or nonfeasibility of otherwise obtaining an adequate
remedy.
    Livestock means all domesticated animals produced on farms or
ranches, as determined by the Chief.
    Livestock production means farm or ranch operations involving the
production, growing, raising, or reproduction of domesticated livestock
or livestock products.
    Local working group means the advisory body as defined in 7 CFR
part 610.
    National Organic Program means the national program established
under the Organic Foods Production Act of 1990 (7 U.S.C. 6501 et seq.),
administered by the Agricultural Marketing Service, which regulates the
standards for any farm, wild crop harvesting, or handling operation
that wants to sell an agricultural product as organically produced.
    National priorities mean resource issues identified by the Chief,
with advice from other federal agencies, Indian Tribes, and State
Conservationists, which is used to determine the distribution of EQIP
funds and guide local EQIP implementation.
    Natural Resources Conservation Service (NRCS) is an agency of USDA,
which has responsibility for administering EQIP using the funds,
facilities, and authorities of the CCC.
    Nonindustrial private forest land (NIPF) means rural land, as
determined by NRCS, that has existing tree cover or is suitable for
growing trees; and is owned by any nonindustrial private individual,
group, association, corporation, Indian Tribe, or other private legal
entity that has definitive decision-making authority over the land.
    Operation and maintenance (O&M) means work performed by the
participant to keep the applied conservation practice functioning for
the intended purpose during the conservation practice lifespan.
Operation includes the administration, management, and performance of
nonmaintenance actions needed to keep the completed practice
functioning as intended. Maintenance includes work to prevent
deterioration of the practice, repairing damage, or replacement of the
practice to its original condition if one or more components fail.
    O&M agreement means the document that, in conjunction with the EQIP
plan of operations, specifies the O&M responsibilities of the
participant for
[[Page 69283]]
conservation practices installed with EQIP assistance.
    Organic system plan (OSP) means a management plan for organic
production or for an organic handling operation that has been agreed to
by the producer or handler and the certifying agent. The OSP includes
all written plans that govern all aspects of agricultural production or
handling as required under the Organic Foods Production Act of 1990 (7
U.S.C. 6501 et seq.).
    Participant means an applicant that has entered into an EQIP
contract who incurs the cost of practice implementation, will receive
or has received payment, or is responsible for implementing the terms
and conditions of an EQIP contract.
    Payment means financial assistance provided to the participant
based on the estimated costs incurred in performing or implementing
conservation practices, including costs for: Planning, design,
materials, equipment, installation, labor, management, maintenance, or
training, as well as the estimated income foregone by the participant
for designated conservation practices.
    Person means, as defined in 7 CFR part 1400, an individual, natural
person, and does not include a legal entity.
    Priority resource concern means a resource concern, as determined
by the Chief, with input from the State Technical Committee, that--
    (1) Is identified at the national, State, or local level as a
priority for a particular area of a State; and
    (2) Represents a significant concern in a State or region.
    Producer means a person, legal entity, Indian Tribe, or joint
operation who NRCS determines is engaged in agricultural production or
forestry management on the agricultural operation.
    Resource concern means a specific natural resource issue or problem
that represents a significant concern in a State or region and is
likely to be addressed through the implementation of conservation
practices by producers according to NRCS technical standards.
    Semi-public means entities that are private or public companies
that serve a public purpose, i.e. Public utility companies. They often
have condemnation authority but are not considered part of the State or
State government.
    Socially disadvantaged farmer or rancher means a producer who is a
member of a group whose members have been subjected to racial or ethnic
prejudices without regard to its members' individual qualities. For an
entity, at least 50-percent ownership in the business entity must be
held by socially disadvantaged individuals.
    Soil remediation means scientifically based practices, as
determined by NRCS, that--
    (1) Ensure the safety of producers from contaminants in soil;
    (2) Limit contaminants in soils from entering agricultural products
for human or animal consumption; and
    (3) Regenerate and sustain the soil.
    Soil testing means the evaluation of soil health, including testing
for the--
    (1) Optimal level of constituents in the soil, such as organic
matter, nutrients, and the potential presence of soil contaminants
(including heavy metals, volatile organic compounds, polycylic aromatic
hydrocarbons, or other contaminants), as determined by NRCS; and
    (2) Biological and physical characteristics indicative of proper
soil functioning.
    State conservationist means the NRCS employee authorized to
implement EQIP and direct and supervise NRCS activities in a State and
the Caribbean and Pacific Island Areas.
    State Technical Committee means a committee established by NRCS in
a State pursuant to 7 CFR part 610, subpart C.
    Structural practice means a conservation practice, including a
vegetative practice, that involves establishing, constructing, or
installing a site-specific measure to conserve and protect a resource
from degradation, or improve soil, water, air, or related natural
resources. Examples include, but are not limited to, animal waste
management facilities, terraces, grassed waterways, tailwater pits,
livestock water developments, contour grass strips, filter strips,
critical area plantings, tree plantings, establishment or improvement
of wildlife habitat, and capping of abandoned wells.
    Technical assistance means technical expertise, information,
training, education, and tools necessary for a producer to be able to
successfully implement, operate, and maintain conservation practices to
ensure the conservation of natural resources on land active in
agricultural, forestry, or related uses. These technical services
include:
    (1) Technical services provided directly to farmers, ranchers,
Indian Tribes, and other eligible entities, such as conservation
planning, technical consultation, and assistance with design and
implementation of conservation practices; and
    (2) Technical infrastructure, including activities, processes,
tools, and agency functions needed to support delivery of technical
services, such as technical standards, resource inventories, training,
education, data, technology, monitoring, and effects analyses.
    Technical service provider (TSP) means an individual, private-
sector entity, Indian Tribe, or public agency either:
    (1) Certified by NRCS pursuant to 7 CFR part 652 and placed on the
approved list to provide technical services to participants; or
    (2) Selected by the Department to assist in the implementation of
conservation programs covered by this part through a procurement
contract, contributions agreement, or cooperative agreement with the
Department.
    Tribal Conservation Advisory Council means, in lieu of or in
addition to forming a Tribal conservation district, an Indian Tribe may
elect to designate an advisory council to provide input on NRCS
programs and the conservation needs of the Tribe and Tribal producers.
The 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, and programs
and their impacts on Tribes.
    Veteran farmer or rancher means a producer who meets the definition
in section 2501(a) of the Food, Agriculture, Conservation, and Trade
Act of 1990, as amended (7 U.S.C. 2279(a)).
    Water management entity means a State, irrigation district,
groundwater management district, acequia, land grant-merced, or similar
entity that has jurisdiction or responsibilities related to water
delivery or management to eligible lands.
    Wildlife means nondomesticated birds, fishes, reptiles, amphibians,
invertebrates, and mammals.
    Wildlife habitat means the aquatic and terrestrial environments
required for fish and wildlife to complete their life cycles, providing
air, food, cover, water, and spatial requirements.
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
[[Page 69284]]
total maximum daily loads (TMDL) where available;
    (2) The reduction of surface and ground 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;
    (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 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.
    (b) In consultation with other Federal agencies and Indian Tribes,
NRCS may undertake periodic reviews of the national priorities and the
effects of program delivery at the State and local levels to adapt the
program to address emerging resource issues. NRCS may--
    (1) Use the national priorities to guide the allocation of EQIP
funds to the NRCS State offices;
    (2) Use the national priorities in conjunction with States, Indian
Tribes, and local priorities to assist with prioritization and
selection of EQIP applications; and
    (3) Periodically review and update the national priorities
utilizing input from the public, Indian Tribes, other Federal and State
agencies, and affected stakeholders to ensure that the program
continues to address priority resource concerns.
Sec.  1466.5   Outreach activities.
    (a) NRCS conducts outreach activities at the national, State,
Tribal, and local levels to ensure that producers whose land has
environmental problems or priority resource concerns are aware and
informed that they may be eligible to apply for program assistance.
    (b) NRCS will make special outreach to eligible producers with
historically low participation rates, including but not restricted to,
limited resource, socially disadvantaged, small-scale, beginning
farmers or ranchers, veteran farmers or ranchers, Indian Tribes, Alaska
Natives, and Pacific Islanders.
    (c) NRCS provides outreach to ensure producer participation is not
limited based on the size or type of operation or production system,
including small-scale, specialty crop, and organic production.
    (d) NRCS will notify historically underserved producers, at the
time of enrollment in the program, of the option to receive advance
payments under Sec.  1466.24 of this part and document the election of
each of these producers.
Sec.  1466.6   Program requirements.
    (a) General. Program participation is voluntary. An applicant must
develop an EQIP plan of operations for the eligible land to be treated
which serves as the basis for the EQIP contract. Under EQIP, NRCS
provides participants with technical assistance and payments to plan
and apply needed conservation practices.
    (b) Applicant eligibility. To be eligible to participate in EQIP,
an applicant must--
    (1) Be in compliance with the highly erodible land and wetland
conservation provisions at 7 CFR part 12;
    (2) Be a producer as determined by NRCS;
    (3) Have control of the land for the term of the proposed contract
unless an exception is made by the Chief in the case of land
administered by the Bureau of Indian Affairs (BIA), Indian lands, or
other instances in which the Chief determines sufficient assurance of
control;
    (i) The Chief may determine that land administered by BIA, Indian
land, or other such circumstances provides sufficient assurance of
control, and
    (ii) If the applicant is a tenant of the land involved in
agricultural production or forestry management, the Chief may require
the applicant to obtain the written concurrence of the landowner to
apply a conservation practice;
    (4) Agree to implement the EQIP plan of operations according to the
provisions and conditions established in the EQIP contract, including
the EQIP contract appendix;
    (5) Submit an EQIP plan of operations or plan developed for the
purposes of acquiring an air or water quality permit, provided these
plans contain elements equivalent to those elements required by an EQIP
plan of operations and are acceptable to NRCS as being consistent with
the purposes of the program;
    (6) Supply information, as required by NRCS, to determine
eligibility for the program, including but not limited to, information
to verify the applicant's status as a historically underserved
producer, and payment eligibility as established by 7 CFR part 1400;
and
    (7) Provide a list of all members of the legal entity and embedded
entities along with members' tax identification numbers and percentage
interest in the entity.
    (c) Consideration for enrollment of eligible land. Eligible land,
as defined in Sec.  1466.3, may be considered for enrollment in EQIP
only if NRCS determines that the land is--
    (1) Privately owned land;
    (2) Publicly owned land where--
    (i) The land is a working component of the participant's
agricultural or forestry operation,
    (ii) The participant has control of the land for the term of the
contract, and
    (iii) The conservation practices to be implemented on the public
land are necessary and will contribute to an improvement in the
identified resource concern; or
    (3) Indian land.
    (d) Eligibility of a water management entity. (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) and (ii) of this section can be met:
    (i) The entity is a public or semi-public agency or organization,
and
    (ii) Its purpose is to assist private agricultural producers manage
water distribution systems.
    (2) Water conservation or irrigation practices that are the subject
of a contract entered into under paragraph (d)(1) of this section shall
be implemented on--
    (i) Eligible land of a producer; or
    (ii) Land that is--
    (A) Under the control of the water management entity, and
    (B) Adjacent to eligible land of a producer, provided the Chief
determines the adjacent land is necessary to support the installation
of a practice or system implemented on eligible land.
    (3)(i) The Chief may waive the average adjusted gross income
limitation set forth in 7 CFR part 1400 or the aggregate payment
limitation set forth in Sec.  1466.24 of this part for a contract under
paragraph (d)(1) of this section if the Chief determines that the
waiver is necessary to fulfill the objectives of the project.
    (ii) In determining whether to grant a waiver under this paragraph,
the Chief shall consider--
    (A) The number of producers who will benefit from the project;
    (B) The conservation benefit of the practices involved in the
project;
    (C) The amount of non-federal assets leveraged to facilitate the
project;
    (D) The extent to which the project involves progressive
implementation of conservation practices; and
[[Page 69285]]
    (E) Other criteria as determined by NRCS.
    (iii) Notwithstanding any waiver of the aggregate payment
limitation, a water management entity or individual member thereof
shall not receive, in the aggregate, directly or indirectly, payments
under this paragraph, in aggregate, in excess of $900,000 for all
contracts entered into under this paragraph by the water management
entity during the period of fiscal years 2019 through 2023.
Sec.  1466.7   EQIP plan of operations.
    (a) All conservation practices in the EQIP plan of operations must
be approved by NRCS and developed and carried out in accordance with
the applicable NRCS planning and FOTG technical requirements.
    (b) The participant is responsible for implementing the EQIP plan
of operations according to the approved implementation schedule.
    (c) The EQIP plan of operations must include--
    (1) A description of the participant's specific conservation
objectives to be achieved;
    (2) To the extent practicable, the quantitative or qualitative
goals for achieving the participant's conservation and natural resource
objectives;
    (3) A description of one or more conservation practices in the
conservation management system, including conservation planning,
design, or installation activities to be implemented to achieve the
conservation objectives;
    (4) A schedule for implementing the conservation practices,
including timing, sequence, operation, and maintenance; and
    (5) Information that enables evaluation of the effectiveness of the
plan of operations in achieving the conservation objectives.
    (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 develop a CNMP by the end of the contract period, and any
conservation practices in the EQIP plan of operation must be
implemented consistent with a CNMP.
    (e) An EQIP plan of operations on forest land must implement
conservation practices consistent with an approved forest management
plan.
    (f) NRCS may provide a participant with assistance to implement an
EQIP plan of operations which includes irrigation-related practices to
address a water conservation resource concern only if the participant
establishes through documented evidence, including irrigation history,
that such assistance will facilitate a reduction in ground or surface
water use on the agricultural operation, unless the producer is
participating in a watershed-wide project, as approved by NRCS, which
will effectively conserve water in accordance with Sec.  1466.20 of
this part.
Sec.  1466.8   Conservation practices.
    (a) NRCS will determine the conservation practices for which
participants may receive program payments and provide a list of
eligible practices to the public.
    (b) Payment will not be made to a participant for conservation
practices that--
    (1) Either the applicant or another producer has initiated or
implemented prior to application for the program; or
    (2) Has been initiated or implemented prior to contract approval,
unless a waiver was granted by the Chief prior to the practice
implementation.
    (c) Unless waived for circumstances as determined by the Chief, a
participant is eligible for payments for water conservation and
irrigation-related conservation practices only on land that has been
irrigated for 2 of the last 5 years prior to application for
assistance.
    (d) Upon the development of a new technology or management approach
that provides a high potential for optimizing conservation benefits,
NRCS may approve an interim conservation practice standard that
incorporates the new technology or management approach and provide
financial assistance for pilot work to evaluate and assess the
performance, efficiency, and effectiveness of the new technology or
management approach.
    (e) NRCS will at least annually consult with State Technical
Committees, Tribal Conservation Advisory Councils, local work groups,
and other stakeholders to identify conservation practices with
appropriate purposes and the criteria for their application to address
priorities to establish wildlife habitat including--
    (1) Upland wildlife habitat;
    (2) Wetland wildlife habitat;
    (3) Habitat for threatened and endangered species;
    (4) Fish habitat;
    (5) Habitat on pivot corners and other irregular areas of a field;
and
    (6) Other types of wildlife habitat, as determined by NRCS.
Sec.  1466.9   Technical services provided by qualified personnel not
affiliated with USDA.
    (a) NRCS may use the services of qualified third-party TSPs in its
delivery of EQIP technical assistance in accordance with 7 CFR part
652.
    (b) Participants may obtain technical services from certified TSPs
in accordance with 7 CFR part 652.
    (c) NRCS retains approval authority of work done by non-NRCS
personnel for the purpose of approving EQIP payments.
Subpart B--Contracts and Payment
Sec.  1466.20   Application for contracts and selecting applications.
    (a) General guidelines. (1) Any producer who has eligible land may
submit an application for participation in EQIP.
    (2) NRCS, to the greatest extent practicable, will group
applications of similar crop, forestry, and livestock operations for
evaluation purposes.
    (3) Applications may be accepted on a continuous basis throughout
the year.
    (4) Producers who are members of a joint operation may file a
single application for ranking purposes for the joint operation.
    (b) Ranking guidelines. In evaluating EQIP applications, NRCS--
    (1) Will establish ranking pools to address a specific resource
concern by geographic area or agricultural operation type with advice
from the State Technical Committee, Tribal Conservation Advisory
Council, or local working groups;
    (2) Will develop an evaluation process using, where applicable,
science-based tools to prioritize and rank applications for funding
that considers national, State, and local priority resource concerns,
taking into account the factors related to conservation benefits to
address identified resource concerns through implementation of
conservation practices such as:
    (i) The degree of cost-effectiveness of the proposed conservation
practices;
    (ii) The magnitude of the expected conservation benefits resulting
from the conservation treatment and the priority of the resource
concerns that have been identified at the local, State, and national
levels;
    (iii) How effectively and comprehensively the project addresses the
designated resource concern or resource concerns;
    (iv) Use of conservation practices that provide long-term
conservation enhancements;
    (v) Compliance with Federal, State, Tribal, or local regulatory
requirements concerning soil, water, and air quality; wildlife habitat;
and ground and surface water conservation;
    (vi) Willingness of the applicant to complete all conservation
practices in an expedited manner;
[[Page 69286]]
    (vii) The ability to improve existing conservation practices or
systems which are in place at the time the application is accepted, or
that complete a conservation system;
    (viii) The applicant's meeting O&M requirements for the lifespan of
conservation practices previously funded through EQIP; and
    (xi) Other locally defined pertinent factors, such as the location
of the conservation practice, the extent of natural resource
degradation, and the degree of cooperation by local producers to
achieve environmental improvements.
    (3) May give priority for applications that include water
conservation or irrigation-related practices, and consistent with State
law in which the applicant's eligible land is located, if the
application--
    (i) Results in a reduction in water use in the agricultural
operation, or
    (ii) Includes an agreement by the applicant not to use any
associated water savings to bring new land (other than incidental land
needed for efficient operations) under irrigation production unless the
producer is participating in a watershed-wide project that will
effectively conserve water as designated under paragraph (c) of this
section;
    (4) May not assign a higher priority to the application solely
because it would present the least cost to the program if determined
that the conservation benefits of two or more applications for payments
are comparable;
    (5) Will ensure that the ranking score does not give preferential
treatment to applications based on size of the operation, income
generated from the operation, type of operation, or other factors not
related to conservation benefits to address a resource concern unless
authorized in this rule;
    (6) Will determine through the evaluation process the order in
which applications will be selected for funding; and
    (7) Will make available to the public all information regarding
priority resource concerns, the list of eligible practices, payment
rates, and how EQIP is implemented in a State.
    (c) Eligibility of certain water conservation projects. NRCS may
designate as eligible watershed-wide projects that effectively conserve
water, using the criteria in paragraphs (c)(1) through (3) of this
section:
    (1) The project area has a current, comprehensive water resource
assessment; and
    (2) The project plan incorporates one or more of the practices in
paragraphs (c)(2)(i) through (iii) of this section:
    (i) Water conservation scheduling, water distribution efficiency,
soil moisture monitoring, or an appropriate combination thereof,
    (ii) Irrigation-related structural or other measures that conserve
surface or ground water, including managed aquifer recovery practices,
or
    (iii) A transition to water-conserving crops, water-conserving crop
rotations, or deficit irrigation; and
    (3) The project sponsors have consulted relevant State and local
agencies.
    (d) Administrative efficiency. (1) NRCS may use screening factors
as part of its evaluation process that may include sorting applications
into high, medium, or low priority.
    (2) If screening factors are used to designate a higher priority
for ranking, all eligible applications screened with a higher priority
are ranked and considered for funding before ranking applications that
are a lower priority.
    (3) NRCS is the approving authority for all EQIP contracts.
Sec.  1466.21  Contract requirements.
    (a) Requirement for a contract. For a participant to receive
payments, the participant must enter into a contract agreeing to
implement one or more conservation practices. Payment for technical
services may be included in the contract pursuant to requirements of
this part.
    (b) Contract terms. An EQIP contract will--
    (1) Identify all conservation practices to be implemented, the
timing of practice installation, the O&M requirements for the
practices, and applicable payments allocated to the practices under the
contract;
    (2) Have a term for no more than 10 years;
    (3) Incorporate all provisions as required by law or statute,
including requirements that the participant will--
    (i) Not implement any practices on the enrolled land that would
defeat the program's purposes,
    (ii) Refund any program payments received with interest, and
forfeit any future payments under the program, on the violation of a
term or condition of the contract, consistent with the provisions of
Sec.  1466.26,
    (iii) Refund all program payments received on the transfer of the
right and interest of the producer in land subject to the contract,
unless the transferee of the right and interest agrees to assume all
obligations, including O&M of the EQIP contract's conservation
practices, consistent with the provisions of Sec.  1466.25,
    (iv) Develop and implement any conservation practices identified in
an EQIP plan of operations consistent with a CNMP when the EQIP
contract includes an animal waste management facility on an AFO,
    (v) Implement conservation practices consistent with an approved
forest management plan when the EQIP plan of operations includes
forest-related practices that address resource concerns on NIPF,
    (vi) Supply information as required by NRCS to determine compliance
with contract and program requirements, and
    (vii) Specify the participant's responsibilities for the O&M of the
applied conservation practices, consistent with the provisions of Sec.
1466.22; and
    (4) Specify any other provision determined necessary or appropriate
by NRCS to achieve the technical requirements of a practice or purposes
of the program.
    (c) Timeline for implementation. At least one conservation practice
must be scheduled for completion within the first 12 months of the
contract; NRCS may extend this timeframe if NRCS determines that the
participant is unable to complete the conservation practice for reasons
beyond their control.
    (d) Contract limitation. Each contract will be limited to no more
than $450,000, unless the contract is with an Indian Tribe or the Chief
grants a waiver. Contracts related to organic operations are also
subject to payment limitations pursuant to Sec.  1466.24(b).
    (e) Waiver to contract limitation. (1) The Chief may waive the
contract limitation set forth in paragraph (d) of this section if the
Chief determines that--
    (i) The waiver is in the best interests of the program; and
    (ii) The contract involves either--
    (A) A joint operation,
    (B) A group project, such as for the development of an anaerobic
digestor or the improvement of privately owned and operated irrigation
systems that benefits multiple producers or a large area of land; or
    (C) A water management entity for which NRCS has approved a payment
limitation waiver.
    (2) A contract for which the Chief has granted a waiver to the
contract limitation set forth in paragraph (d) of this section shall be
limited to no more than $900,000.
    (f) Water conservation and irrigation efficiency projects with
water management entities. NRCS may decline to select an EQIP
application from a legal entity who is otherwise eligible under Sec.
1466.6(d) if NRCS
[[Page 69287]]
determines that the project is better suited to be implemented under
the Regional Conservation Partnership Program or 7 CFR part 622.
Sec.  1466.22  Conservation practice operation and maintenance (O&M).
    (a) The contract will incorporate the O&M agreement that addresses
the O&M of conservation practices applied under the contract.
    (b) NRCS expects the participant to operate and maintain each
conservation practice installed under the contract for its intended
purpose for the conservation practice lifespan as specified in the O&M
agreement.
    (c) Conservation practices installed before the contract execution
but included in the contract to obtain the conservation benefits agreed
upon, must be operated and maintained as specified in the contract and
O&M agreement.
    (d) NRCS may periodically inspect the conservation practice during
the contract duration as specified in the O&M agreement to ensure that
O&M requirements are being carried out and that the conservation
practice is fulfilling its intended objectives.
    (e) If NRCS finds during the contract that a participant is not
operating and maintaining practices in an appropriate manner, NRCS may
terminate the contract and request a refund of payments made for that
conservation practice under the contract.
Sec.  1466.23  Payment rates.
    (a) Conservation practices. NRCS will develop a list of
conservation practices eligible for payment under the program, which
considers:
    (1) The conservation practice cost-effectiveness, implementation
efficiency, and innovation;
    (2) The degree and effectiveness in treating priority resource
concerns;
    (3) The number of resource concerns the practice addresses;
    (4) The longevity of the practice's conservation benefit;
    (5) The conservation practice's ability to assist producers in
meeting regulatory requirements; and
    (6) Other pertinent local considerations.
    (b) Payment schedules. The Chief will determine the process and
methodology used for development, review, and approval of payment
schedules to support accurate and cost-effective delivery of program
benefits, including determination of estimated incurred costs and
income foregone associated with implementation of all financially-
supported conservation practices or activities.
    (1) Payment to a participant for performing a practice may not
exceed, as determined by NRCS, the maximum payment percentages in
paragraphs (b)(1)(i) through (iii) of this section:
    (i) Seventy-five percent of the estimated costs incurred by
implementing the conservation practice,
    (ii) One hundred percent of the estimated income foregone, or
    (iii) Both conditions in paragraphs (b)(1)(i) and (ii) of this
section, where a producer incurs costs in implementing a conservation
practice and foregoes income related to that practice implementation.
    (2) In determining the amount and rate of estimated income
foregone, NRCS may assign higher significance to conservation practices
which promote--
    (i) Soil health;
    (ii) Water quality and quantity improvement;
    (iii) Nutrient management;
    (iv) Pest management;
    (v) Air quality improvement;
    (vi) Wildlife habitat development, including pollinator habitat;
    (vii) Invasive species management; or
    (viii) Other natural resource concerns of regional or national
significance, as determined by NRCS.
    (3) Notwithstanding paragraph (b)(1) of this section, a participant
that meets the definition of a historically underserved producer under
Sec.  1466.3 may be awarded the applicable payment rate and an
additional rate that is not less than 25 percent above the applicable
rate, provided this increase does not exceed 90 percent of the
estimated costs incurred for implementing the conservation practice.
    (4) NRCS shall reduce the payments to a participant through EQIP
proportionately below the contracted payment rate established by the
Chief, so that the total combined payments for a conservation practice
from EQIP and other USDA sources does not exceed 100 percent of the
estimated costs incurred for implementing or performing the
conservation practice.
    (5) When NRCS enters into a formal agreement with partners who
provide financial support to help implement program initiatives, the
Chief shall adjust NRCS program payment percentages to provide practice
payment rates to an amount such that the total financial assistance to
the participant from NRCS and the partner does not exceed the amount
needed to encourage voluntary adoption of the practice. The formal
agreement must be approved by NRCS prior to announcement of the program
initiative and adjusted payment rates.
    (6) NRCS may provide payments for conservation practices on some or
all of the operations of a participant related to organic production
and the transition to organic production. Payments may not be provided
for any costs associated with organic certification, enterprise costs
associated with transition to organic production, or for practices or
activities that are eligible for financial assistance under the
National Organic Program (7 U.S.C. 6523).
    (c) High priority practices. (1) NRCS, with input from the State
Technical Committee, may designate not more than 10 practices to be
eligible for increased payments under paragraph (c)(2) of this section,
on the condition that the practice, as determined by NRCS--
    (i) Addresses specific causes of impairment relating to excessive
nutrients in ground or surface water;
    (ii) Addresses the conservation of water, to advance drought
mitigation and declining aquifers;
    (iii) Meets other environmental priorities and other priority
resource concerns identified in habitat or other area restoration
plans; or
    (iv) Is geographically targeted to address a natural resource
concern in a specific watershed.
    (2) Notwithstanding paragraph (b) of this section, in the case of a
practice designated as high priority under paragraph (c)(1) of this
section a participant may receive an increased amount provided the
payment does not exceed 90 percent of the incurred costs estimated for
the conservation practice.
    (d) Source water protection practices. Notwithstanding paragraph
(b) of this section, in the case of a practice that is a source water
protection practice as identified by the Chief, a participant may
receive an increased amount provided the payment does not exceed 90
percent of the incurred costs estimated for the practice.
Sec.  1466.24  EQIP payment restrictions and exceptions.
    (a) EQIP general aggregate payment limitation. (1) The total amount
of financial assistance payments paid to a person or legal entity under
this part, during the period of fiscal years 2019 through 2023, may not
exceed an aggregate of $450,000, directly or indirectly.
    (2) Except as otherwise provided in Sec.  1466.6, the limitation in
paragraph (a)(1) of this section cannot be waived.
    (b) Organic production aggregate payment limitation. Payments for
conservation practices related to organic production to a person or
legal entity, directly or indirectly, during the period of fiscal years
2019 through 2023, may not exceed an aggregate of $140,000.
[[Page 69288]]
    (c) Payment eligibility criteria. To determine eligibility for
payments, NRCS will use the criteria in paragraphs (c)(1) through (9)
of this section:
    (1) The provisions in 7 CFR part 1400, Payment Limitation and
Payment Eligibility;
    (2) Except as otherwise set forth in this part, States, political
subdivisions, and entities thereof are not considered to be producers
eligible for payment;
    (3) In accordance with 7 CFR part 1400, an applicant applying as a
joint operation or legal entity must provide a list of all members of
the legal entity and joint operation and associated embedded entities,
along with the members' tax identification numbers and percentage
interest in the joint operation or legal entity, which all legal
entities or persons applying, either alone or as part of a joint
operation, must provide to be eligible to receive an EQIP payment;
    (4) Contracts with Indian Tribes are not subject to payment or
contract limitations, provided that--
    (i) Indian Tribes certify in writing that no one individual,
directly or indirectly, will receive more than the payment limitation,
    (ii) Certification provided at the time of enrollment covers the
entire contract period, and
    (iii) The Tribal entity provides, upon request from NRCS, a listing
of individuals and payment made, by Social Security number or other
unique identification number, during the previous year for calculation
of overall payment limitations, with the conditions in paragraphs
(c)(4)(iii)(A) through (C) of this section:
    (A) Payment limitations apply to individual Tribal member(s) when
applying and subsequently being granted a contract as an individual(s);
    (B) American Indians, Alaska Natives, and Pacific Islanders may use
another unique identification number for each individual eligible for
payment; and
    (C) Any individual Tribal member who is identified utilizing a
unique identification number as an alternative to a tax identification
number will utilize only that identifier for all contracts to which the
individual Tribal member receives a payment directly or indirectly;
    (5) Any cooperative association of producers that markets
commodities for producers is not eligible for payment;
    (6) NRCS will confirm eligibility for payments in accordance with 7
CFR part 1400, subpart F, Average Adjusted Gross Income Limitation,
prior to contract approval;
    (7) To be eligible for payments for conservation practices related
to organic production or the transition to organic production:
    (i) Participants who are USDA certified organic producers will
implement conservation practices that are consistent with an approved
organic system plan (OSP), and
    (ii) Participants who are transitioning to organic production
(including participants who are exempt from certification as defined by
the Organic Foods Production Act of 1990) will develop an OSP and
implement conservation practices that are consistent with OSP
requirements and purposes of the program;
    (8) A participant is not eligible for payments for conservation
practices on eligible land if the participant receives payments or
other benefits for the same practice to address the same resource
concern on the same land under any other conservation program
administered by USDA; and
    (9) Before NRCS approves and issues any EQIP payment, the
participant must certify that the conservation practice has been
completed in accordance with contract requirements, and NRCS or an
approved TSP must certify that the practice has been carried out in
accordance with the applicable NRCS FOTG technical standards.
    (d) Advance payments. (1) Notwithstanding paragraph (c) of this
section, with respect to participants who are historically underserved
producers, NRCS may issue advance payments of at least 50 percent and
not to exceed 100 percent of the anticipated amount of the costs
incurred for the purpose of purchasing materials or services to
implement a conservation practice.
    (2) Eligibility for advance payment is contingent upon the
requirement that the participant obtain an NRCS-approved practice
design prior to approval of the advance payment.
    (3) The participant must expend advanced funds for practice
implementation within 90 days from receipt of funds or return the funds
to NRCS within a reasonable time as determined by NRCS.
Sec.  1466.25   Contract modifications and transfers of contract
rights.
    (a) NRCS may modify a contract, if--
    (1) The participant agrees to the modification; and
    (2) NRCS determines the modified contract continues to meet the
purposes of the program.
    (b) NRCS may approve a transfer of the contract if--
    (1) NRCS receives written notice that identifies the new producer
who will take control of the acreage, as required in paragraph (e) of
this section;
    (2) The new producer meets program eligibility requirements within
a reasonable time frame, as specified in the EQIP contract;
    (3) The new producer agrees to assume the rights and
responsibilities for the acreage under the contract; and
    (4) NRCS determines that the purposes of the program will continue
to be met despite the original participant's losing control of all or a
portion of the land under contract.
    (c)(1) Until NRCS approves the transfer of contract rights, the
transferee is not a participant in the program and may not receive
payment for a conservation practice commenced prior to approval of the
contract transfer.
    (2) For contract payment purposes, NRCS will consider the
transferor to be the participant to whom payments will be made for
conservation practices implemented during the pendency of the approval
of contract transfer.
    (d) NRCS may terminate the entire contract if, within the time
specified in the contract, a participant does not provide NRCS with
written notice regarding any voluntary or involuntary loss of control
of any acreage under the EQIP contract, which includes changes in a
participant's ownership structure or corporate form.
    (e) Unless NRCS receives timely notice of a loss of control and
approves a transfer of contract rights, a participant losing control of
any acreage will constitute a violation of the EQIP contract and NRCS
may terminate the contract and require a participant to refund all or a
portion of any financial assistance provided.
    (f) NRCS may not approve a contract transfer and may terminate the
contract in its entirety if NRCS determines that the loss of control is
voluntary, the new producer is not eligible or willing to assume
responsibilities under the contract (including payment rate
eligibility), or the purposes of the program cannot be met.
    (g) In the event a conservation practice fails through no fault of
the participant, NRCS may issue payments to reestablish the practice,
at the rates established in accordance with Sec.  1466.23, provided
such payments do not exceed the payment limitation requirements as set
forth in Sec.  1466.24.
    (h) In the case of death, incompetency, or disappearance of any
participant, NRCS may, as identified in the EQIP contract--
    (1) Terminate the contract;
    (2) Make any payments due under this part pursuant to guidance
under applicable provisions of 7 CFR parts 707 and 1400 (including
payment to successor(s)); or
[[Page 69289]]
    (3) Take any further action that the Chief determines is fair and
reasonable in light of all of the circumstances.
Sec.  1466.26   Contract violations and terminations.
    (a) NRCS may terminate a contract--
    (1) Without the consent of the participant where NRCS determines
that the participant violated the contract; or
    (2) With the consent of the participant if NRCS determines that the
termination is in the public interest.
    (b)(1) NRCS may allow a participant in a contract terminated in
accordance with the provisions of paragraph (a) of this section to
retain a portion of any payments received appropriate to the effort the
participant has made to comply with the contract, or in cases of
hardship, when forces beyond the participant's control prevented
compliance with the contract.
    (2) The condition that is the basis for the participant's inability
to comply with the contract must not have existed at the time the
contract was executed by the participant.
    (3) If a participant believes that such a hardship condition
exists, the participant may submit a request with NRCS for relief
pursuant to this paragraph and any such request must contain
documentation sufficient for NRCS to make a determination that this
hardship condition exists.
    (c)(1) If NRCS determines that a participant is in violation of the
terms of a contract, O&M agreement, or documents incorporated by
reference into the contract, NRCS may give the participant a reasonable
period of time, as determined by NRCS, to correct the violation and
comply with the terms of the contract and attachments thereto.
    (2) If a participant continues to be in violation after such
reasonable time, NRCS may terminate the EQIP contract in accordance
with Sec.  1466.26(f).
    (d) Notwithstanding the provisions of paragraph (c) of this
section, a contract termination is effective immediately upon a
determination by NRCS that the participant--
    (1) Submitted false information or filed a false claim;
    (2) Engaged in any act, scheme, or device for which a finding of
ineligibility for payments is permitted under the provisions of Sec.
1466.35; or
    (3) Incurred a violation of the contract provisions that cannot be
corrected in a timeframe established by NRCS.
    (e) If NRCS terminates a contract due to breach of contract, the
participant forfeits all rights to future payments under the contract,
pay liquidated damages, and refund all or part of the payments
received, plus interest.
    (1) NRCS may require a participant to provide only a partial refund
of the payments received if a previously installed conservation
practice can function independently and is not adversely affected by
the violation or the absence of other conservation practices that would
have been installed under the contract.
    (2) NRCS may reduce or waive the liquidated damages depending upon
the circumstances of the case.
    (3) When terminating a contract, NRCS may reduce the amount of
money owed by the participant by a proportion that reflects the good
faith effort of the participant to comply with the contract or the
existence of hardships beyond the participant's control that have
prevented compliance with the contract.
    (4) Any participant whose EQIP contract is terminated under
paragraph (d) of this section may be subject to debarment or suspension
under 7 CFR part 1407.
    (f) NRCS may terminate a contract that provides payments to a
participant for conservation practices related to organic production,
if NRCS determines that the participant is not implementing practices
according to provisions of the contract agreement or does not meet
provisions of this part.
Subpart C--Conservation Innovation
Sec.  1466.30   Definitions.
    In addition to the terms defined in Sec.  1466.3, the definitions
in this section apply to this subpart:
    Eligible entity means, as determined by NRCS:
    (1) A third-party private entity the primary business of which is
related to agriculture;
    (2) A nongovernmental organization with experience working with
agricultural producers; or
    (3) A governmental organization.
    Grant agreement means a document describing a relationship between
NRCS and a State or local government, or other recipient whenever the
principal purpose of the relationship is the transfer of a thing of
value to a recipient in order to accomplish a public purpose of support
or stimulation authorized by Federal law and substantial Federal
involvement is not anticipated.
    Grant Review Board consists of representatives of NRCS staff as
determined by the Chief.
    On-Farm Conservation Innovation Trial (OFCIT) agreement means an
agreement that governs the relationship between NRCS and the
participant for the purposes of OFCIT implementation. An OFCIT
agreement may be between either NRCS and a producer or NRCS and an
eligible entity.
    On-farm conservation research means an investigation conducted to
answer a specified conservation-related question using a statistically
valid design, while employing farm-scale equipment on farm fields.
    Project means the activities as defined within the scope of the
grant agreement or cooperative agreement.
    Project director means the individual responsible for the technical
direction and management of the project as designated in the
application.
    Technical Peer Review Panel means a panel consisting of Federal and
non-Federal technical advisors who possess expertise in a discipline or
disciplines deemed important to provide a technical evaluation of
project proposals submitted under the funding opportunity announcement.
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 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.
    (b) Applications for CIG are accepted from the 50 States, District
of Columbia, Commonwealth of Puerto Rico, Guam, Virgin Islands of the
United States, American Samoa, and Commonwealth of the Northern Mariana
Islands.
    (c) NRCS may award grants to applicants either through a national
competition or, at the Chief's discretion, separate State-level
components, either of which may be offered multiple times each fiscal
year.
    (d) Applications for CIG should propose innovative projects or
activities that--
    (1) Demonstrate the use of innovative approaches and technologies
to leverage Federal investment in environmental enhancement and
protection, in conjunction with agricultural production;
    (2) Promote innovative on-the-ground conservation, including pilot
projects and field demonstrations of promising approaches or
technologies;
    (3) Lead to the transfer of conservation technologies, management
systems, and innovative approaches (such as market-based systems) into
[[Page 69290]]
NRCS technical manuals and guides or to the private sector.
    (e) For NRCS to consider a proposal eligible for CIG funding, the
applicant must clearly demonstrate the innovative features of the
proposed technology or approach.
    (f) An applicant may demonstrate the innovative features of the
proposed technology or approach through a variety of means, such as by
establishing that it--
    (1) Uses a technology or approach that was studied sufficiently to
indicate a high probability for success;
    (2) Demonstrates, evaluates, and verifies the effectiveness,
utility, affordability, and usability of natural resource conservation
technologies and approaches in the field;
    (3) Adapts and transfers conservation technologies, management,
practices, systems, approaches, and incentive systems to improve
performance and encourage adoption; or
    (4) Introduces proven conservation technologies and approaches to a
geographic area or agricultural sector where that technology or
approach is not currently in use.
    (g) Projects or activities under CIG shall comply with all
applicable Federal, Tribal, State, and local laws and regulations
throughout the duration of the project.
Sec.  1466.32   Conservation innovation grant funding.
    (a) General guidelines. The guidelines in paragraphs (a)(1) through
(5) of this section apply for national-level CIG awards:
    (1) CIG funding is available for single- or multi-year projects.
    (2) The Chief will determine the funding level for CIG on an annual
basis.
    (3) CIG funding is made available from EQIP funds made available
for EQIP.
    (4) The Chief may establish funding limits for individual grants.
    (5) The Chief will publicly announce funding for CIG.
    (b) Project or activity funding. (1) Selected applicants may
receive grants or cooperative agreements of up to 50 percent of the
total project cost, not to exceed the federal project cap.
    (2) Applicants must provide non-federal funding at least equal to
the amount of federal funds requested.
    (3) Non-federal funds must be derived from cash or in-kind sources.
    (c) Limitation to funding technical assistance. CIG provides
financial assistance to grantees. Procurement of any technical
assistance to agricultural producers required to carry out a project is
the responsibility of the grantee. A Federal technical representative
designated by NRCS will provide technical oversight for grant projects.
    (d) Set-aside. NRCS may set aside up to 10 percent of the total
funds available for CIG for applications from historically underserved
producers, or a community-based organization comprised of,
representing, or exclusively working with these producers on a CIG
project.
Sec.  1466.33   Conservation innovation grant administration.
    (a) CIG applications must describe the use of innovative approaches
or technologies to address announced national or State program
priorities.
    (b) NRCS may consider as eligible for CIG any individual or non-
federal entity; however, all agricultural producers receiving a direct
or indirect payment through participation in a CIG project to address
announced national or State program priorities must--
    (1) Be in compliance with the highly erodible land and wetland
conservation provisions of 7 CFR part 12;
    (2) Be a producer as determined by NRCS; and
    (3) Have control of the land for the term of the proposed contract
unless an exception is made by the Chief in the case of land
administered by the Bureau of Indian Affairs (BIA), Indian lands, or
other instances in which the Chief determines that there is sufficient
assurance of control.
    (c) NRCS will annually publish detailed guidance on how to apply
for the grants competition(s) to address announced national or State
program priorities.
Sec.  1466.34   Award determinations.
    (a) A peer review panel evaluates completed applications based on
the application evaluation criteria that address announced national or
State program priorities.
    (b) The peer review panel forwards compiled application evaluations
to a Grant Review Board (Board).
    (c) The Board reviews the peer review panel evaluations and
considers review comments from State Conservationists. The Board then
makes recommendations for awards to the Chief, who makes final
selections.
    (d) The NRCS National Headquarters makes a grant or cooperative
agreement award after the Chief selects a grantee and the grantee
agrees to the terms and conditions of the NRCS grant or cooperative
agreement document.
Sec.  1466.35   State-level conservation innovation grant component.
    (a) NRCS has the option of implementing a State-level CIG
component. Except as otherwise indicated of this section, State-level
CIG awards follows the requirements of this subpart for national-level
CIG awards.
    (b) Funding availability, application, and submission information
for State competitions are announced through public notices separately
from the national program and emphasize projects that cover limited
geographic areas including individual farms, multicounty areas, or
small watersheds.
    (c) The State Conservationist determines the funding level for the
State CIG competition and creates a review process for applications
that considers various relevant criteria, including any potential
conflicts of interest.
    (d) NRCS may choose to adhere to the CIG national priorities or
select other priority resource concerns.
Sec.  1466.36   Intellectual property.
    (a) This section applies to all CIG awardees under this subpart.
    (b) Allocation of rights to patents and inventions shall be in
accordance with 2 CFR part 200.
    (c) Small businesses may retain the principal worldwide patent
rights to any invention developed with the support of USDA.
    (d) USDA may--
    (1) Receive a royalty-free license for Federal Government use,
    (2) Reserve the right to require the patentee to license others in
certain circumstances, and
    (3) Require that anyone exclusively licensed to sell the invention
in the United States must normally manufacture it domestically.
Sec.  1466.37   On-Farm Conservation Innovation Trials.
    (a) Purpose. The purpose of the On-Farm Conservation Innovation
Trials (OFCIT) under this section is for NRCS to facilitate and
incentivize experimentation and testing of new and innovative
conservation approaches on farms in a diversity of geographic regions
and on multiple scales.
    (b) Eligibility determinations. When determining eligibility for a
private or nongovernmental organization, whether or not that
organization is operated for profit, to enroll in OFCIT, NRCS may
consider multiple factors including--
    (1) The extent to which the organization conducts business that is
related to agriculture;
    (2) The quantity and quality of experience the organization has
working with agricultural producers; or
[[Page 69291]]
    (3) Other factors related to the organization's likelihood to
succeed or the proposed trial's likelihood to fulfill the purpose of
OFCIT, as determined by the Chief.
    (c) Agreements with eligible entities. An OFCIT agreement with an
eligible entity shall contain provisions indicating how NRCS or the
eligible entity shall provide technical assistance to producers.
    (d) Innovation determinations. Notwithstanding any limitation in
Sec.  1466.31(f) of this subpart, when determining whether to approve
of a proposed conservation approach as new or innovative, NRCS may
consider multiple factors including--
    (1) The extent to which the proposed conservation approach makes
use of new or innovative conservation practices, systems, or
technology;
    (2) The extent to which the proposed conservation approach applies
conservation practices, systems, or technology in new or innovative
ways, geographic regions, or agricultural sectors; or
    (3) The extent to which the proposed conservation approach uses new
or innovative processes or financing for implementing conservation
practices or activities.
    (e) Requirements for producers. When considering whether to enroll
the land of a producer under an OFCIT agreement, NRCS first determines
that--
    (1) The participating producer complies with the highly erodible
land and wetland conservation provisions of 7 CFR part 12;
    (2) The producer controls the land for the term of the proposed
OFCIT agreement, unless an exception is made by the Chief in the case
of land administered by the BIA, Indian lands, or other instances in
which the Chief determines that there is sufficient assurance of
control;
    (3) The producer is within the income limitations set forth in part
1400, subpart F of this chapter; and
    (4) The land subject to the project proposal meets the definition
of eligible land under Sec.  1466.3.
    (f) Restriction on administrative cost. None of the funds made
available to carry out this section may be used to pay for the
administrative expenses of an eligible entity.
    (g) OFCIT agreement period. (1) An OFCIT agreement shall be for a
period of at least 3 years, unless the Chief determines that a longer
period is necessary.
    (2) The contract period in excess of 3 years shall be no longer
than reasonably and foreseeably necessary to fulfill the purpose of
OFCIT, as determined by the Chief.
    (3) When determining whether to set a contract period longer than 3
years, NRCS shall consider whether such a period is appropriate
including whether the period supports--
    (i) Adaptive management over multiple crops years; and
    (ii) Adequate data collection and analysis by a producer or
eligible entity to report the natural resource and agricultural
production benefits of the new or innovative conservation approaches to
the Secretary.
    (h) Data collection. For all OFCIT contracts, NRCS shall ensure
that appropriate data is collected and analyzed while respecting
relevant privacy safeguards by transforming the data into statistical
or aggregated form so as not to include any identifiable or personal
information of individual producers.
    (i) OFCIT payments. Pursuant to an OFCIT agreement, NRCS may
provide--
    (1) Technical assistance to a participating producer or eligible
entity with respect to the design, installation, and management of the
new or innovative conservation approaches;
    (2) Technical assistance to a participating eligible entity with
respect to data analyses of the OFCIT; and
    (3) Financial assistance to a participating producer (either
directly or through an eligible entity) that may include payments to
compensate for income foregone, as appropriate to address the increased
economic risk potentially associated with new or innovative
conservation approaches:
    (j) Absence of payment limitation. Neither the contract payment
limitation set forth in Sec.  1466.22 nor the aggregate payment
limitation set forth in Sec.  1466.24 shall apply to OFCIT agreements.
Sec.  1466.38   Soil Health Demonstration trial.
    (a) The Soil Health Demonstration (SHD) shall make use of the OFCIT
process, including eligibility requirements, and funding set forth in
Sec.  1466.37 to provide incentives to producers to implement
conservation practices that improve soil health, increase carbon levels
in the soil, or both.
    (b) In carrying out SHD, NRCS shall coordinate with eligible
entities to establish protocols for measuring carbon levels in the soil
and testing carbon levels on land where conservation practices
described in paragraph (a) of this section were applied to evaluate
gains in soil health as a result of the practices implemented by the
producers in the soil health demonstration trial.
    (c) For each SHD contract, NRCS shall ensure that appropriate data
is collected and analyzed while respecting relevant privacy safeguards
by transforming the data into statistical or aggregated form so as not
to include any identifiable or personal information of individual
producers.
Subpart D--Incentive Contracts
Sec.  1466.40   High priority areas.
    (a) The Chief shall, in consultation with the State Technical
Committee, develop a set of high priority areas for each State.
    (b) The set of high priority areas described in paragraph (a) of
this section must encompass every region within the State.
    (c) A high priority area may encompass an entire State or overlap
with other high priority areas such that a given parcel of land may
exist in multiple high priority areas.
    (d) The Chief, in consultation with the State Technical Committee,
shall identify up to three priority resource concerns for each land use
within a given high priority area.
    (e) An identification under paragraph (d) of this section of a
priority resource concern for one land use shall not preclude NRCS from
identifying the same priority resource concern for a different land use
within the same high priority area.
    (f) NRCS shall identify which practices qualify as incentive
practices for each land use within each high priority area based on the
priority resource concern(s) identified for that land use.
    (g) NRCS shall make public all determinations made under this
section.
Sec.  1466.41   Incentive contract selection.
    (a) NRCS will give priority to applications that address eligible
priority resource concerns identified under Sec.  1466.40.
    (b) NRCS will evaluate applications relative to other applications
for similar agriculture and forest operations.
    (c) NRCS shall not select an application for an incentive contract
that does not contain at least one qualifying incentive practice as
identified under Sec.  1466.40.
Sec.  1466.42   Incentive contract requirements.
    (a) Requirement for a contract. (1) In order for a participant to
receive incentive payments, the participant must enter into an
incentive contract agreeing to implement one or more incentive
practices.
    (2) Payment for technical services may be included in the contract
pursuant to requirements of this part.
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    (b) Incentive contract terms. An incentive contract will--
    (1) Identify all incentive practices to be implemented, the timing
of practice installation, responsibilities of the participant, the O&M
requirements for the practices, and applicable payments allocated to
the practices under the contract;
    (2) Have a period as set forth in Sec.  1466.43;
    (3) Specify any other provision determined necessary or appropriate
by NRCS to achieve the technical requirements of a practice or purposes
of the program.
    (c) Termination of the incentive contract. NRCS may terminate an
incentive contract consistent with the provisions of Sec.  1466.26.
Sec.  1466.43   Incentive contract period.
    (a) NRCS shall apply science-based criteria to determine an
appropriate contract period to achieve desired conservation benefits.
    (b) The period determined as appropriate under paragraph (a) of
this section shall not be less than 5 years nor exceed 10 years.
Sec.  1466.44   Incentive payment rates and restrictions.
    (a) Aggregate payment limitation. (1) Notwithstanding the payment
limitation in Sec.  1466.24, the total amount of payments paid to a
person or legal entity under this subpart, during the period of fiscal
years 2019 through 2023, may not exceed an aggregate of $200,000,
directly or indirectly.
    (2) Payments received for technical assistance will be excluded
from the limitation in paragraph (a)(1) of this section.
    (3) The limitation in paragraph (a)(1) of this section cannot be
waived.
    (b) Restrictions and exceptions. Except as otherwise indicated in
paragraph (a) of this section, incentive contracts are subject to the
payment restrictions and exceptions as set forth in Sec.  1466.24.
    (c) Implementation payments. The payment rates for implementation
of incentive practices shall be identical to the payment rates for
practice implementation as set forth in Sec.  1466.23.
    (d) Annual payments. In addition to the payment for implementation
set forth in paragraph (c) of this section, NRCS may award annual
payments through incentive contracts to compensate the participant for
up to 100 percent of the costs of--
    (1) O&M of the incentive practice; and
    (2) Income foregone by the participant, including payments to
address, as appropriate--
    (i) Increased economic risk,
    (ii) Loss in revenue due to anticipated reductions in yield, and
    (iii) Economic losses during transition to a resource-conserving
cropping system, resource-conserving crop rotation, or resource-
conserving land uses.
Subpart E--General Administration
Sec.  1466.50   Appeals.
    A participant may obtain administrative review of an adverse
decision under EQIP in accordance with 7 CFR parts 11 and 614.
Determination in matters of general applicability, such as payment
rates, payment limits, the designation of identified priority resource
concerns, and eligible conservation practices are not subject to
appeal.
Sec.  1466.51   Compliance with regulatory measures.
    Participants who carry out conservation practices will be
responsible for obtaining the authorities, rights, easements, permits,
or other approvals necessary for the implementation, operation, and
maintenance of the conservation practices in keeping with applicable
laws and regulations. Participants will be responsible for compliance
with all laws and for all effects or actions resulting from the
participant's performance under the contract.
Sec.  1466.52   Access to operating unit.
    An authorized NRCS representative will have the right to enter land
under an NRCS conservation program contract for the purposes of
determining eligibility and for ascertaining the accuracy of any
representations related to contract performance. Access will include
the right to provide technical assistance, determine eligibility,
inspect any work undertaken under the contract, and collect information
necessary to evaluate the conservation practice performance specified
in the contract. The NRCS representative will make an effort to contact
the participant prior to the exercising this provision.
Sec.  1466.53   Equitable relief.
    (a) If a participant relied upon the advice or action of an
authorized NRCS representative and did not know, or have reason to
know, that the action or advice was improper or erroneous, NRCS may
accept the advice or action as meeting program requirements and may
grant relief, to the extent it is deemed desirable by NRCS, to provide
a fair and equitable treatment because of the good-faith reliance on
the part of the participant. The financial or technical liability for
any action by a participant that was taken based on the advice of an
NRCS certified non-USDA TSP is the responsibility of the certified TSP
and will not be assumed by NRCS when NRCS authorizes payment. Where a
participant believes that detrimental reliance on the advice or action
of an NRCS representative resulted in ineligibility or a program
violation, but the participant believes that a good-faith effort to
comply was made, the participant may request equitable relief under 7
CFR 635.3.
    (b) If, during the term of an EQIP contract, a participant has been
found in violation of a provision of the EQIP contract, the O&M
agreement, or any document incorporated by reference through failure to
fully comply with that provision, the participant may be eligible for
equitable relief under 7 CFR 635.4.
    (c) NRCS reserves the right to correct all errors in entering data
or the results of computations in an EQIP contract. If a participant
does not agree to such corrections, NRCS shall terminate the contract.
Sec.  1466.54   Offsets and assignments.
    (a) Except as provided in paragraph (b) of this section, any
payment or portion thereof to any person, joint venture, legal entity,
or Tribe will be made without regard to questions of this title under
State law and without regard to any claim or lien against the crop, or
proceeds thereof, in favor of the owner or any other creditor except
agencies of the U.S. Government. The regulations governing offsets and
withholdings found at part 1403 of this chapter will be applicable to
contract payments.
    (b) EQIP participants may assign any payments in accordance with
part 1404 of this chapter.
Sec.  1466.55   Misrepresentation and scheme or device.
    (a) A person, joint operation, legal entity, or Indian Tribe that
is determined to have erroneously represented any fact affecting a
program determination made in accordance with this part will not be
entitled to contract payments and must refund to NRCS all payments,
plus interest, determined in accordance with 7 CFR part 1403.
    (b) A producer who is determined to have knowingly--
    (1) Adopted any scheme or device that tends to defeat the purpose
of the program;
    (2) Made any fraudulent representation;
    (3) Adopted any scheme or device for the purpose of depriving any
tenant or sharecropper of the payments to which
[[Page 69293]]
such person would otherwise be entitled under the program; or
    (4) Misrepresented any fact affecting a program determination, will
refund to NRCS all payments, plus interest, determined in accordance
with 7 CFR part 1403, received by such producer with respect to all
contracts. The producer's interest in all contracts will be terminated.
Sec.  1466.56   Environmental credits for conservation improvements.
    (a) A participant in EQIP may achieve environmental benefits that
may qualify for environmental credits under an environmental credit-
trading program. NRCS asserts no direct or indirect interest on these
credits. However, NRCS retains the authority to ensure that EQIP
purposes are met. In addition, any requirements or standards of an
environmental market program in which an EQIP participant
simultaneously enrolls to receive environmental credits must be
compatible with the purposes and requirements of the EQIP contract and
with this part.
    (b) The participant must meet all O&M requirements for EQIP-funded
activities, consistent with Sec. Sec.  1466.21 and 1466.22. Where
activities required under an environmental credit agreement may affect
the land and conservation practices under an EQIP contract, NRCS
recommends that EQIP participants request assistance with the
development of a compatibility assessment prior to entering into any
credit agreement. The EQIP contract may be modified in accordance with
policies outlined in Sec.  1466.25, provided the modification meets
EQIP purposes and is in compliance with this part.
    (c) EQIP participants may not use EQIP funds to implement
conservation practices and activities that the participant is required
to establish as a result of a court order. EQIP funds may not be used
to satisfy any mitigation requirement for which the EQIP participant is
responsible.
Kevin Norton,
Associate Chief, Natural Resources Conservation Service.
Robert Stephenson,
Executive Vice President, Commodity Credit Corporation.
[FR Doc. 2019-26872 Filed 12-16-19; 8:45 am]
 BILLING CODE 3410-16-P