[Federal Register Volume 75, Number 106 (Thursday, June 3, 2010)]
[Rules and Regulations]
[Pages 31610-31661]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-12699]



[[Page 31609]]

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Part III





Department of Agriculture





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Commodity Credit Corporation



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7 CFR Part 1470



Conservation Stewardship Program; Final Rule

Federal Register / Vol. 75 , No. 106 / Thursday, June 3, 2010 / Rules 
and Regulations

[[Page 31610]]


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DEPARTMENT OF AGRICULTURE

Commodity Credit Corporation

7 CFR Part 1470

RIN 0578-AA43


Conservation Stewardship Program

AGENCY: Commodity Credit Corporation, Natural Resources Conservation 
Service, United States Department of Agriculture.

ACTION: Final rule.

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SUMMARY: Section 2301 of the Food, Conservation, and Energy Act of 2008 
(2008 Act) amended the Food Security Act of 1985 to establish the 
Conservation Stewardship Program (CSP). On July 29, 2009, the Natural 
Resources Conservation Service (NRCS) published an interim final rule 
for CSP with a 60-day public comment period. On September 21, 2009, the 
public comment period was extended 30 days. NRCS is publishing a final 
rule that addresses the comments received on the interim final rule and 
makes other minor adjustments to improve clarity of the rule.

DATES: Effective Date: The rule is effective June 3, 2010.

FOR FURTHER INFORMATION CONTACT: Dwayne Howard, Branch Chief, Financial 
Assistance Programs Division, Department of Agriculture, Natural 
Resources Conservation Service, 1400 Independence Avenue, SW., Room 
5237 South Building, Washington, DC 20250; Telephone: (202) 720-1845; 
Fax: (202) 720-4265; or e-mail <a href="/cdn-cgi/l/email-protection#c5869695f7f5f5fd85b2a1a6ebb0b6a1a4eba2aab3"><span class="__cf_email__" data-cfemail="99dacac9aba9a9a1d9eefdfab7eceafdf8b7fef6ef">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION: 

Regulatory Certifications

Executive Order 12866

    Pursuant to Executive Order 12866 (FR Doc. 93-24523, September 30, 
1993), this final rule is an economically significant regulatory action 
since it results in an annual effect on the economy of $100 million or 
more. The administrative record is available for public inspection at 
the Department of Agriculture, 1400 Independence Avenue, SW., Room 5242 
South Building, Washington, DC 20250.
    Pursuant to Executive Order 12866, NRCS conducted an economic 
analysis of the potential impacts associated with this program. A 
summary of the economic analysis can be found at the end of the 
Regulatory Certifications section of this preamble and a copy of the 
analysis is available upon request from Dwayne Howard, Branch Chief, 
Financial Assistance Programs Division, Department of Agriculture, 
Natural Resources Conservation Service, Room 5237 South Building, 
Washington, DC 20250 or electronically at http://www.nrcs.usda.gov/programs/csp/ under the CSP Rules and Notices with Supporting Documents 
title.

Regulatory Flexibility Act

    NRCS has determined that the Regulatory Flexibility Act is not 
applicable to this final rule because NRCS is not required by 5 U.S.C. 
553, or any other provision of law, to publish a notice of proposed 
rulemaking with respect to the subject matter of this rule.

Environmental Analysis

    Availability of the Environmental Assessment (EA) and Finding of No 
Significant Impact (FONSI). A programmatic environmental assessment was 
prepared in association with the CSP interim final rule. The analysis 
determined that there was not a significant impact to the human 
environment and as a result an Environmental Impact Statement was not 
required to be prepared (40 CFR part 1508.13). The EA and FONSI were 
available for review and comment for 30 days from the date the interim 
final rule was published in the Federal Register.
    For this final rulemaking, the agency has determined that there are 
no new circumstances or significant new information that has a bearing 
on environmental effects which warrant supplementing the previous EA 
and FONSI. The proposed changes identified in this final rule are 
considered minor changes that should be implemented for the program. 
The majority of these changes are administrative or technical or 
corrections to the regulation.
    Copies of the EA and FONSI may be obtained from Matt Harrington, 
National Environmental Coordinator, Ecological Sciences Division, 
Department of Agriculture, Natural Resources Conservation Service, 1400 
Independence Avenue, SW., Room 6151 South Building, Washington, DC 
20250. The CSP EA and FONSI are also available at the following 
Internet address: http://www.nrcs.usda.gov/programs/Env_Assess.

Civil Rights Impact Analysis

    NRCS has determined through a Civil Rights Impact Analysis (CRIA) 
that the interim final rule discloses no disproportionately adverse 
impacts for minorities, women, or persons with disabilities. The final 
CRIA provides responses to the interim final rule's CRIA comments. The 
Department of Agriculture (USDA), Office of Assistant Secretary for 
Civil Rights (OASCR), Office of Compliance, Policy, and Training 
(formally the Office of Adjudication and Compliance) worked with NRCS 
in the initial preparation of the proposed interim final rule and CRIA. 
Based on these preliminary meetings and their review, it was determined 
there was no adverse impact. The OASCR concurred with the CRIA for the 
proposed final rule.
    The data presented indicates producers who are members of the 
protected groups have participated in NRCS conservation programs at 
parity with other producers. Extrapolating from historical 
participation data, it is reasonable to conclude that NRCS programs, 
including CSP, will continue to be administered in a non-discriminatory 
manner. Outreach and communication strategies are in place to ensure 
all producers will be provided the same information to allow them to 
make informed compliance decisions regarding the use of their lands 
that will affect their participation in USDA programs. CSP applies to 
all persons equally regardless of their race, color, national origin, 
gender, sex, or disability status. Therefore, the CSP rule portends no 
adverse civil rights implications for women, minorities, and persons 
with disabilities.

Paperwork Reduction Act

    Section 2904 of the 2008 Act provides that the promulgation of 
regulations and the administration of Title II of the 2008 Act, which 
contain the amendments that authorize CSP, will be made without regard 
to chapter 35 of Title 44 of the U.S.C. also known as the Paperwork 
Reduction Act. Therefore, NRCS is not reporting recordkeeping or 
estimated paperwork burden associated with this interim final rule.

Government Paperwork Elimination Act

    NRCS is committed to compliance with the Government Paperwork 
Elimination Act, which requires government agencies, in general, to 
provide the public the option of submitting information or transacting 
business electronically to the maximum extent possible. To better 
accommodate public access, NRCS has developed an online application and 
information system for public use.

Executive Order 12988

    This final rule has been reviewed in accordance with Executive 
Order 12988, Civil Justice Reform. The provisions of this final rule 
are not retroactive. The provisions of this final rule preempt State 
and local laws to the extent that such laws are inconsistent with this

[[Page 31611]]

final rule. Before an action may be brought in a Federal court of 
competent jurisdiction, the administrative appeal rights afforded 
persons at 7 CFR parts 614, 780, and 11 must be exhausted.

Federal Crop Insurance Reform and Department of Agriculture 
Reorganization Act of 1994

    Section 304 of the Department of Agriculture Reorganization Act of 
1994, Public Law 103-354, requires that a risk assessment be prepared 
in conjunction with any notice of proposed rulemaking for a major 
regulation. Pursuant to section 2904 of the 2008 Act, NRCS is 
promulgating this final rule, and therefore, a risk assessment is not 
required. However, risks associated with the final rule have been 
assessed pursuant to the analysis prepared in compliance with Executive 
Order 12866.

Unfunded Mandates Reform Act of 1995

    NRCS assessed the effects of this rulemaking action on State, 
local, and tribal governments, and the public. This action does not 
compel the expenditure of $100 million or more by any State, local, or 
tribal governments, or anyone in the private sector; therefore, a 
statement under section 202 of the Unfunded Mandates Reform Act of 1995 
is not required.

Executive Order 13132

    This final rule has been reviewed in accordance with the 
requirements of Executive Order 13132, Federalism. USDA has determined 
that this final rule conforms with the Federalism principles set forth 
in the Executive Order, would not impose any compliance costs on the 
States, and would not have substantial direct effects on the States, on 
the relationship between the Federal Government and the States, or on 
the distribution of power and responsibilities on the various levels of 
government. Therefore, USDA concludes that this final rule does not 
have Federalism implications.

Executive Order 13175

    This final rule has been reviewed in accordance with the 
requirements of Executive Order 13175, Consultation and Coordination 
with Indian Tribal Governments. NRCS has assessed the impact of this 
final rule on Indian tribal governments and concluded that this final 
rule will not negatively affect Indian tribal governments or their 
communities. The rule neither imposes substantial direct compliance 
costs on tribal governments nor preempts tribal law. However, NRCS 
plans to undertake a series of at least six regional tribal 
consultation sessions before December 30, 2010, on the impact of NRCS 
conservation programs and services on tribal governments and their 
members to establish a baseline of consultation for future actions. 
Reports from these sessions will be made part of the USDA annual 
reporting on Tribal Consultation and Collaboration. NRCS will respond 
in a timely and meaningful manner to all tribal governments' requests 
for consultation.

Small Business Regulatory Enforcement Fairness Act of 1996

    Section 2904(c) of the 2008 Act requires that the Secretary use the 
authority in section 808(2) of title 5 U.S.C., which allows an agency 
to forgo the Small Business Regulatory Enforcement Fairness Act of 1996 
usual congressional review delay of the effective date of a regulation 
if the agency finds that there is a good cause to do so. NRCS hereby 
determines that it has good cause to do so in order to meet the 
congressional intent to have the conservation programs authorized or 
amended by Title II in effect as soon as possible. Accordingly, this 
rule is effective upon filing for public inspection by the Office of 
the Federal Register.

Section 2708 of the 2008 Act

    Section 2708, ``Compliance and Performance,'' of the 2008 Act added 
a paragraph to section 1244(g) of the Food Security Act of 1985 Act 
entitled, ``Administrative Requirements for Conservation Programs,'' 
which states the following:
    ``(g) Compliance and performance.--For each conservation program 
under Subtitle D, the Secretary will develop procedures--
    (1) To monitor compliance with program requirements;
    (2) To measure program performance;
    (3) To demonstrate whether long-term conservation benefits of the 
program are being achieved;
    (4) To track participation by crop and livestock type; and
    (5) To coordinate activities described in this subsection with the 
national conservation program authorized under section 5 of the Soil 
and Water Resources Conservation Act of 1977 (16 U.S.C. 2004).''
    This new provision presents in one place the accountability 
requirements placed on the agency as it implements conservation 
programs and reports on program results. The requirements apply to all 
programs under Subtitle D, including the Wetlands Reserve Program, 
Conservation Security Program, Conservation Stewardship Program, Farm 
and Ranch Lands Protection Program, Grassland Reserve Program (GRP), 
Environmental Quality Incentives Program (EQIP) (including the 
Agricultural Water Enhancement Program), Wildlife Habitat Incentive 
Program (WHIP), and Chesapeake Bay Watershed initiative. These 
requirements are not directly incorporated into these regulations which 
set out requirements for program participants. However, certain 
provisions within these regulations relate to elements of section 
1244(g) of the Food Security Act of 1985 Act and the agency's 
accountability responsibilities regarding program performance. NRCS is 
taking this opportunity to describe existing procedures that relate to 
meeting the requirements of section 1244(g) of the Food Security Act of 
1985, and agency expectations for improving its ability to report on 
each program's performance and achievement of long-term conservation 
benefits. Also included is reference to the sections of these 
regulations that apply to program participants and that relate to the 
agency accountability requirements as outlined in section 1244(g) of 
the Food Security Act of 1985.
    Monitor compliance with program requirements. NRCS has established 
application procedures to ensure that participants meet eligibility 
requirements and follow-up procedures to ensure that participants are 
complying with the terms and conditions of their contractual 
arrangement with the government and that the installed conservation 
measures are operating as intended. These and related program 
compliance evaluation policies are set forth in agency guidance 
(Conservation Programs Manual--440--Part 512 and Conservation Programs 
Manual --440--Part 508) (http://directives.sc.egov.usda.gov/). The 
program requirements applicable to participants that relate to 
compliance are set forth in these regulations in Sec.  1470.6 
``Eligibility requirements,'' Sec.  1470.21 ``Contract requirements,'' 
Sec.  1470.22 ``Conservation stewardship plan,'' and Sec.  1470.23 
``Conservation activity operation and maintenance.'' These sections 
make clear the general program eligibility requirements, participant 
obligations for implementing a conservation stewardship plan, contract 
obligations, and requirements for operating and maintaining CSP-funded 
conservation activities.
    Measure program performance. Pursuant to the requirements of the 
Government Performance and Results Act of 1993 (Pub. L. 103-62, Sec. 
1116) and guidance provided by Office of

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Management and Budget Circular A-11, NRCS has established performance 
measures for its conservation programs. Program-funded conservation 
activity is captured through automated field-level business tools, and 
the information is available to the public at http://ias.sc.egov.usda.gov/PRSHOME/. Program performance is also reported 
annually to Congress and the public through the annual performance 
budget, annual accomplishments report, and the USDA Performance 
Accountability Report. Related performance measurement and reporting 
policies are set forth in agency guidance (GM--340--401 and GM--340--
403) (http://directives.sc.egov.usda.gov/).
    The conservation actions undertaken by participants are the basis 
for measuring program performance; specific actions are tracked and 
reported annually, while the effects of those actions relate to whether 
the long-term benefits of the program are being achieved. The program 
requirements applicable to participants that relate to undertaking 
conservation actions are set forth in these regulations in Sec.  
1470.21 ``Contract requirements,'' Sec.  1470.22 ``Conservation 
stewardship plan,'' and Sec.  1470.23 ``Conservation activity operation 
and maintenance.'' These sections make clear participant obligations 
for installing, adopting, improving, maintaining, and managing 
conservation stewardship activities which in aggregate result in the 
program performance that is reflected in agency performance reports.
    Demonstrating the long-term natural resource benefits achieved 
through conservation programs is subject to the availability of needed 
data, the capacity and capability of modeling approaches, and the 
external influences that affect actual natural resource condition. 
While NRCS captures many measures of ``output'' data, such as acres of 
conservation practices, it is still in the process of developing 
methods to quantify the contribution of those outputs to environmental 
outcomes.
    NRCS currently uses a mix of approaches to evaluate whether long-
term conservation benefits are being achieved through its programs. 
Since 1982, NRCS has reported on certain natural resource status and 
trends through the National Resources Inventory (NRI), which provides 
statistically reliable, nationally consistent land cover/use and 
related natural resource data. However, lacking has been a connection 
between these data and specific conservation programs.\1\ In the 
future, the interagency Conservation Effects Assessment Project (CEAP), 
which has been underway since 2003, will provide nationally consistent 
estimates of environmental effects resulting from conservation 
practices and systems applied. CEAP results will be used in conjunction 
with performance data gathered through agency field-level business 
tools to help produce estimates of environmental effects accomplished 
through agency programs, such as CSP. In 2006 a Blue Ribbon panel 
evaluation of CEAP \2\ strongly endorsed the project's purpose but 
concluded ``CEAP must change direction'' to achieve its purposes. In 
response, CEAP has focused on priorities identified by the panel and 
clarified that its purpose is to quantify the effects of conservation 
practices applied on the landscape. Information regarding CEAP, 
including reviews and current status, is available at http://www.nrcs.usda.gov/technical/NRI/ceap/. Since 2004 and the initial 
establishment of long-term performance measures by program, NRCS has 
been estimating and reporting progress toward long-term program goals. 
The NRI and assessment and the performance measurement and reporting 
policies are set forth in agency guidance (GM--290--400, GM--340--401, 
and GM--340--403) (http://directives.sc.egov.usda.gov/).
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    \1\ The exception to this is the CRP; since 1987 the NRI has 
reported acreage enrolled in CRP.
    \2\ Soil and Water Conservation Society. 2006. Final Report from 
the Blue Ribbon Panel Conducting an External Review of the US 
Department of Agriculture Conservation Effects Assessment Project. 
Ankeny, IA: Soil and Water Conservation Society. This review is 
available at http://www.nrcs.usda.gov/technical/NRI/ceap/.
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    Demonstrating the long-term conservation benefits of conservation 
programs is an agency responsibility. Through CEAP, NRCS is in the 
process of evaluating how these long-term benefits can be achieved 
through the conservation practices and systems applied by participants 
under each of its programs. The CSP program requirements applicable to 
participants that relate to producing long-term conservation benefits 
are located in Sec.  1470.21 ``Contract requirements,'' Sec.  1470.22 
``Conservation stewardship plan,'' and Sec.  1470.23 ``Conservation 
activity operation and maintenance.'' These requirements and related 
program management procedures supporting program implementation are set 
forth in agency guidance (Conservation Programs Manual 440--Part 512 
and Conservation Programs Manual --440--Part 508).
    Coordinate these actions with the national conservation program 
authorized under the Soil and Water Resources Conservation Act (RCA). 
The 2008 Act reauthorized and expanded on a number of elements of the 
RCA related to evaluating program performance and conservation 
benefits. Specifically, the 2008 Act added a provision stating:

    ``Appraisal and inventory of resources, assessment and inventory 
of conservation needs, evaluation of the effects of conservation 
practices, and analyses of alternative approaches to existing 
conservation programs are basic to effective soil, water, and 
related natural resources conservation.''

    The program, performance, and natural resource and effects data 
described previously will serve as a foundation for the next RCA, which 
will also identify and fill, to the extent possible, data and 
information gaps. Policy and procedures related to the RCA are set 
forth in agency guidance (GM--290--400 and GM--130--402) (http://directives.sc.egov.usda.gov/).
    The coordination of the previously described components with the 
RCA is an agency responsibility and is not reflected in these 
regulations. However, it is likely that results from the RCA process 
will result in modifications to the program and performance data 
collected, to the systems used to acquire data and information, and 
potentially to the program itself. Thus, as the Secretary proceeds to 
implement the RCA in accordance with the statute, the approaches and 
processes developed will improve existing program performance 
measurement and outcome reporting capability and provide the foundation 
for improved implementation of the program performance requirements of 
section 1244(g) of the Food Security Act of 1985.

Economic Analysis--Executive Summary

    Pursuant to Executive Order 12866, Regulatory Planning and Review, 
NRCS conducted a cost-effectiveness analysis (CEA) of the CSP as 
formulated for the interim final rule.
    This CEA describes how CSP financial assistance and technical 
assistance are made available to farmers and ranchers who agree to 
install and adopt additional conservation activities; and improve, 
maintain, and manage conservation activities in place in accordance 
with CSP's objectives. The CEA compares the impact of these activities 
in generating environmental benefits with program costs. Many of these 
improvements can produce beneficial impacts concerning onsite

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resource conditions (such as conserving soil) and significant offsite 
environmental benefits (such as cleaner water, improved air quality, 
and enhanced wildlife habitat).
    The environmental outcomes expected to be generated by enhancement 
activities are based on extrapolations of the environmental outcomes 
that have been studied and associated with many traditional NRCS 
conservation practices. While the outcomes from many traditional 
conservation practices have been assessed, the impacts generated from 
these enhancements are not as well studied. In conducting economic 
analyses where benefits are not well understood or difficult to 
measure, but activity costs are available, the traditional benefit-cost 
analysis is generally replaced with a CEA, the approach used for both 
this assessment and the interim final rule.
    In considering alternatives for implementing CSP, NRCS followed the 
legislative intent to establish a clear and transparent method to 
determine in an open and participatory process, potential participants' 
current and future levels of conservation stewardship in order to gauge 
their environmental impacts and compare them. Because CSP is voluntary, 
the program is not expected to impose any obligation or burden upon 
agricultural producers and nonindustrial private forestland (NIPF) 
owners who choose not to participate.\3\
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    \3\ An impact could be expected in cases where CSP funds 
activities that lead to large increases of certain environmental 
services and goods where those markets are beginning to get started.
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    Congress authorized the enrollment of 12,769,000 acres for each 
fiscal year (FY) for the period beginning October 1, 2008, through 
September 30, 2017. For FY 2009 through FY 2012, CSP has been 
authorized 51,076,000 acres (4 years multiplied by a 12,769,000 acre 
program cap per year).
    Total program costs for CSP are shown in Table 1. Full 
participation is assumed for each of the 4 years CSP is offered, and 
the duration of each contract is 5 years. Total costs include only 
costs to the government.\4\ Cumulative program costs for four program 
ranking periods are estimated to be $2.990 billion in constant 2005 
dollars, discounted at 7 percent. At a 3 percent discount rate, program 
costs increase to $3.520 billion in constant 2005 dollars.
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    \4\ Given the wide set of possible initial resource conditions 
and conservation activities likely to be adopted, it is not possible 
to ascertain whether (or to what extent) CSP payments offset 
expected costs to producers in adopting new activities or past 
activities.
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    The information in Table 1 highlights the cumulative impacts of 
four ranking periods and 5-year contracts. Each sign-up creates a 
commitment of $229.842 million for 5 years. Participants in the initial 
ranking period receive payments through FY 2014; participants in the 
last ranking period receive payments through FY 2017. The largest 
outlays of program funds occur in FY 2013 and FY 2014 and then begin to 
taper off as contracts from the first and later ranking periods end.

                                                 Table 1--Total Program Costs of CSP, FY 2010 to FY 2017
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                                                             GDP price    Yearly cost in
                                            Yearly cost    deflator \2\      constant        Discount      Present value     Discount      Present value
                                           \1\  (million     (chained,      dollars \1\    factors  for     of costs-3%    factors  for     of costs-7%
                                                $)           2005=100)      (million $)         3%          (million $)         7%          (million $)
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FY10....................................         229.842           108.5         211.836          0.9709         205.666          0.9346         197.978
FY11....................................         459.684           110.1         417.515          0.9426         393.548          0.8734         364.674
FY12....................................         689.526           111.3         619.520          0.9151         566.949          0.8163         505.713
FY13....................................         919.368           113.1         812.881          0.8885         722.234          0.7629         620.143
FY14....................................         919.368           115.6         795.301          0.8626         686.034          0.7130         567.039
FY15....................................         689.526           118.1         583.849          0.8375         488.965          0.6663         389.043
FY16....................................         459.684           120.7         380.848          0.8131         309.665          0.6227         237.173
FY17....................................         229.842           123.4         186.258          0.7894         147.034          0.5820         108.404
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    Total...............................        4596.840  ..............        4008.008  ..............        3520.093  ..............        2990.166
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\1\ Congress set a maximum acreage limit of 12,769,000 acres and a national average payment rate of $18 per acre.
\2\ USDA Agricultural Projections to 2019. Office of the Chief Economist, World Agricultural Outlook Board, U.S. Department of Agriculture. Prepared by
  the Interagency Agricultural Projections Committee. Long-term Projections Report OCE-2010-1, page 15.

Methodology Employed in This Study

    Many conservation practices have been extensively studied, but 
similar studies pertaining to enhancement activities have not been 
conducted. We do not have sufficiently detailed, site-specific 
information on existing conservation practices and environmental 
outcomes. As a result, estimation of a true baseline of environmental 
conditions before and after CSP implementation is not possible.
    The methodology employed in this final assessment is the same 
methodology applied in the interim final rule except that data from the 
initial CSP ranking period are substituted for the representative farm 
and environmental data. Although instructive in identifying possible 
outcomes of different formulations of CSP, actual enrollment and 
contract data are necessary to provide a fuller assessment of CSP 
outcomes. A relative comparison of results from the interim final rule 
and the final rule was also conducted to identify differences between 
predicted and actual outcomes, determine why differences were observed, 
and make recommendations, when necessary, to improve CSP's cost 
effectiveness. This comparison should not be used beyond its stated 
purpose because of different data sets in the two analyses.

CSP and the Conservation Measurement Tool

    CSP is a challenging program given its purpose, statutory mandates, 
assessments of existing and future conservation activities and their 
associated conservation indices, allocation of program funds and acres 
across States, and price setting. The following are key elements about 
CSP and the conservation measurement tool (CMT).
    (a) NRCS allocated acreage for enrollment across States according 
to each State's proportion of the Nation's agricultural land base.
    (b) NRCS State offices created ranking pools, selected three to 
five priority

[[Page 31614]]

resource concerns for every pool, and allocated acres and program 
dollars from the national office across the pools.
    (c) A national team of NRCS cropland, pastureland, rangeland, and 
forest land specialists developed sets of questions by land use 
category to identify conservation activities already applied to the 
land and the associated level of stewardship by assigning conservation 
performance points. The team also identified additional enhancements 
for increasing stewardship and assigned conservation performance points 
to the additional enhancements. NRCS' Conservation Practice Physical 
Effects methodology was used in both of these instances to assign 
performance points. Conservation performance points earned by land use 
should be viewed as ``environmental indices.''
    (d) NRCS developed a CMT to determine eligibility by verifying that 
minimum stewardship thresholds were met, estimating conservation 
performance from existing and additional activities, and ranking 
applications.
    (e) NRCS field staff tested the questions and the CMT and made 
suggestions that improved CMT's use.
    (f) During the initial ranking period, NRCS assisted producers in 
completing their resource inventories in the CMT and determining 
program eligibility. Eligible applicants identified additional 
activities--enhancements and traditional conservation practices--they 
were willing to adopt. Each applicant's resource inventory and 
additional activities recorded in the CMT earned conservation 
performance points per acre by land use.
    (g) Every application was ranked within a pool according to the sum 
of four equally weighted ranking factors. The maximum ranking score is 
1,000; the minimum zero. NRCS selected applications for enrollment 
beginning with the highest ranked one and worked down the ranked list 
until a pool's funding limit or acreage limit was reached. A fifth 
ranking factor came into play as a ``tie breaker'' when two or more 
applications were ranked equally. When this situation occurred, the 
application that minimized the cost to government was selected.\5\ The 
four equally weighted ranking factors are below:
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    \5\ ``* * * the Secretary shall rank applications based on * * * 
(E) the extent to which the actual and anticipated environmental 
benefits from the contract are provided at the least cost relative 
to other similarly beneficial contract offers.''
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    (1) Ranking factor one measures the existing level of conservation 
stewardship for priority resource concerns at the time of enrollment.
    (2) Ranking factor two measures the degree that new conservation 
activities improve priority resource concern conditions.
    (3) Ranking factor three measures the number of priority resource 
concerns the applicant agrees to meet during the contract period.
    (4) Ranking factor four measures the degree that new conservation 
activities improve other resource concern conditions.
    (h) CSP payment per land use equals conservation performance points 
per acre multiplied by acres multiplied by the land use payment rate. 
Total payment per contract equals the sum of the individual land use 
payments.\6\
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    \6\ For CSP ranking period one, payment rates are $0.0605 for 
every cropland conservation performance point, $0.0329 for pasture, 
$0.0120 for rangeland, and $0.0164 for NIPF.
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    (i) The four policy options used in the interim final rule are also 
used in the final rule to identify tradeoffs among the policy options, 
especially changes in program acres, conservation performance points, 
program costs, and implications with respect to CSP's acreage and 
funding constraints.
    Detailed descriptions of CSP, CMT, ranking period results, and CEA 
analysis can be found in the main body of the report and the 
appendices.

Analysis

    Results of this analysis show that CSP participation was high 
across the nation. As of December 1, 2009, NRCS had classified 15,015 
applications as eligible. These applications involved slightly more 
than 20.8 million acres, close to double CSP's maximum allowable of 
12.179 million acres.\7\
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    \7\ To avoid enrolling too many acres or spending more than the 
$230 million available for this first ranking period, NRCS initially 
allocated 95 percent of the 12.769 million acres. As enrollment 
progressed, NRCS allocated the remaining acres.
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    Some concerns were raised regarding participation in ranking pools. 
No applications were received in 250 of the 693 pools created for CSP. 
NRCS found that the majority of these pools were established 
specifically for conservation access by beginning farmers or ranchers 
and socially disadvantaged farmers or ranchers. All eligible 
applications were preapproved in 303 ranking pools because allotted 
acreage and funding allocations were not fully committed. The remaining 
140 pools accounted for slightly more than 86 percent of eligible 
acres, making them highly competitive.
    More than 80 percent of the eligible applicants across all land 
uses were already meeting and frequently exceeding minimum stewardship 
levels on five of the eight resource concerns. Applicants in the 
initial CSP ranking period appear to be practicing stewardship at a 
fairly high level. As a result, one would expect to see conservation 
performance points earned for existing activities to be higher than 
performance points earned for additional activities. Summary data from 
pre-approved applications in the initial ranking period confirm this 
expectation. Existing conservation performance points amounted to 61 
percent of total points awarded nationally. This 61-39 percent split 
between existing and additional conservation performance points carried 
directly over into payments, with 63 percent of projected $142.6 
million in financial assistance tied to existing activities.
    The policy options described and analyzed using representative farm 
and environmental data in the interim final rule indicated that CSP 
outcomes could be fine-tuned at the national level by changing the 
relative importance of the ranking factors. Based on that analysis, 
policy option 1 (four ranking factors were weighted equally) was 
selected and used for the initial CSP ranking period. Because three of 
the four ranking factors are linked directly to additional activities, 
an equal weighting scenario places considerable importance on 
additional activities--enhancements and traditional conservation 
practices--proposed to be applied over a 5-year period. The expectation 
was that the highest ranked applications would include substantially 
more additional conservation activities than lower ranked applications. 
One of the other policy options might be used to influence the mix 
between existing and additional activities after reviewing actual CSP 
enrollment.
    The five policy options and their reported acreage and program 
costs by land use are summarized in Table 2. Policy option 1 represents 
the actual CSP ranking period where the ranking factors are equally 
weighted. Analyses conducted for policy option 2 (ranking factor 1 
receives 5 times the weight--62.5 percent--of the other ranking 
factors), policy option 3 (ranking factor 2 receives 5 times the 
weight--62.5 percent--of the other ranking factors), policy option 4 
(ranking factor 3 receives 5 times the weight--62.5 percent--of the 
other ranking factors), and policy option 5 (ranking factor 4 receives 
5 times the weight--62.5 percent--of the other ranking factors) did not 
appreciably change the percentage splits between existing and 
additional performance points and funding. Though acres and costs 
shifted among the different land uses, the

[[Page 31615]]

impact on total program costs and costs per acre suggests that policy 
options 2 through 5 did not substantially change the current 
distributions of funds and acres under policy option 1, which was used 
for the initial CSP ranking period.

                            Table 2--Summary of Program Acreage and Costs by Land Use and Policy Options for CSP Sign-Up One
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                         Acres funded in program \a\                               Total program cost \b\
                                  Cost per -------------------------------------------------------------------------------------------------------------
          Policy Option             acre                            Range                                                  Range
                                            Crop land   Pasture      land       NIPF     Total\2\  Crop land   Pasture      land       NIPF      Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             (millions of acres)
                                                      ($ millions)
                                           -------------------------------------------------------------------------------------------------------------
No CSP..........................       N/A      0          0          0          0          0          0          0          0          0          0
                                  ........  .........  .........  .........  .........  .........  .........     14.30      38.90       9.96     180.48
PO-1............................    $14.82      4.833      0.797      5.529      1.019     12.179    117.308      6          9          3          6
                                  ........  .........  .........  .........  .........  .........  .........     14.33      39.16       9.68     176.16
PO-2............................     14.79      4.570      0.792      5.568      0.985     11.914    112.988      2          2          7          9
                                  ........  .........  .........  .........  .........  .........  .........     14.36      37.08       9.36     171.47
PO-3............................     14.66      4.752      0.786      5.204      0.951     11.694    110.659      4          3          7          2
                                  ........  .........  .........  .........  .........  .........  .........     14.36      38.41       9.86     177.85
PO-4............................     14.88      4.726      0.773      5.452      1.004     11.955    115.581      8          5          6          0
                                  ........  .........  .........  .........  .........  .........  .........     13.83      36.13       9.32     179.46
PO-5............................     15.27      4.949      0.757      5.097      0.950     11.753    120.171      6          7          1          5
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ For this analysis, the CSP acreage cap is 12.179 million acres including the 10 percent allocated to NIPF. This was the initial allocation
  distributed to States shortly after closure of the initial CSP ranking period.
\b\ Includes financial and technical assistance.

    NRCS noticed some large operations fell just below the cutoff line 
in many of the pools for policy option 1, the actual ranking period. 
These operations moved up the ranked list and effectively prevented the 
distribution of the full amount of acres under the other policy 
options. Their impact can be seen by examining the total acres in Table 
2.
    In examining the summaries of conservation performance points and 
costs per point, the agency reached a similar conclusion regarding the 
effectiveness of policy options 2 through 5 in changing the emphasis of 
CSP between existing and additional activities (see Table 3). The 
relatively insignificant changes in total conservation performance 
points and dollars per point suggest that significant changes in the 
ranking process yield few tangible results in practice. A closer 
examination of the applications show considerable shifting of the 
applications in terms of rankings, but few of the applications that 
were ranked low during the actual ranking period moved up the list to 
the level of approval.

                              Table 3--Summary of Conservation Performance Points and Cost per Point for CSP Policy Options
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                               Dollars per point
                                                                    Existing         Additional                      -----------------------------------
                                                                   activities        activities       Total points       Additional
                                                                                                                         activities      All activities
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                    (millions of conservation performance points)
                                                                                ($)
                                                               -----------------------------------------------------------------------------------------
No CSP \a\....................................................     Indeterminate               N/A               N/A               N/A               N/A
PO-1..........................................................             3,960             2,488             6,448            0.0573            0.0221
PO-2..........................................................             3,964             2,368             6,332            0.0590            0.0220
PO-3..........................................................             3,779             2,502             6,281            0.0564            0.0225
PO-4..........................................................             3,920             2,398             6,319            0.0587            0.0223
PO-5..........................................................             3,790             2,481             6,271            0.0576            0.0228
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ Assumes CSP is not available to landowners. Data are not available to assess this situation.
\b\ Indeterminate.

    Other possible reasons were identified to explain why the ranking 
process produced such minor shifts in conservation performance points 
and funding between existing and additional activities. Applicants, for 
example, who were addressing a State's priority resource concerns 
received more ranking points than applicants who chose to address fewer 
priority resource concerns. As part of the policy analysis, it became 
apparent that ranking factor 3 moved closely with ranking factor 1. A 
recommendation in the conclusions and recommendations section breaks 
this relationship with ranking factor 1, making it strictly a factor 
that awards ranking points based on proposed new activities that assist 
producers in meeting minimum stewardship levels of priority resource 
concerns.
    Another possible reason is the CMT and how activities and 
conservation performance points are assigned. An additional reason is 
the ranking process itself. Modifications to account for these two 
reasons are detailed in the recommendations.
    The results reported above and other secondary results from the 
analysis of eligible applications and preapproved contracts in CSP's 
initial ranking period substantiate many of the initial CEA findings 
reported in the interim final rule. One primary finding was that the 
policy constraints on the program posed serious challenges for the 
model developers. It is obvious that these constraints will pose 
similar challenges in implementing this program. In particular, 
achieving the national annual acreage enrollment goal at the designated 
average costs per acre mandated in legislation will be a challenge 
given the heterogeneity of producers' initial resource conditions and 
demand for enhancements. This cautionary observation held true in the 
initial ranking period and appears to be a major concern in subsequent 
ranking periods.
    Second, the annual contract limit of $40,000 per contract imposed 
by the interim final rule influences program

[[Page 31616]]

outcomes. CSP gains program acreage when large operations, 13.8 percent 
of the preapproved contracts in the first ranking period, hit the 
maximum annual payment limit and remain enrolled. Costs per acre for 
the program decrease because program funding is spread over more acres. 
As predicted though, CSP's acre constraint of 12.769 million acres 
becomes the controlling factor because of the acres linked to the large 
operations. Though NRCS received an apportionment of $229,842,000, the 
financial assistance portion cannot be fully spent because the acreage 
constraint was met for the initial CSP ranking period. Furthermore, 
NRCS offices incur technical assistance costs associated with these 
additional acres, regardless if the acres are capped for payment.
    Third, the policy options that were part of the CEA in the interim 
final rule proved useful in the final assessment. The different policy 
scenarios reinforced the fact that CSP outcomes depend to a large 
extent on the applications submitted for enrollment. The policy 
scenarios also contributed to a better understanding of how the ranking 
factors were defined and implemented.
    Finally, program design and adaptive program management are 
critical in satisfying the mandated constraints of this program. The 
model results of the CEA used in the interim final rule showed that 
caution must be used in setting land use payment rates. This is due to 
the changing land use compositions and conservation performance 
outcomes that resulted under each alternative policy option. Such 
changes could be expected in subsequent ranking periods and alter the 
acreage and conservation performance points produced. Such changes 
would need to be included in the calculation of appropriate land use 
payment rates that conform to the CSP statute, particularly the $18 per 
acre national program cost constraint.

Conclusions and Recommendations

    As part of the 2008 Act, Congress created the CSP and instructed 
the Secretary of Agriculture to develop a program that compensates a 
producer for ``* * * installing and adopting additional conservation 
activities; and improving, maintaining, and managing conservation 
activities in place at the operation of the producer at the time the 
contract offer is accepted by the Secretary.'' Producers must also meet 
minimum stewardship levels before they become eligible for CSP. 
Acreage, budget, a national average price of $18 per acre, and a 
maximum annual payment of $40,000 per contract established in the 
interim final rule also complicate program implementation.
    The CSP as currently implemented received more than enough 
applications to make it a competitive program. Of the 15,015 eligible 
applications, 10,743 were preapproved for enrollment, and those 
selected were the highest ranked eligible applications. The preapproved 
applications resulted in 61-39 percent split in conservation 
performance points and 63-37 percent split in program payments between 
existing and additional activities, respectively. The acreage 
constraint limited the ability of NRCS to distribute all the funds 
provided by Congress.
    Though little guidance is given on a suitable split of financial 
assistance funds between existing and additional conservation 
activities, preliminary analysis indicates that the initial CSP ranking 
period attracted practicing conservationists. Almost every applicant 
met the stewardship threshold requirement at the time of application. 
More than 80 percent of the applicants were meeting five resource 
concerns at time of application. The $40 thousand cap per contract and 
the requirement that all acres of an operation must be enrolled 
impacted CSP. The acreage constraint became the limiting factor because 
1,487 (13.8 percent) preapproved applications exceeded the cap, but 
their acres were counted, making it impossible for NRCS to distribute 
all the funds.
    A total of five policy options were developed as candidates for 
improving CSP's overall cost effectiveness at the national level. These 
policy options are directly tied to CSP's ranking process. Under policy 
option 1, the four ranking factors are equally weighted. In the 
remaining options, each ranking factor is separately weighted five 
times more important than the other factors. Based on the interim 
analysis, the ranking process recommended and implemented for the first 
CSP sign-up was policy option 1. This translated into an effective 
weighting scheme of 25 percent for existing activities and 75 percent 
for additional activities.
    For the most part, these policy options exhibited their intended 
impacts. With each change in the weights assigned to the ranking 
factors, ranking scores changed, and applications moved up and down in 
ranking based on their mix of existing and additional conservation 
activities and whether priority resource concerns were being targeted. 
With five times the weight assigned to ranking factor 1 (policy option 
2), for example, NRCS observed applications with many existing 
practices earning more ranking points than applications with fewer 
existing practices and applications with similar additional activities. 
When weights were assigned to ranking factors that captured additional 
activities, NRCS observed the opposite. Applications with many 
additional activities ranked higher than applications with a similar 
complement of existing activities and applications with fewer 
additional activities. Overall, policy options 2 through 5 did not 
yield substantially different changes in conservation performance 
points and financial assistance between existing and additional 
activities. Analysis of the data suggests that this initial CSP ranking 
period attracted practicing conservationists. NRCS expects future 
ranking periods to be more representative of the larger agricultural 
sector as others learn about CSP and the remaining population of 
practicing conservationists yet to enroll declines with each ranking 
period.
    There is insufficient evidence of improved cost effectiveness to 
replace policy option 1 with any of the other options. Prior to CSP 
ranking period two, NRCS will review key program components--
eligibility requirements, minimum stewardship levels, conservation 
activities and conservation performance points, CMT, and ranking factor 
specifications--and make any necessary modifications. In addition, NRCS 
will investigate other ranking factor processes, additional ranking 
criteria, and separate prices for existing and additional conservation 
performance points. As data becomes available and is analyzed from each 
new ranking period, NRCS will make necessary changes to improve CSP's 
cost effectiveness.

Discussion of Program

    The 2008 Act amended the Food Security Act of 1985 to establish the 
CSP and authorize the program in fiscal years 2009 through 2012. The 
CSP statute provides that the Secretary will carry out a stewardship 
program to encourage producers to address resource concerns in a 
comprehensive manner by (1) undertaking additional conservation 
activities, and (2) by improving, maintaining, and managing existing 
conservation activities. On July 29, 2009, NRCS published an interim 
final rule for CSP with a 60-day public comment period. On September 
21, 2009, the public comment period was extended 30 days.
    NRCS explained in the preamble of the interim final rule, that it 
will provide financial and technical assistance to eligible producers 
to

[[Page 31617]]

conserve and enhance soil, water, air, and related natural resources on 
their land. Eligible lands include cropland, grassland, prairie land, 
improved pastureland, rangeland, NIPF, agricultural land under the 
jurisdiction of an Indian tribe, and other private agricultural land 
(including cropped woodland, marshes, and agricultural land used for 
the production of livestock) on which resource concerns related to 
agricultural production could be addressed.
    The NRCS State Conservationist, in consultation with the State 
Technical Committee and local working groups, will focus program 
impacts on natural resources that are of specific concern for a State, 
or the specific geographic areas within a State. Applications will be 
evaluated relative to other applications addressing similar priority 
resource concerns to facilitate a competitive ranking process among 
applicants who face similar resource challenges. The program is 
national in scope, and participation is voluntary.
    CSP provides participants with two possible types of payments: (1) 
Annual payments will be offered through split-rate payments; one 
payment for installing and adopting additional activities, and one for 
improving, maintaining, and managing existing activities. This payment 
structure is different from the annual payments offered for contracts 
selected in the 2009 enrollment period. Contracts selected in the 2009 
enrollment period will receive an annual payment that combines the 
conservation performance from additional and existing conservation 
activities. Annual payments may also include compensation for on-farm 
research and demonstration activities or pilot testing, and (2) 
Supplemental payment for the adoption of resource-conserving crop 
rotations on cropland.
    The 2008 Act directed the development of the CMT to estimate the 
level of environmental benefit to be achieved by a producer in 
implementing conservation activities. NRCS successfully implemented the 
CMT during its first sign-up. The CMT effectively evaluated the 
stewardship threshold requirements, estimated conservation performance, 
generated a ranking score, and calculated conservation performance 
payment points. Preliminary data analysis showed the CMT fairly 
evaluated conservation performance on different sizes and types of 
operations, across different land uses, for all regions of the country. 
Although the tool performed well, NRCS recognized that improvements 
were necessary to improve clarity of the questions being asked of 
clients. Therefore, NRCS assembled a team of technical experts to 
analyze the questions in the CMT that could be misunderstood, identify 
those needing adjustment, and provide recommendations to the Chief.
    NRCS designed the program to recognize excellent stewards and 
deliver valuable new conservation on every CSP contract. The agency 
developed multiple program features to enable it to realize this 
objective, including:
    (1) Bundling enhancements to encourage participants to address 
additional resource concerns in a more comprehensive manner. NRCS 
updated its enhancement list and adopted the concept of bundling for 
the second ranking period. Certain enhancements will be offered as 
``bundles.'' The bundling concept enables participants and the nation 
to realize conservation benefits from the synergy that results when 
activities are implemented as a system. Participants who elect to 
bundle enhancements receive a positive adjustment in their ranking 
score and payments.
    (2) Calculating payments based on a process that considers 
conservation performance points rather than just acres. Each 
conservation activity has a performance value. Basing payments on 
conservation performance points rather than a rate per acre enables 
participants to influence their payment rates according to the type and 
number of conservation activities they are willing to adopt.
    (3) Placing a higher value on payments for additional activities 
versus existing activities through split-rate payments. For contracts 
selected for enrollment during the first ranking period, NRCS provided 
participants with an annual payment. Although the single annual payment 
was calculated giving consideration to both new and existing 
activities, participants could not readily distinguish the value of 
each since the participant received one payment. For the second and 
future application ranking periods, NRCS intends to calculate payments 
for additional conservation activities at a higher payment rate than 
existing activities with the goal of providing a majority of payments 
to compensate producers for implementing additional conservation. In 
the initial ranking period, 63 percent of the payments were attributed 
to existing conservation activities. NRCS believes this higher payment 
for additional conservation performance will encourage producers to 
apply additional activities and serve to maximize net additional 
environmental benefits as much as possible beyond the current 63:37 
ratio.
    (4) Requiring the adoption of additional conservation activities to 
earn annual payments. To earn annual payments for an eligible land use, 
a participant must schedule, install, and adopt at least one additional 
conservation activity on that land-use type. Eligible land-use types 
that fail to have at least one additional conservation activity 
scheduled, installed, and adopted will not receive annual payments.
    (5) Implementing a State allocation process that considers the 
extent and magnitude of conservation needs associated with agriculture 
production. The State allocation process will consider natural resource 
data from sources like the NRI related to the nation's major resources 
concerns, including water quality and quantity, soil quality, air 
quality, and wildlife habitat.
    (6) Developing contract renewal criteria that require new 
conservation activities. In order to renew a contract after the initial 
contract period, participants will need to expand the degree, scope, 
and comprehensiveness of conservation activities by meeting an expanded 
stewardship threshold requirement and agreeing to adopt additional 
activities during the renewal period.
    In establishing the measures and methodologies NRCS will use to 
monitor program performance, the agency believes the CMT will assist in 
measuring outcomes. The conservation performance the CMT estimates is 
measured in terms of relative physical effects; they are not true 
environmental benefits. However, the CMT performance estimates are a 
step forward from output measures, like acres of conservation 
practices, used by former programs. NRCS acknowledges challenges, but 
intends to pursue the use of CEAP results with CMT performance data to 
help produce meaningful estimates of environmental effects accomplished 
through CSP.
    NRCS received numerous comments on CSP as it relates to organic 
farming, including that the regulations and overall design of the 
program should include specifically organic conservation activities, as 
well as ensuring that all conservation activities rewarded under the 
program include appropriate variations relevant to organic farms where 
the standard conservation practice may be inappropriate for organic 
systems; organic crop and livestock systems should be recognized for 
their environmental benefits.
    Since organic producers have adopted a number of conservation 
measures that

[[Page 31618]]

have significant environmental benefits, CSP provides opportunities for 
their participation. The NRCS document entitled ``The Conservation 
Stewardship Program's Contribution to Organic Transitioning'' 
highlights how CSP can be used by organic producers. The questions in 
the CMT are designed to assess conservation outcomes on the land. As 
such, the questions do not specifically distinguish between organic and 
non-organic producers. However, in most instances organic producers 
should score very well in the CMT by the use of cover crops, 
perennials, diverse rotations, and limited use of pesticides. In 
addition, CSP offers a number of enhancements targeted specifically at 
organic producers.
    NRCS takes seriously its responsibilities related to providing 
conservation opportunities to organic producers. The agency is working 
to ensure its field office staffs have adequate training to work with 
organic farmers. Individual States conducted numerous training sessions 
on conservation planning with organic producers. A national 
teleconference on organic certification has been conducted, and plans 
are in place to work with several private organic groups to provide 
training to NRCS State specialists on organic farming systems.

Summary of Initial Ranking Period

    NRCS began accepting program applications for the initial ranking 
period on August 10, 2009. The cut-off for the initial ranking period 
was September 30, 2009.
    Each application was evaluated for basic eligibility criteria: 
applicant eligibility, land eligibility, and the stewardship threshold 
requirement. To meet the stewardship threshold requirement, an 
applicant must meet or exceed the threshold level for at least one 
resource concern at the time of the application, and at least one 
priority resource concern by the end of the contract period.
    NRCS assisted applicants with completing a resource inventory of 
their operation using the CMT. The CMT estimates conservation 
performance to determine if the application meets the minimum 
stewardship threshold requirement. Conservation performance points 
estimated by the CMT are also used to determine application ranking 
scores and contract payment levels.
    The conservation performance ranking score is used to determine the 
priority of funding for an applicant. Applicants will be funded 
starting with the highest score and working down the list until acres 
are exhausted. The conservation performance ranking score is based on 
five factors:
    (1) The level of conservation treatment on priority resource 
concerns at the time of application.
    (2) The degree to which treatment on priority resource concerns 
increases conservation performance.
    (3) The number of priority resource concerns to be treated to meet 
or exceed thresholds by the end of the contract.
    (4) The extent to which other resource concerns will be addressed 
to meet or exceed stewardship thresholds by the end of the contract.
    (5) A tie-breaker factor is used in the event that application 
ranking scores are similar. The application that represents the least 
cost to the program will be given higher priority.
    To reach CSP's authorized annual acreage enrollment limit of 
12,769,000 acres, NRCS allocated acreage to States based primarily on 
each State's proportion of eligible land. Within States, NRCS pre-
approved applications for funding based on ranking scores and funding 
pool acreage allocations. As of December 1, 2010, over 10,700 
applications were pre-approved for program participation.
    Preliminary analysis of the initial ranking period provided NRCS 
with some key findings.
    (a) Producer interest in CSP was high. During the initial ranking 
period, NRCS received over 21,000 applications on an estimated 33 
million acres from across the Nation including the Caribbean and 
Pacific Island areas. In general, applicants were diverse in terms of 
size of operation, land use type, and geographical location. Rangeland 
was the land use most offered for program consideration (51 percent of 
acres), followed by cropland (37 percent), NIPF (7 percent), and 
pastureland (5 percent).
    (b) Water quality (89 percent of pools), plants (85 percent pools), 
wildlife (77 percent pools), soil quality (nearly 70 percent of pools) 
were the top priority resource concerns identified in the funding pools 
by the States.
    (c) Eligible applicants share a common characteristic--they are 
excellent stewards of the land. In fact, 80 percent of applicants met 
five resource concerns at the time of application. Conservation 
performance payment points from existing activities equaled 63 percent 
of the total points generated. This dominance of practicing land 
stewards in the initial ranking period limited the agency's ability to 
change the relative weights on the factors in the ranking process and 
substantially alter the distribution of conservation performance 
payment points between existing and additional activities. Future sign-
ups will likely draw applicants from the larger agricultural community 
where the level of stewardship may be lower, thus giving additional 
activities a larger role in the ranking of applications.

Discussion of Comments and Regulatory Changes

    NRCS solicited comments on the CSP interim final rule from July 29, 
2009, through October 28, 2009. The original comment period ended on 
September 28, 2009, but was extended through October 28, 2009, to 
enable the public to submit comments throughout the program's first 
enrollment period. NRCS received 208 letters representing 208 
individual signatures. The total number of letters received includes 
five identical duplicate letters and eight letters from eight 
individuals submitting more than one unique letter. A total of 1,534 
comments were assessed during the content analysis process.
    In addition to requesting public comment in general on the rule and 
the environmental analysis, NRCS sought comment on the following 
specific issues:
    Ranking Factors--NRCS requested input on the appropriate weighting 
of the five ranking factors that are intended to maximize environmental 
benefits while maintaining consistency with the statutory purposes of 
the program.
    Payments--Setting the annual payment rates represented a 
significant challenge for NRCS. In addition to managing the program 
within the national average rate of $18 per acre, the 2008 Act also 
provides an acreage enrollment limit of 12,769,000 acres for each 
fiscal year. To address these constraints, NRCS used the first ranking 
period as a payment discovery period to arrive at a uniform payment 
rate per conservation performance point by eligible land use type. NRCS 
requested public comment on ways to address program acreage and payment 
constraints, refine the payment approach, and make annual payments more 
consistent and predictable. Additionally NRCS sought public comment on 
the proper distribution of CSP annual payments between payment for 
additional activities and payment for existing activities.
    Contract Renewal Criteria--Section 1470.26 in the interim final 
rule provided that NRCS will permit contract renewals to foster 
participant commitment to increased conservation performance. NRCS 
sought public comment on the contract renewal criteria.

[[Page 31619]]

    State Allocations--NRCS requested comments on the factors used to 
allocate acres to States.
    Stewardship Threshold--NRCS requested input on whether meeting the 
stewardship threshold on one resource concern and one priority resource 
concern is adequate, or if that number should be greater.
    Wildlife as Priority Resource Concerns--NRCS requested comments on 
whether or not at least one of the priority resource concerns should 
specifically be identified to address wildlife habitat issues.
    The topics that generated the greatest response include 1470.7 
Enhancements and Conservation Practices, 1470.20 Application and 
Ranking, and 1470.24 Payments.
    The public comments are addressed by section number. The CSP 
regulation is organized into three subparts: Subpart A--General 
Provisions; Subpart B--Contracts; and Subpart C--General 
Administration. Below is a summary of the comments received for each 
section and the agency response.

Subpart A--General Provisions

Section 1470.1 Applicability
    A total of 16 comments were received. This section sets forth the 
purpose, procedures, and requirements of CSP. The subject of the 
comments varied considerably. Commenters offered thoughts and ideas 
regarding the intent of the program, program goals, and whether CSP 
appeals to new farmers or small farmers using CSP in coordination with 
other Farm Bill programs, organic production, local food sources, and 
education and training.
    NRCS received four comments in support of the program intent. 
Commenters expressed that this program is an improvement over the 
Conservation Security Program from the perspective of fairness in 
measuring sustainability and as a tool that has the possibility of 
being an agent of change, making agriculture more sustainable and 
coexisting, or as a part of essential ecosystems; the new CSP holds 
tremendous potential to make a significant contribution to assisting 
farmers, ranchers, and private forest landowners in solving some of the 
nation's most pressing environmental problems. A third identified that 
implementation in all States is critical to maximizing the program's 
potential; the fourth commented that the program is long overdue--both 
farms and the environment will benefit from the program. Some 
commenters expressed that CSP should be available for small farmers.

NRCS Response

    No changes are made to the rule in response to these comments. NRCS 
agrees that CSP can make a significant contribution in assisting 
farmers, ranchers, and private forest landowners with their 
conservation efforts regardless of the size of the operation, 
production type, or land use.

Comments

    Three commenters expressed thoughts related to program goals. One 
commenter expressed that sustainability is related to not only soil 
conservation and crop yields but also an ecological responsibility. CSP 
goals should include helping farmers in similar farming systems become 
more sustainable. One commenter supported the organic production 
assistance as long as the conservation priorities and requirements for 
air, water, soil, and wildlife are being met. The third commenter 
advised that NRCS should follow the intent of the law. The statutory 
purpose of CSP is comprehensive resource management with emphasis on 
producers improving or adding additional conservation activities to 
their operation.

NRCS Response

    No changes are made to the rule in response to these comments. NRCS 
determined the regulation aligns with the commenters recommendations. 
Section 1470.1, paragraph (d) identifies that NRCS will provide program 
participants financial and technical assistance for the conservation, 
protection, and improvement of soil, water, and other related natural 
resources. By addressing resource concerns in a comprehensive manner, 
farming systems will become more sustainable.
    NRCS is following the program's intent provided for in statute. The 
statute directs the Secretary to carry out a CSP to encourage producers 
to address resource concerns in a comprehensive manner by:
    (a) Undertaking additional conservation activities; and
    (b) Improving, maintaining, and managing existing conservation 
activities.

Comments

    NRCS received concerns about CSP only reaching those who already 
participate in conservation programs, as well as a recommendation for 
more levels of conservation in the categories in both the CMT and 
enhancement list. While the overall score may not allow a lower 
conservation threshold to enter a contract under current acreage 
limitations, demand for the program and ecological benefits to the 
public could drive an increase in legislative acreage and funding 
levels.

NRCS Response

    No changes are made to the rule in response to these comments. NRCS 
disagrees that the CSP only reaches farmers who currently use 
conservation programs. NRCS conducts outreach to all producers without 
limiting participation because of size or type of operation or previous 
participation in conservation programs. The level of producer interest 
for the initial ranking period demonstrates that the program is 
attractive to all producers who are willing to install new or improve, 
maintain, or manage existing conservation systems.
    It is clear by the establishment of the stewardship thresholds in 
the CSP statute that CSP is to be delivered to lands that have existing 
conservation measures addressing at least one resource concern and must 
meet one priority resource concern by the end of the contract period. 
NRCS places no priority on existing conservation measures having been 
previously installed under USDA or other conservation programs. NRCS 
will continue to provide planning assistance to other cost-share 
programs for beginning resource stewards and those not approved for 
CSP. As producers improve their environmental performance they may have 
their application re-evaluated in subsequent ranking periods.
    NRCS agrees that demands for the program and ecological benefits 
may influence the authorized acreage and funding levels.

Comments

    Four commenters expressed recommendations related to CSP being a 
working lands program. The commenters largely want the program to be 
targeted to the needs of working agriculture lands and their operators 
and improving the land for the next generation.

NRCS Response

    No changes are made to the rule in response to these comments. The 
program rules and ranking process focus on conservation activities on 
working lands. In addition, the majority of the conservation activities 
available through the program are specifically targeted to working 
lands.

Comments

    NRCS received comments related to placing particular focus, 
attention,

[[Page 31620]]

weight, and publicity on programs that increase local food that is 
grown using local resources.

NRCS Response

    Although NRCS welcomes new ideas related to working with small 
farms, local food production, and improving the resource conditions on 
these farms, no change is made to the rule in response to these 
comments. In recognition of the importance of the locally grown 
movement to the nation's food producers, the program offers an 
enhancement specifically for locally grown and marketed farm products 
for those interested in improving their resource stewardship and 
selling produce through local markets.

Comments

    One commenter requested NRCS clarify that CSP can be used in a 
coordinated manner with all other Farm Bill conservation programs to 
address resource concerns in a comprehensive manner. This approach is 
consistent with the Managers' Report that encourages NRCS to use other 
conservation programs to assist landowners in achieving conservation 
objectives. The rule should clarify that enrollment in other 
conservation programs, such as EQIP and WHIP, does not exclude 
producers from CSP, and these programs can be used in conjunction with 
CSP to address resource concerns provided that producers do not receive 
duplicate payments on the same acres.

NRCS Response

    NRCS promotes the use of other programs to address resource 
concerns in a comprehensive manner. The agency allows applicants to 
identify other practices they are willing to implement to meet resource 
concerns that they are not currently meeting. These additional 
practices could be cost-shared through other NRCS programs if the 
practices are not being compensated through CSP. In addition, NRCS 
encourages producers that are not currently eligible for CSP to contact 
their NRCS office or visit the Web site at http://www.nrcs.usda.gov/programs/ to find out about other conservation programs that can assist 
them on meeting their conservation needs. To address the concerns by 
the public, NRCS amends the rule in paragraph 1470.7 by adding 
paragraph (c) to read, ``CSP encourages the use of other NRCS programs 
to install conservation practices that are required to meet the agreed-
upon stewardship thresholds, but the practices may not be compensated 
through CSP.''

Comments

    One commenter offered that there is a need for expert education and 
training and close CSP implementation scrutiny.

NRCS Response

    No changes are made to the rule in response to this comment. NRCS 
agrees that its employees and clients need to be well informed about 
this program and that it needs to monitor operations to ensure the 
program is being applied consistently across the country. To address 
the educational component of the comment, NRCS made available to the 
public detailed documentation explaining program processes, payment 
rate establishment, CMT matrixes, questions, and scoring calculations. 
Documentation can be found at http://www.nrcs.usda.gov/programs/new_csp/csp.html. In addition, NRCS conducted a series of demonstrations 
and informational meetings for internal and external customers.
Section 1470.2 Administration

Comments

    A total of 35 comments were received on section 1470.2, 
``Administration.'' This section describes the roles of NRCS at the 
national and State levels. Most of the comments related to acreage 
enrollment levels and historically underserved producers. However, a 
few comments were received related to sign-up administration, and one 
comment related to pollinators.
    One commenter expressed the need for NRCS to ensure policies are 
being implemented consistently across field offices. The commenter 
identified that the farmers they work with noted clear variability 
between county offices in the interpretations of various aspects of 
CSP, both in answering CMT questions and the application of 
conservation practices and enhancement activities.

NRCS Response

    NRCS recognizes the need for consistency in implementing this 
program. NRCS will ensure training of field office staff on a 
continuous basis to ensure quality program delivery.

Sign-Up Periods

Comments

    Four comments were received related to sign-up periods; the 
commenters are concerned about the timing of the sign-up, urging NRCS 
to choose sign-up periods carefully and avoid closing ranking periods 
and farm evaluations during busy times of the year for farmers, such as 
spring planting and fall harvest. NRCS received inquiries regarding 
whether allocated acres will be transferred to other States if they are 
not used, and how the rankings are created other than the electronic 
tool available only to NRCS personnel; and one commenter expressed that 
agriculture funds are not intended just for an ever shrinking group who 
are growing certain commodities.

NRCS Response

    NRCS recognizes that having a sign-up at a time that is suitable to 
its clients is critical for the success of the program. Therefore, NRCS 
offers a continuous sign-up which allows producers to submit their 
application at any time. NRCS is fine-tuning the CMT design so it can 
be used to evaluate applications accepted throughout the continuous 
sign-up period, allowing for applications to be ready for evaluation in 
advance of an announced sign-up and funding cycle. NRCS will make every 
effort to enable those interested in applying for the program to have 
ample time to do so.
    Regarding the need for information about ranking, ranking pools 
within States were established based on geographic area boundaries. 
Each State identified, with review and input from the State Technical 
Committee, a minimum of three and a maximum of five priority resource 
concerns for each geographic area. The priority resource concerns 
selected for each ranking pool are used on three out of the four 
ranking factors, thereby ensuring that program dollars are addressing 
the critical resource concerns for each State ranking pool area. 
Priority resource concerns rank higher than non-priority resource 
concerns.
    In any fiscal year, acres allocated to a State that are not 
enrolled by a date determined by the Chief, may be reallocated with 
associated financial and technical assistance funds to another State 
for use in that fiscal year.
    The CMT is the only approved tool to determine the relative 
conservation physical effects of conservation activities on natural 
resource concerns and energy to estimate the existing conservation 
performance levels and the additional conservation performance 
improvement to be achieved by an applicant. The tool is currently Web 
based and linked to the NRCS Programs Contracting Software. There is no 
way to make the tool available to the public at this time. However, it 
is NRCS' intention to move the tool to a Web environment where it can 
be accessible by the public. Until these adjustments are complete, NRCS 
will provide producers with a hard copy of the questions that may be 
used to evaluate their applications if requested.

[[Page 31621]]

    NRCS disagrees that program funds are targeted to a small select 
group. The CSP is a nationwide program open to all eligible producers 
regardless of the type of crops that are grown. Payments through CSP 
are not subsidies, but rather a contract payment for providing 
environmental benefits from maintaining existing conservation 
activities and adopting new conservation activities. CSP is not limited 
to commodity producers and is ``operation size'' neutral in its 
application ranking.

Comments

    One commenter requested clarification on how NRCS arrived at its 
policy option findings by evaluating in its decisionmaking matrix both 
the computerized-modeling formula and the key statutory-policy phrase 
``to the maximum extent practicable.''

NRCS Response

    The policy option findings that were reported in the benefit-cost 
analysis were generated using a model that incorporated most of the 
CSP's program constraints, as well as using secondary data on the 
characteristics of potential participants and a prototype of the CMT. 
The CMT was not complete when the analysis was done. The objective of 
the analysis was to estimate the direction of change in program 
outcomes given certain policy options--not to predict with certainty 
what future program enrollment and outcomes would be. In that analysis, 
any outcomes that involved violations in the program constraints were 
reported, even though care was taken so as to meet them ``to the 
maximum extent practicable.''

Acreage Enrollment Levels

Comments

    Twenty-two comments were received relaying the same message; the 
entire acreage designated by Congress should be available over the life 
of the Farm Bill. NRCS also received comments that it should decrease 
its administrative costs. The conservation stewardship plan will 
clearly be an important integral part of any contract, but the plan 
development and oversight costs must be balanced with the 
implementation costs borne by the participating farm operator. One 
commenter recommended a new paragraph (4) be added to 1470.2(c) to 
stipulate that NRCS will develop and make available the organic 
crosswalk; one commenter recommended NRCS change paragraph 1470.2(c)(1) 
by inserting ``each year'' immediately prior to ``to determine 
enrollments.'' In paragraph (d) insert after ``$18 per acre'' the 
following words directly from the statute: ``During the period 
beginning on October 1, 2008, and ending on September 30, 2017.''

NRCS Response

    NRCS conducted an analysis using the Cost of Programs Model to 
determine the funds needed to promote and deliver the CSP. In addition, 
real time application data was used to establish the national payment 
rates to determine the distribution of financial assistance to meet 
program constraints. The CSP presents a significant shift in how NRCS 
delivers and provides conservation program payments. Under CSP, 
participants are paid for conservation performance. Therefore, it is 
inappropriate to compare a traditional program like EQIP with CSP.
    NRCS does not agree that additional direction related to providing 
assistance for organic production is necessary. The statute provides 
that outreach and technical assistance are available to specialty crop 
and organic producers and their ability to participate in the program. 
Additionally, the program offers activities for the transition to 
organic cropping and organic grazing systems.
    To achieve the conservation goals of CSP, NRCS will:
    (1) Make the program available nationwide to eligible applicants on 
a continuous application basis with one or more ranking periods to 
determine enrollments. One of the ranking periods will occur in the 
first quarter of each fiscal year, to the extent practicable; and
    (2) To add clarity to the regulation, NRCS will amend paragraph 
1470.2(d) to read as follows: During the period beginning on October 1, 
2008, and ending on September 30, 2017, NRCS will, to the maximum 
extent practical: (1) Enroll in CSP an additional 12,769,000 acres for 
each fiscal year, and (2) Manage CSP to achieve a national average rate 
of $18 per acre, which includes the costs of all financial and 
technical assistance, and any other expenses associated with program 
enrollment and participation.

Historically Underserved Populations

Comments

    Several comments were received related to historically underserved 
producers with the majority of the concerns directed to socially 
disadvantaged farmers or ranchers and beginning farmers or ranchers. 
One commenter expressed that the CRIA is incomplete and appeared to 
overstate conclusions. Additional analysis is necessary, as is 
implementation of transparency and accountability provisions in section 
14006 of the Farm Bill. Another commenter recommended NRCS require and 
conduct reviews in each State to address anticipated needs as well as 
gaps in participation in specific programs by federally recognized 
Indian tribes and by socially disadvantaged and other historically 
underserved producer groups by race, gender, and ethnicity. A third 
commenter expressed that NRCS must have a methodology for informing 
socially disadvantaged producers of the reasons for the refusal of a 
CSP contract. Another requested that NRCS ensure the set-asides for 
socially disadvantaged farmers or ranchers and beginning farmers or 
ranchers are swiftly and thoroughly implemented. One commenter 
requested sections 1470.2(e) and 1470.20(1)(3) be revised to establish 
that the 5 percent set-aside for beginning farmers or ranchers and for 
socially disadvantaged farmers or ranchers be target floors, not 
ceilings.

NRCS Response

    NRCS has standard procedures to formally inform all applicants of 
the reasons they were not awarded a CSP contract. Along with the 
determination, applicants are offered appeal rights. This agency policy 
can be found in the Conservation Program Contracting Manual, Part 512 
located at http://directives.sc.egov.usda.gov/RollupViewer.aspx?hid=25932.
    CSP policy provides that each State set aside a minimum of 5 
percent of their State acre allocation for these ranking pools. To add 
clarity and provide flexibility to set aside more than 5 percent, NRCS 
moved the language related to ranking pools for these groups by 
deleting the text in 1470.2(e) and adding text in 1470.4(b) to read as 
follows: Of the acres made available for each of fiscal years 2009 
through 2012 to carry out CSP, NRCS will use, as a minimum: (1) 5 
percent to assist beginning farmers or ranchers, and (2) 5 percent to 
assist socially disadvantaged farmers or ranchers. Paragraph (b) has 
been redesignated as paragraph (c) and amended for clarity to read ``In 
any fiscal year, allocated acres that are not enrolled by a date 
determined by NRCS, may be reallocated with associated funds for use in 
that fiscal year under CSP.''
Section 1470.3 Definitions

Comments

    Thirty-eight comments were received on section 1470.3, 
``Definitions.'' This

[[Page 31622]]

section sets forth definitions for terms used throughout this 
regulation.

Agriculture Land

Comments

    One commenter requested NRCS insert ``including energy'' after 
``agricultural products.''

NRCS Response

    NRCS is retaining the definition in the interim final rule to be 
consistent with other NRCS programs. Crops for producing energy are 
included in the term agricultural products. Although NRCS is retaining 
the definition for consistency and clarification purposes, NRCS adds 
the following text to the end of the definition: ``Agriculture lands 
may also include other land and incidental areas included in the 
agricultural operation as determined by NRCS. Other agricultural lands 
include cropped woodland, marshes, incidental areas included in the 
agriculture operation, and other types of agricultural land used for 
production of livestock.''

Agriculture Operation

Comments

    One commenter responded that the definition is inconsistent with 
the statute, which reads ``eligible land shall include all acres of an 
agricultural operation of the producer, whether or not contiguous, that 
is under the effective control of the producer at the time the producer 
enters into a stewardship contract.'' There is a conflict between the 
words ``under effective control * * * for the term of the proposed 
contract'' vs. ``under effective control * * * at the time the producer 
enters into a stewardship contract.''
    One commenter expressed support for the definition in the interim 
final rule because it allows landowners to participate.

NRCS Response

    NRCS agrees that the definition of agriculture operation needs to 
be consistent with the intent of the statute. Therefore, NRCS amends 
the definition of agricultural operation and adds a definition for 
effective control to clarify that control of the land is needed from 
the time the producer enters the stewardship contract and for the 
required period of the contract. Agricultural operation means all 
agricultural land and other land, as determined by NRCS, whether 
contiguous or noncontiguous:
    (1) Which is under the effective control of the applicant, and
    (2) Which is operated by the applicant with equipment, labor, 
management, and production or cultivation practices that are 
substantially separate from other operations.
    Effective control is defined to mean the possession of the land by 
ownership, written lease, or other legal agreement and authority to act 
as decisionmaker for the day-to-day management of the operation both at 
the time the applicant enters into a stewardship contract and for the 
required period of the contract.

Beginning Farmer or Rancher

Comments

    One commenter requested NRCS change the definition of beginning 
farmer or rancher to make it conform to the definition of socially 
disadvantaged farmer or rancher with respect to entities. In both 
cases, entities in which at least 50 percent ownership in the farm 
business is held by the target population should qualify.

NRCS Response

    No changes are made to the rule in response to this comment. NRCS 
retains the agency's official definition that was published in the 
interim final rule to be consistent with other USDA and NRCS programs.

Conservation Planning

Comments

    One commenter requested the definition be revised to bring it into 
accord with statute concerning conservation planning, including the 
addition of conservation planning in the conservation activities 
definition, the contract definition, and the payments section.

NRCS Response

    NRCS did not include conservation planning as part of the 
conservation activities to be compensated because the producer will not 
incur any cost for planning. The CSP delivery model necessitates a 
conservation stewardship plan prior to contract obligation. Therefore, 
the plan must precede the contract for which payment is granted. The 
authorizing language provides that payments will not be provided for 
conservation activities for which there is no cost incurred or income 
forgone. No changes are made to the rule in response to this comment.

Conservation Activities

Comments

    One commenter requested NRCS change the definition to include 
enhancements and a change to the enhancement definition to incorporate 
environmental quality and to explicitly include the management and 
maintenance of existing enhancements and the adoption of new 
enhancements.
    One commenter expressed concern that the definition in the statute 
includes agricultural drainage systems and that the wording may promote 
wetland drainage. The commenter encouraged NRCS to utilize other 
conservation programs such as those available through the continuous 
Conservation Reserve Program (CRP) (buffers, filter strips, etc.) to 
achieve priority resource concerns such as water quality.

NRCS Response

    NRCS retains the current definition to be consistent with the 
language in the legislation. NRCS does not feel it is appropriate to 
add the program purpose to the definition of conservation activities.
    NRCS acknowledges the concern related to the language in the 
statute that may promote wetland drainage. NRCS addressed this concern 
by offering two agricultural drainage water management enhancements 
with specific criteria to manage existing drainage system to reduce the 
potential for water quality problems from drainage water and to 
manipulate systems for wildlife habitat benefits. The program promotes 
buffers, filter strips, and other vegetative practices to address water 
quality concerns as well as other natural resources.

Conservation Practice

Comments

    NRCS received a recommendation that it amend the definition to 
include ``commonly used to meet a specific need in planning and 
carrying out soil and water conservation programs, including wildlife 
management and forest health for which standards and specifications * * 
*'' The NRCS conservation practice standards not only address soil and 
water conservation but also wildlife habitat management and forest 
health.

NRCS Response

    NRCS agrees with the comment and amends the definition to read as 
follows: Conservation practice means a specified treatment, such as a 
structural or vegetative practice or management technique, commonly 
used to meet a specific need in planning and carrying out conservation 
programs for which standards and specifications have been developed. 
Conservation practices are in the NRCS Field Office Technical Guide 
(FOTG), Section IV, which is based on

[[Page 31623]]

the National Handbook of Conservation Practices.

Enhancements

Comments

    One commenter recommended NRCS change the definition for 
``enhancements'' to read ``a type of activity and the associated 
infrastructure and equipment installed and adopted to treat natural 
resources and improve conservation performance.''

NRCS Response

    No change is made to the rule in response to this comment. NRCS is 
retaining the current definition of enhancements. The definition 
provides that enhancements are a type of conservation activity used to 
treat natural resources and improve conservation performance. This 
includes, by implication, the ``infrastructure and equipment'' 
necessary for an enhancement. In many cases enhancements are management 
actions that do not require equipment or infrastructure.

Management Measure

Comments

    One commenter requested NRCS insert ``or conservation system'' 
after ``conservation practice.''

NRCS Response

    No change has been made to the rule in response to this comment. 
NRCS retains the current definition of management measure. A 
conservation system could be considered a management measure.

Nonindustrial Private Forest Land

Comments

    NRCS received four comments on the definition of NIPF. One 
commenter supports the definition as written in the interim final rule. 
Another commenter requested NRCS remove or qualify the phrase ``or is 
suitable for growing trees'' to preclude the planting of trees in 
places that will further diminish habitat for at-risk species. A third 
commenter requested clarification on the overlap that exists between 
forest land and incidental forest lands on agricultural operations by 
defining incidental forest lands under the agricultural land 
definition. A fourth commenter requested the ``agriculture land'' and 
``agricultural operation'' definitions be updated to include NIPF.

NRCS Response

    The 2008 Act provides the definition of NIPF which is applicable to 
all Title 2 conservation programs, including CSP; therefore, NRCS keeps 
the current definition as provided in the interim final rule.
    NRCS is preventing an overlap between NIPF and incidental forest 
land by not allowing incidental forest land to be included in an 
agricultural operation contract for program payments. However, if an 
applicant designates the forest land for funding consideration, then it 
will be considered as a component of the operation and will be offered 
as separate application.

Resource-Conserving Crops

Comments

    NRCS received a significant number of comments on the definition of 
resource-conserving crops. Seventeen commenters requested that the 
definition specifically require a perennial grass, legume, or legume-
grass mixture for use as a forage, seed for planting, or green manure 
to be part of the rotation. A number of these commenters also expressed 
that rotations that include only crops eligible for Farm Bill commodity 
subsidies should not qualify as resource-conserving.
    Although one commenter supported the definition of resource-
conserving crop and the use of supplemental payments for implementing 
resource-conserving crop rotations, many more were critical. Critical 
comments included the concern that a commodity crop rotation with 
``high'' residue is not a sufficiently effective practice; NRCS should 
return to the strong definition used for the 2005 CSP interim final 
rule to ensure that farmers are being paid for significant 
environmental benefits; NRCS has chosen to allow the simplest of 
rotations, some of which result in no or close to no conservation 
benefits and are simply standard, production-related rotations; 
definition fails to meet the intent of the Farm Bill managers who ``do 
not intend for the Secretary to pay for no-till or other common 
practices that have no cost to the producers; and fix the definition so 
that it clearly rewards complex rotations that deliver significant 
environmental benefits and so that farmers implementing rotations 
rightly merit the supplemental payments.

NRCS Response

    NRCS has evaluated all comments received on the definition of 
``resource-conserving crop'' and revises the definition to read as 
follows: resource-conserving crop means a crop that is one of the 
following: (1) A perennial grass, (2) a legume grown for use as forage, 
seed for planting, or green manure, (3) a legume-grass mixture, and (4) 
a small grain grown in combination with a grass or legume, whether 
inter-seeded or planted in rotation.
Section 1470.4 Allocation and Management.
    Section 1470.4, ``Allocation and management,'' addresses national 
allocations and how the proportion of eligible land will be used as the 
primary means to distribute CSP acres and associated funds among 
States. NRCS received three comments on allocations in general and 
seven comments on State allocations.

General Comments

    One commenter requested allocations be conducted fairly by not 
being skewed towards large farms or established players. The commenter 
also requested a landscape management perspective be employed to 
maximize public benefit at the lowest cost per watershed.
    Another commenter requested that NRCS work with other Federal 
agencies, including the Environmental Protection Agency (EPA), U.S. 
Geological Survey, U.S. Fish and Wildlife Service, and State natural 
resource agencies to identify the relative extent and magnitude of 
particular conservation needs associated with agricultural production 
in each State. The States with the greatest conservation needs should 
be prioritized, but their ranking should still be contingent on factor 
(ii), the degree to which implementation of CSP will impact the natural 
resource needs.
    A third commenter questioned why, on page 37503 (table 1), the NIPF 
component (approximately 1.269 million acres) was not included in the 
analysis and whether or not the absence of that information would 
influence the choice of policy options.

NRCS Response

    No changes are made to the rule in response to the comments. The 
regulatory text and the process for determining State allocations is 
not skewed toward large farms. The State acre allocations are based on 
each State's proportion of eligible acres to the number of eligible 
acres in all States and other consideration of funds, as determined by 
the Chief. NRCS used the 2003 NRI and 2007 Agricultural Census (AK, HI, 
Guam, and PR) data to determine the percent of agricultural lands 
(cropland, pastureland, and rangeland) per State. The National Woodland 
Owner Survey, 2006, from the U.S. Forest Service (USFS), Forest 
Inventory Analysis data was utilized to

[[Page 31624]]

determine the percent of NIPF per State. Once those values were 
established, the percentages were applied against the available 
agricultural lands (cropland, pastureland, and rangeland) for CSP which 
is 11,492,100 and against the 1,276,900 for NIPF, providing an 
equitable acreage allocation based on the national values. NRCS will 
also give consideration to conservation needs and the degree to which 
CSP implementation impacts those needs in future year's allocations.
    NRCS is incorporating the actual data for all applicants from the 
initial ranking period in the final CEA. Although the initial CEA tried 
to control for the absence of NIPF, this final analysis will explicitly 
account for the exact acreage and budget outlays associated with NIPF. 
It is expected that the final CEA will be greatly improved with this 
additional information.

State Allocations--Comments Supporting the State Allocation Process

    Two commenters expressed support for the acreage allocation system 
used to determine the acres available for each State in the first sign-
up period and in the regulation. The one commenter opined that the 
acreage allocation process worked very well and requested the process 
be continued for the life of the program. The other commenter expressed 
that the allocation factors established by section 1238(b)(2)(A) and 
(B) of the Farm Bill and section 1470A(a)(2)(i) and (ii) of the rule 
are important for ensuring CSP does the most it can to drive 
environmental improvement. These factors can and should be emphasized 
by NRCS in making acreage allocations to States.
    Another commenter expressed basic agreement with the interim final 
rule on allocations but urged sparing use of the additional 
considerations beyond the States' proportion of eligible land. The 
commenter urged NRCS to make only modest adjustments, if any, in the 
allocations to take into account the discretionary additional 
considerations. In the near term, any such modest adjustments should be 
based on both a clear and convincing need and on the proven 
effectiveness of the State in delivering the program.

NRCS Response

    NRCS will explore other considerations for future sign-up periods.

Other Comments

    NRCS received a comment that CSP is a premier working-lands 
platform for rice producers with the many attendant waterfowl and other 
wildlife benefits they provide to fulfill the CSP enhance and conserve 
requirements. For this reason, it is essential that rice producing 
States be allocated sufficient CSP acres that recognize their rice-
related conservation benefits and provide an opportunity for rice 
producers' meaningful participation. In addition to the Farm Bill 
mandating a primary State-acreage allocation method, it also calls for 
consideration of other factors, which should be evaluated when CSP 
rice-producing State allocations are determined.
    One commenter urged NRCS to emphasize factors (2)(i) and (2)(ii) 
from section 1470.4 of the rule (``the extent and magnitude of the 
conservation needs associated with agricultural production in each 
State,'' and ``the degree to which implementation of the program in the 
State is, or will be, effective in helping producers address those 
needs'').
    One commenter recommended, in 1470.4(b), when a State does not use 
acres reserved for socially disadvantaged farmers or ranchers those 
acres be reallocated to other States with higher demand for the 
program.

NRCS Response

    The State acre allocations are based on a formula that evaluates 
each State's proportion of eligible acres to the number of eligible 
acres in all States along with consideration of the extent and 
magnitude of the conservation needs associated with agriculture 
production in each State. NRCS amends paragraph (a)(2)(i) to clarify 
that this determination will use science-based resource factors that 
consider regional and State-level priority ecosystem areas. This 
ensures equitable acreage allocation. Additionally, NRCS amends 
1470.4(b) to provide that State Conservationists allocate acres to 
ranking pools, to the extent practicable, based on the same factors the 
Chief uses in making State allocations. Additionally, allocated acres 
that are not enrolled in any fiscal year by a date set by the Chief, 
may be reallocated with associated funds for use in that fiscal year.
    The text related to reserving acres for beginning farmers or 
ranchers, and socially disadvantaged farmers or ranchers is located in 
paragraph (c) and reallocating unused acres are found in paragraph (d). 
NRCS amends the new paragraph (d) to read, ``In any fiscal year, 
allocated acres that are not enrolled by a date determined by NRCS may 
be reallocated with associated funds for use in that fiscal year under 
CSP. As part of the reallocation process, NRCS will consider several 
factors, including demand from applicants, national and regional 
conservation priorities, and prior-year CSP performance in States.
Section 1470.5 Outreach Activities.
    This section describes how NRCS will establish special program 
outreach activities at the national, State, and local levels. Nine 
comments were received related to outreach activities for CRP lands, 
organic producers, and NIPF landowners. The comments are categorized in 
alphabetical order based on topic.

Conservation Reserve Program Lands

Comments

    Several comments were received related to the eligibility provision 
for the CRP land. Six commenters recommended NRCS allow CRP 
participants to apply for CSP in the last year of the CRP contract. 
Additionally, the requirement that any farmable acres must have been 
farmed in 4 of the last 6 years is troubling. This provision leaves any 
land previously enrolled in CRP, but recently expired from the 
contract, completely ineligible for the program. One commenter suggests 
at the very least allow any acres classified as highly erodible to be 
eligible for CSP.

NRCS Response

    No changes are made to the rule in response to the comments. The 
program's authorizing language states that land enrolled in CRP is not 
eligible for enrollment in the program. There is an exception for land 
that has not been farmed 4 of the last 6 years. The statute provides 
that the requirement will not apply if the land has previously been 
enrolled in CRP.

Comments

    One commenter encouraged NRCS to include language in section 1470.5 
clarifying that expiring CRP lands should be targeted by NRCS. The 
commenter recommends that NRCS provide guidance on how producers will 
be encouraged to protect conservation values on expiring CRP by 
enrolling in CSP.

NRCS Response

    NRCS recognizes the natural resource benefits the nation has 
realized on CRP lands and is considering options for those producers 
with expiring CRP lands. However, NRCS is addressing this issue in 
policy rather than in the rule. Rather than targeting CRP lands 
specifically, NRCS considers the importance of maintaining land in 
conserving uses such as grassland and plans to spread this message 
through outreach and public announcements.

[[Page 31625]]

Nonindustrial Private Forest Land

Comments

    NRCS received comment that it should work with other Federal and 
State agencies and non-governmental organizations that can assist them 
with outreach to forest landowners. Additionally, NRCS should conduct 
expanded outreach to this group of landowners since many NIPF 
landowners have not traditionally participated in USDA cost-share 
programs and are unfamiliar with the application process.

NRCS Response

    NRCS agrees that many NIPF landowners have not traditionally 
participated in USDA conservation programs. NRCS encouraged State 
Conservationists to partner with other agencies and non-governmental 
organizations to ensure NIPF landowners were aware of the program. Some 
examples of efforts that States made to reach out to NIPF landowners 
were partnering with Small Woodland Owners Association, USFS, State 
Department of Forestry, and representatives from other local 
organizations. Some States provided training and promotional materials 
to each organization so they could provide accurate CSP information to 
their respective clients. Eight percent of the acres enrolled during 
the initial sign-up were NIPF.

Organic and Transitioning Farmers

Comments

    NRCS received a few comments related to organic production. 
Comments included encouraging participation by organic and 
transitioning farmers; fully develop and implement, in close 
coordination with the National Organic Program, the CSP ``organic 
crosswalk;'' ensure outreach to organic and transitioning farmers by 
providing materials that are farmer-friendly and that account for the 
specific requirements of organic systems under the National Organic 
Program rule and how those requirements overlap with CSP; and seek to 
conduct outreach through avenues that organic and transitioning farmers 
use and access, which often are different from the information avenues 
that most conventional farmers use.

NRCS Response

    No changes are made in the rule in response to the comments. NRCS 
is encouraging participation of organic producers by conducting special 
outreach efforts to this group. During the initial CSP sign-up period, 
outreach efforts were conducted in 17 States targeting organic farming 
organizations, groups, and individuals. Many States have representation 
on the State Technical Committee from organic organizations offering 
their views on how conservation programs are implemented within a 
State. State Conservationists have been encouraged to outreach to 
organic farmers, and NRCS will continue these efforts as we move 
forward with the program into the future.

Other

Comments

    One commenter recommended NRCS conduct outreach programs to help 
make farmers and ranchers aware of the importance of providing habitat 
for managed and native bees and technical resources and available 
assistance.

NRCS Response

    NRCS conducts outreach activities to a wide audience to promote the 
program and the benefits of addressing resource concerns in a 
comprehensive manner. CSP offers several opportunities to address 
pollinator habitat through questions in the CMT and enhancements. NRCS 
will consider additional outreach and publicity efforts to make 
producers aware of the opportunities to address pollinator habitat 
through CSP. No changes are made to the rule in response to this 
comment.

Section 1470.6 Eligibility Requirements

Comments

    Section 1470.6, ``Eligibility requirements,'' sets forth the 
criteria for determining applicant and land eligibility. NRCS received 
numerous comments on this section. One commenter expressed that a 
participant's personal details and proprietary operational information 
must be protected at all times by the Department.

NRCS Response

    Information about applicants is generally not released to the 
public because individual privacy rights must be protected. The Freedom 
of Information Act (FOIA) and the Privacy Act, section 2004 of the Farm 
Security and Rural Investment Act of 2002, and section 1619 of the 2008 
Act permit the government to withhold certain information. Refer to GM-
120, Part 408, Subpart C, FOIA and Privacy Act, for NRCS policy 
regarding FOIA and the Privacy Act. The following information about 
conservation program contract applicants may not be released: Names, 
Addresses, Telephone Numbers, Social Security or tax identification 
numbers, and amount of Federal funds requested.
    The 2008 Act does not impede the sharing of information between and 
among USDA agencies. However, information may only be shared with 
Federal agencies outside of USDA for specific purposes under a 
cooperative program, but not for general regulatory or enforcement 
purposes. Aggregate or statistical information about applications may 
be described in news releases, Web sites, and other tools used to 
inform the public.
    When an applicant becomes a participant, additional information is 
available for release. The following information about participants may 
be released through a FOIA request: Names, limited address (State, 
city, or county), and conservation program contact obligation amount. 
Additional restrictions about the release of address information apply 
to some corporate and nonprofit business types. For more information, 
consult the NRCS General Manual GM-120, Part 408.

Comments

    The other comments are discussed by the following categories: 
Applicant eligibility, operator of record requirements, control of 
land, land eligibility--general, land eligibility--agricultural 
operation, land eligibility--NIPF, and ineligible land.

Applicant Eligibility

Comments

    A number of respondents expressed concerns about overarching Farm 
Bill eligibility requirements such as the treatment of landlords and 
tenants, Adjusted Gross Income (AGI) provisions, and actively engaged 
in farming determinations handled through the Farm Service Agency 
(FSA). One commenter requested NRCS coordinate closely with FSA.

NRCS Response

    NRCS is coordinating closely with FSA regarding FSA's rules for 
legal farming arrangements. NRCS recognizes FSA responsibility in 
maintaining farm records and intends on utilizing these records, to the 
extent practicable, as a basis for program participation. However, NRCS 
will ensure that producers who would have an interest in acreage being 
offered receive fair treatment which NRCS deems to be equitable. NRCS 
may refuse to enter into a contract when there is a disagreement among 
joint applicants seeking enrollment as to an applicant's

[[Page 31626]]

eligibility to participate in the contract as a tenant.

Comments

    NRCS received a comment that it is important when making AGI 
determinations that the current Internal Revenue Service rules 
governing income allocation apply. Accountants and other tax 
professionals are aware of these rules and knowledgeable when using 
them to make the necessary allocation amounts to spouses and other 
members of an entity. The Farm Bill provides an extensive list of 
income sources considered to be farm income for purposes of the farm 
AGI calculation. One area that is not specifically addressed is the 
categorization of wages earned from a farming corporation or other 
entity. Many times, partners or members of an entity receive a salary 
from the operation rather than or in addition to a distribution. NRCS 
should state clearly that this income is considered farm income for AGI 
purposes.

NRCS Response

    The 2008 Act provides very specific AGI information applicable to 
all current Farm Bill programs. AGI clarification applicable to all 
Farm Bill programs is found in 7 CFR 1400.500.

Comments

    NRCS received a comment urging the agency to factor into AGI 
determinations the fact that the Internal Revenue Service arbitrarily 
limits annual losses a producer can claim to $300,000 if the producer 
receives Farm Bill benefits, which if left unaddressed, could 
underestimate the extent of a producer's losses while exaggerating AGI, 
unfairly resulting in program ineligibility.
    One commenter expressed that FSA ``actively engaged in farming'' 
rules should apply. These rules include crop share landlords and 
tenants as actively engaged, but reduce the ability of absentee 
investors to benefit and reduce the opportunity to create ``paper'' 
farms whose only purpose is to enable the beneficiary to collect 
payments in excess of the payment limit through well established 
payment limit avoidance devices that will not be captured by direct 
attribution. A reference to the actively engaged in farming rules 
applying to CSP should be added between paragraphs (g) and (h) in 
1470.24. In addition, the definition of ``producer'' in 1470.2 should 
be modified to say ``actively engaged in agricultural production or 
forest management'' instead of just ``engaged.''

NRCS Response

    No changes are made to the rule in response to these comments. NRCS 
is legally obligated to offer the program to everyone meeting 
eligibility. To apply for the program, the applicant must be the 
operator of the land in the FSA record system. An operator who is 
accepted and subsequently enrolled in a contract may include additional 
participants on their contract who may be landowners or others having 
control of the land enrolled in the contract and are included in the 
FSA record system. Such participants need to meet AGI requirements as 
well as Highly Erodible Land provisions and Swampbuster provisions. All 
participants included in a contract that receive funding will by law, 
be limited to the payment limitations set forth in the statute and the 
rule.

Comments

    Two commenters requested NRCS establish reasonable procedures for 
reporting all members of a legal entity.

NRCS Response

    It is FSA's responsibility to maintain customer records, including 
member information. FSA has forms available for entities to use to 
provide their member information; therefore, it is not necessary for 
NRCS to establish additional procedures. NRCS may obtain a copy of this 
information if needed. No changes are made to the rule in response to 
this comment.

Operator of Record in FSA Records

Comments

    Nine comments were received on this topic. The commenters generally 
expressed dissatisfaction with the requirement that the applicant must 
be the operator of record in the FSA system. In their view, the 
requirement unfairly precludes certain legitimate producers or 
landowners from participating.

NRCS Response

    The policy related to operators' results from a finding from the 
2006 Office of the Inspector General (OIG) CSP audit that identified 
NRCS failed to detect improper identification of producers' 
agricultural operations. OIG recommended that NRCS complete ongoing 
coordination with FSA to utilize their existing data to independently 
verify applicant information for similar programs implemented in the 
future. However, NRCS recognizes this is a significant concern and 
amends paragraph 1470.6(a), Eligible applicant, to read as follows.
    ``To be an eligible applicant for CSP, a producer must be the 
operator in the FSA farm records management system. Potential 
applicants that are not in the FSA farm records management system must 
establish records with FSA. Potential applicants whose records are not 
current in the FSA farm records management system must update those 
records with FSA prior to the close of the ranking period to be 
considered eligible. NRCS may grant exceptions to the ``operator of 
record'' requirement for producers, tenants, and owners in the FSA farm 
records management system that can demonstrate to the satisfaction of 
NRCS they will operate and have effective control of the land for the 
term of the proposed contract.'' This change is not retroactive, and 
therefore, will not apply to the 2009 applications or participants. 
Paragraph 1470.6(a)(1) is deleted and subsequent paragraphs are 
redesignated accordingly. The new paragraph (a)(1) is revised to remove 
the requirement that the producers have ``documented control'' and to 
add a requirement that they have ``effective control.''

Control of Land

Comments

    NRCS received multiple comments on this requirement. Commenters 
expressed dissatisfaction with the requirements that a producer must 
show control of the land for 5 years. NRCS received a comment 
recommending it work to the fullest extent allowed under the CSP 
statute to include rental acres in the program. Not doing so would mean 
that most modern commercial operations would be effectively excluded 
from CSP and the conservation incentives the program provides. It could 
be a significant administrative burden for both producers and NRCS 
personnel to modify the CSP contracts annually to accommodate changes 
in leased landowners. One commenter recommends that it be optional for 
a producer to enter leased land into the CSP.

NRCS Response

    NRCS considers it a sound business practice to enter into contracts 
where the land will remain under contract for the full contract period. 
However, NRCS does recognize the need for flexibility to address those 
situations where operators have oral leases or other similar 
arrangements. Therefore, NRCS will modify its policy to remove the 
requirement for documented assurance

[[Page 31627]]

from the owner that the tenant will have control and will accept 
operator self-certification of control of the land for the contract 
period. Applicants who utilize the self-certification process will be 
subject to an annual review and verification process to confirm they 
maintain control throughout the contract period. In situations where 
operators do not anticipate having control of the land for the required 
period, such operators would not have effective control of that land 
and such land would not be considered part of their agriculture 
operation. NRCS does not expect applicants to project the unknown 
(e.g., health, death, business failures, etc.); as long as applicants 
believe they will have the necessary control at the time of enrollment 
and for the required period of the contract, they are eligible.

Land Eligibility

Comments

    Five respondents recommended that NRCS accept managed grazing land 
as cropland so it qualifies for a higher payment, ranks higher, and can 
support some enhancements not available in the pasture category. 
Operators who use cropland as pasture should be rewarded, not penalized 
by a lower CSP payment; one commenter felt the program should enable 
those who harvest wind to participate by expressing if the respondent 
grew crops to make biofuels they could participate; if they harvest 
wind they cannot; and one commenter requested NRCS implement the 
program in a size neutral manner. Producers of all sizes and 
descriptions are involved in cotton production and should have equal 
opportunities to access conservation programs.

NRCS Response

    NRCS does not want to establish policy that may have an unintended 
consequence of encouraging producers to convert pastureland to 
cropland. Therefore, NRCS is establishing a ``pastured cropland'' 
program designation to provide a more accurate payment rate due to 
higher forgone income costs associated with maintaining a grass-based 
livestock production system on land suitable for cropland. The existing 
activity payment rate for pastured cropland will be higher than the 
pastureland rate. All technical assessments and determinations are 
completed as pastureland. Since the details regarding payment rates are 
not included in the regulation, no changes are made to the rule.
    CSP does recognize wind power used to power agricultural operations 
on the farm through the CMT and enhancements offered by the program. 
However, land that is used solely for wind production does not meet the 
CSP definition of agricultural land as no ``agricultural products or 
livestock'' would be produced on the land.
    No changes are made to the rule in response to these comments.

Comments

    Two commenters requested NRCS clarify that the Conservation 
Security Program contracts may be eligible for CSP.

NRCS Response

    NRCS retains the requirement that land enrolled in the Conservation 
Security Program is not eligible. After the Conservation Security 
Program contract expires, the land becomes eligible.

Comments

    One commenter requested clarification of the term ``other lands.'' 
The commenter requested NRCS identify what this term entails and what 
are the standards for demonstrating appropriate level of conservation 
on these lands that will determine eligibility and compliance. The rule 
itself is somewhat concerning in that it specifies that these areas 
must not have readily observable erosion or point sources of 
contamination such as gullies, manure runoff, or pesticide runoff. It 
is important to note that ``agriculture storm water runoff'' is not a 
point source and is allowed by Federal law under the Clean Water Act. 
The commenter encourages NRCS to revisit this element to make sure the 
standard of conservation sought on these lands is not a hindrance to 
farmer participation or conflicts with Federal law, particularly since 
payments will not be administered for practices on these lands.

NRCS Response

    NRCS recognizes the concerns with using the words ``point source'' 
and will strike that language from procedures for assessing ``Other 
lands.'' ``Other lands'' must be free from readily observable erosion, 
gullies, manure runoff, pesticide runoff, or other similar 
environmental concerns for the applicant to be eligible for the 
program.

Agricultural Operations

Comments

    NRCS received a comment urging USDA to provide clear, detailed 
guidance about how it would implement ``substantially separate'' 
provisions to enable prospective applicants to determine if they would 
be able to participate on the business model their operation uses.

NRCS Response

    The regulation identifies factors that will be used by applicants 
to determine whether operations are ``substantially separate.'' Factors 
include equipment, labor, management, and cultivation or production 
practices. NRCS intends to clarify how these factors are used in 
procedures and guidance for producers.

Comments

    One commenter expressed that the goal in the final rule is to make 
CSP simple and easy for CSP to be of real, concrete, and practical 
assistance to farmers struggling to deal with their real and immediate 
conservation and environment (needs); another expressed concern about 
treatment of eligible acres ``agricultural operations'' and rented land 
in the context of CSP contract requirements that are viewed to be 
unnecessarily restrictive and limiting; NRCS also was questioned about 
whether there is a statutory requirement that requires all of an 
applicant's operation to be covered by a contract. Section 1238E of the 
Food Security Act, as amended by the 2008 Act, says only that eligible 
land ``shall include all acres of an agricultural operation of a 
producer, whether or not contiguous, that are under the effective 
control of the producer at the time the producer enters into a 
stewardship contract'' (Sec.  (b)(3)). While all such acres may be 
``eligible,'' there is no requirement that the applicant enroll all 
these eligible acres as the rule requires. If this language does not 
require the entire operation to be enrolled, we encourage NRCS to 
strike this requirement from the rule and instead adopt a more flexible 
approach that is fully reflective of the program's objective to provide 
comprehensive solutions working from a conservation systems' approach.
    Another commenter recommends that NRCS require an operator to 
enroll a sufficient quantity and type of acres from the producer's 
operation to ensure that their operation's potential contribution to 
the area's resource and priority resource concerns can be properly 
addressed. This is not a fixed percentage of an operation, and it 
cannot be established in a one-size-fits-all approach.

NRCS Response

    NRCS retains the requirement for the agricultural operation from 
section 1238E, i.e., eligible land will include all acres of an 
agricultural operation whether or not contiguous, that are

[[Page 31628]]

under the effective control of the producer at the time they enter a 
stewardship contract, and operated by the producer with equipment, 
labor, management, and production or cultivation practices that are 
substantially separate from other agricultural operations, as 
determined by the Secretary. NRCS gives producers the opportunity to 
enroll owned land and rented ground for which they have effective 
control. NRCS amended paragraph 1470.6(b) to provide clarification that 
a participant may submit an application(s) to enter into additional 
contract(s) for newly acquired eligible land, which would than compete 
with other applications in a subsequent ranking period.

Nonindustrial Private Forest Land

Comments

    NRCS received comments both in favor of and opposed to the agency 
policy of separating out NIPF in the enrollment process, so that forest 
land will be ranked and enrolled separately.
    One commenter encourages NRCS to develop a way to track NIPF within 
their ProTracts system so that producers with both NIPF and 
agricultural lands are not required to file two applications.
    By special rule no more than 10 percent of acres enrolled 
nationally in any fiscal year may be NIPF ownerships. This model 
potentially provides a larger contract payment to the landowner, but by 
the total enrollment calculation may overstate the benefits.

NRCS Response

    NRCS determined it is necessary to maintain forest land 
applications separate to be able to meet the legislative requirement of 
enrolling no more than 10 percent of the annual acres enrolled 
nationally in any fiscal year in NIPF. NRCS chooses to retain the 
process established.

Section 1470.7 Enhancements and Conservation Practices

Comments

    Forty-six comments were received on section 1470.7, ``Enhancements 
and conservation practices.'' This section identifies that a 
participant's decisions describing the additional enhancements and 
conservation practices to be implemented under the CSP contract. The 
list of comments reflects the large selection of potential 
enhancements. The public provided input on managed grazing, pesticide 
management, energy, innovative practices, wildlife, forest management, 
and organic production.

NRCS Response

    NRCS received numerous recommendations on innovative enhancements. 
NRCS is open to suggestions for additional enhancements on all land 
uses and welcomes innovative ideas for consideration. However, the 
program constraints limited how the financial assistance funds could be 
used. In order to achieve a national average rate of $18 per acre, 
enhancement activities emphasize management-based actions rather than 
structural practices. It is NRCS' intention that recommended changes 
and improvements will be incorporated in future ranking periods. New 
enchancement ideas will be evaluated and incorporated as time permits 
for future ranking periods. No changes are made to the rule in response 
to the comment.

Comments

    One commenter recommends NRCS require cover crops and rotational 
grazing, rather than rewarding uninterrupted commodity crops that rob 
the soil.

NRCS Response

    Program requirements to implement specific conservation activities 
would eliminate some farmers from eligibility for CSP. Instead, CSP 
recognizes there are many paths to conservation stewardship and asks 
questions in the CMT and offers enhancements that cover this spectrum. 
In addition, there are five enhancements available to producers that 
encourage the use of cover crops to manage nitrogen, break-up soil 
compaction, and improve bio-diversity. The resource-conserving crop 
rotation is another way CSP promotes crop diversity that includes grass 
and legume.

Comments

    NRCS received criticism that the list of potential enhancements is 
long and exhaustive, and it will benefit potential program participants 
to know the ranking of each enhancement for both conservation 
performance effectiveness and relative cost. The commenter assumes that 
these rankings are, in turn, used in the CMT, and as such, the rankings 
reflected in this document should be subject to review and modification 
by the State Technical Committee to fully reflect that State's needs 
and priorities.

NRCS Response

    The conservation values for each enhancement are posted on the NRCS 
Web site. NRCS welcomes input and thoughts on the relative value of 
each enhancement, but NRCS retains the right to make final decisions on 
the technical and resulting environmental impact of each enhancement. 
NRCS will continue to improve the development of information related to 
the CMT. NRCS recognizes the success of the program is dependent on a 
thorough understanding of resource needs and producer commitments, 
prior to entering a contract. Further, NRCS is looking at options to 
adjust the choices available by ranking pool, State, or region.

Comments

    One commenter urged NRCS to consider offering enhancement practices 
for forest land that are innovative or not offered by other USDA 
programs, and to strongly consider potential environmental benefit when 
offering practices and ranking applications. The commenter recommended 
specific enhancements, some of which are already on the CSP enhancement 
list.

NRCS Response

    The NIPF land enhancements are currently under review with changes 
in number of enhancements and scope to be completed before the next 
ranking period. NRCS will evaluate the enhancements recommended and 
will make its determinations public when changes, if applicable, are 
complete. The recommendations do not require a change to the rule.

Comments

    NRCS received a recommendation that section 1470.7 be rewritten and 
re-titled to include both new enhancements and conservation practices 
to be implemented under a contract, as well as existing enhancements 
and conservation practices to be actively managed and maintained under 
a contract.

NRCS Response

    NRCS chooses to retain the current information in section 1470.7 as 
this section is intended to address additional conservation activities 
to be adopted through CSP. Section 1470.23 deals with maintenance and 
management of existing activities.

Comments

    Two commenters expressed that enhancements should reflect that 
commitment to flexibility and continuous improvement should allow for 
reasonable adaptation and modification during the life of the contract. 
Two commenters requested new enhancements be added to the toolbox of 
offerings as new conservation technologies are developed.

[[Page 31629]]

    One commenter recommended allowing landowners 3 years to adopt 
forest enhancements, including forest stewardship plans which should be 
encouraged.

NRCS Response

    The program has mechanisms in place to accommodate changes in 
operations during the life of the contract. The program allows change 
to the schedule or installed enhancements by allowing enhancements to 
be substituted as long as the conservation performance determined by 
NRCS is equal or better than the conservation performance offered at 
enrollment. In addition, a participant will not be considered in 
violation of the contract for failure to comply with the contract due 
to circumstances beyond the control of the participant.
    CSP rules require that all enhancements be adopted by the third 
year of the contract. No changes are made to the rule in response to 
this comment.

Comments

    One commenter recommended a thorough review of all CSP enhancements 
before the next ranking period and appropriate steps taken to improve 
benefits to fish, wildlife, and their habitats.
    One commenter was opposed to implementing new practices through 
CSP. The commenter expressed that if farmers are interested in adopting 
new practices, they should be encouraged to apply for funding for the 
new adoption under EQIP instead.

NRCS Response

    The program's statutory language provides that the term 
conservation activities mean conservation system, practices, or 
management measures that are designed to address a resource concern.

Comments

    One commenter identified an interest in farmers that transition to 
a lower carbon footprint of production, including increasing soil 
carbon using managed intensive grazing systems, reduced tillage, and 
reduced pesticide use while another proposed a new category 
encompassing many of the CSP enhancements to help some of the 
endangered species, pollinators, and wildlife that are being pushed out 
by increasing housing developments. This should include inclusion and 
priority of biodiversity enhancing and organic farming practices.

NRCS Response

    NRCS recognizes the merit of these conservation measures, and they 
are currently reflected in the CMT questions and enhancements offered 
through the program.

Innovative Enhancements

Comments

    NRCS received multiple suggestions of practices and activities to 
add to the list of enhancements.

NRCS Response

    NRCS conducted a thorough review of all CSP enhancements for all 
land uses, as well as evaluated the recommendations from the public. As 
a result, NRCS updated its enhancement list and adopted a new concept 
for the second ranking period related to the selection and 
implementation of enhancements. Certain enhancements will be offered as 
``bundles'' while others will be offered individually. The bundling 
concept enables participants and the nation to realize conservation 
benefits from the synergy that results when activities are implemented 
as a system. For example, NRCS established a Sustainable Ag Bundle that 
includes enhancements for locally grown and marketed farm products, 
water quality, soil quality and plants, and beneficial insects.
    The environmental benefits of each bundle will be reflected in the 
score and the resulting payment level. NRCS amended the rule in 
1470.7(c) to make known the ability to incorporate bundled enhancements 
in the stewardship plan.

Comments

    Another commenter requested NRCS provide clarity on the development 
and regular review of incentives for Socially Disadvantaged Farmers or 
Ranchers, Beginning Farmers or Ranchers, and Limited Resource Farmers 
or Ranchers, and Indian Tribes.

NRCS Response

    The CSP does not provide incentive payments for historically 
underserved individuals. However, NRCS policy requires State 
Conservationists to address access to program enrollment for Socially 
Disadvantaged Farmers or Ranchers and Beginning Farmers or Ranchers 
through the establishment of special ranking pools. In addition, Indian 
tribes are exempt to payment limitation per legislation as stated in 
section 1238G(g) of the Statute.

Comments

    NRCS should view the development of new technologies and management 
strategies in an entrepreneurial manner that fosters the addition of 
beneficial new activities as they are developed. New enhancements 
should be added to CSP's toolbox of offerings as new conservation 
technologies are developed in order to accelerate the adoption of 
conservation technologies with positive environmental benefits that 
will address societal needs.
    One commenter noted that continued funding of large scale farms and 
conventional practices seems like others are continuing to get 
resources while innovators get nothing. Small scale farms are 
increasing across the country and at the same time, more CSA orientated 
marketing continues to spiral upwards as well.

NRCS Response

    NRCS recognizes the value of small scale farms as well as large 
farms. As a result, the scoring and ranking system used for CSP is size 
neutral. No change is made to the rule in response to this comment.

Conservation Practices and Resource-Conserving Crop Rotation

Comments

    Two commenters recommended that cover crops that best hold the soil 
in place whether legumes or perennial grasses with the least disruption 
causing erosion must be rewarded.

NRCS Response

    Cover crops are given performance points in the CMT. There are also 
five CSP enhancements available that promote the adoption of cover 
crops in various ways. No changes are made to the rule in response to 
this comment.

Comments

    Commenters supported the concept that resource-conserving crop 
rotations and managed rotational grazing should be rewarded through 
CSP.

NRCS Response

    NRCS agrees and these activities are recognized in scoring and 
enhancements through CSP.

Comments

    One commenter expressed that CSP is essential to the development of 
a better, more sustainable agricultural sector in this country, and 
therefore, it is necessary that the program provide support on a wide 
range of important practices like crop rotation.
    Forty-nine commenters recommended that resource-conserving crop 
rotations

[[Page 31630]]

and management-intensive rotational grazing should receive strong 
support or high ranking and payment points. Cropping systems built 
around resource-conserving cropping and livestock systems based on 
rotational grazing are superior conservation approaches with multiple 
environmental benefits. They should be fully rewarded whether they are 
an ongoing conservation system or a newly adopted one.

NRCS Response

    Applicants who choose to implement a resource-conserving crop 
rotation are recognized because they receive a separate payment for 
this activity above and beyond other payments they may qualify for 
under the program. NRCS recognizes the conservation value of crop 
rotations and rotational grazing. Both are scored highly in the CMT, 
and enhancements are offered for both of these activities. No changes 
are made to the regulation in response to these comments.

Comments

    Another commenter expressed that it is also important that the 
funding amounts recognize the critical role that organic crop and 
livestock systems, resource-conserving crop rotations, and management-
intensive rotational grazing play in strong and productive stewardship.

NRCS Response

    CSP uses the CMT in evaluating the environmental impact that a 
management system provides. Those systems that provide the highest 
benefits receive the most conservation performance points resulting in 
higher ranking and increase payments. No changes are made to the rule 
in response to the comment.

Comments

    A number of comments show support for small farmers like the one 
that expressed the concern that small family farmers raising a 
diversity of crops and animals, should receive high ranking and payment 
points based on resource-conserving crop rotations and management-
intensive rotational grazing.

NRCS Response

    Applicants in this category that are addressing natural resource 
concerns will score very well in the CMT and will have the potential 
for high stewardship levels. Recognizing that CSP may not offer 
financial resources to smaller operators that would encourage 
participation, NRCS amended the regulation in paragraph 1470.24 to add 
authority for the Chief to offer a minimum contract payment amount.

Comments

    Farmers coming into newly adopted resource-conserving crop 
rotations and management-intensive rotational grazing (in addition to 
those who presently implement those practices) need to be able to sign-
up for CSP.

NRCS Response

    CSP scoring, ranking, and payments are based on both existing 
conservation activities and additional conservation activities that the 
applicant chooses to implement. This process allows for farmers who are 
at different levels of conservation to participate. NRCS uses an 
environmental focus and not a commodity-based focus when implementing 
CSP. No changes are made to the rule in response to the comment.

Comments

    One commenter expressed that in reviewing the interim final rule 
and the materials posted on the NRCS Web site in reference to the rule, 
the resource-conserving crop rotation and its specific special payment 
is clearly a priority for NRCS. However, exact implementation of this 
provision still appears uncertain. As NRCS moves forward with this 
provision, the agency should strive to attain the objective of greater 
soil conservation and the building of carbon in the soil rather than a 
prescription that can only be met with the addition of a perennial crop 
or forage crop to the rotation.

NRCS Response

    The resource-conserving crop rotation job sheet, describes the 
benefits of a resource-conserving crop rotation that includes reduced 
wind and water erosion, increased soil organic matter, improved soil 
fertility and tilth, interrupted pest cycles, reduced depletion of soil 
moisture or reduced need for irrigation in applicable areas, and 
provided protection and habitat for pollinators. Each State developed a 
list of plants and crops that met the criteria of a resource-conserving 
crop. No changes are made to the rule in response to the comment.

Comments

    One commenter expressed that conservation methods in crop rotations 
are vital for a sound, conservation-based farm. Adequate rewards for 
resource-conserving methods such as green manure plantings and forage, 
is important to ensure such practices are implemented and maintained. 
Well managed rotational grazing systems for livestock are another 
superior conservation method with value-added gain to the environment.

NRCS Response

    NRCS agrees with these comments as reflected in the questions in 
the CMT and the CSP enhancements. No changes are made to the rule.

Comments

    One commenter expected real change with the implementation of the 
CSP. The commenter expressed that the new CSP actually rewards farmers 
who are early adopters and using long-term rotations or grass-based 
livestock systems.

NRCS Response

    Questions in the CMT are designed to analyze an existing crop 
production system and award conservation performance points for those 
systems that provide the greatest environmental benefit. Systems that 
include greater crop diversity reduce tillage and high levels of 
nutrient and pest management receive more conservation performance 
points, increasing chances to be selected for funding. No changes are 
made to the rule in response to the comment.

Comments

    One commenter was critical of the ranking process in situations 
where a producer has to change a rotation that is not on the list, and 
then the producer would have to go through some ranking changes each 
time.

NRCS Response

    Participants can modify stewardship plans to address unforeseen 
contingencies, as long as they select enhancement activities with the 
same or greater environmental benefits. Further, NRCS does not consider 
a participant in violation of the contract for failure to comply with 
the contract due to circumstances beyond the control of the 
participant, including disaster or related conditions, as determined by 
the State Conservationist.

Comments

    One commenter recommended that NRCS seek opportunities to increase 
bee forage when implementing other conservation practices, such as 
cover crops and resource-conserving crop rotations.

NRCS Response

    NRCS feels that it has adequately addressed the concerns in the CMT 
and with the activities offered through the program. NRCS will conduct 
continuous

[[Page 31631]]

reviews to incorporate innovative ideas for future ranking periods. No 
changes are made to the rule in response to the comment.

Comments

    One commenter requested clarification on whether or not orchard and 
vineyard crops are eligible for the resource-conserving crop rotation. 
Wine grape growers typically use a resource-conserving crop in their 
vineyards which meets the first definition, a perennial crop for soil 
fertility. Will vineyards be eligible for the supplemental payment?

NRCS Response

    Resource-conserving crop rotations are not applicable for orchards 
or vineyards. A resource-conserving crop rotation is only applicable 
where there is an annually planted crop in the rotation.

On-Farm Research and Demonstration

Comments

    NRCS received one comment on this provision. The commenter 
recommended the addition of a new paragraph (3) in 1470.2 to stipulate 
that NRCS will make available to eligible applicants design protocols 
and participation procedures for participation in CSP on-farm research 
and demonstration projects. In addition, the commenter recommended that 
either (a) current point values for on-farm research and demonstration 
be enhanced, or (b) that on-farm research and demonstration be taken 
out of the point system for payment purposes and compensated in a more 
traditional manner.

NRCS Response

    NRCS amends section 1470.2(f)(1) to read as follows:
    (f) The State Conservationist will:
    (1) Obtain advice from the State Technical Committee and local 
working groups on the development of State-level technical, outreach, 
and program issues, including the identification of priority resource 
concerns for a State, or the specific geographic areas within a State, 
and design protocols and participation procedures for participation in 
on-farm research and demonstration and pilot projects.
    States are working with their respective research institution in 
educating them on the use of on-farm research and demonstration 
projects to increase the list of available projects for the next 
ranking period.

Section 1470.8 Technical Assistance

Comments

    Section 1470.8, Technical assistance, explains that NRCS or other 
technical service providers (TSP) could provide the technical 
consultation for installing conservation activities under CSP.
    Two commenters recommended that more CSP money to be available for 
technical assistance through TSPs or cooperative agreements with 
entities such as State wildlife agencies in order to meet the 
anticipated program demand.

NRCS Response

    States have an option to enter into cooperative agreements with 
TSPs or other agencies to assist in delivering the program. However, it 
is important to mention that the program constraints of managing the 
program to achieve a national average of $18 per acre for financial 
assistance and technical assistance will limit program servicing 
options.

Technical Assistance on Forest Land

Comments

    A number of comments were received regarding technical assistance 
on forest land. Commenters expressed support for CSP with concerns on 
how the expertise and technical assistance will be delivered at the 
field level to NIPF; technical assistance for many NRCS forest projects 
is provided by agreement with the State Forestry Department, and in 
some cases, technical expertise is very limited; and respondents 
recommended that NRCS utilize the extensive network of forestry 
expertise through the Forest Stewardship Program, which includes State 
forestry agencies, consulting foresters, and other partners working to 
deliver technical assistance to NIPF landowners.

NRCS Response

    NRCS field office staffs have diverse technical backgrounds and in 
some cases have forestry and agroforestry expertise, but in those 
situations where they do not, they will seek professional forestry 
assistance. NRCS has staff foresters in many States that provide 
technical guidance and training to field offices and can assist field 
offices with planning and application questions. In States without 
staff foresters, the field offices will assist the forest owner in 
seeking assistance from either State agency foresters, forestry TSPs, 
or other private consulting foresters in the local area who are 
providing forestry planning and application assistance such as forest 
stewardship planning.

Pollinators

Comments

    One commenter recommended that NRCS further this objective by (1) 
designating a liaison at NRCS charged with working with beekeeping 
industry interests, and (2) establishing and convening a working group 
of beekeepers, qualified research and extension specialists, and 
interested agricultural producers to help conduct the necessary review 
and revisions.
    Another commenter expressed that USDA should realize the full 
potential conservation assistance and incentive programs to help 
farmers and ranchers establish and maintain habitat for managed and 
native bees, and provide training to NRCS and other technical 
assistance providers to make them aware of the new Farm Bill 
authorities and the importance of habitat for managed and native bees 
and how programs can be used to assist farmers and ranchers.

NRCS Response

    NRCS has a Pollinator Initiative through which it is pursuing 
increased attention to pollinators from a variety of approaches. A few 
of these approaches include the following: Establishment of an NRCS 
Liaison with beekeepers and with the United States beekeeping industry 
to ensure that the needs of beekeepers and honey bees are appropriately 
addressed in NRCS pursuits; revision of NRCS Conservation Practice 
Standards to encourage establishment of pollinator habitat and 
discourage management practices harmful to pollinators; implementation 
of the recently-developed NRCS Plant Materials Centers pollinator 
action plan which includes the field-testing of seed mixes for 
pollinators from an eco-region-specific perspective and crop-specific 
recommendations of plant materials that will provide preferred and 
extended pollinator forage and refugia for beneficial insects helpful 
in pest management; inclusion of a large number of opportunities for 
matching funds to create and enhance pollinator habitat through a 
variety of financial assistance and easement conservation programs; 
development of Web based training for NRCS staffs and for our partners 
and customers focused upon pollinators and their habitat requirements; 
and implementation of the NRCS pollinator communications plan for 
awareness-building concerning the critical roles of pollinators and 
what individuals can do to help us sustain pollinator habitat and the 
environmental services they provide.

[[Page 31632]]

    NRCS takes seriously its responsibilities to ensure its field 
office staffs have adequate training to work with organic farmers. 
Individual States have conducted numerous training sessions on 
conservation planning with organic producers. A national teleconference 
on organic certification has been conducted, and plans are in place to 
work with several private organic groups to provide training to NRCS 
State specialists on organic farming systems. No changes are made to 
the rule in response to this comment.

Comments

    One commenter questioned why NRCS included a definition of TSP. The 
commenter did not see where the term is used or referenced in the rule. 
The commenter expressed that the rule leads one to conclude that NRCS 
must provide all technical assistance relative to the CSP.

NRCS Response

    Section 1470.8 states that NRCS may provide technical assistance to 
an eligible applicant or participant either directly or through a TSP 
as set forth in 7 CFR part 652.

Subpart B--Contracts and Payments

Section 1470.20 Application for Contracts and Selecting Offers From 
Applicants

Comments

    Section 1470.20, ``Application for contracts and selecting offers 
from applicants,'' identifies procedures associated with application 
acceptance, contract application requirements, and the application 
evaluation process. NRCS received 20 comments on the application 
process. Many of the commenters expressed frustration related to the 
amount of paperwork necessary to participate in CSP.

Application Process

    Seven commenters expressed that there is too much paperwork or the 
program is too complex; other comments included that NRCS needs to 
control costs and if an applicant is rejected from program enrollment, 
the basis for the rejection needs to be explained to the applicant. 
NRCS received comments that information requirements should be fair, 
reasonable, and limited to data that is necessary, relevant, and 
related directly to determining an applicant's potential CSP 
participation. An applicant's personal details and proprietary 
operational information must be protected at all times by the 
Department; respondents urged NRCS to avoid onerous and invasive CSP 
documentation requirements and to be fair and reasonable. One commenter 
acknowledged that good recordingkeeping is integral to managing a 
successful farming operation; however, due to the newness of this 
program, some producers may not have records for all of the activities 
conducted that would aid them in their application for CSP. The 
commenter has concerns about how farmers will be treated in situations 
where they have recently acquired farm ground where previous records 
would not be available to the new operator, which could limit their 
eligible acres.

NRCS Response

    No changes are made to the rule in response to the comments.
    All applicants are provided written notification of all 
determinations related to their application.
    NRCS designed the CSP to collect as little information from the 
applicants as feasible. It is always difficult to balance the 
information necessary for quality assurance and minimize burden on 
customers. NRCS feels strongly that proper documentation is required to 
avoid improper use of program funds. NRCS does not collect records to 
be kept in NRCS field offices. Records are used to verify that the 
information provided by the applicant is accurate when conducting the 
onsite field verification and State quality assurance process.
    Acreage eligibility is not determined by the presence or absence of 
records; however, it may impact the applicant's ranking score. The 
applicants are required to offer all acres on their operation that are 
under effective control at the time of entry into a conservation 
stewardship contract. To participate in CSP, applicants need to be able 
to provide some form of verification for those activities that they are 
credited in the CMT. There are many ways that information can be 
verified during the onsite field verification such as equipment, crop 
residues, visible signs of erosions, existing practices on the ground, 
photos, receipts, existing conservation plans, aerial photos, etc. It 
is the applicant's responsibility to provide accurate information of 
the existing system that they will be compensated through program 
payments.
    NRCS will evaluate ways to minimize burdens on producers while 
following policies and procedures to ensure that NRCS is accountable 
for the use of program funds. It is critical that participants maintain 
and supply information to verify eligibility. NRCS has the proper 
supporting contract documentation to ensure fair and consistent 
determinations are made.

Comments

    Another area of interest related to the availability of 
information. Four commenters expressed that applicants should have 
access to enhancement points during the application process. For 
farmers to make good decisions, farmers should have access to the 
number of points each enhancement is assigned to make the best decision 
for their operation and for the overall environmental benefit of their 
contract. Three commenters expressed that the list of potential 
enhancements is long and exhaustive, and it will benefit potential 
program participants to know the ranking of each enhancement for both 
conservation performance effectiveness and relative cost. We assume 
that these rankings are in turn used in the CMT and, as such, the 
rankings reflected in this document should be subject to review and 
modification by the State Technical Committee to fully reflect that 
State's needs and priorities.

NRCS Response

    NRCS has made available to the public the conservation performance 
effectiveness values for all activities offered through the program as 
well as for all the inventory questions. In addition, NRCS developed 
two detailed documents explaining how the points are used in the tool. 
This information is located at http://www.nrcs.usda.gov/programs/new_csp/csp.html.
    No changes are made to the rule in response to these comments.

Conservation Performance Ranking Score

Comments

    One commenter indicated that what is unclear is how the activity 
list relates specifically to the ranking process used in CSP contract 
approvals, if at all, and how this list relates to the CMT. NRCS should 
clarify how this list relates in this regard.

NRCS Response

    The CMT is utilized to evaluate CSP applications using a point 
based system for environmental benefits. The CMT evaluates existing and 
proposed new activities to calculate conservation performance points 
that will be used for ranking and payment purposes. No changes are made 
to the rule in response to the comment.

Comments

    One commenter encouraged NRCS to allow one application for 
producers

[[Page 31633]]

with agricultural lands that also contain NIPF. Another commented that 
the contract application requirements and ranking pool protocols for 
NIPF are not specified.

NRCS Response

    NRCS deemed necessary the separation between NIPF from agricultural 
land applications to be able to meet the legislative requirement of not 
more than 10 percent of the annual acres enrolled nationally in any 
fiscal year may be NIP. However, NIPF applicants follow the same 
application requirements and ranking protocols that agricultural land 
applications follow. No changes are made to the rule in response to the 
comment.

Ranking Process

Comments

    NRCS received nine comments related to the ranking process. The 
majority of the comments pertained to implementing CSP in a size 
neutral manner. The commenters encouraged NRCS to resist efforts that 
would place unnecessary size and income restrictions on CSP 
participation, especially if those restrictions go beyond the 
provisions Congress specifically included in the CSP authorization. CSP 
is a program that must be designed in a way that allows participants to 
be ranked and evaluated on the environmental merit of their on-farm 
activities, regardless of the overall size of their operation. One 
commenter expressed that CSP puts more emphasis on change. NRCS needs 
to be careful about what kind of change is being directly or indirectly 
promoted with tax-payer money. In the two sign-ups for the old CSP, the 
highest ranking applications were often continuous no-till row crop 
producers. With the emphasis on change, those applicants who are 
changing to no-till will rank high.

NRCS Response

    The CSP is designed to allow participants to be ranked and 
evaluated on the environmental merit of their on-farm activities 
regardless of the overall size of their operation. The CMT evaluates 
existing and proposed new activities to calculate conservation 
performance points that will be used for ranking and payment purposes. 
The CMT is size neutral ensuring that all operations, despite the size 
of each operation, have the same potential to accrue a similar number 
of points.
    NRCS is following the program's statute by crediting producers for 
the conservation performance from the existing and proposed system. In 
addition, NRCS is following the ranking factors stated in the statute. 
Three out of the four ranking criteria are related to new conservation 
activities. However, a review of the first sign-up data is being 
conducted, and any needed adjustments will be made before the next 
ranking period.

Comments

    Two commenters responded with concerns related to wildlife issues; 
one commenter expressed concern if cost is figured into the ranking 
criteria, that wildlife and forest health enhancements will be 
negatively weighted because of the installation cost, low CSP payment, 
and no cost-share opportunities available for the producer.

NRCS Response

    Cost is not a ranking factor unless there is a tie in ranking 
scores between two or more applications. When there is a tie, the 
application that represents the least cost to the program will be given 
priority. The CSP does not provide cost-share payments but rather 
compensates producers for the conservation performance.

Comments

    One commenter supports a ranking scheme with no weighting for the 
adoption of new enhancements by the producer.

NRCS Response

    NRCS is currently implementing the ranking factors without 
preferential treatment to any one factor. No changes are made to the 
regulation in response to this comment.

Comments

    One commenter recommended NRCS award points for selecting 
conservation practices that address State, regional, or national 
resource concerns such as Gulf of Mexico hypoxia, Northern Bobwhite 
Conservation, and grassland bird initiatives.

NRCS Response

    Conservation practices are used in CSP for the purpose of 
encouraging producers to meet additional stewardship thresholds. NRCS 
is evaluating options and methodologies to allow for State and regional 
adaptation of the CMT at some future point.

Conservation Measurement Tool

Comments

    NRCS received 19 comments on the CMT. Most of the comments 
requested additional conservation considerations in the CMT. NRCS 
received both positive and negative comments related to CMT and agency 
implementation. For example, one commenter expressed the CMT is an 
attempt to provide a nationwide ``level playing field'' in ranking 
applicants and determining funding status across a large number of 
resource conservation areas. For this, the NRCS deserves some 
commendation. Unfortunately, the draft tools available for review thus 
far do not give clear indications of how some of the ranking decisions 
were made, nor how points are applied to producers' activities. Another 
commented that estimation of a true baseline of environmental 
conditions before and after CSP implementation is not possible.

NRCS Response

    NRCS appreciates and understands the positive and negative comments 
on CMT. The first implementation of CMT was a learning process. Changes 
are already planned for CMT based on experiences at the field level. As 
field personnel become more familiar with the use of CMT, 
inconsistencies in its implementation will be minimized. In addition, 
NRCS will conduct additional training for field personnel on CMT to 
ensure consistent application and interpretation across the country.
    NRCS entered into an agreement with the University of Illinois to 
conduct a scientific validation to assess its performance in evaluating 
environmental benefits.

Comments

    One commenter expressed that the CMT considers the relative 
physical effects of existing and proposed conservation activities to 
estimate improvements in conservation performance. It does not measure 
true environmental benefits, e.g., tons of carbon sequestered or tons 
of soil saved.

NRCS Response

    NRCS agrees with this commenter. The CMT was developed for the CSP 
as a means of providing an ordinal ranking of applicants based upon the 
level of conservation stewardship on the applicant's operation. The CMT 
does this by asking a series of questions about the outcomes of 
agricultural and ranching practices in terms that a typical landowner 
should be able to answer. In other words, it provides a means of saying 
that the environmental outcome on applicant A's farm as a result of the 
implementation of farming and conservation activities is better than 
applicant B's. However, NRCS will explore potential future additions 
for quantitative capability to the tool. For

[[Page 31634]]

the CMT to measure benefits will require incorporating other modules 
that can measure change such as Agricultural Policy Environmental 
Extender, Voluntary Reporting of Greenhouse Gases-Carbon Management 
Evaluation Tool, Nitrogen Loss and Environmental Assessment Package, 
etc.

Comments

    Another commenter expressed that the CMT does not adequately 
encourage intensive tillage management for residue management or soil 
tilth.

NRCS Response

    CMT seeks only to judge the results of conservation actions (or 
lack thereof). The encouragement comes as applicants see what actions 
they need to take in order to rank highly or increase their level of 
payment. CMT does in fact reward applicants through increased score 
that practice tillage techniques that maintain high residue levels and 
limit soil disturbance. In addition, by choosing enhancements that 
increase residue and otherwise improve soil quality, applicants can 
further increase ranking and payment levels.

Comments

    One commenter expressed understanding that the CMT has been 
developed to determine if an applicant meets the basic stewardship 
threshold for entry into the program. The CMT should also be capable of 
assisting further in the ranking process by calculating and accounting 
for the practices of those farmers that have achieved a much higher 
level of conservation, above and beyond the entry level threshold. It 
must be remembered that many of the nation's best land stewards adopted 
and implemented these conservation practices with their own money 
because it was the ``right'' thing to do. In time, CSP will have the 
majority of the farms enrolled, but the poor land stewards must be 
aware of the successes of the best land stewards. The new CSP should 
continue to inspire farmers to be ranked among the best land stewards 
in the country.

NRCS Response

    The CMT scores the exceptional steward much higher than the 
applicant that just barely meets eligibility. NRCS acknowledges that 
the number of enhancements available and the environmental points 
granted to a ``barely eligible'' producer could result in an 
application to be ranked higher than for an exceptional steward. NRCS 
will be reviewing the stewardship eligibility levels for each resource 
concern to ensure that good and poor stewards are properly indentified. 
This could ultimately have some effect on who is eligible for the 
program and better identify the good steward.

Comments

    One commenter recommended the CMT needs to better recognize and 
score certain practices. For example, terracing is a conservation 
practice that was advocated for decades by the Soil Conservation 
Service and is still part of the FOTG. Terracing is a vital component 
in controlling water erosion, especially where residue production is 
low. No-till or cover crops are not always an acceptable substitute for 
terraces, and CMT scoring must recognize that fact. Producers who have 
installed and farmed with terraces have incurred significant costs in 
additional time, machinery, and labor requirements. Ignoring both the 
benefits and producer costs, the CMT recognizes terracing with at most 
only 45 points (questions 13 and 14) and specifically only 16 points 
(question 14).

NRCS Response

    While NRCS recognizes the significant contribution that some 
applicants have made to improve the farming landscape by installing 
terrace systems, CMT is designed to judge the conservation outcome of 
activities rather than the capital and labor input to install the 
practices. Farmers make choices based on the land they farm, the crops 
they choose to grow, and other site-specific factors. In most cases, 
there are multiple paths to achieve a good conservation outcome. The 
CMT does not try to define the path, rather it tries to judge the 
result of the choices the farmer makes. The farmer is free to make 
these choices based on their operational goals.

Comments

    One commenter opined that the CMT is particularly flawed in being 
heavily weighted towards practices that are impractical for some 
regions. Although it is recognized that the CSP is outcome based, it 
will not further national conservation efforts to exclude some regions. 
The CMT needs to be expanded with questions and points that match a 
reasonable conservation outcome for a given region. It also needs a 
mechanism to omit questions inappropriate for a particular region.

NRCS Response

    NRCS will take this concern under advisement and look for 
opportunities for States or regions to customize the CMT within the 
constraints of a national program.

Comments

    One commenter questioned in what manner does the CMT account for 
the costs (or lack thereof) of given practices/enhancements? Question 
11 provides up to 64 points for the use of a no-till system. However, 
in many instances no-till systems are actually adopted for cost 
savings. This is in conflict with the language in section 1470.24 and 
with World Trade Organization requirements. Given these payment 
requirements, how do practices/enhancements such as no-till (which is 
potentially income enhancing) warrant high CMT points when significant 
conservation practices such as terracing (which clearly has high costs) 
are assigned much lower point values?

NRCS Response

    NRCS developed CMT to determine the environmental benefits points 
using conservation physical effects and does not take into account 
costs of activities. The payment process takes into account costs 
incurred, income foregone, and to the extent practical, environmental 
benefits.

Comments

    One commenter expressed that the CMT asks no questions related to 
strategies for the management of herbicide resistance in weeds. With 
reduced till/no-till systems relying on the availability of effective 
herbicides (especially glyphosate in which resistance is an increasing 
problem) this topic must be addressed.

NRCS Response

    The CMT includes a section on pest management with the highest 
scoring being the use of an integrated pest management plan (IPM). The 
IPM can include a host of activities that range from the use of 
herbicides to avoidance techniques that rely on management strategies. 
This plan provides sufficient options to address herbicide resistant 
weeds and reward applicants that choose environmentally sound options 
without CMT prescribing the necessary treatment.

Comments

    One commenter responded that other than referencing residue cover 
at planting, the CMT asks no major questions about management for the 
control of wind erosion. This is an example of an issue where regional 
practices/enhancements must be more fully addressed by the CMT. This 
commenter also expressed that despite

[[Page 31635]]

the otherwise heavy emphasis on plant diversity and cover crops, the 
CMT does not recognize the identical role that facilitating postharvest 
volunteer plant growth provides in wheat-fallow rotations.

NRCS Response

    NRCS will take the comments under advisement to ensure that 
additional clarification is included in the CMT.

Comments

    One commenter recommended that NRCS refine the CMT to allow for the 
creation of more precise resource concern categories within the land 
use category of forest land. This would allow States to set priorities 
for conservation on forest land in the same manner that they do for 
other land use types when selecting resource concerns and priority 
resource concerns for cropland, rangeland, or pasture.

NRCS Response

    At this time NRCS does not anticipate changing the micro resource 
concerns that are considered by CSP. Cropland, pastureland, rangeland, 
and forest land are evaluated across the same 27 micro resource 
concerns.

Ranking--Environmental Benefits

Comments

    NRCS received 102 comments on the ranking for environmental 
benefits. The majority of the comments pertained to organic farming and 
livestock systems and ranking applications based on environmental 
outcomes. NRCS received a few comments in support of small farms. The 
comments are summarized as follows:

Organic Production

    NRCS received 43 comments related to organic production. The 
majority of these commenters expressed that organic crop and livestock 
systems should get extra consideration because of their environmental 
benefits. One commenter requested NRCS make the rules flexible enough 
to fit the various needs of organic farmers, since their overall system 
is beneficial but does not always fit the narrow guidelines for 
conventional farming. A number of commenters expressed that organic and 
those transitioning into organic should be treated similarly. Ranking 
and payment point values should be roughly equivalent for ongoing 
organic management and new conversions or transition to organic. 
Another commenter expressed that the points given to organic farmers 
are quite fair, and it is apparent that many organic farming practices 
are sustainable. Those practices may be adopted, at least in a modified 
form, by non-organic farms as a way to become more sustainable and 
protective of the environments.
    Not all the commenters supported giving organic and livestock 
producers special consideration. One commenter expressed that organic 
and livestock practices should not be given higher ranking or points 
because it is organic. The end result is what matters; if conventional 
agriculture or organic agriculture accomplishes the same result, the 
reward should be the same. Another commenter expressed that organic 
farming is not sustainable, and the added tillage to control weeds only 
increases soil erosion. The use of manure encourages phosphorus run 
off, and there is not scientific proof that their producer is any 
better for humans than that produced with no-till.

NRCS Response

    The CMT evaluates the impacts of organic systems in the same manner 
as for non-organic systems. All producers are required to meet the same 
stewardship threshold for each of the resource concerns. The CMT 
evaluates the environmental benefits provided by an operation 
regardless of operation size, land use, or production system.

Environmental Outcomes

Comments

    NRCS received 36 comments recommending that CSP applications be 
ranked and paid based on environmental outcomes. Examples of specific 
comments include: Conservation strategies that yield the largest 
environmental performance and provide multiple benefits should receive 
priority ranking; it would be great if subsidy payments would shift 
towards CSP; effective application ranking that prioritizes enrollment 
of producers promising to do the most to address the important resource 
concerns in a particular area will be critical to maximizing the 
environmental benefits CSP can deliver; and reward good outcomes such 
as enhanced wildlife habitat, better watershed protection, and higher 
regard for air quality. These outcomes should be rewarded whether the 
conservation practice was adopted this year or in the past so that 
farmers with good practices are not punished for starting conservation 
early.

NRCS Response

    The CMT will credit producers with higher points if their existing 
and proposed system is addressing the priority resource concerns 
identified by the State for the geographic area they are competing in. 
In addition, existing and proposed activities' performance are 
calculated by resource concern for each land use ensuring the producers 
are rewarded for multiple benefits they are producing.

Small Farms/Farm Size

Comments

    Two commenters urged NRCS to encourage farms of all sizes to 
practice conservation methods on their farms.

NRCS Response

    NRCS promotes conservation methods on all farms. The program is 
designed in a way that allows participants to be ranked and evaluated 
on the environmental merit of their on-farm activities, regardless of 
the size of their operation.

Comments

    NRCS received comments expressing disappointment from applicants 
whose applications were not selected for participation. Commenters 
indicated their applications were rejected due to their size, lack of 
sufficient income, or cropping history.

NRCS Response

    The CSP has no minimum income or size limitation. However, the CSP 
statute provides that land used for crop production after June 18, 
2008, that had not been planted, considered planted, or devoted to crop 
production for at least 4 of the 6 years preceding that date is not 
eligible. Certain exceptions apply. NRCS recommends the commenters 
contact their local NRCS office for additional clarification.

Resource-Conserving Crop

Comments

    One commenter recommended mechanical row crop cultivation with 
equipment leaving high levels of surface residue should be assigned 
some points when it results in a reduction of herbicide use. Another 
commenter recommended NRCS give more credit for spring planted small 
grains with an under seeding of a legume or legume/grass mix. This is a 
common practice among sustainable farmers here in the Midwest.

NRCS Response

    CMT considers residue amounts and the use of pesticides (including 
herbicides) separately. The applicant has the opportunity to be scored 
for high residue levels under questions 2 and 11. Pesticide related 
questions are dealt with under question 15. In the case described 
above, high residue

[[Page 31636]]

levels could be part of an IPM plan to reduce the application of 
herbicides.
    The use of a nurse crop of grass or legume should be credited under 
question 3 as a cover crop depending upon how it is handled after the 
small grain is harvested and under question 4 for increased crop 
diversity. It might also gain points from question 12 for wildlife 
considerations, again depending on how it is handled after harvest.

Fallow Practices

Comments

    One commenter recommended that fallow practices are not all the 
same and should not all be ranked the same. The commenter suggested a 
way be established to account for conservation fallow such as chemical 
fallow. In arid agricultural regions, the purpose of this fallow type 
is to idle the land for a growing season, and conserve and even 
recharge soil moisture while maintaining a cover of previous crop 
stubble serving to protect the soil from wind and water erosion.

NRCS Response

    NRCS recognizes that fallow with high residue was not accounted for 
in the current version of CMT. This oversight will be corrected for 
future sign-ups.

Wildlife Habitat/Riparian Buffers

Comments

    One commenter requested riparian buffers wider than 50 feet should 
be rewarded. Currently the highest ranking is for buffers with a width 
of 33 feet or 2.5 times the stream channel width, but wider buffers 
capture more nutrients and provide real wildlife habitat.

NRCS Response

    Water quality research has shown that most of the water quality 
benefits are attained in buffers in the first few yards. While we 
recognize that additional width is beneficial, in order to reduce the 
complexity of the CMT questions, we chose to craft question 7 under the 
Water Bodies/Water Courses section to ask about the minimum width 
necessary for water quality. Additionally, question 7 in Cropland and 
question 5 in Pasture will reward an applicant for buffers that are 
wider than the minimum for water quality. NRCS is not changing the 
riparian buffer requirements.

Comments

    The buffer scoring should also reward higher levels of forest 
canopy in regions where forests were the predominant land cover prior 
to conversion to agricultural production. The current version does not 
differentiate between forests and shrubs or grasses.

NRCS Response

    In the CMT, Questions 7 and 8 on Water Bodies/Water Courses ask 
questions about the quality of the vegetation in riparian buffers. 
Buffers that are composed of native vegetation should be scored higher 
than those that have non-natives.

Comments

    Scoring for manure/pesticide application setbacks should be tiered 
to reward greater distances from water bodies. The current version only 
rewards setbacks greater than 33 feet. Higher scores should be 
available for setbacks greater than 100 feet (<greek-i>9 on Water 
Bodies/Water Courses Existing Activity Conservation Performance).

NRCS Response

    Water quality research has shown that most of the water quality 
benefits are attained in buffers in the first few yards. While we 
recognize that additional width is beneficial, in order to reduce the 
complexity of the CMT questions we chose to craft question 9 under the 
Water Bodies/Water Courses section to ask about the minimum width 
necessary for water quality.

Comments

    One commenter requested NRCS provide special consideration to the 
environmental benefits of protection of wildlife habitats and 
corridors, promoting biodiversity and protecting species from the 
dangerous effects of overuse of pesticides.

NRCS Response

    The CMT accomplishes this through a series of questions that 
address (1) the occurrence of native vegetation in buffer areas, (2) 
the current level of management of pesticides, and (3) additional 
enhancements the applicant will apply that will reduce pesticide 
exposure to the environment and improve the quality of wildlife 
habitat. Applicants that do all of these activities to protect and 
benefit wildlife should score well in the CMT.

Comments

    A third commenter expressed that the commenter devoted many areas 
of their farm to providing habitat for reptiles and amphibians. A true 
environmentalist works from the bottom of the food chain up. These 
types of land stewards should be rewarded for protecting this base, not 
penalized.

NRCS Response

    There are many opportunities in the CMT to recognize fish and 
wildlife activities an applicant is currently implementing, as well as 
many opportunities for enhancements to improve fish and wildlife 
habitat on a farm.

Pollinators

Comments

    NRCS received requests that landowners be given credit in the 
scoring system for pollinator-related values of conservation practices 
that provide habitat for native and managed pollinators. Two examples 
are (1) the ecosystem services that native pollinators provide, and (2) 
giving beekeepers permission to place managed hives on their land to 
take advantage of natural forage. To the extent innovative approaches 
are developed that offer premium CSP payments, the same principles 
could apply. The scoring system could also be weighted to provide 
additional value to practices that provide multiple environmental 
benefits.

NRCS Response

    NRCS recognizes the value of pollinators to agriculture and the 
environment. NRCS agrees to make changes in the CMT to specifically 
include pollinator habitat in areas that are managed for wildlife 
habitat. This will provide scoring in the CMT for those applicants that 
are managing non-cropped and non-pastured areas for pollinator habitat.

Comments

    Another commenter recommended NRCS consider awarding additional 
points for selecting additional conservation practices that address 
State, regional, or national resource concerns.

NRCS Response

    The CMT currently does this by rewarding applicants that choose to 
address additional State priority resource concerns during the life of 
the contract.

Other

Comments

    One commenter requested NRCS consider ALL the environmental 
ramifications AND the food ramifications of its decisions. Another 
commenter expressed that CSP should continue to reward farmers who are 
farming at a high stewardship threshold and should provide an incentive 
to maintain those high standards.

[[Page 31637]]

NRCS Response

    NRCS is following the legislation and program purpose. The CSP is a 
new program with a new purpose. The program is a voluntary conservation 
program that encourages producers to address resource concerns in a 
comprehensive manner by:
    (1) Undertaking additional conservation activities; and
    (2) Improving, maintaining, and managing existing conservation 
activities.
    Applicants that are farming at high resource stewardship levels 
will score very well on the existing activities which will be reflected 
in program payments. NRCS is not authorized to provide payments solely 
for improving, maintaining, and managing conservation activities in 
place on the operation. Conservation programs are not authorized to 
make incentive payments. Under CSP, participants are paid for 
conservation performance; the higher the operational performance, the 
higher their payment will be.

Comments

    Another commenter expressed that a practice designed to achieve 
wildlife or other conservation practices could generate significant 
benefits for native and managed pollinators by integrating modest 
enhancements such as selections of pollinator-beneficial plants. 
Similarly, conservation efforts for native and managed pollinators will 
advance other natural resource objectives including the new natural 
resource challenge of mitigating and managing the adverse impacts of 
climate change.

NRCS Response

    A review of CSP enhancements and practices is currently underway 
with recommended changes and improvements to be incorporated into the 
next ranking period. Of the 82 CSP enhancements that were available 
during the first sign-up period, 27 included a wildlife focus or 
purpose. In addition, over 70 percent of the funding pools identified 
wildlife related issues as one of their priority resource concerns. No 
changes are made to the rule in response to these comments.

Comments

    One commenter encouraged NRCS to consult with USFS on analysis of 
environmental benefits. Considerable data and research guidance on such 
matters is available from the USFS State and private forestry, as well 
as the recently established USDA Office of Ecosystem Services and 
Markets.
    One commenter recommended NRCS give additional weight to projects 
that yield significant public benefits beyond the boundaries of the 
enrollee's property. For example, NRCS could develop a suite of 
priorities that pre-qualify proposals that achieve one or more of the 
following: Nitrogen and sediment run-off benefits in targeted 
watersheds.

Greenhouse Gas Sequestration Benefits

    One commenter expressed that some areas of resource concerns seem 
undervalued. For example, the fertilizer decisionmaking questions in 
the operation profile focus on soil nutrient tests, but the California 
perennial crop growers have long used the more sophisticated plant 
tissue testing methods which are not mentioned until you reach the 
``enhancement'' section.
    One commenter requested NRCS encourage proposals/awards to farms/
farmers that make a contribution to lessen C0<INF>2</INF> emissions 
from sunlight oxidizing organic material from bare soil on America's 
Farms.

NRCS Response

    CSP currently rewards farmers who limit tillage and keep the soil 
covered either with residue or cover crops and practice advanced 
nutrient management techniques. This is done by questions in the CMT 
and through enhancements that are targeted to these concerns.

Application and Ranking--Weighting of Ranking Factors

Comments

    NRCS received numerous comments regarding policy options for the 
weighting of ranking factors. The comments were evaluated and given 
consideration in the development of the CEA. To add clarity to the 
issue of weighting ranking factors, NRCS amended 1470.20(d) to read, 
``Weighting of ranking factors. To the extent CSP objectives, including 
implementing new conservation, are not being achieved as determined by 
the Chief, NRCS will adjust the weighting of ranking factors in order 
to place emphasis on improving and adding conservation activities.'' 
Additionally, NRCS adds a new paragraph (e) regarding State and local 
priorities that enables the Chief to develop and use additional 
criteria for evaluating applications to ensure national, State, and 
local priorities are effectively addressed.

Weight Between Existing/Additional Conservation Activities

Supporters of Equal Weighting

    Overall, commenters expressed concern over how NRCS will weight new 
and existing practices. Numerous comments were received expressing 
concern that if NRCS selects those who have considerable conservation 
measures to adopt over those who have actively been practicing higher 
levels of stewardship, NRCS will be punishing those who are practicing 
good stewardship. A recurring theme within the comments is that NRCS 
should not discriminate against early adopters and that the sole 
measure should be the environmental benefits secured by the total 
conservation system regardless of the timing of adoption of various 
parts of the system.
    Thirty-one comments were received expressing that CSP should 
equally balance the benefits of both existing and new practices. The 
most important aspect of CSP needs to be the measure and rewarding of 
conservation benefits secured by a farm regardless of the timing or 
adoption of various conservation measures or practices. Farmers who 
have adopted conservation measures should get the same incentive as a 
farmer who newly adopts conservation measures and agrees to continue 
them into the future. This policy will reward farmers who have been 
doing good things for the environment, it will give them an incentive 
to continue the conservation practices, and it will encourage 
surrounding farmers to do more conservation to qualify for CSP 
incentives. Ultimately this will result in better conservation of our 
environment overall. Another commenter who supported this position 
recommends existing and new practices have equal merit in determining 
participation because existing practices require intensive management 
to sustain them.
    Similarly, 45 commenters expressed that farmers applying to 
participate in CSP should be ranked on environmental outcomes 
regardless of whether the conservation practice was previously adopted. 
A system that emphasizes the existing environmental outcome should be 
the ultimate goal.
    Two commenters requested that conservation enhancements score 
higher than related conservation practices, and that point values for 
existing conservation score equally with new conservation. Moreover, 
the baseline portion of the CMT should allow farms to accumulate points 
for the full range of conservation practices and

[[Page 31638]]

enhancements that are in the non-baseline portion of the CMT.

NRCS Response

    NRCS acknowledges the concerns and will seek to clarify that the 
CSP is not penalizing good stewards of the land. CSP is a competitive 
program that rewards applicants for their existing conservation system 
as well as for the proposed increased conservation performance. NRCS 
has designed the program as presented in the 2008 Act. The ranking 
factors used to evaluate an applicant's conservation performance are 
provided by the legislation, in which three out of the four factors are 
crediting producers for additional conservation activities. NRCS 
recognizes this is a significant concern for good stewards of the land, 
and while reviewing the first sign-up data, will consider all the 
comments made about this topic. NRCS will take in consideration all 
comments received for future analysis and if adjustments are needed, 
will be made before the next ranking period.
    It is important to emphasize that each applicant's existing 
conservation activities are evaluated and used to determine if they 
have met the minimum stewardship threshold for resource concerns. Those 
applicants with a high level of conservation are more likely to exceed 
the minimum stewardship threshold on more resource concerns resulting 
in a higher ranking score, increasing their chances of being selected 
for program funding.
    Good stewards are encouraged to adopt additional conservation 
activities while increasing the environmental benefits they are 
providing which in turn will result in a higher ranking score and 
increase their chances of being selected for program funding.
    NRCS acknowledges the concerns and will seek policy options that 
ensure that CSP does not penalize good stewards of the land.

Supporters of More Weight on Additional Practices

Comments

    Not all commenters supported the equal weighting concept. Five 
commenters supported placing greater weight on additional practices. 
One commenter expressed that both the law and conference report, 
``encourage the Secretary to place emphasis on improving and adding 
conservation activities.'' Therefore, NRCS should follow this guidance 
by placing an emphasis in the ranking criteria for new practices 
adopted with less weight for existing practices. Another urged that 
greater emphasis and valuation be given to scoring additional 
conservation practices and the increased outcomes they will provide. 
The third commenter urged implementation of the CSP consistent with 
statutory intent, with emphasis on rewarding landowners for additional 
conservation enhancements. Habitat loss and degradation is a major 
identified cause of decline for both native and managed pollinator 
populations. CSP provides economic reward to landowners to increase 
habitat as part of their farming, ranching, and stewardship actions.
    Several comments suggested that more weight should be on existing 
practices. One commenter recommended that the program and its benefits 
be geared to those who have taken the steps to conserve their resources 
and that other USDA programs are available for those wanting to install 
new practices. Three others offer that the most cost-effective 
conservation practices are the ones already installed; therefore, early 
adopters should receive credit and not be penalized.

Other Comments

    One commenter offered that during the most recent CSP application 
period, it was common for producers to have already enacted several of 
the enhancements listed. In many cases, compensation and recognition 
for these conservation efforts farmers have adopted on their own was 
not possible. There should be a way when establishing the producer's 
conservation activity baseline with the CMT that the questions asked 
and points offered correspond with the enhancements offered. The 
producer then would get credit in ranking factor 1 for those 
enhancements already adopted and correspondingly would be able to add 
them as enhancements and receive credit if they are not in practice.
    One commenter recommended that if a producer receives credit for a 
practice as an enhancement, then a producer should receive the same 
credit for the practice if it is already implemented on their 
operation.
    One commenter suggested that there needs to be a way within the CMT 
to address and give credit to farmers who have been extremely active in 
adopting conservation practices. If a practice is listed as an 
enhancement, then the producer that has already adopted that particular 
practice should receive equal points or credit within the CMT. If the 
CMT can be used to estimate the existing and proposed conservation 
performance, it should therefore be able to credit existing 
conservation practices.

NRCS Response

    NRCS has thoroughly reviewed the questions in the CMT and the 
enhancements. Almost all of the enhancements are reflected either 
directly or indirectly in the CMT. The few that are not are 
inconsequential in terms of CMT scoring. Therefore, an applicant's 
current level of stewardship, even if it includes enhancement 
activities, should be reflected in the CMT score.

Comments

    Seven commenters expressed that ranking and payment point values 
should be roughly equivalent for ongoing organic management and new 
conversions or transition to organic. Another recommended NRCS credit 
existing organic system plans with a specific baseline question and 
ranking score for existing conservation activities.

NRCS Response

    The CSP evaluates each applicant's conservation activities as to 
their impact on seven resource concerns plus energy. No two systems 
will have the exact same impact on all resource concerns. Giving equal 
environmental benefits to an established organic system and one that is 
in transition would be penalizing the established organic producer at 
the expense of the one in transition. While over the course of time the 
transition farmer might catch up, the CSP rules require the 
conservation evaluation to be done on the system at the time of 
application. This same concept would apply to an organic system plan. 
While they all may meet the national organic plan rules, they all do 
not provide the same level of environmental benefits.

Comments

    One commenter recommended that CSP continue to require additional 
practices, especially when the farm operator already is practicing 
multiple conservation practices.

NRCS Response

    The CSP offers a defined, limited suite of management practices for 
the explicit purpose of encouraging producers to meet additional 
stewardship thresholds.

Comments

    One commenter expressed that there are point values that are off by 
very large factors, well beyond any possible justification based on 
cost. For instance, NRCS estimates the payment range for newly adopted 
resource-conserving crop rotations at $12-16 per acre, yet the payment 
for an existing resource-

[[Page 31639]]

conserving crop rotation as reflected in the baseline assessment points 
could be as low as $1 per acre. This is a fundamental flaw in the 
current CMT that needs to be quickly addressed and remedied before the 
FY 2010 enrollment process gets underway. We have previously suggested 
different ways to fix this problem to the agency, and we are very 
interested in continuing to pursue practical solutions.

NRCS Response

    NRCS respectfully disagrees with the comments. The contrast between 
payment for adopting a resource-conserving crop rotation and existing 
conservation activities is because they are compensated through two 
different payment types, not because CMT point values are off. By 
statute, CSP offers participants two possible types of payments:
    (1) Annual payments for installing and adopting additional 
activities, and improving, maintaining, and managing existing 
activities; and
    (2) A supplemental payment for the adoption of resource-conserving 
crop rotations.
    NRCS received significant feedback from national, State, and 
regional organizations that emphasized the crop rotation provision's 
importance to the overall success of the program and the need to 
implement it in a comprehensive, meaningful manner. NRCS also found 
direction in the Farm Bill Joint Explanatory Statement of the Committee 
of Conference, which provided guidance that, ``The Managers intend for 
the supplemental payment to encourage producers to adopt new, 
additional beneficial crop rotations that provide significant 
conservation benefits.'' With consideration to that feedback, NRCS used 
variable cost and price information to compare the difference in net-
returns between ``conventional'' and ``resource-conserving'' crop 
rotations and arrive at the supplemental payment rate. Based on past 
program experience, NRCS believes this approach provides the level of 
meaningful compensation needed to encourage producers to adopt 
additional resource-conserving crop rotations and effectively use this 
aspect of the program.

Comments

    This feature is of critical importance to sustainable and organic 
farming. The ranking and payment system, which is currently equally 
weighted between existing and new superior conservation, should be 
changed. USDA has indicated that serious consideration is being given 
to giving more weight to the adoption of practices, resulting in 
smaller enrollment chances and smaller payments for farmers already 
practicing superior land stewardship.

NRCS Response

    NRCS is currently evaluating the first sign-up data and will make 
adjustments needed to the program to ensure the program objectives are 
met.

Stewardship Threshold

Comments

    NRCS received nine comments on the topic of stewardship thresholds. 
One commenter encouraged forest landowners to participate in CSP and in 
general believe that conservation assistance should be available for 
farm, ranch, and forest lands. Eligible participants should meet the 
stewardship threshold for one resource concern at the time of their 
application. The commenter believes that this approach will allow more 
participants to be eligible for the program.
    Two commenters recommended that the applicant should be meeting the 
stewardship threshold on a minimum of three resource concerns that 
includes at least one priority concern. Requiring producers to meet at 
least three of the nine potential resource categories is more 
commensurate with the goal of encouraging producers to adopt a 
rewardable level of conservation on their farmed lands.
    One commenter expressed that meeting the stewardship threshold and 
one priority resource concern is not adequate unless that priority 
resource concern includes wildlife. Wildlife enhancements provide 
multiple resource benefits to soil, water, and wildlife as well as 
greater conservation return for the dollars invested. Another commenter 
thought the level was adequate, providing it is considered an entry 
level requirement for the program. The entry level must be low, but at 
the same time not discourage the best farmers in America.

NRCS Response

    No changes are made to the regulation in response to this comment. 
The statute provides that to be eligible to participate in the CSP, a 
producer will demonstrate, to the satisfaction of the Secretary, that a 
producer, at the time of the contract offer, is meeting the stewardship 
threshold for at least one resource concern and would, at a minimum, 
meet or exceed the stewardship threshold for at least one priority 
resource concern by the end of the stewardship contract.
    NRCS does not have authority to require a producer to meet a 
specific priority resource concern to participate in the program. The 
CSP authorizing language provides that three to five priority resource 
concerns are identified at the State level for each geographic area or 
region, in consultation with the State Technical Committee, as a 
priority for a particular watershed or area of the State.

Comments

    One commenter requested each State be given the authority to 
increase the stewardship threshold if they wish to have a more targeted 
impact to achieve particular conservation goals.

NRCS Response

    The CMT is not currently designed to allow States to make 
adjustments on scorings, thresholds, questions, or activities. The tool 
has been normalized and calibrated and to enable State access, will 
require a major rebuild of the tool that will also impact other program 
processes. However, NRCS will explore options to allow States to make 
adjustments as we move into the future with the program.

Comments

    One commenter expressed that the statute provides a choice to the 
applicant to address one or more resource concerns as a condition of 
eligibility and requires them to choose one more priority resource 
concern to address either at the outset or during the first contract 
term, but does not provide discretion to the Department to require 
more. Therefore, the commenter does not recommend the agency consider 
changing the interim final rule provision.

NRCS Response

    NRCS agree with the commenter and intends to maintain the provision 
in the interim final rule as stated in the legislation.

Comments

    One commenter questioned how high is the stewardship threshold for 
the resource concern or priority resource concern?
    Second, how comprehensive is the level of treatment required for 
each resource concern and priority resource concern, and is it truly 
based on resource outcomes and conditions?

NRCS Response

    NRCS set the threshold numbers for each resource concern by running 
a nation-wide test on a sampling of farms. NRCS Conservationists judged 
the level of resource treatment on each farm, and the CMT was then run 
on each of the

[[Page 31640]]

farms. The resulting scores were compared to the level of treatment 
that was determined by the Conservationist. Threshold scores were then 
set at the average of the scores for the farms that were determined to 
be adequately addressing the resource concerns on the farm, what NRCS 
refers to as the Resource Management System level of treatment.

Comments

    Third, is it possible that the priority resource concern might be 
the same as the resource concern? The answer to each of these questions 
will inform our understanding of whether the bar for participation in 
CSP has been set at an appropriate level.

NRCS Response

    The resource concern and priority resource concern used to meet the 
stewardship threshold criteria must be different for the same land use. 
For example, an applicant is only meeting one resource concern, which 
also happens to be a priority resource concern at the time of 
application. That resource concern would meet the ``one resource 
concern at the time of application'' criterion. However, a different 
priority resource concern would need to be used to meet the ``one 
priority resource concern at the time of application, or by the end of 
the stewardship contract'' criterion.

Comments

    One commenter expressed support for using EQIP practices that 
directly contribute to a CSP participant's ability to meet or exceed 
stewardship thresholds. It will both allow CSP to function properly and 
be an excellent use of EQIP, because the funds will be directed to 
meeting the stewardship threshold for priority resource concerns for 
the State or geographic area within the State. The commenter requested 
NRCS design a process that eliminates redundancy and minimizes 
paperwork in the sign-up process. The commenter urged NRCS to have this 
process ready for the 2010 sign-up period.

NRCS Response

    NRCS agrees to address the recommendation by adding language to 
section 1470.7(c) as follows:
    ``CSP encourages the use of other NRCS programs to install 
practices that are required to meet the agreed-upon stewardship 
threshold only if the practice is not compensated through CSP.''

Resource Concerns

Comments

    NRCS received several comments related to resource concerns. NRCS 
should include consideration of habitat and forage needs for both 
native and managed pollinators, requiring producers to address multiple 
resource concerns fits within the purpose of CSP to promote 
comprehensive conservation planning and to encourage producers to adopt 
new activities or maintain existing ones. NRCS should include the 
addition of a special provision for first-year beginning farmers or 
ranchers in the eligibility section (1470.20(b)(1) concerning resource 
concerns.

NRCS Response

    Regarding eligibility, NRCS decided to adopt the statutory 
provision without additional restrictions in order to attract a broad 
spectrum of eligible producers. NRCS does have flexibility with how it 
ranks applications. The greater the number of resource concerns the 
applicant addresses and those planning on being addressed, increases 
the ranking score. Data from the first sign-up shows that 99 percent of 
applicants are meeting more than one resource concern at the time of 
application.

Comments

    Another commenter expressed concern that the practices that rank 
``very high'' seem targeted at Midwestern grain producers.

NRCS Response

    No changes are made to the regulation. NRCS keeps the language in 
the interim final rule to be consistent with the language in 
legislation. Practices are scored based on the environmental impact 
they have across 27 micro-resource concerns regardless of physical 
location. Further, program allocations and ranking pools are 
established and operated at the State level. Applications do not 
compete across State boundaries or ranking pools.

Pollinators

Comments

    Several comments were received related to pollinators. Commenters 
asked NRCS to seek innovative ways in the CSP to maximize forage 
outcomes for honey bees and other pollinators; place emphasis on 
rewarding landowners for additional bee forage; enhance planting mixes 
to include plants that provide optimal forage for honey bees; and urged 
NRCS to allow planting mixes to be enhanced at the national and State 
levels by including plants suitable for each region that provide 
optimal forage for honey bees. Additionally, NRCS received a number of 
specific recommendations to address the habitat needs of native and 
managed native pollinators.

NRCS Response

    NRCS welcomes suggestions on additional enhancements from all 
partners. NRCS solicited input from a wide source of expertise and will 
continue to do so for future enhancements. NRCS will evaluate the 
recommended enhancements and will incorporate those viable for future 
ranking periods.

Comments

    One commenter urged the Chief to direct the development and 
integration of appropriate additional criteria that adequately reflect 
the objectives of the new conservation provisions of the Farm Bill for 
native and managed pollinators as an important part of ensuring that 
national, State, and local conservation priorities address resource 
needs related to native and managed pollinators and the agriculture 
pollination and ecosystem services they provide.

NRCS Response

    No changes are made to the regulation in response to this comment. 
NRCS will modify the questions in the CMT to specifically mention 
pollinator habitat as part of these questions. Pollinator habitat can 
be considered when answering the inventory questions, specifically 
question 7 under cropland and question 5 under pasture. In addition, 
the program offers an enhancement to Establish Pollinator Habitat for 
cropland, pastureland, rangeland, and forest land. In the 2009 sign-up 
this enhancement was in the top ten most popular enhancements selected 
by applicants.

Priority Resource Concerns

Comments

    NRCS received numerous comments on the topic of priority resource 
concerns. In the interim final rule, NRCS requested specific comments 
on whether wildlife should be a required resource concern, and as a 
result, many of the comments focused on wildlife. NRCS received the 
following feedback: NRCS should establish wildlife as one of the 
national ranking priorities by incorporating State wildlife action 
plans in the CSP ranking tool and require producers to address multiple 
resource and priority concerns, rather than just requiring all States 
to select ``wildlife'' as a priority resource concern. NRCS

[[Page 31641]]

should clearly require States to be more strategic by identifying 
particular indicator species or suites of species and specific habitats 
as priority resource concerns for at least one geographic area within 
the State. Forty-one respondents identified biodiversity and fish, 
wildlife, pollinator, and beneficial insect habitat to be specifically 
added as a priority resource concern; priority resource concerns 
related to the needs of native and managed pollinators should be 
incorporated, it is important that fish, forest, and wildlife resources 
be given adequate priority and attention; the agency should strongly 
encourage but not absolutely mandate that one or more wildlife habitat 
resource concerns be included among the up to five priority resource 
concerns in each watershed or State; NRCS should identify forage and 
habitat for agriculture pollinators--honey bees and native 
pollinators--as a national priority resource concern; State offices 
should be encouraged to make a similar determination, especially in 
States or regions where agriculture pollination services are important 
and where forage deficits are recognized as a limiting factor for 
healthy honey bees and native agriculture pollinators.

NRCS Response

    Although the commenters preferred to include wildlife as a priority 
resource concern, NRCS has determined the decision will continue to be 
made at the State level in consultation with the State Technical 
Committee. NRCS prefers to have the resource concerns determined at the 
State level by people more familiar with the local issues. NRCS 
evaluated data from the initial program sign-up and determined it is 
not necessary to identify wildlife as a priority resource concern at 
the national level. Seventy-seven percent of the funding pools 
identified wildlife as one of the priority resource concerns. With such 
a high percentage of pools recognizing the importance of wildlife, the 
national designation seems unnecessary. Therefore, NRCS encourages 
commenters and others to voice their concerns or recommendations to the 
NRCS State Conservationist and the State Technical Committee in their 
respective State as to which resource concerns should be a priority in 
their State or area of the State.

Comments

    Commenters questioned specific priority resource concerns selected 
by States.

NRCS Response

    NRCS has chosen broader resource concerns categories which is 
consistent with the agency planning procedures. NRCS historically has 
planned to address soil, water, air, plants, and animal concerns. The 
recommended priority resource concerns fall under one or more existing 
categories that are used for CSP. NRCS encourages commenters and others 
to voice their concerns or recommendations to the NRCS State 
Conservationist and the State Technical Committee in their respective 
State as to which resource concerns should be a priority in their State 
or area of the State.

Comments

    NRCS received suggestions regarding broad priority resource concern 
categories for State selection. Another commenter recommended 
biodiversity promoting Prairie Reconstructions (50 species or greater) 
as a priority resource concern.

NRCS Response

    NRCS welcomes the suggestions to improve CSP and will consider 
recommendations related to priority resource concern categories. NRCS 
has included Prairie Reconstructions in the resource concerns under the 
Plants category. No changes are made to the regulation in response to 
this comment as the regulation does not include language on each 
priority resource concern.

Comments

    Another commenter recommended farm energy efficiency and the 
reduction of direct and indirect fossil fuel based energy in 
agriculture needs to be more emphasized as a priority resource concern.

NRCS Response

    NRCS already considers farm energy efficiency and the reduction of 
fossil fuels under the Energy category. No changes are made to the rule 
in response to the comment.

Comments

    One commenter recommended that farms in impaired watersheds, listed 
by the EPA under section 303(d) of the Federal Clean Water Act, should 
be required to address water quality as one of their priority resource 
concerns. Another recommended, in addition to the priority resource 
concerns that are identified by the NRCS State offices, codify a suite 
of criteria tailored to ensure that CSP addresses targeted regional and 
national resource priorities that are inherently cross boundary and 
multi-jurisdictional; for example, projects that produce measurable 
downstream outcomes in reducing nitrogen and sediment run-off in 
targeted watersheds (i.e. the Chesapeake Bay) that are shared by 
multiple States or projects that have measurable benefits in 
sequestering or preventing the release of N20 and other greenhouse 
gasses.
    Three commenters recommended NRCS set priorities on specific 
resource concerns at the State and local levels in close coordination 
with the landowners that the program is targeted to serve. Such 
coordination will provide the best opportunity for CSP to fulfill 
Congress' intent of targeting the conservation needs of working 
agricultural lands and their operators.
    One commenter encouraged strategic emphasis on ``at least'' one 
priority resource concern.

NRCS Response

    No change is made to the regulation in response to these comments. 
The priority resource concerns are selected at the State level. States 
use a variety of resources to determine the priority resource concerns. 
NRCS agrees that the 303(d) list of waters reports on streams and lakes 
could be a good reference to assist States in determining the priority 
resource concerns for their geographic areas. In the initial CSP sign-
up, 89 percent of the funding pools listed water quality as one of the 
priority resource concerns.

Comments

    One commenter expressed, with the exception of unusual geographic 
circumstances where the consensus is that one priority resource concern 
is overridingly important, the goal should be for landowners to meet 
more than stewardship threshold. Additional enhancements should be 
designed to meet more than one stewardship threshold where practicable.

NRCS Response

    Most enhancements provide benefits to multiple resource concerns. 
Enhancements that produce multiple benefits across resource concerns 
are scored as such in the CMT. Producers will be rewarded for each 
resource concern individually.

Comments

    One commenter recommended amending paragraph 1470.20(b)(2) to add 
``in addition to the resource concern described in (b)(1)'' after the 
words ``priority resource concern.''

[[Page 31642]]

NRCS Response

    NRCS agrees with the commenter and will amend paragraph 
1470.20(b)(2) as suggested. The paragraph will read ``Would, at 
minimum, meet or exceed the stewardship threshold for at least one 
priority resource concern in addition to the resource concern described 
in (b)(1) by the end of the conservation stewardship contract * * *''

Comments

    Several commenters identified that resource and priority resource 
concerns for an area need to be specific, stable, and consistent to 
give producers confidence that bringing their operations up to the 
basic stewardship threshold level for one or more of the resource 
concerns may in fact lead to a CSP contract in the future. If the 
resource concerns change too often and in an unpredictable manner, CSP 
cannot serve as an effective incentive for operators to improve their 
performance.
    NRCS heard from several commenters that it needs to provide clear 
guidance on how States choose priority resource concerns. One commenter 
requested NRCS take a close look at how all States selected priority 
resource concerns for the FY 2009 sign-up. States should choose 
priority resource concerns that are both specific and are, in fact, the 
most important environmental challenges associated with agricultural 
production in particular areas of the State. Another commenter 
suggested NRCS closely follow the definition set in the statute, and 
require States to select priority resource concerns for specific 
geographic areas.
    NRCS received a comment that it should consider offering an 
incentive through higher acreage allocations to States that do a good 
job of implementing CSP to produce measurable improvements to specific 
habitat types and other specific priority resource concerns. Another 
commenter suggested States establish very broad priority resource 
concerns. NRCS also received a comment that the potential benefit of 
geographically-focused ranking pools may not be realized because it may 
be difficult to ensure that priority is given to applicants who offer 
to do the most to solve specific pressing resource concerns in each 
geographic area.

NRCS Response

    NRCS will consider the recommendations for future ranking periods. 
NRCS will give States an opportunity to review the priority resource 
concerns to ensure they select the most appropriate priority resource 
concerns that best represent the impairments and concerns in their 
areas for subsequent ranking periods.
    Applicants who offer a management system that addresses the 
priority resource concerns selected for the geographic area will score 
very well and increase their chances of being awarded a contract. 
However, applicants are competing among other applicants with similar 
resource challenges. Program funding, State acreage distribution among 
ranking pools, and characteristics of the applicants within a ranking 
pool will be determining factors in whether an applicant is awarded a 
contract.

Section 1470.21 Contract Requirements

Comments

    NRCS received four comments related to the contract requirements in 
this section. The comments are addressed separately.
    One commenter expressed there is considerable discussion regarding 
``available funds.'' Should a situation arise that Federal funding is 
incomplete or not available for CSP, the farmer's continued contract 
obligation should be reduced proportional to the reduction in payment.

NRCS Response

    NRCS believes this scenario is unlikely to happen as Congress 
recognizes the positive benefits on the environment produced by the 
CSP. However, in the event that funds are reduced, NRCS will make 
Congress fully aware of the impacts this action will have on 
participants' contracts and on the landscape. No change is needed to 
the rule in response to this comment.

Comments

    One commenter requested NRCS create an exception that allows for a 
temporary suspension of practices or a temporary reduction in 
conservation performance for the installation of infrastructure and 
equipment necessary to undertake additional CSP enhancements. This 
exception could be administered by setting a specific timeframe and 
conditioned on a requirement that the project is anticipated to result 
in higher overall levels of conservation performance.

NRCS Response

    NRCS understands there may be circumstances where a temporary 
reduction is justified when the reduction is very minor compared to an 
eventual much larger stewardship gain or the plan might include 
mitigating activities to offset the temporary situation. In either 
case, it should be covered in the stewardship plan on a case-by-case 
basis and does not require any change in the CSP rule.

Comments

    One commenter expressed that the 5 years of an operator's contract 
is not a very long time for an environmentally friendly conservation 
practice. The commenter suggested that 10 years of a landowner's 
commitment to a conservation practice is worth a lot more.

NRCS Response

    No change in the rule is needed. NRCS is following a legislative 
requirement regarding the duration of the contract. A conservation 
stewardship contract will be for 5 years. However, at the end of an 
initial conservation stewardship contract NRCS may renew the contract 
for one additional 5-year period when the participant demonstrates 
compliance with terms of the existing contract and agrees to adopt new 
conservation activities.

Comments

    One commenter observed that each of these provisions contains 
important applicant and participant rights and obligations about which 
they must be clearly and regularly informed during each of these CSP 
phases. Clear and regular NRCS guidance about these rights and 
obligations would give applicants and participants appropriate 
information to reinforce their ability to apply for or implement a CSP 
contract without reservation or uncertainty.

NRCS Response

    Program contract requirements are explained in great detail on the 
Contract Appendix (Form NRCS-CPA-1202). The appendix is given to 
producers at the time of application. The Appendix is reviewed, 
accepted, and signed by the applicant before contract obligation and is 
incorporated into the contract by reference. Additional efforts to 
inform producers of their obligations are listed on the conservation 
performance summary report from CMT, producers self screening 
checklist, conservation stewardship plan, job sheets, and practice 
standards. In addition, NRCS continuously updates the CSP Web site with 
information pertaining to program requirements and participants' 
obligations.

Comments

    Another commenter expressed that the conservation stewardship plan 
will

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clearly be an important, integral part of any contract, but the plan 
development and oversight costs must be balanced with the 
implementation costs borne by the participating farm operator.

NRCS Response

    Farm planning is an integral part of any agricultural operation, 
and developing and following a conservation plan does take time and 
effort. While financial assistance programs such as CSP compensate the 
landowner for many of the incurred costs of conservation measures, farm 
programs cannot cover all costs. The landowner (and the community) 
receives benefits from conservation activities in the form of 
sustainable crop and livestock yields, improved water quality, reduced 
labor, improved wildlife habitat, and many other monetary, social, and 
environmental benefits. NRCS requests that the commenter consider these 
benefits as off-setting the uncompensated planning costs of a 
conservation plan. No changes are made to the rule in response to this 
comment.

Section 1470.22 Conservation Stewardship Plan

Comments

    NRCS received six comments related to conservation planning. One 
commenter recommended that the term ``conservation stewardship plan'' 
when expressed in the context of NIPF participation specifically 
reference the forest stewardship plan as the requisite plan to 
participate in CSP (pursuant to the Forest Stewardship Program, section 
5 of the Cooperative Forestry Assistance Act of 1978). Another 
commenter expressed that nothing in the rule should prevent forest 
landowners with a FSP from participating in the program.

NRCS Response

    No changes are made to the rule in response to the comments. The 
CMT is used to determine program eligibility, ranking score, and 
payment points. A FSP is not a requisite to participate in CSP. 
However, if a FSP exists it could be referenced in the conservation 
stewardship plan.
    There is nothing in the rule that will prevent forest landowners 
with a conservation stewardship plan from participating in the program.

Comments

    One commenter recommended, in paragraph 1470.22(b), NRCS add the 
words ``maintained'' after ``managed.''

NRCS Response

    No changes are made to the rule in response to the comment. The 
Conservation Performance Summary Report from CMT documents the existing 
system that the participants are required to maintain. This information 
is not duplicated in the conservation stewardship plan. By signing the 
contract, applicants agree to the conservation plan and to maintain 
existing conservation performance levels and achieve additional 
conservation performance improvements as identified on the Conservation 
Performance Summary Report by land use for the contract period.

Comments

    One commenter identified that the CTA conservation plan approach 
has long dealt at the field level with the realities of conservation 
planning for farms that have sizable quantities of rental acres. The 
commenter recommends that NRCS draw upon this field level expertise 
with preparing conservation plans for farms, in combination with the 
CSP's statutory direction to comprehensively address a farm's resource 
concerns, to determine on a case-by-case basis how much of a producer's 
acreage under their operational control must be enrolled in a CSP 
contract to make the conservation planning process work for that 
operation.

NRCS Response

    No changes are made to the rule in response to the comments. 
However, minor changes were made to the rule in response to comments 
about control of the land. The rule was amended in 1470.6 to mirror the 
statute. The CSP statute states that eligible land will include all 
acres in an agricultural operation of a producer whether or not 
contiguous, that are under the effective control of the producer at the 
time the producer enters into a stewardship contract, and is operated 
by the producer with equipment, labor, management, and production or 
cultivation practices that are substantially separate from other 
agricultural operations.

Section 1470.23 Conservation Activity Operation and Maintenance

Comments

    Section 1470.23, ``Conservation system operation and maintenance,'' 
addresses the participant's responsibility for operating and 
maintaining existing conservation activities on the agricultural 
operation to at least the level of conservation performance identified 
at the time the application is obligated into a contract for the 
conservation stewardship contract period.

Operation and Maintenance

    NRCS received two comments regarding operation and maintenance. In 
particular, both respondents recommended changing ``Operation and 
Maintenance'' to ``Management and Maintenance'' to reflect accurately 
the statutory terms.

NRCS Response

    NRCS agrees with the commenters and amends section 1470.23, 
Conservation activity operation and maintenance, to read as follows: 
The participant will maintain and manage existing conservation 
activities to at least the level of conservation performance identified 
at the time the application is obligated for the contract period and 
any additional activities installed and adopted over the term of the 
contract.

Section 1470.24 Payments

    Section 1470.24, ``Payments,'' describes the types of payments 
issued under CSP, how payments will be derived, and payment 
limitations.

Payments-In General

    NRCS received 53 comments on the topic of payments in general. 
These comments can be organized into subtopics including:

Adjustments

Comments

    NRCS received three comments on adjustments to payments rates. One 
commenter urged NRCS to adjust payment rates based on the results of 
monitoring and evaluation and on-farm research and demonstration. 
Another commenter recommended if the payments are raised for any of the 
practices, they should be made retroactive to the farmers who sign-up 
this year. A third commenter strongly encouraged NRCS to clarify that 
CSP contracts may be modified to address additional resource concerns.

NRCS Response

    CSP participants will receive an annual land use payment for 
operation-level environmental benefits they produce. Under CSP, 
participants are paid for conservation performance not for individual 
activities.
    Payment supporting information used for establishing the 2009 
national payment rates will not change for

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contracts enrolled in the initial ranking period.
    NRCS will not be modifying contracts to address additional resource 
concerns. Applicants will be evaluated based on the activities they 
have implemented and additional activities they commit to at the time 
of application that they are willing to install and adopt. NRCS will 
not allow contract improvement modifications that will increase annual 
payments in order to manage fund obligation amounts.

Rewarding Existing Conservation

Comments

    One commenter expressed that maintaining payments for farms already 
engaged in sound conservation methods will provide a network for such 
farmers and new and beginning farmers. Another encouraged NRCS to 
continue to work toward establishing equity in benefits paid to farmers 
for equivalent levels of conservation to ensure that farmers who work 
towards greater levels of conservation are recognized for their 
contributions. One commenter expressed that the payment rate should be 
the same for current and new activities. This commenter could not 
select several enhancements because the commenter was already doing 
them.

NRCS Response

    The CSP Managers' Report provides that the managers encourage the 
Secretary to place emphasis on improving and adding conservation 
activities. In general it costs more to implement new practices than to 
maintain existing practices. NRCS intends to implement a split payment 
structure with one payment rate for existing activities and a higher 
payment rate for additional activities. NRCS' payment structure will 
recognize producer's conservation contributions regardless of the 
timing of implementation. The structure is designed to encourage 
participants to adopt enhancements to accelerate their conservation 
efforts. NRCS amended the rule in paragraph 1470.24(a) to add ``A 
split-rate annual payment structure will be used to provide separate 
payments for additional and existing conservation activities in order 
to place emphasis on implementing additional conservation.'' To further 
encourage additional activities, the final rule provides in paragraph 
(a)(2) that participants must schedule, install, and adopt at least one 
additional conservation activity on a land use in order for that land 
use to earn annual payments.

Statutory Adherence

Comments

    NRCS received a few comments related to whether payment rates 
adherred to statutory provisions.
    Two commenters identified that NRCS gives no apparent explanation 
in the interim final rule's Summary of Provisions why it is requiring 
in subpart B, one- and three-year schedules for the completion of 
contractual CSP enhancements. Congress does not address this issue in 
the Farm Bill or the Statement of Managers. Absence of an explanation 
makes the provision appear arbitrary. It should be dropped from the 
rule because the schedules would unfairly and unreasonably limit a 
participant's flexibility and adaptability to achieve, productively and 
realistically, the targeted conservation benefits.

NRCS Response

    No changes are made to the rule in response to the comments. The 
requirement that a participant must schedule, install, and adopt at 
least one activity in the first year of the contract is an agency 
policy and is incorporated into the final rule. NRCS chooses to retain 
the requirement to be consistent with other NRCS programs and to 
accelerate conservation benefits. The requirement that all enhancements 
must be scheduled, installed, and adopted by the end of the third year 
is a programmatic decision to ensure that program objectives are met 
and allow sufficient time to evaluate the conservation system. 
Participants will receive prorated annual payments over 5 years for the 
activities they install, adopt, and maintain. The policy to require all 
enhancements to be started by year three of the contract is designed to 
achieve conservation benefits on the land at a faster rate than if 
producers choose to adopt activities in year four or five of the 
contract.
    NRCS believes this policy maximizes the environmental benefits 
produced, minimizes contract administration, and helps producers 
maximize their payments. Payments are based on the participant's 
performance which is calculated based on the potential and 
environmental benefits produced. The longer the activity is on the 
ground, the more environmental benefits they produce translating to a 
higher payment.

Enhancements

Comments

    Six respondents addressed the issue of payments for enhancements. 
NRCS received requests for higher payment levels; one commenter 
expressed that Enhancement ANM11, patch burning to enhance wildlife 
habitat, does not pay enough to persuade producers considering the 
danger and work involved. FSA pays considerably more to burn entire 
patches of CRP; one commenter expressed a willingness to plant native 
shrubs, trees, create shallow ponds, and otherwise create a haven for 
wildlife on his property rather than mow 10 acres like all of his 
neighbors if a financial incentive were provided; one commenter opined 
that based on the intent of the law it appears a producer would only 
receive the maximum CSP payment from NRCS if they had addressed all 
resource concerns on their entire operation. If such is the case, then 
the producer would simply continue receiving payments with a contract 
extension as long as they continued to follow their plan. If a producer 
had not addressed all resource concerns, then higher payments could 
only be awarded if additional resource concerns were addressed.

NRCS Response

    No changes are made to the rule in response to the comments. 
Participants are being compensated for existing conservation through 
the annual payment. However, legislation requires that payments are 
made for existing and new conservation activities.
    The CSP presents a significant shift in how NRCS provides 
conservation program payments. CSP participants will receive an annual 
land use payment for operation-level environmental benefits they 
produce. Under CSP, participants are paid for conservation 
performance--the higher the operational performance, the higher their 
payment.
    Participants' annual payments are not determined using the 
traditional compensation model where they receive a percentage of the 
estimated practice installation cost or a per acre rental rate. Instead 
participants' annual payment level will be unique for their operation 
and land uses based on the combined total of environmental benefits 
from existing and new activities.

Comments

    One commenter recommended NRCS add in paragraph (a)(4)(i)--``and 
practices'' after ``enhancements'' both times and add ``practice'' 
after ``enhancement.'' In paragraph (b) and (b)(2) add ``or improve'' 
after ``adopt.''

NRCS Response

    No changes are made to the rule in response to the comments. CSP 
allows producers to substitute enhancements.

[[Page 31645]]

Practices are not to be substituted as they are utilized to encourage 
producers to meet additional resource concerns. A practice substitution 
may not meet the stewardship threshold for a resource concern which may 
result in a producer being ineligible for the program.

Other Program Payments

Comments

    Five respondents address the interrelationship between CSP payments 
and other program payments. One commenter recommended that producers be 
allowed to utilize programs, including EQIP and WHIP, to help fund the 
installment of enhancements as long as they do not duplicate payments 
on lands enrolled in CSP. In addition, NRCS should allow the use of 
other conservation programs to assist producers with meeting 
comprehensive stewardship goals. Using other conservation programs will 
shift some of the costs to these programs and more readily allow NRCS 
to meet CSP acreage and funding requirements.

NRCS Response

    No changes are made to the rule in response to the comments. The 
policy related to the source of payments is designed to avoid 
duplication of payment. When an enhancement is scheduled to be 
completed in CSP through the CMT, the producer is receiving 
compensation for the enhancement through their annual payment rather 
than receiving a direct cost-share payment like they would through 
EQIP. The statute prohibits payments to participants for new activities 
that were applied with financial assistance through other USDA programs 
on the same land.
    If an applicant wishes to install conservation practices or 
activities not included in the CSP contract, then other programs could 
be used to assist producers meet their goals.

Comments

    One commenter recommended that the rule explicitly exclude from the 
CSP annual payment rate calculation, costs incurred for conservation 
practices, or enhancements applied with financial assistance through 
other USDA conservation programs.

NRCS Response

    No changes are made to the rule in response to the comment. 
Legislation states that the amount of conservation stewardship payment 
will be determined and based, to the maximum extent practicable, on the 
following factors:
    (a) Cost incurred by the producer associated with planning, design, 
materials, installation, labor, management, maintenance, or training;
    (b) Income forgone by the producer; and
    (c) Expected environmental benefits as determined by the CMT.

Comments

    One commenter strongly encouraged NRCS to improve estimated payment 
rates and clarify that CSP contracts can be modified to allow producers 
to participate in other Title II Conservation Programs such as CRP, 
EQIP, or WHIP.

NRCS Response

    To manage CSP funding and meet legislative requirements, NRCS used 
the 2009 application period to arrive at a uniform payment rate per 
land use conservation performance point. NRCS modeled the annual land 
use payment rates using the following nationwide sign-up data from the 
2009 application period pre-approved applications:
    (a) New and existing environmental benefits measured in 
conservation performance points generated by land use type;
    (b) Costs incurred and income foregone for conservation activities; 
and
    (c) Available program funding levels.

Land use payment rates represent the costs of existing and new 
activities per performance point proportionally adjusted to manage 
program payments to achieve the national average rate of $18 per acre.
    Each case where a potential modification could be needed will be 
evaluated in a case-by-case basis by the State to determine if contract 
provisions are being met.
    Legislation prohibits land to be enrolled in CRP, WRP, or GRP and 
CSP at the same time. If a producer wants to transition out of the CSP 
contract to another land retirement or working land preservation 
program, the CSP contract will terminate with respect to the acres 
enrolled in the other program. The annual payment for the land 
remaining in CSP will be reduced in proportion to the acres removed.
    It is also important to mention that CSP participants can 
participate in EQIP or WHIP, but must ensure they follow agency policy 
that prohibits the participants from receiving financial assistance 
from more than one program on the same land for the same practice or 
activity.

Public Information

Comments

    One respondent addressed the need to keep the public informed. In 
addition, it is essential that USDA keep participants and the public 
informed on a regular basis about its payment rate findings during the 
first ranking period. USDA is to be commended for its dedication to 
making payments more consistent and predictable because these factors 
will have a strong impact on future CSP participation rates, and most 
importantly, achieving the conservation benefits desired by Congress.

NRCS Response

    No changes are made to the rule in response to the comments. NRCS 
agrees that it is critical to keep the participants and the public 
informed of program information on a regular basis. NRCS continuously 
posts information on the NRCS Home Page at http://www.nrcs.usda.gov to 
ensure producers are informed and processes are transparent. NRCS has 
posted a one-page ``Payment for Performance'' document to explain the 
process used to establish the national payment rates. This information, 
along with other important information related to the program, can be 
found at http://www.nrcs.usda.gov/programs/new_csp/csp.html.

Fairness of Payments

Comments

    Three respondents touched on the topic of fairness of CSP payments 
between farmers. One expressed that some have spent years increasing 
soil organic matter and nutrients, reducing soil erosion, and 
increasing beneficial wildlife habitat with our own resources while 
watching neighbors do just the opposite with intensive grain production 
on erodible land and having USDA pay them a subsidy for their actions; 
another expressed concern about huge sums of money for no-till planters 
of corn in Iowa as being unfair to small struggling dairy farmers that 
adopt practices that are much more sustainable in the long run; one 
recommended NRCS should be paying farmers for producing healthier soil, 
cleaner water, climate change mitigation, and greater bio-diversity 
instead of an approach that encourages farmers to get bigger, faster, 
better, and cheaper with little to no regard for the environmental 
impacts they have.

NRCS Response

    No changes are made to the rule in response to the comments. The 
CSP provides an annual payment to contract holders for the combined 
total of environmental benefits from existing and new activities. 
Payments are not for specific conservation activities, instead

[[Page 31646]]

they are for the combined environmental benefits. The CMT calculated 
conservation performance for existing and additional conservation 
activities and benefits. It is computed by land use type for cropland, 
pastureland, rangeland, and forest land. The tool is size neutral, 
ensuring that all applicants regardless of the size or type of 
operation have the same opportunity to earn similar points.

Establishing Payments

Comments

    NRCS received 17 comments related to recommendations about how NRCS 
should establish payment rates including setting the payment rate at 
inordinately low levels perpetuates the ground being conventionally 
cropped. NRCS should be emphasizing paying good stewards over poor 
stewards who agree to do better; USDA should increase the payment 
levels for cropland and pastureland. The 2009 estimated payment ranges 
are not sufficient; using the first ranking period as a payment 
discovery period was a good idea; and the preamble and rule do not 
correspond. The preamble states ``This retrospective payment approach 
will allow NRCS to field-verify applied conservation activities prior 
to contract obligation and payment.'' No part of paragraph 1470.24, 
references the same intent and procedure. A reference would clarify the 
rule for NRCS employees and program participants.
    Other comments included payment point values should be roughly 
equivalent for ongoing organic management and new conversions or 
transition to organic; encouragement to clarify exact payment levels 
for satisfying particular resource concerns and for meeting other 
resource concerns; and comments seeking information about exact 
payments for program enrollment. Regarding the contract payments under 
CSP, the majority of the payments should be dedicated to the base 
contract payments rather than separate enhancement payment. Applicants 
should be giving them priority points based on their conservation value 
or effectiveness which would be added into the point total for the 
contract which in turn would establish the per acre price.

NRCS Response

    CSP does not provide payments for individual activities. Applicants 
are ranked and paid based on the conservation performance points 
generated by the environmental benefits produced by the existing and 
new activities. NRCS has made information available at http://www.nrcs.usda.gov/programs/new_csp/csp.html.

Comments

    For many landowners, the promise of CSP-generated income will not 
be sufficient to prompt actions that advance conservation practices 
that will meet resource concerns, including those for native and 
managed pollinators. However, ``bundling'' of multiple values for the 
multiple benefits that conservation practices provide, such as carbon 
sequestration and water quality nutrient trading, is an approach that 
offers considerable potential to generate a combined economic value to 
landowners that will stimulate increased adoption and integration of 
conservation practices into their operations. Support was expressed for 
both types of payments to reward innovation and to advance new 
conservation practices, particularly those that yield multiple 
conservation outcomes. NRCS received comments that the CSP payment 
should recognize the environmental benefits for adopting a practice not 
only on the actual acres, but also the benefits gained on adjacent 
agricultural or forest land.

NRCS Response

    Environmental benefits are based on the actual amount of the 
activity the producers agree to apply versus the potential of land that 
could receive the treatment. It measures the environmental benefits 
generated by the producer.

Comments

    Four respondents recommended payments be based on environmental 
outcomes.

NRCS Response

    To be able to implement the program and meet legislative 
requirements, the following three criteria were the driving factors for 
establishing the payment rates:
    (1) Contract payment by CMT point per land use fixed nationwide for 
four eligible land uses: crop, pasture, range, forest;
    (2) National average payment less than $18 per acre per year 
(includes technical assistance and financial assistance); and
    (3) Payment limitations.
    CSP makes payments for conservation activities that benefit both 
the landowner and community. The CSP program must be fair, equitable, 
and accessible to all landowners and easy to administer by government 
agencies. CSP cannot pay for all expenses incurred for conservation 
activities, but CSP can offset some expenses. CSP encourages landowners 
to maintain and adopt new conservation activities.
    NRCS amended section 1470.20 to add paragraph (h) to read, ``NRCS 
will conduct onsite field verification prior to contract obligation to 
substantiate that the information provided by pre-approved applicants 
during the application process is accurate prior to contract 
obligation.''

Owners of Forest Lands

Comments

    NRCS received three comments related to CSP payments and forest 
landowners. The rules propose payments for on-farm research, 
demonstration, and pilot testing. It is not clear if such payments are 
also available to NIPF components. The National Association of State 
Foresters recommends that forestry research and demonstration should 
also be eligible for annual payments.

NRCS Response

    No changes are made to the rule in response to the comments. On-
farm research and demonstrations and pilot projects are eligible for 
cropland, pastureland, rangeland, and NIPF. The protocols for the 
States to offer these activities can be found at http://www.nrcs.usda.gov/programs/new_csp/csp.html.

Comments

    One commenter expressed that it would seem apparent that NIPF would 
deserve the highest annual payment per acre to encourage people to 
continue to invest time and labor to benefit our environment.
    One commenter expressed concern that the low payment per acre and 
no cost-share will also discourage participation, especially among 
forest landowners.

NRCS Response

    No changes are made to the rule in response to the comments. Land 
use payment rates represent the composite costs of existing and new 
activities per performance point proportionally adjusted to manage 
program payments to achieve the national average rate of $18 per acre. 
NRCS has supporting cost information to demonstrate that national 
payment rates were established following the established process and 
ensuring fairness with all land uses.
    To manage CSP funding and meet legislative requirements, NRCS used 
the 2009 application period to arrive at a uniform payment rate per 
land use conservation performance point. NRCS modeled the annual land 
use payment

[[Page 31647]]

rates using the following nationwide sign-up data from 2009 application 
period pre-approved applications:
    (a) New and existing environmental benefits measured in 
conservation performance points generated by land use type;
    (b) Costs incurred and income foregone for conservation activities; 
and
    (c) Available program funding levels.

Other

Comments

    One commenter provided that the statement that no payment will be 
made for which there is no cost incurred or income forgone by the 
participant, is truly biased toward the individual who has in the past 
raped the soil, and now wants to possibly change his ways if you pay 
him enough. Not the spirit that CSP was intended to convey.

NRCS Response

    No changes are made to the rule in response to the comment. NRCS is 
following CSP authorizing language that provides that the amount of 
conservation stewardship payment will be determined and based, to the 
maximum extent practicable, on the following factors:
    (a) Cost incurred by the producer associated with planning, design, 
materials, installation, labor, management, maintenance, or training;
    (b) Income forgone by the producer; and
    (c) Expected environmental benefits as determined by the CMT.

Exclusions

    SEC(e)(3)(B) payments to a producer will not be provided for 
conservation activities for which there is no cost incurred or income 
forgone to the producers.

Comments

    One commenter recognized and applauded NRCS' effort to place the 
dollars in the hands of the operator. This policy avoids creating 
unnecessary angst within the farming communities.

NRCS Response

    The CSP statutory authority requires that NRCS provide contract 
holders payments to compensate for installing and adopting additional 
conservation activities, and improving, maintaining, and managing 
conservation activities in place on the operation of the producer at 
the time the contract offer is accepted. NRCS has added clarity to the 
rule in paragraph 1470.6(a).

Interaction With Subsidy Payments

Comments

    NRCS received two comments regarding CSP and subsidy payments. One 
commenter expressed that it is about time that we stop giving subsidies 
to specific farmers on the basis of specific crops. We can ALL benefit 
greatly if these subsidies were distributed instead on the basis of 
their environmental effectiveness; and two, in no way should these 
payments be added to the government's corn or grain subsidies obtained 
by those who rent the land.

NRCS Response

    NRCS is following statutory authority by providing contract holders 
payments to compensate for installing and adopting additional 
conservation activities, and improving maintaining, and managing 
conservation activities in place at the operation of the producer at 
the time the contract offer is accepted. The CSP payment is based on 
environmental benefits accrued across the four major land uses 
authorized by the program and is not crop specific.

Annual Payments

Comments

    Commenters expressed a number of concerns related to annual 
payments including that payment rates are too low and that low payment 
rates push landowners towards less beneficial enhancements. 
Additionally, the ability to receive cost-share assistance or use other 
conservation programs to improve conservation systems is a disincentive 
to participate in CSP, especially when combined with the low payment 
rate; producers cannot determine their exact cost and benefit of 
program participation if they are provided estimated annual payment 
rates; payment rates for cropland, pastureland, and managed grazing 
lands are too low; managed grazing land should be paid at the same rate 
as cropland; and NIPF deserves the highest annual payment rate. NRCS 
also heard that prompt payments are important to cover participant 
expenses incurred in the preceding months.

NRCS Response

    The CSP statute provides a maximum acreage enrollment and funding 
level for each fiscal year. NRCS needed the payment discovery period, 
described in the ``Discussion of Payment'' section, because no 
historical information was available to be able to establish the rates 
for performance points and still be able to meet the program 
constraints. NRCS used real time data from the first sign-up to 
establish the national payment rate per point by land use. It is NRCS' 
intention to maintain, to the extent practicable, the per point payment 
rates established for the first sign-up in future ranking periods. This 
decision allows NRCS to provide estimated payment amounts to applicants 
early in the application process.
    To manage CSP funding and meet legislative requirements, NRCS used 
the 2009 application period to arrive at a uniform payment rate per 
land use conservation performance point. NRCS modeled the annual land 
use payment rates using the following nationwide sign-up data from the 
2009 application period:
    (a) New and existing environmental benefits measured in 
conservation performance points generated by land use type;
    (b) Costs incurred and income foregone for conservation activities; 
and
    (c) Available program funding levels.
    Note that land use payment rates represent the composite costs of 
existing and new activities per performance point, proportionally 
adjusted to manage program payments to achieve the national average 
rate of $18 per acre.
    CSP payments by statute are based on the costs associated with 
agriculture on different land uses. In general, the costs associated 
with the maintenance and enhancements on pastureland are lower than 
those associated with cropland; therefore, the payment rate for 
pastureland is lower.
    The CSP statute establishes that the Secretary look at current 
practices and future commitments to conservation. Historical changes to 
agricultural operations were made for a multitude of personal, 
financial, and cultural reasons. Although it is difficult to fairly 
assess past actions, CSP payments are calculated based on existing 
levels of conservation stewardship as well as a commitment to add 
conservation. A grass based farm should score well for existing levels 
of stewardship, and the CSP payment should reflect this.
    NRCS has established that grassland, that is managed for hay or 
haylage, is considered cropland. If the land is also grazed, a 
determination must be made about which is the predominant activity, 
haying or grazing. The predominant activity will determine the land use 
category. If it is split evenly between the two activities the 
applicant should decide which land use will be considered.
    Although many commenters referenced payment rates in terms of 
payment per acre, under CSP, participants are paid for operational 
conservation performance--the higher

[[Page 31648]]

the performance, the higher their payment. It is inappropriate to refer 
to the national payment rates on a per acre basis as the payments are 
made for performance points, and they are unique for each operation. 
NRCS clarifies that the estimated payment rates were made available to 
applicants in the 2009 sign-up to provide a proxy of type of national 
average payment that the program could offer. Additional information 
related to payments can be located at http://www.nrcs.usda.gov/programs/new_csp/csp.html.
    Regarding concerns related to prompt payments, NRCS will make 
payments as soon as practicable after October 1 of each fiscal year for 
activities carried out in the previous fiscal year. NRCS amends 
1470.24(d), timing of payments, to add, ``For newly enrolled contracts, 
payments will be made as soon as practicable after October 1 following 
the fiscal year of enrollment.''

Supplemental Payments--Resource-Conserving Crop Rotation

Comments

    NRCS received 5 comments on the topic of supplemental payments.
    One commenter expressed the timely release of the rules for 
implementation of and application for resource-conserving crop rotation 
supplemental payments is very important, in particular for rice, which 
is an irrigated crop. The Farm Bill says that the term resource-
conserving crop means, in part, a rotation that reduces soil-moisture 
depletion or otherwise reduces the need for irrigation. With irrigation 
being the essence of rice production, rice producers who apply for the 
rotation supplement should not be disadvantaged in any way because they 
must irrigate their rice crop. Prompt USDA determinations about what 
rotations are beneficial and the definition of resource-conserving 
crops, for purposes of this program component, would assist prospective 
applicants in making informed, timely decisions about applying.
    Another commenter recommended no supplemental payment will be made 
until the crop rotation is installed.

NRCS Response

    NRCS acknowledges the concerns and encourages producers to refer to 
the activity criteria listed on the resource-conserving crop rotation 
jobs sheet at http://www.nrcs.usda.gov/programs/new_csp/csp.html. In 
addition, refer to the State Web site where eligible resource-
conserving crops are posted. NRCS understands the importance of this 
under advisement for future ranking periods. However, the procedures 
allow applicants to schedule the resource-conserving crop rotation when 
the resource-conserving crop is planted on at least one-third of the 
rotation acres. The resource-conserving crop must be adopted by the 
third year of the contract and established or planted on all rotation 
acres by the fifth year of the contract.

Comments

    One commenter requested NRCS provide more than one resource 
outcome, combined with the concept of supplemental payments. 
Consideration should be given to resource-conserving crops that provide 
nectar and pollen for native and managed pollinators. Alfalfa is a good 
example, so long as the practice includes allowing the plants to bloom 
and providing access to beekeepers.

NRCS Response

    The benefits of a resource-conserving crop rotation include 
protection and habitat for pollinators. A resource-conserving crop 
rotation means a crop rotation that includes at least one resource-
conserving crop, and reduces wind and water erosion, increases soil 
organic matter, improves soil fertility and tilth, interrupts pest 
cycles, reduces depletion of soil moisture or reduces the need for 
irrigation in applicable areas, and may provide protection and habitat 
for pollinators.

Comments

    Finally, one commenter expressed that the payment for a resource-
conserving crop rotation is inadequate to encourage change.

Payment Limitations

    NRCS received 58 comments on the topic of payment limitations. 
Although commenters expressed both support for and dissatisfaction with 
payment limitations, more commenters supported the limitations than did 
not.
    One commenter expressed that section 1470.24(g) imposes an 
arbitrary contract limit of $200,000 per contract regardless of the 
number of producers involved in the farming operation covered by the 
contract. This limit is outside the clear language of the statute and 
will negatively impact commercial-size farming operations.
    Thirty-two respondents stated that the CSP payment limits should be 
retained and enforced. Many of these respondents also expressed that 
NRCS should resist pleas to incorporate payment limitation loopholes. 
One of the respondents expressed that USDA needs to ensure that as many 
farmers as possible can access the program for the greatest 
environmental benefit and farmers' bottom lines. Another respondent 
recommended an addition to the rule to make CSP contracts and payments 
subject to the FSA ``actively engaged in farming'' rules. One 
respondent identified that payment limits should remain a separate 
payment limitation and not be combined with other payments to encourage 
more moderate sized farms to participate and keep the total cost of the 
program at the limits of $40,000 per person or legal entity during any 
fiscal year, and $200,000 over any 5-year period.
    Conversely, NRCS received many comments expressing that the only 
CSP payment limit the Farm Bill does declare explicitly is that 
$200,000 is the amount that a person or legal entity may receive in the 
aggregate, but may not exceed for all CSP contracts entered into during 
any 5-year period. A limit on a CSP contract as proposed in the interim 
final rule paragraph 1470.24 (g), is neither legislated in the Farm 
Bill nor discussed in the Statement of Managers.

NRCS Response

    NRCS follows the Commodity Credit Corporation (CCC) regulation in 
7CFR part 1400 when applying its statutory payment limitation 
requirements for CSP. This regulation is applicable to most CCC and FSA 
commodity, price support, and conservation programs.
    NRCS used 7 CFR part 1400 as a guide for establishing the CSP 
contract limitation. A joint operation is composed by members who are 
either persons or legal entities. Based on how joint operations are 
characterized in section 1400.106, the statutory payment limitation 
applies to each person or legal entity that comprises the joint 
operation. NRCS recognizes the $200,000 contract limitation established 
in the interim final rule was too low and unfairly restricted certain 
joint operations who achieve the conservation performance levels needed 
to earn the payments. Therefore, NRCS raises, in the final rule, the 
CSP contract limitation to $400,000, which would allow two members of a 
joint-tenancy operation to earn the payments to obtain their $200,000 
per person payment limitation authorized in statute. Further, NRCS 
establishes in paragraph (h) an annual contract limit for these joint 
operations of up to $80,000. These payment limitations do not apply to 
funding arrangements with federally recognized Indian tribes or Alaska 
Native corporations.

[[Page 31649]]

Comments

    Twenty-one respondents expressed concern about the payment limits.
    NRCS received comments suggesting where CSP accepted farming 
operations that exceed the $40,000 payment limit, NRCS should only 
include the acres necessary to reach the $40,000 payment limit against 
the State's allotted acres because the limit is understood and 
acceptable to producers. There is no advantage to NRCS offering a 
program that results in artificially low per acre contracts. If large 
farms only consumed their proportional share of the allotted CSP acres, 
large farms would present no threat to other operations. Large farms 
offer tremendous value to the United States taxpayer by providing more 
acres of conservation practices for the tax dollar. The current rule 
could result in large farms avoiding CSP.

NRCS Response

    No changes are made to the rule in response to the comments. NRCS 
acknowledges the concern and explored this recommendation during the 
payment discovery period. NRCS cannot limit the acres it considers 
attributable to the authorized enrollment level. By statute, NRCS is 
required to enroll in the program no more than 12,769,000 acres for 
each fiscal year.

Comments

    One respondent expressed that it is important to consider the 
longer-term implication of the agency's decision to create program 
provisions that run contrary to clear statutory language. If the agency 
can create its own set of payment limitations in each regulation it 
issues, the same overriding logic would allow it to impose its own set 
of environmental requirements, or allow it to change or override clear 
congressional guidelines with respect to expected environmental 
benefits.
    One commenter recommended program participants should be able to 
roll over the annual payment limit for cause, so if they cannot 
undertake the conservation activity in a given year, but shift that 
work into the next year, the limit should be lifted if they request and 
extension on the activity.

NRCS Response

    NRCS will not make payments for individual activities, so an annual 
payment amount will not be changed to adjust for actual performance. An 
actual performance level below what is required in the contract is 
considered a potential contract violation. Potential contract 
violations are addressed with a formal contract review as per agency 
policy in the Conservation Programs Manual, Part 512.55. In these 
cases, the annual payments will not be issued until NRCS and the 
applicant agree to a timeframe when the applicant will be back in 
compliance with the contract provisions. This agreement is official 
when form NRCS-CPA-153 has been signed by the participant and NRCS.

Statutory Acreage/Payment Constraints

Comments

    NRCS received four comments on the statutory acreage and payment 
constraints. One respondent stated that payment constraints should be 
addressed in part by enrolling considerably more grassland than is 
assumed by the economic analysis, but rather is more in keeping with 
2009 applications by land-use type. Payment constraints should also be 
addressed by allowing for year-to-year flexibility in meeting the 
statutory average per-acre payment cap over the full 9-year period 
provided by statute.

NRCS Response

    No changes are made to the rule in response to the comments. NRCS 
is not limiting the acres of grassland that enrolls in the program. The 
amount projected in the economic analysis was used in lieu of 
historical data for analytical purposes only. The analysis is being 
reviewed with actual sign-up data which will reflect the amount of 
pastureland that sign-up for the program. NRCS is offering fair payment 
rates to encourage participation by operators of all land uses.

Comments

    One respondent stated that as the level of CSP payments per acre is 
relatively low (not to exceed an average of $18 per acre), we 
anticipate that smaller acreage producers that might need to install a 
more costly enhancement on their own will be discouraged from applying 
for CSP because their expense to adopt some costlier enhancements (e.g. 
conversion of cropland to native grass for wildlife, alternative water 
sources, and exclusion fencing) may exceed their CSP payment. Thus, the 
commenter recommends that producers be allowed to utilize programs 
including EQIP and WHIP to help fund the installment of enhancements, 
as long as they do not duplicate payments on lands enrolled in CSP.

NRCS Response

    No changes are made to the rule in response to the comments. NRCS 
recognizes the concerns related to small acreage producers. 
Participants have an extensive menu of enhancements to choose from that 
vary significantly in cost and environmental benefits. Although NRCS 
will not allow producers to combine programs to help producers install 
enhancements as that will be considered a duplicate payment, CSP 
participants can participate and receive funds under EQIP providing 
they do not receive payment for the same practice on the same land 
under both programs.

Comments

    One respondent stated that given that the 2008 Farm Bill set caps 
on average payment rate and total acres, NRCS will need the flexibility 
to make changes based on the real data that a sign-up would offer to 
keep within the congressionally-set parameters.

NRCS Response

    NRCS acknowledges the recommendation and will take under advisement 
for future ranking periods. However, it is NRCS' intention to maintain 
the per point payment rates in future ranking periods close to the same 
that was used in the first sign-up. This should allow NRCS to tell 
applicants early in their application process what their estimated 
payment will be.

Comments

    One respondent urged NRCS to attempt to keep the average cost per 
acre for CSP down to $18 per acre ``to the extent practicable'' as 
required by the statute.

NRCS Response

    NRCS followed rigorous processes during the payment discovery 
period to ensure payment rates were established based on sign-up data 
and not to exceed legislative requirements. NRCS is currently 
monitoring the contract obligation process, and program constraints are 
being met. However, the States have not completed the obligation 
process which may result in small variations of the expected results.

Minimum Contract Payment

Comments

    NRCS received 55 comments expressing support that the final rule 
incorporates a minimum payment. Of these 55 comments, 21 respondents 
identified that the minimum payment should be at least $1,500. The 
respondents asserted that a minimum payment would encourage 
participation among small farms, especially among organic producers and 
producers in the New England States. The respondents expressed that 
small farms are important links in our ecological system. The 
respondents were

[[Page 31650]]

concerned that without this minimum, there may be no incentive for 
farmers operating at a scale smaller than 50-100 acres to take part in 
the program. However, one of the respondents, while supporting the 
$1,500 minimum payment, urged that the CSP payment limits in the 
interim final rule be retained and enforced to prevent payment 
limitation loopholes. NRCS also received comments that producers in 
certain geographic locations, such as Hawaii, Guam, and Alaska would 
potentially not participate in the program if the contract payment was 
too low.

NRCS Response

    Under the existing payment structure, payments consider the 
environmental benefits produced on each acre. NRCS recognizes that 
small scale operations, beginning farmers or ranchers, and limited 
resource farmers or ranchers could be discouraged from participating, 
as well as producers in certain geographic locations and those who have 
been historically underserved. NRCS intends to encourage conservation 
on all agriculture operations regardless of size or type of operation, 
including organic production systems. NRCS is seeking CSP regulatory 
provisions to more directly encourage participation of small-scale 
producers, socially disadvantaged farmers or ranchers, beginning 
farmers or ranchers, and limited resource farmers or ranchers. NRCS 
believes that participation by these agricultural producers will 
provide for more conservation assistance for those who traditionally 
have not participated in USDA programs, as well as beginning farmers or 
ranchers seeking assistance with their operations.
    Therefore, NRCS modified the rule in 1470.24 to add a new paragraph 
(d) that provides authority for minimum contract payments to socially 
disadvantaged farmers or ranchers, beginning farmers or ranchers, and 
limited resource farmers or ranchers. Paragraph (d) now reads, 
``Minimum contract payment. NRCS will make a minimum contract payment 
to participants who are socially disadvantaged farmers or ranchers, 
beginning farmers or ranchers, or limited resource farmers or ranchers 
at a rate determined by the Chief in any fiscal year that a contract's 
payment amount total is less than $1,000.''

Section 1470.25 Contract Modifications and Transfers of Land

Comments

    NRCS received ten comments on the topic of contract modifications 
and transfers of land.
    NRCS received several comments in support of the provisions in the 
interim final rule. One commenter supported the interim final rule 
regarding NRCS' ability to modify, renew, and terminate contracts found 
in Sec.  1470.25, Sec.  1470.26, and Sec.  1470.27. Another commenter 
supported the ability to transfer all or portions of the CSP contract 
if land is transferred or control of land changes. NRCS may wish to 
allow 90 days rather than 60 days to accomplish the transfer to ensure 
transfers are completed. However, another commenter expressed that the 
proposed rule provides for no contract modifications. Farm operations 
are dynamic organizations, and provisions should be allowed for the 
addition of qualifying land during the contract period. The other 
option would be to allow producers to enter into separate contracts for 
land added to the farm operation subsequent to an initial contract.

NRCS Response

    NRCS chooses to retain the 60 days to accomplish the transfer to be 
consistent with other NRCS programs' contract prohibitions. NRCS has 
determined that although participants cannot modify contracts to add 
lands after a contract has been approved due to complexities related to 
ranking and payment rates, participants may offer new applications for 
additional lands they acquire after the initial contract is approved. 
The application on the newly acquired land will have to compete against 
other lands being offered for the program at the same time.

Comments

    One commenter expressed that section 1470.25(b) prohibits 
modifications that increase the contract obligation over the initial 
amount with the exception of contracts that are renewed after the 5-
year period. This prohibition has no basis in statute, and it is 
unclear why NRCS would want to prohibit contract modifications that 
increase the initial obligation as long as the increase is within the 
overall person or entity cap of $200,000.

NRCS Response

    NRCS has amended the rule to allow participants who expand their 
farming operation to submit new applications for additional contracts 
on the newly acquired acreage. Any new application will have to compete 
with other applications received during the same ranking period. This 
policy enables producers to participate in CSP on newly acquired land 
while maintaining the integrity of the ranking and payment process.

Comments

    Two commenters strongly encouraged NRCS to not penalize producers 
for amending their contract to enroll sensitive lands in other Title II 
Conservation Programs such as CRP, GRP, or WRP. Another recommended 
clarifying that CSP contracts can be modified to allow producers to 
enroll land into other conservation programs and payments should be 
modified to reflect the producers' costs and the environmental benefits 
gained on the entire field.

NRCS Response

    NRCS agrees with the commenters and amended the final rule in 
paragraph 1470.25 to allow modifications to contracts to cancel and 
remove contract acres enrolled in programs like CRP, GRP, WRP, or other 
similar Federal or State programs without penalty to the participant.

Comments

    One commenter recommended when renewable energy facilities and 
infrastructure are built on existing CSP contracts, the contract should 
be modified to address acres impacted by earthmoving and construction 
activities. These activities change the intent and purpose of the CSP 
contract.

NRCS Response

    NRCS agrees with the commenter. NRCS will consider taking land out 
of production in a potential non-compliance situation. State 
Conservations will evaluate these cases individually and decide if 
contract termination is needed or if a modification of contract acres 
is permitted to allow the producer to maintain the contract with the 
reduced acres.

Section 1470.26 Contract Renewal

Comments

    NRCS received nine comments on the topic of contract renewal. One 
commenter supported the interim final rule regarding NRCS' ability to 
modify, renew, and terminate contracts found in Sec.  1470.25, Sec.  
1470.26, and Sec.  1470.27.

NRCS Response

    NRCS appreciated the positive feedback.

[[Page 31651]]

Comments

    NRCS received a comment that it should be much clearer and more 
explicit in the final rule. As a condition of eligibility for renewal, 
the participant should be required to meet or exceed the stewardship 
threshold for at least two additional priority resource concerns during 
the second contract term, provided they are not already exceeding the 
threshold for all or at least four priority resource concerns. In 
addition, the requirement to adopt additional conservation activities 
should be tied directly to the requirement to meet or exceed the 
threshold on those additional priority resource concerns.

NRCS Response

    NRCS intends to follow the Managers' Report language that provides, 
``The Secretary is provided authority to require new conservation 
activities as part of the contract renewal process. It is the intent of 
the Managers that this could include expanding the degree, scope, and 
comprehensiveness of conservation activities adopted by a producer to 
address the original priority resource concerns or addressing one or 
more additional priority resource concerns.'' To add clarity to the 
rule, NRCS amends paragraphs 1470.26(b)(3) and (4) to read as follows: 
``(3) At a minimum, meet stewardship thresholds for at least two 
priority resource concerns; and (4) agree to adopt additional 
conservation activities to address at least one additional priority 
resource concern during the term of the renewed conservation 
stewardship contract.''

Comments

    One respondent identified that section 1470.26 of the interim final 
rule provides that NRCS will permit contract renewals to foster 
participant commitment to increased conservation performance. The 
commenter believes that payment for implementing additional 
conservation activities should be equally weighted with payment for 
implementing existing conservation activities.

NRCS Response

    NRCS established the National Payment Rates which include the 
conservation performance for existing and new activities. It 
anticipates it will maintain the same payment structure on renewed 
contracts.

Comments

    One commenter supported the idea of contract renewals. Some 
practices take years of implementation before you actually see 
financial results. When transitioning to no-till farming practices in 
semi-arid Montana, it takes between 7 and 10 years before the nutrient 
requirements stabilize and the producer is able to reduce the amount of 
fertilizer that is required. Assisting farmers and ranchers with 
additional time to implement larger practices can only serve to help 
the meet the goals of CSP and improve our environment.

NRCS Response

    NRCS agrees with the commenter. Contract renewal will ensure that 
conservation benefits achieved in the first period will be maintained 
longer. In addition, this will allow participants to adopt new 
conservation activities and address additional stewardship thresholds. 
No change is made to the rule in response to the comment.

Section 1470.27 Contract Violations and Termination

Comments

    Section 1470.27, ``Contract violations and termination,'' addresses 
the procedures that NRCS will take when a violation has occurred or a 
contract termination is needed. NRCS received four comments on this 
section.
    One commenter recommended NRCS remove the penalty for terminating 
the CSP contract before the 5 years is done. The environment will reap 
a benefit from even just one year of CSP enrollment and conservation 
practices. We should be trying to encourage participation rather than 
instilling fear of repercussions.

NRCS Response

    NRCS will follow agency contracting policies to be consistent with 
other NRCS programs and ensure program objectives are met. However, 
NRCS will not penalize a participant if they failed to comply with 
contract provisions due to circumstances beyond their control.

Comments

    One commenter requested NRCS include verbiage that specifically 
says the landowner will not be held liable in any manner if their 
tenant does not fulfill the 5-year contract. This would encourage 
landowners to cooperate with tenants who want to do good things for the 
environment.

NRCS Response

    NRCS does not consider it appropriate to include the language 
recommended above as NRCS may not have any contractual obligations with 
the landlords. NRCS enters into a contract with the applicant who is 
held responsible for meeting the contract provisions. NRCS has 
provisions that explain that participants will not be considered in 
violation of the contract for failure to comply with the contract due 
to circumstances beyond the control of the participant. In addition, 
NRCS will ensure that producers who would have an interest in acreage 
being offered received treatment which NRCS deems to be equitable.

Subpart C--General Administration

Section 1470.30 Fair Treatment of Tenants and Sharecroppers

Comments

    Section 1470.30, ``Fair treatment of tenants and sharecroppers,'' 
specifies that any CSP payments received must be divided in the manner 
specified in the contract. Where conflicts arise between an operator 
and landowner, NRCS may refuse to enter into a CSP contract. NRCS 
received two comments on this section.
    One commenter expressed that tenant and sharecropper treatment must 
be a priority and communicated clearly and frequently to applicants and 
participants during every phase of the CSP process. In particular, USDA 
must clearly and frequently communicate to applicants and participants 
the interim final rule statement, i.e., that the Department may refuse 
to enter into a CSP contract when there is a disagreement amongst joint 
applicants seeking enrollment as to an applicant's eligibility to 
participate in the contract as a tenant.

NRCS Response

    NRCS does not want to interfere with the contractual relationship 
between landowners and tenants. However, NRCS has a responsibility to 
ensure fair treatment of tenants. NRCS feels that this concern has been 
addressed in the program contract appendix which is given to the 
applicants at the time of application and reviewed, accepted, and 
signed before contract obligation. The contract appendix provides that:
    No payment will be approved for the current year if the CCC 
determines that any of the following conditions exist: (1) The landlord 
or operator has not given the tenants that have an interest in the 
agricultural operation covered by the contract, or that have a lease 
that runs through the contract term at the time of sign-up, an 
opportunity to participate in the benefits of the program, and (2) The 
landlord or operator has adopted any other scheme or device for the 
purpose of depriving any tenant of any benefits to which such tenant 
would otherwise be entitled. If any such conditions occur or are 
discovered after payments have

[[Page 31652]]

been made, all or any part of the payments, as determined by the CCC, 
must be refunded according to paragraph 5F of the contract, and no 
further payments will be made.

Comments

    The second commenter recommended NRCS adopt additional procedures 
to be sure that the contracts themselves provide fair treatment to 
tenants, and that landowners be required to disclose any operators on 
the land who may be farming on the land covered under CSP who lack 
adequate written lease agreements.

NRCS Response

    NRCS accepts applications from the operator of record in the FSA 
farm records management system. Exceptions may be made for other 
tenants, other producers, and owners in the FSA farm records management 
system that can demonstrate, to the satisfaction of NRCS, they are the 
operator and have effective control of the land at the time of 
enrollment in the program. This should ensure that the contracts 
provide for fair treatment of tenants.

Section 1470.31 Appeals

    No comments were received.

Section 1470.32 Compliance With Regulatory Measures

    No comments were received.

Section 1470.33 Access to Operating Unit

    NRCS received three comments regarding access to operating unit. 
One commenter requested USDA inform and make clearly available notices 
in its national, State, and local offices during public outreach 
activities, and during prospective applicants' and active participants' 
meetings, that its authorized representatives have certain limited 
rights to enter a private agricultural operation solely for CSP-related 
purposes. The interim final rule statement that NRCS will make every 
effort to contact the participant prior to the exercise of this 
provision must be honored and fulfilled to the fullest extent. Every 
effort to make prior contact must be documented and logged, using 
permissible and appropriate means of communication. Two commenters 
recommended that the right to access be extended to any representative 
of USDA, as in other USDA regulations. This will allow conservation 
partners with TSP agreements to assist with applications and 
conservation planning on the applications land.

NRCS Response

    NRCS supports the comment and has inserted ``or its authorized 
representative'' after ``NRCS'' where appropriate within this section 
of the rule.

Section 1470.34 Equitable Relief

    No comments were received.

Section 1470.35 Offsets and Assignments

    No comments were received.

Section 1470.36 Misrepresentation and Scheme or Device

    No comments were received.

Section 1470.37 Environmental Credits for Conservation Improvements

    Section 1470.37, ``Environmental credits for conservation 
improvements,'' provides NRCS' policy on environmental credits. NRCS 
received five comments on this section.
    Two commenters were encouraged to see the provisions included on 
environmental credits and support the policy that any environmental 
credits (for example carbon or water quality) created in conjunction 
with a CSP contract are solely the property of the contract holder. 
This is consistent with policy statements made by USDA in reference to 
EQIP and CRP.

NRCS Response

    NRCS appreciates the positive feedback. It is correct that the 
policy on this issue with respect to CSP is consistent with many other 
USDA programs. Although such assistance may favor program participants 
at the expense of non-participants, this stance is based on the 
Department's desire to foster the creation of credits to spur the 
supply side of these markets.

Comments

    One commenter expressed that although NRCS is asserting no interest 
in the credits that may be generated due to participation in CSP, it is 
possible that the rules of an ecosystem services market may preclude 
the purchase of credits that may have already been partially funded by 
the taxpayer. In almost all cases, it is highly likely that NRCS has 
only financed the creation of a portion of the credits that may be 
generated by an operation, and that a large percentage of the potential 
ecosystem service credit is being generated through ongoing labor and 
investment on the part of the farm operator. It would help ensure the 
ability of all USDA conservation program participants to sell ecosystem 
services credits in any ecosystem services market if USDA would 
calculate what portion of the potential credit they have financed and 
what portion remains that could be sold into an ecosystem services 
market. This would create more stability and assurance for producers 
who wish to participate in these markets.

NRCS Response

    USDA recognizes and respects the rights for markets to establish 
their own technical and trading requirements for market participants. 
The rationale for precluding environmental credits generated by 
taxpayer-assisted programs is that these markets only want to recognize 
``additional'' credits produced without tax-payer assistance. These 
markets would contend that credits generated through such programs 
would have been produced regardless of the presence of an environmental 
market and in fact, could affect the decision of non-program 
participants to create and enter into environmental markets. Measuring 
the degree of distortion created by tax-payer assistance programs to 
extricate its portion of the credits due to their influence would add 
another level of complexity to these emerging markets.

Comments

    One commenter supported the provision of the regulation regarding 
environmental credits for conservation improvements. It is important 
the conservation program participants be able to participate in future 
ecosystem services markets regardless of whether they have or have not 
participated in Federal conservation programs.

NRCS Response

    USDA supports the creation of environmental markets and does not 
directly affect the decision of program participants to participate in 
them.

Comments

    One commenter recommended NRCS provide additional weight to 
projects that acreage CSP program goals while concurrently facilitating 
emerging environmental credit markets (i.e. those projects that are 
well-tailored to resulting in the production of marketable climate and 
water quality credits). In addition to meeting program goals, these 
projects will meet the administration's goal for fostering economic 
stimulus through enhanced markets in ecosystem services.

NRCS Response

    The CSP has the potential to address specific resource concerns by 
allowing the State Technical Committee to select

[[Page 31653]]

the priority resource concerns in their State. Also, although NRCS 
recognizes that there may be substantial indirect impacts on local 
economies and employment, NRCS' primary objective is to put 
conservation on the ground.

Other Regulatory Changes

    NRCS made the following administrative changes to add clarity to 
the rule:
    (1) Text related to funding reserves for Socially Disadvantaged 
Farmers or Ranchers and Beginning Farmers or Ranchers was removed from 
paragraph 1470.2(e) and relocated more appropriately under 1470.4, 
Allocation and Management;
    (2) Paragraphs 1470.2(f)(1)(i) through (iii) were added to place 
responsibilities of the State Technical Committees and local working 
groups in one location within the rule.
    (3) Paragraph 1470.4(e) was added to include a statutory 
requirement to identify that CSP may contribute to the Cooperative 
Conservation Partnership Initiative (CCPI). CCPI provides that, for the 
funds available for CCPI, 90 percent will be allocated for projects 
selected at the State level and 10 percent for projects offered through 
a national competitive process. For the percentage of funds allocated 
based on a national competitive process, this regulation identifies 
that funding allocation decisions will consider the extent to which the 
project addresses national and regional conservation priorities.
    (4) Paragraph 1470.3 includes a new definition for limited resource 
farmer and rancher for consistency with other NRCS regulations.
    (5) Outreach--in paragraph 1470.5(b), deleted redundant text and 
added paragraph 1470.5(d) clarifying that NRCS will conduct focused 
outreach in regions of national significance in order to maximize 
program participation.
    (6) Paragraph 1470.6(b)(4) was amended to provide clarification to 
``other eligible lands'' to include ``other private agricultural land 
as determined by the Chief, on which resource concerns related to 
agricultural production could be addressed by enrolling the land in 
CSP.''
    (7) The text in paragraph 1470.20(e), Application, was deleted and 
relocated to ``Administration'' to keep reference to administrative 
functions in one location. A new paragraph (e) has been added regarding 
State and local priorities.
    (8) Paragraph 1470.24(e) clarified the timing of payments for newly 
enrolled contracts. In paragraph (i) clarified payment limitation 
provisions for Indian tribes, Pueblos, and Indian nations. In paragraph 
(j) clarified that payments will be directly attributed to entity 
members.

List of Subjects in 7 CFR Part 1470

    Agricultural operation, Conservation activities, Conservation 
measurement tool, Natural resources, Priority resource concern, 
Stewardship threshold, Resource-conserving crop rotation, Soil and 
water conservation, Soil quality, Water quality and water conservation, 
Wildlife and forest management.

0
For the reasons stated above, the CCC adds part 1470 of Title 7 of the 
CFR to read as follows:

PART 1470--CONSERVATION STEWARDSHIP PROGRAM

Subpart A--General Provisions

Sec.
1470.1 Applicability.
1470.2 Administration.
1470.3 Definitions.
1470.4 Allocation and management.
1470.5 Outreach activities.
1470.6 Eligibility requirements.
1470.7 Enhancements and conservation practices.
1470.8 Technical and other assistance.
Subpart B--Contracts and Payments
1470.20 Application for contracts and selecting offers from 
applicants.
1470.21 Contract requirements.
1470.22 Conservation stewardship plan.
1470.23 Conservation activity operation and maintenance.
1470.24 Payments.
1470.25 Contract modifications and transfers of land.
1470.26 Contract renewal.
1470.27 Contract violations and termination.
Subpart C--General Administration
1470.30 Fair treatment of tenants and sharecroppers.
1470.31 Appeals.
1470.32 Compliance with regulatory measures.
1470.33 Access to agricultural operation.
1470.34 Equitable relief.
1470.35 Offsets and assignments.
1470.36 Misrepresentation and scheme or device.
1470.37 Environmental credits for conservation improvements.

    Authority: 16 U.S.C. 3838d-3838g.

Subpart A--General Provisions


Sec.  1470.1  Applicability.

    (a) This part sets forth the policies, procedures, and requirements 
for the Conservation Stewardship Program (CSP) as administered by the 
Natural Resources Conservation Service (NRCS), for enrollment during 
fiscal year (FY) 2009 and thereafter.
    (b) The purpose of CSP is to encourage producers to address 
resource concerns in a comprehensive manner by:
    (1) Undertaking additional conservation activities; and
    (2) Improving, maintaining, and managing existing conservation 
activities.
    (c) CSP is applicable in any of the 50 States, District of 
Columbia, Commonwealth of Puerto Rico, Guam, Virgin Islands of the 
United States, American Samoa, and Commonwealth of the Northern Mariana 
Islands.
    (d) NRCS provides financial assistance and technical assistance to 
participants for the conservation, protection, and improvement of soil, 
water, and other related natural resources, and for any similar 
conservation purpose as determined by NRCS.


Sec.  1470.2  Administration.

    (a) The regulations in this part will be administered under the 
general supervision and direction of the Chief, NRCS, who is a Vice 
President of the Commodity Credit Corporation (CCC).
    (b) The Chief is authorized to modify or waive a provision of this 
part if the Chief deems the application of that provision to a 
particular limited situation to be inappropriate and inconsistent with 
the purposes of the program. This authority cannot be further 
delegated. The Chief may not modify or waive any provision of this part 
which is required by applicable law.
    (c) To achieve the conservation goals of CSP, NRCS will:
    (1) Make the program available nationwide to eligible applicants on 
a continuous application basis with one or more ranking periods to 
determine enrollments. One of the ranking periods will occur in the 
first quarter of each fiscal year, to the extent practicable; and
    (2) Develop conservation measurement tools (CMT) for the purpose of 
carrying out the program.
    (d) During the period beginning on October 1, 2008, and ending on 
September 30, 2017, NRCS will, to the maximum extent practicable:
    (1) Enroll in CSP an additional 12,769,000 acres for each fiscal 
year; and
    (2) Manage CSP to achieve a national average rate of $18 per acre, 
which includes the costs of all financial and technical assistance and 
any other expenses associated with program enrollment and 
participation.
    (e) The State Conservationist will:
    (1) Obtain advice from the State Technical Committee and local 
working groups on the development of State-level technical, outreach, 
and program matters, including:

[[Page 31654]]

    (i) Establishment of ranking pools appropriate for the conduct of 
CSP within the State to ensure program availability and prioritization 
of conservation activities. Ranking pools may be based on watersheds, 
geographic areas, or other appropriate regions within a State and may 
consider high-priority regional and State-level resource concern areas;
    (ii) Identification of not less than three, nor more than five 
priority resource concerns in particular watersheds, geographic areas, 
or other appropriate regions within a State;
    (iii) Identification of resource-conserving crops that will be part 
of resource-conserving crop rotations;
    (iv) Development of design protocols and participation procedures 
for participation in on-farm research, and demonstration and pilot 
projects; and
    (v) Evaluation of Cooperative Conservation Partnership Initiative 
(CCPI) projects and allowable program adjustments for the conduct of 
projects.
    (2) Assign NRCS employees as designated conservationists to be 
responsible for CSP at the local level; and
    (3) Be responsible for the program in their assigned State.
    (f) NRCS may enter into agreements with Federal, State, and local 
agencies, conservation districts, Indian tribes, private entities, and 
individuals to assist NRCS with program implementation.


Sec.  1470.3  Definitions.

    The following definitions will apply to this part and all documents 
issued in accordance with this part, unless specified otherwise:
    Agricultural land means cropland, rangeland, and pastureland on 
which agricultural products or livestock are produced and resource 
concerns may be addressed. Agricultural lands may also include other 
land and incidental areas included in the agricultural operation as 
determined by NRCS. Other agricultural lands include cropped woodland, 
marshes, incidental areas included in the agricultural operation, and 
other types of agricultural land used for production of livestock.
    Agricultural operation means all agricultural land and other land, 
as determined by NRCS, whether contiguous or noncontiguous:
    (1) Which is under the effective control of the applicant; and
    (2) Which is operated by the applicant with equipment, labor, 
management, and production or cultivation practices that are 
substantially separate from other operations.
    Animal waste storage or treatment facility means a structural 
conservation practice used for storing or treating animal waste.
    Applicant means a person, legal entity, joint operation, or Indian 
tribe that has an interest in an agricultural operation, as defined in 
7 CFR part 1400, who has requested in writing to participate in CSP.
    Beginning farmer or rancher means:
    (1) An individual or legal entity who:
    (i) Has not operated a farm, ranch, or nonindustrial private forest 
land (NIPF), or who has operated a farm, ranch, or NIPF for not more 
than 10 consecutive years (this requirement applies to all members of a 
legal entity); and
    (ii) Will materially and substantially participate in the operation 
of the farm or ranch.
    (2) In the case of a contract with an individual, individually, or 
with the immediate family, material and substantial participation 
requires that the individual provide substantial day-to-day labor and 
management of the farm or ranch, consistent with the practices in the 
county or State where the farm is located.
    (3) In the case of a contract with a legal entity or joint 
operation, all members must materially and substantially participate in 
the operation of the farm or ranch. Material and substantial 
participation requires that each of the members provide some amount of 
the management or labor and management necessary for day-to-day 
activities, such that if each of the members did not provide these 
inputs, operation of the farm or ranch would be seriously impaired.
    Chief means the Chief of NRCS, or designee.
    Conservation activities means conservation systems, practices, or 
management measures needed to address a resource concern or improve 
environmental quality through the treatment of natural resources, and 
includes structural, vegetative, and management activities as 
determined by NRCS.
    Conservation district means any district or unit of State, tribal, 
or local government formed under State, tribal, or territorial law for 
the express purpose of developing and carrying out a local soil and 
water conservation program. Such district or unit of government may be 
referred to as a ``conservation district,'' ``soil conservation 
district,'' ``soil and water conservation district,'' ``resource 
conservation district,'' ``land conservation committee,'' ``natural 
resource district,'' or similar name.
    Conservation measurement tool means procedures developed by NRCS to 
estimate the level of environmental benefit to be achieved by a 
producer using the proxy of conservation performance.
    Conservation planning means using the planning process outlined in 
the applicable National Planning Procedures Handbook (NPPH).
    Conservation practice means a specified treatment, such as a 
structural or vegetative practice or management technique, commonly 
used to meet a specific need in planning and carrying out conservation 
programs for which standards and specifications have been developed. 
Conservation practices are in the NRCS Field Office Technical Guide, 
section IV, which is based on the National Handbook of Conservation 
Practices.
    Conservation stewardship plan means a record of the participant's 
decisions that describes the schedule of conservation activities to be 
implemented, managed, or improved. Associated supporting information 
that identifies and inventories resource concerns and existing 
conservation activities, establishes benchmark data, and documents the 
participant's conservation objectives will be maintained with the plan.
    Conservation system means a combination of conservation practices, 
management measures, and enhancements used to address natural resource 
and environmental concerns in a comprehensive, holistic, and integrated 
manner.
    Contract means a legal document that specifies the rights and 
obligations of any participant who has been accepted into the program. 
A CSP contract is an agreement for the transfer of assistance from NRCS 
to the participant for installing, adopting, improving, managing, and 
maintaining conservation activities.
    Designated conservationist means an NRCS employee whom the State 
Conservationist has designated as responsible for CSP at the local 
level.
    Effective control means possession of the land by ownership, 
written lease, or other legal agreement and authority to act as 
decisionmaker for the day-to-day management of the operation both at 
the time the applicant enters into a stewardship contract and for the 
required period of the contract.
    Enhancement means a type of conservation activity used to treat 
natural resources and improve conservation performance. Enhancements 
are installed at a level of management intensity that exceeds the 
sustainable level for a given resource concern, and those enhancements 
directly related to a practice standard are applied in a manner that 
exceeds the

[[Page 31655]]

minimum treatment requirements of the standard.
    Enrollment means for the initial sign-up for FY 2009, NRCS will 
consider a participant ``enrolled'' in CSP based on the fiscal year the 
application is submitted, once NRCS approves the participant's 
contract. For subsequent ranking cut-off periods, NRCS will consider a 
participant enrolled in CSP based on the fiscal year the contract is 
approved.
    Field office technical guide means the official local NRCS source 
of resource information and interpretations of guidelines, criteria, 
and standards for planning and applying conservation practices and 
conservation management systems. It contains detailed information on 
the conservation of soil, water, air, plant, and animal resources 
applicable to the local area for which it is prepared.
    Indian lands means all lands held in trust by the United States for 
individual Indians or Indian tribes, or all land titles held by 
individual Indians or tribes, subject to Federal restrictions against 
alienation or encumbrance, or lands subject to the rights of use, 
occupancy, or benefit of certain Indian tribes. This term also includes 
lands for which the title is held in fee status by Indian tribes and 
the U.S. Government-owned land under the Bureau of Indian Affairs (BIA) 
jurisdiction.
    Indian Tribe means any Indian tribe, band, nation, pueblo, or other 
organized group or community, including any Alaska Native village or 
regional or village corporation as defined in or established pursuant 
to the Alaska Native Claims Settlement Act (43 U.S.C. 1601 et seq.), 
which is recognized as eligible for the special programs and services 
provided by the United States to Indians because of their status as 
Indians.
    Joint operation means, as defined in part 1400 of this chapter, a 
general partnership, joint venture, or other similar business 
arrangement in which the members are jointly and severally liable for 
the obligations of the organization.
    Legal entity means, as defined in part 1400 of this chapter, an 
entity created under Federal or State law.
    Limited Resource Farmer or Rancher means:
    (1) A person with direct or indirect gross farm sales not more than 
the current indexed value in each of the previous 2 years ($142,000 is 
the amount for 2010, adjusted for inflation using Prices Paid by Farmer 
Index as compiled by the National Agricultural Statistical Service); 
and
    (2) Has a total household income at or below the national poverty 
level for a family of four, or less than 50 percent of county median 
household income in each of the previous 2 years (to be determined 
annually using Department of Commerce Data).
    Liquidated damages means a sum of money stipulated in the CSP 
contract that the participant agrees to pay NRCS if the participant 
fails to fulfill the terms of the contract. The sum represents an 
estimate of the technical assistance expenses incurred to service the 
contract, and reflects the difficulties of proof of loss and the 
inconvenience or non-feasibility of otherwise obtaining an adequate 
remedy.
    Local working group means the advisory body as described in 7 CFR 
part 610.
    Management measure means one or more specific actions that is not a 
conservation practice, but has the effect of alleviating problems or 
improving the treatment of the natural resources.
    National Organic Program means the program, administered by the 
Department of Agriculture (USDA) Agricultural Marketing Service, which 
regulates the standards for any farm, wild crop harvesting, or handling 
operation that wants to market an agricultural product as organically 
produced.
    Natural Resources Conservation Service means an agency of USDA 
which has responsibility for administering CSP using the funds, 
facilities, and authorities of the CCC.
    Nonindustrial private forest land means rural land that has 
existing tree cover or is suitable for growing trees, and is owned by 
an individual, group, association, corporation, Indian tribe, or other 
private legal entity that has definitive decisionmaking authority over 
the land.
    Operation and maintenance means work performed by the participant 
to maintain existing conservation activities to at least the level of 
conservation performance identified at the time the application is 
obligated into a contract, and maintain additional conservation 
activities installed and adopted over the contract period.
    Participant means a person, legal entity, joint operation, or 
Indian tribe that is receiving payment or is responsible for 
implementing the terms and conditions of a CSP contract.
    Payment means financial assistance provided to the participant 
under the terms of the CSP contract.
    Person means, as defined in part 1400 of this chapter, an 
individual, natural person and does not include a legal entity.
    Priority resource concern means a resource concern that is 
identified by the State Conservationist, in consultation with the State 
Technical Committee and local working groups, as a priority for a 
State, or the specific geographic areas within a State.
    Producer means a person, legal entity, joint operation, or Indian 
tribe who has an interest in the agricultural operation, as defined in 
part 1400 of this chapter, or who is engaged in agricultural production 
or forest management.
    Resource concern means a specific natural resource problem that is 
likely to be addressed successfully through the implementation of 
conservation activities by producers.
    Resource-conserving crop means a crop that is one of the following:
    (1) A perennial grass;
    (2) A legume grown for use as forage, seed for planting, or green 
manure;
    (3) A legume-grass mixture;
    (4) A small grain grown in combination with a grass or legume, 
whether inter-seeded or planted in rotation.
    Resource-conserving crop rotation means a crop rotation that:
    (1) Includes at least one resource-conserving crop as determined by 
the State Conservationist;
    (2) Reduces erosion;
    (3) Improves soil fertility and tilth;
    (4) Interrupts pest cycles; and
    (5) In applicable areas, reduces depletion of soil moisture or 
otherwise reduces the need for irrigation.
    Secretary means the Secretary of USDA.
    Socially disadvantaged farmer or rancher means a producer who has 
been subjected to racial or ethnic prejudices because of their identity 
as a member of a group without regard to their individual qualities. A 
socially disadvantaged group is a group whose members have been subject 
to racial or ethnic prejudice because of their identity as members of a 
group, without regard to their individual qualities. These groups 
consist of American Indians or Alaskan Natives, Asians, Blacks or 
African Americans, Native Hawaiians or other Pacific Islanders, and 
Hispanics. A socially disadvantaged applicant is an individual or 
entity who is a member of a socially disadvantaged group. For an 
entity, at least 50 percent ownership in the farm business must be held 
by socially disadvantaged individuals.
    State Conservationist means the NRCS employee authorized to 
implement CSP and direct and supervise NRCS activities in a State, 
Caribbean Area, or Pacific Islands Area.

[[Page 31656]]

    State Technical Committee means a committee established by the 
Secretary in a State pursuant to 16 U.S.C. 3861.
    Stewardship threshold means the level of natural resource 
conservation and environmental management required, as determined by 
NRCS using the CMT, to conserve and improve the quality and condition 
of a natural resource.
    Technical assistance means technical expertise, information, and 
tools necessary for the conservation of natural resources on land 
active in agricultural, forestry, or related uses. The term includes 
the following:
    (1) Technical services provided directly to farmers, ranchers, 
forest producers, and other eligible entities, such as conservation 
planning, technical consultation, preparation of forest stewardship 
management plans, and assistance with the design and implementation of 
conservation activities; and
    (2) Technical infrastructure, including processes, tools, and 
agency functions needed to support delivery of technical services, such 
as technical standards, resource inventories, training, data, 
technology, monitoring, and effects analyses.
    Technical Service Provider means an individual, private-sector 
entity, or public agency certified by NRCS to provide technical 
services to program participants in lieu of, or on behalf of, NRCS as 
referenced in 7 CFR part 652.


Sec.  1470.4  Allocation and management.

    (a) The Chief will allocate acres and associated funds to State 
Conservationists:
    (1) Primarily on each State's proportion of eligible land to the 
total amount of eligible land in all States; and
    (2) On consideration of:
    (i) The extent and magnitude of the conservation needs associated 
with agricultural production in each State based on natural resource 
factors that consider national, regional, and State-level priority 
ecosystem areas,
    (ii) The degree to which implementation of the program in the State 
is, or will be, effective in helping producers address those needs, and
    (iii) Other considerations determined by the Chief to achieve 
equitable geographic distribution of program participation.
    (b) The State Conservationist will allocate acres to ranking pools, 
to the extent practicable, based on the same factors the Chief 
considers in making allocations to States.
    (c) Of the acres made available for each of fiscal years 2009 
through 2012 to carry out CSP, NRCS will use, as a minimum:
    (1) Five percent to assist beginning farmers or ranchers, and
    (2) Five percent to assist socially disadvantaged farmers or 
ranchers.
    (d) In any fiscal year, allocated acres that are not enrolled by a 
date determined by NRCS may be reallocated with associated funds for 
use in that fiscal year under CSP. As part of the reallocation process, 
NRCS will consider several factors, including demand from applicants, 
national and regional conservation priorities, and prior-year CSP 
performance in States.
    (e) Of the CSP funds and acres made available for each fiscal year:
    (1) The Chief will reserve 6 percent of funds and acres to ensure 
an adequate source of funds and acres for the CCPI. Of the funds and 
acres reserved, the Chief will allocate:
    (i) Ninety percent to projects based on the direction of State 
Conservationists, with the advice of State Technical Committees; and
    (ii) Ten percent to projects based on a national competitive 
process established by the Chief. In determining funding allocation 
decisions for these projects, NRCS will consider the extent to which 
they address national and regional conservation priorities.
    (2) Any funds and acres reserved for the CCPI in a fiscal year that 
are not obligated by April 1 of that fiscal year may be used to carry 
out other CSP activities during the remainder of that fiscal year.


Sec.  1470.5  Outreach activities.

    (a) NRCS will establish program outreach activities at the 
national, State, and local levels to ensure that potential applicants 
who control eligible land are aware and informed that they may be 
eligible to apply for program assistance.
    (b) Special outreach will be made to eligible producers with 
historically low participation rates, including but not restricted to, 
beginning farmers or ranchers, limited resource farmers or ranchers, 
and socially disadvantaged farmers or ranchers.
    (c) NRCS will ensure that outreach is provided so as not to limit 
producer participation because of size or type of operation or 
production system, including specialty crop and organic production.
    (d) NRCS will conduct focused outreach in regions of national 
significance in order to maximize program participation. These areas 
could include landscapes such as the Chesapeake Bay watershed and Great 
Lakes basin.


Sec.  1470.6  Eligibility requirements.

    (a) Eligible applicant. To be an eligible applicant for CSP, a 
producer must be the operator in the Farm Service Agency (FSA) farm 
records management system. Potential applicants that are not in the FSA 
farm records management system must establish records with FSA. 
Potential applicants whose records are not current in the FSA farm 
records management system must update those records prior to the close 
of the evaluation period to be considered eligible. NRCS may grant 
exceptions to the ``operator of record'' requirement for producers, 
tenants, and owners in the FSA farm records management system that can 
demonstrate, to the satisfaction of NRCS, they will operate and have 
effective control of the land. Applicants must also meet all of the 
following requirements:
    (1) Have effective control of the land unless an exception is made 
by the Chief in the case of land administered by the BIA, Indian lands, 
or other instances in which the Chief determines that there is 
sufficient assurance of control;
    (2) Be in compliance with the highly erodible land and wetland 
conservation provisions found at 7 CFR part 12;
    (3) Be in compliance with Adjusted Gross Income provisions found at 
7 CFR part 1400;
    (4) Supply information, as required by NRCS, to determine 
eligibility for the program, including but not limited to, information 
related to eligibility requirements and ranking factors; conservation 
activity and production system records; information to verify the 
applicant's status as a historically underserved producer, if 
applicable; and payment eligibility as established by 7 CFR part 1400; 
and
    (5) Provide a list of all members of the legal entity and embedded 
entities along with members' tax identification numbers and percentage 
interest in the entity. Where applicable, American Indians, Alaska 
Natives, and Pacific Islanders may use another unique identification 
number for each individual eligible for payment.
    (b) Eligible land. A contract application must include all of the 
eligible land on an applicant's agricultural operation, except as 
identified in paragraph (b)(3) of this section. A participant may 
submit an application(s) to enter into an additional contract(s) for 
newly acquired eligible land, which would then compete with other 
applications in a subsequent ranking period. The land as described 
below is part of the agricultural operation and eligible for enrollment 
in the CSP:
    (1) Private agricultural land;
    (2) Agricultural Indian lands;

[[Page 31657]]

    (3) NIPF:
    (i) By special rule in the statute, NIPF is eligible land,
    (ii) No more than 10 percent of the acres enrolled nationally in 
any fiscal year may be NIPF,
    (iii) The applicant will designate by submitting a separate 
application if they want to offer NIPF for funding consideration,
    (iv) If designated for funding consideration, then the NIPF 
component of the operation will include all the applicant's NIPF. If 
not designated for funding consideration, then the applicant's NIPF 
will not be part of the agricultural operation; and
    (4) Other private agricultural land, as determined by the Chief, on 
which resource concerns related to agricultural production could be 
addressed by enrolling the land in CSP.
    (c) Ineligible land. The following ineligible lands are part of the 
agricultural operation, but ineligible for inclusion in the contract or 
for payment in CSP:
    (1) Land enrolled in the Conservation Reserve Program (CRP), 7 CFR 
part 1410;
    (2) Land enrolled in the Wetlands Reserve Program (WRP), 7 CFR part 
1467;
    (3) Land enrolled in the Grassland Reserve Program (GRP), 7 CFR 
part 1415;
    (4) Land enrolled in the Conservation Security Program, 7 CFR part 
1469;
    (5) Public land including land owned by a Federal, State, or local 
unit of government; and
    (6) Land used for crop production after June 18, 2008, that had not 
been planted, considered to be planted, or devoted to crop production 
for at least 4 of the 6 years preceding that date, unless that land:
    (i) Had previously been enrolled in CRP,
    (ii) Has been maintained using long-term crop rotation practices as 
determined by the designated conservationist, or
    (iii) Is incidental land needed for efficient operation of the farm 
or ranch as determined by the designated conservationist.


Sec.  1470.7   Enhancements and conservation practices.

    (a) Participant decisions describing the additional enhancements 
and conservation practices to be implemented under the conservation 
stewardship contract will be recorded in the conservation stewardship 
plan.
    (b) NRCS will make available to the public the list of enhancements 
and conservation practices available to be installed, adopted, 
maintained, and managed through the CSP.
    (c) NRCS will make available bundled suites of conservation 
activities for participants to voluntarily select to include as part of 
their conservation stewardship plans. The bundles will be designed to 
coordinate the installation and adoption of enhancements with each 
other to address resource concerns in a more comprehensive and cost-
effective manner.
    (d) CSP encourages the use of other NRCS programs to install 
conservation practices that are required to meet agreed-upon 
stewardship thresholds, but the practices may not be compensated 
through CSP.


Sec.  1470.8  Technical and other assistance.

    (a) NRCS may provide technical assistance to an eligible applicant 
or participant either directly or through a technical service provider 
(TSP) as set forth in 7 CFR part 652.
    (b) NRCS retains approval authority over certification of work done 
by non-NRCS personnel for the purpose of approving CSP payments.
    (c) NRCS will ensure that technical assistance is available and 
program specifications are appropriate so as not to limit producer 
participation because of size or type or operation or production 
system, including specialty crop and organic production. In providing 
technical assistance to specialty crop and organic producers, NRCS will 
provide appropriate training to field staff to enable them to work with 
these producers and to utilize cooperative agreements and contracts 
with nongovernmental organizations with expertise in delivering 
technical assistance to these producers.
    (d) NRCS will assist potential applicants dealing with the 
requirements of certification under the National Organic Program and 
CSP requirements concerning how to coordinate and simultaneously meet 
eligibility standards under each program.
    (e) NRCS may utilize the services of State foresters and existing 
technical assistance programs such as the Forest Stewardship Program of 
the U.S. Forest Service, in coordinating assistance to NIPF owners.

Subpart B--Contracts and Payments


Sec.  1470.20  Application for contracts and selecting offers from 
applicants.

    (a) Submission of contract applications. Applicants may submit an 
application to enroll all of their eligible land into CSP on a 
continuous basis.
    (b) Stewardship threshold requirement. To be eligible to 
participate in CSP, an applicant must submit to the designated 
conservationist for approval, a contract application that:
    (1) Indicates the applicant's conservation activities, at the time 
of application, are meeting the stewardship threshold for at least one 
resource concern;
    (2) Would, at a minimum, meet or exceed the stewardship threshold 
for at least one priority resource concern in addition to the resource 
concern described in paragraph (b)(1) of this section by the end of the 
conservation stewardship contract by:
    (i) Installing and adopting additional conservation activities, and
    (ii) Improving, maintaining, and managing conservation activities 
present on the agricultural operation at the time the contract 
application is accepted by NRCS;
    (3) Provides a map, aerial photograph, or overlay that:
    (i) Identifies the applicant's agricultural operation and NIPF 
component of the operation, and
    (ii) Delineates eligible land with associated acreage amounts; and
    (4) If the applicant is applying for on-farm research and 
demonstration activities or for pilot testing, describes the nature of 
the research, demonstration, or pilot testing in a manner consistent 
with design protocols and application procedures established by NRCS.
    (c) Evaluation of contract applications. NRCS will conduct one or 
more ranking periods each fiscal year.
    (1) To the extent practicable, one ranking period will occur in the 
first quarter of the fiscal year;
    (2) In evaluating CSP applications, the State Conservationist or 
designated conservationist will rank applications based on the 
following factors, using the CMT, to the maximum extent practicable:
    (i) Level of conservation treatment on all applicable priority 
resource concerns at the time of application,
    (ii) Degree to which the proposed conservation treatment on 
applicable priority resource concerns effectively increases 
conservation performance,
    (iii) Number of applicable priority resource concerns proposed to 
be treated to meet or exceed the stewardship threshold by the end of 
the contract, and
    (iv) Extent to which other resource concerns, in addition to 
priority resource concerns, will be addressed to meet or exceed the 
stewardship threshold by the end of the contract period;
    (3) In the event that application ranking scores from (2) above are

[[Page 31658]]

similar, the application that represents the least cost to the program 
will be given higher priority; and
    (4) The State Conservationist or designated conservationist may not 
assign a higher priority to any application because the applicant is 
willing to accept a lower payment than the applicant would otherwise be 
eligible to receive.
    (d) Weighting of ranking factors. To the extent the CSP objective 
of additional conservation is not being achieved, as determined by the 
Chief, NRCS will adjust the weighting of ranking factors in order to 
place emphasis on increasing net conservation benefits.
    (e) State and local priorities. The Chief may develop and use 
additional criteria for evaluating applications that are determined 
necessary to ensure that national, State, and local conservation 
priorities are effectively addressed.
    (f) Ranking pools. Ranking pools will be established in accordance 
with Sec.  1470.2(e)(1)(i).
    (1) NIPF will compete in ranking pools separate from agricultural 
land. An applicant with both NIPF and agricultural land will have the 
options to submit:
    (i) One application for NIPF;
    (ii) One application for agricultural land; or
    (iii) Two applications, one for each land type.
    (2) An applicant with an agricultural operation or NIPF component 
of the operation that crosses ranking pool boundaries will make 
application and be ranked in the ranking pool where the largest acreage 
portion of their operation occurs.
    (3) Within each State or established ranking pool, the State 
Conservationist will address conservation access for certain farmers or 
ranchers, including:
    (i) Socially disadvantaged farmers or ranchers; and
    (ii) Beginning farmers or ranchers.
    (g) Application pre-approval. The State Conservationist or 
designated conservationist will make application pre-approval 
determinations during established ranking periods based on eligibility 
and ranking score.
    (h) Field verification. NRCS will conduct onsite field verification 
prior to obligation of contract funding to substantiate the accuracy of 
the information provided by pre-approved applicants during the 
application process.


Sec.  1470.21  Contract requirements.

    (a) After a determination that the application will be approved and 
a conservation stewardship plan will be developed in accordance with 
Sec.  1470.22, the State Conservationist or designee will enter into a 
conservation stewardship contract with the participant to enroll all of 
the eligible land on a participant's agricultural operation.
    (b) The conservation stewardship contract will:
    (1) Provide for payments over a period of 5 years;
    (2) Incorporate by reference the conservation stewardship plan;
    (3) State the payment amount NRCS agrees to make to the participant 
annually, subject to the availability of funds;
    (4) Incorporate all provisions as required by law or statute, 
including requirements that the participant will:
    (i) Implement the conservation stewardship plan approved by NRCS 
during the term of the contract,
    (ii) Operate and maintain conservation activities on the 
agricultural operation consistent with Sec.  1470.23,
    (iii) Comply with the terms of the contract or documents 
incorporated by reference into the contract,
    (iv) Refund as determined by NRCS, any program payments received 
with interest, and forfeit any future payments under the program, upon 
the violation of a term or condition of the contract, consistent with 
Sec.  1470.27,
    (v) Refund as determined by NRCS, all program payments received 
with interest, upon the transfer of the right and interest of the 
participant, in land subject to the contract, unless the transferee of 
the right and interest agrees to assume all obligations of the 
contract, consistent with Sec.  1470.25,
    (vi) Maintain and make available to NRCS upon request, appropriate 
records documenting applied conservation activity and production system 
information, and provide evidence of the effective and timely 
implementation of the conservation stewardship plan and contract, and
    (vii) Not engage in any action during the term of the conservation 
stewardship contract on the eligible land covered by the contract that 
would interfere with the purposes of the conservation stewardship 
contract;
    (5) Permit all economic uses of the land that:
    (i) Maintain the agricultural or forestry nature of the land, and
    (ii) Are consistent with the conservation purposes of the contract;
    (6) Include a provision to ensure that a participant will not be 
considered in violation of the contract for failure to comply with the 
contract due to circumstances beyond the control of the participant, 
including a disaster or related condition, as determined by the State 
Conservationist; and
    (7) Include such other provisions as NRCS determines necessary to 
ensure the purposes of the program are achieved.


Sec.  1470.22  Conservation stewardship plan.

    (a) NRCS will use the conservation planning process as outlined in 
the NPPH to encourage participants to address resource concerns in a 
comprehensive manner.
    (b) The conservation stewardship plan will contain a record of the 
participant's decisions that describes the schedule of conservation 
activities to be implemented, managed, or improved under the 
conservation stewardship contract.
    (c) Associated supporting information maintained with the 
participant's plan will include:
    (1) CMT documentation that will be the basis for:
    (i) Identifying and inventorying resource concerns,
    (ii) Establishing benchmark data on the condition of existing 
conservation activities, and
    (iii) Documenting the participant's conservation objectives to 
reach and exceed stewardship thresholds;
    (2) A plan map delineating enrolled land with associated acreage 
amounts;
    (3) In the case where a participant wishes to initiate or retain 
organic certification, documentation that will support the 
participant's transition to or participation in the National Organic 
Program;
    (4) In the case where a participant is approved for the on-farm 
research and demonstration or pilot testing option, a research, 
demonstration, or pilot testing plan consistent with design protocols 
and application procedures established by NRCS; and
    (5) Other information as determined appropriate by NRCS.


Sec.  1470.23  Conservation activity operation and maintenance.

    The participant will maintain and manage existing conservation 
activities on the agricultural operation to at least the level of 
conservation performance identified at the time the application is 
obligated into a contract for the conservation stewardship contract 
period, and additional activities installed and adopted over the term 
of the conservation stewardship contract.


Sec.  1470.24  Payments.

    (a) Annual payments. Subject to the availability of funds, NRCS 
will provide, as appropriate, annual

[[Page 31659]]

payments under the program to compensate a participant for installing 
and adopting additional conservation activities, and improving, 
maintaining, and managing existing conservation activities. A split-
rate annual payment structure will be used to provide separate payments 
for additional and existing conservation activities in order to place 
emphasis on implementing additional conservation.
    (1) To receive annual payments, a participant must:
    (i) Install and adopt additional conservation activities as 
scheduled in the conservation stewardship plan. At least one additional 
enhancement must be scheduled, installed, and adopted in the first 
fiscal year of the contract. All enhancements must be scheduled, 
installed, and adopted by the end of the third fiscal year of the 
contract, and
    (ii) As a minimum, maintain existing activities to the level of 
existing conservation performance identified at the time the 
application is obligated into a contract for the conservation 
stewardship contract period;
    (2) To earn annual payments for an eligible land use, a participant 
must schedule, install, and adopt at least one additional conservation 
activity on that land-use type. Eligible land-use types that fail to 
have at least one additional conservation activity scheduled, 
installed, and adopted will not receive annual payments;
    (3) A participant's annual payments will be determined using the 
conservation performance estimated by the CMT and computed by land-use 
type for eligible land earning payments. Conservation performance is 
prorated over the contract term so as to accommodate, to the extent 
practicable, participants earning equal annual payments in each fiscal 
year;
    (4) The annual payment rates will be based to the maximum extent 
practicable, on the following factors:
    (i) Costs incurred by the participant associated with planning, 
design, materials, installation, labor, management, maintenance, or 
training,
    (ii) Income foregone by the participant, and
    (iii) Expected environmental benefits, determined by estimating 
conservation performance improvement using the CMT;
    (5) The annual payment method will accommodate some participant 
operational adjustments without the need for contract modification.
    (i) Enhancements may be replaced with similar enhancements without 
adjustment of annual payment as long as the conservation performance is 
determined by NRCS to be equal to or better than the conservation 
performance of the additional enhancements offered at enrollment. An 
enhancement replacement that results in a decline below that 
conservation performance level will not be allowed, and
    (ii) Adjustments to existing activities may occur consistent with 
conservation performance requirements from Sec.  1470.23; and
    (6) Enhancements may be applied on other land included in an 
agricultural operation, as determined by NRCS.
    (b) Supplemental payments. Subject to the availability of funds, 
NRCS will provide a supplemental payment to a participant receiving 
annual payments, who also agrees to adopt a resource-conserving crop 
rotation.
    (1) The State Conservationist will determine whether a resource-
conserving crop rotation is eligible for supplemental payments based on 
whether the resource-conserving crop rotation is designed to provide 
natural resource conservation and production benefits;
    (2) A participant must agree to adopt and maintain a beneficial 
resource-conserving crop rotation for the term of the contract to be 
eligible to receive a supplemental payment. A resource-conserving crop 
rotation is considered adopted when the resource-conserving crop is 
planted on at least one-third of the rotation acres. The resource-
conserving crop must be adopted by the third fiscal year of the 
contract and planted on all rotation acres by the fifth fiscal year of 
the contract; and
    (3) The supplemental payment is set at a rate needed to encourage a 
producer to adopt a resource-conserving crop rotation and will be 
based, to the maximum extent practicable, on costs incurred and income 
foregone by the participant and expected environmental benefits, 
determined by estimating conservation performance improvement using the 
CMT.
    (c) On-farm research and demonstration or pilot testing. A 
participant may be compensated through their annual payment for:
    (1) On-farm research and demonstration activities; or
    (2) Pilot testing of new technologies or innovative conservation 
activities.
    (d) Minimum contract payment. NRCS will make a minimum contract 
payment to participants who are socially disadvantaged farmers or 
ranchers, beginning farmers or ranchers, or limited resource farmers or 
ranchers, at a rate determined by the Chief in any fiscal year that a 
contract's payment amount total is less than $1,000. Definitions of 
socially disadvantaged farmers or ranchers, beginning farmers or 
ranchers, and limited resource farmers or ranchers are contained in 
Sec.  1470.3.
    (e) Timing of payments. NRCS will make payments as soon as 
practicable after October 1 of each fiscal year for activities carried 
out in the previous fiscal year. For newly enrolled contracts, payments 
will be made as soon as practicable after October 1 following the 
fiscal year of enrollment.
    (f) Non-compensatory matters. A CSP payment to a participant will 
not be provided for:
    (1) New conservation practices or enhancements applied with 
financial assistance through other USDA conservation programs;
    (2) The design, construction, or maintenance of animal waste 
storage or treatment facilities, or associated waste transport or 
transfer devices for animal feeding operations; or
    (3) Conservation activities for which there is no cost incurred or 
income foregone by the participant.
    (g) Payment limits. A person or legal entity may not receive, 
directly or indirectly, payments that, in the aggregate, exceed $40,000 
during any fiscal year for all CSP contracts entered into, and $200,000 
for all CSP contracts entered into during any 5-year period, excluding 
funding arrangements with federally recognized Indian tribes or Alaska 
Native corporations, regardless of the number of contracts entered into 
under the CSP by the person or legal entity.
    (h) Contract limits. Payments under a conservation stewardship 
contract with joint operations will be limited to $80,000 per fiscal 
year and $400,000 over the term of the initial contract period, 
excluding funding arrangements with federally recognized Indian tribes 
or Alaska Native corporations. The payment limits for contracts with 
persons or legal entities are contained in Sec.  1470.24(g).
    (i) Payment limitation provisions for individual Indians and Indian 
tribes. Payment limitations apply to individual tribal member(s) when 
applying and subsequently being granted a contract as an individual(s). 
Contracts with Indian tribes or Alaska Native corporations are not 
subject to payment or contract limitations. Indian tribes and BIA will 
certify in writing that no one individual, directly or indirectly, will 
receive more than the payment limitation. Certification provided at the 
time of contract obligation will cover the entire contract period. The 
tribal entity must also provide, upon request from NRCS, a listing of 
individuals and payment made, by Social Security number or

[[Page 31660]]

other unique identification number, during the previous year for 
calculation of overall payment limitations.
    (j) Tax Identification Number. To be eligible to receive a CSP 
payment, all legal entities or persons applying, either alone or as 
part of a joint operation, must provide a tax identification number and 
percentage interest in the legal entity. In accordance with 7 CFR part 
1400, an applicant applying as a joint operation or legal entity must 
provide a list of all members of the legal entity and joint operation 
and associated embedded entities, along with the members' Social 
Security numbers and percentage of interest in the joint operation or 
legal entity. Payments will be directly attributed to legal entity 
members for the purpose of complying with Sec.  1470.24(g).
    (k) Unique tax identification numbers. Where applicable, American 
Indians, Alaska Natives, and Pacific Islanders may use another unique 
identification number for each individual eligible for payment. Any 
participant that utilizes a unique identification number as an 
alternative to a tax identification number will utilize only that 
identifier for any and all other CSP contracts to which the participant 
is a party. Violators will be considered to have provided fraudulent 
representation and be subject to full penalties of Sec.  1470.36.
    (l) Payment data. NRCS will maintain detailed and segmented data on 
CSP contracts and payments to allow for quantification of the amount of 
payments made for:
    (1) Installing and adopting additional activities;
    (2) Improving, maintaining, and managing existing activities;
    (3) Participation in research and demonstration or pilot projects; 
and
    (4) Development and periodic assessment and evaluation of 
conservation stewardship plans developed under this rule.


Sec.  1470.25  Contract modifications and transfers of land.

    (a) NRCS may allow a participant to modify a conservation 
stewardship contract if NRCS determines that the modification is 
consistent with achieving the purposes of the program.
    (b) NRCS will allow modification to a conservation stewardship 
contract to remove contract acres enrolled in the CRP, WRP, or GRP or 
other Federal or State programs that offer greater natural resource 
protection. Such modifications are consistent with the purposes of CSP. 
Participants will not be subject to liquidated damages or refund of 
payments received for enrolling land in these programs.
    (c) NRCS will not allow a participant to modify a conservation 
stewardship contract to increase the contract obligation beyond the 
amount of the initial contract, with exception for contracts approved 
by NRCS for renewal or other exceptional cases as determined by the 
Chief.
    (d) Land under contract will be considered transferred if the 
participant loses control of the acreage for any reason.
    (1) The participant is responsible to notify NRCS prior to any 
voluntary or involuntary transfer of land under contract;
    (2) If all or part of the land under contract is transferred, the 
contract terminates with respect to the transferred land unless:
    (i) The transferee of the land provides written notice within 60 
days to NRCS that all duties and rights under the contract have been 
transferred to, and assumed by, the transferee, and
    (ii) The transferee meets the eligibility requirements of the 
program; and
    (e) Contract payment adjustments due to modifications will be 
reflected in the fiscal year following the modification.


Sec.  1470.26  Contract renewal.

    (a) At the end of an initial conservation stewardship contract, 
NRCS may allow a participant to renew the contract to receive payments 
for one additional 5-year period, subject to the availability of funds, 
if they meet criteria from paragraph (b) of this section.
    (b) To be considered for contract renewal, the participant must:
    (1) Be in compliance with the terms of their initial contract as 
determined by NRCS;
    (2) Add any newly acquired eligible land that is part of the 
agricultural operation and meets minimum treatment criteria as 
established and determined by NRCS;
    (3) At a minimum, meet stewardship thresholds for at least two 
priority resource concerns; and
    (4) Agree to adopt additional conservation activities to address at 
least one additional priority resource concern during the term of the 
renewed conservation stewardship contract.


Sec.  1470.27  Contract violations and termination.

    (a) The State Conservationist may terminate, or by mutual consent 
with the participants, terminate a contract where:
    (1) The participants are unable to comply with the terms of the 
contract as the result of conditions beyond their control; or
    (2) As determined by the State Conservationist, it is in the public 
interest.
    (b) If a contract is terminated in accordance with the provisions 
of paragraph (a) of this section, the State Conservationist may allow 
the participant to retain a portion of any payments received 
appropriate to the effort the participant has made to comply with the 
contract, or in cases of hardship, where forces beyond the 
participant's control prevented compliance with the contract. If a 
participant claims hardship, such claims must be clearly documented and 
cannot have existed when the applicant applied for participation in the 
program.
    (c) If NRCS determines that a participant is in violation of the 
contract terms or documents incorporated therein, NRCS will give the 
participant a period of time, as determined by NRCS, to correct the 
violation and comply with the contract terms and attachments thereto. 
If a participant continues in violation, NRCS may terminate the CSP 
contract in accordance with paragraph (e) of this section.
    (d) Notwithstanding the provisions of paragraph (c) of this 
section, a contract termination will be effective immediately upon a 
determination by NRCS that the participant:
    (1) Has submitted false information or filed a false claim;
    (2) Engaged in any act, scheme, or device for which a finding of 
ineligibility for payments is permitted under the provisions of Sec.  
1470.36; or
    (3) Engaged in actions that are deemed to be sufficiently 
purposeful or negligent to warrant a termination without delay.
    (e) If NRCS terminates a contract, the participant will forfeit all 
rights to future payments under the contract, pay liquidated damages, 
and refund all or part of the payments received, plus interest. 
Participants violating CSP contracts may be determined ineligible for 
future NRCS-administered conservation program funding.
    (1) NRCS may require a participant to provide only a partial refund 
of the payments received if a previously installed conservation 
activity has achieved the expected conservation performance 
improvement, is not adversely affected by the violation or the absence 
of other conservation activities that would have been installed under 
the contract, and has met the associated operation and maintenance 
requirement of the activity; and
    (2) NRCS will have the option to reduce or waive the liquidated 
damages,

[[Page 31661]]

depending upon the circumstances of the case--
    (i) When terminating a contract, NRCS may reduce the amount of 
money owed by the participant by a proportion that reflects the good 
faith effort of the participant to comply with the contract or the 
existence of hardships beyond the participant's control that have 
prevented compliance with the contract. If a participant claims 
hardship, that claim must be well documented and cannot have existed 
when the applicant applied for participation in the program, and
    (ii) In carrying out its role in this section, NRCS may consult 
with the local conservation district.

Subpart C--General Administration


Sec.  1470.30  Fair treatment of tenants and sharecroppers.

    Payments received under this part must be divided in the manner 
specified in the applicable contract. NRCS will ensure that tenants and 
sharecroppers who would have an interest in acreage being offered 
receive treatment which NRCS deems to be equitable, as determined by 
the Chief. NRCS may refuse to enter into a contract when there is a 
disagreement among joint applicants seeking enrollment as to an 
applicant's eligibility to participate in the contract as a tenant.


Sec.  1470.31  Appeals.

    A participant may obtain administrative review of an adverse 
decision under this part in accordance with 7 CFR parts 11 and 614. 
Determinations in matters of general applicability, such as payment 
rates, payment limits, the designation of identified priority resource 
concerns, and eligible conservation activities are not subject to 
appeal.


Sec.  1470.32  Compliance with regulatory measures.

    Participants will be responsible for obtaining the authorities, 
rights, easements, permits, or other approvals or legal compliance 
necessary for the implementation, operation, and maintenance associated 
with the conservation stewardship plan. Participants will be 
responsible for compliance with all laws and for all effects or actions 
resulting from the implementation of the contract.


Sec.  1470.33  Access to agricultural operation.

    NRCS, or its authorized representative, will have the right to 
enter an agricultural operation for the purpose of determining 
eligibility and for ascertaining the accuracy of any representations, 
including natural resource information provided by an applicant for the 
purpose of evaluating a contract application. Access will include the 
right to provide technical assistance, determine eligibility, assess 
natural resource conditions, inspect any work undertaken under the 
contract, and collect information necessary to evaluate the 
implementation of conservation activities in the contract. NRCS, or its 
authorized representative, will make an effort to contact the 
participant prior to the exercise of this provision.


Sec.  1470.34  Equitable relief.

    (a) If a participant relied upon the advice or action of NRCS and 
did not know, or have reason to know, that the action or advice was 
improper or erroneous, the participant may be eligible for equitable 
relief under 7 CFR part 635. The financial or technical liability for 
any action by a participant that was taken based on the advice of a TSP 
will remain with the TSP and will not be assumed by NRCS.
    (b) If a participant has been found in violation of a provision of 
the conservation stewardship contract or any document incorporated by 
reference through failure to comply fully with that provision, the 
participant may be eligible for equitable relief under 7 CFR part 635.


Sec.  1470.35  Offsets and assignments.

    (a) Any payment or portion thereof due to any participant under 
this part will be allowed without regard to any claim or lien in favor 
of any creditor, except agencies of the United States Government. The 
regulations governing offsets and withholdings found at 7 CFR part 1403 
will be applicable to contract payments.
    (b) Any participant entitled to any payment may assign such 
payments in accordance with regulations governing assignment of payment 
found at 7 CFR part 1404.


Sec.  1470.36  Misrepresentation and scheme or device.

    (a) If NRCS determines that an applicant intentionally 
misrepresented any fact affecting a CSP determination, the application 
will be determined ineligible immediately.
    (b) A participant who is determined to have erroneously represented 
any fact affecting a program determination made in accordance with this 
part will not be entitled to contract payments and must refund to NRCS 
all payments, plus interest determined in accordance with 7 CFR part 
1403.
    (c) A participant will refund to NRCS all payments, plus interest 
determined in accordance with 7 CFR part 1403, received by such 
participant with respect to all CSP contracts if they are determined to 
have:
    (1) Adopted any scheme or device that tends to defeat the purpose 
of the program;
    (2) Made any fraudulent representation;
    (3) Adopted any scheme or device for the purpose of depriving any 
tenant or sharecropper of the payments to which such person would 
otherwise be entitled under the program; or
    (4) Misrepresented any fact affecting a program determination.
    (d) Participants determined to have committed actions identified in 
paragraph (c) of this section will:
    (1) Have their interest in all CSP contracts terminated; and
    (2) In accordance with Sec.  1470.27(e), may be determined by NRCS 
to be ineligible for future NRCS-administered conservation program 
funding.


Sec.  1470.37  Environmental credits for conservation improvements.

    NRCS believes that environmental benefits will be achieved by 
implementing conservation activities funded through CSP. These 
environmental benefits may result in opportunities for the program 
participant to sell environmental credits. Any requirements related to 
these environmental credits must be compatible with the purposes of the 
contract. NRCS asserts no direct or indirect interest on these credits. 
However, NRCS retains the authority to ensure that operation and 
maintenance (O&M) requirements for CSP-funded improvements are met, 
consistent with Sec.  1470.21 and Sec.  1470.23. Where actions may 
impact the land and conservation activities under a CSP contract, NRCS 
will at the request of the participant, assist with the development of 
an O&M compatibility assessment prior to the participant entering into 
any credit agreement.

    Signed this 21st day of May in Washington, DC.
Dave White,
Vice President, Commodity Credit Corporation and Chief, Natural 
Resources Conservation Service.
[FR Doc. 2010-12699 Filed 6-2-10; 8:45 am]
BILLING CODE 3410-05-P


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