ATTACHMENT 3

[**General Procedure**:]{.underline} **The following guidance is to be
used when cancelling or terminating contracts:**

**Designated Conservationist Action: Participant requests contract
cancellation:**

1.  The Designated Conservationist (DC) will send a letter to the
    participant describing the contract cancellation and reminding them
    of the terms contained in the appendix regarding cost recovery. The
    letter will include the Natural Resources Conservation Service
    (NRCS) LTP-153 form with all potential cost recovery calculated and
    documented in section 3. The DC will not make a recommendation of
    waiver or reduction in cost recovery on the NRCS LTP-153.

2.  After 30 days from the date letter is sent to participant and no
    response in original request is indicated or communicated to DC, a
    letter will be prepared and sent to the Area Conservationist (AC)
    describing the participant's request in detail and the recommended
    action. The DC will provide the contract cancellation worksheet
    (Appendix 1), a signed copy of the NRCS LTP-153 form, and
    documentation that clearly support circumstances such as hardship,
    good faith effort, and involuntary loss of control of land.
    Likewise, the DC will provide recommendation for waiver or
    reductions in cost recovery to the AC if documented and justified.

3.  The DC will provide an appeal administrative record to Area Office
    upon request.

    **Designated Conservationist Action: Non-Compliance (Terminations)**

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1.  If contract is in non-compliance and clearly documented in contract
    folder, and the participant has been provided reasonable opportunity
    to rectify deficiencies, the DC will send a letter identifying the
    deficiencies and the Agency's intent to terminate the contract based
    on non compliance with the terms and conditions of the contract. The
    letter will include the NRCS LTP-153 form with all potential cost
    recovery calculated and documented in section 3. The DC will not
    make a recommendation of waiver or reduction in cost recovery on the
    NRCS LTP-153.

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1.  The letter is sent certified mail with return receipt requested.

2.  If no corrective action is taken by the participant within 45 days
    of the receipt of the certified letter, the DC will send
    documentation to the AC describing in detail the situation,
    timeframe and recommended actions. The DC will provide the AC the
    contract termination worksheet (Appendix 2), a signed copy of the
    NRCS LTP-153 form, and documentation that clearly support
    circumstances such as hardship, good faith effort, and involuntary
    loss of control of land. Likewise, the DC will provide
    recommendation for waiver or reductions in cost recovery to AC if
    properly documented and justified.

3.  The DC will provide an appeal administrative record to Area Office
    upon request.

    **Area Conservationist Action:**

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1.  The AC will send official letter(s) and a copy of the signed NRCS
    LTP-153 to the contract holder clearly stating actions being taken,
    cost recovery assessments and appeal rights as applicable. The most
    up-to-date Appeals Procedures will be followed. Presently, the NRCS
    Appeals Procedure are those in 7 CFR 614 issued in the Federal
    Register on May 6, 2006, and in the Conservation Program Contracting
    Manual CPM 440 Part 512.57 issued December 2007. Appeal letter(s)
    sent to contract holder will be "carbon copied" to the Assistant
    State Conservationist-Programs (ASTC-P).

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1.  The AC will provide consistency and equitable administration by
    using cost recovery tables and adequate documentation for any
    variances. The AC will represent the State Conservationist (SC)
    during an informal appeal, appeal to the Farm Service Agency (FSA)
    County Committee, Mediation or National Appeals Division hearing.
    The ASTC-P and State office (SO) programs staff will assist as
    requested.

2.  The Area office will establish and maintain files tracking
    decisions, timelines, and cost recovery for all contract
    cancellations and terminations. A copy of the signed, completed NRCS
    LTP-153 contract cancellation or termination form and cost recovery
    payments will be forwarded to the ASTC-P.

3.  When a contract is cancelled or terminated, or the appeal is
    otherwise concluded, the AC or designee will complete the following
    action:

> a\. Update the contract status to cancelled or terminated in
> Protracts.
>
> b\. Instruct the DC to write "cancelled" or "terminated" and the
> effective date of
>
> termination on the contract documents and in the case file tech notes.
> (The
>
> contract cancellation or termination date is that date when the
> appeals process is
>
> complete.)

**State Office Action:**

1\. The ASTC-P and/or staff will provide training on cancellation and
termination policy and the appeals process. The AC will also be provided
an Excel spreadsheet template for tracking the cancellation, termination
process, appeals and cost recovery timelines.

2\. The ASTC-P and/or staff will work with the AC during mediation and
appeals to the National Appeals Division (NAD) and at any other time
during the appeals process as requested.

3\. The ASTC-P and/or staff will process cost recovery payments received
through the Area offices.

4\. The ASTC-P and/or staff will provide a minimum of 5% quality review
for each Area on all terminated or cancelled contracts on a fiscal year
basis.

5\. The ASTC-P and/or staff will provide guidance on those situations
that are unusual, extraordinary and or outside the situations noted on
the cost recovery tables.