EQIP Money For Public Lands Ranchers An Abuse Of Tax Dollars

Every time a Farm Bill comes up for renewal in Congress the budget hawks searching for wasteful government spending should take a close look at the Environmental Quality Incentives Program (EQIP) funds being awarded to public lands ranchers in the West by the USDA’s Natural Resources Conservation Service (NRCS).

EQIP funds provide cost-sharing assistance to agricultural producers to help them implement “conservation” practices. The money is disbursed by the NRCS through contracts with the producers. It’s a called a cost-sharing program because the producer is supposed to share in the cost of the EQIP project. Most of the EQIP assistance awarded to public lands ranchers is used to fund the construction of new livestock waters and pasture fences. Typically, the money is used to purchase the materials, while the ranchers contribute the labor. In other words, there’s usually little out-of-pocket expense for the ranchers, and if they pay somebody to complete the labor, it’s a convenient tax deduction against the EQIP assistance, which is taxable income.

2019 EQIP Audit

The amount of money the NRCS pays to help producers implement EQIP projects isn’t based upon receipts, invoices, or evidence of the local actual costs. Instead, the NRCS uses a payment schedule of the estimated costs of various practices in order to reduce the workload associated with collecting specific actual cost data. In September 2019 the USDA’s Officer of Inspector General Audit Report 10601-0005-3 found that, “component costs used to calculate financial assistance to EQIP producers are outdated and may not consistently represent the producer’s cost to implement conservation practices.” This lead to agricultural producers being “unreasonably compensated.” The auditors stated that:

Because NRCS relied on outdated and inaccurate component prices to calculate payment schedules, we question over $2.16 billion obligated for FYs 2016–2017.

Public lands ranchers were not allowed to receive EQIP assistance when Congress created the program in 1996. That was probably because most Americans felt they were already getting a significant subsidy in the form of the below-market grazing fees they pay for using Forest Service and Bureau of Land Management (BLM) lands.

But that situation changed after the beginning 2002, when Arizona’s Tonto National Forest, which includes much of Gila County, ordered its grazing permittees to remove almost all of their cattle from the Forest because of an increase in the severity of a long-term drought. Arizona had experienced two of the driest winters on record, back-to-back, and six of the last seven winters had brought below-normal precipitation. Furthermore, 791,284 acres of the Tonto’s total 2,964,308 acres, or about 27% of the Forest, are inherently unsuited for livestock grazing, regardless of any drought, because they are hot Sonoran Desert.

2002 Farm Bill

In April Arizona Gov. Jane Hull reacted to the state’s drought crisis by submitting a drought relief request to Republican President George W. Bush’s Secretary of Agriculture, Ann Veneman, and on May 17 Secretary Veneman responded by declaring all of Arizona a drought disaster area. A few days before that, on May 13, Congress had passed the 2002 Farm Bill, which included a revision to the EQIP program that changed the definition of the program’s eligible lands to allow the inclusion of, “other agricultural land that the Secretary determines poses a serious threat to soil, air, water, or related resources.” The new definition was so vague that it could include almost any land, including public land – especially if it was located in a drought disaster area.

The true intention of this change was made clear when the NRCS consequently published its new EQIP rules in the Federal Register on May 30, 2003. Section 1466.8(c) of the new rules stated that EQIP eligible lands now included:

(2) Publicly owned land where:

(i) The land is under private control for the contract period and is included in the participant’s operating unit; and

(ii) The conservation practices will contribute to an improvement in the identified natural resource concern;

The new rules were issued too late to be applicable to the 2003 EQIP financing cycle, but by 2004 the Tonto National Forest EQIP Pilot Project was operational. Arizona’s Gila County Cattlegrowers Association had proposed it to Arizona’s NRCS State Conservationist Michael Somerville, and it had subsequently been approved by Secretary Veneman’s administration in Washington D.C. (Dale Moore, her chief of staff, was a former lobbyist for the National Cattlemen’s Beef Association.) By September of 2004 the pilot project had awarded more than $1.5 million in EQIP assistance to ranchers with grazing permits on the Tonto National Forest. The NRCS stated that the goal of the pilot project was “preserving sustainable grazing in the Tonto National Forest.” In November Secretary Veneman announced that the program had been expanded to include public lands ranchers in neighboring New Mexico, another place where the regional drought had forced the Forest Service to remove cattle.

Most of the ranchers’ cattle were still off the Tonto because of the drought, so it was difficult to understand how the EQIP money was going to being applied. But it became clear in 2005 when the Tonto began to issue authorizations for cattle to resume grazing on the Forest because the ranchers had used the EQIP money to build numerous new livestock watering sites and pasture fences. These new “range improvements” were characterized as conservation measures because they allowed the cattle to be more evenly disbursed, supposedly reducing their overuse of favorite gathering places, such as riparian areas. But few, if any, of the new fences were built to exclude cattle from streams, so the primary ecological effect of the new upland waters, coupled with the increased cattle numbers, was to bring grazing impacts, during a continuing drought, to areas that had previously seen few cows. (This was confirmed by a research article titled Upland Water and Deferred Rotation Effects on Cattle Use in Riparian and Upland Areas that was published in a 2017 edition of Rangelands, a periodical publication of the Society for Range Management. The researchers found that building upland livestock watering sites didn’t significantly improve the condition of riparian areas but primarily facilitated rotational grazing and more livestock on the uplands.)

The 2008 Farm Bill continued to allow public lands ranchers to receive EQIP assistance, and afterwards the NRCS published new rules on May 29, 2009, that made any public lands rancher eligible for EQIP assistance, even if the project had nothing to do with improving their private land. When Congress passed the 2014 Farm Bill it continued the EQIP eligibility for public lands ranchers, and folded the Wildlife Habitat Incentives Program (WHIP) into the EQIP program.

Congress also steadily increased the EQIP funding. In Arizona, for example, EQIP assistance awarded to public lands ranchers grew to $4.96 million in federal fiscal year 2008. In fiscal year 2015, Arizona agricultural producers received $13.2 million in EQIP assistance. It’s difficult, however, to know how much EQIP money is going to public lands ranchers these days, because the NRCS no longer tracks them as unique EQIP recipients. Fortunately, the Environmental Working Group maintains a searchable online Farm Subsidy Database that lists U.S. agricultural subsidy payments, including EQIP, that were made to all individuals and businesses since 1995.

These large public investments in private ranching operations have occurred during a continuing drought in the Southwest, and in spite of scientific predictions that the weather will become hotter and drier due to climate change. The decision to make public lands ranchers eligible for EQIP, and the resultant increases in permitted cattle numbers, have been intentionally implemented with little public notice. Many EQIP projects, for example, are completed without engaging the National Environmental Policy Act (NEPA) public planning process. After the passage of each Farm Bill, the NRCS has completed an environmental assessment (EA) they claimed allowed subsequent EQIP projects to be completed using NEPA categorical exclusions. But a nationwide programmatic EA does not provide the legally required site-specific analysis of the expensive and controversial new livestock management schemes being implemented on our public lands.

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