[Federal Register: March 25, 2005 (Volume 70, Number 57)]
[Rules and Regulations]
[Page 15201-15223]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr25mr05-2]
-----------------------------------------------------------------------
DEPARTMENT OF AGRICULTURE
Commodity Credit Corporation
Natural Resources Conservation Service
7 CFR Part 1469
RIN 0578-AA36
Conservation Security Program
AGENCY: Natural Resources Conservation Service and Commodity Credit
Corporation, USDA.
ACTION: Interim final rule with request for comments.
-----------------------------------------------------------------------
SUMMARY: This document establishes an amendment to the interim final
rule governing activities under the Conservation Security Program (CSP)
which is administered by the Natural Resources Conservation Service
(NRCS). The CSP sets forth a mechanism to provide financial and
technical assistance to agricultural producers who, in accordance with
certain requirements, conserve and improve the quality of soil, water,
air, energy, plant and animal life, and support other conservation
activities. The CSP regulations implement provisions of the Food
Security Act of 1985, as amended by the Farm Security and Rural
Investment Act of 2002, and are intended to assist agricultural
producers in taking actions that will provide long-term beneficial
effects to our Nation.
DATES: Effective date: March 25, 2005. Comments must be received by
July 25, 2005.
ADDRESSES: Send comments by mail to Financial Assistance Programs
Division, Natural Resources Conservation Service, P.O. Box 2890, or by
e-mail to FarmBillRules@usda.gov; Attn: Conservation Security Program.
You may access this interim final rule via the Internet through the
NRCS homepage at http://www.nrcs.usda.gov. Select ``Farm Bill. The rule
may also be reviewed and comments submitted via the Federal
Government's centralized rulemaking Web site at http://www.regulations.gov.
''
FOR FURTHER INFORMATION CONTACT: Craig Derickson, Conservation Security
Program Manager, Financial Assistance Programs Division, NRCS, P.O. Box
2890, Washington, DC 20013-2890, telephone: (202) 720-1845; fax: (202)
720-4265.
SUPPLEMENTARY INFORMATION: This document establishes an amendment to
the interim final rule governing activities under the Conservation
Security Program (CSP). The CSP is a voluntary program administered by
NRCS, using the authorities and funds of the Commodity Credit
Corporation (CCC). CSP provides financial and technical assistance to
producers who advance the conservation and improvement of soil, water,
air, energy, plant and animal life, and other conservation purposes on
Tribal and private working lands. Such lands include cropland,
grassland, prairie land, improved pasture, and rangeland, as well as
forested land and other non-cropped areas that are an incidental part
of an agricultural operation. The amendment may be reviewed via the
Federal Government's centralized rulemaking Web site at http://www.regulations.gov
.
The CSP regulations implement provisions set out in Title XII,
Chapter 2, Subchapter A, of the Food Security Act of 1985, 16 U.S.C.
3801 et seq., as amended by the Farm Security and Rural Investment Act
of 2002, Public Law 107-171, and are intended to assist agricultural
producers in taking actions that will provide long-term beneficial
effects to our Nation.
The CSP helps support those farmers and ranchers who reach the
pinnacle of good land stewardship, and encourage others to conserve
natural resources on their farms and ranches. During 2004, NRCS held a
CSP sign-up in 18 watersheds covering 22 states. This phased-in
approach to CSP implementation brought forth several issues and
concerns that encompass the broad range of agricultural production at
all scales including mainstream commodity production and small-scale
niche producers. Additional questions are incorporated below with a
request for public comment in order to more
[[Page 15202]]
fully harness the program potential for environmental performance and
streamline the underlying delivery system. NRCS intends to finalize the
CSP rule once additional programmatic experience is gathered with a
full-scale sign-up in 2005.
The CSP amendment is based on an interim final rule that was
published in the Federal Register on June 21, 2004 (69 FR 34501). The
comment period for that rulemaking proceeding ended October 5, 2004 (69
FR 56159). NRCS received more than 13,400 submissions that raised
numerous issues. NRCS received over 13,300 submissions from farmers,
ranchers, and other individuals, 8 from businesses, 41 from non-
governmental organizations (including, but not limited to, conservation
and agricultural industry organizations), one from an unidentified
organization, two from academic institutions, and ten from State,
local, and Tribal governments. Ninety-seven percent of the submissions
were form letters, and most of the issues raised during the comment
period were already raised and addressed in the interim final rule.
This document affirms these earlier responses and discusses only the
new issues that were not already discussed in the interim final rule.
Accordingly, based on the rationale set forth in the interim final rule
and this document, the provisions of the interim final rule are adopted
as an amendment with changes discussed below. NRCS intends to finalize
the CSP rule once additional programmatic experience is gathered with a
full-scale sign-up in 2005.
Responses to Comments
We first address general comments and then present our response to
comments and explanation of changes associated with specific sections
of the interim final rule. In addition to the changes discussed below,
NRCS also made non-substantive changes for purposes of clarification.
Commenters asserted that NRCS should adopt the highly successful
model of producer-initiated grants under USDA's Sustainable Agriculture
Research and Education (SARE) program in establishing protocols and
payment rates for on-farm research and demonstration. Although NRCS
made no changes based on these comments, NRCS is reviewing the SARE
program and other programs to determine whether to expand the eligible
list of enhancements that could be allowed under the statutory
provisions.
Commenters asserted that NRCS should not allow participation in the
CSP by farmers who spray any toxics based on the argument that such
farmers would have already despoiled the land. NRCS made no changes
based on these comments. To be eligible for CSP payments, producers
must meet minimum soil and water requirements which could not be met
unless producers followed appropriate practices regarding the use of
fertilizers, manure, and pesticides.
Commenters asserted that NRCS should reconsider whether the
Conservation Security Program is the proper program to provide
incentives for types of renewable energy production that already
qualify for Federal incentives, such as tax credits and grant funding.
NRCS made no changes based on these comments. The statutory provisions
at 16 U.S.C. 3838a specifically provide for the CSP to assist producers
of agricultural operations in promoting, among other things, the
``conservation and improvement of the quality of * * * `energy' and
identifies energy conservation measures as eligible conservation
practices.'' This rule is constructed to include energy management and
energy creation when it ultimately leads to conservation or
improvement.
Commenters asserted that the regulations should include provisions
reflecting the statutory provisions for renewal of contracts. NRCS made
no changes based on these comments. This is covered adequately by the
statute.
Section by Section Discussion
Section 1469.2 Administration
Commenters asserted that to prevent administrative overreaching,
NRCS should delete the provisions in Sec. 1469.2(b) that grant the
NRCS Chief authority to modify or waive provisions of the CSP. NRCS
made no changes based on these comments. The provisions of Sec.
1469.2(b) contain appropriate safeguards by allowing a waiver only if
the Chief determines (for a particular limited situation) that the
provisions to be waived would be inappropriate and inconsistent with
the goals of the program.
Section 1469.3 Definitions
There were several changes and comments to the definition of
agricultural land eligible to be enrolled in the CSP. The statutory
provisions at 16 U.S.C. 3838a includes as eligible land for CSP
``private agricultural land (including cropland, grassland, prairie
land, improved pasture land, and rangeland).'' Commenters asserted that
NRCS should remove silvopasture as pastureland eligible for CSP in
order to better encourage environmentally sound management of invasive
species and to protect wildlife and habitat. NRCS made no changes based
on these comments. Silvopasture is improved pasture land and,
therefore, is eligible for CSP.
NRCS experience during the 2004 sign-up was that certain
agricultural products, such as sugar maple and ginseng, might be
excluded from the program by the exclusion of forestland as defined in
the rule. Such products are cultivated more like orchards, typically
consisting of a monoculture requiring more intensive agricultural
inputs than a forestland. NRCS proposes to adjust the definition of
agricultural land to include land of varying cover types, primarily
managed through a low input system, for the production of food, fiber
or other agricultural products to allow inclusion of these products.
NRCS is proposing a conforming change to the definition of forest land.
Less intensively managed forest systems used for foraging
activities are not currently included in CSP. The commercial harvest of
products, such as landscaping plants, fungi, floral greens, and wild
edible plants, is on the rise. Most forestland managed for these
products will qualify for CSP since very rarely are nutrients of any
kind applied, the areas are not grazed so protection of streams is not
an issue, pest issues are generally sporadic in nature so few if any
pesticides are used, harvesting of most non-wood products is
accomplished by hand so equipment use is limited to existing roads, and
for the most part irrigation is not used. However, the tools commonly
used for assessing cropland, such as RUSLE2, are not suited for these
forested conditions and there is no consistent system for collecting
data to determine sustainability or quality criteria. NRCS expects that
tools assessing the applicable quality criteria for the various
resource concerns would need to be developed or existing tools would
need to be modified to allow the agency to determine the appropriate
tier and enrollment categories in which to place such operations. NRCS
is seeking comment and information about the best way to accommodate
and consider forested land products in CSP. Specifically, if included
in future program implementation, on which landuse should the
stewardship payments be based and what analytical tools should measure
performance?
Commenters asserted that NRCS should modify the definition of
``agricultural operation'' to encourage efficient NRCS spending, to
facilitate eligibility determinations for the agency and the producer,
and to guard against program fraud and abuse. NRCS made
[[Page 15203]]
no changes as a result of these comments. The delineation of an
agriculture operation is not a condition of eligibility. It determines
contract boundaries and tier placement. Also, the definition is not the
place to promote efficient spending. Program efficiency is an outcome
of the eligibility, minimum requirements, and tier criteria. Fraud and
abuse is handled as a separate section within the rule and has no
relevance to this definition.
The interim final rule at Sec. 1469.6(b)(3)(ii) gives some
preferences to limited resource producers by allowing limited resource
producer participation to be a factor considered in developing the
enrollment subcategories. Commenters asserted that NRCS should change
the definition of ``limited resource producer'' to increase the gross
farm sales and poverty level tests and thereby include a larger number
of producers to be within the category. Commenters also asserted that
NRCS should change the definition of ``beginning farmer'' and
``beginning rancher'' in the interim final rule to help target the
cost-share bonuses to individuals without large net incomes. NRCS made
no changes based on these comments. NRCS notes that the definition of
limited resource producers includes a yearly adjustment for inflation
using the Prices Paid by Farmer Index as compiled by National
Agricultural Statistical Service. Also, these are definitions used in
other USDA programs. Moreover, NRCS believes that placing additional
emphasis on monetary factors would be inconsistent with the statutory
criteria which, except for the cost share rate discussed above, does
not place emphasis for monetary payments based on income.
The statutory provisions at 16 U.S.C. 3838a also state that
``forested land that is an incidental part of an agricultural operation
shall be eligible for enrollment in the conservation security
program.'' The definition of ``incidental forest land'' at Sec. 1469.3
stated that ``Areas of incidental forest land that are not part of a
linear conservation practice are limited individually in size to 10
acres or less and limited to 10 percent in congregate of the total
offered acres.'' Commenters asserted that NRCS should remove the
maximum parcel size requirement for eligible incidental forestland and
increase the allowable total to 20 percent of the enrolled acreage.
NRCS made no changes based on these comments. CSP is an agricultural
working lands program for specifically named land uses, which does not
include forestry. NRCS believes that such suggested changes are simply
beyond the concept of ``incidental.''
NRCS experience in the 2004 sign-up revealed a potential need to
limit the total amount of incidental land eligible for payment in a
contract. For simplicity, incidental land was included with the
adjacent land for purposes of calculating the stewardship and existing
practice payments. NRCS proposes to limit the amount to ten percent of
the total contract acreage for payment purposes.
The statutory provisions at 16 U.S.C. 3838a specify that land
eligible for CSP includes rangeland. The regulations at Sec. 1469.3
define rangeland to include ``areas where introduced hardy and
persistent grasses, such as crested wheatgrass, are planted.''
Commenters asserted that the specific reference to acreage planted in
crested wheatgrass should be deleted from the definition of rangeland.
NRCS made a change based on these comments by removing the specific
reference. NRCS did add additional examples of the types of land
included in rangeland to be consistent with Society for Range
Management definitions.
Under the regulations, ``resource-conserving crop rotation'' may be
considered for enhancement payments. The provisions of 16 U.S.C.
3838(10) define ``resource-conserving crop rotation'' as ``a crop
rotation that--(A) Includes at least 1 resource-conserving crop (as
defined by the Secretary); (B) reduces erosion; (C) improves soil
fertility and tilth; (D) interrupts pest cycles; and (E) in applicable
areas, reduces depletion of soil moisture (or otherwise reduces the
need for irrigation).'' Commenters asserted that NRCS should confine
the regulatory definition of a ``resource-conserving crop rotation'' to
the statutory wording, and make the necessary and appropriate revisions
to the conservation practice standard for conservation crop rotation.
Commenters also asserted that NRCS should add the following to the end
of the definition of ``resource-conserving crops'': ``a winter annual
oilseed crop which provides soil protection; and such other plantings,
including non-traditional crops with substantially reduced water use
needs, as the Secretary considers appropriate for a particular area.''
NRCS made no changes based on these comments. The regulations more
closely relate the ``resource-conserving crop rotation'' to enhancement
payments and provide examples of resource conserving crops. There are
situations where one or more of the listed practices would provide
additional environmental performance above the quality criteria for a
specific resource concern. In these cases, the performance of the
practice above the minimum criteria would qualify as an enhancement
payment, such as the soil quality enhancement.
Section 1469.5 Eligibility Requirements
The provisions of Sec. 1469.5 set forth eligibility requirements
for CSP, including provisions regarding minimum level of treatment for
water quality on cropland. These provisions state that the minimum
treatment for water quality on cropland for Tier I and Tier II is
considered achieved if the benchmark inventory indicates that the
current level of treatment meets or exceeds the quality criteria
according to the NRCS technical guides for these specific resource
considerations: nutrients, pesticides, salinity and sediment for
surface waters and nutrients, pesticides, and salinity for groundwater.
NRCS determines applicants' eligibility for Tier I and Tier II by
verifying that a producer has implemented specific conservation
practices and activities that at least meet the agency's technical
guides for soil and water quality standards. NRCS is considering
options for augmenting and enhancing its ability to evaluate
applications in order to better identify producers who are effectively
managing their agricultural operations from an environmental
stewardship perspective. By evaluating not only which conservation
practices have been implemented, but also how well the practices and
activities are performing, CSP will be able to more cost effectively
measure and encourage beneficial conservation outcomes.
NRCS is seeking comment on the amended eligibility provision that
encompasses the agency's enhanced methodology for determining water
quality performance. The amended provision states that the minimum
level of treatment for water quality on cropland for Tier I and Tier II
is considered achieved if the benchmark inventory indicates that the
current level of treatment addresses the risks that nutrients,
pesticides, sediment, and salinity present to water quality by meeting
or exceeding the quality criteria. NRCS may determine that the quality
criteria have been addressed both by implementing specific conservation
practices or activities and by reducing the risks associated with
agricultural practices to below acceptable thresholds.
NRCS is developing risk assessment indices that measure how
conservation activities reduce risks to human health
[[Page 15204]]
and environmental quality. These new performance-based indices measure
water quality risk reduction for several resource concerns, including
salinity, sediment, pesticides, and nutrients. The indices use models,
such as WIN-PST (a quantitative tool that examines the risks caused by
certain pesticides). With WIN-PST, NRCS can develop bundles of
conservation practices and management techniques that address the risks
presented by pesticides. Other examples include the Phosphorous Indexes
and Nitrate Leaching Indexes that allow NRCS to identify water quality
risks caused by nutrients and to develop mitigation practices to reduce
those risks. Other models such as APEX determine sediment delivery to
surface waters and provide information about how to mitigate these
risks. The Irrigation Water Management Index allows for the
determination of irrigation water management practices to address the
risks of salinity for water quality.
Performance indices used in CSP serve many functions including
establishing basic program eligibility by determining if quality
criteria have been met. In addition, they are used in calculating
levels of performance above the minimum, and providing a gradational
scale of performance which allows for direct environmental payment
calculations. The Soil Conditioning Index is an example of a simple
tool that performs all of these functions. NRCS is committed to further
developing performance-based tools, models and associated indices that
depict and measure environmental outcomes. It is also the agency's
intent to use outcome-based tools for all its programs in the future to
determine the effectiveness and impact of conservation planning and
implementation in treating natural resource concerns. NRCS is also
seeking comment on the potential for other performance-based indices
for determining eligibility and assessing performance. In particular,
NRCS is interested in public comment on indices for measuring pasture
and rangeland management, as well as wildlife habitat management.
Also, with respect to the minimum level of treatment for soil
quality and water quality on cropland, NRCS has added provisions
stating that ``The Chief may make minor exceptions to criteria for
areas, such as tropical and tundra regions, where technology tools are
being refined or testing is needed to review performance data.''
Technology tools and standards are typically developed for the majority
of the climatic situations, but there may be areas that have unique
resource concerns where the minimum of treatment must be adjusted to
provide the same level of environmental performance.
NRCS is seeking comment on the rigor of the minimum level of
treatment for grazing lands for Tier I and Tier II. NRCS has modified
the interim final rule to require pastureland and rangelands to have
vegetation and animal management accomplished by following a grazing
management plan that provides a forage-animal balance; proper livestock
distribution; timing of use and managing livestock access to water
courses.
Forage and animal balance means that the total amount of available
grazing forage and the addition of any roughage supply (hay, silage, or
green chop) is balanced with the amount consumed by the total number of
livestock and wildlife to meet their daily consumption needs. The
knowledge of how much forage is available, when it is available, its
nutritive value, and location in the agricultural operation outlines
the design of the livestock distribution and timing of use portions of
the grazing plan. The determination of available forage includes
leaving an appropriate level of the plant for proper regeneration and
reproduction. The consumption estimates includes an amount for wildlife
species which consume herbaceous plants available in the grazing unit.
If there is a negative balance (not enough forage) during certain times
of the year, then the producer provides supplemental feed. If there is
a positive balance (too much forage), the producer might take on extra
animals during that period. In highly intensive grazing rotations, the
animal movement and supplemental feeding may occur more than once a
day, such as after milking. In low intensity systems, such as high
mountain desert areas, the animal movement will be much less often and
animals are typically managed by water, shade, and salt placement or
herding.
Proper timing of use prevents locating animals in overly wet
pastures or high mountain zones to protect the soil from compaction and
potential gully initiation. Managing the plant community addresses soil
quality concerns and most of the water quality criteria for sediment
and salinity and nutrient or pesticide concerns relating to runoff.
Managing access to water courses addresses other water quality
concerns. Depending on the topographic situation and climate, the
grazing land might necessitate management options from fencing of
entire stream reaches and the use of ``flash'' grazing to only fencing
fragile areas in the desert and assuring that during the stream flow
peaks animals are managed to be away from those areas by salt and shade
placement. NRCS is seeking comment regarding the sufficiency of this
minimum level of treatment for those conservation stewards to meet soil
quality and water quality minimums as described in the rule.
NRCS has made several modifications to the eligibility requirements
for Tier III to further clarify the agency's expectations for the
highest tier of participation. NRCS is clarifying that producers
seeking to be placed in Tier III must use a resource management system
that addresses the entire agricultural operation. NRCS believes that a
comprehensive and operational resource management system is essential
for meeting and documenting the eligibility requirement that all the
applicable resource concerns are addressed in accordance with the NRCS
quality criteria.
NRCS has added an explicit reference to the field-based tool that
NRCS will utilize to determine if an agricultural operation is
addressing the wildlife resource concern. NRCS intends to rely on
either a general or species specific habitat assessment guide as the
basis for determining whether an index value of at least 0.5 is
achieved. The intent of the general habitat assessment guide is to
provide an alternative for landscapes where there is no species of
conservation concern. The general guide evaluates the suitability of
the types, amounts, and distribution of habitat elements that support
diverse populations of wildlife species. The species specific habitat
assessment guide was also included so that watersheds can assess
conservation efforts on behalf of a single species in need of special
assistance. The species guide evaluates the quality and quantity of
elements such as shelter, food and water that are needed to satisfy the
life requirements of a particular species of conservation concern. NRCS
has determined that either assessment technique is valid and
appropriate to document the impact of conservation activities on
working lands.
NRCS has added a specific eligibility requirement for Tier III
contracts that all riparian corridors within the agricultural lands or
incidental parcels offered for CSP contracts are buffered to restore,
protect, and enhance riparian resources. Riparian corridors are
essential elements of working landscapes. Practices and activities on
agricultural lands can have a profound positive impact on riparian
corridors, especially when they are positioned to intercept sediment,
nutrients,
[[Page 15205]]
pesticides, and other materials in surface runoff, reduce nutrients and
other pollutants in shallow subsurface water flow, retard stream-bank
mass movement, and provide litter or other habitat components to
address fish and wildlife needs. NRCS is adding this specific
eligibility requirement to highlight the importance of riparian zone
practices and activities in contributing to stream and river health and
providing other benefits such as wildlife habitat.
There are a number of conservation practices and activities that
can be utilized to comprehensively protect riparian areas and enhance
their function as habitat for aquatic species.
For example, vegetative filter strips help improve water quality
benefits and surface runoff control. Forest buffers and herbaceous
cover promote wildlife habitat benefits. Streambank stabilization
structures and bio-engineering actions, such as, willow-plugs help
stabilize shorelines and reduce streambank erosion. Other practices,
such as fencing, livestock walkways, and livestock watering facilities,
also work in concert to protect riparian areas from degradation.
Riparian corridor resource concerns will be included and documented
as part of the benchmark condition inventory for Tier III contracts and
will be included as part of any resource management system developed
for CSP contracts transitioning to Tier III. Riparian areas that are
enrolled in the Conservation Reserve Program and the Wetlands Reserve
Program are not eligible for CSP payments but may be used to
demonstrate eligibility for Tier III contracts.
NRCS is proposing to use the NRCS Stream Visual Assessment Protocol
(SVAP) to determine if riparian corridors have been adequately treated
in future rulemaking. SVAP is a field technique used to evaluate the
ecological condition of a stream and its riparian corridor. It contains
standard evaluation elements (e.g., channel condition, hydrologic
alteration, riparian zone, bank stability) that combine to yield an
overall quality rating for a stream reach or other aquatic habitat.
NRCS is considering requiring in the final rule that riparian corridors
within agricultural operations offered for the program will meet the
minimum eligibility criteria for Tier III if the SVAP indicates that
50% of the habitat potential is provided. NRCS is seeking comment on
the rigor of the minimum level of treatment for riparian corridors for
Tier III if such a measure is used. NRCS will evaluate the use of SVAP
during the 2005 sign-up to determine if it would be feasible to use it
to determine minimum eligibility for Tier III.
The CSP rewards stewards who improve and protect riparian areas
through a wide variety of enhancement options. Producers demonstrating
the top levels of total resource conservation, including protecting and
enhancing riparian areas, will qualify for the highest level of CSP
participation.
Environmental performance and actual field based outcomes have
proven difficult for agencies to establish and report. Typically
agencies report progress toward achieving environmental goals as
outputs such as acres managed (for example resource management systems
planned or applied on grazing lands), acres created (such as wetlands),
or permits issued (for regulatory agencies). NRCS broke through the
performance outcome barrier with its use of the soil conditioning index
(SCI) during the 2004 CSP sign-up. The SCI estimates the amount of net
carbon stored in the soil and the reduction in sediment leaving the
land on an annual basis. The enhancement payment is based on the value
of the outcomes rather than calculated on the paradigm for cost-share
programs--the cost of implementing an activity. Additionally NRCS is in
the process of developing performance-based indices similar to the Soil
Conditioning Index for the major resource concerns along with a payment
structure that corresponds with the environmental benefit produced.
NRCS seeks comment of this approach to enhancement payments as a basis
for rewarding environmental performance.
Section 1469.20 Application for Contracts
During the 2004 sign-up, NRCS recognized that despite the ``one
contract at any one time'' provision of the regulation, this limit was
only applied to the producer who actively managed the agricultural
operation, and not to any other participant in the CSP contract. NRCS
seeks to clarify that the one contract limit applies to all signatories
to the CSP contract and is seeking comments on this interpretation
which will be utilized in the FY 2005 sign-up. Conforming changes were
made to the definition of ``participant'' and elsewhere in the rule to
recognize that the CSP contract may be signed by multiple parties whom
may not all be producers.
Section 1469.21 Contract Requirements
Commenters asserted that clarification was needed regarding the
contract length when a contract transitions from Tier I to a higher
tier. The provisions of the interim final rule did not allow contracts
to extend beyond the original five-year contract length once the
transition to a higher tier occurred. NRCS agrees with the comments and
has added Sec. 1469.21(d)(4) to allow for a contract adjustment once
the transition occurs. NRCS will assure that the conservation criteria
are met prior to the transition by conducting a field visit and review
of those contracts.
Commenters asserted that clarification was needed regarding the
watershed rotational cycle. They were concerned that the watershed
might come again into sign-up before the Tier II and Tier III 10-year
contracts were completed. The interim final rule states in Sec.
1469.5(b) that ``Producers who are participants in an existing
conservation stewardship contract are not eligible to submit another
application.'' and in Sec. 1469.20(d) that ``Producers can only have
one active contract at any one time.'' NRCS made no changes based on
these comments.
Commenters requested that NRCS give the watersheds selected to
participate in the FY 2004 pilot sign-up another chance to participate
in the Conservation Security Program in the next year or two based on
the argument that there was too little time allowed for the sign-ups to
occur, contracts to be signed, and payments to be made before the end
of the fiscal year. Additionally, sign-up occurred during harvest
period which further decreased participation. In the May 4, 2004,
notice on watershed process and in the preamble to the June 21, 2004,
interim final rule NRCS discusses the benefits of a watershed rotation
and further states, ``The watershed approach includes a rotation system
aspect in that all watersheds will be selected once before any are
selected for a second time.'' (69 FR 34505, June 21, 2004).
Additionally 69 FR 24560, May 4, 2004, states, ``NRCS expects that the
selection of different watersheds for each sign-up will result in every
farmer and rancher being potentially eligible for CSP over the next 8
years. No qualifying producer will be left out.''
However, due to the concerns expressed to NRCS, the agency has
determined that the 18 watersheds will be reopened only for new
applicants during the 2005 sign-up. The agency is still committed to
the established watershed rotation process and will continue to utilize
it in subsequent
[[Page 15206]]
years. However, NRCS recognizes that there were unique circumstances in
the program's first year and it seeks to fairly treat the farmers and
ranchers in those first watersheds.
The provisions of the interim final rule at Sec. 1469.21(c)(2)
provided that to be eligible for Tier II, a participant must include
``the treatment of an additional locally significant resource concern''
by the end of their contract period. This was originally included to
assure that Tier II participants achieved additional resource benefits
beyond the minimum level of soil and water quality. NRCS's experience
with the 2004 sign-up revealed that this requirement may be difficult
to implement in cases where the producer has either already addressed
the relevant locally significant resource concerns or no locally
significant resource concerns existed on the operation. In some cases,
NRCS and the producers had to identify a resource concern that added
little environmental benefit compared to its cost to fulfill this
contract requirement.
To ensure that CSP Tier II participants focus on significant
resource concerns that provide substantial offsite environmental
benefits and to streamline application review and acceptance, NRCS will
determine, for each participating watershed, a pressing locally
significant resource concern. Tier II applicants will only be required
to address this concern if it is applicable to their operation and not
already fully addressed to NRCS's quality criteria. Otherwise this
requirement will be considered satisfied. Participants may receive
cost-share payments for new practices required to address this resource
concern, if offered as part of the sign-up, to assist them in
fulfilling this contract requirement.
The provisions of the interim final rule at Sec. Sec.
1469.21(d)(3), 1469.23(c)(5), and 1469.24(b) required that a
participant achieve a higher Tier for at least 12 months before
becoming eligible for corresponding payments based on the higher Tier.
Commenters asserted that the regulations should not impose such a
barrier based on the argument that participants have earned the higher
payments when they meet the requirements for a higher Tier and that
removal of the barrier would encourage participants to obtain a higher
Tier as soon as possible. In response, NRCS has deleted the 12-month
requirement based on the arguments submitted by the commenters, but
have added the provision that a field verification will be conducted by
NRCS prior to transition to assure program compliance with the new tier
requirement.
Section 1469.23 Program Payments
The provisions of 16 U.S.C. 3838c(b)(3) state that payment to a
producer shall not be provided for ``construction or maintenance of
animal waste storage or treatment facilities or associated waste
transport or transfer devices for animal feeding operations.'' Pursuant
to this authority, the regulations at Sec. 1469.23(c)(3)(i) state that
NRCS may not make new practice payments for such facilities or devices.
Commenters asserted that the prohibitions should apply to all payment
components and not just to the new practice component. NRCS agrees with
the comments and has made adjustments in Sec. 1469.23(c)(3) and added
a new subsection, Sec. 1469.23(i).
Commenters asserted that the regulations should include feedlots in
the stewardship payment computation. NRCS made no changes based on
these comments. Feedlots are not a land type eligible for CSP.
To be eligible for payments under CSP, the provisions of 16 U.S.C.
3838a(b) require a producer to develop and submit to NRCS a
conservation security plan. Commenters asserted these provisions should
be utilized. NRCS made no changes based on these comments. The
statutory term ``conservation security plan'' is more descriptively
described in the regulations as the ``conservation stewardship plan.''
To be eligible for payments under CSP, the provisions of Sec. 1469.7
require a participant to develop and submit to NRCS a conservation
stewardship plan.
Commenters also asserted that NRCS had abandoned the statutory
provision giving beginning farmers a higher cost-share rate. NRCS
considered these comments and has adjusted the section to continue the
50 percent cost-share for new practice payments, except the cost-share
limit is raised to 65 percent for limited resource and beginning
producers.
The statutory provisions at 16 U.S.C. 3838c(b)(2) constrain
spending through a contract cap of $20,000 for Tier I, $35,000 for Tier
II, and $45,000 for Tier III. The interim final rule also provided the
following regulatory cap: ``The total of the stewardship component, the
existing practice component, and the enhancement component may not
exceed 0.15 of the stewardship payment amount without any reductions
for Tier I, may not exceed 0.25 of the stewardship payment amount
without any reductions for Tier II, and may not exceed 0.4 of the
stewardship payment amount without any reductions for Tier III.'' Many
of the commenters asserted that the payment formula should allow for
payments without any reductions or caps and that the reduction is
unfair to small acreage farms and dairies. NRCS agrees that the
regulatory cap should be deleted because it disadvantaged small farms
in areas with low rental rates.
Specifically, NRCS was concerned that tying the enhancement payment
to the stewardship payment penalized small operations with significant
opportunities for enhancement activities. Accordingly, NRCS deleted the
specific section containing the regulatory cap, but retained the
authority of the Chief to limit payments for any component in order to
focus funding toward targeted activities and conservation benefits the
Chief identifies in the sign-up notice and any subsequent addenda.
In the FY 2004 sign-up notice, NRCS used this authority to specify
that the total annual enhancement payments per contract may not exceed
$10,000 for Tier I, $17,500 for Tier II and $22,500 for Tier III,
regardless of operation size. NRCS is seeking comment about the
effectiveness of capping total enhancement payments. NRCS intends to
cap enhancement payments in the 2005 sign-up at higher levels of
$13,750 for Tier I, $21,875 for Tier II, and $28,125 for Tier III.
NRCS is seeking to encourage participants to further improve their
environmental performance through CSP. CSP allows contract payment for
existing enhancements based on the benchmark inventory and application.
NRCS will be requiring applicants in the 2005 sign-up to agree to a
variable payment rate for enhancement activities that are part of the
initial contract. The annual enhancement payment will be calculated at
a variable payment rate with the rate initiating at 150% for the first
contract year and then at a declining rate for the remainder of the
contract. This will provide contract capacity to add additional
enhancements in the out-years and will encourage participants to make
continuous improvements to their operation. Additionally this mechanism
will allow for a more consistent number of contracts accepted for each
sign-up year according to the current budget projections. In order to
maintain the same level of payment over the life of the contract, the
participant may add additional enhancement activities of their choice.
The variable rate would be established in the sign-up announcement.
NRCS is seeking comment on this action. NRCS believes that with the
changes made by this document, each of the reductions and caps will
help create the appropriate
[[Page 15207]]
balance between allowing the largest number of participants in each of
the categories yet providing meaningful payments (see also the
discussion regarding payment formulas in the interim final rule at 69
FR 34503).
NRCS is considering including enhancement payment limits in the
final rule. NRCS is seeking comments on whether the enhancement payment
limits imposed in 2004 or 2005 are appropriate and whether they should
be included in the final rule to provide more consistency and
regulatory certainty across different sign-ups. NRCS is also seeking
comments about the establishment of individual payment sub-caps for
groups of enhancement activities addressing specific resource concerns
(such as air quality, energy, etc.) to encourage participants to adopt
a variety of enhancement activities that would target the full suite of
resource concerns on their agricultural operations.
Commenters asserted that enhancement payments should be adjusted to
include maintenance costs. NRCS made no changes based on these
comments. Enhancement components already are calculated to include
compensation for maintenance (operation and management) in Sec.
1469.23(d)(5)(ii). NRCS is seeking comments on the process used to
determine the appropriate level of enhancement payments for practices
and activities. NRCS seeks to base its enhancement payments on an
objective measure of either adoption cost or environmental benefit. In
some cases, especially with respect to changes in management,
environmental benefits may be realized but the cost to the producer is
difficult to determine. Similarly, it is not always possible to
quantify and monetize the benefits generated by enhancement activities.
In the cases that both are determinable, NRCS prefers to compensate
producers based on the economic value of environmental benefits to
recognize the environmental performance achieved by adopting a practice
or activity. NRCS recognizes that the cost lists used to calculate
enhancement payments are still being developed for participating
watersheds and is seeking suggestions about the most effective and
equitable method to determine the cost or benefits of enhancement
activities.
Commenters asserted that payments should be made retroactive to the
application date. NRCS made no changes based on these comments. The CSP
payments are made within the same fiscal year as the application is
made and includes payment for the entire year as the first contract
year.
Section 1469.24 Contract Modifications and Transfers of Land
Under the provisions of Sec. 1469.24, conservation stewardship
contracts may be modified, including modifications to add or subtract
land to the contract. Commenters asserted that NRCS should not allow
land to be added or subtracted once a contract is signed. They asserted
that this is necessary to guard against program fraud and abuse. NRCS
made no changes based on these comments. The government will be a party
to modifications and has expertise to help avoid fraud and abuse. The
addition and subtraction of land follows the typical flow of
agricultural operations in American production agriculture.
Section 1469.30 Fair Treatment of Tenants and Sharecroppers
Commenters asserted that NRCS should establish a limit for the
landlord's share of any payments for land operated by a tenant. NRCS
made no changes based on these comments. NRCS believes that this a
contract issue that should be resolved between the landlord and the
tenant.
Section 1469.31 Appeals
The regulations at Sec. 1469.31 sets forth provisions regarding
appeals. These provisions do not allow appeal of payment rates.
Commenters asserted that appeals should be allowed regarding payment
rates. NRCS made no changes based on these comments. As indicated in
Section 1469.31, participants are not allowed to appeal matters of
general applicability. Such appeals would affect all participants and
would be administratively unworkable.
Executive Order 12866
The Conservation Security Program (CSP) is a voluntary Natural
Resources Conservation Service (NRCS) program that recognizes the
stewardship of natural resources by farmers and ranchers on working
lands. The CSP takes an innovative approach in that it rewards the best
stewards of the land. Over the next 8 years, CSP will be offered to all
eligible farmers and ranchers in the United States.
Discussion of the Economic Analysis Benefit Cost Model
The economic analysis is based on a model that was designed to
simulate producers' willingness to participate in CSP. The model
includes a number of simplifying assumptions, some of which are
discussed below. Because of the assumptions used, the model should not
be relied on to predict actual participation rates, tier and regional
distribution, or the magnitude of payments. The model is best used to
predict the direction of how participation would change if a particular
program feature is changed, rather than the magnitude of the change.
Because program implementation has only begun, the model has not been
validated so its ability to predict program participation has not been
assessed.
The model provides results reflecting total participation over the
next 15 years, rather than information on any particular year's sign-
up. Annualized values are also presented for informational purposes,
but they represent an average over the time period covered by the
model, rather than any particular year. A budget constraint has not
been incorporated into the model and the results do not reflect the use
of enrollment categories intended to comply with any such budget
constraint.
Farms--The model used ARMS 2002 Phase 3 data to construct 6,105
farm types representing the 2.1 million farms in the U.S. Such farms
are likely more numerous than the agricultural operations that may
enroll in CSP because several ``farms'' may be operated by a single
applicant. Additionally, the model assumes that farms as small as five
acres will enroll in CSP. In reality, the cost of fulfilling the
eligibility requirements and applying to the program may exceed the
benefits for such small farms.
Information about each representative farm includes acreage needing
treatment (from the NRCS work load assessment database), acreage
already treated (from the NRCS Performance and Results Measurement
System), cost of installing practices, and county rental rates. Such
information represents the average for the farm type and watershed in
which each farm is located, and so may differ from the characteristics
of actual farms enrolled in CSP. Additionally, some the data are only
available on a statewide basis, so allocations to the watershed are
based on the acreage covered by each land type. To the extent that
agricultural operations in a watershed may have adopted conservation
practices to a higher or lower degree than average, such estimates may
not be accurate.
Eligibility--The model includes several assumptions about the
treatment of natural resource concerns for CSP eligibility. Due to lack
of data, the model considered up to six resource concerns that need to
be addressed and assumed that 1.5 selected practices per acre are
needed to fully treat each resource concern. If different practices or
combination of practices are needed
[[Page 15208]]
to treat resource concerns in actual agricultural operations, producers
may be less or more likely to sign up for CSP or they may enroll in a
different tier than predicted by the model.
The model constructed a set of uniform decision rules to predict
whether a producer would apply to CSP. These decision rules include:
A return of at least seven percent on conservation costs
to the producer during the contract,
Minimum size farm of five acres,
The cost of complying with eligibility requirements prior
to enrollment cannot exceed 10 percent of annual rental rate of the
land,
A willingness to participate factor based on socioeconomic
data from participants in other conservation programs,
Tier selection that maximizes net return, and
Producers are assumed to recognize only 25 percent of the
onsite benefits derived from conservation practices.
To the extent producers use a different set of decision rules or
consider additional factors in their decision to apply to CSP, the
model results may differ from actual participation. Note for example
that the decision rules do not include the cost of adopting practices
to become eligible for any enrollment categories since the categories
were not incorporated into the model.
Payments--The model used estimated rental rates for the purpose of
calculating stewardship payments. In watersheds where there was no data
on rental rates, the rates had to be imputed. The model assumes that
only Tier II contracts or contracts transitioning to a higher tier will
receive new practice payments. In the model for Alternatives 1 and 3,
enhancement payments are assumed to either equal 50 percent of the
contract statutory limit or 70 percent of the contract payment,
whichever is less. For the baseline and Alternative 2, enhancement
payments are assumed to either equal 50 percent of the contract
statutory limit or the difference between the regulatory limit and the
sum of the stewardship payments and existing practice payments. These
constraints differ from the limits placed by NRCS either in the rule or
in the 2004 sign-up and so the model does not reflect actual contract
requirements. Producer costs for enhancement activities are assumed to
be 25 percent of the enhancement payments. This may be lower or higher
than actual costs and so may affect producers' willingness or ability
to undertake enhancement activities.
Benefits--Due to a lack of data, no attempt was made to estimate
the benefits generated by the implementation of enhancement activities.
The model results therefore show a negative net benefit for the various
program alternatives, because enhancements activities, which constitute
a large portion of the contracts' cost, are assigned zero benefits. It
is likely that enhancement activities do provide significant benefits,
and therefore the results of the model should be viewed as a lower
threshold of expected benefits. Tables 1a-1c provide the results of
several sensitivity analyses that use different assumptions regarding
enhancement activities' benefits to illustrate a range of other
potential outcomes.
Discussion of Differences Between Model and Other Program Estimates
The benefit-cost model results differ from the estimate of the Cost
of Program (COP) model used to predict the actual number of contracts
that could be funded based on the President's budget baseline. The
benefit-cost model results have a much greater participation estimate
and lower average acres per contract. These differences occur because
the model enrolls a greater proportion of small farms than the
President's budget estimate which reduces the average payments per farm
and increases the number of CSP participants. The benefit-cost model
predicts a larger number of enrolled small farms than the President's
budget because the model assumes that farms as small as 5 acres would
participate, whereas in reality transaction costs may reduce
participation of such small operations. This assumption results in a
prediction that the average farm size would be about 200 acres. In
contrast, the COP model using 2004 sign-up data indicates that the
participating farm size would be about 750 acres on average. Varying
the benefit-cost model assumption of minimum farm size has a dramatic
effect on the benefit-cost model results. For example, increasing the
smallest farm size to 50 acres decreases the number of farms predicted
to enroll in CSP by the model by 40 percent and total government costs
by 20 percent, all else being equal.
In addition to different farm sizes, the COP model assumes both a
constrained budget consistent with a programmatic ramp-up funding
scenario and that only about five percent of the farms would meet the
minimum level of treatment for CSP. These different assumptions lead
the COP model to estimate CSP participation at about 89,000 over the
budget cycle of ten years while the benefit cost model estimates
participation to total about 990,000 over fifteen years for the
baseline (similar to the 2004 Interim Final Rule) scenario. The results
of the unconstrained benefit-cost model underscore the need to use
enrollment categories or other means to comply with the program's
budget.
The COP is utilized by the agency to predict CSP participation
using assumed budget caps within the President's budget and calculate
the number of contracts alternative budget scenarios might fund. This
model has assumptions that can be easily modified to reflect ever
changing programmatic data. For example, the average acreage per
contract and average cost per contract by tier can be estimated based
on projections and then compared with actual sign-up data. The
projections for the 2005 sign-up are estimated at 520 acres for a Tier
I, 850 acres for Tier II and 1,400 acres for Tier III contracts. The
projections for the annual average cost per existing contract are
estimated at $6,000 for a Tier I, $12,500 for Tier II, and $26,600 for
Tier III in FY 2005.
Discussion of Program Alternatives and Results
Baseline--No Action: The Baseline Assumes That CSP, as Implemented in
2004 Under the Interim Final Rule, Will Continue Under the Interim
Final Rule Conditions
National participation in CSP under the Baseline is estimated to be
a total of 989,000 farms (or about 47 percent of all ``farms'' across
the U.S., as defined by the ARMS Phase 3 survey) over a fifteen year
period. The Midwest leads all regions in number of participants with
about 37 percent of all enrollees, followed by the Southeast (about 21
percent) and the Northern Plains (about 14 percent). Almost eighty-
three percent of participation is estimated to be at the Tier I level;
10 percent either at Tier II or Tier I transitioning into Tier II; and,
about seven percent in Tier III. Over 75 percent of contract payments
consist of enhancement payments. An estimate of the conservation
assurance payments are found in Table 1 in the ``Baseline'' column of
data. Eligible producers receive these payments to increase assurance
that conservation measures will continue to provide a broad and ongoing
stream of environmental benefits for the public. Conservation assurance
payments may induce other farmers and ranchers to install additional
conservation measures that further enhance environmental quality so
that they can qualify for the CSP program.
[[Page 15209]]
Table 1.--Selected Results of Modeling Alternative Program Structures, FY 2005-2020
--------------------------------------------------------------------------------------------------------------------------------------------------------
Participation totals--total over entire 15 years and average annual estimates
---------------------------------------------------------------------------------------------------------------------------------------------------------
Difference from baseline from Difference from baseline
Baseline--over baseline Baseline--average --------------------------------------
Tier level 15 years --------------------------------------- annual \1\
Alt. 1 Alt. 2 Alt. 3 Alt. 1 Alt. 2 Alt. 3
--------------------------------------------------------------------------------------------------------------------------------------------------------
Tier 1................................. 817,617 -83,069 4,967 -78,185 272,539 -27690 1656 -26062
Tier 2................................. 73,958 -1,995 -1,809 -3,914 49,305 -1330 -1206 -2609
Tier 3................................. 66,940 0 15 15 44,626 0 10 10
Tier 1 to 2............................ 27,345 1,478 -3,538 -1,950 13,673 739 -1769 -975
Tier 2 to 3............................ 3,520 0 -440 -440 2,347 0 -293 -293
-----------------
Total.............................. 989,380 -83,586 -804 -84,474 382,490 -28281 -1602 -29929
----------------------------------------
Average Annual Payout
--------------------------------------------------------------------------------------------------------------------------------------------------------
Tier level Dollars per year on a 7% annualized rate
Dollars per year on a 3% annualized rate
----------------------------------------
Tier 1................................. 1,082 -672 -3 -674 1,006 -625 -1 -627
Tier 2................................. 2,244 -331 55 -275 2,273 -327 58 -269
Tier 3................................. 6,952 389 4 393 7,026 393 5 398
Tier 1 to 2............................ 2,502 -1,233 1,478 15 2,432 -1,166 1,491 120
Tier 2 to 3............................ 7,308 69 263 325 7,338 96 156 240
----------------------------------------
Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Location Millions of dollars on a 7% annualized rate
Millions of dollars on a 3% annualized rate
----------------------------------------
On-site................................ 72 -4 -3 -7 74 -4 -3 -7
Off-site \2\........................... 99 -9 0 -9 99 -9 0 -9
-----------------
Total Benefits..................... 171 -13 -2 -16 174 -13 -3 -17
----------------------------------------
Program Cost Information
--------------------------------------------------------------------------------------------------------------------------------------------------------
Costs Millions of dollars on a 7% annualized rate
Millions of dollars on a 3% annualized rate
----------------------------------------
Producer............................... 198 -64 2 -62 127 -42 1 -41
Gov't TA............................... 115 -32 2 -30 113 -30 2 -28
Gov't FA............................... 767 -212 13 -199 750 -197 13 -184
----------------------------------------
Net Benefits, Net Returns, and Conservation Assurance Payment
--------------------------------------------------------------------------------------------------------------------------------------------------------
Net Benefits \3\....................... -143 82 -6 76 -66 59 -6 52
Net Returns \4\........................ 641 -152 9 -144 697 -159 9 -150
Conservation Assurance Payments \5\.... 569 -148 11 -137 623 -155 12 -143
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Average annual participation assumes that \1/3\ of all Tier 1 participants are enrolled in any one year: participants in other tiers are enrolled \2/
3\ of the time due to longer contract lives.
\2\ Off-site benefits are environmental benefits.
\3\ Net benefits are total benefits less producer conservation costs less the cost of technical assistance. Financial assistance to producers is a
benefit for producers but a cost to taxpayers and, therefore cancels out of the net benefit calculation.
\4\ Net returns represents the financial assistance plus on-site benefits less producer conservation costs.
\5\ Conservation assurance payments are considered to be payments to producers that exceed the total cost of practice installation and adoption.
Conservation assurance payments are a cost to society, and although they are a benefit to CSP participants, they are neither a net cost nor a net
benefit to the economy at large.
Features Common to all Alternatives--Enhancement payments are
limited to 50 percent of the tier specific statutory limit; however,
the calculation of enhancement payments differs by alternatives.
Existing practice payments are calculated as 25 percent of the total
stewardship payments, which is consistent with the Baseline (Interim
Final Rule or Baseline scenario above). Cost-share rates for new
practices installed with CSP funds are assumed to be consistent with
Environmental Quality Incentives Program (EQIP) cost share rates of 50
percent.
Program Alternative 1--This alternative is similar to the Interim
Final Rule, except the enhancement payments are not calculated as the
difference between the regulatory limit and the sum of the stewardship
payments and existing practice payments and are instead calculated as
70 percent limit of the total contract payment. The regulatory limit is
not a constraint in this alternative.
National participation under Alternative 1 registers declines in
all regions with especially large decreases shown in the Midwest and
the South Central regions as compared with the Baseline. Although a
small increase in participation occurs in those transitioning from Tier
I to Tier II, the large declines in Tier I and II participants cause
over-all participation to drop. The participation changes noted above
result from drops in contract payments for Tier I and II while payments
for Tier III and for contracts transitioning to Tier III increase. All
of the change in total payments results from changes in the benefit-
cost model limits on enhancement payments. Annualized net benefits,
producer net
[[Page 15210]]
returns, and an estimate of the conservation assurance payment are
found in Table 1.
Program Alternative 2--This alternative is the same as the Baseline
except contracts that include movement between Tier I and Tier II are
allowed to increase the length of the contract from a maximum of 5
years to 10 years.
This alternative assumes that all the constraints consistent with
the Interim Final Rule are in place (that is, similar to the Baseline)
however it assumes that if a producer enters a contract at a Tier I
level and wants to move up to a Tier II level, the contract life is
extended from 5 years to 10 years. This removes the disincentive of
limiting the contract life for producers willing to implement
conservation plans that would yield greater potential environmental
benefits.
National participation is virtually the same as under the Baseline.
Slight drops in participation are registered in the Midwest and West
with a slight increase in the Southeast and virtually no change in any
other region. A higher participation level in Tier I is off-set by
greater declines in Tier II and those transitioning from Tier I to II
and from Tier II to III. Average contract payment amounts are similar
in Alternative 2 as compared with the Baseline for Tier I, II, and III
participants, but are lower for those participants transitioning from
Tier I to II and lower for those transitioning from Tier II to III.
Annualized benefits are similar to those under the Baseline while
annualized government costs (FA) are slightly higher (Table 1,
Alternative 2 column).
Program Alternative 3--This alternative combines the features of
Alternatives 1 and 2: Removing the regulatory limit on contract
payments; calculating enhancement payments as 70 percent of total
contract payments; and, allowing the length of contracts that include
movement between Tier I and Tier II to increase from a maximum of 5
years to 10 years.
This alternative combines all the assumptions included in the
previous alternatives. It is most similar to the Amendment to the
Interim Final Rule, with the exception that the enhancement payments
are limited as in Alternative 1.
National participation declines by about 8 percent compared to the
Baseline--the lowest of all scenarios. Participation drops in all
regions with the largest declines registered in the South Central
region. As compared to the baseline, participation decreases in all
tiers except Tier III. Regional and Tier level participation declines
are caused by an overall drop in contract payments. The large number of
Tier I participants and their lower payment rates masks the much larger
payments to participants in the other tiers and the transition between
tiers.
Selected Alternative
Alternative 3 is the most similar to the changes adopted by the
Amendment to the Interim Final Rule. The model predicts that
Alternative 3 will produce higher social net benefits than the
Baseline. However, Alternative 3 results in lower net benefits than
Alternative 1. There are programmatic reasons for selecting Alternative
3 (Amendment to the Interim Final Rule) over Alternative 1. In response
to public comments, the agency also decided that contracts that include
a transition from Tier I to Tier II should be granted the same contract
length limit that is provided to Tier II contracts.
Alternative 3 provides lower net returns to producers than the
Baseline (2004 Interim Final Rule). This is primarily the result of
assuming more stringent limits on enhancement payments in the model
than those provided either in the 2004 Interim Final Rule or in the
2005 Amendment to the Interim Final Rule. To the extent that the agency
would likely select less stringent limits for the 2005 sign-up,
producers' actual net returns may be higher and more comparable to
those provided by the Baseline.
Results Viewed Under Varying Assumptions Concerning Enhancement
Benefits and Costs
The benefit cost analysis discusses the uncertainty in calculating
enhancement benefits and the interpretation of costs. The following
three tables highlight some of the results as found in Table 1, but
report them under different assumptions regarding the annualized
benefits and costs of enhancement activities. As would be expected,
these assumptions have a great effect on expected program net benefits.
Table 1a excludes all enhancement benefits and implementation costs
from producer conservation costs and government financial assistance.
Thus, net benefits are higher than those found in Table 1. Table 1b
reports the results after enhancement benefits are set equal to
enhancement implementation costs. Table 1c summarizes the model results
the same way as in Table 1, but producer net returns now reflect that
the ratio of enhancement benefits and costs are assumed to be the same
as the ratio of existing annualized practice benefits and costs. Under
all alternatives, the calculations produce the same level of
conservation assurance payment received by producers, regardless of the
assumptions made.
Table 1a.--Summary of Total Benefits and Costs, and Incremental Change by Alternative, Excluding Enhancement Benefits and Implementation Costs
[Annualized at 7 percent, FY 2005-2020] \1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Benefits Gov't expenditure Producer
--------------------------------- Producer ---------------------- Net net Conservation
Alternative Offsite conservation Tech. Fin. benefits returns assurance
Onsite \2\ Total costs assist. assist \3\ \4\ payment \5\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annual Payment Value, $ Millions
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline....................................... $72 $99 $171 $53 $28 $185 $90 $204 $132
1.............................................. -4 -9 -13 -11 0 -2 -2 5 9
2.............................................. -3 0 -2 4 3 22 -10 16 18
3.............................................. -7 -9 -16 -12 0 2 -4 7 14
--------------------------------------------------------------------------------------------------------------------------------------------------------
[[Page 15211]]
Table 1b.--Summary of Total Benefits and Costs, and Incremental Change by Alternative, With Enhancement Benefits Equal to Enhancement Implementation
Costs
[Annualized at 7 percent, FY 2005-2020] \1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Benefits Gov't expenditure Producer
--------------------------------- Producer ---------------------- Net net Conservation
Alternative Offsite conservation Tech. Fin. benefits returns assurance
Onsite \2\ Total costs assist. assist \3\ \4\ payment \5\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annual Payment Value, $ Millions
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline....................................... $319 $434 $753 $198 $115 $767 $439 $887 $569
1.............................................. 25 -40 -66 -64 -32 -212 30 -173 -148
2.............................................. -5 0 -5 2 2 13 -8 6 11
3.............................................. -28 -38 -66 -62 -30 -199 26 -165 -137
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table 1c.--Summary of Total Benefits and Costs With Enhancements Benefits Using Same Ratio as New Practice and Existing Practice Benefits and Costs
[Annualized at 7 percent, FY 2005-2020] \1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Benefits Gov't expenditure Producer
--------------------------------- Producer ---------------------- Net net Conservation
Alternative Offsite conservation benefits returns assurance
Onsite \2\ Total costs TA FA \3\ \4\ payment \5\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annual Payment Value, $ Millions
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline....................................... $343 $1,182 $1,525 $198 $115 $767 $1,211 $912 $569
1.............................................. -75 -292 -367 -64 -32 -212 -271 -223 -148
2.............................................. -3 -1 -4 2 2 13 -8 8 11
3.............................................. -70 -260 -330 -62 -30 -199 -238 -206 -137
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Annual Payment over 15 years at 7% interest.
\2\ Offsite Benefits are environmental benefits.
\3\ Net Benefits are total benefits less producer conservation costs (i.e., the cost of installing and maintaining conservation practices) and the cost
of technical assistance that accompanies those activities. Financial assistance to producers is a benefit for producers but a cost to taxpayers and,
therefore, cancels out of the net benefit calculation.
\4\ Producer net returns is financial assistance plus on-site benefits less producer conservation cost.
\5\ Conservation Assurance Payments, in this case, are considered to be payments to producers that exceed the total cost of practice installation/
adoption. Conservation Assurance Payments are a cost to society, and although they are a benefit to CSP participants, therefore are neither a net cost
nor net benefit to the economy at large.
Regulatory Flexibility Act
The Regulatory Flexibility Act is not applicable to this rule
because NRCS is not required by 5 U.S.C. 533, or any other provision of
law, to publish a notice of proposed rulemaking with respect to the
subject matter of this rule.
Executive Order 13132, Federalism
This interim final rule has been reviewed in accordance with the
requirements of Executive Order 13132, Federalism. USDA has determined
that the rule conforms to the federalism principles set forth in the
Executive Order; would not impose any compliance cost on the States;
and would not have substantial direct effects on the States, on the
relationship between the Federal Government and the States, or on the
distribution of power and responsibilities on the various levels of
government.
Small Business Regulatory Enforcement Fairness Act (SBREFA)
Pursuant to Section 2702 of the Farm Security and Rural Investment
Act of 2002 (2002 Farm Bill), the Secretary ``shall use the authority
provided under section 808(2) of title 5, United States Code.'' As
required by 5 U.S.C. 808(2), NRCS hereby finds that additional public
notice and comment prior to the effective date of this amendment to the
interim final rule are unnecessary and contrary to the public interest.
Even though proposed rulemaking was not required for this rulemaking,
NRCS published in the Federal Register an Advance Notice of Proposed
Rulemaking on February 18, 2003 (68 FR 7720), and a Notice of Proposed
Rulemaking on January 2, 2004 (69 FR 194). In the interim final rule
published in the Federal Register on June 21, 2004 (69 FR 34501), NRCS
responded to the comments received during the comment period for the
proposed rulemaking. The comment period for the original interim final
rule ended October 5, 2004 (69 FR 56159). In this amendment to the
interim final rule, NRCS responds to the comments received pursuant to
the interim final rule, and makes some minor adjustments based on those
comments and its experience from implementing CSP in FY 2004 in 18
watersheds encompassing 22 States. In FY 2005, NRCS will implement CSP
in 202 watersheds encompassing all 50 States and the Caribbean. NRCS
would like to gain additional information based on the more extensive
sign-up prior to finalizing the CSP regulatory provisions, and thus is
providing an additional opportunity to comment. However, NRCS does not
believe that additional public notice through 5 U.S.C. 808(1) is
necessary prior to the effective date of this amendment to the interim
final rule. Congress authorized $202 million to be available to
implement CSP in FY 2005. NRCS needs to obligate these funds by
September 30, 2005, in order for them to be available for payment to
CSP program participants. To ensure that
[[Page 15212]]
NRCS has the adjusted regulatory framework in place for the FY 2005
sign-up, NRCS determines that it is in the public interest for this
amendment to the interim rule to be in effect upon its publication in
the Federal Register.
Environmental Analysis
A final Environmental Assessment (EA) has been prepared to assist
in determining whether this amendment would have a significant impact
on the quality of the human environment. Based on the results of the
final EA, NRCS issued a Finding of No Significant Adverse Impact
(FONSI) on December 16, 2004. Copies of the final EA and FONSI may be
obtained from Kevin Brown, Director, Financial Assistance Programs
Division, Natural Resources Conservation Service, Room 5241-S,
Washington, DC 20250-2890, and electronically at http://www.nrcs.usda.gov/programs/csp/index.html
under ``Program
Information''.
Paperwork Reduction Act
Section 2702 of the Farm Security and Rural Investment Act of 2002
requires that the implementation of this provision be carried out
without regard to the Paperwork Reduction Act, Chapter 35 of title 44,
United States Code. Therefore, NRCS is not reporting record keeping or
estimated paperwork burden associated with this amendment.
Government Paperwork Elimination Act
NRCS is committed to compliance with the Government Paperwork
Elimination Act, which requires Government agencies, in general, to
provide the public the option of submitting information or transacting
business electronically to the maximum extent possible. To better
accommodate public access, NRCS is proposing to develop an online
application and information system for public use.
Executive Order 12988
This amendment has been reviewed in accordance with Executive Order
12988, Civil Justice Reform. The provisions of this interim final rule
are not retroactive. The provisions of this amendment preempt State and
local laws to the extent that such laws are inconsistent with this
amendment. Before an action may be brought in a Federal court of
competent jurisdiction, the administrative appeal rights afforded
persons at 7 CFR parts 614, 780, and 11 must be exhausted.
Federal Crop Insurance Reform and Department of Agriculture
Reorganization Act of 1994
Pursuant to section 304 of the Federal Crop Insurance Reform and
Department of Agriculture Reorganization Act of 1994 (Pub. L. 103-354),
USDA classified this rule as major and NRCS conducted a risk
assessment. The risk assessment examined environmental degradation of
soil, water and air quality, water quantity, and plant and wildlife
habitat in absence of the program. The risk assessment is available
upon request from Kevin Brown, Director, Financial Assistance Programs
Division, Natural Resources Conservation Service, P.O. Box 2890,
Washington, DC 20013-2890, and electronically at http://www.nrcs.usda.gov/programs/csp/index.html
under ``Program
Information''.
Unfunded Mandates Reform Act of 1995
NRCS assessed the effects of this rulemaking action on State,
local, and Tribal governments, and the public. This action does not
compel the expenditure of $100 million or more by any State, local, or
Tribal governments, or anyone in the private sector; therefore, a
statement under section 202 of the Unfunded Mandates Reform Act of 1995
is not required.
List of Subjects in 7 CFR Part 1469
Agricultural operations, Conservation practices, Conservation
stewardship contract, Conservation stewardship plan, Plant and animal
management, Soil and water conservation, Soil quality, Water and air
quality.
0
Accordingly, Title 7, Chapter XIV of the Code of Federal Regulations is
amended by revising part 1469 to read as follows:
PART 1469--CONSERVATION SECURITY PROGRAM
Subpart A--General Provisions
Sec.
1469.1 Applicability.
1469.2 Administration.
1469.3 Definitions.
1469.4 Significant resource concerns.
1469.5 Eligibility requirements.
1469.6 Enrollment criteria and selection process.
1469.7 Benchmark condition inventory and conservation stewardship
plan.
1469.8 Conservation practices and activities.
1469.9 Technical assistance.
Subpart B--Contracts and Payments
1469.20 Application for contracts.
1469.21 Contract requirements.
1469.22 Conservation practice operation and maintenance.
1469.23 Program payments.
1469.24 Contract modifications and transfers of land.
1469.25 Contract violations and termination.
Subpart C--General Administration
1469.30 Fair treatment of tenants and sharecroppers.
1469.31 Appeals.
1469.32 Compliance with regulatory measures.
1469.33 Access to agricultural operation.
1469.34 Performance based on advice or action of representatives of
NRCS.
1469.35 Offsets and assignments.
1469.36 Misrepresentation and scheme or device.
Authority: 16 U.S.C. 3830 et seq.
Subpart A--General Provisions
Sec. 1469.1 Applicability.
(a) This part sets forth the policies, procedures, and requirements
for the Conservation Security Program (CSP) as administered by the
Natural Resources Conservation Service (NRCS) for enrollment during
calendar year 2004 and thereafter.
(b) CSP is applicable only on privately owned or Tribal lands in
any of the 50 States, the District of Columbia, the Commonwealth of
Puerto Rico, Guam, the Virgin Islands of the United States, American
Samoa, and the Commonwealth of the Northern Marianna Islands.
(c) The Commodity Credit Corporation (CCC), by and through the
NRCS, provides financial assistance and technical assistance to
participants for the conservation, protection, and improvement of soil,
water, and other related resources, and for any similar conservation
purpose as determined by the Secretary.
Sec. 1469.2 Administration.
(a) The regulations in this part will be administered under the
general supervision and direction of the Chief, Natural Resources
Conservation Service (NRCS), who is a Vice President of the CCC.
(b) The Chief may modify or waive a provision of this part if the
Chief determines that the application of such provision to a particular
limited situation is inappropriate and inconsistent with the goals of
the program.
(c) The Chief determines fund availability to provide financial and
technical assistance to participants according to the purpose and
projected cost of contracts in a fiscal year. The Chief allocates the
funds available to carry out CSP to the NRCS State
[[Page 15213]]
Conservationist. Contract obligations will not exceed the funding
available to the Agency.
(d) The State Conservationist may obtain advice from the State
Technical Committee and local workgroups on the development of State
program technical policies, payment related matters, outreach efforts,
and other program issues.
(e) NRCS may enter into agreements with Federal agencies, State and
local agencies, conservation districts, Indian Tribes, private
entities, and individuals to assist NRCS with educational efforts,
outreach efforts, and program implementation assistance.
(f) For lands under the jurisdiction of an Indian Tribe or Tribal
Nation, certain items identified in paragraph (d) of this section may
be determined by the Indian Tribe or Tribal Nation and the NRCS Chief.
Sec. 1469.3 Definitions.
The following definitions apply to this part and all documents
issued in accordance with this part, unless specified otherwise:
Activity means an action other than a conservation practice that is
included as a part of a conservation stewardship contract; such as a
measure, incremental movement on a conservation index or scale, or an
on-farm demonstration, pilot, or assessment.
Agricultural land means cropland, rangeland, pastureland, hayland,
private non-industrial forest land if it is an incidental part of the
agricultural operation, and other land on which food, fiber, and other
agricultural products are produced. Areas used for strip-cropping or
alley-cropping and silvopasture practices will be included as
agricultural land. This includes land of varying cover types, primarily
managed through a low input system, for the production of food, fiber
or other agricultural products.
Agricultural operation means all agricultural land and other lands
determined by the Chief, whether contiguous or noncontiguous, under the
control of the applicant and constituting a cohesive management unit,
that is operated with equipment, labor, accounting system, and
management that is substantially separate from any other. The minimum
size of an agricultural operation is a field.
Applicant means a producer as defined in this rule who has
requested in writing to participate in CSP.
Beginning farmer or rancher means an individual or entity who:
(1) Has not operated a farm or ranch, or who has operated a farm or
ranch for not more than 10 consecutive years, as defined in 7 U.S.C.
1991(a). This requirement applies to all members of an entity; and
(2) Will materially and substantially participate in the operation
of the farm or ranch.
(i) In the case of a contract with an individual, solely, or with
the immediate family, material and substantial participation requires
that the individual provide substantial day-to-day labor and management
of the farm or ranch, consistent with the practices in the county or
State where the farm is located.
(ii) In the case of a contract with an entity, all members must
materially and substantially participate in the operation of the farm
or ranch. Material and substantial participation requires that each of
the members provide some amount of the management, or labor and
management necessary for day-to-day activities, such that if each of
the members did not provide these inputs, operation of the farm or
ranch would be seriously impaired.
Benchmark condition inventory means the documentation of the
resource condition or situation pursuant to Sec. 1469.7(a) that NRCS
uses to measure an applicant's existing level of conservation
activities in order to determine program eligibility, to design a
conservation stewardship contract, and to measure the change in
resource conditions resulting from conservation treatment.
Certified Conservation Planner means an individual certified by
NRCS who possesses the necessary skills, training, and experience to
implement the NRCS nine-step planning process to meet client objectives
in solving natural resource problems. The certified conservation
planner has demonstrated skill in assisting producers to identify
resource problems, to express the client's objectives, to propose
feasible solutions to resource problems, and assists the producers
select and implement an effective alternative that treats resource
concerns and consistent with client's objectives.
Chief means the Chief of NRCS, USDA or designee.
Conservation district means any district or unit of State or local
government formed under State, territorial, or Tribal law for the
express purpose of developing and carrying out a local soil and water
conservation program. Such a district or unit of government may be
referred to as a ``conservation district,'' ``soil conservation
district,'' ``soil and water conservation district,'' ``resource
conservation district,'' ``land conservation committee,'' or similar
name.
Conservation practice means a specified treatment, such as a
structural or land management practice, that is planned and applied
according to NRCS standards and specifications.
Conservation Reserve Program (CRP) means the Commodity Credit
Corporation program administered by the Farm Service Agency pursuant to
16 U.S.C. 3831-3836.
Conservation stewardship contract means a legal document that
specifies the rights and obligations of any participant who has been
accepted to receive assistance through participation in CSP.
Conservation stewardship plan means the conservation planning
document that builds on the inventory of the benchmark condition
documenting the conservation practices currently being applied; those
practices needing to be maintained; and those practices, treatments, or
activities to be supported under the provisions of the conservation
stewardship contract.
Conservation system means a combination of conservation practices,
measures and treatments for the treatment of soil, water, air, plant,
or animal resource concerns.
Conservation treatment means any and all conservation practices,
measures, and works of improvement that have the purpose of alleviating
resource concerns, solving or reducing the severity of natural resource
use problems, or taking advantage of resource opportunities.
Considered to be planted means a long term rotation of alfalfa or
multi-year grasses and legumes; summer fallow; typically cropped wet
areas, such as rice fields, rotated to wildlife habitat; or crops
planted to provide an adequate seedbed for re-seeding.
Cropland means a land cover/use category that includes areas used
for the production of adapted crops for harvest, including but not
limited to land in row crops or close-grown crops, forage crops that
are in a rotation with row or close-grown crops, permanent hayland,
horticultural cropland, orchards, and vineyards.
Designated conservationist means an NRCS employee whom the State
Conservationist has designated as responsible for administration of CSP
in a specific area.
Enhancement payment means CSP payments available to all tiers as
described in Sec. 1469.23(d).
Enrollment categories means a classification system used to sort
out applications for payment. The enrollment category mechanism will
[[Page 15214]]
create distinct classes for funding defined by resource concerns,
levels of treatment, and willingness to achieve additional
environmental performance.
Existing practice component of CSP payments means the component of
a CSP payment as described in Sec. 1469.23(b).
Field means a part of an agricultural operation which is separated
from the balance of the agricultural operation by permanent boundaries,
such as fences, permanent waterways, woodlands, and crop-lines in cases
where farming practices make it probable that such crop-line is not
subject to change, or other similar features.
Field Office Technical Guide (FOTG) means the official local NRCS
source of resource information and the interpretations of guidelines,
criteria, and standards for planning and applying conservation
treatments and conservation management systems. It contains detailed
information on the conservation of soil, water, air, plant, and animal
resources applicable to the local area for which it is prepared. Guides
can be reviewed at the local USDA Service Center or online at http://www.nrcs.usda.gov/technical/efotg
.
Forage and animal balance means that the total amount of available
grazing forage and the addition of any roughage supply (hay, silage, or
green chop) is balanced with the amount consumed by the total number of
livestock and wildlife to meet their daily consumption needs.
Forest land means a land cover/use category that is at least 10
percent stocked by single-stemmed woody species of any size that will
be at least 4 meters (13 feet) tall at maturity. Also included is land
bearing evidence of natural regeneration of tree cover (cut over forest
or abandoned farmland) that is not currently developed for nonforest
use. Ten percent stocked, when viewed from a vertical direction,
equates to an aerial canopy cover of leaves and branches of 25 percent
or greater. The minimum area for classification as forest land is 1
acre, and the area must be at least 100 feet wide. Exceptions may be
made by the Chief for land primarily managed through a low-input system
for food, fiber or other agricultural products.
Hayland means a subcategory of ``cropland'' managed for the
production of forage crops that are machine harvested. The crop may be
grasses, legumes, or a combination of both.
Incidental forest land means forested land that includes all
nonlinear forested riparian areas (i.e., bottomland forests), and small
associated woodlots located within the bounds of working agricultural
land or small adjacent areas and that are managed to maximize wildlife
habitat values and are within the NRCS FOTG standards for a wildlife
practice. However, silvopasture that meets NRCS practice standards will
be considered as pasture or range land and not incidental forestland
since silvopasture is one type of intense grazing system. Areas of
incidental forest land that are not part of a linear conservation
practice are limited individually in size to 10 acres or less and
limited to 10 percent in congregate of the total offered acres.
Indian Tribe means any Indian Tribe, band, Nation, or other
organized group or community, including any Alaska Native village or
regional or village corporation as defined in or established pursuant
to the Alaska Native Claims Settlement Act (43 U.S.C. 1601 et seq.)
that is recognized as eligible for the special programs and services
provided by the United States to Indians because of their status as
Indians.
Indian trust lands means real property in which:
(1) The United States holds title as trustee for an Indian or
Tribal beneficiary; or
(2) An Indian or Tribal beneficiary holds title and the United
States maintains a trust relationship.
Joint operation means a general partnership, joint venture, or
other similar business arrangement as defined in 7 CFR 718.2.
Land cover/use means a term that includes categories of land cover
and categories of land use. Land cover is the vegetation or other kind
of material that covers the land surface. Land use is the purpose of
human activity on the land; it is usually, but not always, related to
land cover. The National Resources Inventory uses the term land cover/
use to identify categories that account for all the surface area of the
United States.
Land management practice means conservation practices and measures
that primarily use site-specific management techniques and methods to
conserve, protect from degradation, or improve soil, water, air, or
related natural resources in the most cost-effective manner. Land
management practices include, but are not limited to, nutrient
management, energy management, manure management, integrated pest
management, integrated crop management, resource conserving crop
rotations, irrigation water management, tillage or residue management,
stripcropping, contour farming, grazing management, and wildlife
habitat management.
Limited resource producer means a producer:
(1) With direct or indirect gross farm sales not more than $100,000
in each of the previous two years (to be increased starting in FY 2004
to adjust for inflation using Prices Paid by Farmer Index as compiled
by National Agricultural Statistical Service (NASS)); and
(2) Who has a total household income at or below the national
poverty level for a family of four, or less than 50 percent of county
median household income in each of the previous 2 years (to be
determined annually using Commerce Department Data).
Liquidated damages means a sum of money stipulated in the
conservation stewardship contract which the participant agrees to pay
NRCS if the participant fails to adequately complete the contract. The
sum represents an estimate of the anticipated or actual harm caused by
the failure, and reflects the difficulties of proof of loss and the
inconvenience or non-feasibility of otherwise obtaining an adequate
remedy.
Local work group means representatives of local offices of FSA, the
Cooperative State Research, Education, and Extension Service, the
conservation district, and other Federal, State, and local government
agencies, including Indian Tribes, with expertise in natural resources
who advise NRCS on decisions related to implementation of USDA
conservation programs.
Maintenance means work performed to keep the applied conservation
practice functioning for the intended purpose during its life span.
Maintenance includes work to prevent deterioration of the practice,
repairing damage, or replacement of the practice to its original
condition if one or more components fail.
Management intensity means the degree and scope of practices or
measures taken by a producer which are beyond the quality criteria for
a given resource concern or beyond the minimum requirements of a
management practice, and which may qualify as additional effort
necessary to receive an enhancement payment.
Measure means one or more specific actions that is not a
conservation practice, but has the effect of alleviating problems or
improving the treatment of the resources.
Minimum level of treatment means the specific conservation
treatment NRCS requires that addresses a resource concern to a level
that meets or exceeds the quality criteria according to NRCS technical
guides or the minimum tier
[[Page 15215]]
requirements to address resource concerns as defined in Sec.
1469.5(e).
Nationally significant resource concerns means the significant
resource concerns identified by NRCS in this rule and in the sign-up
notice as basic program eligibility requirements.
New practice payment means the payment as described in Sec.
1469.23(c).
Operator means an individual, entity, or joint operation who is in
general control of the farming operations on the farm at the time of
application.
Participant means a producer who is accepted into CSP and any
signatory to a CSP contract.
Pastured cropland means a land cover/use category that includes
areas used for the production of pasture in grass-based livestock
production systems that could support adapted crops for harvest,
including but not limited to land in row crops or close-grown crops,
and forage crops that are in a rotation with row or close-grown crops.
Pastured cropland will receive the same stewardship payment as
cropland.
Pastureland means a land cover/use category of land managed
primarily for the production of introduced forage plants for grazing
animals and includes improved pasture. Pastureland cover may consist of
a single species in a pure stand, a grass mixture, or a grass-legume
mixture. Management usually consists of cultural treatments:
fertilization, weed control, reseeding or renovation, and control of
grazing.
Practice life span means the time period in which the conservation
practices are to be used and maintained for their intended purposes as
defined by NRCS technical references.
Priority resource concern means nationally significant resource
concerns and local resource concerns, approved by the Chief, for which
enhancement payments will be available.
Producer means an owner, operator, landlord, tenant, or
sharecropper who shares in the risk of producing any crop or livestock;
and is entitled to share in the crop or livestock available for
marketing from a farm (or would have shared had the crop or livestock
been produced).
Quality criteria means the minimally acceptable level of treatment
as defined in the technical guide of NRCS, required to achieve a
resource management system for identified resource considerations for a
particular land use.
Rangeland means a land cover/use category on which the climax or
potential plant cover is composed principally of native grasses,
grasslike plants, forbs, or shrubs suitable for grazing and browsing,
and introduced forage species that are managed like rangeland. This
term would include areas where introduced hardy and persistent grasses
are planted and such practices as deferred grazing, burning, chaining,
and rotational grazing are used, with little or no chemicals or
fertilizer being applied. Grasslands, savannas, prairie, many wetlands,
some deserts, tundra, coastal marshes and wet meadows are considered to
be rangeland. Certain communities of low forbs and shrubs, such as
mesquite, chaparral, mountain shrub, and pinyon-juniper, are also
included as rangeland.
Resource concern means the condition of natural resources that may
be sensitive to change by natural forces or human activity. Resource
concerns include the resource considerations listed in Section III of
the FOTG, such as soil erosion, soil condition, soil deposition, water
quality, water quantity, animal habitat, air quality, air condition,
plant suitability, plant condition, plant management, and animal
habitat and management.
Resource-conserving crop rotation means a crop rotation that
reduces erosion, maintains or improves soil fertility and tilth,
interrupts pest cycles, or conserves soil moisture and water and that
includes at least one resource-conserving crop, such as a perennial
grass, a legume grown for use as forage, seed for planting, or green
manure, a legume-grass mixture, a small grain grown in combination with
a grass or legume, whether inter-seeded or planted in rotation.
Resource management system means a system of conservation practices
and management relating to land or water use that is designed to
prevent resource degradation and permit sustained use of land, water,
and other natural resources, as defined in accordance with the
technical guide of NRCS.
Secretary means the Secretary of the U.S. Department of
Agriculture.
Sharecropper means an individual who performs work in connection
with the production of the crop under the supervision of the operator
and who receives a share of such crop in return for the provision of
such labor.
Sign-up notice means the public notification document that NRCS
provides to describe the particular requirements for a specific CSP
sign-up.
Significant resource concerns means the list of resource concerns,
identified by NRCS, associated with an agricultural operation that is
subject to applicable requirements under CSP, such as the additional
Tier II contract requirement.
Soil quality means resource concerns and/or opportunities related
to depletion of soil organic matter content through soil disturbance or
by sheet, rill, and wind erosion, and the physical condition of the
soil relative to ease of tillage, fitness as a seedbed, the impedance
to seedling emergence or root penetration, salinity, and overall soil
productivity.
State Conservationist means the NRCS employee authorized to direct
and supervise NRCS activities within a specified State, the Pacific
Basin, or the Caribbean Area.
State Technical Committee means a committee established by the
Secretary in a State pursuant to 16 U.S.C. 3861.
Stewardship payment means the CSP base payment component of the
payment as described in Sec. 1469.23(a).
Structural practice means a land-based conservation practice,
including vegetative practices, that involves establishing,
constructing, or installing a site-specific measure to conserve,
protect from degradation, or improve soil, water, air, or related
natural resources in the most cost-effective manner. Examples include,
but are not limited to, terraces, grassed waterways, tailwater pits,
livestock water developments, contour grass strips, filterstrips,
critical area plantings, tree planting, wildlife habitat, and capping
of abandoned wells.
Technical assistance means the activities as defined in 7 CFR part
1466.
Technical Service Provider means an individual, private-sector
entity, or public agency certified or approved by NRCS to provide
technical services through NRCS or directly to program participants, as
defined in 7 CFR part 652.
Tenant means one who rents land from another in consideration of
the payment of a specified amount of cash or amount of a commodity; or
one (other than a sharecropper) who rents land in consideration of the
payment of a share of the crops or proceeds there from.
Tier means one of the three levels of participation in CSP.
Water quality means resource concerns or opportunities, including
concerns such as excessive nutrients, pesticides, sediment,
contaminants, pathogens and turbidity in surface waters, and excessive
nutrients and pesticides in ground waters, and any other concerns
identified by state water quality agencies.
Watershed or regional resource conservation plan means a plan
developed for a watershed or other geographical area defined by the
stakeholders. The plan addresses identified resource problems, contains
alternative solutions that meet the stakeholder objectives for each
resource,
[[Page 15216]]
and addresses applicable laws and regulations as defined in the NRCS
National Planning Procedures Handbook.
Wetlands Reserve Program (WRP) means the Commodity Credit
Corporation program administered by NRCS pursuant to 16 U.S.C. 3837-
3837f.
Sec. 1469.4 Significant resource concerns.
(a) Soil quality and water quality are nationally significant
resource concerns for all land uses.
(b) For each sign-up, the Chief may determine additional nationally
significant resource concerns for all land uses. Such significant
resource concerns will reflect pressing conservation needs and
emphasize off-site environmental benefits. In addition, the Chief may
approve other priority resource concerns for which enhancement payments
will be offered for specific locations and land uses.
Sec. 1469.5 Eligibility requirements.
(a) In general--To be eligible to participate in CSP:
(1) Applicants must meet the requirements for eligible applicants,
including any additional eligibility criteria and contract requirements
that may be included in a CSP sign-up notice pursuant to Sec.
1469.6(c);
(2) Land must meet the definition of eligible land; and
(3) The application must meet the conservation standards
established pursuant to this section.
(b) Applicants may submit only one application for each sign-up.
Producers who are participants in an existing conservation stewardship
contract are not eligible to submit another application.
(c) Eligible applicants. To be eligible to participate, an
applicant must--
(1) Be in compliance with the highly erodible land and wetland
conservation provisions found in 7 CFR Part 12;
(2) Have control of the land for the life of the proposed contract
period.
(i) The Chief may make an exception for land allotted by the Bureau
of Indian Affairs (BIA), Tribal land, or other instances in which the
Chief determines that there is sufficient assurance of control; and
(ii) If the applicant is a tenant, the applicant must provide NRCS
with the written evidence or assurance of control from the landowner;
(3) Share in risk of producing any crop or livestock and be
entitled to share in the crop or livestock available for marketing from
the agricultural operation (landlords and owners are ineligible to
submit an application for exclusively cash rented agricultural
operations);
(4) Complete a benchmark condition inventory for the entire
agricultural operation or the portion being enrolled in accordance with
Sec. 1469.7(a); and
(5) Supply information, as required by NRCS, to determine
eligibility for the program, including but not limited to information
related to eligibility criteria in the sign-up notice, and information
to verify the applicant's status as a beginning or a limited resource
farmer or rancher.
(d) Eligible land:
(1) To be eligible for enrollment in CSP, land must be:
(i) Private agricultural land;
(ii) Private non-industrial forested land that is an incidental
part of the agricultural operation;
(iii) Agricultural land that is Tribal, allotted, or Indian trust
land;
(iv) Other incidental parcels, as determined by NRCS, which may
include, but are not limited to, land within the bounds of working
agricultural land or small adjacent areas (such as center pivot
corners, field borders, linear practices, turn rows, intermingled small
wet areas or riparian areas); or
(v) Other land on which NRCS determines that conservation treatment
will contribute to an improvement in an identified natural resource
concern, including areas outside the boundary of the agricultural land
such as farmsteads, ranch sites, barnyards, feedlots, equipment storage
areas, material handling facilities, and other such developed areas.
Other land must be treated in Tier III contracts; and
(vi) A majority of the agricultural operation must be within a
watershed selected for sign-up.
(2) The following land is not eligible for enrollment in CSP:
(i) Land enrolled in the Conservation Reserve Program;
(ii) Land enrolled in the Wetlands Reserve Program;
(iii) Land enrolled in the Grassland Reserve Program;
(iv) Public land including land owned by a Federal, State or local
unit of government;
(v) Land referred to in paragraphs (d)(2)(i), (ii) (iii) and (iv)
of this section may not receive CSP payments, but the conservation work
on this land may be used to determine if an applicant meets the minimum
level of treatment on the eligible land and may be described in the
conservation stewardship plan.
(3) The following land is not eligible for any payment component in
CSP: Land that is used for crop production after May 13, 2002, that had
not been planted, considered to be planted, or devoted to crop
production, as determined by NRCS, for at least 4 of the 6 years
preceding May 13, 2002.
(4) Delineation of the agricultural operation.
(i) The applicant will delineate the agricultural operation to
include all agricultural lands, other incidental parcels identified in
paragraph (d)(1)(iv) of this section, and other lands, identified in
paragraph (d)(1)(v) of this section under the control of the applicant
and constituting a cohesive management unit, and is operated with
equipment, labor, accounting system, and management that is
substantially separate from any other land.
(ii) In delineating the agricultural operation, USDA farm
boundaries may be used. If farm boundaries are used in the application,
the entire farm area must be included within the delineation. An
applicant may offer one farm or aggregate farms into one agricultural
operation and any other additional eligible land not within a farm
boundary.
(e) Conservation standards.
(1) Minimum tier eligibility requirements:
(i) An applicant is eligible to participate in CSP Tier I only if
the benchmark condition inventory demonstrates to the satisfaction of
NRCS that the applicant has addressed the nationally significant
resource concerns of Water Quality and Soil Quality to the minimum
level of treatment as specified in paragraphs (e)(2) and (3) of this
section on part of the eligible land uses within the agricultural
operation. Only the acreage meeting such requirements is eligible for
stewardship and existing practice payments in CSP.
(ii) An applicant is eligible to participate in CSP Tier II only if
the benchmark condition inventory demonstrates to the satisfaction of
NRCS that the applicant has addressed the nationally significant
resource concerns of water quality and soil quality to the minimum
level of treatment as specified in paragraphs (e)(2) and (3) of this
section for all eligible land uses on the entire agricultural
operation. Under Tier II, the entire agricultural operation must be
enrolled in CSP.
(iii) An applicant is eligible to participate in CSP Tier III only
if the benchmark condition inventory demonstrates to the satisfaction
of NRCS that the applicant has addressed all of the applicable resource
concerns to the minimum level of treatment as specified in paragraph
(e)(4) of this section for all eligible land uses on the entire
agricultural operation. Practices or activities shall not be required
for
[[Page 15217]]
participation in the program unless they would have an ultimate
conservation benefit as demonstrated by the Conservation Practice
Physical Effects matrix in the FOTG. Under Tier III, the entire
agricultural operation is enrolled in CSP including other land as
defined in Sec. 1469.5(d)(1)(v).
(2) The minimum level of treatment on cropland for Tier I and Tier
II:
(i) The minimum level of treatment for soil quality on cropland is
considered achieved when the Soil Conditioning Index value is positive.
(ii) The minimum level of treatment for water quality on cropland
is considered achieved if the benchmark inventory indicates that the
current level of treatment addresses the risks that nutrients,
pesticides, sediment, and salinity present to water quality by meeting
or exceeding the quality criteria for the specific resource concerns of
nutrients, pesticides, sediment and salinity for surface water and
nutrients, pesticides and salinity for ground water.
(iii) The Chief may make minor exceptions to criteria for areas,
such as tropical and tundra regions, where technology tools are being
refined or testing is needed to review performance data.
(3) The minimum level of treatment on pastureland and rangelands
for Tier I and Tier II is vegetation and animal management accomplished
by following a grazing management plan that provides for:
(i) A forage-animal balance;
(ii) Proper livestock distribution;
(iii) Timing of use; and
(iv) Managing livestock access to water courses.
(4) The minimum level of treatment for Tier III:
(i) The minimum level of treatment for Tier III is having a fully
implemented resource management system that meets the quality criteria
for the local NRCS FOTG for all applicable resource concerns and
considerations with the following exceptions:
(A) The minimum requirement for soil quality on cropland is
considered achieved when the Soil Conditioning Index value is positive;
(B) The minimum requirement for water quantity--irrigation water
management on cropland or pastureland is considered achieved when the
current level of treatment and management for the system results in a
water use index value of at least 50; and
(C) The minimum requirement for wildlife is considered achieved
when the current level of treatment and management for the system
results in an index value of at least 0.5 using a general or species
specific habitat assessment guide; and
(ii) All riparian corridors, including streams and natural
drainages, within the agricultural operation are buffered to restore,
protect, or enhance riparian resources. Riparian corridors, as
appropriate, will be managed or designed to intercept sediment,
nutrients, pesticides, and other materials in surface runoff; reduce
nutrients and other pollutants in shallow subsurface water flow; lower
water temperature; and provide litter fall or structural components for
habitat complexity or to slow out-of-bank floods.
(5) In the instance of a significant natural event, such as
drought, wildfire, pestilence, or flooding which would prevent the
participant or applicant from achieving the minimum requirements, those
requirements will be considered met so long as the participant or
applicant can provide documentation of their stewardship prior to such
an event.
Sec. 1469.6 Enrollment criteria and selection process.
(a) Selection and funding of priority watersheds.
(1) NRCS will prioritize watersheds based on a nationally
consistent process using existing natural resource, environmental
quality, and agricultural activity data along with other information
that may be necessary to efficiently operate the program. The watershed
prioritization and identification process will consider several
factors, including but not limited to:
(i) Potential of surface and ground water quality to degradation;
(ii) Potential of soil to degradation;
(iii) Potential of grazing land to degradation;
(iv) State or national conservation and environmental issues e.g.
location of air non-attainment zones or important wildlife/fisheries
habitat; and
(v) Local availability of management tools needed to more
efficiently operate the program, such as digital soils information.
(2) Priority watersheds selected, in which producers would be
potentially eligible for enrollment, will be announced in the sign-up
notice.
(b) Enrollment categories. The Chief may limit new program
enrollments in any fiscal year to enrollment categories designed to
focus on priority conservation concerns and enhancement measures. NRCS
will utilize enrollment categories to determine which contracts will be
funded in a given sign-up.
(1) Enrollment categories may be defined by criteria related to
resource concerns and levels of historic conservation treatment,
including the producer's willingness to achieve additional
environmental performance or conduct enhancement activities.
(2) All applications which meet the sign-up criteria within the
priority watersheds will be placed in an enrollment category regardless
of available funding.
(3) NRCS will develop subcategories within each enrollment category
and include them in the sign-up notice. The development of
subcategories may consider several factors, including:
(i) Willingness of the applicant to participate in local
conservation enhancement activities;
(ii) Targeting program participation for Limited Resource
Producers;
(iii) Targeting program participation to water quality priority
areas for nutrient or pest management;
(iv) Targeting program participation for locally important
wildlife/fisheries habitat creation and protection; and
(v) Other priorities as determined by the Secretary.
(4) At the beginning of each sign-up, the Chief will announce the
order in which categories and subcategories are eligible to be funded.
(5) All eligible applications will be placed in the highest
priority enrollment category and sub-category for which the application
qualifies.
(6) Enrollment categories and subcategories will be funded in
priority order until the available funds specified in the CSP sign-up
notice are exhausted.
(c) Sign-up process.
(1) NRCS will publish a CSP sign-up notice with sufficient time for
producers to consider the benefits of participation prior to the
opening of the sign-up period. In the public sign-up notice, the Chief
will announce and explain the rationale for decisions for the following
information:
(i) Any additional program eligibility criteria that are not listed
in Sec. 1469.5;
(ii) Any additional nationally significant resource concerns that
are not listed in Sec. 1469.4(a) that will apply;
(iii) Any additional requirements that participants must include in
their CSP applications and contracts that are not listed in Sec.
1469.21;
(iv) Information on the priority order of enrollment categories and
subcategories for funding contracts;
(v) Specific information on the level of funding that NRCS
estimates will go toward stewardship, existing practice, and
enhancement payments;
(vi) An estimate of the total funds NRCS expects to obligate under
new
[[Page 15218]]
contracts during a given sign-up, and an estimate for the number of
enrollment categories and contracts NRCS expects to be able to fund;
and
(vii) The schedule for the sign-up process, including the
deadline(s) for applying.
(2) NRCS will accept applications according to the timeframes
specified in the sign-up notice.
(d) Selection of contracts. (1) NRCS will determine whether the
application meets the eligibility criteria, and will place applications
into an enrollment category and subcategory based on the criteria
specified in the sign-up notice and into a Tier based on the criteria
in 1469.5(e). Enrollment categories will be funded in the order
designated in the sign-up notice until the available funding is
exhausted. NRCS will determine the number of categories that can be
funded in accordance with the sign-up notice, and will inform the
applicant of its determinations.
(2) NRCS will develop a conservation stewardship contract for the
selected applications. If the contract falls within the enrollment
categories and subcategories funded in the given sign-up, NRCS will
make payments as described in the contract in return for the
implementation and/or maintenance of a specified level of conservation
treatment on all or part of the agricultural operation.
Sec. 1469.7 Benchmark condition inventory and conservation
stewardship plan.
(a) The benchmark condition inventory and associated case file
information must include:
(1) A map, aerial photograph, or overlay that delineates the entire
agricultural operation, including land use and acreage;
(2) A description of the applicant's production system(s) on the
agricultural operation to be enrolled;
(3) The existing conservation practices and resource concerns,
problems, and opportunities on the operation;
(4) Other information needed to document existing conservation
treatment and activities, such as, grazing management, nutrient
management, pest management, and irrigation water management plans;
(5) A description of the significant resource concerns and other
resource concerns that the applicant is willing to address in their
contract through the adoption of new conservation practices and
measures; and,
(6) A list of enhancements that the applicant may be willing to
undertake as part of their contract.
(b) Conservation stewardship plan. (1) The conservation stewardship
plan and associated case file information must include:
(i) To the extent practicable, a quantitative and qualitative
description of the conservation and environmental benefits that the
conservation stewardship contract will achieve;
(ii) A plan map showing the acreage to be enrolled in CSP;
(iii) A verified benchmark condition inventory as described in
Sec. 1469.7(a);
(iv) A description of the significant resource concerns and other
resource concerns to be addressed in the contract through the adoption
of new conservation measures;
(v) A description and implementation schedule of--
(A) Individual conservation practices and measures to be maintained
during the contract, consistent with the requirements for the tier(s)
of participation and the relevant resource concerns and with the
requirements of the sign-up,
(B) Individual conservation practices and measures to be installed
during the contract, consistent with the requirements for the tier(s)
of participation and the relevant resource concerns,
(C) Eligible enhancement activities as selected by the applicant
and approved by NRCS, and
(D) A schedule for transitioning to higher tier(s) of
participation, if applicable;
(vi) A description of the conservation activities that is required
for a contract to include a transition to a higher tier of
participation;
(vii) Information that will enable evaluation of the effectiveness
of the plan in achieving its environmental objectives; and
(viii) Other information determined appropriate by NRCS and
described to the applicant.
(2) The conservation stewardship plan may be developed with
assistance from NRCS or NRCS-certified Technical Service Providers.
(3) All additional conservation practices in the conservation
stewardship plan for which new practice payments will be provided must
be carried out in accordance with the applicable NRCS FOTG.
Sec. 1469.8 Conservation practices and activities.
(a) Conservation practice and activity selection. (1) The Chief
will provide a list of structural and land management practices and
activities eligible for each CSP payment component. If the Chief's
designee provides the list, it will be approved by the Director of the
Financial Assistance Programs Division of NRCS. When determining the
lists of practices and activities and their associated rates, the Chief
will consider:
(i) The cost and potential conservation benefits;
(ii) The degree of treatment of significant resource concerns;
(iii) The number of resource concerns the practice or activity will
address;
(iv) Locally available technology;
(v) New and emerging conservation technology;
(vi) Ability to address the resource concern based on site specific
conditions; and,
(vii) The need for cost-share assistance for specific practices and
activities to help producers achieve higher management intensity levels
or to advance in tiers of eligibility.
(2) To address unique resource conditions in a State or region, the
Chief may make additional conservation practices, measures, and
enhancement activities eligible that are not included in the national
list of eligible CSP practices.
(3) NRCS will make the list of eligible practices and activities
and their individual payment rates available to the public.
(b) NRCS will consider the qualified practices and activities in
its computation of CSP payments except as provided for in paragraph (d)
of this section.
(c) NRCS will not make new practice payments for a conservation
practice the producer has applied prior to application to the program.
(d) New practice payments will not be made to a participant who has
implemented or initiated the implementation of a conservation practice
prior to approval of the contract, unless a waiver was granted by the
State Conservationist or the Designated Conservationist prior to the
installation of the practice.
(e) Where new technologies or conservation practices that show high
potential for optimizing environmental benefits are available, NRCS may
approve interim conservation practice standards and financial
assistance for pilot work to evaluate and assess the performance,
efficacy, and effectiveness of the technology or conservation
practices.
(f) NRCS will set the minimum level of treatment within land
management practices at the national level; however, the State
Conservationist may supplement specific criteria to meet localized
conditions within the State or areas.
Sec. 1469.9 Technical assistance.
(a) NRCS may use the services of NRCS-approved or certified
Technical
[[Page 15219]]
Service Providers in performing its responsibilities for technical
assistance.
(b) Technical assistance may include, but is not limited to:
Assisting applicants during sign-up, processing and assessing
applications, assisting the participant in developing the conservation
stewardship plan; conservation practice survey, layout, design,
installation, and certification; information, education, and training
for producers; and quality assurance activities.
(c) NRCS retains approval authority over the certification of
technical assistance done by non-NRCS personnel.
(d) NRCS retains approval authority of the conservation stewardship
contracts and contract payments.
(e) Conservation stewardship plans will be developed by NRCS
certified conservation planners.
Subpart B--Contracts and Payments
Sec. 1469.20 Application for contracts.
(a) Applications must include:
(1) A completed self-assessment workbook;
(2) Benchmark condition inventory and conservation stewardship plan
in accordance with Sec. 1469.7 for the eligible land uses on the
entire operation or, if Tier I, for the portion being enrolled;
(3) Any other requirements specified in the sign-up notice;
(4) For Tier I, clear indication of which acres the applicant
wishes to enroll in the CSP; and,
(5) A certification that the applicant will agree to meet the
relevant contract requirements outlined in the sign-up notice.
(b) Producers who are members of a joint operation, trust, estate,
association, partnership or similar organization must file a single
application for the joint operation or organization.
(c) Producers can submit only one application per sign-up.
(d) Participants can only have one active contract at any one time.
Sec. 1469.21 Contract requirements.
(a) To receive payments, each participant must enter into a
conservation stewardship contract and comply with its provisions. Among
other provisions, the participant agrees to maintain at least the level
of stewardship identified in the benchmark inventory for the portion of
land being enrolled for the entire contract period, as appropriate, and
implement and maintain any new practices or activities required in the
contract.
(b) Program participants will only receive payments from one
conservation stewardship contract.
(c) CSP participants must address the following requirements or
additional resource concerns to the minimum level of treatment by the
end of their conservation stewardship contract:
(1) Tier I contract requirement: additional practices and
activities as included by the applicant in the conservation stewardship
plan and approved by NRCS, over the part of the agricultural operation
enrolled in CSP.
(2) Tier II contract requirements:
(i) Address an additional locally significant resource concern, as
described in section III of the NRCS FOTG over the entire agricultural
operation. Applicants may satisfy this requirement by demonstrating
that the locally significant resource concern is not applicable to
their operation or that they have already addressed it in accordance
with NRCS'; quality criteria; and
(ii) Additional practices and activities as included by the
applicant in the conservation stewardship plan and approved by NRCS,
over the entire agricultural operation, where applicable.
(3) Tier III contract requirement: additional practices and
activities as included by the applicant in the conservation stewardship
plan and approved by NRCS, over the entire agricultural operation,
where applicable.
(d) Transition to a higher tier of participation. (1) Upon
agreement by NRCS and the participant, a conservation stewardship
contract may include provisions that lead to a higher tier of
participation during the contract period. Such a transition does not
require a contract modification if that transition is laid out in the
schedule of contract activities. In the event that such a transition
begins with Tier I, only the land area in the agricultural operation
that meets the requirements for enrollment in Tier I can be enrolled in
the contract until the transition occurs. Upon transition from Tier I
to a higher tier of participation, the entire agricultural operation
must be incorporated into the contract. All requirements applicable to
the higher tier of participation would then apply. NRCS will calculate
all stewardship, existing practice, new practice payments, and
enhancement payments using the applicable enrolled acreage at the time
of the payment.
(2) A contract which transitions to higher tier(s) of participation
must include:
(i) A schedule for the activities associated with the
transition(s);
(ii) A date certain by which time the transition(s) must occur;
and,
(iii) A specification that the CSP payment will be based on the
current Tier of participation, which may change over the life of the
contract.
(3) A contract which transitions to a higher tier will be modified
to receive the higher payments once the required level of treatment has
been achieved and field verified by NRCS.
(4) A contract which includes a transition from Tier I to Tier II
or III may be adjusted in length up to 10 years beginning from the
original contract date.
(e) A conservation stewardship contract must:
(1) Incorporate by reference the conservation stewardship plan;
(2) Be for 5 years for Tier I, and 5 to 10 years for Tier II or
Tier III;
(3) Incorporate all provisions as required by law or statute,
including participant requirements to--
(i) Implement and maintain the practices as identified and
scheduled in the conservation stewardship plan, including those needed
to be eligible for the specified tier of participation and comply with
any additional sign-up requirements,
(ii) Not conduct any practices on the farm or ranch that tend to
defeat the purposes of the contract,
(iii) Comply with the terms of the contract, or documents
incorporated by reference into the contract. NRCS will give the
participant a reasonable time, as determined by the State
Conservationist, to correct any violation and comply with the terms of
the contract and attachments thereto. If a violation continues, the
State Conservationist may terminate the conservation stewardship
contract, and
(iv) Supply records and information as required by CCC to determine
compliance with the contract and requirements of CSP;
(4) Specify the requirements for operation and maintenance of the
applied conservation practices;
(5) Specify the schedule of payments under the life of the
contract, including how those payments--
(i) Relate to the schedule for implementing additional conservation
measures as described in the conservation stewardship plan,
(ii) Relate to the actual implementation of additional conservation
measures as described in the conservation stewardship plan, and
(iii) May be adjusted by NRCS if the participant's management
decisions change the appropriate set or schedule
[[Page 15220]]
of conservation measures on the operation; and,
(6) Incorporate any other provisions determined necessary or
appropriate by NRCS, or included as a requirement for the sign-up.
(f) Practices scheduled in contracts must be applied and maintained
within the timelines specified in the contract.
(g) Contracts expire on September 30 in the last year of the
contract.
(h) Participants must:
(1) Implement the conservation stewardship contract approved by
NRCS;
(2) Make available to NRCS, appropriate records showing the timely
implementation of the contract;
(3) Comply with the regulations of this part; and
(4) Not engage in any activity that interferes with the purposes of
the program, as determined by NRCS.
(i) NRCS will determine the payments under the contract as
described in Sec. 1469.23.
(j) For contracts encompassing the entire agricultural operation,
the geographic boundaries of the acreage enrolled in the contract must
include all fields and facilities under the participant's direct
control, as determined by NRCS.
Sec. 1469.22 Conservation practice operation and maintenance.
(a) The contract will incorporate the operation and maintenance of
the conservation practice(s) applied under the contract.
(b) The participant must operate and maintain any new conservation
practice(s) for which a payment was received to ensure that the new
practice or enhancement achieves its intended purpose for the life span
of the conservation treatment, as identified in the contract or
conservation stewardship plan, as determined by NRCS.
(c) Conservation practices that are installed before the execution
of a contract, but are needed in the contract to obtain the intended
environmental benefits, must be operated and maintained as specified in
the contract whether or not an existing practice payment is made.
(d) NRCS may periodically inspect the conservation practices during
the practice lifespan as specified in the contract to ensure that
operation and maintenance are being carried out, and that the practice
is fulfilling its intended objectives. When NRCS finds that a
participant is not operating and maintaining practices installed
through the CSP in an appropriate manner, NRCS will initiate contract
violation procedures as specified in Sec. 1469.25. If an existing
practice is part of a system that meets the quality criteria, but does
not technically meet NRCS minimum practice standards, the practice must
be modified or updated to meet the standard according the FOTG as
specified in Sec. 1469.25(a) of this part.
Sec. 1469.23 Program payments.
(a) Stewardship component of CSP payments. (1) The conservation
stewardship plan, as applicable, divides the land area to be enrolled
in the CSP into land use categories, such as irrigated and non-
irrigated cropland, irrigated and non-irrigated pasture, pastured
cropland and range land, among other categories.
(2) NRCS will determine an appropriate stewardship payment rate for
each land use category using the following methodology:
(i) NRCS will initially calculate the average 2001 rates using the
Agriculture Foreign Investment Disclosure Act (AFIDA) Land Value
Survey, the National Agriculture Statistics Service (NASS) land rental
data, and Conservation Reserve Program (CRP) rental rates.
(ii) Where typical rental rates for a given land use vary widely
within a State or between adjacent States, NRCS will adjust the county-
level rates to ensure local and regional consistency and equity.
(iii) The State Conservationists can also contribute additional
local data, with advice from the State Technical Committee.
(iv) The final stewardship payment rate will be the adjusted
regional rates described in paragraph (a)(2)(i) through (iii) of this
section multiplied by a reduction factor of 0.25 for Tier I, 0.50 for
Tier II, and 0.75 for Tier III.
(v) Pastured cropland will receive the same stewardship payment as
cropland.
(3) NRCS will compute the stewardship component of the CSP payment
as the product of: the number of acres in each land use category (not
including ``other'' or land not in the applicant's control); the
corresponding stewardship payment rate for the applicable acreage; and
a tier-specific percentage. The tier-specific percentage is 5 percent
for Tier I payments, 10 percent for Tier II payments, and 15 percent
for Tier III payments.
(4) Other incidental parcels as defined in Sec. 1469.5(d)(1)(iv)
may be given a stewardship rate as though they were the land use to
which they are contiguous if they are serving a conservation purpose,
such as wildlife habitat. Payment is limited to not more than ten
percent of the contract acres. Minimum treatment requirements for the
contract tier apply.
(5) Other land, as defined in Sec. 1469.5(d)(1)(v), is not
included in the stewardship payment computation.
(6) NRCS will publish the stewardship payment rates at the
announcement of each program sign-up.
(b) Existing practice component of CSP payments. (1) The Chief will
determine and announce which practices will be eligible for existing
practice payments in accordance with Sec. 1469.8(a).
(2) With exceptions including, but not limited to, paragraph (b)(3)
and (4) of this section, NRCS may pay the participant a percentage of
the average 2001 county cost of maintaining a land management, and
structural practice that is documented in the benchmark condition
inventory as existing upon enrollment in CSP. The Chief may offer
alternative payment methods such as paying a percentage of the
stewardship payment as long as the payment will not exceed 75 percent
(or, in the case of a beginning farmer or rancher, 90 percent) of the
average 2001 county costs of installing the practice in the 2001 crop
year. NRCS will post the rates for payment at the time of the sign-up
notices on the NRCS website and in USDA Service Centers.
(3) NRCS will not pay for maintenance of equipment.
(4) NRCS will not pay an existing practice component of CSP
payments for any practice that is required to meet conservation
compliance requirements found in 7 CFR Part 12.
(5) Existing practice payments are not intended to pay for routine
maintenance activities related to production practices or practices
considered typical in farm and ranch operations for a specific
location.
(6) Existing practice payments will be made only on practices that
meet or exceed the practice standards described in the FOTG.
(7) The Chief may reduce the rates in any given sign-up notice.
(c) New practice payments. (1) The Chief will determine and
announce which practices will be eligible for new practice payments in
accordance with Sec. 1469.8(a).
(2) If the conservation stewardship contract requires the
implementation of a new structural or land management practice, NRCS
may pay a percentage of the cost of installing the new practice. NRCS
will provide the list of approved practices and the percentage cost-
share rate for each practice at the time of each CSP sign-up notice.
(3) Participants may contribute to their share of the cost of
installing a new
[[Page 15221]]
practice through in-kind sources, such as personal labor, use of
personal equipment, or donated materials. Contributions for a
participant's share of the practice may also be provided from non-
Federal sources, as determined by the Chief.
(4) Cost-share payments may be provided by other programs; except
that payments may not be provided through CSP and another program for
the same practice on the same land area.
(5) If additional practices are installed or implemented to advance
a contract from one tier of participation to a higher tier, the
practice must be certified as meeting FOTG practice standards by NRCS.
(6) In no instance will the total financial contributions for
installing a practice from all public and private entity sources exceed
100 percent of the actual cost of installing the practice.
(7) NRCS will not pay a new practice payment for any practice that
is required to meet the conservation compliance plan requirements found
in 7 CFR Part 12.
(8) The Chief may reduce the rates in any given sign-up notice.
(d) Enhancement component of CSP payments. (1) The Chief will
establish a list of conservation practices and activities that are
eligible for enhancement payments for a given sign-up. State
Conservationists, with advice from the State Technical Committees, will
tailor the list to meet the needs of the selected watersheds and submit
to the Chief for concurrence.
(2) NRCS may pay an enhancement component of a CSP payment if a
conservation stewardship plan demonstrates to the satisfaction of NRCS
that the plan's activities will increase conservation performance
including activities related to energy management as a result of
additional effort by the participant and result in:
(i) The improvement of a resource concern by implementing or
maintaining multiple conservation practices or measures that exceed the
minimum eligibility requirements for the contract's Tier of
participation as outlined in the sign-up notice and as described in
Sec. 1469.5(e) and the contract requirements in Sec. 1469.21; or
(ii) An improvement in a local resource concern based on local
priorities and in addition to the national significant resource
concerns, as determined by NRCS.
(3) NRCS may also pay an enhancement component of a CSP payment if
a participant:
(i) Participates in an on-farm conservation research,
demonstration, or pilot project as outlined in the sign-up notice; or
(ii) Cooperates with other producers to implement watershed or
regional resource conservation plans that involve at least 75 percent
of the producers in the targeted area; or
(iii) Carries out assessment and evaluation activities relating to
practices included in the conservation stewardship plan as outlined in
the sign-up notice.
(4) NRCS will not pay the enhancement component of a CSP payment
for any practice that is required to meet the conservation compliance
plan requirements found in 7 CFR Part 12.
(5) Eligible enhancement payments. (i) State Conservationists, with
advice from the State Technical Committees, will develop proposed
enhancement payment amounts for each practice and activity.
(ii) An enhancement payment will be made to encourage a producer to
perform or continue a management practice or activity, resource
assessment and evaluation project, or field-test a research,
demonstration, or pilot project that produces enhanced environmental
performance and benefits or produces information and data to improve a
resource concern or update the NRCS technical guides. Enhancement
payments will be:
(A) For activities where NRCS can demonstrate the economic value of
the environmental benefits, based on a given activity's expected
environmental benefit value. The payment may not exceed the activity's
expected economic value; or
(B) For activities where NRCS cannot demonstrate the economic value
of the environmental benefits, a rate that will not exceed a producer's
cost to implement a given activity.
(iii) NRCS will post the list of approved enhancement activities
and payment amounts for each activity concurrent with the CSP sign-up
notice.
(6) The Chief may set a not-to-exceed limit or variable payment
rate for the enhancement payment in any given sign-up notice.
(7) Enhancements above the minimum criteria for the resource
concern that are included in the benchmark inventory may be included in
the first CSP payment.
(e) Contracts will be limited as follows:
(1) $20,000 per year for a Tier I conservation stewardship
contract,
(2) $35,000 per year for a Tier II conservation stewardship
contract, or
(3) $45,000 per year for a Tier III conservation stewardship
contract.
(4) Stewardship components of CSP payments cannot exceed $5,000 per
year for Tier I, $10,500 per year for Tier II, or $13,500 per year for
Tier III.
(5) The new practice payment will not exceed 50 percent of the
average county costs of installing the practice (or a similar practice,
if new) in the 2001 crop year with the exception of beginning and
limited resource producers, in which case the new practice payment may
be up to 65 percent.
(f) The new practice and enhancement components of the conservation
stewardship contract payment may increase once the participant applies
and agrees to maintain additional conservation practices and activities
as described in the conservation stewardship plan.
(g) The Chief of NRCS may limit the stewardship, practice, and
enhancement components of CSP payments in order to focus funding toward
targeted activities and conservation benefits the Chief identifies in
the sign-up notice and any subsequent addenda.
(h) In the event that annual funding is insufficient to fund
existing contract commitments, the existing contracts will be pro-rated
in that contract year.
(i) NRCS may not make any payments to participants for:
(1) Practices within their conservation stewardship plan that are
required to meet conservation compliance requirements found in 7 CFR
Part 12;
(2) Practices that are included in maintenance agreements (with
financial reimbursements for maintenance) that existed prior to the
conservation stewardship contract approval;
(3) Construction or maintenance of animal waste storage or
treatment facilities or associated waste transport or transfer devices
for animal feeding operations;
(4) The purchase or maintenance of equipment;
(5) A non-land based structure that is not integral to a land based
practice, as determined by the Chief; or
(6) New practices that were applied with cost-share assistance
through other USDA cost-share programs.
Sec. 1469.24 Contract modifications and transfers of land.
(a) Contracts may be modified:
(1) At the request of the participant, if the modification is
consistent with the purposes of the conservation security program, or;
(2) As required by the State Conservationist due to changes to the
type, size, management, or other aspect of the agricultural operation
that would interfere with achieving the purposes of the program.
[[Page 15222]]
(b) Participants may request a modification to their contract to
change their tier of participation under a conservation stewardship
contract once the measures determined necessary by NRCS to meet the
next tier level have been established.
(c) Contract transfers are permitted when there is agreement among
all parties to the contract and the contract area remains intact.
(1) NRCS must be notified within 60 days of the transfer of
interest and the transferee's acceptance of the contract terms and
conditions, or the contract will be terminated.
(2) The transferee must be determined by NRCS to be eligible and
must assume full responsibility under the contract, including operation
and maintenance of those conservation practices and activities already
undertaken and to be undertaken as a condition of the contract.
Sec. 1469.25 Contract violations and termination.
(a) If the NRCS determines that a participant is in violation of
the terms of a contract, or documents incorporated by reference into
the contract, NRCS will give the participant a reasonable time, as
determined by the State Conservationist, to correct the violation and
comply with the terms of the contract and attachments thereto. If the
violation continues, the State Conservationist may terminate the
conservation stewardship contract.
(b) Notwithstanding the provisions of paragraph (a) of this
section, a contract termination is effective immediately upon a
determination by the State Conservationist that the participant has:
submitted false information; filed a false claim; engaged in any act
for which a finding of ineligibility for payments is permitted under
this part; or taken actions NRCS deems to be sufficiently purposeful or
negligent to warrant a termination without delay.
(c) If NRCS terminates a contract due to breach of contract, the
participant will forfeit all rights for future payments under the
contract, and must refund all or part of the payments received, plus
interest, and liquidated damages as determined in accordance with part
1403 of this chapter. The State Conservationist may require only
partial refund of the payments received if a previously installed
conservation practice can function independently, is not affected by
the violation or other conservation practices that would have been
installed under the contract, and the participant agrees to operate and
maintain the installed conservation practice for the life span of the
practice.
(d) If NRCS terminates a contract due to breach of contract, or the
participant voluntarily terminates the contract before any contractual
payments have been made, the participant will forfeit all rights for
further payments under the contract, and must pay such liquidated
damages as are prescribed in the contract. The State Conservationist
has the option to waive the liquidated damages, depending upon the
circumstances of the case.
(e) When making any contract termination decisions, the State
Conservationist may reduce the amount of money owed by the participant
by a proportion which reflects the good faith effort of the participant
to comply with the contract, or the hardships beyond the participant's
control that have prevented compliance with the contract including
natural disasters or events.
(f) The participant may voluntarily terminate a contract, without
penalty or repayment, if the State Conservationist determines that the
contract terms and conditions have been fully complied with before
termination of the contract.
(g) In carrying out this section, the State Conservationist may
consult with the local conservation district.
Subpart C--General Administration
Sec. 1469.30 Fair treatment of tenants and sharecroppers.
Payments received under this part must be divided in the manner
specified in the applicable contract or agreement, and NRCS will ensure
that potential participants who would have an interest in acreage being
offered receive treatment which NRCS deems to be equitable, as
determined by the Chief. NRCS may refuse to enter into a contract when
there is a disagreement among multiple applicants seeking enrollment as
to an applicant's eligibility to participate in the contract as a
tenant.
Sec. 1469.31 Appeals.
(a) An applicant or a participant may obtain administrative review
of an adverse decision under CSP in accordance with parts 11 and 614,
Subparts A and C, of this title, except as provided in paragraph (b) of
this section.
(b) Participants cannot appeal the following decisions:
(1) Payment rates, payment limits, and cost-share percentages;
(2) Eligible conservation practices; and,
(3) Other matters of general applicability.
(c) Before a participant can seek judicial review of any action
taken under this part, the participant must exhaust all administrative
appeal procedures set forth in paragraph (a) of this section, and for
purposes of judicial review, no decision will be a final agency action
except a decision of the Chief under these procedures.
Sec. 1469.32 Compliance with regulatory measures.
Participants who carry out conservation practices are responsible
for obtaining the authorities, permits, easements, or other approvals
necessary for the implementation, operation, and maintenance of the
conservation practices in keeping with applicable laws and regulations.
Participants must comply with all laws and are responsible for all
effects or actions resulting from their performance under the contract.
Sec. 1469.33 Access to agricultural operation.
Any authorized NRCS representative has the right to enter an
agricultural operation for the purpose of ascertaining the accuracy of
any representations made in a contract or in anticipation of entering a
contract, as to the performance of the terms and conditions of the
contract. Access includes the right to provide technical assistance,
inspect any work undertaken under the contract, and collect information
necessary to evaluate the performance of conservation practices in the
contract. The NRCS representative will make a reasonable effort to
contact the participant prior to the exercise of this provision.
Sec. 1469.34 Performance based on advice or action of representatives
of NRCS.
If a participant relied upon the advice or action of any authorized
representative of CCC, and did not know or have reason to know that the
action or advice was improper or erroneous, the State Conservationist
may accept the advice or action as meeting the requirements of CSP. In
addition, the State Conservationist may grant relief, to the extent it
is deemed desirable by CCC, to provide a fair and equitable treatment
because of the good faith reliance on the part of the participant.
Sec. 1469.35 Offsets and assignments.
(a) Except as provided in paragraph (b) of this section, NRCS will
make any payment or portion thereof to any participant without regard
to questions of title under State law and without regard to any claim
or lien against the crop, or proceeds thereof, in favor of the owner or
any other creditor except agencies of the U.S. Government. The
regulations governing offsets and withholdings found at 7 CFR part 1403
are applicable to contract payments.
[[Page 15223]]
(b) Any producer entitled to any payment may assign any payments in
accordance with regulations governing assignment of payment found at 7
CFR part 1404.
Sec. 1469.36 Misrepresentation and scheme or device.
(a) If the Department determines that a participant erroneously
represented any fact affecting a CSP determination made in accordance
with this part, the participant's conservation stewardship contract
will be terminated immediately in accordance with Sec. 1469.25(b). The
participant will forfeit all rights for future contract payments, and
must refund payments received, plus interest, and liquidated damages as
described in Sec. 1469.25.
(b) A producer who is determined to have knowingly:
(1) Adopted any scheme or device that tends to defeat the purpose
of CSP;
(2) Made any fraudulent representation; or
(3) Misrepresented any fact affecting a CSP determination, must
refund to NRCS all payments, plus interest, and liquidated damages as
determined in accordance with Sec. 1469.25 received by such
participant with respect to all contracts. In addition, NRCS will
terminate the participant's interest in all conservation stewardship
contracts.
(c) If the producer acquires land subsequent to enrollment in CSP,
that land is not considered part of the agricultural operation;
however, if the land was previously owned or controlled by them before
the date of enrollment and after May 13, 2002, then NRCS will conduct
an investigation into the activity to see if there was a scheme or
device.
Signed in Washington, DC, on March 18, 2005.
Bruce I. Knight,
Vice President, Commodity Credit Corporation, Chief, Natural Resources
Conservation Service.
[FR Doc. 05-5894 Filed 3-24-05; 8:45 am]
BILLING CODE 3410-16-P