Tuesday, April 21, 2009


I've had the opportunity to compare EQIP and FLEP funding programs for small landowners. Yesterday I walked the woods with a team of USDA foresters and wildlife biologists who authorize EQIP federal grants for sustainable forest management.

The Environmental Quality Incentives Program (EQIP) is run by NRCS, the Natural Resources Conservation Service of USDA. These guys drove down from Okanogan WA, then spent the better part of an afternoon touring our stands and explaining their grant program.

They say we're likely to be approved for a 5-year contract with grants to cover a variety of activities, including thinning, pruning, slash disposal, pest management and wildlife habitat. 

Meanwhile, we have time left on our Forest Land Enhancement Program (FLEP) grant issued by the WA DNR. We'll spend this summer doing work under that program. 

FLEP pays 50% of the cost of approved practices, up to a modest limit per acre.

EQIP is not a matching grant, the payment amount is fixed per practice, per acre.

For pre-commercial thinning, for example, FLEP pays us half of actual cost up to $220 (i.e., FLEP will pay up to $110) per acre. EQIP will pay actual cost up to $180 per acre. 

Both payment types are reported to the IRS as income and are taxable. Of course you'll have related expenses in excess of the income, unless you do the work yourself. Ask your accountant about a Schedule C or farm schedule on your Form 1040.

The two programs can be "stacked" for the same acreage. They have stops in place to prevent us from being reimbursed more than the cost of a practice -- which is unlikely in any event given the cost of this kind of work. (Using the above example, actual cost of thinning an acre can exceed $1,000 if the stand is dense.)

The key to stacking the programs is to submit costs to FLEP before you collect the EQIP payment. That means aligning the requirements -- for example, pruning the same acres in the same year under both programs. It takes some planning, but by submitting the full cost to FLEP first you avoid having DNR base a significantly reduced payment on your net cost after an EQIP reimbursement.

Program home pages:

Forestland Enhancement Program (FLEP)
Environmental Quality Incentives Program (EQIP)

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