Conservation Stewardship Program

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.

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

CSP2008@wdc.usda.gov.

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

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 § 1470.6 “Eligibility requirements,” § 1470.21 “Contract requirements,” § 1470.22 “Conservation stewardship plan,” and § 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

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 § 1470.21 “Contract requirements,” § 1470.22 “Conservation stewardship plan,” and § 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/

).

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/.

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 § 1470.21 “Contract requirements,” § 1470.22 “Conservation stewardship plan,” and § 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

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

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.

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.

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.

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

Yearly cost

1

(million $)

GDP price deflator

2

(chained, 2005=100)

Yearly cost in constant

dollars

1

(million $)

Discount

factors

for 3%

Present value of costs−3%

(million $)

Discount

factors

for 7%

Present value of costs−7%

(million $)

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

Total

4596.840

4008.008

3520.093

2990.166

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

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:

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.”

(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

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.

(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

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.

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

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

Policy Option

Cost

per

acre

Acres funded in program

a

Crop

land

Pasture

Range

land

NIPF

Total

2

Total program cost

b

Crop

land

Pasture

Range

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

Existing

activities

Additional

activities

Total points

Dollars per point

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

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

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

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.

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,

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.

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

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

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

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.

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

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

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” (§ (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

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.

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

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

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.

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

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 p

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