To spend $20 billion, USDA needs to make some little tweaks to some big programs

By Harry Huntley

Note: This blog is the third and final in a series that address the questions USDA asked in its Request for Information about implementation of the Inflation Reduction Act’s conservation provisions. Comments are due Wednesday December 21st.

The bulk of Conservation funding in the Inflation Reduction Act (IRA) goes to four of the Farm Bill’s “Big Five” programs: EQIP, CSP, ACEP, and RCPP. The fifth, CRP, was excluded, because it is a land retirement program. EQIP and CSP have demand far higher than the current supply of funding; in FY20 USDA funded only 27% of eligible program applications received for EQIP and 35% for CSP. While the Natural Resources Conservation Service will need to effectively utilize the IRA’s $1 billion for technical assistance and adopt new processes to meet the backlog of qualified applications, there is such a demand for financial assistance that the programs will be relatively easy to scale. RCPP and ACEP represent a bigger challenge because the programs are already struggling to expeditiously execute contracts and get money out the door.

RCPP:

The Regional Conservation Partnership Program (RCPP) is built on a strong fundamental idea of working with local partners to identify and implement conservation practices from the other Farm Bill conservation programs. Partners provide conservation technical assistance helping farmers to sign up for USDA conservation practices. Farmers are typically compensated just like they would be under EQIP, ACEP, or CSP, but partner engagement can target conservation dollars and bring in producers who might not otherwise participate. Nonetheless, in its eight-year history, it has drawn many complaints, chiefly around the glacial pace of its contract negotiations and the excessive paperwork burdens. Speaking as someone who received a RCPP award over a year ago and still hasn’t finished initial contract negotiations, I don’t know how NRCS will even come close to spending the additional almost $5 billion to RCPP if they don’t significantly reform how it’s administered.

First, let’s raise the artificial cap USDA put on RCPP project awards at $10 million. As one RCPP recipient told me, “Ten million dollars doesn't go as far as it used to”. But also, the IRA money has created radically new circumstances than when that rule was finalized after the last Farm Bill. The Department needs to focus its thinking on how to effectively spend the money in the short time allotted. When the program’s funding is almost doubling next year and nonupling by 2026, the cap could get raised to $25 or $50 million while still having plenty of money to spread around to a diversity of projects.

As mentioned in a previous blog, one easy way NRCS could quickly scale RCPP to spend IRA funds is by using it as a match for the most effective state conservation programs, such as water quality outcomes purchasing programs. Maryland, Pennsylvania, and Iowa are already buying nitrogen and phosphorus reduction outcomes from farmers and seeing the benefits: cost-savings for the state, speed, and more profits for farmers. A dedicated 1:1 match from RCPP could turbocharge these emerging programs and encourage even more states to leap into offering outcomes purchasing as a tool in their suite of farm conservation programs.

The Inflation Reduction Act includes a boring but critical sentence: “Section 1271C(d)(2)(B) of the Food Security Act of 1985 (16 U.S.C. 3871c(d)(2)(B)) shall not apply”. In case you don’t know off the top of your head what’s included in Section 1271C(d)(2)(B) of the Food Security Act of 1985, it caps the number of RCPP Alternative Financial Arrangements (AFAs) at 15. AFAs allow funds to flow through partners to farmers, meaning the partners can take huge amounts of the burden off NRCS’s shoulders–cutting paperwork for farmers and increasing scalability for NRCS. Unfortunately, AFAs currently still require partners to go through the arduous process of developing a cooperative agreement with NRCS, writing multiple contracts that can each take over a year–all after completing a detailed application and having it accepted. Administering AFAs as a grant program instead of as cooperative agreements will take some of that hassle of contract negotiation away from partners and from NRCS staff–something NRCS is trying with the most recent round of (non-IRA-funded) AFAs that are still in the application review phase. Administering most of the RCPP projects as grants under the AFA option will free up NRCS staff time, let partners spend more resources on implementation and less on paperwork, and speed up the whole program. 

ACEP:

ACEP, the Agriculture Conservation Easement Program, is divided into two main categories: wetland reserve easements (WRE) and agriculture land easements (ALE). Wetland reserve  easements are an agreement for landowners to restore and maintain wetlands in perpetuity. Agriculture land easements essentially purchase the right to develop working agricultural lands–such as into housing or strip malls–keeping them farms forever. To spend the $1.4 billion the Inflation Reduction Act allocates to ACEP (currently a $450 million/year program) over the next four years will require it to speed up its processes with staffing and programmatic tweaks.

One of the first steps to creating an easement is surveying the land, understanding exactly where the boundaries of the property are. Right now, this survey has to be completed by a contractor hired by the federal government through its Architect & Engineering contracting process–one of the more arduous ways to commission work. As a result, just completing the surveying can regularly take up to 8 months. To speed up this process, ACEP surveyors should be reclassified to a less onerous contracting process. 

After USDA knows where the land is, they have to know how much it’s worth. Appraisals to do so are a routine process in real estate. The problem is that any ACEP project valued over one million dollars has to be reviewed individually by the NRCS national office. This amounts to hundreds of projects a year, and the national office has just three relevant staff. NRCS could eliminate this bottleneck in two ways: raising the limit at which a project has to be evaluated by the national office and increasing staffing for this section of the national office. 

Regulatory sandboxes are an idea EPIC has championed across the conservation world, and ACEP could be an excellent opportunity for them to be applied. A regulatory sandbox allows a small subset of projects to bypass the typical regulatory requirements to create flexibility and speed. ACEP is not the only federal easement program, and frequently multiple federal departments will be interested in placing an agricultural conservation easement on the same plot of land. Being eligible for funding from multiple sources should be a good thing, but turf battles between USDA and, for instance, the Department of Defense actually make it harder for agricultural land to be protected. This is typically because the partners cannot agree whose easement terms to use. A solution is to statutorily allow for a relatively small number–say 10% or up to 50 easements per year–of ACEP projects to follow other partners’ easement terms. A requirement could be added that ACEP must document the benefits to this approach in terms of speed of processing or completing more projects. If this review finds significant benefits to the regulatory sandbox, it could be made permanent.

Finally, a small but important change to make the program more equitable: ACEP should have a historically underserved producer carveout like EQIP and CSP. All the hurdles enumerated here and more make it harder for marginalized producers to participate in ACEP. USDA should set aside 5% (the amount it currently does for EQIP and CSP) or slightly more for easements on lands of historically underserved producers. Crucially, if these funds aren’t used one year, they should be repooled for the next year.

Governing is hard. Program design is hard. USDA has a lot of very smart people working very hard every day on administering these programs. They know as well as we do that the programs aren’t perfect. Sometimes imperfect programs require radical overhauls to work as intended or to meet new circumstances. But in this case, we’re optimistic that these big programs just need some little tweaks.