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The Environmental Quality Incentives Program (EQIP) is a voluntary program that provides
farmers with financial and technical assistance to plan and implement soil and water conservation
practices. EQIP is the largest agriculture conservation financial assistance program for working
lands. EQIP was first authorized in 1996 and was most recently revised by Section 2501 of the
Food, Conservation, and Energy Act of 2008 (P.L. 110-246, the 2008 farm bill). It is a mandatory
spending program (i.e., not subject to annual appropriations) and is administered by the U.S.
Department of Agriculture’s (USDA’s) Natural Resources Conservation Service (NRCS). Funding
is currently authorized to grow to $1.75 billion in FY2012. Eligible land includes cropland,
rangeland, pasture, non-industrial private forestland, and other land on which resource concerns
related to agricultural production could be addressed through an EQIP contract.
With the 111th Congress facing tighter budget constraints, EQIP could face similar challenges
with a potential reduction in mandatory funding levels and a continuing backlog of unfunded
applications. A change in income limitations along with a new waiver created in the 2008 farm
bill could also raise issues for the program. EQIP will also continue to face challenges in
measuring environmental and program accomplishments.
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Program Overview .......................................................................................................................... 1
Eligibility and Program Requirements...................................................................................... 2
Program Funding....................................................................................................................... 3
Subprograms ............................................................................................................................. 5
Agricultural Water Enhancement Program ......................................................................... 5
Conservation Innovation Grants ......................................................................................... 5
Selected Issues................................................................................................................................. 6
Mandatory Funding Levels ....................................................................................................... 6
Unfunded Application Backlog................................................................................................. 6
Adjusted Gross Income (AGI) Waiver ...................................................................................... 7
Measuring EQIP Accomplishments .......................................................................................... 8
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Figure 1. EQIP Funding and Reductions, FY1997-FY2012 ........................................................... 4
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Table 1. Four Largest EQIP Allocation Recipient States, FY2003-FY2007 ................................... 4
Table 2. EQIP Funded and Unfunded Applications and Funds Obligated ...................................... 7
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Author Contact Information ............................................................................................................ 9
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The Environmental Quality Incentives Program (EQIP) is a voluntary program that provides
technical and financial assistance to eligible agricultural producers who wish to implement soil
and water conservation practices. The purpose of EQIP is to promote agriculture production,
forestry management, and environmental quality as compatible goals, and to optimize
environmental benefits. EQIP was originally authorized in the 1996 farm bill1 as an amendment
to the 1985 farm bill.2 EQIP replaced four conservation programs repealed in the same law. These
were the Great Plains Conservation Program, the Agricultural Conservation Program, the Water
Quality Incentives Program, and the Colorado River Basin Salinity Control Program.
EQIP is the largest agriculture conservation program for working lands.3 The program encourages
farmers and ranchers to participate in conservation efforts by paying a portion of the cost of
installing or constructing approved conservation practices. Eligible producers enter into EQIP
contracts to receive payment for implementing conservation practices. Approved activities are
carried out according to an EQIP plan developed in conjunction with the producer that identifies
the appropriate conservation practice or practices to address resource concerns on the land.
EQIP was amended and reauthorized in both the 2002 and 2008 farm bills.4 The U.S. Department
of Agriculture’s Natural Resources Conservation Service (NRCS) administers EQIP under a final
rule.5 NRCS implemented EQIP by establishing national priorities to reflect the most pressing
natural resource needs and emphasize offsite benefits to the environment. The current national
priorities, set in 2008 by NRCS, are as follows:
• reduction of nonpoint source pollutants in impaired watersheds (consistent with
total maximum daily loads, or TMDLs);6
• conservation of ground and surface water resources;
• reduction of emissions that contribute to air quality impairment violations of
National Ambient Air Quality Standards;
• reduction of soil erosion and sedimentation from unacceptable levels on
agricultural land; and
• promotion of at-risk species habitat conservation.
1 Section 334 of the Federal Agriculture Improvement and Reform Act of 1996, P.L. 104-127, 16 U.S.C. 3839aa.
2 Sections 1240-1240I of the Food Security Act of 1985, P.L. 99-198.
3 Working lands conservation programs are typically classified as programs that allow private land to remain in
production, while implementing various conservation practices to address natural resource concerns specific to the area.
Other conservation programs retire land from production or place restrictive easements on the land.
4 Section 2301 of the Farm Security and Rural Investment Act of 2002, P.L. 107-171, and Section 2501 of the Food,
Conservation, and Energy Act of 2008, P.L. 110-246.
5 USDA, NRCS, “Environmental Quality Incentives Program,” 74 Federal Register 2293, January 15, 2009.
6 For more information on TMDLs, see CRS Report 97-831, Clean Water Act and Total Maximum Daily Loads
(TMDLs) of Pollutants, by Claudia Copeland.
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Producers with eligible land7 can submit an EQIP plan that describes the conservation and
environmental purposes that will be achieved using one or more USDA-approved conservation
practices. USDA-approved conservation practices may involve structures, vegetation, or land
management. Structural practices include the establishment, construction, or installation of
measures designed for specific sites, such as animal waste management facilities, livestock water
developments, and capping abandoned wells. Vegetative practices involve introduction or
modification of plantings, such as filter strips or trees. Land management practices require site-
specific management techniques and methods, such as nutrient management, irrigation water
management, or grazing management.
Producers can receive technical assistance to develop an EQIP plan and, after approval, to
implement the plan. Decisions about which plans to fund are made by USDA at the state level,
with local input. Applications are accepted and ranked throughout the year within each state.
Applications are grouped with similar crop, forestry, and livestock operation applications and
evaluated within the groups. Additional funding groups may be created to rank applications based
on similar resource objectives, geographic area, or type of agricultural operation. After an
application is selected and approved, USDA provides payments to help the producer offset the
cost of each practice, as well as income forgone relating to that practice implementation.
Participants are eligible to receive payments for both constructing structures and implementing
land management practices. Of the total annual EQIP spending, 60% is allocated to livestock
practices.
Under an EQIP contract, USDA pays up to 75% of the projected costs associated with planning,
design, materials, equipment, installation, labor, management, maintenance, or training, or up to
100% of the estimated income forgone to implement certain conservation practices. This payment
rate can be higher for limited-resource, socially disadvantaged, or beginning farmers and
ranchers,8 provided this increase does not exceed 90% of practice costs. Initial payments are
made in the year in which the contract is signed, but most payments are made after the practices
are completed.
Contracts have a term of one to ten years and payments are limited by direct attribution to
individuals or entities. 9 Total payments a person or entity can receive over any six-year period are
limited to $300,000, except for projects having special environmental significance, which are
limited to $450,000 over any six-year period. Individuals or entities with an average annual non-
7 Eligible land includes cropland, rangeland, pasture, non-industrial private forestland, and other land on which
resource concerns related to agricultural production could be addressed through an EQIP contract.
8 USDA combines these three groups and refers to them as “historically underserved producers.” A limited resource
producer or rancher is defined as having direct or indirect gross farm sales of less than $155,200 in each of the previous
two years (adjusted for inflation) and a total household income at or below the national poverty level, or less than 50%
of county median household income in the previous two years. A beginning farmer or rancher is defined as having
farmed for less than 10 consecutive years. Socially disadvantaged farmers or ranchers are defined as having been
subjected to racial or ethnic prejudice because of their identity as members of a group without regard to their individual
qualities. Previously, USDA included gender prejudice in the definition of a socially disadvantaged farmer or rancher;
however, changes in the 2008 farm bill removed gender from the definition, as it applies to conservation programs.
9 Direct attribution means that payments must be directly attributed to a living person. If the person is part of a larger
business entity then payments must be directly attributed to that person based on ownership shares in the entity.
Individual people may receive EQIP payments through any number of contracts or ownership arrangement of farms,
but the total amount of payments attributed to each living person may not exceed the statutory limits.
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farm adjusted gross income (AGI) of $1 million or more for the three years prior to the contract
period are ineligible unless they received at least two-thirds of their AGI from farming, ranching,
or forestry. The 2008 farm bill created a case-by-case waiver to the AGI limitation for
conservation programs (discussed in more detail in the “Adjusted Gross Income (AGI) Waiver”
section below).
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The 1996 farm bill authorized EQIP funding of $130 million in FY1996 and $200 million
annually from FY1997 through FY2002. The 2002 farm bill significantly increased the annual
authorized funding level incrementally from $400 million in FY2002 to $1.3 billion in FY2007.
EQIP funding levels were revised in Section 1203 of the Deficit Reduction Act of 2005 (P.L. 109-
171) to limit funding to $1.27 billion in FY2007, while extending the authorization through
FY2010 and providing $1.27 billion in each of FY2008 and FY2009, and $1.3 billion in FY2010.
The 2008 farm bill further increased the annual authorized funding levels incrementally from
$1.34 billion in FY2009 to $1.75 billion in FY2012. Funding under EQIP is mandatory (not
subject to annual appropriations), and the program receives authorized amounts each year under
the borrowing authority of USDA’s Commodity Credit Corporation (CCC).10 Congress, however,
has limited EQIP funding below authorized levels in every year since FY2005, through annual
appropriations bills. Figure 1 identifies the authorized and actual funding levels for EQIP. The
Senate-reported FY2009 agriculture appropriations bill (S. 3289, S.Rept. 110-426) would limit
EQIP to $1.05 billion for FY2009—a reduction of $285 million from the authorized level of
$1.34 billion in the 2008 farm bill.11 Final action on FY2009 agriculture appropriations is
pending.
Annual funding received for EQIP is allocated to the states by NRCS using a formula based on
national priorities, natural resource need, efficiency and performance measures, and regional
equity. 12 The EQIP allocation formula uses 20 weighted factors based on the characteristics of
agriculture and land use and resource considerations. Factors with the largest weights within the
FY2009 formula include irrigated cropland, non-irrigated cropland, non-federal grazing land,
livestock animal units, cropland eroding above the tolerance level, and impaired rivers and
streams. States that receive the largest EQIP allocations have remained consistent from year to
year, with Texas, California, and Colorado receiving the highest levels of funding annually
between FY2003 and FY2007 (see Table 1).
10 The CCC is the funding mechanism for the mandatory payments that are administered by various agencies of USDA.
For EQIP, NRCS provides the staff.
11 For more information, see CRS Report R40000, Agriculture and Related Agencies: FY2009 Appropriations,
coordinated by Jim Monke.
12 The regional equity provision was first instituted in the 2002 farm bill (P.L. 107-171, Sec. 2701) and reauthorized in
the 2008 farm bill (P.L. 110-246, Sec. 2703). The provision mandates that each state receive annually a minimum
aggregate amount of funding for specified conservation programs. Regional equity affects not only EQIP but also the
Wildlife Habitat Incentives Program, the Farmland Protection Program, and the Grassland Reserve Program. The 2008
farm bill increased the minimum level of funding to each state for these combined four conservation programs from
$12 million to $15 million.
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Figure 1. EQIP Funding and Reductions, FY1997-FY2012
($ in millions)
$2,000
$1,800
$1,600
$1,400
$1,200
$1,000
ons ($)
illi
M
$800
$600
Actual
$400
Authorized
$200
$0
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Year
Source: CRS, based on historical Agriculture Appropriations Reports.
Note: The Consolidated Appropriations Act, 2008 (P.L. 110-161) limited EQIP spending to $1 billion in FY2008. This
was $270 million below the authorized level. The 2008 farm bill (P.L. 110-246), which was passed after the
appropriations act, authorized EQIP spending at $1.2 billion for FY2008, thereby superseding the appropriations limit
and effectively funding EQIP at its authorized level. Final action on FY2009 agriculture appropriations is pending.
Table 1. Four Largest EQIP Allocation Recipient States, FY2003-FY2007
($ in thousands)
Fiscal
Highest
2nd Highest
3rd Highest
4th Highest
Total
Year
Allocation
Allocation
Allocation
Allocation
Allocations
2003
Texas
California
Colorado
Nebraska
$626,701
$57,717
$48,582
$25,560
$20,442
2004 Texas
California
Colorado
Nebraska
$908,280
$78,566
$62,114
$36,932
$29,600
2005 Texas
California
Colorado
Minnesota
$991,879
$90,007
$62,114
$39,186
$32,924
2006 Texas
California
Colorado
Minnesota
$1,013,277
$91,290
$62,902
$41,200
$32,000
2007 Texas
California
Colorado
Minnesota
$1,004,926
$89,124
$62,090
$40,216
$32,907
Source: USDA, NRCS, EQIP Program Information by Fiscal Year, http://www.nrcs.usda.gov/programs/eqip/.
Notes: Allocations in this table represent financial assistance allocated to states only. Technical assistance,
administrative, and technology costs are not included.
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One of two subprograms under EQIP is the Agricultural Water Enhancement Program (AWEP).
The 2008 farm bill (Sec. 2510, P.L. 110-246) created AWEP to promote ground and surface water
conservation and to improve water quality on agricultural lands. The program replaces two
previous water conservation programs: the Ground and Surface Water Conservation Program and
the Klamath Basin Program.
Eligible partners or groups13 submit project proposals to conserve ground and surface water or
improve water quality in a specified area. NRCS selects projects based on requirements
established in a Federal Register notice14 and enters into agreements with selected partners. Once
proposals for specific areas are selected, there are two methods for producers to sign up for an
AWEP contract. Producers may either (1) apply directly to NRCS for approved agricultural water
enhancement activities or (2) apply through the partner or group who submits applications on the
producer’s behalf. Funding is authorized as a separate amount from the general EQIP, at $73
million for each of FY2009 and FY2010, $74 million in FY2011, and $60 million in FY2012 and
each fiscal year thereafter.
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The second subprogram under EQIP is the Conservation Innovation Grants (CIG) program, which
was created in the 2002 farm bill. The program is implemented through EQIP and is intended to
leverage federal investment, stimulate innovative approaches to conservation, and accelerate
technology transfer in environmental protection, agricultural production, and forest management.
Examples of CIG projects include developing market-based approaches in conservation,
demonstrating precision agriculture, capturing nutrients through a community anaerobic digester,
and establishing a tribal partnership for regional habitat conservation.15 The program was
reauthorized in the 2008 farm bill through FY2012 at an unspecified funding level of general
EQIP dollars. NRCS utilizes this discretion to determine the level of general EQIP funds used for
CIG and allocates approximately $15 million for a national competition and up to $5 million for a
Chesapeake Bay watershed competition annually. In addition, 32 states conduct, or have
conducted, a state-level CIG competition, which has awarded over $17 million since FY2005.
CIG awarded a total of $12.6 million (35 projects) in FY2004, $22.0 million (105 projects) in
FY2005, $25.3 million (161 projects) in FY2006, $26 million (176 projects) in FY2007, and $21
million (95 projects) in FY2008. A recent announcement of program funding for CIG indicates
that approximately $20 million is available in FY2009.16
The 2008 farm bill made some modifications to the CIG program. Previously, grants could not
exceed 50% of the project cost, with nonfederal matching funds provided by the grantee. The
2008 farm bill removed this requirement, though USDA still requires a 50% match of nonfederal
13 An eligible partner or group may be a federally recognized tribe, state, unit of local government, agricultural or
silvicultural association, or other such group of agricultural producers.
14 USDA, NRCS, “Agricultural Water Enhancement Program,” 74 Federal Register 2040, January 14, 2009.
15 For additional examples of CIG projects, see http://www.nrcs.usda.gov/programs/cig/.
16 USDA, NRCS, Conservation Innovation Grants Fiscal Year (FY) 2009 Announcement for Program Funding,
Catalog of Federal Domestic Assistance (CFDA) Number: 10.912, January 16, 2009, http://www.nrcs.usda.gov/
programs/cig/pdf_files/Fiscal_Year_2009_Announcement_for_Program_Funding.pdf.
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funds.17 Also, the farm bill added an air quality component requiring that payments be made
through CIG to producers to implement practices to address air quality concerns from agricultural
operations and to meet federal, state, and local regulatory requirements. This air quality
component is authorized at $37.5 million annually. The highest level of funding for all of CIG
was in FY2006 ($26 million), making the $37.5 million requirement for air quality a potentially
difficult target for the program.
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EQIP continues to receive widespread support in the farm community and in Congress, as it
remains the major source of financial and technical assistance to help producers implement
conservation practices that address specific resource and environmental problems. During the
111th Congress, several issues may attract congressional interest, including budgetary pressures, a
continuing backlog of unfunded applications, adjusted gross income waivers, and measuring
program accomplishments.
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The 2008 farm bill reauthorized EQIP through September 30, 2012, with annual authorized
funding levels of $1.2 billion in FY2008, $1.34 billion in FY2009, $1.45 billion in FY2010,
$1.59 billion in FY2011, and $1.75 billion in FY2012. As shown in Figure 1, the authorized
funding level has continued to increase since the 2002 farm bill; however, annual appropriations
acts have reduced the actual funding levels by a total of nearly $820 million from FY2005
through FY2008.18 With the 111th Congress facing tighter budget constraints, similar cuts to EQIP
could be considered either in the appropriations process or if budget reconciliation is required.19
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A main justification for the large funding increase in the 2002 farm bill was to respond to a large
backlog of producer demand that had been documented during the farm bill debate. Despite this
increase in funding, the number of pending applications continues to exceed the amount of
available funding (see Table 2). Although this gap now constitutes a smaller portion of
applications, it is still an issue for many producers who seek environmental assistance and are
continuously denied funding due to budgetary constraints.20 Many conservation groups worry that
this could deter producers from applying and enrolling in the program. This issue will likely
intensify if annual appropriations continue to reduce actual funding for EQIP.
17 USDA, NRCS, Conservation Innovation Grants Fiscal Year (FY) 2009 Announcement for Program Funding,
Catalog of Federal Domestic Assistance (CFDA) Number: 10.912, January 16, 2009, http://www.nrcs.usda.gov/
programs/cig/pdf_files/Fiscal_Year_2009_Announcement_for_Program_Funding.pdf, p. 8.
18 Annual appropriations reduce funding for several other agriculture mandatory programs as a means of meeting
overall budget targets. The Senate-reported agriculture appropriations bill (S. 3289, S.Rept. 110-426) proposes an
additional reduction of $285 million below authorized levels for FY2009.
19 For more information on the budget reconciliation progress, see CRS Report RL30458, The Budget Reconciliation
Process: Timing of Legislative Action, by Robert Keith.
20 At the conclusion of FY2007 (most recent data available), states with the highest total of unfunded applications were
Oklahoma (3,772), Texas (3,078), Missouri (2,813), Mississippi (2,163), and Montana (1,811).
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Table 2. EQIP Funded and Unfunded Applications and Funds Obligated
Fiscal Total Applications Total Applications
Percentage of
Funds Obligated (Financial
Year
Funded
Unfunded
Applications Funded
Assistance, $ in millions)
2000 16,249
37,712
30%
$139,606
2001 17,648
29,777
37%
$160,123
2002 19,817
70,495
22%
$322,193
2003 30,251
174,062
15%
$483,484
2004 46,413
135,394
26%
$718,150
2005 49,406
32,708
60%
$794,261
2006 41,190
32,633
56%
$787,968
2007 41,700
40,535
51%
$784,186
Source: USDA, NRCS, EQIP Contract and Funding Information, http://www.nrcs.usda.gov/programs/eqip/.
One reason why higher funding has not resulted in the elimination of the backlog is that the
average contract size has grown since the 2002 farm bill. The average cost of an EQIP contract
has more than doubled from almost $7,800 per contract prior to 2002 to over $16,000 per contract
since 2002.21 One reason for this increase could be the higher funding cap established in the 2002
farm bill that allowed large-scale livestock operations to fund waste management facilities and
allowed the installation of more expensive conservation practices. According to NRCS, between
1997 and 2007, the top practice by cumulative cost-share dollars was waste storage facilities,
which totaled $486 million over the ten-year period.22 Though the 2008 farm bill lowered the
payment limitation to $300,000 over any six-year period, the average contract is still considerably
less ($16,000) than the limit. This will continue to be an issue as it is widely believed that the
lower payment limitation will not greatly reduce the number of unfunded applications.
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Another issue that the 111th Congress will likely monitor is the new waiver of the AGI limitation
for conservation programs created in the 2008 farm bill. The AGI provision sets a maximum
amount of income that an individual can earn and still remain eligible for program benefits, but
USDA is allowed to waive the limit in certain cases. USDA administers the AGI limitation
through an interim rule issued on December 29, 2008.23
21 Contracts can vary from one to ten years; however, most are between two and five years in length and include
between two and five practices. Data compiled by Soil and Water Conservation Society and Environmental Defense,
Environmental Quality Incentives Program (EQIP)—Program Assessment, March 2007, http://www.swcs.org/
documents/filelibrary/EQIP_assessment.pdf.
22 Other top practices between FY1997 and FY2007, by cumulative cost-share dollar, were irrigation systems ($337
million), fence ($329 million), brush management ($190 million), pipeline ($187 million), irrigation pipeline ($168
million), and nutrient management ($164 million). The term cost-share describes the percentage of the cost to install
conservation practices paid by USDA. This term does not represent incentive payments and was removed from the
program in the 2008 farm bill.
23 USDA, CCC, “Farm Program Payment Limitation and Payment Eligibility for 2009 and Subsequent Crop, Program,
or Fiscal Years,” 73 Federal Register 79267-79284, December 29, 2008.
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Income limitations on conservation programs have been somewhat controversial. The 2008 farm
bill made the AGI limitation for conservation programs higher than the AGI limitation for
commodity programs to encourage environmental stewardship on farms and ranches, particularly
larger operations that may have greater natural resource concerns. Supporters of AGI limits
believe that tighter limits benefit small producers and gain additional public support for all
agricultural programs through fiscal responsibility. Opponents of AGI limits on conservation
programs believe that conservation benefits the general public, and thus any producer’s
enrollment, irrespective of wealth, is good for the general public.
The AGI waiver can be granted on a case-by-case basis by USDA if it is determined that
environmentally sensitive land of special significance would be protected through the
conservation program. 24 Under this rule, USDA can waive the AGI limitation through a written
request that documents that the land contains critical resources, for example, endangered,
threatened, or at-risk species; historical or cultural resources; unique wetlands; or critical
groundwater recharge areas. The waiver must also show that the producer’s participation is
critical for the success of the project and will benefit multiple producers in the community,
geographic region, or watershed. The number and frequency of AGI waivers granted is not
limited, is at USDA’s sole discretion, and remains to be determined.
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From available records, NRCS can provide considerable information about EQIP contracts,
including which conservation practices are being installed, and their design and maintenance
standards. However, until recently, relatively little was known about what is actually being
accomplished through EQIP contracts. To begin filling this void, NRCS has compiled information
about various resource concerns that EQIP addresses. These data show that in 2007, the primary
resource concerns addressed through EQIP spending included water quality (20%), plant
condition (17%), soil erosion (16%), water quantity (13%), domestic animals (12%), soil
condition (10%), wildlife and fish (7%), and air quality (5%).25 Little is known, however, about
how enduring those conservation practices might be after the contract ends. Among the questions
that NRCS is trying to address for all of its conservation activities, including EQIP, are how to
(1) evaluate performance, (2) measure environmental changes, (3) evaluate cost-effectiveness, (4)
determine which methods to use to identify environmental effects, and (5) determine which types
of data should be collected to measure output.
NRCS initiated a national review in 2003, called the Conservation Effects Assessment Project
(CEAP), in an attempt to develop better answers to all these questions. CEAP was originally
intended to account for the benefits from the 2002 farm bill’s substantial increase in conservation
program funding through the scientific understanding of the effects of conservation practices at
the watershed scale.26 Only a few initial results are currently available; however, a draft
watershed report is expected to be released this year for technical review.27
24 Section 1604, P.L. 110-246.
25 USDA, NRCS, Environmental Quality Incentives Program: Program Information Review, Fiscal Year 2007.
26 Lisa F. Duriancik, Dale Bucks, and James P. Dobrowolski et al., “The First Five Years of the Conservation Effects
Assessment Project,” Journal of Soil and Water Conservation, vol. 63, no. 6 (Nov/Dec 2008), p. 185A.
27 For more information on CEAP, see http://www.nrcs.usda.gov/technical/NRI/ceap/.
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Megan Stubbs
Analyst in Agricultural Conservation and Natural
Resources Policy
mstubbs@crs.loc.gov, 7-8707
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