a

GAO

United States Government Accountability Office

Report to the Chairman, Committee on 

Appropriations, U.S. Senate

April 2006 CONSERVATION 

SECURITY PROGRAM

Despite Cost Controls, 

Improved USDA 

Management Is 

Needed to Ensure 

Proper Payments and 

Reduce Duplication 

with Other Programs

GAO-06-312
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

April 2006

CONSERVATION SECURITY PROGRAM

Despite Cost Controls, Improved USDA 

Management Is Needed to Ensure Proper 

Payments and Reduce Duplication with 

Other Programs 

Highlights of GAO-06-312, a report to the 

Chairman, Committee on Appropriations, 

U.S. Senate 

The Conservation Security 

Program (CSP)—called for in the 

2002 farm bill and administered by 

the U.S. Department of

Agriculture’s (USDA) Natural 

Resources Conservation Service 

(NRCS)—provides financial 

assistance to producers to reward

past conservation actions and to 

encourage further conservation 

stewardship. CSP payments may be 

made for structural or land

management practices, such as

strip cropping to reduce erosion. 

CSP has raised concerns among

some stakeholders because CSP 

cost estimates generally have

increased since the 2002 farm bill’s 

enactment. For example, the 

Congressional Budget Office’s 

estimate increased from $2 billion 

in 2002 to $8.9 billion in 2004. 

GAO determined (1) why CSP cost

estimates generally increased; (2) 

what authority USDA has to

control costs and what cost control

measures exist; and (3) what 

measures exist to prevent

duplication between CSP and other 

USDA conservation programs and 

what duplication, if any, has 

occurred. 

What GAO Recommends

GAO recommends, in part, that 

NRCS review its state offices’ 

wildlife habitat assessment criteria

and develop a process to preclude

and identify duplicate payments. 

NRCS generally agreed with GAO’s 

findings and recommendations. 

Various factors explain why estimates of CSP costs generally increased since 

the 2002 farm bill’s enactment. Of most importance, little information was 

available regarding how this program would be implemented at the time of 

its inception in 2002. As more information became available, cost estimates

rose. In addition, the time frames on which the estimates were based 

changed. While the initial estimates covered years in which the program was

expected to be nonoperational or minimally operational, subsequent 

estimates did not include these years. 

The farm bill provides USDA general authority to control CSP costs, 

including authority to establish criteria that enable it to control program 

participation and payments and, therefore, CSP costs. For example, NRCS 

restricts participation by limiting program enrollment each year to producers 

in specified, priority watersheds. NRCS also has established certain CSP 

payment limits at levels below the maximum allowed by the statute. 

However, efforts to control CSP spending could be improved by addressing

weaknesses in internal controls and inconsistencies in the wildlife habitat 

assessment criteria that NRCS state offices use, in part, to determine 

producer eligibility for the highest CSP payment level. Inconsistencies in 

these criteria also may reduce CSP’s conservation benefits. 

The farm bill prohibits duplicate payments for the same practice on the same

land made through CSP and another USDA conservation program. Various 

other farm bill provisions also reduce the potential for duplication. For 

example, as called for under the farm bill, CSP may reward producers for 

conservation actions they have already taken, whereas other programs 

generally provide assistance to encourage new actions or to idle or retire 

environmentally sensitive land from production. In addition, CSP regulations 

establish higher minimum eligibility requirements for CSP than for other 

programs. However, despite these legislative and regulatory provisions, the 

possibility that producers can receive duplicate payments remains because 

of similarities in the conservation actions financed through these programs. 

In addition, NRCS does not have a comprehensive process to preclude or 

identify such duplicate payments. In reviewing NRCS’s payments data, GAO 

found a number of examples of duplicate payments. ___________________________________________________________________

Strip Cropping to Reduce Soil Erosion 

Source: Photo courtesy of USDA NRCS.

Note: Strip cropping means growing row crops, forages, or small grains in equal width strips. 

www.gao.gov/cgi-bin/getrpt?GAO-06-312.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Robert A. 

Robinson at (202) 512-3841 or 

robinsonr@gao.gov. 
Page i GAO-06-312 Conservation Security Program Costs

Contents

Letter 1

Results in Brief 6

Background 10

Estimates of CSP Costs Generally Increased because of Better 

Information on Program Implementation and Changes to the Time 

Frames Covered by the Estimates 19

USDA Has Authority to Control CSP Costs and Has Established Cost 

Control Measures but Needs to Improve Internal Controls and 

Better Ensure Consistency in NRCS State Offices’ Determinations 

of Producer Eligibility 27

Despite Legislative and Regulatory Measures That Lessen Possible 

Duplication between CSP and Other Programs, the Potential for 

Duplicate Payments Still Exists, and Such Payments Have 

Occurred 43

Conclusions 55

Recommendations for Executive Action 57

Agency Comments and Our Evaluation 57

Appendixes

Appendix I: Objectives, Scope, and Methodology 60

Appendix II: CSP Payments Information for Fiscal Years 2004 and 2005 66

Appendix III: CSP Application and Enrollment Process Flowchart 74

Appendix IV: Other Key USDA Conservation Programs 75

Appendix V: Explanation of Budget Scoring 77

Appendix VI: Time Line of Legislative Actions and CBO and OMB 10-Year 

Estimates of CSP Costs 79

Appendix VII: Description of USDA and NRCS Internal Controls and the 

Results of Reviews of These Controls 81

Appendix VIII: Comments from the U.S. Department of Agriculture 85

GAO Comments 92

Appendix IX: GAO Contact and Staff Acknowledgments 94

Related GAO Products 95

Tables Table 1: CSP Payment Tiers 12
Contents

Page ii GAO-06-312 Conservation Security Program Costs

Table 2: CBO’s CSP Cost Estimates, Fiscal Years 2002 through 2016 

25

Table 3: OMB’s CSP Cost Estimates, Fiscal Years 2002 through 

2016 26

Table 4: Key Farm Bill and Regulatory Cost Control Measures Used 

in the Fiscal Year 2005 CSP Sign-up 29

Table 5: Tier III Contracts and Payments by Watershed, Fiscal Year 

2004 37

Table 6: Conservation Payments Available through CSP, EQIP, and 

WHIP 49

Table 7: Priority Watersheds, Lead NRCS State Offices, and CSP 

Contracts Awarded in the Fiscal Year 2004 CSP Sign-up 63

Table 8: Total CSP Payments and Contracts by Tier, Fiscal Year 

2004 67

Table 9: Total CSP Payments by Payment Type, Fiscal Year 2004 67

Table 10: Total CSP Enhancement Payments by Enhancement Type, 

Fiscal Year 2004 68

Table 11: Distribution of All CSP Contracts by Payment Range 

(Excluding and Including Advance Enhancement 

Payments in Contract Amounts), Fiscal Year 2004 69

Table 12: Distribution of Tier I CSP Contracts by Payment Range 

(Excluding and Including Advance Enhancement 

Payments in Contract Amounts), Fiscal Year 2004 70

Table 13: Distribution of Tier II CSP Contracts by Payment Range 

(Excluding and Including Advance Enhancement 

Payments in Contract Amounts), Fiscal Year 2004 70

Table 14: Distribution of Tier III CSP Contracts by Payment Range 

(Excluding and Including Advance Enhancement 

Payments in Contract Amounts), Fiscal Year 2004 71

Table 15: Total CSP Payments and Contracts by Tier, Fiscal Year 

2005 71

Table 16: Total CSP Payments by Payment Type, Fiscal Year 2005 72

Table 17: Total CSP Enhancement Payments by Enhancement Type, 

Fiscal Year 2005 72

Table 18: Distribution of CSP Contracts by Payment Range, Fiscal 

Year 2005 73

Table 19: Acres Enrolled in CSP by Land Type, Fiscal Years 2004 and 

2005 73

Table 20: Description of Other Key USDA Conservation Programs 76

Figures Figure 1: Watersheds Included in the Fiscal Year 2004 and Fiscal 

Year 2005 CSP Sign-ups 16
Contents

Page iii GAO-06-312 Conservation Security Program Costs

Figure 2: Comparison of CBO and OMB 10-Year Estimates of CSP 

Costs 20

Abbreviations

CBO Congressional Budget Office

CCC Commodity Credit Corporation

CRS Congressional Research Service

CSP Conservation Security Program

EQIP Environmental Quality Incentives Program

IG Inspector General

NRCS Natural Resources Conservation Service

O&E Oversight and Evaluation

OMB Office of Management and Budget

USDA U.S. Department of Agriculture

WHIP Wildlife Habitat Incentives Program

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Page 1 GAO-06-312 Conservation Security Program Costs

United States Government Accountability Office

Washington, D.C. 20548

A

April 28, 2006 Letr

The Honorable Thad Cochran

Chairman

Committee on Appropriations

United States Senate

Dear Mr. Chairman:

Farmers and ranchers own and manage about 940 million acres, or about 

half of the continental United States’ land area, and are thus among the 

most important stewards of our soil, water, and wildlife habitat. Because 

of this important responsibility, how private land is used is increasingly 

recognized as vital to protecting the nation’s environment and natural 

resources. For example, to help protect water quality and conserve wildlife 

habitat, private landowners have installed millions of acres of conservation 

buffers.1

 Despite these efforts, state water-quality agencies report that 

agricultural production is still a leading contributor to impaired water 

quality; similarly, habitat loss associated with agriculture has been a factor 

in the declining populations of numerous wildlife species, including many 

threatened or endangered native species. Recognizing the critical role 

played by private landowners, Congress significantly increased authorized 

funding for an array of conservation programs managed by the U.S. 

Department of Agriculture (USDA) in the Farm Security and Rural 

Investment Act of 2002 (farm bill).2

 Specifically, Congress authorized 

additional funding for these programs for fiscal years 2002 through 2007, 

estimated by the Congressional Budget Office (CBO) to be $20.8 billion, 

nearly an 80 percent increase over the previous baseline for these 

programs.3

 Part of this increase was for several new conservation programs

1

Conservation buffers are strips or areas of land in permanent vegetation—such as grasses, 

shrubs, or trees—designed and strategically placed to intercept pollutants—such as 

nutrients and pesticides—that wash off cropland or to serve other environmental purposes, 

such as to provide wildlife habitat or windbreaks. 

2

Pub. L. No. 107-171, 116 Stat. 134 (2002).

3

In April 2001, CBO estimated the baseline for USDA conservation programs to be $11.6 

billion for fiscal years 2002 through 2007, assuming neither changes nor additions to these 

programs. However, with the passage of the new farm bill in May 2002, Congress made a 

number of changes and additions to these programs. As a result, CBO increased its estimate 

by nearly 80 percent to $20.8 billion for fiscal years 2002 through 2007. 
Page 2 GAO-06-312 Conservation Security Program Costs

called for by the farm bill, including the Conservation Security Program 

(CSP). 

CSP supports ongoing conservation stewardship of agricultural lands by 

providing financial and technical assistance to promote conservation and 

the improvement of soil, water, air, energy, and plant and animal life on 

private and tribal agricultural lands. Unlike other USDA conservation 

programs that provide assistance to take new actions aimed at addressing 

identified problems such as excessive soil erosion or nutrient runoff, CSP 

is unique in that it rewards farmers and ranchers who already meet very 

high standards of conservation and environmental management in their 

operations. The program seeks to encourage these producers to continue 

and further enhance their high level of stewardship while creating an 

incentive for other producers to increase their level of stewardship in order 

to qualify for CSP assistance as well. CSP is also unique among USDA 

conservation programs in that Congress authorized it without placing limits 

on either its funding or the number of acres enrolled, although at times 

Congress has capped its funding in other legislation.4

 CSP is open to all 

eligible agricultural producers, regardless of size of operation, crops 

produced, or geographic location. CSP is administered by USDA’s Natural 

Resources Conservation Service (NRCS) and funded through USDA’s 

Commodity Credit Corporation (CCC).5

 

4

Since calling for the establishment of CSP, Congress has capped program funding in some 

manner in other legislation. For example, in the annual appropriations act for fiscal year 

2004, Congress limited the amount of funding available for CSP to $41.443 million, Pub. L. 

No. 108-199, div. A, tit. VII, § 752, 118 Stat. 3, 38 (2004). For fiscal years 2005 and 2006, 

Congress limited the amount of funding available to pay salaries and expenses of personnel 

in carrying out CSP to $202.411 million and $259 million, respectively. Pub. L. No. 108-447, § 

749, 118 Stat. 2809 (2004) and Pub. L . No. 109-97, § 741, 119 Stat. 2120 (2005). In addition, 

legislation enacted in February 2006 capped CSP’s funding at $1.954 billion for fiscal years 

2006 through 2010 and $5.650 billion for fiscal years 2006 through 2015. Pub. L. No. 109-171, 

120 Stat. 4 (2006). See appendix VI for more information. 

5

CCC is a government-owned and government–operated corporation under USDA that was 

created in 1933 to stabilize, support, and protect farm income and prices. CCC also helps to 

maintain balanced and adequate supplies of agricultural commodities and aids in their 

orderly distribution. Essentially, CCC is a financing institution for USDA’s farm price and 

income support commodity programs, agricultural export subsidies, and some agricultural 

conservation programs, including CSP. CCC has the authority to borrow up to $30 billion 

from the U.S. Treasury, private lending institutions, and others to carry out its obligations. 

Net losses from CCC’s operations are subsequently restored through the congressional 

appropriations process. 
Page 3 GAO-06-312 Conservation Security Program Costs

CSP rewards three levels, or tiers, of conservation treatment for qualified 

producers who enter into CSP contracts with NRCS.6

 Tier I participants 

must have addressed soil and water quality resource concerns to a 

specified minimum level of treatment on at least part of the participant’s 

operation prior to applying to the program.7

 Under this tier, contracts are of 

5-year duration, and annual payments of up to $20,000 are to be made. Tier 

II participants must have addressed soil and water quality resource 

concerns to the minimum level of treatment on the entire agricultural 

operation prior to application and must treat an additional significant 

resource concern as well. Under this tier, contracts are of a 5- to 10-year 

duration, and annual payments of up to $35,000 are to be made. In addition 

to addressing soil and water quality resource concerns to specified 

minimum levels, Tier III participants must have addressed all other 

applicable resource concerns, including wildlife habitat, to a minimum 

level on their entire agricultural operation before application. These 

additional resource concerns are described in the CSP sign-up notice,8

 and 

the related criteria for the minimum treatment levels are provided in CSP 

regulations and may be further augmented by NRCS state offices to reflect 

local conditions. For example, for the fiscal year 2004 and fiscal year 2005 

CSP sign-ups, wildlife habitat management was identified as an applicable 

resource concern in the sign-up notices. Under Tier III, contracts are of a 5- 

to 10-year duration, and annual payments of up to $45,000 are to be made.

6

A CSP contract (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. 

7

Resource concern refers to the condition of natural resources that may be sensitive to 

change by natural forces or human activity. Resource concerns include soil erosion, soil 

condition, soil deposition, water quality, water quantity, air condition, plant management, 

and animal habitat and management. 

8

Sign-up notice means the public notification document that NRCS provides to describe the 

particular requirements for a specific CSP sign-up. This notice is published in the Federal 

Register. 
Page 4 GAO-06-312 Conservation Security Program Costs

Regardless of the tier, a producer’s total CSP contract payment may include 

up to four components: (1) an annual stewardship component for the base 

level of conservation treatment required for program eligibility,9

 (2) an 

annual existing practice component for the maintenance of existing 

conservation practices,10 (3) an annual enhancement component for 

additional activities that provide increased resource benefits beyond the 

base level of conservation treatment that is required for program 

eligibility,11 and (4) a one-time new practice component for additional 

approved practices.12 In determining which CSP contract applications to 

accept, NRCS first determines whether an application meets the minimum 

requirements for Tier I, II, or III. NRCS then groups qualified applications 

into one of five enrollment categories—defined by criteria such as a 

producer’s willingness to undertake additional conservation activities—

and funds the applications beginning with the highest category in each tier 

until the available funding is exhausted. The farm bill requires NRCS to 

provide technical assistance to producers for the development and 

implementation of conservation security contracts but in an amount not to 

exceed 15 percent of amounts expended for the fiscal year.13

9

Conservation treatment refers to 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.

10Conservation practice refers to a specified treatment, such as a structural or land 

management practice, that is planned and applied to NRCS standards and specifications. 

11Enhancement payments may be made for implementing or maintaining multiple 

conservation practices that exceed minimum requirements for the applicable tier; 

addressing local conservation priorities in addition to resources of concern for the 

agricultural operation; participating in an on-farm conservation research, demonstration, or 

pilot project; participating in a watershed or regional resource conservation plan that 

involves at least 75 percent of producers in a targeted area; or carrying out assessment or 

evaluation activities relating to practices included in a conservation security plan. 

12At a minimum, all CSP contract payments include some amount for the stewardship and 

existing practice components. The enhancement payment and new practice component 

amounts may be zero in some cases.

13According to NRCS, technical assistance refers to conservation planning, design, and 

implementation assistance that NRCS provides to producers, including assisting producers 

to enroll in NRCS programs. 
Page 5 GAO-06-312 Conservation Security Program Costs

NRCS held the first CSP sign-up in fiscal year 2004. Nearly 2,200 farmers 

and ranchers participated in the program that year, with contracts covering 

nearly 1.9 million acres in 18 watersheds in 22 states. Producer payments 

totaled about $34.6 million in fiscal year 2004. For fiscal year 2005, NRCS 

approved over 12,700 CSP contract applications, covering over 9 million 

acres in 220 watersheds in 50 states and Puerto Rico. Producer payments 

totaled about $171.4 million (including payments for contacts approved in 

2004) in fiscal year 2005. In January 2006, USDA announced that it plans to 

offer CSP contracts to producers in an additional 60 watersheds during 

fiscal year 2006, with participants receiving an estimated $220 million 

(including payments for contracts approved in 2004 and 2005). Over time, 

NRCS plans to accept CSP contract applications from eligible producers in 

each of the nation’s 2,119 watersheds.14 

CSP has attracted considerable interest by stakeholders in Congress and in 

farm, conservation, and environmental organizations for a variety of 

reasons. Notably, cost estimates for CSP generally have increased since 

the program’s inception, and some stakeholders are concerned that CSP 

may duplicate assistance provided under other USDA conservation 

programs. Regarding program costs, estimates made by CBO and the 

Office of Management and Budget (OMB) generally have increased over 

time. For example, in May 2002, CBO estimated CSP would cost about $2 

billion over 10 years. CBO revised its 10-year cost estimate to $7.8 billion in 

January 2003 and then increased it again to $8.9 billion in March 2004. 

OMB’s estimates also increased. In May 2002, OMB estimated CSP would 

cost $5.9 billion over 10 years. OMB increased its estimate to $9.7 billion in 

January 2004. Regarding potential program duplication, some stakeholders 

note that CSP and other USDA conservation programs appear to provide 

financial and technical assistance for similar conservation activities, such 

as creating conservation buffers around cropped fields, creating the 

possibility that a producer could receive duplicate payments for the same 

activity.

In this context, you asked us to determine (1) why CBO and OMB cost 

estimates for CSP generally increased over time; (2) what authority USDA 

has to control CSP costs and what cost control measures are in place; and 

14NRCS has limited CSP enrollment each year to producers in selected watersheds to stay 

within funding and staff resource constraints. NRCS anticipates it will take 8 years—fiscal 

years 2004 through 2011—to implement the program in all 2,119 watersheds, subject to 

available funding. 
Page 6 GAO-06-312 Conservation Security Program Costs

(3) what legislative and regulatory measures exist to prevent duplication 

between CSP and other USDA conservation programs and what 

duplication, if any, has occurred. 

To determine why CSP costs estimates have increased, we interviewed 

CBO and OMB officials and reviewed documentation they provided. We 

did not attempt to re-estimate or audit the CBO or OMB estimates or data 

discussed in this report. To determine USDA’s authority to control CSP 

costs and the cost control measures implemented, we reviewed relevant 

legislation, CSP regulations, and NRCS’s Conservation Programs Manual

and related guidance. We also interviewed NRCS and other USDA officials 

and reviewed documentation they provided. To determine what legislative 

and regulatory measures exist to prevent duplication between CSP and 

other conservation programs and what duplication, if any, has occurred, we 

reviewed relevant authorizing legislation and CSP regulations. We also 

interviewed NRCS and other USDA officials and reviewed the documents 

they provided. In addition, we interviewed NRCS officials specifically 

responsible for developing a plan to coordinate USDA’s conservation 

programs to, among other things, eliminate redundancy. Furthermore, to 

identify apparent cases of duplication, we reviewed and analyzed 2004

payments data for CSP and two other USDA conservation programs that 

also provide assistance to implement conservation practices on land used 

for agricultural production. We then discussed these cases with NRCS 

officials to determine the extent of duplication, if any. Finally, we 

interviewed officials and reviewed documentation they provided at farm, 

conservation, and environmental organizations. We conducted our review 

from February 2005 through February 2006 in accordance with generally 

accepted government auditing standards. Appendix I provides additional 

information on our objectives, scope, and methodology.

Results in Brief Various factors explain why CBO and OMB estimates of CSP costs 

generally have increased over time. Most importantly, agency officials 

indicated that little information was available regarding how the program 

would be implemented at the time of the original cost estimates in May 

2002. Consequently, these officials relied on their professional judgment 

and past experience with estimating costs when making assumptions about 

key aspects of CSP, such as the level of participation, number of acres 

enrolled, and the amount and types of payments made. Later, when more 

information became available as to how USDA planned to implement the 

program, officials’ estimates were better informed and more accurately 

captured program costs, resulting in higher estimates. In addition, 
Page 7 GAO-06-312 Conservation Security Program Costs

increases in estimated CSP costs also can be attributed to revising the time 

frames on which the estimates were based. The agencies’ initial estimates 

were based on the 10-year period fiscal years 2002 through 2011 and 

included years in which the program was not operational (2002 and 2003) 

or minimally operational (2004). The agencies’ subsequent estimates were 

based on different 10-year intervals. For example, CBO’s and OMB’s fiscal 

year 2004 estimates were based on the 10-year period fiscal years 2005 

through 2014 and assumed the program would be fully operational in each 

of these years. 

The farm bill provides USDA general authority to control CSP costs, and 

while USDA has used its statutory authority to establish several cost 

control measures, its efforts to control program spending may be enhanced 

by addressing (1) weaknesses in internal controls used to ensure the 

accuracy of program payments and (2) inconsistencies in the wildlife 

resource criteria used by NRCS state offices to determine producer 

eligibility for Tier III, the highest CSP payment level. More specifically,

• the farm bill establishes some eligibility requirements for CSP, but gives 

USDA the authority to establish additional requirements. For example, 

the farm bill states that a payment under CSP “may” be received under 

three tiers of conservation contracts and that the Secretary of 

Agriculture “shall” determine and approve the minimum requirements 

for each tier. Furthermore, under the legislation, payments for each tier 

are not to exceed specified amounts, giving the Secretary of Agriculture 

the discretion to set payments for each tier below these limits. Under 

this statutory authority, NRCS implemented a number of CSP cost 

control measures to restrain program spending primarily by either 

restricting participation or limiting payments to individual producers. 

For example, NRCS restricts CSP participation by limiting program 

enrollment each year to producers in specified, priority watersheds. In 

addition, NRCS limits annual stewardship payments to 25, 50, and 75 

percent of the maximum amount that the farm bill allows for Tiers I, II, 

and III, respectively. 

• NRCS’s cost control efforts may be undermined by weaknesses in the 

internal controls the agency uses to ensure accurate program payments. 

According to a January 2006 draft report, NRCS internal auditors found 

problems with several aspects of the agency’s implementation of CSP, 

including its implementation of some internal controls. Among other 

things, the auditors found weaknesses in quality assurance and case file 

documentation. For example, they found that 33 of 55 fiscal year 2004 
Page 8 GAO-06-312 Conservation Security Program Costs

CSP contracts studied had not had an annual contract review, as 

required by NRCS’s programs manual, to document that CSP 

participants are following contract provisions. The absence of an 

annual contract review, according to the internal auditors, could result 

in payments being made for conservation activities that are not being 

done or are not yet completed as scheduled in the producer’s 

conservation security plan. NRCS plans to prepare a management 

action plan describing its response to this draft report’s 

recommendations. In addition, other aspects of NRCS’s internal 

controls have been criticized. For example, in January 2005, the USDA 

Inspector General reported that NRCS had neither identified the internal 

control measures in place to preclude, or detect in a timely manner, 

improper payments for the programs it administers, including CSP, nor 

did it know if the controls were in operation. 

• NRCS’s cost control efforts also may be undermined by inconsistencies 

in the wildlife habitat assessment criteria used by NRCS state offices, in 

part, to determine producer eligibility for Tier III payments. For the 

fiscal year 2004 CSP sign-up, according to NRCS, state offices developed 

wildlife habitat assessment criteria that were extremely variable, 

contributing significantly to differences in Tier III participation and 

payments among the various watersheds. For example, among the nine 

watersheds where cropland was the predominant type of land enrolled, 

the percentage of payments going to Tier III contracts ranged from 0 to 

75 percent. In response, NRCS developed national guidance that its 

state offices were to follow in creating wildlife habitat assessment 

criteria. However, we found—and NRCS officials agreed—that some 

state offices developed and applied criteria for the fiscal year 2005 signup that were inconsistent with the national guidance. For example, the 

criteria used in watersheds under these states’ jurisdiction did not 

require that a minimum percentage (as determined by the relevant state 

office) of a producer’s operation be noncrop vegetative cover, such as 

grassy or riparian areas managed for wildlife, as specified in the national 

guidance. Thus, producers in these watersheds were eligible for Tier III 

payments even though they may not have satisfied criteria for one of the 

resource components that the national guidance specifies is necessary 

for eligibility. Moreover, an NRCS official explained that although NRCS 

has not undertaken a review to determine whether producers have 

qualified for Tier III payments under this scenario, based on informal 

discussions with field office staff, this official concluded that some 

producers received such payments during the fiscal years 2004 and 2005 

sign-ups. Finally, the use of criteria that are inconsistent with the 
Page 9 GAO-06-312 Conservation Security Program Costs

national guidance not only weakens CSP cost control measures by 

making more Tier III payments possible, it also reduces NRCS’s ability 

to ensure that CSP is achieving its intended wildlife habitat benefits. 

Despite the possible undesirable outcomes associated with 

inconsistencies in state offices’ wildlife habitat assessment criteria, as of 

February 2006, NRCS had not reviewed or field tested each state office’s 

criteria and did not have plans to do so. In addition, NRCS has not 

incorporated a reference to the national guidance in its Conservation 

Programs Manual used by the agency’s field staff.

Various legislative and regulatory measures exist to reduce the potential for 

duplication between CSP and other USDA conservation programs; 

however, the possibility that producers can receive duplicate payments for 

the same conservation action from CSP and other programs remains. 

Specifically, the farm bill explicitly prohibits duplicate payments under CSP 

and other conservation programs for the same practice on the same land. 

The farm bill also prohibits NRCS from making payments under CSP for 

certain activities that can be funded under other conservation programs, 

such as the construction or maintenance of animal waste storage or 

treatment facilities. Furthermore, NRCS designed its CSP regulations to 

prevent duplication between CSP and other conservation programs. For 

example, the regulations establish higher minimum eligibility standards for 

CSP than exist for other programs, helping to differentiate the applicant 

pool for CSP from the potential applicants for these other programs. The 

regulations also encourage CSP participants to implement conservation 

actions, known as enhancements, intended to achieve a level of treatment 

that generally exceeds the level required by other USDA conservation 

programs. However, despite statutory provisions and NRCS actions 

designed to prevent CSP from duplicating other programs, the potential for 

duplicate payments still exists and duplicate payments have occurred. In 

particular, payments for CSP’s conservation enhancements—which 

represented about 81 percent of total CSP payments in fiscal years 2004 

and 2005—could duplicate payments for other programs’ conservation 

practices. For example, in the course of performing limited file reviews at 

several NRCS field offices, we found a case where a producer received 

payments under CSP and another program in 2004 for the same 

conservation activity—establishing a small grain cover crop—on the same 

tract of land. Furthermore, our analysis of 2004 payments data for CSP and 

two other USDA conservation programs revealed other potential examples 

of duplicate payments. Specifically, we found 121 cases of payments that 

were made under CSP and another program that year that were potentially 

duplicates. We then selected 12 of these cases for further investigation, and 
Page 10 GAO-06-312 Conservation Security Program Costs

we found that in 8 cases duplicate payments had occurred. NRCS officials 

acknowledged that duplicate payments had occurred in 4 of these cases but 

did not agree in the other 4 cases. Finally, NRCS officials stated the agency 

lacks a comprehensive process to either preclude duplicate payments or 

identify them after a contract has been awarded. Instead, these officials 

said that NRCS relies on the institutional knowledge of its field staff and 

the records they keep as a guard against potential duplication. 

In light of these findings, we are recommending that USDA direct NRCS to 

(1) review its state offices’ wildlife habitat assessment criteria to ensure 

consistency with the agency’s national guidance for developing these 

criteria; (2) include a reference to the national guidance in its Conservation 

Programs Manual to emphasize the importance of this guidance; (3) 

establish a comprehensive process to identify potential duplicate payments 

in the future, as well as such payments that already may have been made 

under existing CSP contracts; and (4) take action to recover duplicate 

payments already made. 

In commenting on a draft of this report, NRCS generally agreed with the 

findings and recommendations and provided information on actions it has 

taken, is taking, or will take to implement them. NRCS’s comments are 

reprinted in appendix VIII. NRCS also provided us with suggested 

technical corrections, which we incorporated into this report as 

appropriate. 

We also provided a draft of this report to CBO and OMB for review and 

comment. Their clarifying comments were incorporated into this report as 

appropriate.

Background CSP, called for under section 2001 of the 2002 farm bill,15 is a voluntary 

conservation program that supports ongoing stewardship of private and 

tribal agricultural lands by providing payments to producers for 

maintaining and enhancing natural resources. According to USDA, CSP 

identifies and rewards those farmers and ranchers who are meeting the 

highest standards of conservation and environmental management on their 

operations, while creating powerful incentives for other producers to meet 

those same standards of conservation performance. In turn, the 

15The Farm Security and Rural Investment Act of 2002 amended the Food Security Act of 

1985 and required the Secretary of Agriculture to establish CSP. 
Page 11 GAO-06-312 Conservation Security Program Costs

conservation benefits gained will help these farms and ranches to be more 

economically and environmentally sustainable while increasing natural 

resources benefits to society at large. 

CSP provides financial and technical assistance to agricultural producers 

who advance the conservation and improvement of soil, water, air, energy, 

plant and animal life, and other conservation purposes on working lands. 

Such lands include cropland, grassland, prairie land, improved pasture, and 

rangeland, as well as forested land and other noncropped areas that are an 

incidental part of the agriculture operation. The program is available in all 

50 states, the District of Columbia, the Commonwealth of Puerto Rico, 

Guam, the Virgin Islands of the United States, American Samoa, the 

Commonwealth of the Northern Marianna Islands, and the Trust Territory 

of the Pacific Islands. Under the farm bill, the program is open to all 

agricultural producers, regardless of size of operation, crops produced, or 

geographic location. CSP is administered by NRCS.

In implementing CSP, NRCS emphasizes soil and water quality as nationally 

important resource concerns because of the potential for significant 

environmental benefits from conservation treatment that improves their 

condition. Thus, although the farm bill required producers to treat at least 

one resource of concern under CSP, NRCS program regulations require 

producers to treat at least two resources—soil and water—to be eligible for 

the program.16 Producers can use CSP payments to fund a variety of soil 

and water quality conservation practices. Soil quality practices include 

crop rotation, planting cover crops, tillage practices, prescribed grazing, 

and providing adequate wind barriers. Water quality practices include 

conservation tillage, strip cropping, vegetative filter strips, terraces, 

grassed waterways, managed access to water courses, nutrient and 

pesticide management, prescribed grazing, and irrigation water 

management. In addition, under the farm bill and NRCS regulations, to be 

eligible for CSP, both the producer and the producer’s operation must first 

meet several basic eligibility criteria, including (1) the land must be private 

agricultural land, forested land that is an incidental part of an agricultural 

operation, or tribal land with the majority of the land located within a 

selected priority watershed; (2) the applicant must be in compliance with 

highly erodible land and wetlands provisions of the Food Security Act of 

1985 and generally must have control of the land for the life of the contract; 

and (3) the applicant must share in the risk of producing any crop or 

16The CSP regulations are found at 7 C.F.R. Part 1469.
Page 12 GAO-06-312 Conservation Security Program Costs

livestock and be entitled to a share in the crop or livestock available for 

marketing from the operation.

The farm bill establishes three tiers or levels of participation. Each tier has 

a specified contract period and an annual payment limit and calls for a plan 

addressing resources of concern (as further delineated in NRCS 

regulations), as indicated in table 1. 

Table 1: CSP Payment Tiers

Source: 2002 farm bill and NRCS’s CSP regulations. 

a

Producers can satisfy the requirement to address an additional resource of concern 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’s quality criteria. 

In addition to these tiers, NRCS’s program regulations and sign-up 

announcements establish enrollment categories and subcategories. Under 

NRCS regulations, enrollment categories may be defined by criteria related 

to resource concerns and levels of historic conservation treatment, 

including a producer’s willingness to achieve additional environmental 

performance or conduct conservation enhancement activities. For the 

fiscal year 2005 sign-up, five enrollment categories (A through E) were 

used for cropland, pasture, and rangeland. For example, for cropland, the 

enrollment categories were defined by various levels of soil conditioning 

index scores and the number of stewardship practices and activities in

Tier

Contract period

(years) Annual payment limit

Conservation criteria

(The producer must have addressed...)

I 5 $20,000 water and soil quality to meet specified minimum levels of 

treatment on part of the agricultural operation prior to 

enrollment.

II 5 to 10 35,000 water and soil quality to meet specified minimum levels of 

treatment on the entire agricultural operation prior to 

enrollment and agree to address at least one additional 

locally significant resource concern by the end of the 

contract.a

III 5 to 10 $45,000 all existing resource concerns to meet specified minimum 

levels of treatment on the entire agricultural operation.
Page 13 GAO-06-312 Conservation Security Program Costs

place on the farm for at least 2 years.17 All applications that met the sign-up 

criteria were placed in an enrollment category, regardless of available 

funding. NRCS then funded all eligible producers enrolled in category A 

before funding producers in category B and subsequent categories until 

available funding was exhausted.18 If an enrollment category could not be 

fully funded, then the subcategories were used to determine application 

funding order within a category. For the fiscal year 2005 sign-up, 12 

subcategories were used. These subcategories included factors such as 

whether (1) the applicant is a limited resource producer or a participant in 

an ongoing environmental monitoring program; (2) the agricultural 

operation is in a designated water conservation area or aquifer zone, 

drought area, or nonattainment area for air quality; or (3) the agricultural 

operation is in a designated area for threatened and endangered species 

habitat creation and protection. 

The producer’s CSP contract identifies the type and amount of program 

payments that a producer will receive. NRCS has established criteria for 

calculating each of the four components of the program payment. For 

example, the stewardship component is based on the number of acres 

enrolled in CSP, the stewardship payment rate established for the 

watershed, and reduction factors based on the tier of enrollment. At a 

minimum, all CSP contract payments include amounts for the stewardship 

and existing practice components. To be eligible to participate in CSP, the 

producer must develop a conservation security plan (also known as a 

conservation stewardship plan) that identifies the land and resources to be 

conserved; describes the tier of conservation security contract and the 

particular conservation practices to be implemented, maintained, or 

improved; and contains a schedule for the implementation, maintenance, 

or improvement of these practices. This plan must be submitted to and 

approved by NRCS.

17The soil conditioning index is used to predict the consequences of cropping systems and 

tillage practices on the trend of soil organic matter. This index has three main components: 

(1) the amount of organic matter returned to the soil, (2) the effects of tillage and field 

operations on organic matter decomposition, and (3) the effect of predicted soil erosion 

associated with the management system. The index gives an overall rating based on these 

components. Negative ratings indicate declining soil organic matter, while positive ratings 

indicate increasing soil organic matter. 

18According to NRCS, it uses enrollment categories to determine funding hierarchy due to 

budget limits and statutory constraints on technical assistance. The farm bill prohibits 

competitive bidding or similar practices, but NRCS states that it does not have applicants 

compete with one another for contracts. 
Page 14 GAO-06-312 Conservation Security Program Costs

According to NRCS, about 1.8 million farmers and ranchers nationwide are 

potentially eligible for CSP. However, the agency has chosen a staged 

approach to implementing CSP, based on limiting program sign-ups to 

selected, priority watersheds each year.19 In part, this reflects CSP’s 

newness. As with any new program, there have been birthing and growing 

pains as the agency has grappled with developing program regulations, 

training its staff, outreaching to producers and stakeholder groups, and 

adjusting program implementation based on lessons learned from one 

program sign-up year to the next. NRCS also chose a staged approach in 

light of limited program funding—Congress authorized caps for total CSP 

funding in fiscal year 2004 and for salaries and expenses of personnel to 

carry out CSP in fiscal years 2005 and 200620—and the statutory limitation 

on the amount of CSP funding that can be used for technical assistance—

NRCS cannot incur technical assistance costs in excess of 15 percent of the 

funds expended in a given fiscal year for CSP. According to NRCS, focusing 

on priority watersheds reduces the administrative burden on applicants 

and the costs of processing a large number of applications that cannot be 

funded. In addition, the agency notes that everyone in the United States 

lives in a watershed and, because each year producers in approximately 

one-eighth of the nation’s 2,119 watersheds will be eligible for the sign-up, 

all eligible producers will have the opportunity to participate over an 8-year 

period, subject to available funding.

19Under NRCS regulations, NRCS is to prioritize watersheds considering several factors 

including (1) potential of surface water and groundwater quality to degradation, (2) 

potential of soil to degradation, (3) potential of grazing land to degradation, (4) state or 

national conservation and environmental issues (such as location of air nonattainment 

zones or important wildlife or fisheries habitat), and (5) local availability of management 

tools needed to more efficiently operate the program (such as digitized soils information). 

20USDA officials explained that they consider the caps appearing in the annual 

appropriations acts for fiscal years 2005 and 2006 to be limitations on the total funding 

available for CSP, not just for the salaries and expenses of personnel to carry out the 

program. In providing technical comments on a draft of this report, these officials explained 

that they understood that the wording, "to pay the salaries and expenses of personnel," was 

used for scorekeeping purposes to count savings against discretionary spending limits. 

According to these officials, this language has been used across the board, i.e., for all farm 

bill programs in several of the past appropriations acts. They stated that the effect is to 

prevent any administrative actions to implement a program that spends more than the 

amount set out in the provision. Accordingly, these officials said that it was understood that 

the caps were, in fact, limits on total program spending, including financial assistance to 

producers as well as technical assistance (i.e., salaries and expenses of NRCS employees to 

implement CSP).
Page 15 GAO-06-312 Conservation Security Program Costs

NRCS held the first CSP sign-up in fiscal year 2004. Nearly 2,200 farmers 

and ranchers participated in the program that year with contracts covering 

nearly 1.9 million acres in 18 watersheds in 22 states. Producer payments 

totaled about $34.6 million in fiscal year 2004, and NRCS used about $5.9 

million for technical assistance.21 For fiscal year 2005, NRCS approved over 

12,700 CSP contract applications, covering nearly 9 million acres in 220 

watersheds in 50 states and Puerto Rico. These 220 watersheds included 

the 18 watersheds covered by the fiscal year 2004 sign-up. Producer 

payments totaled about $171.4 million (including payments for contracts 

approved in 2004) in fiscal year 2005, and NRCS used about $30.2 million 

for technical assistance.22 In January 2006, USDA announced that it plans to 

offer CSP contracts to producers in an additional 60 watersheds during 

fiscal year 2006, with participants receiving an estimated $220 million 

(including payments for contracts approved in 2004 and 2005).23 More 

detail on the CSP payments made in fiscal years 2004 and 2005 is 

summarized in appendix II, including information on these payments by 

tier, payment type, and enhancement type. Figure 1 shows the watersheds 

included in the fiscal year 2004 and fiscal year 2005 CSP sign-ups. 

21Congress capped CSP funding at $41.443 million for fiscal year 2004. Agency officials said 

that they reserved $996,322 of fiscal year 2004 funding for unexpected contract costs 

associated with producer contracts. Applying principles established in the Account Closing 

Statute (31 U.S.C. § 1553) and under OMB guidance (OMB Circular A-11, Preparation, 

Submission, and Execution of the Budget, Part 1, § 20.4(c), Nov. 2, 2005), agency officials 

indicated that the budget authority for this reserve expired at the end of fiscal year 2004, but 

the amount remains available for an additional 5 fiscal years to pay for certain adjustments 

to contract costs and legitimate contract modifications. 

22For fiscal year 2005, Congress limited the amount of funds available to pay salaries and 

personnel expenses to carry out CSP to $202.411 million. NRCS interpreted this limit on 

salaries and personnel expenses to be a limit on total program funding. According to NRCS 

officials, the agency reserved about $842,770 of this funding for legitimate contract 

adjustments and modifications as described in note 21.

23For fiscal year 2006, Congress limited the amount of funds available to pay salaries and 

personnel expenses to carry out CSP to $259 million. Again, NRCS interpreted this limit on 

salaries and personnel expenses to be a limit on total program funding. Based on this level 

of funding, on August 25, 2005, USDA announced preliminary selection of 110 watersheds 

for the fiscal year 2006 CSP sign-up. However, on Jan. 31, 2006, USDA announced that this 

sign-up would be limited to 60 watersheds only because of anticipated reductions to the CSP 

funding cap for future years to generate savings for deficit reduction. Specifically, the 

Deficit Reduction Act of 2005, Pub. L. No. 109-171, § 1202, 120 Stat. 4 (2006), repeals the 

$6.037 billion cap on CSP funding through 2014 but creates new caps that limit CSP 

spending to $1.954 billion for the period fiscal years 2006 through 2010 and $5.650 billion for 

the period fiscal years 2006 through 2015. CBO estimates that these new caps will generate 

savings of $649 million over the period fiscal years 2006 through 2010 and savings of $1.1 

billion over the period fiscal years 2006 through 2015. 
Page 16 GAO-06-312 Conservation Security Program Costs

Figure 1: Watersheds Included in the Fiscal Year 2004 and Fiscal Year 2005 CSP Sign-ups

Note: NRCS allowed the 18 watersheds included in the fiscal year 2004 sign-up to be reopened only 

for new applicants for the fiscal year 2005 sign-up. This was because NRCS received many 

complaints from producers in these watersheds that they did not have sufficient time or did not know 

enough about CSP to apply for assistance under the program in the fiscal year 2004 sign-up. The 

arrows denote some of the smaller watersheds included in the fiscal year 2005 sign-up. 

Hawaii

Source: NRCS.

Alaska

202 FY 2005 watersheds

Puerto Rico/U.S. Virgin Islands

18 FY 2004 and FY 2005 watersheds
Page 17 GAO-06-312 Conservation Security Program Costs

In general, NRCS implements CSP by (1) offering periodic sign-ups in 

specific, priority watersheds across the Nation; (2) requiring producers to 

complete a self-assessment, including a description of conservation 

activities on their operations, to determine their eligibility for the 

program;24 (3) scheduling interviews with eligible producers in local NRCS 

field offices to review the producers’ applications; (4) determining which 

program tier and enrollment category an eligible producer may participate 

in; (5) selecting the enrollment categories to be funded for CSP contracts; 

(6) developing conservation security plans and contracts for the producers 

selected; and (7) making the associated payments. Appendix III provides a 

flowchart describing the CSP application and enrollment process in more 

detail. Applicants may submit only one application for each sign-up. 

Producers who are participants in an existing CSP conservation 

stewardship contract are not eligible to submit another application.

Many stakeholders refer to CSP as an “entitlement” program.25 However, 

the farm bill does not refer to the creation of any entitlements under the 

program. Moreover, the legislation provides the Secretary of Agriculture 

with discretion to establish additional eligibility requirements, provides 

that the Secretary must approve a producer’s conservation security plan 

before entering into a conservation security contract, and only states that 

payments “may” be received under three tiers of contracts. Thus, CSP is 

not an entitlement program.

24Among other things, the self-assessment details the type of agricultural operation, land 

uses, existing conservation practices, resource concerns, and the producer’s willingness to 

do additional conservation in the future.

25Entitlement authority is authority to make payments for which budget authority is not 

provided in advance by appropriation acts to any person or government if, under the 

provisions of the law containing such authority, the U.S. government is legally required to 

make the payments to persons or governments that meet the requirements established by 

law. 2 U.S.C. § 622(9). 
Page 18 GAO-06-312 Conservation Security Program Costs

Finally, many proponents of CSP maintain that this program will help U.S. 

producers stay competitive in the world market while providing significant 

societal environmental benefits. These proponents note that traditional 

farm commodity programs tend to distort trade and will thus face 

increasing pressure for reduction or elimination in the next round of World 

Trade Organization talks.26 However, they note, “green payments” programs 

such as CSP that are designed to promote conservation and stewardship of 

natural resources on working lands are more likely to survive in these 

talks.27 They also maintain that several European countries are far ahead of 

the United States in using green payments programs to provide financial 

assistance to their producers while promoting conservation and 

environmental stewardship. CSP is generally regarded as the most 

comprehensive green payments program developed in the United States, 

primarily because CSP promotes integrated, whole-farm planning for 

conservation. 

Information on other USDA conservation programs is presented in 

appendix IV.

26In the 1994 Uruguay Round Agreement on Agriculture of the General Agreement on Tariffs 

and Trade, World Trade Organization members, including the United States, made 

commitments to improve market access, reduce export subsidies, and limit and, in some 

cases, reduce trade-distorting domestic agricultural supports. The United States and other 

World Trade Organization members are currently engaged in another round of multilateral 

trade negotiations that began in Doha, Qatar, in 2001, where they reaffirmed their 

commitment to agricultural trade liberalization, and in July 2004, the members agreed on a 

framework to guide negotiations on agriculture. The U.S. negotiating position has 

emphasized harmonizing, reducing, and further disciplining agricultural subsidies. In the 

interim, existing Uruguay Round commitments will continue at established levels. World 

Trade Organization members found to be in violation of these commitments can be subject 

to retaliatory measures, such as punitive tariffs on exports. 

27Green payments are made to producers as compensation for environmental benefits that 

accrue as a result of or in conjunction with their farming activities. In general, these 

payments are deemed to be minimally trade distorting and are excluded from reduction 

commitments in the Uruguay Round Agreement on Agriculture. 
Page 19 GAO-06-312 Conservation Security Program Costs

Estimates of CSP Costs 

Generally Increased 

because of Better 

Information on 

Program 

Implementation and 

Changes to the Time 

Frames Covered by the 

Estimates

Various factors explain why CBO and OMB estimates of CSP costs 

generally have increased over time. Of most importance, CBO and OMB 

officials indicated that little information was available regarding how the 

program would be implemented at the time of its inception in May 2002. 

Subsequent estimates have been better informed because USDA had 

developed and implemented program regulations and had data on the 

number of participants from program sign-ups. In addition, increases in 

estimated CSP costs also can be attributed to revising the time frames on 

which the estimates were based. In general, this involved replacing 

estimates from earlier years during which the program was not operational, 

or minimally operational, with later years during which the program is 

expected to be more fully operational. 

Estimates of CSP Costs 

Generally Have Increased 

over Time 

Over time, CBO and OMB each made several estimates of CSP costs for 

specified 10-year periods, and these estimates generally increased.28 CBO 

and OMB developed these estimates as part of their responsibilities for 

budget scoring (also known as scorekeeping). These responsibilities are 

discussed in appendix V. As reflected in figure 2, CBO and OMB estimates 

generally increased during the period 2001 through 2006, although at times 

the estimates dropped because of legislative actions to cap or limit CSP 

funding. Appendix VI also provides a more detailed time line of legislative 

actions and CBO and OMB 10-year estimates of CSP costs during the period 

2001 through 2006.

28NRCS also estimated CSP costs as part of benefit-cost assessments it prepared in 

conjunction with issuing an interim final rule (June 2004) and an amended interim final rule 

(March 2005) for CSP. Specifically, these assessments estimated the dollar value of the 

benefits, to the extent deemed possible, and costs associated with various program 

alternatives. According to the benefit-cost assessments, because of the simplifying 

assumptions that were used, these assessments should not be used to predict the actual 

magnitude of CSP costs. 
Page 20 GAO-06-312 Conservation Security Program Costs

Figure 2: Comparison of CBO and OMB 10-Year Estimates of CSP Costs

Notes: (1) CBO's December 2001 estimate was based on an early Senate version of the farm bill, S. 

1731. The farm bill, which called for establishment of CSP, was enacted into law on May 13, 2002. (2) 

The Deficit Reduction Act of 2005 repealed the $6.0 ($6.037) billion cap for fiscal years 2005 through 

2014. Instead, the act limits CSP spending to $1.954 billion for fiscal years 2006 through 2010 and to 

$5.650 billion for fiscal years 2006 through 2015. 

0

2

4

6

8

10

OMB

CBO

Dec. May Jan. Mar. Jan. Mar. Oct. Jan. Mar. Jan. Mar.

Dollars in billions

Estimate for

FYs 2002-11

2001 2002 2003

Sources: GAO analysis of CBO and OMB data and review of legislation.

$3.7

$2.0

$5.9

$7.8

$3.8

$9.7

$8.9

$6.0

$6.7 $6.7 $6.4 $6.2

January:

Eliminated

$3.8 billion

11-yr. cap

Estimates for

FYs 2002-11

Estimates for

FYs 2004-13

Estimates for

FYs 2005-14

Estimates for

FYs 2007-16

2004 2006

Estimates for

FYs 2006-15

2005

February:

$3.8 billion

11-yr. cap

(FYs 2003-13)

October:

$6.0 billion

10-yr. cap

(FYs 2005-14)

February:

$1.95 billion

5-yr. cap

(FYs 2006-10)

and $5.65 billiion

10-yr. cap

(FYs 2006-15)
Page 21 GAO-06-312 Conservation Security Program Costs

As shown in the figure, CBO made its first estimate of CSP costs—$3.7 

billion for fiscal years 2002 through 2011—in December 2001, about 5 

months before the farm bill was enacted (May 13, 2002). At the time, CBO 

based its estimate on the Senate’s version of the farm bill; the House of 

Representative’s version of the farm bill did not include provisions for CSP 

at that time.29 In early May 2002, just before the farm bill’s enactment, CBO 

estimated CSP costs to be $2 billion for the same 10-year period. CBO 

officials cited changes in the final bill’s provisions as the basis for the 

reduction in its estimate.30 They also cited an agreement they stated had 

been reached by members of the Senate Agriculture Committee that only 

$2 billion of the new funds to be made available for the farm bill’s 

conservation title would be used for CSP. The farm bill, as enacted, does 

not specifically include a $2 billion limit; however, it does include language 

that CBO officials said would result in reducing program costs to about $2 

billion. OMB also made its first estimate of CSP costs—$5.9 billion for 

fiscal years 2002 through 2011—in May 2002, soon after the farm bill’s 

enactment. OMB officials said that, although they were aware of an 

agreement reached in the Senate to limit CSP funding to $2 billion, because 

this limit was not included in the final legislation, they disregarded it in 

making their cost estimate. As a result, OMB’s cost estimate was nearly 

three times larger than CBO’s estimate, although both estimates were made 

in May 2002, were based on the same farm bill provisions, and covered the 

same 10-year period. 

As indicated by the figure, subsequent CBO and OMB estimates of CSP 

costs were more similar and generally increased, except in cases where 

one or both agencies’ estimates reflected legislative actions to cap or limit 

CSP funding. For example, in January 2003, CBO estimated CSP costs to 

be $7.8 billion for the 10-year period fiscal years 2004 through 2013. In 

February of that year, Congress enacted legislation that capped CSP 

funding at approximately $3.8 billion through fiscal year 2013 in order to, 

29See S. 1731, 107th Cong. (2001); H.R. 2646, 107th Cong. (2001). 

30According to CBO officials, these changes included the following: (1) stewardship 

payment rates were reduced and the basis for stewardship payments was frozen at 2001 

land rental rates; (2) maximum stewardship payments were reduced from 75 percent of the 

tier payment limit for all tiers to 25 percent for Tier I and 30 percent for Tiers II and III (e.g., 

the maximum stewardship payment for Tier I went from 75 percent of $20,000 [$15,000] to 

25 percent of $20,000 [$5,000]); (3) cost share payment rates for new management practices 

were reduced; (4) eligibility requirements for the three tiers were made more complete; (5) 

the payment limit for Tier III contracts was reduced from $50,000 to $45,000; and (6) funding 

for CSP technical assistance was limited to 15 percent of total CSP funding.
Page 22 GAO-06-312 Conservation Security Program Costs

according to OMB, generate savings for drought disaster assistance.31 The 

following month, in light of this cap, OMB estimated CSP costs to be $3.8 

billion for fiscal years 2004 through 2013. However, in January 2004, 

Congress repealed the $3.8 billion cap.32 As a result, subsequent OMB and 

CBO estimates increased substantially. 

Congress acted again to cap CSP funding in October 2004, passing 

legislation to 1imit the program’s funding to approximately $6 billion for 

the 10-year period fiscal years 2005 through 2014.33 This action was taken to 

offset emergency supplemental appropriations for hurricane disaster 

assistance. Later that month, because of the cap, OMB estimated CSP 

costs to be $6 billion for the same period. However, in January 2004, about 

9 months earlier, OMB had estimated the costs for this 10-year period to be 

$9.7 billion.

In 2005, both agencies estimated CSP costs to be $6.7 billion for the 10-year 

period fiscal years 2006 through 2015. In large measure, these estimates 

reflected the $6 billion legislative cap covering fiscal years 2005 through 

2014.34 However, that cap was scheduled to expire at the end of fiscal year 

2014, meaning the estimated costs for fiscal year 2015 were not subject to a 

cap. In February 2006, Congress repealed the $6 billion cap, replacing it 

with caps of $1.954 billion for fiscal years 2006 through 2010 and $5.650 

billion for fiscal years 2006 through 2015.35 The estimate made by OMB in 

January 2006—$6.2 billion for fiscal years 2007 through 2016—anticipated 

this change. CBO’s March 2006 estimate for fiscal years 2007 through 2016 

was $6.4 billion.

31Pub. L. No. 108-7, tit. II, § 216, 117 Stat. 538, 546 (2003). The exact amount of this cap was 

$3.773 billion. 

32Pub. L. No. 108-199, § 101, 118 Stat. 3, 434 (2004). 

33Pub. L. No. 108-324, § 101, 118 Stat. 1220, 1231 (2004). The exact amount of this cap was 

$6.037 billion.

34Congress also has acted to limit CSP’s funding on an annual basis. For example, in fiscal 

year 2004, Congress limited the total funding available for CSP to $41.443 million. For fiscal 

year 2005, Congress capped funding for salaries and expenses of personnel to carry out CSP 

to $202.411 million. USDA officials said that they consider the fiscal year 2005 cap to be a 

limit on the total funding available for CSP. A cap on the available funding for a given year 

affects estimates for subsequent years because the cap limits the number of producers 

receiving CSP contract payments that year and in subsequent years covered by their 

contracts. 

35Deficit Reduction Act of 2005, Pub. L. No. 109-171, § 1202, 120 Stat. 4, 5 (2006).
Page 23 GAO-06-312 Conservation Security Program Costs

As More Information on 

CSP Implementation 

Became Available, Cost 

Estimates Increased

According to CBO and OMB officials, the primary reason for increases in 

their estimates of CSP costs over time is that subsequent estimates have 

been better informed. Specifically, subsequent estimates have been better 

informed by USDA’s development and implementation of program 

regulations and data from the results of program sign-ups. As a result, 

these estimates more accurately capture program costs, resulting in higher 

estimates. 

At CSP’s inception in May 2002, little information was available about how 

it would be implemented and the expected level of producer participation. 

CBO and OMB officials noted that the farm bill provided a basic framework 

for CSP and only a very limited basis for cost estimation, giving USDA wide 

discretion on how to implement the program. Consequently, these officials 

had to rely on their professional judgment and past experience with 

estimating costs when making assumptions about key aspects of CSP, such 

as the level of participation, number of acres enrolled, land rental rates,36

and the amount and types of payments made. However, according to CBO 

and OMB officials, CSP’s uniqueness made this more difficult as these 

officials had not made cost estimates for a similar program in the past. 

Later, NRCS’s development of CSP regulations provided key information on 

how the program would be implemented. In this regard, NRCS issued an 

advance notice of proposed rulemaking in February 2003; a proposed rule 

in January 2004; an interim final rule in June 2004; and an amended interim 

final rule in March 2005. For example, the proposed rule indicated that 

NRCS planned to limit enrollments to specific sign-up periods rather than 

allow continuous sign-ups; limit CSP enrollment to producers in selected, 

priority watersheds rather than offer nationwide enrollment for a given 

sign-up; and prioritize funding by way of enrollment categories to ensure 

that producers with the highest commitment to conservation are funded 

first. The amended interim final rule incorporates each of these elements. 

In addition, CBO and OMB officials had informal conversations with NRCS 

officials to obtain information on how the agency intended to implement 

the program. For example, CBO officials said that they learned that NRCS 

anticipated program participation would be greater than it originally 

expected and that enhancement payments would be a more important

36The farm bill requires USDA to determine CSP base payments based on either the average 

national per-acre rental rate for a specific land use during the 2001 crop year or another 

appropriate rate for the 2001 crop year that ensures regional equity.
Page 24 GAO-06-312 Conservation Security Program Costs

component of total producer payments than originally planned.37 OMB also 

reviewed and commented on NRCS’s proposed and interim final rules 

before their publication in the Federal Register.

38 And CBO and OMB 

officials indicated that they conferred with one another from time to time 

to discuss issues related to estimating CSP costs, although the agencies 

arrived at their estimates independently. 

Finally, CBO and OMB officials stated that after making their initial CSP 

cost estimates at the program’s inception, they had more time to develop 

subsequent estimates, including more time to gather and consider program 

implementation information. They also said that their future estimates of 

program costs will be even better informed as more data become available 

from each annual CSP sign-up, including data on program participation and 

the mix of payments made by tier and type. 

Changing Time Frames Also 

Account for Increases in 

Estimates

CBO and OMB officials also attributed increases in their CSP cost 

estimates to revisions in the time frames on which the estimates were 

based.39 In making their initial estimates in May 2002, CBO and OMB took 

into account a time lag assumed for program development and 

implementation by NRCS, which included the time needed for rulemaking 

and public comment, training NRCS field staff, and outreach to producers 

and stakeholder groups. Thus, these initial estimates, covering the 10-year 

period fiscal years 2002 through 2011, included years in which the program 

was either not expected to be operational, such as fiscal years 2002 and 

2003, or minimally operational, such as fiscal year 2004. For example, in 

CBO’s May 2002 estimate, the costs associated with these first 3 fiscal years 

totaled only $22 million. In contrast, CBO’s March 2004 estimate, covering 

a later 10-year period, fiscal years 2005 through 2014, assumed the program 

would be fully operational in each of these years. CBO’s cost estimates for 

the three additional fiscal years—2012, 2013, and 2014—totaled $3.1 billion. 

37Enhancement payments are made for additional listed conservation activities (known as 

enhancements) that provide increased resource benefits beyond the minimum standard. In 

order for a producer to receive the full amount of financial assistance available under each 

of CSP’s payment tiers, the producer must undertake enhancements. 

38The regulation was subject to review by OMB’s Office of Information and Regulatory 

Affairs. See Executive Order No. 12866, 58 Fed. Reg. 51735 (Sept. 30, 1993). 

39Each year, CBO and OMB prepare estimates of budgetary costs for the next 10 fiscal years. 

For example, in March 2004, CBO prepared an estimate of budgetary costs for fiscal years 

2005 through 2014. 
Page 25 GAO-06-312 Conservation Security Program Costs

Thus, the substitution of fiscal years 2012 through 2014 in the latter 

estimate for fiscal years 2002 through 2004 in the earlier estimate amounted 

to an increase of more than $3 billion and helps to explain, in part, why the 

subsequent estimate was greater. Table 2 provides further information on 

CBO estimates of CSP costs for various 10-year periods during fiscal years 

2002 through 2016. 

Table 2: CBO’s CSP Cost Estimates, Fiscal Years 2002 through 2016 

Source: CBO.

Note: Dashes (-) indicate that CBO did not include an estimate for that fiscal year.

a

Estimates were provided for these years but were not included in the table to show only the years 

included in the 10-year estimate total.

b

This is a capped estimate for all years except 2015, based on legislation capping the program at 

$6.037 billion over 10 years (fiscal years 2005 through 2014) to help pay for agricultural disaster 

assistance.

c

This is a capped estimate for all years except 2016 based on the Deficit Reduction Act of 2005 that 

established caps on program funding of $1.954 billion for fiscal years 2006 through 2010 and $5.650 

billion for fiscal years 2006 through 2015.

A similar pattern can be seen with OMB’s estimates. OMB’s May 2002 

estimate, covering the 10-year period fiscal years 2002 through 2011, 

included fiscal years 2002, 2003, and 2004, years in which the program was 

assumed not to be implemented or only minimally implemented. OMB’s 

estimate for these 3 fiscal years was $98 million. In contrast, OMB’s 

January 2004 estimate, covering a later 10-year period, fiscal years 2005 

through 2014, included three additional years, fiscal years 2012, 2013, and 

2014. OMB’s estimate for these years was $4.049 billion. Thus, the 

substitution of fiscal years 2012 through 2014 in the latter estimate for 

Dollars in millions

Estimates by fiscal year

Date of 

estimate 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

10-year 

total

May 2002 0 $3 $19 $55 $110 $182 $267 $361 $459 $544 - - - - - $2,000

January 

2003 a a 73 177 319 493 687 877 1,050 1,207 1,378 1,499 - - - 7,760

March 

2004 - a a 282 649 846 942 993 1,018 1,032 1,039 1,045 1,050 - - 8,896

March 

2005b - - a a 331 450 582 676 737 761 767 768 761 835 - 6,668

March

2006c - - - a a $373 $446 $436 $440 $579 $685 $763 $794 $875 $1,008 $6,399
Page 26 GAO-06-312 Conservation Security Program Costs

fiscal years 2002 through 2004 in the earlier estimate amounted to an 

increase of about $3.95 billion and helps to explain, in part, why the 

subsequent estimate was greater. Table 3 provides further information on 

OMB estimates of CSP costs for various 10-year periods during fiscal years 

2002 through 2016.

Table 3: OMB’s CSP Cost Estimates, Fiscal Years 2002 through 2016

Source: OMB.

Note: Dashes (-) indicate that OMB did not include an estimate for that fiscal year.

a

Estimates were provided for these years but were not included in the table to show only the years 

included in the 10-year estimate total.

b

This is a capped estimate based on legislation capping the program at $3.773 billion over 11 years 

(fiscal years 2003 through 2013) to, according to OMB, help pay for drought disaster assistance. This 

cap was later removed in early 2004.

c

This is a capped estimate based on legislation capping the program at $6.037 billion over 10 years 

(fiscal years 2005 through 2014) to help pay for agricultural disaster assistance.

d

This is a capped estimate for all years except fiscal year 2015.

e

This is a capped estimate for all years except fiscal year 2016 based on the Deficit Reduction Act of 

2005 that established caps on program funding of $1.954 billion for fiscal years 2006 through 2010 and 

$5.650 billion for fiscal years 2006 through 2015.

Dollars in millions

Estimates by fiscal year

Date of 

estimate 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

10-

year 

total

May 2002 0 $11 $87 $270 $442 $659 $870 $1,015 $1,183 $1,278 - - - - - $5,858

March

2003b - - 10 77 166 261 356 442 527 612 658 681 - - - 3,788

January 

2004 - - a 249 457 665 873 1,046 1,118 1,191 1,264 1,337 1,448 - - 9,650

October 

2004c - - - 249 348 465 582 675 668 704 740 777 832 - - 6,041

January

2005d - - - a 314 470 559 648 693 738 760 804 849 893 - 6,728

January 

2006e - - - - a $342 $396 $456 $500 $640 $723 $719 $783 $831 $831 $6,222
Page 27 GAO-06-312 Conservation Security Program Costs

USDA Has Authority to 

Control CSP Costs and 

Has Established Cost 

Control Measures but 

Needs to Improve 

Internal Controls and 

Better Ensure 

Consistency in NRCS 

State Offices’ 

Determinations of 

Producer Eligibility

The farm bill provides USDA general authority to control CSP costs. While 

USDA’s NRCS has established several cost control measures under this 

statutory authority, its efforts to restrict program spending could be 

improved by addressing (1) weaknesses in internal controls used to ensure 

the accuracy of program payments and (2) inconsistencies in the wildlife 

resource criteria used by NRCS state offices to determine producer 

eligibility for Tier III, the highest CSP payment level. Furthermore, because 

of inconsistencies in wildlife resources criteria, NRCS cannot ensure that 

CSP is achieving its intended wildlife habitat benefits.

The Farm Bill Provides 

USDA Authority to Control 

CSP Costs

The farm bill establishes some eligibility requirements for CSP but gives 

USDA the authority to establish additional requirements that would enable 

it to control CSP costs, even absent legislative caps on CSP funding. For 

example, the farm bill establishes some producer and land eligibility 

requirements for CSP but also states that a payment under CSP “may” be 

received under three tiers of conservation contracts and that the Secretary 

of Agriculture “shall” determine and approve the minimum eligibility 

requirements for each tier—giving USDA the authority to establish 

additional eligibility requirements that would enable it to control program 

participation and, therefore, CSP costs.40 This provision, for example, gives 

the Secretary discretion to establish a tier eligibility requirement that a 

producer be located within a specified watershed. The Secretary also must 

approve a producer’s conservation stewardship plan—as meeting both the 

statutory eligibility requirements and any tier requirements—for the 

producer to be eligible to participate in CSP.41 In addition, the Secretary 

must ensure that the lowest cost conservation practice alternative is used 

to fulfill the purposes of the plan.42 Furthermore, the farm bill sets a 

4016 U.S.C. § 3838a(d)(6).

4116 U.S.C. § 3838a(b)(1)(A). Such plans are referred to as Conservation Security Plans in 

the farm bill but are called Conservation Stewardship Plans by NRCS.

4216 U.S.C. § 3838a(d)(1)(B)(ii).
Page 28 GAO-06-312 Conservation Security Program Costs

payment limit for each tier level ($20,000 for Tier I; $35,000 for Tier II; and 

$45,000 for Tier III) but, in stating that payments shall be determined by the 

Secretary and shall not exceed such amounts, provides discretion to the 

Secretary to further limit the payment amounts.43

NRCS Established Cost 

Control Measures in CSP 

Regulations Designed to 

Limit Program Enrollment 

and Payments

Under the statutory authority provided by the farm bill, NRCS has 

implemented a number of CSP cost control measures to restrain program 

spending, primarily by either restricting CSP enrollment or limiting 

payments to individual producers. For example, NRCS restricts CSP 

participation by limiting program enrollment each year to producers in 

specified, priority watersheds. In addition, NRCS limits annual 

stewardship payments to 25, 50, and 75 percent of the maximum amount 

that the farm bill allows for Tiers I, II, and III, respectively. Key cost control 

measures—found either in the farm bill, in CSP regulations, or in the 

program sign-up notice—in place for the fiscal year 2005 CSP sign-up are 

described in table 4.

4316 U.S.C. § 3838c(b).
Page 29 GAO-06-312 Conservation Security Program Costs

Table 4: Key Farm Bill and Regulatory Cost Control Measures Used in the Fiscal Year 2005 CSP Sign-up

Cost control 

measures Farm bill

NRCS’s CSP regulations and fiscal year 2005 sign-up 

notice

Program enrollment 

limited to specified 

watersheds

No specific language to restrict enrollment 

based on location. However, the Secretary of 

Agriculture shall determine and approve the 

minimum eligibility requirements for each tier.

One of the eligibility requirements is that a majority of the 

agricultural operation must be within a watershed selected for 

sign-up. According to NRCS, limiting enrollment each year to 

priority watersheds enables NRCS to adjust the potential 

scope of the program in accordance with the available 

funding. In addition, according to NRCS, this approach 

constrains technical assistance costs associated with 

processing CSP applications by limiting the number of 

applications.

Sign-ups are periodic, 

not continuous 

No specific language regarding when sign-ups 

should occur.

CSP enrollment is restricted to specified sign-up periods. For 

example, the fiscal year 2005 sign-up period ran from March 

28, 2005, through May 27, 2005. 

Minimum conservation 

treatment requirements 

for eligibility

Tier I: An applicant must—in a plan of 

conservation practices—(1) address at least 

one significant resource of concern for the 

enrolled portion of the agricultural operation at a 

level that meets the appropriate nondegradation 

standard and (2) cover active management of 

conservation practices that are implemented or 

maintained under the conservation security 

contract.a 

Tier II: An applicant must—in a plan of 

conservation practices—(1) address at least 

one significant resource of concern for the 

entire agricultural operation at a level that meets 

the appropriate nondegradation standard and 

(2) cover active management of conservation 

practices that are implemented or maintained 

under the conservation security contract. 

Tier III: An applicant must—in a plan of 

conservation practices—(1) apply a resource 

management system that meets the appropriate 

nondegradation standard for all resources of 

concern for the entire agricultural operation and 

(2) cover active management of conservation 

practices that are implemented or maintained 

under the conservation security contract.c

Tier I: An applicant must have addressed both soil and water 

(i.e., two) resource concerns on at least part of the operation 

to a specified minimum level of treatment.b

Tier II: An applicant must have addressed both soil and water 

(i.e., two) resource concerns on the entire operation to a 

specified minimum level of treatment. In addition, the 

applicant must agree to address an additional resource 

concern by the end of the contract period.

Tier III: An applicant must have addressed all applicable 

resource concerns on the entire operation to a specified 

minimum level of treatment.d

Prioritization of eligible 

applications for funding

No specific language to prioritize eligible 

applications. However, the Secretary of 

Agriculture shall determine and approve the 

minimum eligibility requirements for each tier.e

New program enrollments may be limited in any fiscal year to 

enrollment categories designed to focus on priority 

conservation concerns and enhancement measures. For the 

fiscal year 2005 sign-up, NRCS placed all eligible 

applications into five enrollment categories that prioritized 

applications for funding. Beginning with the highest 

enrollment category, NRCS accepted applications until the 

available funding was exhausted.f

 
Page 30 GAO-06-312 Conservation Security Program Costs

Sources: GAO analysis of the farm bill and NRCS’s amended interim final CSP rule, 70 Fed. Reg. 15212 (Mar. 25, 2005) (7 C.F.R. pt. 

1469) and 2005 sign-up notice, 70 Fed. Reg. 15277 (Mar. 25, 2005).

a

The nondegradation standard is defined as the level of measures required to adequately protect and 

prevent degradation of one or more natural resources as determined by NRCS in accordance with the 

quality criteria described in its handbooks.

b

For Tiers I and II, the minimum level of treatment for soil quality on cropland is considered achieved 

when the soil conditioning index is positive. For Tiers I and II, the minimum level of treatment for water 

quality on cropland is considered achieved if the current level of treatment meets or exceeds NRCS’s 

quality criteria for the specific resource concerns of nutrients, pesticides, sediment, and salinity for 

surface water and nutrients, pesticides, and salinity for groundwater. For Tiers I and II, the minimum 

level of treatment on pastureland and rangeland is vegetation and animal management accomplished 

by following a grazing management plan that provides for (1) a forage-animal balance, (2) proper 

livestock distribution, (3) timing of use, and (4) managing livestock access to water courses. To 

Requirement for 

documentation of 

existing conservation 

treatment

No specific language to require documentation 

of existing conservation treatment. However, 

the Secretary of Agriculture shall determine and 

approve the minimum eligibility requirements for 

each tier. 

An applicant must provide NRCS with documentation that 

includes information on existing conservation practices, 

treatment, and activities on the applicant’s operation. NRCS 

used this information to determine if the application met the 

minimum eligibility requirements and, if so, to place the 

application in an enrollment category. 

Limits on total CSP 

contract payments

Annual contract payments to an individual or 

entity shall not exceed $20,000 for Tier I; 

$35,000 for Tier II; and $45,000 for Tier III. 

The payment limits per contract were not changed. A CSP 

applicant may submit only one application per sign-up period 

and have only one active contract at any time. 

Limits on stewardship 

(base) payments

Annual stewardship payments are limited to 

$5,000 for Tier I, $10,500 for Tier II, and 

$13,500 for Tier III. For a given contract, the 

stewardship payment is based on (1) the 

average national per-acre rental rate for a 

specific land use during the 2001 crop year or 

another appropriate rate for the 2001 crop year 

that ensures regional equity and (2) a tierspecific percentage (i.e., 5 percent for Tier I; 10 

percent for Tier II; and 15 percent for Tier III).

Further reduces the stewardship payment to a percentage of 

the amount calculated under the farm bill formula (i.e., 25 

percent for Tier I, 50 percent for Tier II, and 75 percent for 

Tier III). 

Limits on existing 

conservation practice 

(maintenance) 

payments

Payments to maintain existing conservation 

practices are limited to 75 percent of the 

average county costs of the practices for the 

2001 crop year. For a beginning producer, this 

limit is 90 percent. 

Existing practice payments may be limited for any given signup. For the 2005 sign-up, existing practice payments were 

set at 25 percent of the stewardship payment.g

Limits on new 

conservation practice

payments 

New practice payments are limited to 75 percent 

of the cost of the average county costs of the 

practices for the 2001 crop year. For a 

beginning producer, this limit is 90 percent.

New practice payments were limited to 50 percent of the cost 

of adopting the practice during the 2001 crop year. For a 

beginning producer, this limit was 65 percent. In addition, 

new practice payments were limited to a total of $10,000 over 

the life of a CSP contract. Furthermore, within each 

watershed, only designated conservation practices were 

eligible for new practice payments.

Limits on enhancement 

payments

No specific language to limit enhancement 

payments. 

An enhancement payment limit or variable rate may be set for 

any given sign-up. For the 2005 sign-up, annual 

enhancement payments were limited to $13,750 for Tier I 

contracts; $21,875 for Tier II contracts; and $28,125 for Tier 

III contracts.

(Continued From Previous Page)

Cost control 

measures Farm bill

NRCS’s CSP regulations and fiscal year 2005 sign-up 

notice
Page 31 GAO-06-312 Conservation Security Program Costs

determine that resource concerns were managed at specified minimum levels of conservation 

treatment, NRCS field office staff reviewed information provided by the applicant and verified the 

accuracy of this information through interviewing the applicant and, in some cases, performing field 

checks.

c

A resource management system is 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 resources, as defined in accordance with the NRCS technical guide.

d

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 field office technical guide for all applicable 

resource concerns and considerations with the following exceptions: (1) the minimum requirement for 

soil quality on cropland is considered achieved when the soil conditioning index is positive, (2) the 

minimum requirement for water quantity and irrigation water management on cropland or pastureland 

is considered achieved when the current level of management for the system results in a water use 

index value of at least 50, and (3) 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. In addition, for Tier III, all riparian 

corridors, including streams and natural drainages, within the agricultural operation must be buffered to 

restore, protect, or enhance riparian resources. As appropriate, riparian corridors must 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. 

e

The farm bill provides that “[i]n entering into conservation security contracts with producers...the 

Secretary shall not use competitive bidding or any similar procedure.” Some stakeholders view 

NRCS’s use of enrollment categories as being inconsistent with this statutory language. However, 

NRCS has stated that it is not implementing a competitive process but is merely implementing the 

statutory scheme of providing payments for those applicants meeting specified criteria, so as to stay 

within the budgetary and technical assistance limits. 

f

Placement of applications into the five enrollment categories was based on the conservation treatment 

in place for at least 2 years, as well as soil conditioning index levels. If all the applications in an 

enrollment category could not be funded, the applications were funded based on subcategories. In the 

fiscal year 2005 sign-up, placement in these subcategories was based on various factors such as 

whether the applicant was a limited resource producer.

g

According to an NRCS official, NRCS generally lacks data on the cost of maintaining conservation 

practices in the 2001 crop year. As a result, NRCS calculates existing practice payments based on 25 

percent of the stewardship payment amount. According to another NRCS official, this alternative 

results in lower payments. In addition, NRCS stipulates in its regulation that existing practice 

payments may be based on a percentage of the stewardship payment if this payment does not exceed 

75 percent of the average 2001 county cost of installing the conservation practice.

Some Fiscal Year 2004 CSP 

Contract Payments 

Exceeded Farm Bill 

Payment Limits

Some fiscal year 2004 CSP contract payments exceeded applicable 

payment limits established in the farm bill. As discussed, the farm bill 

limited annual contract payments to an individual or entity to $20,000 for 

Tier I; $35,000 for Tier II; and $45,000 for Tier III. However, we found that 

409 (19 percent) of the 2,180 fiscal year 2004 CSP contract payments 

exceeded these limits. Specifically, 95 (12 percent) of Tier I payments 

exceeded $20,000; 209 (24 percent) of Tier II payments exceeded $35,000; 

and 105 (21 percent) of Tier III payments exceeded $45,000. (Tables 12, 13, 

and 14 in app. II show the distribution of fiscal year 2004 contract payments 

for Tiers I, II, and III, respectively.)
Page 32 GAO-06-312 Conservation Security Program Costs

According to NRCS officials, these contract payments exceeded the 

statutory limits because they included an “advance” enhancement payment 

component. These officials noted that NRCS did not intend for this 

advance component to be included in the annual contract payment limit 

because it was a one-time payment. Furthermore, they said that any 

producer who received an advance enhancement payment would have that 

payment (generally limited to $10,000) offset through deductions over the 

remaining years of that producer’s CSP contract. For example, for a 

producer whose contract had 9 remaining years, NRCS would deduct oneninth of the advance enhancement payment in each of these years. Thus, 

over the life of a contract, no producer would receive more than the 

maximum total possible payment (e.g., $450,000 over 10 years for a Tier III 

contract). NRCS officials explained that for the fiscal year 2004 CSP signup, NRCS, using its borrowing authority, obtained the maximum amount of 

funding available, or $41.443 million. However, because of lower than 

anticipated producer participation in CSP that year, NRCS did not need all 

of this money to make annual contract payments to producers. NRCS 

decided to use the remaining amounts—about $13.6 million—to make a 

one-time advance enhancement payment to most (2,070 of 2,180) of the 

producers enrolled in CSP that year.44 In addition, according to NRCS 

officials, in subsequent years, the offsetting deductions made for these 

fiscal year 2004 advance enhancement payments would result in more 

funding being available for new CSP contracts. 

We plan to pursue with USDA’s Office of General Counsel the availability of 

remaining CSP funds for advance enhancement payments that, when 

included with annual contract payments, exceed the statutory payment 

limits.

44NRCS’s CSP sign-up notices for fiscal years 2005 and 2006 indicated that advance 

enhancement payments would be available in those years as well. However, unlike the 2004 

signup, the 2005 and 2006 signup notices stated that the annual maximum payment limits 

would include any advance enhancement payment made to a producer. NRCS did not make 

advance enhancement payments in 2005. The results of the 2006 signup were not available 

as of early April 2006. 
Page 33 GAO-06-312 Conservation Security Program Costs

Although NRCS Has 

Established Internal 

Controls, Weaknesses in 

These Controls Increase the 

Risk of Improper Payments 

In addition to the cost control measures in the farm bill and CSP 

regulations, USDA and NRCS have established internal controls that help 

to ensure the accuracy and appropriateness of payments made through 

agricultural conservation programs, including CSP. These controls, also 

referred to as management controls, include the organizational policies and 

procedures used to reasonably ensure that (1) programs achieve their 

intended results; (2) resources are used consistent with agency and 

departmental missions; (3) programs and resources are protected from 

waste, fraud, and mismanagement; (4) laws and regulations are followed; 

and (5) reliable and timely information is obtained, maintained, reported, 

and used for decision-making.45 (More specific information on USDA and 

NRCS internal controls is presented in app. VII.) However, recent reviews 

of these internal controls done by NRCS’s Oversight and Evaluation (O&E) 

Staff and the USDA Inspector General raise concerns regarding the 

adequacy of some of these controls to preclude improper payments being 

made under CSP. 

Although NRCS has established internal control guidance for CSP, 

implementation of these controls has sometimes been criticized. For 

example, in reviews it conducted in 2005, NRCS’s O&E staff found 

problems with several aspects of the agency’s implementation of CSP, 

including its implementation of some internal controls. (We examined 

draft reports related to these reviews in January 2006; NRCS considers the 

information contained in these drafts to be predecisional and subject to 

change pending management review and the agency’s preparation of 

management action plans describing its response to the reports’ 

recommendations.) In assessing internal controls, the O&E staff 

conducted work at NRCS field offices located in 18 watersheds (in 13 

states) that were eligible for either the fiscal year 2004 or fiscal year 2005 

CSP sign-up. Among other things, the staff found weaknesses in quality 

assurance and case file documentation. For example, the staff found that 

12 of 13 NRCS state-level Quality Assurance Plans reviewed did not include 

specific CSP components such as those related to conservation planning 

45Standards for Internal Control in the Federal Government (GAO/AIMD-00-21.3.1, 

Washington, D.C.: November 1999) defines internal controls as an integral component of an 

organization’s management that provides reasonable assurance that effectiveness and 

efficiency of operations, reliability of financial reporting, and compliance with applicable 

laws and regulations are being achieved. The five standards of internal control are control 

environment, risk assessment, control activities, information and communications, and 

monitoring. The terms internal control, management control, and administrative control are 

often used interchangeably. 
Page 34 GAO-06-312 Conservation Security Program Costs

and application, that NRCS’s Conservation Programs Manual (sec. 518.75 

(b)) states must be included. In addition, the staff found that 33 of 55 fiscal 

year 2004 CSP contracts studied had not had a contract review. The 

Conservation Programs Manual (sec. 518.101) provides that “the 

designated [NRCS] conservationist will review the contract annually and 

document that the provisions of the contract are followed.” According to 

the O&E staff, the absence of a contract review could result in payments 

being made for enhancements that are not being done or not yet completed 

as scheduled in the producer’s conservation security plan. 

Regarding case file documentation, the O&E staff found that many 

conservation stewardship plans were missing components. For example, 

most plans included components such as maps and map attribute 

information, but information needed to evaluate the effectiveness of a plan 

in achieving its environmental objectives was either missing or incomplete 

in up to 60 percent of the plans. The preparation of conservation 

stewardship plans is required by the farm bill and, according to the 

Conservation Programs Manual (sec. 518.70), this plan “is the basis for a 

conservation stewardship contract.” In general, a plan identifies the 

objectives for the associated contract, the time frames for implementing 

new practices, enhancements that will impact payment levels over the life 

of the contract, and additional measures needed to move to a higher tier 

level. In light of these findings, O&E staff offered several tentative 

recommendations related to revising NRCS’s written guidance documents, 

developing a checklist for staff to use in compiling conservation 

stewardship plans, improving management oversight, and providing staff 

further training. 

In addition, other aspects of NRCS’s internal controls have been criticized. 

For example, in January 2005, the USDA Inspector General reported that 

(1) NRCS had neither identified the internal control measures in place to 

preclude, or detect in a timely manner, improper payments for the 

programs it administers, including CSP, nor did it know if the controls were 

in operation and (2) NRCS had not conducted risk assessments of potential 

improper payments for these programs. In addition, USDA reported 

several material weaknesses to its financial and accounting systems and 

information security program in its fiscal year 2005 Performance and 

Accountability Report. See appendix VII for further discussion of these 

matters. 

In its planning documents, NRCS notes that the nation made a massive 

financial commitment to conservation in the 2002 farm bill and thus NRCS 
Page 35 GAO-06-312 Conservation Security Program Costs

must manage the taxpayers’ money well, including documenting how these 

funds have been spent. Among other things, the agency said it would 

develop processes to better record obligations and improve the accuracy 

and timeliness of its financial information. However, until actions are 

completed to correct these internal control problems, NRCS cannot be 

certain that contract payments information for CSP and other programs is 

accurate. This increases the potential for improper payments being made 

under these programs. 

Inconsistencies in State 

Office Determinations of 

Producer Eligibility for CSP 

Payments May Undermine 

NRCS Cost Controls and the 

Achievement of CSP’s 

Intended Wildlife Habitat 

Benefits

NRCS’s efforts to control program spending may be weakened by 

inconsistencies in NRCS state offices’ determinations of producer 

eligibility for the three CSP payment tiers. Several NRCS state officials 

expressed concerns about such inconsistencies, suggesting that some state 

offices may have been more lenient than their own state in determining 

producers’ eligibility for CSP payments. In particular, several NRCS state 

officials had specific concerns about inconsistencies in the wildlife habitat 

assessment criteria that NRCS state offices use, in part, to determine 

applicant eligibility for Tier III, the highest CSP payment level.46 The farm 

bill requires a producer to meet minimum standards for all applicable 

resource concerns on the entire agricultural operation, which would 

include wildlife habitat, to be eligible for Tier III payments.47

For the fiscal year 2004 CSP sign-up, NRCS provided limited guidance to its 

state offices that were responsible for developing the assessment criteria 

that were used to determine whether a producer met minimum standards 

for protecting wildlife habitat. However, a post-sign-up debriefing of NRCS 

headquarters and state officials to identify lessons learned indicated that 

the state offices developed assessment criteria that were extremely 

variable, contributing to significant differences in the rate of CSP 

participation and payments at the Tier III level among the various 

46Other NRCS state officials did not share the concern that state offices’ wildlife habitat 

assessment criteria were inconsistent. They generally stated that they view CSP as a 

“working lands” program that should be flexible and not overemphasize wildlife habitat.

47Wildlife habitat could also be a factor in determining applicant eligibility for Tier II. For 

example, to be eligible for Tier II under NRCS’s fiscal year 2005 sign-up notice, an applicant 

must address a third applicable resource concern—in addition to soil and water quality—by 

the end of the contract period. For some watersheds, NRCS identified wildlife habitat as 

this third resource concern. 
Page 36 GAO-06-312 Conservation Security Program Costs

watersheds included in the sign-up.48 According to documentation based on 

this debriefing, this variability in assessment criteria was attributed to (1) 

differences in the type of assessment criteria used (i.e., some states used 

targeted species assessment criteria while others used general wildlife 

assessment criteria) and (2) differences among the states’ general wildlife 

assessment criteria. Table 5 shows the Tier III participation and payment 

rates for each of these watersheds.

48In addition, Environmental Defense, a national environmental organization, reviewed the 

fiscal year 2004 assessment criteria and reported—in a November 2004 discussion paper, 

“Targeting Wildlife through the Conservation Security Program (CSP): Assessment of the 

2004 Sign-up”—that the criteria were highly unequal from watershed to watershed. This 

paper, coauthored by a former NRCS wildlife biologist, also raised questions about whether 

significant wildlife habitat benefits were being achieved on all operations determined to be 

eligible for Tier III payments.
Page 37 GAO-06-312 Conservation Security Program Costs

Table 5: Tier III Contracts and Payments by Watershed, Fiscal Year 2004

Source: GAO analysis of NRCS data (as of July 27, 2005).

Watershed/lead NRCS state 

office

Tier III 

contracts

Total 

contracts

Percentage of 

total contracts 

in Tier III

Tier III 

contract 

payments

Total 

payments

Percentage of total 

payments for

Tier III contracts

Auglaize

Ohio 66 189 35% $982,117 $2,831,953 35%

Blue Earth

Minnesota 9 280 3 183,424 3,242,507 6

East Nishnabotna 

Iowa 8 145 6 86,356 1,129,248 8

Hondo

Texas 8 16 50 61,205 71,766 85

Kishwaukee

Illinois 16 191 8 304,386 4,828,559 6

Lemhi

Idaho 10 18 56 289,917 379,555 76

Little

Georgia 0 37 0 0 949,539 0

Little River Ditches

Missouri 12 189 6 311,548 4,424,805 7

Lower Chippewa

Wisconsin 50 207 24 836,637 2,056,147 41

Lower Little Blue

Kansas 18 143 13 342,893 1,204,849 28

Lower Salt Fork Arkansas

Oklahoma 57 176 32 552,618 1,305,590 42

Lower Yellowstone 

Montana 13 49 27 327,821 874,217 37

Moses Coulee

Washington 4 43 9 92,563 826,985 11

Punta de Agua

New Mexico 15 19 79 584,594 626,491 93

Raystown

Pennsylvania 14 36 39 82,556 145,831 57

Saluda 

South Carolina 1 76 1 272 138,619 < 1

St. Joseph

Indiana 125 217 58 3,122,554 4,183,158 75

Umatilla

Oregon 83 149 56 3,860,988 5,237,575 74

Total 509 2,180 23% $12,022,446 $34,457,394 35%
Page 38 GAO-06-312 Conservation Security Program Costs

As shown in the table, the percentage of total contracts in Tier III varied 

from a low of 0 in one watershed to a high of 79 percent in another 

watershed. Part of this variation may be attributed to differences in land 

uses among watersheds. For example, land that is in an intensive 

agricultural use, such as cropland, tends to be less suitable as wildlife 

habitat than land that is not used intensively such as rangeland. However, 

even among watersheds in which CSP enrollments were over 90 percent 

cropland—Auglaize, Blue Earth, East Nishnabotna, Kishwaukee, Little, 

Little River Ditches, Lower Chippewa, Raystown, and St. Joseph—the 

percentage of total contracts in Tier III varied from 0 to 58 percent, and the 

percentage of payments going to Tier III contracts ranged from 0 to 75 

percent. 

In response to the variation in wildlife habitat assessment criteria used 

during the fiscal year 2004 sign-up and related differences in Tier III 

participation, NRCS’s Wildlife Team, responsible for technical matters 

concerning wildlife habitat under CSP, developed national guidance that 

NRCS state offices were to follow in creating their criteria for subsequent 

sign-ups. The national guidance was provided to state office staff during 

training sessions held before the fiscal year 2005 CSP sign-up. 

The Wildlife Team developed the national guidance based on NRCS’s CSP 

regulations that state that the minimum requirement for wildlife habitat is 

considered achieved when a producer’s level of treatment and management 

results in an index value of at least 0.5 based on a general or speciesspecific habitat assessment guide. A Wildlife Team official said this 0.5 

index value corresponds to 50 percent of the potential habitat for a given 

land area49 and stated that the national guidance was developed 

accordingly. He noted that, because habitat needs differ across the nation, 

it is not possible to develop one set of criteria that would work for the 

whole country and apply to all situations. Because of these differences, the 

national guidance instructs each state to define its own minimum criteria 

for each of the listed wildlife resource components in the national guidance

49“Potential habitat” refers to that portion of the land area of an operation that would be 

needed to support general or species-specific habitat needs, such as food, cover, and water. 

For example, potential habitat areas could include shelterbelts or buffers consisting of 

trees, shrubs, grasses, or other perennial vegetation interspersed with cropland fields. 
Page 39 GAO-06-312 Conservation Security Program Costs

based upon the state’s own unique set of conditions.50 For example, for 

rangeland, the national guidance identifies vegetative height management 

during nesting season as a component that must be addressed and instructs 

state offices to define the minimum foliage height of grasses. Despite this 

flexibility, the official said that the purpose of this national guidance was to 

avoid the wide variations in criteria that led to large discrepancies and 

inconsistencies in the fiscal year 2004 sign-up. 

According to the national guidance, NRCS state offices’ general wildlife 

habitat assessment criteria for cropland must address the following six 

wildlife resource components:51

• Amount of noncrop vegetative cover. These areas include woodlots, 

windbreaks, field corners, hedgerows, grassed areas, wetlands, or 

riparian areas managed for wildlife. According to the guidance, state 

offices must define a minimum percentage of noncrop vegetative cover 

within or adjacent to offered cropland fields.52 A state office’s criteria for 

this component must be met for each cropland field.53

• Size of noncrop vegetative cover. State offices must define a minimum 

dimension for these areas. According to a Wildlife Team official, an 

example is a minimum width. 

50This instruction pertains to general wildlife habitat assessment criteria. For speciesspecific criteria—referred to in the national guidance as models for species of conservation 

concern—the guidance instructs state offices to define the habitat elements (food, cover, 

and water) that are required and rate those elements based upon the degree to which they 

are present within the assessment area. 

51In addition to a list of components for cropland, the national guidance includes separate 

wildlife resource component lists for rangeland, hayland, and pastureland. According to 

NRCS officials, establishing habitat assessment criteria for cropland is particularly difficult, 

because cropland is used intensively and generally is less compatible with wildlife habitat 

than other land uses. On an acreage basis, cropland is the leading type of land enrolled in 

CSP. 

52According to NRCS officials, this noncrop vegetative cover does not necessarily need to be 

land that the producer has recently removed from crop production. That is, it can be land 

that has not been used for crop production in recent years or was never used for crop 

production.

53Under this guidance, state office criteria regarding size, interspersion, and condition of 

noncrop vegetative cover must also be met for each cropland field. 
Page 40 GAO-06-312 Conservation Security Program Costs

• Interspersion of noncrop vegetative cover.54 State offices must define a 

minimum distance from all parts of cropland fields to noncrop 

vegetative cover. 

• Condition of noncrop vegetative cover. Minimum standards for the 

composition and structure of the noncrop vegetative cover must be 

defined. Examples include minimum plant heights and restrictions on 

mowing.

• Conditions for lakes, ponds, wetlands, and streams. Minimum 

conditions, such as buffer widths, must be defined 

• Crop residue management. Minimum levels of crop residue must be 

defined.55 

According to Wildlife Team officials, the national guidance instructed each 

NRCS state office to develop wildlife habitat assessment criteria that 

consisted of questions corresponding to the wildlife resource components 

in the national guidance. For each component of the national guidance, 

these officials said these questions were to include specific criteria 

established by the state offices and were intended to determine if a CSP 

applicant was meeting these criteria and thus was addressing the wildlife 

habitat resource concern. In general, the phrasing and number of questions 

that state offices included in these assessment criteria, as well as the 

overall design of the assessment criteria, varied. For example, one state 

office’s assessment criteria had nine questions and required a “yes” 

response to each question. Another state office’s assessment criteria 

included six questions and required a “yes” response to each question. 

In reviewing the wildlife habitat assessment criteria that NRCS state offices 

used in the fiscal year 2005 sign-up, we found that some NRCS state offices 

used criteria that were inconsistent with the national guidance. For 

example, the design of the assessment criteria used for cropland in three 

states made it possible for NRCS to determine that a producer was 

addressing the wildlife habitat resource concern even though that producer 

may not have met the state criteria for each of the six resource components 

54Interspersion refers to the proximity of noncrop vegetative cover to cropland fields.

55A measure of the amount of crop residue is the percentage of crop residue from the 

previous harvest left on the soil surface before and after planting a new crop.
Page 41 GAO-06-312 Conservation Security Program Costs

identified in the national guidance. Although these three state offices’ 

wildlife habitat assessment criteria included a question or questions that 

generally related to each of the national guidance’s components, the state 

offices required “yes” responses to only five of the seven questions listed in 

the assessment criteria. Thus, in effect, these states did not require 

producer compliance with all aspects of their state criteria or, by extension, 

all six components of the national guidance. A Wildlife Team official 

explained that although NRCS has not undertaken a review to determine 

whether producers have qualified for Tier III payments under this scenario, 

based on informal discussions with field office staff, this official concluded 

that some producers received such payments during the fiscal years 2004 

and 2005 sign-ups.56 In addition, another Wildlife Team official said it was 

particularly problematic that a producer could receive a Tier III payment in 

these states without meeting the state criteria related to the amount of 

noncrop vegetative cover.57 According to this official, this component of the 

national guidance is particularly important for cropland because it is 

intensively farmed and generally unsuitable for wildlife habitat. Thus, the 

creation or preservation of areas of noncrop vegetative cover associated 

with cropland is critical to providing adequate wildlife habitat. 

As a result of these inconsistencies with the national guidance, producers 

in these states could qualify for Tier III payments even though they might 

not be providing habitat as intended by the national guidance and might not 

have qualified for Tier III payments in another state that used criteria that 

more closely followed the national guidance. In addition, the use of criteria 

that are inconsistent with the national guidance reduces NRCS’s ability to 

ensure that CSP is achieving its intended wildlife habitat benefits. If 

producers are not providing the wildlife habitat benefits intended by the 

national guidance, the environmental benefit achieved per dollar of CSP

56We did not conduct file reviews at these NRCS state offices to determine the extent of 

producers who answered “yes” to only five or six of the seven questions included in the 

wildlife habitat assessment criteria used by these states. 

57In addition, the states’ criteria for the amount of noncrop vegetative cover are inconsistent 

with the national guidance. Specifically, the states’ criteria require a minimum percentage 

of noncrop vegetative cover for the “offered operation,” meaning the entire farm. However, 

the national guidance states that a minimum percentage of noncrop vegetative cover for 

“each cropland field” on an operation must be defined by the states.
Page 42 GAO-06-312 Conservation Security Program Costs

spending may be reduced,58 and CSP cost control measures would be 

weakened. Furthermore, some NRCS state officials said such variability in 

state assessment criteria could lead to pressures for more lenient payment 

eligibility determinations within their own states. According to these 

officials, when producers in a state that is conforming to the national 

wildlife habitat guidance see that other states are using more lenient 

criteria, they may pressure their NRCS state office to adopt more lenient 

criteria as well.

NRCS Wildlife Team officials agreed with our assessment that some NRCS 

state offices used wildlife habitat assessment criteria for the fiscal year 

2005 sign-up that were not consistent with the national guidance. In 

addition, these officials said that NRCS should conduct field tests of states’ 

criteria to ensure that these criteria are consistent with the national 

guidance and to determine the extent to which Tier III contracts provide 

adequate wildlife habitat benefits. However, they cited time constraints as 

the primary reason that states’ criteria have not been field tested and they 

indicated, as of February 2006, that NRCS does not have plans to do this 

testing. Regarding reasons why some state offices have not developed 

criteria consistent with the national guidance, these officials noted that 

some state office officials hold the view that CSP is a working lands 

program and, therefore, should not place too much emphasis on wildlife 

habitat or force a producer to take land out of production in order to create 

the habitat needed to qualify for a Tier III payment. Some of the state 

officials we contacted corroborated this point. In addition, the Wildlife 

Team officials noted that some state office officials might not have 

understood what guidance they were supposed to follow during the fiscal 

year 2005 sign-up because NRCS’s Conservation Programs Manual—the 

principal source of guidance for NRCS field office staff for implementing 

conservation programs—had no explicit reference to the national 

guidance. Accordingly, the Wildlife Team officials said they had 

recommended to NRCS’s programs office that a reference to the national

58For example, a producer who is not fully providing the wildlife habitat benefits intended 

by the national guidance could nevertheless be determined by an NRCS state office to be 

eligible for Tier III payments. Thus, this producer could receive a maximum payment of up 

to $45,000. However, if the NRCS state office had strictly applied the national guidance, the 

producer would have been enrolled in Tier II instead. Under this tier, the producer’s 

maximum payment would be up to $35,000. In this case, the difference between the Tier III 

and Tier II payment—up to $10,000—would free up program funds for other purposes, such 

as funding the application of another eligible producer who otherwise would not receive 

program funding.
Page 43 GAO-06-312 Conservation Security Program Costs

guidance be included in the manual. They opined that inclusion of this 

reference would emphasize the importance of the national guidance to the 

agency’s field staff. 

Finally, some NRCS state officials also expressed concerns about other 

inconsistencies among state offices in determining producer eligibility for 

certain CSP payments. In particular, they cited inconsistencies in states’ 

determinations that producers are sufficiently addressing water quality 

issues. According to NRCS officials, the agency has been aware of this 

issue since the fiscal year 2004 sign-up when it relied on state-based 

standards to determine if CSP applicants were meeting eligibility 

requirements for water quality concerns. In the 2005 sign-up, to increase 

consistency, NRCS required its state offices to develop water quality 

checklists based on national criteria to assess applicant eligibility regarding 

water quality issues. These checklists were to address all critical water 

quality concerns, including those related to nutrients, pesticides, and 

sediment. In the 2006 sign-up, to further increase consistency, NRCS 

developed a national water quality eligibility “tool” that uses indices and 

scales to achieve an overall water quality assessment rating for each 

applicant. Using the tool, NRCS assigns points for an applicant’s current 

conservation activities and the level of water quality protection those 

activities provide. 

Despite Legislative and 

Regulatory Measures 

That Lessen Possible 

Duplication between 

CSP and Other 

Programs, the 

Potential for Duplicate 

Payments Still Exists, 

and Such Payments 

Have Occurred

The farm bill and CSP regulations include various measures that reduce the 

potential for duplication between CSP and other USDA conservation 

programs. For example, as authorized in the statute, CSP can reward 

producers for conservation actions that they have already taken, whereas 

other programs generally provide assistance to producers to encourage 

them to take new actions intended to address conservation problems on 

working lands or to idle or retire environmentally sensitive land from 

production. In addition, USDA regulations establish higher minimum 

eligibility standards for CSP than exist for other programs, helping to 

differentiate the applicant pool for CSP from these programs. However, the 

possibility remains that producers could receive duplicate payments for the 

same conservation action from CSP and other programs, and such 

duplication has occurred. In addition, NRCS does not have a 

comprehensive process to preclude or identify such duplicate payments. 
Page 44 GAO-06-312 Conservation Security Program Costs

Farm Bill Provisions Lessen 

the Potential for Duplication

CSP operates under a number of statutory provisions that distinguish it 

from other USDA conservation programs and make duplicate payments 

less likely. Specifically, the farm bill 

• explicitly prohibits duplicate payments under CSP and other 

conservation programs for the same practices on the same land.

• provides incentives to producers, through CSP’s Tier III payments, to 

address all applicable resource concerns on entire agricultural 

operations (i.e., whole-farm planning).

• provides that CSP may reward producers for maintaining conservation 

practices that they have already undertaken, whereas other programs 

generally provide assistance to encourage producers to take new 

actions to address conservation problems on working lands or to idle or 

retire environmentally sensitive land from agricultural production.

• establishes several types of CSP payments—stewardship, existing 

practice, and enhancement payments—that are unique to CSP and not 

offered under other programs.59

In addition, other farm bill provisions reduce potential duplication by 

prohibiting certain payments from being made through CSP.60 For example, 

CSP payments cannot be made for

59CSP stewardship payments reward producers for conservation actions they have already 

taken; existing practice payments support the maintenance of existing conservation 

practices; and enhancement payments encourage conservation actions that generally 

exceed the minimum or nondegradation standards developed by NRCS for individual 

conservation practices. The term “nondegradation standard” means the level of measures 

(actions) required to adequately protect and prevent degradation of one or more natural 

resources, as determined by NRCS in accordance with the quality criteria described in 

NRCS handbooks, such as the National Handbook of Conservation Practices. According to 

NRCS’s regulations, a conservation practice is a specified treatment, such as a structural or 

land management practice, that is planned and applied according to NRCS standards and 

specifications. If a producer’s conservation actions exceed the minimum standards for a 

conservation practice, the producer may qualify for an enhancement payment. 

60The farm bill also states that NRCS shall, to the maximum extent practicable, eliminate 

duplication of planning activities under Environmental Quality Incentives Program (EQIP) 

and comparable conservation programs. 
Page 45 GAO-06-312 Conservation Security Program Costs

• construction or maintenance of animal waste storage or treatment 

facilities or associated waste transport or transfer devices for animal 

feeding operations.61 

• conservation activities on lands enrolled in the Conservation Reserve 

Program, the Wetlands Reserve Program, and the Grassland Reserve 

Program.

Furthermore, if a producer receives payments under another program—

such as a commodity price support program—that are contingent on the 

producer’s compliance with requirements for the protection of highly 

erodible land and wetlands, the farm bill only authorizes a CSP payment on 

that land for practices that exceed those requirements.62

NRCS Regulatory Measures 

and Procedures Further 

Distinguish CSP from Other 

Programs

In addition to farm bill provisions that reduce potential duplication, a 

number of NRCS regulatory measures and procedures further distinguish 

CSP from other USDA conservation programs. These include the 

following: 

• NRCS’s CSP regulations and Conservation Programs Manual elaborate 

on statutory provisions that prevent producers from receiving payments 

under CSP for the same practice on the same land. For example, the 

manual states that a CSP participant may not receive CSP cost-share 

funding for new conservation practices that were applied with financial 

assistance from other USDA conservation programs. In addition, the 

manual states that a participant may not receive a CSP payment for 

enhancement activities if the participant is also earning financial 

61In contrast, EQIP cost-share payments for these practices are significant because the farm 

bill required NRCS to target 60 percent of EQIP funds made available for cost-share and 

incentive payments at practices related to livestock and poultry production. 

62The conservation compliance provisions of the Food Security Act of 1985, as amended, 

require, as a condition of eligibility for certain federal farm programs, that producers reduce 

erosion on highly erodible cropland and, with certain exceptions, prohibit the conversion of 

wetlands to cropland. Specifically, the 1985 act, as amended, requires farmers to do the 

following: (1) apply conservation systems to highly erodible lands cropped in any year from 

1981 through 1985 to substantially reduce soil erosion (the act’s specific “conservation 

compliance” provision); (2) for highly erodible land not farmed prior to the act’s passage, 

apply a conservation system before planting and control soil erosion to a greater extent than 

required under conservation compliance (the act’s “sodbuster” provision); and (3) avoid 

converting wetlands to cropland (the act’s “swampbuster” provision). 
Page 46 GAO-06-312 Conservation Security Program Costs

assistance payments through other programs for the same conservation 

practice or action on the same land during the same year. 

• CSP regulations establish higher minimum eligibility standards for CSP 

than exist for other programs, helping to differentiate the applicant pool 

for CSP from the potential applicants for other programs. For example, 

to be eligible for a Tier I CSP contract, a producer must already have 

addressed water and soil quality to a minimum level of treatment. NRCS 

encourages producers who do not meet these higher standards to apply 

for assistance under other programs. 

• For the 2005 sign-up, NRCS limited CSP cost-share payments for new 

conservation practices to 50 percent (65 percent for beginning and 

limited-resource producers) of implementation costs. NRCS allows 

cost-share payments of up to 75 percent under the Environmental 

Quality Incentives Program (EQIP) and the Wildlife Habitat Incentives 

Program (WHIP).63 Thus, producers have a stronger financial incentive 

to apply for new conservation practice payments through EQIP or WHIP 

rather than CSP. In addition, NRCS has limited the number of 

conservation practices that are eligible for funding through CSP. In any 

given watershed, CSP payments for new conservation practices were 

only offered for up to about 20 of the approximately 200 conservation 

practices that can be funded through EQIP.

• NRCS has encouraged enhancement payments for conservation actions 

that exceed the minimum treatment standards required for CSP 

eligibility. According to NRCS officials, emphasizing enhancements 

helps to differentiate CSP from other programs, such as EQIP and WHIP, 

which do not offer similar payments. As discussed, EQIP and WHIP 

payments generally assist producers in achieving a level of treatment 

that meets the minimum or nondegradation standard for a conservation 

activity,64 as defined by NRCS, which generally is less than the minimum 

treatment standard for CSP enhancements. Most CSP payments made 

in fiscal years 2004 and 2005 were for enhancements. In fiscal year 2004, 

enhancement payments and advance enhancement payments accounted 

63EQIP and WHIP are described in appendix IV. Under EQIP, beginning and limited-resource 

producers may receive cost-share payments of up to 90 percent.

64Under EQIP, a producer could receive cost-share payments for conservation practices that 

exceed the nondegradation standard although this level of management intensity is not 

required per se.
Page 47 GAO-06-312 Conservation Security Program Costs

for about 81 percent of total CSP payments.65 In fiscal year 2005, 

enhancement payments were 81 percent of total CSP payments.

• CSP regulations and procedures also provide financial incentives for 

enhancements. Specifically, in order to receive a larger payment up to 

the full total payment allowed under each enrollment tier, a producer 

must agree to implement enhancements because of the limits on 

stewardship, existing practice, and new practice payments. 

Stewardship payments are capped under the farm bill and CSP 

regulations at $5,000 for Tier I, $10,500 for Tier II, and $13,500 for Tier 

III.66 Furthermore, CSP sign-up notices have limited existing practice 

payments to a flat rate of 25 percent of the stewardship payment for 

each tier and have limited new practice payments to $10,000 for each 

tier. As a result of these limits, the maximum total payment a producer 

could receive (i.e., the total of the stewardship, existing practice, and 

new practice payments) without an enhancement payment would be 

$16,250 for Tier I, $23,125 for Tier II, and $26,875 for Tier III. Therefore, 

in order to receive the full amount of CSP financial assistance available 

for an enrollment tier (e.g., $20,000 for Tier I; $35,000 for Tier II; and 

$45,000 for Tier III), the producer must agree to implement 

enhancements. In addition, to encourage participants to add new 

enhancements over the life of a contract, NRCS incorporated variable 

enhancement payments into the fiscal year 2005 CSP contracts that 

gradually reduce the annual payments for a contract’s base (initial) 

enhancements over the contract’s term.67 Thus, to compensate for this 

65Fiscal year 2004 CSP payments included $13.6 million in advance enhancement payments. 

Excluding advance enhancement payments, total enhancement payments made in fiscal 

year 2004 were about $14.1 million, or about 68 percent of total CSP payments made that 

year.

66In addition, under the farm bill, stewardship payments are calculated by formula, taking 

into account acreage, land rental rates (or other appropriate rates), and a defined 

percentage that varies by tier. The CSP regulations reduce the stewardship payments by 

applying a reduction factor that varies by tier (i.e., 25 percent for Tier I, 50 percent for Tier 

II, and 75 percent for Tier III).

67For these contracts, the fiscal year 2005 enhancement payment was 150 percent of the 

contract’s base enhancement value. Annual enhancement payments are scheduled to 

decline to 90 percent of this base in fiscal year 2006, 70 percent in fiscal year 2007, 50 

percent in fiscal year 2008, 30 percent in fiscal year 2009, and 10 percent in fiscal year 2010. 

In contrast, payments for enhancements added to a fiscal year 2005 contract after that year 

are not subject to this declining payment schedule. 
Page 48 GAO-06-312 Conservation Security Program Costs

diminishing income, a producer would need to add new enhancements 

over the life of a contract. 

Potential for Duplication 

Still Exists and Duplicate 

Payments Have Occurred

Despite farm bill and NRCS regulatory measures and procedures that 

lessen possible duplication between CSP and other programs, the potential 

for duplication still exists and has occurred with regard to CSP 

enhancement payments. For example, although some payments made 

through CSP are unique to that program, payments for new conservation 

practices or actions such as nutrient management can be made through 

CSP and other programs, creating the potential for duplicate payments. In 

addition, CSP payments for enhancement actions have the potential to 

overlap with payments under other programs for conservation practices. 

Regarding the latter possibility, we found a number of cases where 

duplicate payments had been made for CSP enhancements and 

conservation practices under other programs for the same conservation 

action on the same land during the same year. In addition, NRCS lacks a 

comprehensive process to identify potential duplicate payments or 

duplicate payments already made. 

Table 6 summarizes the types of conservation payments available through 

CSP, EQIP, and WHIP.
Page 49 GAO-06-312 Conservation Security Program Costs

Table 6: Conservation Payments Available through CSP, EQIP, and WHIP

Sources: GAO analysis of CSP, EQIP, and WHIP provisions.

a

The farm bill states that these enhancement payments are for conservation practices that exceed the 

minimum requirements for the applicable tier of CSP participation. Under these minimum 

requirements, the level of conservation treatment must meet nondegradation standards for the 

applicable resource concerns. In implementing CSP, NRCS has made enhancement payments 

available for soil, nutrient, wildlife habitat, pest, energy, air, irrigation water, and grazing management, 

as well as locally identified conservation needs. 

As indicated in the table, the farm bill allows cost-share payments for the 

adoption of conservation practices that could be implemented through any 

of these programs,68 creating the possibility that a producer could receive 

duplicate payments for the same conservation practice under CSP and 

another program. In reviewing fiscal year 2004 contracts and payments 

data for CSP, EQIP, and WHIP, we did not find evidence of duplicate 

payments related to funding the adoption of the same conservation 

practice under CSP and another program on the same operation during the 

same year. However, the opportunity for such duplicate payments to have 

been made during fiscal year 2004 was very low because only four 

producers received CSP payments for the adoption of new conservation 

practices that year. NRCS officials said that, because the fiscal year 2004 

contracts were approved in July 2004, the time remaining in the fiscal year 

was not sufficient for most CSP participants to implement new 

Payment type CSP EQIP WHIP

Stewardship payment to reward prior conservation actions X

Existing practices payment for the cost of maintaining previously implemented conservation 

practices X

Cost-share payment for the adoption of conservation practices that meet nondegradation 

standards; these conservation practices include land management practices (e.g., nutrient 

management to reduce water pollution); vegetative practices (e.g., planting native grasses to 

provide wildlife habitat); and structural practices (e.g., fencing to keep livestock out of streams) X X X

Incentive payment for the adoption of land management conservation practices that meet 

nondegradation standards (e.g., crop residue management to reduce soil erosion) X

Enhancement payment for conservation actions that exceed minimum eligibility standards (e.g., 

delaying haying and grazing pasture or grassland from April 15 to August 1 to improve habitat for 

ground-nesting birds that reproduce during this period)a X

68These conservation practices must be listed in NRCS’s National Handbook of 

Conservation Practices. A conservation practice is a specified treatment that is planned and 

applied according to NRCS standards and specifications. Practices approved by NRCS are 

compiled at each conservation district in its field office technical guide. Practices can be 

structural, such as terraces and animal waste storage facilities, or land management, such as 

strip cropping, nutrient management, and pest management. 
Page 50 GAO-06-312 Conservation Security Program Costs

conservation practices and receive a payment. In addition, these officials 

said NRCS encourages producers to use programs other than CSP to obtain 

financial assistance for new conservation practices. As discussed, these 

other programs generally offer a higher cost share for new practices than 

offered under CSP. In the future, greater numbers of producers may 

receive CSP payments for new conservation practices, increasing the 

potential for duplicate payments. 

The potential for duplicate payments also exists between CSP 

enhancement payments and conservation practice payments made under 

other programs. Each year, NRCS state offices develop lists of 

conservation actions eligible for CSP enhancement payments in their 

states. NRCS headquarters officials then review and approve the states’ 

lists. If the reviewing officials find that a proposed enhancement includes 

conservation actions that do not exceed the minimum standard for the 

related conservation practice, as defined by NRCS, they work with the 

NRCS state office to revise the proposed enhancement. However, some 

overlap may occur because a given conservation action can have a different 

purpose under another program. For example, several states offer CSP 

enhancement payments for the use of conservation crop rotation for the 

purpose of breaking plant pest cycles to reduce the need for pesticide 

applications. At the same time, these states offer EQIP funding for the use 

of conservation crop rotation for the purposes of reducing soil erosion, 

providing wildlife cover and food, and improving soil organic matter. This 

overlap increases the potential for a producer to receive two payments for 

the same conservation action on the same land during the same year. The 

farm bill prohibits payments under CSP and another conservation program 

for the same practice on the same land. The CSP manual elaborates on this 

provision, stating that a participant may not receive a CSP payment for 

enhancement activities if the participant is also earning financial assistance 

payments through other programs for the same practice or activity on the 

same land during the same year.69

69“Activity” means an action other than a conservation practice that is included as a part of a 

conservation stewardship contract. These actions could include a measure, an incremental 

movement on a conservation index or scale, or an on-farm demonstration, pilot, or 

assessment. “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 resources.
Page 51 GAO-06-312 Conservation Security Program Costs

Our file reviews and analysis of NRCS payments data for calendar year 

2004 showed that duplicate payments have occurred. Specifically, we 

found cases where a producer received duplicate payments from CSP and 

EQIP for performing the same conservation action on the same land during 

the same year. For example, in the course of performing limited file 

reviews at several NRCS field offices, we found that a producer had 

received a CSP enhancement payment and an EQIP conservation practice 

payment for the same conservation action—establishing a small grain 

cover crop—on the same tract of land during 2004. This producer also was 

scheduled to receive the same duplicate payments during 2005.70

Furthermore, our analysis of 2004 payments data for CSP, EQIP, and WHIP 

revealed other cases in which a producer received a CSP enhancement 

payment and an EQIP payment for performing a similar conservation 

action during the same year. Our analysis of these data showed that 172 (or 

8 percent) of the 2,180 producers who received a CSP payment in 2004 also 

received an EQIP payment that year as well. None of these 2,180 producers 

received a WHIP payment that year.71 In analyzing the conservation actions 

funded for the 172 producers who received both CSP and EQIP payments, 

we initially identified 72 producers who received payments that appeared 

to be for similar or related conservation actions and may have been 

duplicates. Specifically, in aggregate, these producers received a total of 

121 payments under each program that were potentially duplicates. We 

then selected 11 of these producers, who in aggregate received a total of 12

70After bringing this situation to the attention of NRCS state office officials, these officials 

issued further guidance on preventing duplicate payments to their field office staff in 

October 2005. This guidance states that a producer who has a CSP contract and an EQIP or 

a WHIP contract with funding for the same conservation action in the same year cannot 

receive two payments for the same action. According to the guidance, to avoid duplicate 

payments, the CSP enhancement payment for an activity funded by EQIP or WHIP should 

not be made until the year following the year in which the last EQIP or WHIP payment for 

the activity is made.

71Because EQIP is a much larger program than WHIP in terms of funding and participation, 

the potential for duplication between EQIP and CSP is greater than the potential for 

duplication between WHIP and CSP. 
Page 52 GAO-06-312 Conservation Security Program Costs

payments under each program, for more detailed analysis.72 We discussed 

these 12 cases with NRCS field office officials to determine if any of these 

payments were made for implementing the same conservation action on 

the same land. In 6 of the 12 cases, a producer received a CSP 

enhancement payment and an EQIP payment for conservation actions that 

appeared to be similar (e.g., CSP and EQIP payments for nutrient 

management). In the other 6 cases, a producer received a CSP 

enhancement payment based on an index score that may have increased as 

a result of a conservation action for which the producer received an EQIP 

payment. 

We discussed the first 6 cases—those in which a producer received a CSP 

enhancement payment for a conservation action and an EQIP payment for 

a similar conservation action—with NRCS field office officials. Based on 

these discussions, we determined that duplicate payments were made in 4 

of these 6 cases. For example, in one instance, a producer received a CSP 

pest management enhancement payment of $9,160 for a conservation crop 

rotation. On the same parcel of land, the producer also received an EQIP 

payment of $795 for the same conservation action—conservation crop 

rotation.73 Regarding these 4 cases, in 2 instances, NRCS field office 

officials acknowledged that duplicate payments had occurred, i.e., that the 

producer received a CSP enhancement payment and an EQIP conservation 

practice payment for the same conservation action on the same land during 

the same year. In these cases, these officials said the duplicate payments 

resulted from simple error. In the other 2 cases, NRCS field office officials 

held the view that even though the payments were for the same 

conservation action, if they were made for different conservation purposes 

(e.g., a CSP-funded conservation crop rotation to break pest cycles and an 

EQIP-funded conservation crop rotation to improve soil quality), then they 

72We selected these 11 producers from a cross section of states—Nebraska, Oklahoma, 

Oregon, and South Carolina. In general, these states had the highest number of cases of 

potential duplication. In each state, we contacted NRCS field office officials in the county 

with the largest number of cases to discuss whether the payments were duplicates. Our 

choice of these producers, states, and counties was not intended to be representative for 

projection purposes. 

73NRCS state officials agreed that these payments were duplicates. They stated that they 

were unaware that such duplication was occurring and that they would inform their district 

offices of it. In addition, they said that in cases where duplication is found, they would give 

the producer a choice of either receiving only one payment (and delay payments under the 

other program to a subsequent year) or, where applicable, eliminating that portion of the 

payment made under one or the other program for specific acres that are eligible for 

payments under both programs.
Page 53 GAO-06-312 Conservation Security Program Costs

were not duplicates. However, the farm bill clearly prohibits payments 

under CSP and another conservation program for the same practice on the 

same land. In addition, NRCS’s Conservation Programs Manual

elaborates on this provision, stating that a participant may not receive a 

CSP payment for enhancement activities if the participant is also earning 

financial assistance payments through other programs for the same 

practice or activity on the same land during the same year. NRCS state 

office and headquarters officials agreed with our interpretation that in such 

situations producers should not receive payments under both programs. 

We also discussed the other 6 cases—those in which a producer received a 

CSP enhancement payment based on an index score that may have 

increased as a result of a conservation action for which the producer 

received an EQIP payment in the same year—with NRCS field office 

officials. In 4 of these cases, a producer received a CSP soil management 

enhancement payment based on a soil conditioning index score while also 

receiving an EQIP payment for conservation practices that reduce soil 

erosion. For each of these cases, these officials stated that the EQIPfunded conservation practice had contributed to increasing the soil 

conditioning index score and, as a result, had increased the CSP 

enhancement payment. For example, a producer may implement an EQIPfunded soil conservation practice that is factored into the calculation of a 

soil conditioning index score, increasing the index score from 0.2 to 0.5. If 

CSP soil management enhancement payments in that producer’s state 

increase by $1.16 per acre for each 0.1 increase in the soil conditioning 

index, the producer’s enhancement payment would increase by $3.48 per 

acre. 

The NRCS field office officials we interviewed had mixed views as to 

whether these payments were duplicates. We believe such payments were, 

at least in part, duplicates. However, an NRCS headquarters official stated 

that such payments are not duplicates. According to this official, EQIP 

payments are intended to compensate producers for “input” costs 

associated with installing or initiating conservation actions, while CSP 

enhancement payments are intended to reward producers for conservation 

“outputs” (i.e., benefits derived from conservation actions). Therefore, the 

official said, such payments are not duplicates. We do not agree with this 

rationale. Payments for producer “input” costs under EQIP are made 

because of their resulting conservation “outputs,” and payments for CSP 

conservation “outputs” are made to compensate producer “input” costs. In 

other words, the programs are both compensating the same action but are 

doing so either before or after the fact. To receive payments from both for 
Page 54 GAO-06-312 Conservation Security Program Costs

the same action would thus clearly be duplication. Moreover, we continue 

to consider such payments to be inconsistent with both the farm bill 

prohibition and NRCS’s guidance on duplicate payments.

In the other 2 cases related to index scores, the producers received CSP 

enhancement payments based on a wildlife habitat management index 

score while also receiving an EQIP payment for conservation practices that 

may improve wildlife habitat. In one of these cases, the EQIP-funded 

conservation practice was not taken into consideration in determining the 

index score because the practice did not affect habitat for the species of 

concern, bobwhite quail. In the other case, an NRCS field office official 

stated that, to prevent the payment from being a duplicate, he had not 

included the EQIP-funded conservation practice in calculating the index 

score. We agreed that duplicate payments had not occurred in these 2 

cases. 

NRCS headquarters officials stated the agency lacks a comprehensive 

process, such as an automated system, to either preclude duplicate 

payments or identify them after a contract has been awarded. Instead, 

these officials said that NRCS relies on the institutional knowledge of its 

field office staff and the records they keep to prevent duplicate payments. 

Several NRCS state officials noted that the field staff are familiar with the 

assistance that producers in their county receive under various programs 

and suggested that these staff would reject a CSP application for a 

conservation activity already financed through another program. However, 

reliance on the institutional knowledge of staff can be problematic, 

especially since NRCS reported in June 2003 that almost 50 percent of its 

field-level workforce would be eligible to retire in 5 years, representing a 

serious loss of knowledge, experience, and institutional memory as these 

employees are replaced with less-experienced, newly hired employees.74 In 

addition, because CSP sign-ups operate under a compressed time schedule, 

additional staff—who do not have knowledge of local producers’ prior and 

current participation in conservation programs—are often temporarily 

relocated from other parts of a state to assist in developing CSP contracts. 

These staff would not be familiar with local producers and their history of 

conservation program participation. 

74See Natural Resources Conservation Service Strategic Plan 2003 Update, USDA/NRCS, 

June 2003.
Page 55 GAO-06-312 Conservation Security Program Costs

A number of NRCS officials acknowledged the need for a comprehensive 

process to prevent duplicate payments and said NRCS is considering a 

modification of CSP contract information stored in the Program Contracts 

System (ProTracts), NRCS’s contract management information system, that 

would allow the agency to identify potential duplicate payments before 

CSP contracts are approved. For example, these officials said NRCS is 

considering a modification to ProTracts that would flag a planned CSP 

enhancement payment that may duplicate a conservation practice payment 

made under another program, such as EQIP. However, these officials said 

such a modification could require adding more detailed information on 

enhancement payments to ProTracts than currently exists within the 

system. By the same token, these officials also acknowledged a need to 

develop a process to efficiently identify duplicate payments—such as those 

we found—already being made under CSP contracts issued in fiscal years 

2004 and 2005. At present, NRCS does not know the extent of these 

duplicate payments or their aggregate dollar value. Although the total 

dollar amount of duplicate payments may be relatively small at present, in 

the future, as the program grows to include more participants, the 

frequency and total dollar value of duplicate payments could become 

significant. Furthermore, since CSP and EQIP offer producers multipleyear contracts, these duplicate payments, if undetected, would continue in 

subsequent years. To the extent that duplicate payments are being made, 

the effectiveness of CSP and the other programs involved is undermined 

and, because of limited funding, some CSP enrollment categories or 

subcategories that otherwise would have been funded may not be funded. 

As a result, some eligible producers may not receive CSP payments that 

they otherwise qualify for and would have received in the absence of these 

erroneous payments. 

Finally, NRCS has authority to recover duplicate payments. CSP contracts, 

by way of reference, include a clause stating that CSP participants cannot 

receive duplicate payments. Under a CSP contract, as required in the farm 

bill, a producer agrees that on violation of any term or condition of the 

contract the producer will refund payments and forfeit all rights to receive 

payments or to refund or accept adjustments to payments, depending on 

whether the Secretary of Agriculture determines that termination of the 

contract is or is not warranted, respectively. 

Conclusions Despite farm bill provisions and NRCS actions to control CSP costs, 

inconsistencies in the wildlife habitat assessment criteria used by NRCS 

state offices for determining producer payments in the highest CSP 
Page 56 GAO-06-312 Conservation Security Program Costs

payment category may undermine these cost controls. Specifically, some 

state offices have used criteria less stringent than those outlined in the 

NRCS national guidance, potentially resulting in Tier III payments to 

producers who are not providing the wildlife habitat benefits intended by 

the national criteria. Based on NRCS officials’ observations and the 

weaknesses we found in some state offices’ criteria, we believe it is highly 

likely that such payments have occurred. Currently, NRCS does not 

systematically review and field check its state offices’ criteria so that 

inconsistencies with the national guidance can be detected and the agency 

can determine whether Tier III contracts are providing the wildlife habitat 

benefits intended. Furthermore, because there is no reference to the 

national guidance in NRCS’s Conservation Programs Manual, some NRCS 

state and field offices may not know what wildlife habitat assessment 

criteria to follow or may fail to appreciate the importance of the national 

guidance.

In addition, despite farm bill provisions and NRCS regulations and 

procedures designed to prevent CSP from duplicating payments made by 

other conservation programs, the potential for duplication still exists, and 

duplicate payments for the same practice or activity on the same land have 

occurred. Duplicate payments reduce the effectiveness of the programs 

involved and, because of limited funding, may result in some producers not 

receiving program benefits for which they are otherwise eligible. For these 

reasons, NRCS also should use its authority to recover duplicate payments 

already made. At present, NRCS lacks a comprehensive process, such as 

an automated system, to identify payments that are potential duplicates 

before they are made. The agency also lacks an effective way to identify 

duplicate payments already made under existing CSP contracts. 

Without question, NRCS’s challenge in implementing CSP—a new, unique, 

and complex conservation program—has been formidable. However, we 

believe that factors such as the substantial increase in conservation 

funding authorized by the 2002 farm bill; the extent of agriculture’s 

continuing contribution to impaired soil, water, air, and wildlife habitat; 

and the importance of farmers and ranchers as stewards of the nation’s 

natural resources underscore the need for NRCS to manage CSP in a way 

that ensures consistent program implementation nationwide, achieves 

intended environmental benefits, and prevents duplicate payments.
Page 57 GAO-06-312 Conservation Security Program Costs

Recommendations for 

Executive Action

To improve NRCS’s implementation of the Conservation Security Program, 

we recommend that the Secretary of Agriculture direct the Chief of NRCS 

to take the following four actions: 

• Review and field check each NRCS state office’s wildlife habitat 

assessment criteria to ensure that states use consistent criteria and 

achieve the habitat benefits intended by the national guidance; 

• Include a reference to the national guidance for wildlife habitat 

assessment criteria in NRCS’s Conservation Programs Manual; 

• Develop a comprehensive process, such as an automated system, to 

review CSP contract applications to ensure that CSP payments, if 

awarded, would not duplicate payments made by other USDA 

conservation programs; and

• Develop a process to efficiently review existing CSP contracts to 

identify cases where CSP payments duplicate payments made under 

other programs and take action to recover appropriate amounts and to 

ensure that these duplicate payments are not repeated in fiscal year 

2006 and beyond.

Agency Comments and 

Our Evaluation

We provided a draft of this report to NRCS for review and comment. We 

received written comments from NRCS’s Chief, which are reprinted in 

appendix VIII. Among other things, NRCS stated that our report provides 

valuable information that will help NRCS to improve implementation of 

CSP. NRCS also provided us with suggested technical corrections, which 

we have incorporated into this report, as appropriate.

NRCS generally agreed with our findings and recommendations and 

discussed the actions that it has taken, is taking, or plans to take to address 

our recommendations. Regarding our first two recommendations, while 

acknowledging that problems exist, NRCS indicated that it recently has 

taken or is considering corrective actions other than those suggested in our 

recommendations. For example, because some NRCS state offices have 

not fully adhered to the agency’s national guidance for wildlife habitat 

assessment criteria, NRCS said that it issued a national bulletin to all of its 

state offices during the fiscal year 2006 CSP sign-up to reemphasize the 

guidance that these offices must use in developing their wildlife habitat 

assessment criteria. However, while the promulgation of this bulletin 
Page 58 GAO-06-312 Conservation Security Program Costs

should be helpful, we still believe that NRCS should review and field check 

each state office’s assessment criteria to ensure its adherence to the 

national guidance. In the second case, in lieu of including a reference in its 

Conservation Programs Manual, NRCS said that it is proposing that NRCS 

wildlife biologists develop a special technical note that would describe how 

the national guidance for wildlife habitat assessment criteria should be 

used by NRCS state offices. Again, while we support this step, we still 

believe that the inclusion of a reference in the Conservation Programs 

Manual to the national guidance would help to emphasize its importance to 

NRCS state and field-level employees. 

Regarding our third recommendation, NRCS indicated that other 

automation features will be developed and incorporated into NRCS’s 

contracting software to avoid duplicate payments. In the meantime, NRCS 

said that it had implemented other procedures to help eliminate the 

occurrence of duplicate payments. For example, for the fiscal year 2006 

sign-up, NRCS is requiring applicants to complete a form that asks an 

applicant to certify whether or not they are receiving payments from 

another conservation program on any of the land being offered for 

enrollment in CSP. In addition, NRCS said it plans to revise the CSP 

contract appendix to include a statement about prohibitions on duplicative 

payments. Regarding our fourth recommendation, NRCS said that it has 

improved management oversight to cross-check payments made to CSP 

participants and participants under other conservation programs to 

determine if duplicative payments have been made. If duplicative 

payments have been made, NRCS said it has contracting procedures that 

can be utilized to recover the payments. 

We also provided a draft of this report to CBO and OMB for review and 

comment. These agencies provided us with suggested technical 

corrections, which we incorporated into the report, as appropriate. 

We are sending copies of this report to interested congressional 

committees; the Secretary of Agriculture; the Director, CBO; the Director, 

OMB; and other interested parties. We also will make copies available to 

others upon request. In addition, the report will be available at no charge 

on the GAO Web site at http://www.gao.gov.
Page 59 GAO-06-312 Conservation Security Program Costs

If you or your staff have any questions about this report, please contact me 

at (202) 512-3841 or robinsonr@gao.gov. Contact points for our Offices of 

Congressional Relations and Public Affairs may be found on the last page 

of this report. GAO staff who made major contributions to this report are 

listed in appendix IX. 

Sincerely yours,

Robert A. Robinson

Managing Director, Natural Resources 

and Environment
Page 60 GAO-06-312 Conservation Security Program Costs

Appendix I

Objectives, Scope, and Methodology AAppenednxidexiIs

At the request of the Chairman, Senate Committee on Appropriations, we 

reviewed issues related to the U.S. Department of Agriculture’s (USDA) 

implementation of the Conservation Security Program (CSP). Specifically, 

we determined (1) why Congressional Budget Office (CBO) and Office of 

Management and Budget (OMB) cost estimates for CSP generally increased 

over time; (2) what authority USDA has to control CSP costs and what cost 

control measures are in place; and (3) what legislative and regulatory 

measures exist to prevent duplication between CSP and other USDA 

conservation programs, and what duplication, if any, has occurred. 

To determine why CSP cost estimates have increased, we interviewed CBO 

and OMB officials and reviewed documentation they provided. At each 

agency, we spoke with budget analysts about their agency’s estimating 

practices, including the types of data, assumptions, and models used to 

prepare cost estimates. We did not attempt to re-estimate or audit the CBO 

or OMB estimates or data discussed in this report. For comparison 

purposes, we also interviewed USDA officials, including Natural Resources 

Conservation Service (NRCS) and Economic Research Service officials, 

and reviewed documentation they provided related to NRCS’s benefit-cost 

assessments of CSP. NRCS prepared these assessments in conjunction with 

its issuance of interim final and amended interim final rules for the 

program, published in the Federal Register in June 2004 and March 2005, 

respectively. In addition, we interviewed officials at the Congressional 

Research Service (CRS) and reviewed documentation they provided, 

including CRS reports that discuss CSP cost and implementation issues. 

We also sought the views of other interested stakeholder organizations, 

such as farm, conservation, and environmental organizations, as to why the 

estimated costs of CSP have risen substantially. These organizations 

included the American Farm Bureau Federation, the National Association 

of Conservation Districts, the Soil and Water Conservation Society, the 

Sustainable Agriculture Coalition, the Theodore Roosevelt Conservation 

Partnership, the Wildlife Management Institute, Ducks Unlimited, and 

Environmental Defense. At each organization, we interviewed 

knowledgeable officials and reviewed documentation they provided. 
Appendix I

Objectives, Scope, and Methodology

Page 61 GAO-06-312 Conservation Security Program Costs

To determine USDA’s authority to control CSP costs and the cost control 

measures in place, we reviewed relevant authorizing and appropriations 

legislation and related legislative history. This legislation includes the Farm 

Security and Rural Investment Act of 2002 (the farm bill);1

 USDA 

appropriations acts for fiscal years 2004, 2005, and 2006;2 and other 

legislation that capped CSP funding for the 11-year period, fiscal years 2003 

through 2013,3

 and for the 10-year period, fiscal years 2005 through 2014.4 

In addition, we interviewed USDA officials and reviewed documentation 

they provided at NRCS, the Economic Research Service, the Office of the 

General Counsel, and the Office of Budget and Program Analysis. We also 

reviewed USDA’s budget explanatory notes for fiscal years 2004 through 

2007; NRCS’s CSP regulations and associated public comments and benefitcost assessments; and NRCS’s Conservation Programs Manual and related 

guidance pertaining to CSP implementation. Furthermore, we interviewed 

officials and reviewed documentation they provided at farm, conservation, 

and environmental organizations and at CRS. 

Concerning cost control measures, we also examined NRCS internal 

management controls (internal controls) related to ensuring that CSP cost 

control measures are properly and consistently implemented and that CSP 

contract payments are accurately determined and tracked.5

 In particular, 

we focused on controls related to the agency’s (1) verification of producerreported data used to determine program eligibility and payment levels; (2) 

monitoring of producer implementation of CSP contract provisions; and (3) 

oversight of program implementation by its field offices, including 

oversight of the offices’ compliance with legislative and regulatory program 

provisions. To do this, we interviewed NRCS officials and reviewed 

documentation they provided at the Operations Management and Oversight 

Division of the Office of Strategic Planning and Accountability. This 

1

Pub. L. No. 107-171, 116 Stat. 134 (2002).

2

Pub. L. No. 108-199, 118 Stat. 3 (2004); Pub. L. No. 108-447, 118 Stat. 2809 (2004); Pub. L. No. 

109-97, 119 Stat. 2155 (2005). 

3

Pub. L. No. 108-7, 117 Stat. 11 (2003). 

4

Pub. L. No. 108-324, 118 Stat. 1220 (2004).

5

Internal controls include (1) control goals and objectives; (2) control procedures used to 

provide reasonable assurance that goals and objectives are met, resources are adequately 

safeguarded and efficiently used, reliable data are obtained, maintained, and fairly 

discussed in agency reports, and laws and regulations are complied with; (3) financial 

accounting systems; and (4) management monitoring systems. 
Appendix I

Objectives, Scope, and Methodology

Page 62 GAO-06-312 Conservation Security Program Costs

documentation included NRCS’s General Manual and Conservation 

Programs Manual. It also included an internal draft study prepared by the 

division’s Oversight and Evaluation Staff regarding CSP’s implementation. 

Among other things, this draft study discusses internal controls related to 

the program’s application process, payment tier designation criteria, and 

award of contracts across tiers and designated watersheds. In addition, we 

reviewed USDA’s Management Control Manual and Management 

Accountability and Control Regulation. Furthermore, we reviewed, from 

USDA, relevant Office of Inspector General reports and the fiscal year 2005 

performance and accountability report; and, from NRCS, the strategic plan 

for fiscal years 2003 through 2008; the fiscal year 2003 performance plan;6

performance reports for fiscal years 2003 and 2004; the fiscal year 2004 

accomplishments report; and business plans for fiscal years 2004 and 2005. 

Finally, concerning cost controls and related internal controls, we 

conducted structured interviews with the relevant NRCS official(s)—

usually the CSP program manager or Assistant State Conservationist in a 

given NRCS state office—who had primary responsibility for implementing 

CSP in each of the 18 priority watersheds included in the fiscal year 2004 

sign-up.7

 These 18 watersheds also were among the 220 watersheds 

included in the fiscal year 2005 sign-up. For these interviews, we first 

developed and pretested a data-collection instrument to guide the 

interviews.8

 In developing the instrument, we met with officials in NRCS 

headquarters and reviewed documentation they provided to gain a 

thorough understanding of CSP implementation issues and related internal 

controls. To pretest the instrument, we contacted NRCS officials in Indiana 

and Pennsylvania who were involved in the fiscal year 2004 sign-up. After 

conducting the pretest, we interviewed the respondents to ensure that (1) 

the questions were clear and unambiguous, (2) the terms we used were 

6

NRCS did not prepare annual performance plans for fiscal years 2004 through 2006. 

According to an NRCS official, in an effort to integrate planning and budgeting, the agency 

stopped publishing annual performance plans after fiscal year 2003 and began using a 

working performance budget. This performance budget, also called the budget explanatory 

notes or “greensheets,” is part of NRCS’s budget request and is modified based on the 

appropriations received by the agency. 

7

A structured interview is one in which the questions to be asked, their sequence, and the 

detailed information to be gathered are all predetermined. This technique is useful where 

maximum consistency across interviews and interviewees is needed to facilitate analysis 

and develop meaningful summary information. 

8

A data-collection instrument is a highly structured document that requires the user or 

respondent to collect or provide data in a systematic and highly precise fashion. 
Appendix I

Objectives, Scope, and Methodology

Page 63 GAO-06-312 Conservation Security Program Costs

precise, (3) the questions asked were independent and unbiased, and (4) 

answering the questions did not place an undue burden on the agency 

officials interviewed. On the basis of feedback from the pretests, we 

modified the questions as appropriate. We then conducted the structured 

interview by phone with NRCS officials representing each of the 18 

watersheds. Table 7 lists the 18 watersheds included in the fiscal year 2004 

sign-up, the lead NRCS state office for each watershed, and the number of 

CSP contracts awarded in each watershed. 

Table 7: Priority Watersheds, Lead NRCS State Offices, and CSP Contracts Awarded 

in the Fiscal Year 2004 CSP Sign-up 

Source: GAO analysis of NRCS data (as of July 27, 2005). 

We did not conduct structured interviews with officials representing the 

lead offices for all 220 priority watersheds included in the fiscal year 2005 

sign-up because (1) time frames for completing this sign-up and awarding 

contracts fell beyond the time frames for completing this portion of our 

work and (2) the 18 watersheds covered by our interviews were included in 

Priority watershed Lead NRCS state office CSP contracts awarded

Auglaize Ohio 189

Blue Earth Minnesota 280

East Nishnabotna Iowa 145

Hondo Texas 16

Kishwaukee Illinois 191

Lemhi Idaho 18

Little Georgia 37

Little River Ditches Missouri 189

Lower Chippewa Wisconsin 207

Lower Little Blue Kansas 143

Lower Salt Fork Arkansas Oklahoma 176

Lower Yellowstone Montana 49

Moses Coulee Washington 43

Punta de Agua New Mexico 19

Raystown Pennsylvania 36

Saluda South Carolina 76

St. Joseph Indiana 217

Umatilla Oregon 149

Total 2,180
Appendix I

Objectives, Scope, and Methodology

Page 64 GAO-06-312 Conservation Security Program Costs

both the fiscal year 2004 and fiscal year 2005 sign-ups and provided wide 

geographic coverage. 

To determine what legislative and regulatory measures exist to prevent 

duplication between CSP and other programs and what duplication, if any, 

has occurred, we reviewed relevant authorizing legislation and program 

regulations and interviewed USDA officials and reviewed documentation 

they provided at NRCS, the Economic Research Service, the Office of the 

General Counsel, and the Office of the Inspector General. We also included 

questions in our structured interviews regarding potential duplication 

between CSP and other programs. In addition, we interviewed NRCS 

officials responsible for developing a plan to coordinate USDA’s land 

retirement and agricultural working land conservation programs to achieve 

the goals of (1) eliminating redundancy, (2) streamlining program delivery, 

and (3) improving services provided to agricultural producers. As required 

in the farm bill, USDA was to have submitted a report by December 31, 

2005, to the Senate Committee on Agriculture, Nutrition, and Forestry and 

the House Committee on Agriculture that describes this plan and the means 

by which USDA will achieve these goals. As of March 2006, USDA was still 

preparing this report (USDA officials indicated that the plan and report will 

be one-in-the-same document).

Furthermore, to identify potential duplication, we visited and conducted 

file reviews at NRCS field offices in two of the watersheds—Lower 

Chippewa and St. Joseph—that were included in the fiscal year 2004 and 

fiscal year 2005 sign-ups. We selected these watersheds based on several 

factors, including (1) their similarity to most of the other 18 watersheds 

included in both sign-ups in terms of the predominant type of land use (i.e., 

cropland), (2) the relatively high number of financial assistance contracts 

provided to producers in these watersheds under CSP and other USDA 

conservation programs, and (3) the availability of NRCS field staff to meet 

with us at the time. In addition, our selection of watersheds reflected a 

wide variation in the percent of total payments made to producers in each 

watershed under Tier III, the highest CSP payment category—41 percent in 

Lower Chippewa versus 75 percent in St. Joseph. Finally, the Lower 

Chippewa watershed lies entirely within the state of Wisconsin; in contrast, 

the St. Joseph watershed straddles three states—Indiana, Michigan, and 

Ohio—and thus multiple NRCS state offices were involved in implementing 

CSP in this watershed (Indiana was the lead office). In each watershed, we 

visited two NRCS county offices to review the contract files of producers 

who received a CSP payment in fiscal 2004 and an Environmental Quality 

Incentives Program (EQIP) payment or a Wildlife Habitat Incentives 
Appendix I

Objectives, Scope, and Methodology

Page 65 GAO-06-312 Conservation Security Program Costs

Program (WHIP) payment in one or more years during fiscal years 2002 

through 2004.9

 We chose the offices visited because they had made 

relatively large numbers of payments under these programs.

We also obtained and analyzed data from NRCS’s Program Contracts 

System (ProTracts) electronic database regarding calendar year 2004

payments made under CSP and two other USDA conservation programs—

EQIP and WHIP. In particular, we compared payment information for CSP 

and EQIP to identify producers who received payments under both 

programs that year. We then did further analysis to determine cases in 

which it appeared a producer had received payments under both programs 

for the same conservation practice or activity, on the same land, in the 

same year. We discussed payments received by 11 producers with NRCS 

officials to determine the actual extent of duplication, if any. We selected 

these 11 producers from a cross section of states—Nebraska, Oklahoma, 

Oregon, and South Carolina. In general, these states had the highest 

number of cases of potential duplication. In each state, we contacted NRCS 

field office officials in the county with the largest number of cases to 

discuss whether the payments were duplicates. Our choice of these 

producers, states, and counties was not intended to be representative for 

projection purposes. Finally, we interviewed officials and reviewed 

documentation they provided at farm, conservation, and environmental 

organizations, CRS, the U.S. Fish and Wildlife Service in the Department of 

the Interior, and the U.S. Environmental Protection Agency; conducted a 

literature search to identify relevant studies and articles; and attended a 

CSP training workshop at USDA headquarters. 

We conducted our review between February 2005 and February 2006 in 

accordance with generally accepted government auditing standards. We 

conducted a data reliability assessment of the fiscal years 2004 and 2005 

payments data for CSP, EQIP, and WHIP and determined the data to be 

sufficiently reliable. For the data obtained from the other sources noted 

above, we did not independently verify the data, but we discussed with 

these sources, as appropriate, the measures they take to ensure the 

accuracy of these data. For the purposes for which the data were used in 

this report, these measures seemed reasonable.

9

Like CSP, EQIP and WHIP are working lands programs, in contrast to other USDA 

conservation programs that seek to idle or retire working lands from production. 
Page 66 GAO-06-312 Conservation Security Program Costs

Appendix II

CSP Payments Information for Fiscal Years 

2004 and 2005 ApendxiI

Tables 8 through 14 summarize Conservation Security Program (CSP) 

payments information for fiscal year 2004. Tables 15 through 18 summarize 

similar information for fiscal year 2005, including payments for new and 

existing (2004) contracts. Table 19 summarizes information on the acres

enrolled in CSP by land type during these fiscal years. Although the farm 

bill called for the establishment of CSP in fiscal year 2003, the Natural 

Resources Conservation Service (NRCS) held the first program sign-up in 

fiscal year 2004, after developing program regulations, training its field 

staff, and introducing the program to producers and stakeholder groups. 

Information on CSP payments for fiscal year 2006 was not available at the 

time of our review.

To develop tables 8 through 18, we used payments information from 

NRCS’s Program Contracts System (ProTracts). Among other things, 

ProTracts is used to manage and monitor the CSP application, contracting, 

and payment process. ProTracts is a feeder system into the U.S. 

Department of Agriculture’s (USDA) Foundation Financial Information 

System (Foundation System), the department’s official accounting system 

for making payments for current and prior year programs. The Foundation 

System records obligations and payments made and is the source of data 

used in financial statements for all USDA programs. In general, the 

payments data in the Foundation System is considered official, whereas 

payments data in ProTracts is considered preliminary until it has been 

checked, corrected, and migrated to the Foundation System.1

 For this 

reason, payments data taken from these systems may not be consistent. 

However, in order to separate CSP payments data by tier, payment type, 

and enhancement type, it was necessary to use data from ProTracts; this 

level of detail or disaggregation was not possible using data from the 

Foundation System. 

1

USDA’s fiscal year 2005 performance and accountability report discusses material 

weaknesses related to USDA’s financial and accounting systems. Among the weaknesses 

identified are NRCS’s application controls for ProTracts. To address this weakness, NRCS 

plans to take a number of actions such as establishing a schedule for the systematic 

reconciliation of appropriations, obligations, and payments data in ProTracts with amounts 

recorded in the Foundation System. 
Appendix II

CSP Payments Information for Fiscal Years 

2004 and 2005

Page 67 GAO-06-312 Conservation Security Program Costs

Table 8: Total CSP Payments and Contracts by Tier, Fiscal Year 2004

Source: GAO analysis of NRCS ProTracts data (as of July 27, 2005).

Note: The percentages may not total 100 due to rounding.

a

Our analysis of NRCS ProTracts data indicates that total CSP payments in fiscal year 2004 were 

$34,457,394 (or $34.5 million), as reflected in the table. However, according to an NRCS official, more 

recent data in USDA’s Foundation Financial Information System indicates that these total payments 

were $34,556,220 (or $34.6 million).

Table 9: Total CSP Payments by Payment Type, Fiscal Year 2004

Source: GAO analysis of NRCS ProTracts data (as of July 27, 2005).

Note: The percentages do not total 100 due to rounding.

a

Fiscal year 2004 payments included advance enhancement payments. These payments were to be 

limited to $10,000 per contract. For a producer who received an advance enhancement payment, 

NRCS will make deductions from subsequent payments over the remaining years of the producer’s 

contract such that the total advance payment would be offset. For example, for a producer whose 

contract has 9 remaining years, NRCS would deduct one-ninth of the advance enhancement payment 

in each of these years. NRCS officials explained that for the fiscal year 2004 CSP sign-up, NRCS, 

using its borrowing authority, obtained the maximum amount of funding available, or $41.443 million. 

However, because of lower than anticipated producer participation in CSP that year, NRCS did not 

need all of this money to make annual contract payments to producers. NRCS decided to use the 

remaining amounts—about $13.6 million—to make a one-time advance enhancement payment to 

most (2,070 of 2,180) of the producers enrolled in CSP that year. 

Tier Payments

Percentage 

of total 

payments Contracts

Percentage of 

total number 

of contracts

Average 

payment

I $5,696,212 17% 785 36% $7,256

II 16,738,736 49 886 41 18,892

III 11,022,446 35 509 23 23,620

Total $34,457,394a 100% 2,180 100% $15,806

Payment type Payments

Percentage of 

total payments

Stewardship $5,401,915 16%

Existing practice 1,355,826 4

New practice 5,148 <1

Enhancement 14,082,782 41

Advance enhancement paymenta 13,611,724 40

Total $34,457,394 100%
Appendix II

CSP Payments Information for Fiscal Years 

2004 and 2005

Page 68 GAO-06-312 Conservation Security Program Costs

Table 10: Total CSP Enhancement Payments by Enhancement Type, Fiscal Year 2004

Source: GAO analysis of NRCS ProTracts data (as of July 27, 2005).

Note: The information in this table excludes advance enhancement payments made in fiscal year 

2004.

Enhancement type Payments

Percentage of total

enhancement payments

Air resource management $216,545 2%

Energy management 712,384 5

Grazing management 344,716 2

Habitat management 953,736 7

Nutrient management 3,506,663 25

Pest management 3,680,118 26

Soil management 4,349,110 31

Water management 319,508 2

Total $14,082,782 100%
Appendix II

CSP Payments Information for Fiscal Years 

2004 and 2005

Page 69 GAO-06-312 Conservation Security Program Costs

Table 11: Distribution of All CSP Contracts by Payment Range (Excluding and Including Advance Enhancement Payments in 

Contract Amounts), Fiscal Year 2004

Source: GAO analysis of NRCS ProTracts data (as of July 27, 2005).

Note: The percentages may not total 100 due to rounding.

Payment

Number of contracts 

(amounts exclude advance 

enhancement payments)

Percentage of all contracts 

(amounts exclude advance 

enhancement payments)

Number of contracts 

(amounts include 

advance enhancement 

payments)

Percentage of all 

contracts (amounts 

include advance 

enhancement 

payments)

$1-$5,000 1,043 48% 763 35%

$5,001-$10,000 394 18 375 17

$10,001-$15,000 232 11 233 11

$15,001-$20,000 138 6 136 6

$20,001-$25,000 143 7 173 8

$25,001-$30,000 104 5 75 3

$30,001-$35,000 40 2 78 4

$35,001-$40,000 86 4 56 3

$40,001-$45,000 0 0 140 6

$45,001-$50,000 0 0 58 3

$50,001-$55,000 0 0 4 <1

$55,001-$60,000 0 0 23 1

$60,001-$65,000 0 0 66 3

Total 2,180 100% 2,180 100%
Appendix II

CSP Payments Information for Fiscal Years 

2004 and 2005

Page 70 GAO-06-312 Conservation Security Program Costs

Table 12: Distribution of Tier I CSP Contracts by Payment Range (Excluding and Including Advance Enhancement Payments in 

Contract Amounts), Fiscal Year 2004

Source: GAO analysis of NRCS ProTracts data (as of July 27, 2005).

a

This contract payment was $21,427, which exceeds the statutory payment limit of $20,000 for a Tier I 

contract.

Table 13: Distribution of Tier II CSP Contracts by Payment Range (Excluding and Including Advance Enhancement Payments in 

Contract Amounts), Fiscal Year 2004

Source: GAO analysis of NRCS ProTracts data (as of July 27, 2005).

Note: The percentages do not total 100 due to rounding.

Payment

Number of contracts 

(amounts exclude 

advance enhancement 

payments)

Percentage of Tier I 

contracts (amounts 

exclude advance 

enhancement payments)

Number of contracts 

(amounts include 

advance enhancement 

payments)

Percentage of Tier I 

contracts (amounts 

include advance 

enhancement 

payments)

$1-$5,000 546 70% 428 55%

$5,001-$10,000 133 17 141 18

$10,001-$15,000 104 13 78 10

$15,001-$20,000 1 <1 43 5

$20,001-$25,000 1a <1 94 12

$25,001-$30,000 0 0 1 <1

Total 785 100% 785 100%

Payment

Number of contracts 

(amounts exclude 

advance enhancement 

payments)

Percentage of Tier II 

contracts (amounts 

exclude advance 

enhancement payments)

Number of contracts 

(amounts include 

advance enhancement 

payments)

Percentage of Tier II 

contracts (amounts 

include advance 

enhancement payments)

$1-$5,000 337 38% 220 25%

$5,001-$10,000 160 18 159 18

$10,001-$15,000 81 9 97 11

$15,001-$20,000 90 10 57 6

$20,001-$25,000 113 13 45 5

$25,001-$30,000 83 9 42 5

$30,001-$35,000 22 2 57 6

$35,001-$40,000 0 0 35 4

$40,001-$45,000 0 0 128 14

$45,001-$50,000 0 0 46 5

Total 886 100% 886 100%
Appendix II

CSP Payments Information for Fiscal Years 

2004 and 2005

Page 71 GAO-06-312 Conservation Security Program Costs

Table 14: Distribution of Tier III CSP Contracts by Payment Range (Excluding and Including Advance Enhancement Payments in 

Contract Amounts), Fiscal Year 2004

Source: GAO analysis of NRCS ProTracts data (as of July 27, 2005).

Table 15: Total CSP Payments and Contracts by Tier, Fiscal Year 2005

Source: GAO analysis of NRCS ProTracts data (as of October 1, 2005).

Note: The information in this table is based on contracts approved for fiscal years 2004 and 2005. 

Specifically, the information includes the payments made in the second year of the fiscal year 2004 

contracts and the first year of the fiscal year 2005 contracts.

a

Our analysis of NRCS ProTracts data indicates that total CSP payments in fiscal year 2005 were 

$177,384,387 (or $177.4 million), as reflected in the table. However, according to an NRCS official, 

more recent data in USDA’s Foundation Financial Information System indicates that these total 

payments were $171,388,723 (or $171.4 million).

Payment

Number of contracts 

(amounts exclude 

advance enhancement 

payments)

Percentage of Tier III 

contracts (amounts 

exclude advance 

enhancement payments)

Number of contracts 

(amounts include 

advance enhancement 

payments)

Percentage of Tier III 

contracts (amounts include 

advance enhancement 

payments)

$1-$5,000 160 31% 115 23%

$5,001-$10,000 101 20 75 15

$10,001-$15,000 47 9 58 11

$15,001-$20,000 47 9 36 7

$20,001-$25,000 29 6 34 7

$25,001-$30,000 21 4 32 6

$30,001-$35,000 18 4 21 4

$35,001-$40,000 86 17 21 4

$40,001-$45,000 0 0 12 2

$45,001-$50,000 0 0 12 2

$50,001-$55,000 0 0 4 1

$55,001-$60,000 0 0 23 5

$60,001-$65,000 0 0 66 13

Total 509 100% 509 100%

Tier Payments

Percentage 

of total 

payments Contracts

Percentage of 

total number 

of contracts

Average 

payment

I $49,407,374 28% 7,294 49% $6,774

II 67,268,160 38 4,530 30 14,849

III 60,708,854 34 3,059 21 19,846

Total $177,384,387a 100% 14,883 100% $11,919
Appendix II

CSP Payments Information for Fiscal Years 

2004 and 2005

Page 72 GAO-06-312 Conservation Security Program Costs

Table 16: Total CSP Payments by Payment Type, Fiscal Year 2005

Source: GAO analysis of NRCS ProTracts data (as of October 1, 2005).

Notes: (1) The information in this table is based on contracts approved in fiscal years 2004 and 2005. 

Specifically, the information includes the payments made in the second year of the fiscal year 2004 

contracts and the first year of the fiscal year 2005 contracts. (2) NRCS did not make any advance 

enhancement payments in fiscal year 2005. (3) The percentages do not total 100 due to rounding. 

Table 17: Total CSP Enhancement Payments by Enhancement Type, Fiscal Year 2005

Source: GAO analysis of NRCS ProTracts data (as of October 1, 2005).

Notes: (1) The information in this table is based on contracts approved in fiscal years 2004 and 2005. 

Specifically, the information includes the payments made in the second year of the fiscal year 2004 

contracts and the first year of the fiscal year 2005 contracts. (2) The percentages do not total 100 due 

to rounding.

Payment type Payments

Percentage of 

total payments

Stewardship $27,428,071 15%

Existing practice 6,864,218 4

New practice 119,777 <1

Enhancement 142,972,322 81

Total $177,384,387 100%

Enhancement type Payments

Percentage of total

enhancement payments

Air resource management $4,767,408 3%

Drainage management 965,890 1

Energy management 6,259,355 4

Grazing management 4,552,552 3

Habitat management 11,186,833 8

Nutrient management 27,239,832 19

Pest management 32,400,211 23

Salinity management 2,067 <1

Soil management 50,025,411 35

Water management 5,572,763 4

Total $142,972,322 100%
Appendix II

CSP Payments Information for Fiscal Years 

2004 and 2005

Page 73 GAO-06-312 Conservation Security Program Costs

Table 18: Distribution of CSP Contracts by Payment Range, Fiscal Year 2005

Source: GAO analysis of NRCS ProTracts data (as of October 1, 2005).

Note: The information in this table is based on contracts approved in fiscal years 2004 and 2005. 

Specifically, the information includes the payments made in the second year of the fiscal year 2004 

contracts and the first year of the fiscal year 2005 contracts. 

a

This total includes one contract payment that exceeded $45,000 ($45,228). 

Table 19: Acres Enrolled in CSP by Land Type, Fiscal Years 2004 and 2005

Source: NRCS.

Payment

Number of 

contracts

Percentage of 

total contracts

$1-$5,000 5,423 36%

$5,001-$10,000 2,738 18

$10,001-$15,000 2,504 17

$15,001-$20,000 1,162 8

$20,001-$25,000 724 5

$25,001-$30,000 998 7

$30,001-$35,000 630 4

$35,001-$40,000 284 2

$40,001-$45,000 420a 3

Total 14,883 100%

Fiscal year Cropland

Irrigated 

cropland Pasture Range Other Total

2004 1,083,055 189,682 30,443 577,004 8,227 1,888,411

2005 4,805,342 1,483,755 107,257 2,639,641 0 9,035,995

Total 5,888,397 1,673,437 137,700 3,216,645 8,227 10,924,406
Page 74 GAO-06-312 Conservation Security Program Costs

Appendix III

CSP Application and Enrollment Process 

Flowchart ApendxiI

No

Yes

Yes

Yes

Yes

Yes

Yes

Stop

Stop

No Stop

Stop

Are all soil quality and water 

quality concerns addressed to 

the minimum level of treatment 

on the entire agriculture 

operation?

Are all applicable resource 

concerns addressed to the 

minimum level of treatment 

on the entire agriculture 

operation?

No

Source: NRCS.

Yes

Yes

Is majority of agriculture 

operation in a watershed 

announced for the sign-up? Wait for future sign-up.

Eligibility:

Is land eligible? Does producer 

share risk of producing crop or 

livestock and entitled to a

share? Other (sign-up specific).

Is producer in compliance with 

highly erodible land & 

swampbuster?

Is producer willing to 

meet compliance 

requirements?

Yes

Has producer completed

self-assessment including

benchmark inventory?

Is producer willing to 

complete selfassessment?

No

No

Wait for future sign-ups

when resource concerns

are addressed.

Place in enrollment 

category based on 

benchmark inventory.

Tier III minimum

requirements are 

met.

Tier II minimum

requirements are 

met.

Develop conservation 

security plan and 

contract, determine 

program payments.

Implement contract.

Yes

Yes

No

No

No

No

Is producer willing to 

address soil quality and 

water quality on the part 

of the agriculture 

operation?

Yes

No

Tier I minimum

requirements are 

met.

Refer producer to other 

appropriate conservation 

programs.

Are all soil quality and water 

quality concerns addressed to 

the minimum level of treatment 

on the part of the agriculture 

operation?
Page 75 GAO-06-312 Conservation Security Program Costs

Appendix IV

Other Key USDA Conservation Programs ApendxiIV

In addition to to the Conservation Security Program (CSP), the U.S. 

Department of Agriculture (USDA) manages a number of other 

conservation programs. In general, these other programs (1) help farmers 

and ranchers address existing environmental problems by paying for a 

portion of the cost of needed conservation practices or structures; (2) keep 

land in farming or grazing by purchasing rights to part of the land, such as 

development rights through easements; or (3) idle or retire 

environmentally sensitive land, such as highly erodible land or wetlands, 

from production. In contrast, CSP is focused on operations that already 

have addressed environmental problems and have achieved a high level of 

environmental stewardship, while keeping the land in production. 

Producers cannot receive CSP payments and payments under another 

USDA conservation program for the same conservation practices or 

activities on the same land. However, producers can use assistance 

received under other USDA programs, as well as assistance received under 

state or private conservation programs, to arrive at a high level of 

stewardship necessary to participate in CSP. Table 20 describes other key 

USDA conservation programs. 
Appendix IV

Other Key USDA Conservation Programs

Page 76 GAO-06-312 Conservation Security Program Costs

Table 20: Description of Other Key USDA Conservation Programs

Sources: GAO analysis of USDA and CBO information and the 2002 farm bill.

a

In states that impose a maximum duration for easements, the Secretary can use an easement for the 

maximum duration allowed under state law.

Dollars in millions

Program Description

Total authorization, 

fiscal years 2002 

through 2007

Conservation Reserve 

Program 

Provides annual rental payments and cost-share and technical assistance to 

establish permanent vegetative land cover in exchange for taking environmentally 

sensitive cropland out of production for 10 to 15 years. Most program lands are 

enrolled through the use of contracts and competitive bidding during designated 

sign-ups. Some economic uses of enrolled land are allowed with a reduction of 

annual rental payments, such as the installation of wind turbines and managed 

haying and grazing. Up to 39.2 million acres may be enrolled at any one time. 

$11,118

Environmental Quality 

Incentives Program 

Offers incentive and cost-share payments and technical assistance through 1- to 

10-year contracts to implement structural and land management practices or to 

develop a comprehensive nutrient management plan. At least 60 percent of 

annual funds made available for cost-share and incentive payments are required 

to be targeted at practices relating to livestock production.

5,800

Wetlands Reserve 

Program 

Targets restoration of prior-converted and farmed wetlands to a wetland condition.

Acreage can be enrolled in the program through the use of permanent easements, 

30-year easements, and restoration cost-share agreements. Program lands may 

be used for compatible economic uses such as hunting, fishing, or limited timber 

harvests. Up to 2.275 million acres may be enrolled. 

1,506

Farmland Protection 

Program 

Purchases easements or other interests in eligible land (up to 50 percent of fair 

market value) for the purpose of protecting topsoil by limiting nonagricultural uses 

of the land. Eligible land means land on a farm or ranch that is subject to a 

pending offer for purchase from an eligible entity and that has prime, unique, or 

other productive soil or that contains historical or archeological resources. Eligible 

land includes cropland, rangeland, grassland, pastureland, and forestland that is 

an incidental part of the agricultural operation. 

597

Wildlife Habitat 

Incentives Program 

Offers cost-share payments through 5- to 10-year agreements to develop and 

protect and restore wildlife habitat. Allows up to 15 percent of funds each year to 

be used for increased cost-share assistance to producers who enter into 15-year 

agreements. 

360

Grassland Reserve 

Program 

Offers permanent and 30-year easementsa and 10- to 30-year rental agreements 

to grassland owners to assist owners in restoring and conserving eligible land. Up 

to 2 million acres may be enrolled. 

$254
Page 77 GAO-06-312 Conservation Security Program Costs

Appendix V

Explanation of Budget Scoring ApendxiV

Budget scoring or scorekeeping is the process of estimating the budgetary 

effects of pending and enacted legislation and comparing them with a 

baseline, such as a budget resolution, or to any limits that may be set in law. 

Scorekeeping tracks data such as budget authority, receipts, outlays, the 

surplus or deficit, and the public debt limit. The process allows Congress 

to compare the cost of proposed budget policy changes with existing law in 

order to enforce spending and revenue levels agreed upon in the budget 

resolution. The congressional budget committees and the Congressional 

Budget Office (CBO) score legislation in relation to levels set by Congress 

in concurrent budget resolutions. The Office of Management and Budget 

(OMB) also scores legislation for the purposes of developing the 

President’s annual budget proposal, executing the budget, and providing 

the President with estimates of the budgetary impacts of pending 

legislation awaiting the President’s signature (or veto).

Budget scorekeeping guidelines are used by the congressional budget 

committees, CBO, and OMB (the “scorekeepers”) in measuring compliance 

with the Congressional Budget and Impoundment Control Act of 1974, as 

amended, and the Balanced Budget and Emergency Deficit Control Act of 

1985, as amended.1

 The purpose of the guidelines is to ensure that the 

scorekeepers measure the effects of legislation on the deficit consistent 

with established scorekeeping conventions and with specific legislative 

requirements regarding discretionary spending, direct spending, and 

receipts. These guidelines are reviewed annually by the scorekeepers and

1

Budget-scorekeeping guidelines were developed by the executive and legislative branches 

in order to ensure compliance with the Budget Enforcement Act of 1990, enacted by the 

Omnibus Budget Reconciliation Act of 1990, Pub. L. No. 101-508, tit. XIII, 104 Stat. 1388-573 

(1990), which established discretionary spending limits and pay-as-you-go rules for 

mandatory programs. The Budget Enforcement Act amended the Congressional Budget and 

Impoundment Control Act of 1974, Pub. L. No. 93-344, 88 Stat. 297 (1974), and the Balanced 

Budget and Emergency Deficit Control Act of 1985, Pub. L. No. 99-177, tit. II, 99 Stat. 1037, 

1038 (1985) (commonly known as Gramm-Rudman-Hollings). The Omnibus Budget 

Reconciliation Act of 1993, Pub. L. No. 103-66, 107 Stat. 312 (1993), extended these 

enforcement mechanisms through fiscal year 1998. The Budget Enforcement Act of 1997, 

enacted by the Balanced Budget Act of 1997, Pub. L. No. 105-33, tit. X, 111 Stat. 251 (1997), 

further extended these enforcement mechanisms through fiscal year 2002. Although the 

enforcement mechanisms of the Budget Enforcement Act expired, or became ineffective, at 

the end of fiscal year 2002, the scorekeepers continue to apply these scorekeeping 

principles for budget execution and the congressional budget process.
Appendix V

Explanation of Budget Scoring

Page 78 GAO-06-312 Conservation Security Program Costs

revised as necessary to adhere to that purpose. The guidelines are 

contained in Appendix A of OMB Circular No. A-11.2

 

In general, CBO prepares costs estimates for all bills other than 

appropriations bills when they are reported by a full committee of either 

House of Congress. However, CBO also prepares cost estimates for 

proposals at other stages of the legislative process at the request of a 

committee of jurisdiction, a budget committee, or the congressional 

leadership. For example, CBO may prepare cost estimates for a series of 

bills to be considered by a subcommittee, including draft bills not yet 

introduced, or for amendments to be considered during committee 

markups. Similarly, it may prepare cost estimates for floor amendments 

and for bills that pass one or both Houses. For appropriations bills, CBO 

provides estimates of outlays that would result from the provision of 

budget authority. CBO also provides the budget and appropriation 

committees with frequent tabulations of congressional action on both 

spending and revenue bills so that Congress can know whether it is acting 

within the limits set by the annual budget resolution. After CBO cost 

estimates have been transmitted, they may be revised to correct errors or 

to incorporate new or updated information. OMB also may revise its 

estimates for similar reasons. 

The Director, CBO, transmits by letter all formal budget and mandate cost 

estimates of legislative proposals and all requested analyses. Scorekeeping 

data published by CBO include, but are not limited to, status reports on the 

effects of congressional actions and comparisons of these actions to 

targets and ceilings set by Congress in the budget resolutions. Weekly 

status reports are published in the Congressional Record for the Senate 

during the weeks it is in session and status reports for the House of 

Representatives are published at least monthly when the House is in 

session. CBO is also required to produce periodic scorekeeping reports on 

at least a monthly basis pursuant to section 308(b) of the Congressional 

Budget and Impoundment Act of 1974, as amended. OMB scorekeeping 

data generally are not published.

2

OMB Circular No. A-11, Preparation, Submission, and Execution of the Budget, Nov. 2, 

2005. 
Page 79 GAO-06-312 Conservation Security Program Costs

Appendix VI

Time Line of Legislative Actions and CBO and 

OMB 10-Year Estimates of CSP Costs ApendxiVI

a

Farm Security and Rural Investment Act of 2002, Pub. L. No. 107-171, 116 Stat. 134 (2002).

Sources: GAO analysis of CBO and OMB data and review of legislation.

December: Funding uncapped

$3.7 billion (FYs 2002-2011)h

May: Funding uncapped

$5.9 billion (FYs 2002-2011)

May: Funding uncapped

$2.0 billion (FYs 2002-2011)i

May: 

CSP enacted into lawa

January: Funding uncapped

$7.8 billion (FYs 2004-2013) February:

$3.8 billion 11-year cap

(FYs 2003-2013)

b March: Funding capped

$3.8 billion (FYs 2004-2013)

January:

$41.4 million 1-year cap

(FY 2004) and repealed 

$3.8 billion 11-year cap 

for FYs 2003-2013c

January: Funding uncapped

$9.7 billion (FYs 2005-2014)

March: Funding uncapped

$8.9 billion (FYs 2005-2014)

October:

$6.0 billion 10-year cap

(FYs 2005-2014)d

October: Funding capped

$6.0 billion (FYs 2005-2014)

December:

$202.4 million 1-year cap

on salaries and personnel 

expenses (FY 2005)e

November:

$259 million 1-year cap

on salaries and personnel 

expenses (FY 2006)f

January: Funding capped 

except for 2015

$6.7 billion (FYs 2006-2015)

March: Funding capped 

except for 2015

$6.7 billion (FYs 2006-2015)

February:

$1.95 billion 5-year cap

(FYs 2006-2010) and $5.65 

billion 10-year cap

(FYs 2006-2015)g

January: Funding capped 

except for 2016

$6.2 billion (FYs 2007-2016)

March: Funding capped 

except for 2016

$6.4 billion (FYs 2007-2016)

Calendar

years

2001

Legislation CBO OMB

2003

2002

2004

2005

2006
Appendix VI

Time Line of Legislative Actions and CBO and 

OMB 10-Year Estimates of CSP Costs

Page 80 GAO-06-312 Conservation Security Program Costs

b

Agricultural Assistance Act of 2003, Pub. L. No. 108-7, tit. II, § 216, Stat. 538, 546 (2003).

c

Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations 

Act, 2004, § 752, and Miscellaneous Appropriations and Offsets Act, 2004, § 101, enacted by the 

Consolidated Appropriations Act, 2004, Pub. L. No. 108-199, 118 Stat. 3 (2004). The exact amounts of 

these caps were $41.443 million and $3.773 billion, respectively.

d

Emergency Supplemental Appropriations for Hurricane Disasters Assistance Act, 2005, § 101(e), 

enacted by the Military Construction Appropriations and Emergency Hurricane Supplemental 

Appropriations Act, 2005, Pub. L. No. 108-324, 118 Stat. 1220 (2004). The exact amount of this cap 

was $6.037 billion. The Deficit Reduction Act of 2005, Pub. L. No. 109-171, § 1202, (2006), repealed 

this cap. 

e

Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations 

Act, 2005, § 749, enacted by the Consolidated Appropriations Act, 2005, Pub. L. No. 108-447, 118 

Stat. 2809 (Dec. 8, 2004). This law limited the amount of funds available to pay the salaries and 

expenses of personnel to carry out CSP to $202.411 million. NRCS officials said that this amount was 

the total amount of funding available to CSP for fiscal year 2005. 

f

Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations 

Act, 2006, Pub. L. No. 109-97, tit.VII, § 741, 119 Stat. 2120, 2155 (Nov. 10, 2005).

g

Deficit Reduction Act of 2005, Pub. L. No. 109-171, § 1202 (2006). The exact amount of these caps 

were $1.954 billion for fiscal years 2006 through 2010 and $5.650 billion for fiscal years 2006 through 

2015.

h

Estimate based on CSP as proposed in S. 1731, 107th Cong. (2001).

i

Estimate based on CSP as in the farm bill conference report, H.R. Conf. Rep. No. 107-424 (2002), just 

prior to the farm bill being enacted into law.
Page 81 GAO-06-312 Conservation Security Program Costs

Appendix VII

Description of USDA and NRCS Internal 

Controls and the Results of Reviews of These 

Controls ApendxiVI

Federal agencies have been required for over 20 years to establish and 

assess internal controls in their programs and financial management 

activities pursuant to the Federal Managers’ Financial Integrity Act of 1982 

and other legislative and administrative initiatives.1

 Furthermore, the 

Improper Payments Information Act of 2002 requires each agency to 

annually review all programs and activities the agency administers and to 

identify those that may be susceptible to significant improper payments.2

 

To ensure that programs are managed with integrity and that program 

operations comply with these requirements, the U.S. Department of 

Agriculture (USDA) issued a departmental regulation, Management 

Accountability and Control, and a related departmental manual, 

Management Control Manual.

3

 The departmental regulation establishes 

departmentwide policy for internal controls. The manual discusses specific 

controls, including separation of duties, reconciliation of records from two 

sources, reconciliation of records with physical inventories, limiting access 

(e.g., authorizations on data systems), providing supervision, 

documentation of processes and procedures, written delegations of 

authority, analyzing and reporting on risk, and periodic reviews of 

performance. As a USDA agency, the Natural Resources Conservation 

1

The Federal Managers’ Financial Integrity Act of 1982, Pub. L. No. 97-255, 96 Stat. 814 

(1982) also requires GAO to issue standards for internal control in government. The 

standards provide the overall framework for establishing and maintaining internal control 

and for identifying and addressing major performance and management challenges and 

areas at greatest risk of fraud, waste, abuse, and mismanagement. Office of Management 

and Budget (OMB) Circular A-123, Management Accountability and Control, provides 

agencies guidance on how to satisfy the requirements of the Federal Managers’ Financial 

Integrity Act of 1982. The term “internal control” is synonymous with “management 

control,” as used in the circular, and covers all aspects of an agency’s operations—

programmatic, financial, and compliance. Also, the Chief Financial Officers Act of 1990, 

Pub. L. No. 101-576, 104 Stat. 2838 (1990), calls for financial management systems to comply 

with internal control standards, and the Federal Financial Management Improvement Act of 

1996 (enacted by the Consolidated Appropriations Act, 1997, Pub. L. No. 104-208, 110 Stat. 

3009 (1996) identifies internal control as an integral part of improving financial management 

systems. 

2

Pub. L. No. 107-300, 116 Stat. 2350 (2002). OMB issued guidance—Implementation 

Guidance for the Improper Payments Act of 2002, P.L. 107-300, M-03-13—on May 21, 2003, 

to agencies on implementing the Improper Payments Information Act. Among other things, 

OMB defined significant improper payments as annual erroneous payments exceeding both 

2.5 percent of program payments and $10 million. 

3

The departmental regulation, No. 1110-002, was issued on Apr. 14, 2004, canceling an earlier 

department regulation, Internal/Management Controls, issued on Feb. 23, 1999. The manual, 

DM 1110-002, was issued on Nov. 29, 2002. 
Appendix VII

Description of USDA and NRCS Internal 

Controls and the Results of Reviews of These 

Controls

Page 82 GAO-06-312 Conservation Security Program Costs

Service (NRCS) is to follow the internal control guidance in this regulation 

and manual.

NRCS also has established agency-specific guidance on internal controls, 

found principally in its General Manual and its Conservation Programs 

Manual. The General Manual establishes NRCS policy for effectively 

guarding against waste, loss, and misuse of program resources. 

Specifically, it outlines the process through which the agency complies 

with governmentwide requirements for internal management control. The 

Conservation Programs Manual provides specific policy, guidance, and 

operating procedures for implementing the Conservation Security Program 

(CSP) (and other programs). For example, the manual sets procedures for 

key program controls such as the documentation required from an 

applicant and the conduct of CSP eligibility determinations and contract 

compliance reviews. The manual also discusses specific responsibilities for 

program implementation as they relate to internal controls. For example, 

within each state, the NRCS State Conservationist is responsible for 

ensuring compliance with internal controls, including separation of duties 

related to contract approval and payment certification. In addition, this 

official is responsible for designating in writing the authorized NRCS 

representative for obligating program funds, disbursing payments, and 

acting as Contracting Officer.

USDA’s Office of Inspector General (IG) issued a report in January 2005 

that examined NRCS’s compliance with the Improper Payments 

Information Act of 2002.4

 Among other things, the IG found that NRCS had 

not taken sufficient action to comply with the act and related guidance set 

forth by OMB and USDA’s Office of the Chief Financial Officer. In summary, 

the IG found that NRCS had neither identified the internal control 

measures in place to preclude, or detect in a timely manner, improper 

payments nor did it know if the controls were in operation. In addition, the 

IG noted that NRCS had not conducted adequate risk assessments of 

potential improper payments for the programs it administers, including 

CSP. According to the IG, NRCS officials stated that risk assessments were 

not completed because they did not have the time or personnel to perform 

them. These officials also said that they misinterpreted the guidance 

regarding what they needed to do to comply with the act. Accordingly, the 

4

See U.S. Department of Agriculture, Office of Inspector General, Natural Resources 

Conservation Service: Compliance with the Improper Payments Information Act of 2002, 

Audit Report No. 10601-003-KC (Washington, D.C.: Jan. 10, 2005). 
Appendix VII

Description of USDA and NRCS Internal 

Controls and the Results of Reviews of These 

Controls

Page 83 GAO-06-312 Conservation Security Program Costs

IG recommended that NRCS conduct more thorough risk assessments of 

all programs with outlays of $10 million or more (includes CSP) and 

develop an estimated error rate by (1) developing criteria for identifying 

program vulnerabilities, (2) determining acceptable risk levels, (3) ranking 

the risk factors, and (4) establishing controls to ensure their timely and 

accurate completion. NRCS agreed with the IG’s recommendations and 

indicated that it would take corrective actions by April 30, 2005. In 

February 2006, IG officials indicated that the IG had not assessed the 

adequacy of these actions, including NRCS’s preparation of risk 

assessments. 

In a January 2004 report, GAO found that significant, pervasive information 

security control weaknesses exist at USDA, including serious access 

control weaknesses, as well as other information security weaknesses.5

 

Specifically, USDA had not adequately protected network boundaries, 

sufficiently controlled network access, appropriately limited mainframe 

access, or fully implemented a comprehensive program to monitor access 

activity. In addition, weaknesses in other information security controls, 

including physical security, personnel controls, system software, 

application software, and service continuity, further increase the risk to 

USDA’s information systems. As a result, sensitive data—including 

information relating to the privacy of U.S. citizens, payroll and financial 

transactions, proprietary information, agricultural production and 

marketing estimates, and mission critical data—are at increased risk of 

unauthorized disclosure, modification, or loss, possibly without being 

detected. Accordingly, GAO recommended that USDA establish a 

comprehensive security management program, including (1) ensuring that 

security management positions have the authority and cooperation of 

agency management to effectively implement and manage security 

programs, (2) completing periodic risk assessments for systems, (3) 

completing information security plans and establishing policies and 

procedures on the basis of identified risks, (4) ensuring that employees 

complete security awareness training, (5) implementing ongoing tests and 

evaluations of controls, (6) completing system certifications and 

accreditations, and (7) developing corrective action plans that clearly tie to 

identified weaknesses. USDA concurred, but as of January 2006, USDA had 

not yet fully implemented these recommendations. 

5

See Information Security: Further Efforts Needed to Address Serious Weaknesses at 

USDA, GAO-04-154, Jan. 30, 2004.
Appendix VII

Description of USDA and NRCS Internal 

Controls and the Results of Reviews of These 

Controls

Page 84 GAO-06-312 Conservation Security Program Costs

Furthermore, USDA’s fiscal year 2005 performance and accountability 

report discusses material weaknesses related to USDA’s financial and 

accounting systems and information security program.6

 Among the 

material weaknesses identified in the report are NRCS’s application 

controls for its Program Contracts System (ProTracts). To address this 

weakness, NRCS plans to take a number of actions in fiscal year 2006, 

including (1) documenting the ProTracts change control process; (2) 

documenting changes to the ProTracts software; (3) establishing a 

ProTracts testing process; (4) establishing a formally approved document 

for the ProTracts payment specifications; and (5) establishing a schedule 

for the systematic reconciliation of ProTracts appropriations, obligations, 

and payments with amounts recorded in the department’s Foundation 

Financial Information System.7

 

6

These weaknesses relate to the requirements found in the Federal Managers’ Financial 

Management Integrity Act, the Federal Financial Management Improvement Act, and the 

Federal Information Security Management Act. A material weakness is a reportable 

condition in which the design or operation of one or more of the internal control 

components does not reduce to a relatively low level the risk that misstatements caused by 

error or fraud in amounts that would be material in relation to the financial statements being 

audited may occur and not be detected within a timely period by employees in the normal 

course of performing their assigned functions. 

7

The Foundation Financial Information System is USDA’s official accounting system for 

making payments for current and prior year programs. This system is also the source of data 

used in financial statements for all USDA programs. 
Page 85 GAO-06-312 Conservation Security Program Costs

Appendix VIII

Comments from the U.S. Department of 

Agriculture ApendxiVI

Note: GAO comments 

supplementing those in 

the report text appear 

at the end of this 

appendix.
Page 86 GAO-06-312 Conservation Security Program Costs

Appendix VIII

See comment 1.
Page 87 GAO-06-312 Conservation Security Program Costs

Appendix VIII
Appendix VIII

Comments from the U.S. Department of 

Agriculture

Page 88 GAO-06-312 Conservation Security Program Costs
Appendix VIII

Comments from the U.S. Department of 

Agriculture

Page 89 GAO-06-312 Conservation Security Program Costs

See comment 2.

See comment 3.
Appendix VIII

Comments from the U.S. Department of 

Agriculture

Page 90 GAO-06-312 Conservation Security Program Costs

See comment 4.
Appendix VIII

Comments from the U.S. Department of 

Agriculture

Page 91 GAO-06-312 Conservation Security Program Costs

See comment 5.

See comment 6.
Appendix VIII

Comments from the U.S. Department of 

Agriculture

Page 92 GAO-06-312 Conservation Security Program Costs

The following are GAO’s comments on the letter from the U.S. Department 

of Agriculture dated April 10, 2006.

GAO Comments 1. We deleted the language cited by NRCS as being from an earlier 

Oversight and Evaluation (O&E) draft report and no longer accurate.

2. Because some NRCS state offices have not fully adhered to the agency’s 

national guidance for wildlife habitat assessment criteria, NRCS said 

that it issued a national bulletin to all of its state offices during the 

fiscal year 2006 CSP sign-up to reemphasize the guidance that these 

offices must use in developing their wildlife habitat assessment criteria. 

While the promulgation of this bulletin should be helpful, we still 

believe that NRCS should review and field check each NRCS state 

office’s assessment criteria to ensure that states use consistent criteria 

and achieve the wildlife habitat benefits intended by the national 

guidance. In addition, field checks would help to establish baseline 

information on the habitat results produced by the existing general 

wildlife habitat assessment criteria. Such information would be useful 

in determining whether these criteria need adjustment.

3. We are not aware of any formal estimates or studies of the potential 

cost of CSP in the absence of funding caps and NRCS cost controls. 

The report discusses estimates of program costs developed by the 

Congressional Budget Office (CBO) and the Office of Management and 

Budget (OMB) that have ranged as high as $9.7 billion. In general, these 

estimates consider statutory funding caps, farm bill provisions, and the 

manner in which NRCS has implemented the program, including cost 

control measures. NRCS cites the benefit-cost assessment it prepared 

for the amendment to the interim final rule for CSP as a possible source 

of this information. However, according to this assessment, none of the 

alternatives discussed fully excludes NRCS cost controls. In addition, 

the assessment notes that the benefit-cost model used has a number of 

simplifying assumptions and, because of these assumptions, the model 

should not be relied on to predict actual participation rates, tier or 

regional distribution, or the magnitude of payments. Instead, the 

assessment indicates 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. Furthermore, the 

assessment states that the benefit-cost model has not been validated so 

its ability to predict program participation has not been assessed. 
Appendix VIII

Comments from the U.S. Department of 

Agriculture

Page 93 GAO-06-312 Conservation Security Program Costs

4. We have modified the report to reflect this information on the methods 

NRCS has used to determine whether producers are sufficiently 

addressing water quality issues. 

5. In lieu of including a reference in its Conservation Programs Manual, 

NRCS said that it is proposing that NRCS wildlife biologists develop a 

special technical note that would describe how the national guidance 

for wildlife habitat assessment should be used by NRCS state offices. 

While this step would be useful, we still believe that the inclusion of a 

reference in the manual to the national guidance would help to 

emphasize its importance to NRCS state and field-level employees. The 

Conservation Programs Manual is the primary guidance document 

used by NRCS state and field-level officials in implementing CSP. 

Furthermore, the inclusion of a reference in this manual need not be a 

complete restatement of the national guidance that is provided in other 

documents, including training materials and the technical note, if 

created. Instead, this reference could state that national guidance 

exists and should be followed by state offices in developing their 

wildlife habitat assessment criteria. The reference also could identify 

relevant resource materials (other manuals, bulletins, technical notes, 

training materials, etc.) that describe this guidance. 

6. We agree that the planned revisions in the self-assessment workbook 

and the contract appendix will provide greater assurance that CSP 

payments do not duplicate payments made by other USDA 

conservation programs. However, while most producers probably 

provide accurate and complete information on their program 

applications, NRCS has found that this is not always the case. For 

example, according to a February 2006 News Release by NRCS’s 

Washington state office, 15 CSP contract holders in the Upper Crab and 

Rock watersheds were issued “intent to terminate” notices regarding 

their submission of apparently false information associated with their 

program applications. Specifically, these producers appeared to have 

provided false or altered soil test results. USDA’s Office of Inspector 

General is investigating this matter. Because program applicants may 

purposefully or inadvertently provide inaccurate information in their 

program applications, we urge NRCS to proceed with the development 

and implementation of automated methods to identify potentially 

duplicative payments before they are made.
Page 94 GAO-??-?? Document Name

Appendix IX

GAO Contact and Staff Acknowledgments ApendxiIX

GAO Contact Robert A. Robinson (202) 512-3841

Staff 

Acknowledgments

In addition to the individual named above, James R. Jones, Jr., Assistant 

Director; William B. Bates; Gary T. Brown; John W. Delicath; Barbara J. El 

Osta; Nathan A. Morris; Lynn M. Musser; Katherine M. Raheb; and Amy E. 

Webbink made key contributions to this report.
Page 95 GAO-06-312 Conservation Security Program Costs

Related GAO Products

Agricultural Conservation: USDA Should Improve Its Methods for 

Estimating Technical Assistance Costs. GAO-05-58. Washington, D.C.: 

November 30, 2004.

Information Security: Further Efforts Needed to Address Serious 

Weaknesses at USDA. GAO-04-154. Washington, D.C.: January 30, 2004.

Department of Agriculture: Status of Efforts to Address Major Financial 

Management Challenges. GAO-03-871T. Washington, D.C.: June 10, 2003. 

Agricultural Conservation: USDA Needs to Better Ensure Protection of 

Highly Erodible Cropland and Wetlands. GAO-03-418. Washington, D.C.: 

April 21, 2003.

Agricultural Conservation: State Advisory Committees’ Views on How 

USDA Programs Could Better Address Environmental Concerns. GAO-02-

295. Washington, D.C.: February 22, 2002.

Environmental Protection: Federal Incentives Could Help Promote Land 

Use That Protects Air and Water Quality. GAO-02-12. Washington, D.C.: 

October 31, 2001.

Budget Scoring: Budget Scoring Affects Some Lease Terms but Full Extent 

Is Uncertain. GAO-01-929. Washington, D.C.: August 31, 2001. 

Budget Issues: Budget Enforcement Compliance Report. GAO/AIMD-00-

174. Washington, D.C.: May 31, 2000.

Natural Resources Conservation Service: Additional Actions Needed to 

Strengthen Program and Financial Accountability. GAO/RCED-00-83. 

Washington, D.C.: April 7, 2000. 

Water Quality: Federal Role in Addressing—and Contributing to—

Nonpoint Source Pollution. GAO/RCED-99-45. Washington, D.C.: February 

26, 1999.

Commodity Credit Corporation: Information on the Availability, Use, 

and Management of Funds. GAO/RCED-98-114. Washington, D.C.: April 28, 

1998.

Budget Process: Issues Concerning the 1990 Reconciliation Act. 

GAO/AIMD-95-3. Washington, D.C.: October 7, 1994.
Related GAO Products 

Page 96 GAO-06-312 Conservation Security Program Costs

Budget Policy: Issues in Capping Mandatory Spending. GAO/AIMD-94-

155. Washington, D.C.: July 18, 1994.

(360544)
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