Fixing the Farm Bill to Allow Partners to Deliver Faster Conservation Funding to Farmers

November 10, 2023

The 2018 Farm Bill elevated the Regional Conservation Partnership Program (RCPP) into a stand-alone program, provided $300 million per year in funding, and created an “alternative funding arrangement” (AFA) track intended to catalyze innovative projects that could deliver conservation dollars more quickly and efficiently to agricultural producers, including through performance-based payment approaches. This new “AFA track” was meant to blossom alongside the original RCPP “Classic track.” As envisioned, Classic projects would reimburse producers for implementing approved conservation practices using NRCS contracts, whereas under AFAs, the lead partner would work directly with producers to develop new conservation projects, payment structures and delivery approaches that would not be available under Classic.

The drafters hoped these RCPP changes would become the NRCS’ flagship conservation partnership program. Unfortunately, this aspiration has not yet been realized. RCPP has been dogged by complex administrative requirements on NRCS staff and partners, years-long delays in contracting, complicated technical assistance structures, and cumbersome reimbursement approaches. While AFAs were called out as a priority in the 2018 Farm Bill, the drafters didn’t provide enough direction on how to implement the new track. As a result, NRCS filled in many AFA track steps with Classic steps. So instead of realizing the efficiency and speed benefits of performance-based payment approaches, partners have often had to complete Classic and AFA steps, resulting in twice the work. In far too many cases, funding awards have failed to move to implementation.

The Inflation Reduction Act added $4.95 billion to RCPP on top of existing Farm Bill appropriations ($300 million/year). NRCS recognizes that the program needs improvements, and has announced important streamlining efforts to address some of these challenges. While we applaud and appreciate NRCS’ administrative changes, we also recognize that for RCPP partners to successfully deliver more money, more quickly, to more agricultural producers during this historic IRA investment window, we must legislatively streamline and enhance the program in four ways:

1. Simplify and Streamline Program Administration. To address contracting delays, we think the statute should include clear contracting, renewal/extension, and reimbursement deadlines, as well as a requirement for NRCS to have only one contract with partners. Likewise, for the Classic track we suggest reverting to a simpler contract that allows partners to bundle traditional NRCS-producer contracts under “covered programs,” instead of through the RCPP “program contract” added in the last Farm Bill. Similarly, partners should be able to pick which track they are applying for, with separate and distinct eligibility pathways, and different contracting approaches: under the AFA track, NRCS should use alternative funding arrangements, grants or fixed amount awards, whereas Classic can use cooperative agreements. Amendments should also clarify that the NRCS has access to the full authorities of traditional covered programs, an ambiguity that has been particularly problematic for conservation easement implementation. Partner cost-share expectations should be fixed instead of the current subjective standards and should include flexibility that enables partners to build a stack of leveraged cash on top of RCPP funds to truly implement a regional effort. And the program award cap should be raised well above $10 million to reflect regional impact aspirations. Subjective administrative determinations (e.g., adjusted gross income (AGI) waivers, prioritization) should be clarified so that partners know what they must provide NRCS to navigate these hurdles and quickly deliver funds to projects as soon as possible. And partners should be more empowered to help complete the pre-funding compliance obligations that often slow down the delivery of NRCS funds to good projects.

2. More Detailed Procurement Guidance to Make the AFA Track Work. To deliver on the promise of the AFA track, more statutory procurement direction is needed. NRCS has long realized that performance-based programs can reap more benefits, but are more complex to set up. Accordingly, step-by-step language is needed through the program statute to properly guide the agency and partners through program design and implementation. This starts with clear definitions of “conservation benefits” (quantifiable and verifiable improvements from projects) and “performance-based payments” (purchasing conservation benefits at per unit prices). Next, it’s important to clarify that partners can purchase conservation benefits using performance-based payments that depart from traditional covered program cost-share schedules, and that both partners and NRCS can procure benefits this way. Another impediment to effective implementation of this track is the National Environmental Policy Act (NEPA). With covered programs, NRCS operates with NEPA “categorical exclusion”-like authority (a blanket finding that the practice does not have a significant effect on the environment). For the more innovative, performance-based approaches in the AFA track, NRCS does not have a NEPA pathway, so a statutory categorical exclusion is needed. The entire AFA track is built on verifiable, quantifiable conservation benefits—a rigorous process that should satisfy NEPA. Getting this performance-based track right in RCPP will help convert on the promise of selling “environmental services benefits … through an environmental services market” as called for by the SUSTAINS Act (Section 202 of the Consolidated Appropriations Act of 2023), which was developed by House Agriculture Committee Chairman Rep. Glenn “GT” Thompson (R-15th-PA).

3. Simplify the Administrative Expense Question. NRCS is currently not allowed to reimburse partners for administrative expenses. This restriction puts tremendous burden on NRCS staff to scrutinize every reimbursement expense for anything that might be an “administrative expense,” a term with no statutory definition and that in practice varies greatly across states. Like the rest of federal agencies, RCPP should adopt the “negotiated indirect cost rate agreement” (NICRA) approach, with a cap of 20%. This approach ensures partners don’t lose too much money administering projects while keeping strong protections against applying NICRA to subawards, equipment, and capital expenditures that don’t require administrative oversight. This approach will likely cost NRCS the same or less to administer as the current approach, while overcoming a major barrier that currently slows down delivery of funds to producers. It is essential to ensure that RCPP dollars get to producers, and this simple adjustment will help partners and NRCS focus more efforts on the main goal instead of exhaustively screening invoices.

4. Reduce Producers’ Risk by Creating More Flexible Multi-Benefit Practice Options. Partners need more options to deliver funding to producers for practices that help insulate producers from the risks posed by extreme weather events, such as drought, flood, or wildfire. This can be accomplished by adding more covered program authorities into RCPP, while also making clear in the statute that long-term, multi-benefit project types not specifically defined by covered programs are also encouraged pursuant to RCPP.

#conservation finance    #Farm Bill    #policy    #USDA