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How EQIP in Montana Works

Since 1997, the Environmental Quality Incentives Program (EQIP) has brought over 100 million dollars to Montana’s private landowners assisting them with land conservation. In particular, the changes to EQIP ushered in by the 2002 Farm Bill have provided significant conservation opportunities to landowners in Montana.

In 2007, Montana again offered input into the program at the local level and greater flexibility in the ranking criteria. Each county Local Work Group met in June 2006 to identify the significant natural resource issues in its own county. Based on these issues, each Local Work Group provided a recommendation to the Natural Resources Conservation Service (NRCS) county office on how their 2007 EQIP county allocation should be issued. Additionally, each Local Working Group had the flexibility to develop a county ranking criteria in order to more adequately address local resource concerns. Montana rolled the 2007 LWG recommendations over to fiscal year 2008.

Depending on the county, a producer may have more than one choice of EQIP funding sources.  Each county will receive a county allocation. All applications for the county allocation compete within the county for those funds.  All applications for Animal Feeding Operations (AFOs)/Confined Animal Feeding Operations (CAFOs) are also submitted to the local NRCS office by the application deadline. However, after ranking these applications are forwarded to the NRCS state office where the application competes statewide for funding. If an American Indian Reservation lies within a county, eligible participants may choose instead to compete for EQIP funds specifically set aside for American Indian lands. All applications for these funds earmarked for American Indians must also be submitted to the appropriate local NRCS office for ranking before the application cut-off date.

Another option for funding contracts is through the Ground and Surface Water provisions of EQIP. These contracts must facilitate a net increase to ground or surface water on the ag operation. Ground and surface applications use a different ranking criteria and are submitted to the local NRCS office by the application cut-off date for forwarding to the NRCS state office where the applications compete statewide.

In all, there are many potential ranking criteria used in Montana: one for the Ground and Surface Water provision of EQIP; one for funds earmarked for American Indians; and five different county criteria for the 5 natural resource areas (these can then be slightly modified for each county with the Local Work Groups able to assess 50 additional points). These options provide multiple opportunities for producers to address natural resource needs on private lands in Montana.

How does NRCS determine how much cost-share NRCS will pay and how do I get paid?

NRCS follows a step-by-step procedure to establish the amount of funding that NRCS will pay to the producer. This amount is referred to as cost-share since NRCS is sharing in the cost of establishing the conservation practice. The producer is responsible for the share of the practice that NRCS does not pay for. Below is the procedure that NRCS follows along with an example practice.

  1. NRCS obtains information on what the average cost of the practice installation is in a given geographic area that may range from a region of the state to statewide. This is referred to as the conservation practice average cost. Often it is also referred to as the practice average cost or simply, the average cost. This practice average cost includes all necessary components required for practice installation in order to meet the applicable NRCS conservation practice standards and specifications. The practice average cost is NOT the amount of funds that NRCS will pay to the contract holder. For example, the average cost of a fence installation might be $1.00 per foot which would include all components of that practice (installation labor, posts, wire, gates, etc.).
  2. NRCS then establishes what percentage of the conservation practice average cost that the NRCS will pay for. This is referred to as the cost-share rate. This is NOT the cost-share rate that NRCS will pay based on the contract holder’s actual costs for installing the practice; which is a common misconception. For fencing the cost-share rate might be 75%.
  3. The conservation practice average cost and the cost-share rate are used to determine the NRCS fixed dollar cost-share amount (for FY08 and newer contracts this is referred to as the payment rate*). This IS the actual amount that NRCS will pay. For the example, the NRCS fixed dollar cost-share amount paid on the fence will be $0.75 per foot ($1.00 X 75% = $0.75).
  4. Pre-2008 Contracts: When NRCS writes the contract it will show that NRCS estimates the installation cost of the fence to be $1.00 per foot, that NRCS will pay 75% of that estimated cost, and that this results in an NRCS contractual obligation to pay $0.75 per foot of the fence. 2008 Contracts: When NRCS writes the contract it will show the payment rate that NRCS will pay for the installation of the practice. For the example this results in an NRCS contractual obligation to pay $0.75 per foot of the fence.
  5. NRCS will provide design assistance that must be followed for practice installation.
  6. After the producer installs the fence he or she may be required to turn in receipts showing what was actually installed. NRCS will do a field verification of the practice installation.
  7. If the practice meets NRCS specifications a payment can be issued. If it does not meet the NRCS specifications the producer will be given the opportunity to correct the deficiencies prior to payment disapproval.
  8. NRCS will pay to the contract holder the NRCS fixed dollar cost-share amount or the established payment rate as specified in the contract. This payment amount cannot exceed 100% of the installation cost. For example, if the fence cost the contract holder $2.00 per foot to install NRCS will pay $0.75 per foot, as contracted. If the contract holder had installed the fence for $0.90 per foot, NRCS would still pay $0.75 per foot as contracted. Lastly, if the contract holder paid $0.60 per foot to install the fence NRCS will cap the payment at $0.60 per foot. Therefore, it is to the producer’s advantage to install practices early in the contract before inflationary cost increases kick in and for the producer to accept bids on the project or to do it themselves, if possible.
  9. Other Information: Contracted conservation practice average costs are set at various cost-share rates. Typically, the cost-share rates used to establish the NRCS fixed dollar cost-share amount are 50% or 75% with new AFO/CAFO operations limited to 25%. Limited Resource Producers and Beginning Farmers are eligible for an additional 15% added to the applicable payment rate for most practices. As previously explained any reference to cost-share rates are used only to calculate the NRCS fixed dollar cost-share amount or the payment rate and should NOT be used by a producer to estimate what he or she will receive as a percentage of their actual costs. For that type of specific information the contract holder should contact suppliers and contractors to determine what the total cost of the practice installation will be. This information can be compared to the NRCS contracted amount to determine what the actual cost-share rate will be.

    * - Steps 1-3 occur prior to the beginning or at the very beginning of the fiscal year in which they will be utilized. Beginning in FY2008 the payment amount that NRCS will pay, referred to here as the fixed dollar cost-share amount, is now called the "Payment Schedule Rate". This rate, like it's predecessor amounts, is a take-it-or-leave-it amount that is not negotiable.

More Information on Local Work Groups

Local Work Groups Factsheet

Last Modified: 02/27/2008