187 
‘‘(iii) INCENTIVES.—In making rental 
payments to an owner or operator of land 
described in subparagraph (A), the Sec-
retary may provide incentive payments suf-
ficient to encourage proper thinning and 
practices to improve the condition of re-
sources on the land.’’. 
(c) ANNUAL RENTAL PAYMENTS.—Section 1234(c) 
of the Food Security Act of 1985 (16 U.S.C. 3834(c)) is 
amended— 
(1) in paragraph (1), by inserting ‘‘and other 
eligible land’’ after ‘‘highly erodible cropland’’ both 
places it appears; 
(2) by striking paragraph (2) and inserting the 
following: 
‘‘(2) METHODS OF DETERMINATION.— 
‘‘(A) IN GENERAL.—The amounts payable 
to owners or operators in the form of rental 
payments under contracts entered into under 
this subchapter may be determined through— 
‘‘(i) the submission of bids for such 
contracts by owners and operators in such 
manner as the Secretary may prescribe; or 
‘‘(ii) such other means as the Sec-
retary determines are appropriate. 
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188 
‘‘(B) GRASSLAND.—In the case of eligible 
land described in section 1231(b)(3), the Sec-
retary shall make annual payments in an 
amount that is not more than 75 percent of the 
grazing value of the land covered by the con-
tract.’’; and 
(3) in paragraph (5)(A)— 
(A) by striking ‘‘The Secretary’’ and in-
serting the following: 
‘‘(i) SURVEY.—The Secretary’’; and 
(B) by adding at the end the following: 
‘‘(ii) USE.—The Secretary may use 
the survey of dryland cash rental rates de-
scribed in clause (i) as a factor in deter-
mining rental rates under this section as 
the Secretary determines appropriate.’’. 
(d) PAYMENT SCHEDULE.—Section 1234 of the Food 
Security Act of 1985 (16 U.S.C. 3834) is amended by 
striking subsection (d) and inserting the following: 
‘‘(d) PAYMENT SCHEDULE.— 
‘‘(1) IN GENERAL.—Except as otherwise pro-
vided in this section, payments under this sub-
chapter shall be made in cash in such amount and 
on such time schedule as is agreed on and specified 
in the contract. 
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189 
‘‘(2) SOURCE.—Payments under this sub-
chapter shall be made using the funds of the Com-
modity Credit Corporation. 
‘‘(3) ADVANCE
PAYMENT.—Payments under 
this subchapter may be made in advance of deter-
mination of performance.’’. 
(e) PAYMENT LIMITATION.—Section 1234(f) of the 
Food Security Act of 1985 (16 U.S.C. 3834(f)) is amend-
ed— 
(1) in paragraph (1), by striking ‘‘, including 
rental payments made in the form of in-kind com-
modities,’’; 
(2) by striking paragraph (3); and 
(3) by redesignating paragraph (4) as para-
graph (2). 
SEC. 2006. CONTRACT REQUIREMENTS. 
Section 1235 of the Food Security Act of 1985 (16 
U.S.C. 3835) is amended— 
(1) in subsection (f)— 
(A) in paragraph (1)— 
(i) in the matter preceding subpara-
graph (A), by striking ‘‘DUTIES’’ and all 
that follows through ‘‘a beginning farmer 
or rancher or’’ and inserting ‘‘TRANSITION 
TO COVERED FARMER OR RANCHER.—In 
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190 
the case of a contract modification ap-
proved in order to facilitate the transfer of 
land subject to a contract from a retired 
farmer or rancher to a beginning farmer or 
rancher, a veteran farmer or rancher (as 
defined in section 2501(e) of the Food, Ag-
riculture, Conservation, and Trade Act of 
1990 (7 U.S.C. 2279(e))), or a’’; 
(ii) in subparagraph (D), by striking 
‘‘the farmer or rancher’’ and inserting ‘‘the 
covered farmer or rancher’’; and 
(iii) in subparagraph (E), by striking 
‘‘section 1001A(b)(3)(B)’’ and inserting 
‘‘section 1001’’; and 
(B) in paragraph (2), by striking ‘‘require-
ment of section 1231(h)(4)(B)’’ and inserting 
‘‘option 
provided 
under 
section 
1234(c)(2)(A)(ii)’’; and 
(2) by adding at the end the following: 
‘‘(g) FINAL YEAR OF CONTRACT.—The Secretary 
shall not consider an owner or operator to be in violation 
of a term or condition of a conservation reserve contract 
if— 
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191 
‘‘(1) during the year prior to expiration of the 
contract, the land is enrolled in the conservation 
stewardship program; and 
‘‘(2) the activity required under the conserva-
tion stewardship program pursuant to the enroll-
ment is consistent with this subchapter. 
‘‘(h) LAND ENROLLED
IN AGRICULTURAL CON-
SERVATION EASEMENT PROGRAM.—The Secretary may 
terminate or modify a contract entered into under this 
subchapter if eligible land that is subject to such contract 
is transferred into the agricultural conservation easement 
program under subtitle H.’’. 
SEC. 2007. CONVERSION OF LAND SUBJECT TO CONTRACT 
TO OTHER CONSERVING USES. 
Section 1235A of the Food Security Act of 1985 (16 
U.S.C. 3835a) is repealed. 
SEC. 2008. EFFECTIVE DATE. 
(a) IN GENERAL.—The amendments made by this 
subtitle shall take effect on October 1, 2013, except, the 
amendment made by section 2001(d), which shall take ef-
fect on the date of enactment of this Act. 
(b) EFFECT ON EXISTING CONTRACTS.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this subtitle 
shall not affect the validity or terms of any contract 
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