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

NRCS’s process for providing EQIP funds to the states is not clearly linked  to the program’s purpose of optimizing environmental benefits. In  particular, NRCS’s general financial assistance formula, which accounts  for approximately two-thirds of funding provided to the states, does not  have a documented rationale for each of the formula’s factors and weights,  which are used to determine the allocation of funds to the states to  address environmental issues. As a result, NRCS may not be directing  EQIP funds to states with the most significant environmental concerns  arising from agricultural production. Financial Assistance Formula Relies on Some Questionable and Outdated Data

Weaknesses in the financial assistance formula are compounded by  NRCS’s use of questionable and outdated data as they apply to the  formula. In addition to providing information to better gauge  program performance, these measures could also help NRCS refine its  funding allocation process to the states by directing funds to areas of the  country that need the most improvement. However, at the time of our  report, NRCS did not yet have any plans to link these performance  measures to the EQIP funding allocation process. In 2002, NRCS established annual performance  measures for EQIP. Legislative and Regulatory Measures Reduce the Potential for Duplication between CSP and Other Programs, but the Potential Remains for Duplicate Payments, and Such Payments Have Occurred

A number of legislative and regulatory actions have been taken that reduce  the potential for duplication between CSP and other USDA conservation  programs, such as EQIP. For these reasons, we recommended  that the Secretary of Agriculture direct the Chief of NRCS to (1) develop a  comprehensive process, such as an automated system, to review CSP  contract applications to ensure that CSP payments, if awarded, would not  duplicate payments made by other USDA conservation programs; and (2)  develop a process to efficiently review existing CSP contracts to identify  cases where CSP payments duplicate payments made under other  programs and take action to recover appropriate amounts and to ensure  that these duplicate payments are not repeated in fiscal year 2006 and  beyond. In conclusion, EQIP and CSP are key agricultural conservation programs  that can play an invaluable role in encouraging farmers and ranchers to act  as stewards of the nation’s natural resources. However, the weaknesses  we identified in the management of EQIP and CSP funds may lessen these  programs’ effectiveness. Furthermore, oversight of  these programs, such as today’s hearing, helps ensure funds are spent as  economically, efficiently and effectively as possible and benefit the  agricultural sector as intended. Such oversight is especially critical in light  of the nation’s current deficit and growing long-term fiscal challenges. Unlike other USDA conservation programs that provide  assistance to take new actions aimed at addressing identified conservation  problems, CSP rewards farmers and ranchers who already meet very high  standards of conservation and environmental management in their operations.
Why GAO Did This Study

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

What GAO Found

Because farmers and ranchers own and manage about 940 million acres, or about half of the continental United States' land area, they are among the most important stewards of our soil, water, and wildlife habitat. EQIP provides assistance to farmers and ranchers to take new actions aimed at addressing identified conservation problems, whereas CSP rewards farmers and ranchers who already meet very high standards of conservation and environmental management on their operations. In fiscal year 2006, EQIP and CSP provided about $1 billion and $260 million, respectively, in financial and technical assistance to farmers and ranchers. Efficient and effective management of these programs by NRCS is especially important in light of the nation's current deficit and growing long-term fiscal challenges. GAO found the following weaknesses in the management of EQIP and CSP. NRCS's process for providing EQIP funds to states is not clearly linked to the program's purpose of optimizing environmental benefits; as such, NRCS may not be directing funds to states with the most significant environmental concerns arising from agricultural production. To allocate most EQIP funds, NRCS uses a general financial assistance formula that consists of 31 factors and weights. However, NRCS does not have a documented rationale for how each factor contributes to accomplishing the program's purpose. In addition, some data that NRCS uses in applying the formula are questionable or outdated. NRCS has begun to develop long-term, outcome-oriented performance measures for EQIP. Such measures can provide information to better gauge program performance and also help NRCS refine its process for allocating funds to the states by directing funds to areas of the country that need the most improvement. However, NRCS did not have plans to link these measures to the EQIP funding allocation process. Despite legislative and regulatory provisions, it is still possible for producers to receive duplicate payments through CSP and other USDA conservation programs because of similarities in the conservation actions financed through these programs. However, NRCS did not have a comprehensive process to preclude or identify such duplicate payments. In reviewing NRCS's payments data, GAO found a number of examples of duplicate payments. Ensuring the integrity and equity of existing farm programs is a key area needing enhanced congressional oversight. Such oversight can help ensure that conservation programs, such as EQIP and CSP, benefit the agricultural sector as intended and protect rural areas from land degradation, diminished water and air quality, and loss of wildlife habitat.