CSP, called for under section 2001 of the 2002 farm bill, is a voluntary conservation program that supports ongoing stewardship of private and tribal agricultural lands by providing payments to producers for maintaining and enhancing natural resources. According to USDA, CSP identifies and rewards those farmers and ranchers who are meeting the highest standards of conservation and environmental management on their operations, while creating powerful incentives for other producers to meet those same standards of conservation performance. In turn, the conservation benefits gained will help these farms and ranches to be more economically and environmentally sustainable while increasing natural resources benefits to society at large. CSP provides financial and technical assistance to agricultural producers who advance the conservation and improvement of soil, water, air, energy, plant and animal life, and other conservation purposes on working lands. Such lands include cropland, grassland, prairie land, improved pasture, and rangeland, as well as forested land and other noncropped areas that are an incidental part of the agriculture operation. The program is available in all 50 states, the District of Columbia, the Commonwealth of Puerto Rico, Guam, the Virgin Islands of the United States, American Samoa, the Commonwealth of the Northern Marianna Islands, and the Trust Territory of the Pacific Islands. Under the farm bill, the program is open to all agricultural producers, regardless of size of operation, crops produced, or geographic location. CSP is administered by NRCS. In implementing CSP, NRCS emphasizes soil and water quality as nationally important resource concerns because of the potential for significant environmental benefits from conservation treatment that improves their condition. Thus, although the farm bill required producers to treat at least one resource of concern under CSP, NRCS program regulations require producers to treat at least two resources—soil and water—to be eligible for the program. Producers can use CSP payments to fund a variety of soil and water quality conservation practices. Soil quality practices include crop rotation, planting cover crops, tillage practices, prescribed grazing, and providing adequate wind barriers. Water quality practices include conservation tillage, strip cropping, vegetative filter strips, terraces, grassed waterways, managed access to water courses, nutrient and pesticide management, prescribed grazing, and irrigation water management. In addition, under the farm bill and NRCS regulations, to be eligible for CSP, both the producer and the producer’s operation must first meet several basic eligibility criteria, including (1) the land must be private agricultural land, forested land that is an incidental part of an agricultural operation, or tribal land with the majority of the land located within a selected priority watershed; (2) the applicant must be in compliance with highly erodible land and wetlands provisions of the Food Security Act of 1985 and generally must have control of the land for the life of the contract; and (3) the applicant must share in the risk of producing any crop or livestock and be entitled to a share in the crop or livestock available for marketing from the operation. The farm bill establishes three tiers or levels of participation. Each tier has a specified contract period and an annual payment limit and calls for a plan addressing resources of concern (as further delineated in NRCS regulations), as indicated in table 1. In addition to these tiers, NRCS’s program regulations and sign-up announcements establish enrollment categories and subcategories. Under NRCS regulations, enrollment categories may be defined by criteria related to resource concerns and levels of historic conservation treatment, including a producer’s willingness to achieve additional environmental performance or conduct conservation enhancement activities. For the fiscal year 2005 sign-up, five enrollment categories (A through E) were used for cropland, pasture, and rangeland. For example, for cropland, the enrollment categories were defined by various levels of soil conditioning index scores and the number of stewardship practices and activities in place on the farm for at least 2 years. All applications that met the sign-up criteria were placed in an enrollment category, regardless of available funding. NRCS then funded all eligible producers enrolled in category A before funding producers in category B and subsequent categories until available funding was exhausted. If an enrollment category could not be fully funded, then the subcategories were used to determine application funding order within a category. For the fiscal year 2005 sign-up, 12 subcategories were used. These subcategories included factors such as whether (1) the applicant is a limited resource producer or a participant in an ongoing environmental monitoring program; (2) the agricultural operation is in a designated water conservation area or aquifer zone, drought area, or nonattainment area for air quality; or (3) the agricultural operation is in a designated area for threatened and endangered species habitat creation and protection. The producer’s CSP contract identifies the type and amount of program payments that a producer will receive. NRCS has established criteria for calculating each of the four components of the program payment. For example, the stewardship component is based on the number of acres enrolled in CSP, the stewardship payment rate established for the watershed, and reduction factors based on the tier of enrollment. At a minimum, all CSP contract payments include amounts for the stewardship and existing practice components. To be eligible to participate in CSP, the producer must develop a conservation security plan (also known as a conservation stewardship plan) that identifies the land and resources to be conserved; describes the tier of conservation security contract and the particular conservation practices to be implemented, maintained, or improved; and contains a schedule for the implementation, maintenance, or improvement of these practices. This plan must be submitted to and approved by NRCS. According to NRCS, about 1.8 million farmers and ranchers nationwide are potentially eligible for CSP. However, the agency has chosen a staged approach to implementing CSP, based on limiting program sign-ups to selected, priority watersheds each year. In part, this reflects CSP’s newness. As with any new program, there have been birthing and growing pains as the agency has grappled with developing program regulations, training its staff, outreaching to producers and stakeholder groups, and adjusting program implementation based on lessons learned from one program sign-up year to the next. NRCS also chose a staged approach in light of limited program funding—Congress authorized caps for total CSP funding in fiscal year 2004 and for salaries and expenses of personnel to carry out CSP in fiscal years 2005 and 2006—and the statutory limitation on the amount of CSP funding that can be used for technical assistance— NRCS cannot incur technical assistance costs in excess of 15 percent of the funds expended in a given fiscal year for CSP. According to NRCS, focusing on priority watersheds reduces the administrative burden on applicants and the costs of processing a large number of applications that cannot be funded. In addition, the agency notes that everyone in the United States lives in a watershed and, because each year producers in approximately one-eighth of the nation’s 2,119 watersheds will be eligible for the sign-up, all eligible producers will have the opportunity to participate over an 8-year period, subject to available funding. NRCS held the first CSP sign-up in fiscal year 2004. Nearly 2,200 farmers and ranchers participated in the program that year with contracts covering nearly 1.9 million acres in 18 watersheds in 22 states. Producer payments totaled about $34.6 million in fiscal year 2004, and NRCS used about $5.9 million for technical assistance. For fiscal year 2005, NRCS approved over 12,700 CSP contract applications, covering nearly 9 million acres in 220 watersheds in 50 states and Puerto Rico. These 220 watersheds included the 18 watersheds covered by the fiscal year 2004 sign-up. Producer payments totaled about $171.4 million (including payments for contracts approved in 2004) in fiscal year 2005, and NRCS used about $30.2 million for technical assistance. In January 2006, USDA announced that it plans to offer CSP contracts to producers in an additional 60 watersheds during fiscal year 2006, with participants receiving an estimated $220 million (including payments for contracts approved in 2004 and 2005). More detail on the CSP payments made in fiscal years 2004 and 2005 is summarized in appendix II, including information on these payments by tier, payment type, and enhancement type. Figure 1 shows the watersheds included in the fiscal year 2004 and fiscal year 2005 CSP sign-ups. In general, NRCS implements CSP by (1) offering periodic sign-ups in specific, priority watersheds across the Nation; (2) requiring producers to complete a self-assessment, including a description of conservation activities on their operations, to determine their eligibility for the program; (3) scheduling interviews with eligible producers in local NRCS field offices to review the producers’ applications; (4) determining which program tier and enrollment category an eligible producer may participate in; (5) selecting the enrollment categories to be funded for CSP contracts; (6) developing conservation security plans and contracts for the producers selected; and (7) making the associated payments. Appendix III provides a flowchart describing the CSP application and enrollment process in more detail. Applicants may submit only one application for each sign-up. Producers who are participants in an existing CSP conservation stewardship contract are not eligible to submit another application. Many stakeholders refer to CSP as an “entitlement” program. However, the farm bill does not refer to the creation of any entitlements under the program. Moreover, the legislation provides the Secretary of Agriculture with discretion to establish additional eligibility requirements, provides that the Secretary must approve a producer’s conservation security plan before entering into a conservation security contract, and only states that payments “may” be received under three tiers of contracts. Thus, CSP is not an entitlement program.