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Conservation Security ProgramInterim Final Rule with Request for Comments[Billing Code 3410-16]
The CSP is a voluntary program administered by NRCS, using the authorities and funds of the Commodity Credit Corporation, that provides financial and technical assistance to producers who advance the conservation and improvement of soil, water, air, energy, plant and animal life, and other conservation purposes on Tribal and private working lands. Such lands include cropland, grassland, prairie land, improved pasture, and rangeland, as well as forested land and other non-cropped areas that are an incidental part of an agricultural operation. The CSP regulations implement provisions set out in Title XII, Chapter 2, Subchapter A, of the Food Security Act of 1985, 16 U.S.C. 3801 et seq., as amended by the Farm Security and Rural Investment Act of 2002, enacted on May 13, 2002, Public Law 107-171 and are intended to assist agricultural producers in taking actions that will provide long-term beneficial effects to our nation. NRCS responded in the notice of proposed rulemaking to the comments submitted in response to the advance notice of proposed rulemaking and to the information submitted in public workshops and focus groups. For the proposed rule, we provided a 60 day comment period that ended March 2, 2004. We received more than 10,000 separate written responses containing over 20,000 specific comments were received: 9,638 comments were from farmers, ranchers, and other individuals, 253 from non-governmental organizations, 27 from businesses, and 128 from state, local, and tribal governments. Over 700 oral comments were received from the 10 Nationally-sponsored CSP listening sessions. Several other listening sessions were held and those comments were considered in the written responses. We discuss below the significant issues raised in response to the proposed rule, including the written responses and the oral submissions at the public listening sessions. Based on the rationale set forth in the proposed rule and this rule, we are adopting the provisions of the proposed rule as a interim final rule, except for certain changes as discussed below. Additional responses were received from Federal agencies and employees; their
comments are not included in the following analysis of public comments. These
responses were treated as inter- and intra-agency comments and considered along
with the public comments, where appropriate. There were also comments related to
the statute, the budget, and other areas of concern outside the purview of this
rulemaking that are not discussed here. Congress authorized $41.443 million to be available to implement CSP in FY 2004. NRCS needs to obligate these funds by September 30, 2004. Given the time-frame established by the authorization of funds, NRCS must have its framework for implementation of CSP available immediately. While NRCS has considered the comments in response to the proposed rule and will respond to further comments on its interim final rule, NRCS believes that the public interest will best be served if CSP can be implemented this fiscal year under the basic framework set forth in its proposed rule. This interim final rule sets forth the manner in which NRCS will operate the CSP. As noted in one public response, “The proposed rule was designed to manage budget exposure and participation under the constraints of a severely capped entitlement program and enable eventual implementation of the fully functioning stewardship-based entitlement program.” This interim final rule reflects the authority of the Secretary to set criteria, standards, and priorities for annual sign-ups in order to match participation with available technical and financial resources, and achieve an orderly and effective ramp up to full implementation of CSP. Environmental performance, priorities for CSP and programmatic costs will be effectively managed through criteria established for general sign-ups in priority watersheds. Ramping up CSP as quickly as possible while preserving its integrity as a novel approach of integrating environmental performance while rewarding stewards were the primary considerations that guided rulemaking. In developing this interim final rule, NRCS carefully considered its
experience with conservation programs and the public comments it received. CSP
raises policy issues that are not usually addressed in other conservation
programs. This interim final rule lays out the approach NRCS believes will best
achieve the statutory objectives and responds to the suggestions from the
public. Several policy decisions established in the rule are highlighted in this
preamble for further public comment, but NRCS is seeking comment on all aspects
of this rule. The majority of comments centered on six major issues in the proposed rule: 1) the Administration’s response to legislative intent; 2) the watershed approach and enrollment categories ; 3) the minimum stewardship eligibility requirements; 4) the funding and payment rates; 5) the definition of agricultural operation; and 6) locally led conservation. These comments were considered as part of the rulemaking record to the extent that they were relevant to the objectives of the rulemaking. Numerous minor editorial and other language clarification changes were suggested; these comments are not included in the following analysis but all were considered and many of the minor technical changes are included in the interim final rule. Comments on other issues are discussed in the Summary of Provisions. As appropriate, public comments and recommendations have been incorporated in the interim final rule or will be included in program guidance and delivery activities. 1. The Administration’s response to legislative intent Limiting payments
• Limit the sign-up periods Many commenters asserted that the proposed rule did not meet the intent of Congress or the law They suggested that CSP should not adopt any provisions that would establish a mechanism for responding to partial funding because the CSP should have full funding. In light of the congressional cap on spending in FY 2004 and the President’s 2005 Budget request, NRCS established a priority mechanism in order to most effectively administer the CSP. This interim final rule allows the flexibility to conduct any CSP sign-up in an appropriate number of watersheds and enrollment categories according to the program’s funding status at the time of sign-up. Since the CSP statutory funding was adjusted three times in twenty months, there is a need to allow for regulatory flexibility to operate the program. The alternative would be to change the rule each time Congress makes an adjustment to CSP funding. Further, NRCS believes that each of the limiting factors will help create the appropriate balance between allowing the largest number of participants and yet providing meaningful payments. The limitation in the interim final rule concerning stewardship (base) payments is different from that set forth in the proposed rule. The proposed rule provided that we would reduce base payments, now termed “stewardship payments”, for all three tiers by applying a 0.1 reduction factor. In the interim final rule, the stewardship rate for Tier I is reduced to 0.25, the stewardship rate for Tier II is reduced to 0.50, and the stewardship rate for Tier III is reduced to 0.75. We chose these percentages for two reasons. First, this will provide incentives for producers to move to a higher Tier which provides significantly greater environmental benefits. Second, the conservation treatment necessary to advance from Tier II to Tier III would otherwise be disproportionate with the payment scheme. Commenters asserted that rather than prorate funding, a better approach may
be to hold the remaining funds for a future sign-up. Other commenters asserted
that this year’s limited funding should be used to develop implementation
strategy and capability instead of launching a scaled down program. We made no
changes based on these comments. Congress intended that NRCS expend or obligate
the funds in FY 2004 for establishing CSP contracts with participants. NRCS has
no authority to carry CSP funds into the next fiscal year and funds not expended
or obligated will be returned to the Treasury. Commenters asserted that producers should be accepted into the CSP without having accepted a conservation security plan, but funding should be withheld until a security conservation plan is accepted. We made no changes based on these comments. We would be unable to make determinations regarding the adequacy of the applicant’s conservation performance and therefore eligibility for enrollment into the CSP without the submission of a conservation security plan. Commenters asserted that in times of less than full funding NRCS should give priority to Tier III over Tier II and give priority to Tier II over Tier I. We made no changes based on these comments. The statute provides no authority for prioritizing one Tier over another and requires that the program offer all three Tiers for participation.
The Watershed Approach In order to be able to implement CSP in FY 2004, NRCS announced, in a notice to the Federal Register, dated May 4, 2004 (69 FR 24560), its decision to use priority watersheds and enrollment categories for operating the program for the current fiscal year. The authority for the use of priority watersheds and enrollment categories is the authority to determine the conservation purposes for which assistance for conservation and improvement are to be provided under CSP - 16 U.S.C. 3838A(a). The May 4 document and a copy of the enrollment category chart can be found on the web at http://www.nrcs.usda.gov/programs/csp. The interim final rule includes a process to select the priority watersheds and includes specific enrollment categories for identifying, classifying, and prioritizing contracts to be funded. As discussed below, NRCS will use similar provisions regarding watersheds and enrollment categories for FY 2004. NRCS will not rank selected watersheds for funding purposes, but rather provide funding to producers in all selected watersheds in the order established through the enrollment categories. However, NRCS is requesting comments on the process to select the priority watersheds and on the specific enrollment categories for identifying, classifying, and prioritizing contracts to be funded. NRCS will consider the comments and may make appropriate changes for future years. In the proposed rule, NRCS also asked for ideas for program delivery as alternatives to its “preferred approach and the listed alternatives.” These comments are also addressed below. Commenters asserted that priority should be given to those with the highest number of enhancement activities. We made no changes based on these comments. This would be inconsistent with the statutory scheme regarding the ranking of applications. Commenters asserted that the CSP process constitutes competitive bidding. We made no changes based on these comments. We are not implementing a competitive process. We are merely implementing the statutory scheme of providing payments for those meeting specified criteria, so as to stay within the budgetary and technical assistance limits explained below. NRCS will prioritize watersheds based on a nationally consistent process using existing natural resource, environmental quality, and agriculture activity data along with other information that may be necessary to efficiently operate the program. The watershed prioritization and identification process will consider several factors, including but not limited to: the potential of surface and ground water quality to degradation; the potential of soil to degradation; the potential of grazing land to degradation; state or national conservation and environmental issues i.e. location of air non-attainment zones or important wildlife habitat; and local availability of management tools needed to more efficiently operate the program. The number and location of eligible watersheds will be announced and identified prior to the sign-up. Commenters made a number of suggestions regarding the establishment of
priority watersheds, including the following: Based on the projection from the President’s budget, the selection of the watershed priorities would put all watersheds on a multi-year rotation for CSP sign-up. Only producers with a majority of their agricultural operation located within those watersheds would be eligible for a given sign-up. Commenters asserted that the watershed priority system should be deleted and
instead NRCS should fund only those agricultural operations that already meet
the highest conservation standards, such as those eligible for Tier III
payments. Other commenters asserted that the watershed priority system should be
deleted, and instead, NRCS should fund only those who do not yet meet high
standards but strive to do so. Commenters further asserted that instead of the
priority watershed approach, NRCS should select one farm from every watershed,
select one farm from each county, select farms based on a lottery system, select
farms based on a first-come first-serve approach, and select all farms in non
priority watersheds. We made no changes based on these comments. By statute, the
cost of technical assistance is limited to 15 percent of the total funds
expended in a fiscal year. It is not feasible to conduct a nationwide sign-up
for any purpose because the technical assistance cost would far exceed the 15
percent cap. Given capped spending authority in FY 2004, and as proposed in the
President’s 2005 Budget, the Administration wants to focus CSP’s activities and
benefits in high-priority regions that meet the environmental and philosophical
goals of the program. Using watersheds allows for improved watershed-scale
planning, program execution, and monitoring and evaluation of results, creating
a first-of-its-kind conservation program. The staged implementation will allow Agency personnel to refine, streamline,
and perfect application procedures as well as self-assessment and self-screening
processes. By concentrating participation for each sign-up for CSP in specific
watersheds and addressing priority resource concerns, NRCS will be better able
to provide high quality technical assistance, adapt new technology tools, and
assessment techniques to critically evaluate the program. Additionally, NRCS
will have the opportunity to evaluate the effectiveness of the treatment in an
established geographic context where it will be more practical and reasonable to
relate to environmental performance. Commenters argued that watershed priorities will help industrial sized agriculture instead of small to moderately sized family farms. We made no changes based on these comments. The criteria for selecting priority watersheds do not take into account the size of the farms. USDA natural resource, agricultural statistics, and economic research data do not indicate any relationship between resource conservation and agricultural operation size. Some commenters asserted that if eligibility is to be determined based on
ranking of watersheds, the watersheds should be selected by rotation. The
watershed approach includes a rotation system aspect in that all watersheds will
be selected once before any are selected for a second time. Careful accounting for and tracking of CSP enrolled acres will help to
demonstrate the environmental performance achieved through the program. The
first order of benefits is provided as stewards maintain enrolled acres to the
stringent CSP non-degradation standard, which they met in order to qualify for
the program. These acres reflect a stream of environmental benefits sustained,
and the first increment of environmental benefit. Acres enhanced beyond
non-degradation, through management intensity that amplifies conservation
benefits, provides a second increment of environmental performance. Quantifying
the natural resource and environmental improvements delivered will be achieved
at micro and macro scales over time. At the field level, environmental
performance will be observed and documented through the producer-based studies
and evaluation and assessment components of CSP. At larger scales, natural
resource inventory, ongoing conservation system physical effects documentation,
and modeling methods will form the basis for quantifying CSP environmental
performance. Commenters asserted that the watershed approach should concentrate on ranching areas. We made no changes based on theses comments. By statute, a number of different land uses are eligible for CSP and there is no basis for emphasizing rangeland. Enrollment categories (i) Categories will serve to sustain past environmental gains for nationally
significant resource concerns consistent with the producer's historic
conservation performance. NRCS also allowed that sub-categories might be established within the
categories. NRCS is requesting comment on the categories chosen for 2004 and the specific
criteria used to sort applications. This input will be considered in developing
the FY 2005 sign-up and a final rule. Another group responded, “More flexibility should be given to State Conservationists in the funding priorities for the enrollment categories and sub-categories. Rather than strictly funding all projects in full based on some categorization, it may be more feasible to pro-rate funding across several participants with sound plans if such partial funding is enough to provide a significant enhancement incentive. On the other hand, limited funding should not be pro-rated to the extent that it merely offers “pennies on the dollar” and is not commercially-viable.” Another commenter stated, “a second overarching theme of CSP is that it is
for all farmers. Unlike commodity programs, it is open to livestock farmers,
fruit and vegetable growers, organic producers, and many others. It is open to
large and small farms. Unlike other conservation programs, it is not just for
those who have ongoing resource degradation, but also rewards those who have
done a good conservation job all along on their own. Unfortunately, these rules
fall short of achieving the goal of being open to all who agree to meet its
conservation challenge.” 3. Minimum stewardship eligibility requirements The law allows the Secretary to set the minimum tier eligibility for CSP.
With the concept of “reward the best and motivate the rest” , the minimums were
set to reward those historic stewards who have been providing the most
fundamental conservation treatment to protect the soil and manage nutrients and
pesticides through the most basic stewardship practices that result in
environmental improvements that benefit all Americans, clean water, and healthy
landscapes. This reward serves as a motivator to those who have not practiced
basic conservation management to complete these minimum requirements for future
CSP eligibility. All activities above these minimums are potentially eligible
for enhancement payments once the producer enters the program.
We made no changes based on these comments. Although all resources are important for agricultural operations, NRCS established minimum criteria for eligibility based on soil quality and water quality because they are essential to all agricultural operations and provide the best yardstick for measuring commitment to conservation. These nationally significant resource concerns are eligibility requirements that must be met as a condition for enrollment rather than a theme for improvement. In this interim final rule we are retaining the provisions to allow NRCS to designate additional nationally significant resource concerns so that NRCS can further limit eligibility in any sign-up by adding these additional eligibility requirements. Other commenters suggested that the rule clarify the specific CSP requirements of soil quality and water quality on cropland and grazing land. Based on these comments, NRCS has more specifically set the minimum level of treatment for the Tiers. As described in the May 4 notice, for assessing soil quality on cropland, irrigated cropland, vineyards and orchards, NRCS will use the Soil Condition Index (SCI) to provide an overall indication of the trend and quality of the soil resource. Soil quality minimum level of treatment is defined as achieving a positive SCI. To assess the condition of the soil resource, the SCI is an effective tool that readily evaluates the producers farming activities for soil quality and assigns an index value for that operation. The SCI can predict the consequences of cropping systems and tillage practices on the trend of soil organic matter. Commenters asserted that soil quality is mostly defined as soil organic
matter, and this should not be the conservation target. We made no changes based
on these comments. Organic matter is a primary indicator of soil quality and an
important factor in carbon sequestration and global climate change. NRCS
reviewed other options, such as assigning specific practices to be achieved for
program entry, requiring all soil quality resource concerns in the NRCS
technical documentation to be addressed, and adding soil erosion as an
additional factor. The SCI provides an overall indication of the trend and
quality of the soil resource, provides local flexibility, takes advantage of new
and emerging technology, is easy to use by the public and NRCS work force, and
provides a science-based approach to improving the soil resource and positive
benefits toward air quality, carbon sequestration, reduction of green house
gases, and soil moisture conservation. Achievement of soil and water quality criteria on rangelands and pasture is based on the management of plant communities through control of grazing animals. Controlled rotational grazing ensures the appropriate kind and number of animals is balanced with the adequate amount of available forage and meets the need of the plants. Water quality issues on rangelands for the purposes of the CSP means resource concerns and/or opportunities, including concerns such as nutrients, sediment, pesticides, and turbidity in surface waters with limited impacts to groundwater. Soil quality issues on rangelands include erosion, organic matter, and compaction. These issues are adequately addressed through grazing management and managing livestock access to water courses through a properly applied grazing management plan. Adequate vegetation cover provides soil and water quality benefits, such as maintaining filtering capacity, infiltration rates, organic matter content, and is achieved by controlling grazing animals to minimize livestock concentration, and trailing and trampling, and enhancing nutrient distribution. Commenters asserted that water quality criteria and the soil quality criteria
were too high. Some commenters asserted that the CSP rule should list all water
and soil quality and resource criteria levels so there is no question about what
they are at sign-up. Others argued that the CSP should be changed so that all
could be eligible, and that standards should not be required to be met for a
period of time, such as three years. In addition, some commenters asserted that
that the definition of water quality should specifically address water
temperature. In order to address these comments NRCS made the minimum
requirements for soil quality and water quality more specific. For
implementation of CSP, the soil quality minimum requirement is now defined as a
SCI value of 0.0 or greater, and the water quality minimum requirement is
defined as meeting the quality criteria for nutrients, pesticides, salinity, and
sediment for surface waters and nutrients, pesticides, and salinity for
groundwater according to the FOTG. Commenters argued that the selected resource concerns were not appropriate for their region of the country, or to add additional concerns to the list such as rangeland health and at-risk wildlife. Resource concerns and quality criteria for their sustained use rely on the existing NRCS technical guides and conservation planning guidance and policies. Even though not all operations have problems to solve in the area of water quality and soil quality, most have opportunities to improve the condition of the resource through more intensive management of typical soil quality or water quality conservation activities such as conservation tillage, nutrient management, grazing management, and wildlife habitat management. Operations that have already treated soil and water quality to the minimum level of treatment could increase the management intensity applicable to those resource concerns through enhancement activities. This rule requires that every contract address national priority resource concerns. At the announcement of sign-up, the Chief may designate additional resource concerns of national significance. Additionally, State and local concerns would be addressed through the enhancement activities undertaken by CSP participants. Commenters asserted that eligibility should not be based on resource concerns but instead on management practices. We made no changes based on these comments. The statute provides the minimum requirement for Tier I and Tier II as addressing at least one resource concern and all resource concerns for Tier III. NRCS has exercised the Secretary’s authority to set the minimum requirement by elevating Tier I and Tier II requirements to having addressed both soil quality and water quality. Addressing these resource concerns requires more than just implementing a specified practice or management activity. NRCS received comments expressing concerns that the proposed rule is silent on how the Department will coordinate participation in the CSP for organic farmers who are certified under USDA's National Organic Program (NOP). NRCS did a comparison between the technical requirements for the NOP and CSP minimum eligibility requirements. The land management plan required by NOP does not necessarily meet the minimum standards for soil quality and water quality. In fact, there is no requirement in NOP to be in compliance with highly erodible land provisions. NRCS is generating a crosswalk between the regulatory NOP practices and NRCS FOTG practices to assure that certified growers get full credit for their NOP compliance. The eventual final rule preamble will include a clear mechanism for coordinating participation in the NOP and the CSP. USDA staff will deliver these complementary programs in the most farmer-friendly, least burdensome fashion possible. Commenters asserted that NRCS should make CSP participation conditional on
attaining the presumably stronger non-degradation standard as required by some
laws. We made no changes based on these comments. The term non-degradation
standard as used in the CSP statute means the level of measures required to
adequately protect, and prevent degradation of natural resources, as determined
by the Secretary in accordance with the quality criteria described in handbooks
of the NRCS. The term non-degradation is not used in this rule in order to avoid
confusion with the regulatory compliance meanings used by EPA and other
regulatory agencies. The FOTG relies upon quality criteria, the functional
equivalent to the non-degradation standard. Proposed § 1469.23, set up a CSP payment system that included a base component based on land use categories, an existing practice component based on a percentage of the average 2001 county cost of maintaining a land management and structural practice, and an enhancement component based on specific criteria. Proposed § 1469.23 also included one-time new practice payments. Numerous commenters provided advice regarding the types of lands and activities that should be considered for the various components and for new-practice payments. The proposed rule contains mechanisms to help ensure that determinations are made based on the best potential conservation stewardship impact. A. General Concerns: Commenters asserted that payments should be variable over the life of the contract so that rates are consistent with the local trends. Other commenters asserted that those producers obtaining contracts in a particular year should receive higher rates in future years if the actual costs increase. We made no changes based on these comments. We want to use whatever new funding we have to enroll more producers in CSP, by statute, the rates are based and set according to the 2001 crop year. As NRCS was developing the CSP stewardship payment provisions, research of the history of the establishment of similar rental payments for the CRP indicated that producers were concerned about the potential effects of the CSP rental payments levels on the land prices and rental values. Therefore to avoid possible distortions in those prices and values, NRCS is providing that the total CSP contract payment (combination of the stewardship, existing and enhancement payments) not exceed the following percentage payment rate (the amount prior to application of the reduction factor) for the applicable Tier level: 15 percent for Tier I, 25percent for Tier II and 40 percent for Tier III. However the new practice payment will be exempt from this limitation and will be excluded from the computation of the limitation. NRCS requests comments on this limitation for consideration in the administration of CSP sign-ups. In addition, NRCS is reviewing a process to allow the existing practice payments to be calculated as a percentage of the stewardship payment, allowing for paperwork reduction burden for producers and administrative efficiency for the agency. NRCS requests comments on this proposal which will be tested during the FY 2004 sign-up.
The CSP Interim Final Rule Benefit Cost Assessment indicates that, depending
upon the magnitude of the CSP, stewardship payments can have a significant
effect on program participation and has the potential of greatly effecting
regional equity. A key consideration is whether the use of regional or local
rental rates maintains "regional equity." Stewardship payments calculated from
national average rental rates are equitable in the sense that the payment rate
per acre is uniform. However, this method of calculating payments is less
equitable on a per-farm basis. Where land rental rates are low, farms tend to be
large compared to those in areas of high rental rates. On a per farm basis,
then, overall stewardship payments could be quite large on large farms located
in areas where land rental rates are low when compared to smaller farms located
in areas where land rental rates are higher. Larger farms in areas with lower
rental rates would incur a disproportionately large increase in farm incomes and
(if payments are capitalized into land values) wealth. Thus, the goal of
regional equity is best served by using local rental rates to calculate
stewardship payments. NRCS invites comment on the appropriate reduction factor,
and whether it should be fixed or vary by sign-up. At a listening session, one commenter was concerned that CSP had an impact on the producer’s farm program base, and explained that the use of the term “base payment” could be confused with the “base” acres from farm programs. In order to avoid any further confusion, the “base payment” was renamed “stewardship payment” for clarification purposes. Commenters asserted that they support a method where the local land rental rates only account for a small portion of the base payment to producers, and thereby prevent any bias towards States with big land values. The statute requires that any alternative form of base payment take into account the issue of regional equity. The process developed by NRCS takes land value into account. Commenters asserted that they strongly oppose the proposal to use State and
local rental rates over a set national rate. NRCS has proposed an alternate
stewardship payment system using statistical techniques in an analysis of land
value, CRP rental rate, and NASS rental rate data sets along with a reduction
factorbased on data developed at the county level and reviewed by the State
Conservationist. In order to allow for maximizing the level of enhancements for
additional environmental performance above the minimum and to reduce the skew
between small and large operations, the stewardship payment used a reduction
factor. After considering the comments and the budget impacts, NRCS has adjusted
the reduction factor from the proposed level of 0.1 for all stewardship payments
to 0.25 for Tier I 0.50 for Tier II, and 0.75 for Tier III. NRCS recognizes that decisions about the proper use and management of the
resources that support agricultural operations are made on a daily basis. In
some instances, a management decision may be made that causes a major shift in
land use, such as changes from a less intensive use or from a more intensive
land use. For example, a dairy operation that is using cropland to grow forages
may convert to a rotational grazing system. This reduction in land use intensity
has many associated environmental benefits. NRCS requested comments on how the
base payment could be calculated in this situation. Under the proposed rule, the
land use conversion would change the basis from a cropland (higher) payment per
acre rate to a pasture (lower) payment per acre. By statute, the base payment rates must be based on land use. An idea forwarded in the comments was to create another category of land termed “pastured-cropland,” meaning that the land has the capability to support cropland but a management decision was made to put the land into pasture. The comments recommend that the pastured-cropland base payment be made according to the cropland base payment rate. We made no changes based on these comments. Land uses were used to set the stewardship payment rates rather than land capability classes. Commenters asserted that incidental forest land should be defined in various ways so as to provide a basis for obtaining a base rate value. Based on these and other comments, NRCS has set a definition for incidental forest land, and the stewardship payment will be the same as the adjacent benefiting land. Commenters asserted that CSP funds should only be used for base payments and not for new practices. We made no changes based on these comments. The statute authorizes payments for both new and existing practices. Commenters asserted that NRCS should develop criteria for construction of enrollment categories. NRCS provided in the proposal that they would publish additional information about the construction of the enrollment categories and those were published in the Federal Register on May 4, 2004 (69 FR 24560). C. Existing and new practice payment components: NRCS will maintain the concept of limiting the practice payment options and encourage enhancement activities that provide for additional environmental performance. This rule also encourages farmer innovation through a robust process for on-farm demonstration and pilot testing of innovative practices. The Chief will determine and announce which practices will be eligible for
new and existing practice payments s available for a given sign-up based on
factors described in the regulation including: the potential conservation
benefits; the degree of treatment of significant resource concerns; the number
of resource concerns the practice or activity will address; new and emerging
conservation technology; and the need for cost-share assistance for specific
practices and activities to help producers achieve higher management intensity
levels or to advance in tiers of eligibility. State Conservationists will have
an opportunity to tailor the lists to meet the needs of local and State
conditions. Not all practices will be available through CSP for payment. NRCS
believes that CSP should work together as a complement with, rather than a
substitute for, cost share programs such as EQIP, WHIP, and continuous CRP, as
well as other Federal, non-Federal, State, local and Tribal programs.
Alternatively, producers can install structural practices through other State or
Federal programs, such as WHIP, and then qualify for a future CSP contract to
help with the maintenance of those and other practices. Commenters asserted that NRCS should provide for on-going support rather than a one time payment for adoption of new stewardship practices. We made no changes based on these comments. New practice payments are intended to cover initial practice installation and application costs. As with other NRCS cost-share programs, the participant is required to maintain the practice for the life of the practice as part of the contract obligation for new practice installation. Commenters asserted that maintenance payments should be based on the level of management intensity. We made no changes based on these comments. Maintenance payments are provided for existing practices at the time of enrollment and are based according to the 2001 crop year as prescribed in the statute. Commenters asserted that new practices should be considered “existing practices” after they are installed. We made no changes based on these comments. New practices that are installed with CSP financial assistance are required to be maintained for the life of the practice as a condition of receiving the cost-share and, thus, are not eligible for existing practice payments. Commenters asserted that new practices should be only those that would assist producers to move from one Tier to the next. We made no changes based on these comments. NRCS is utilizing the new practice payment to assist the producers in gaining additional environmental performance when it is considered that a cost-share would be appropriate. Some of the practices selected may, in fact, assist a participant move to a higher Tier, but it is not the major consideration. The CSP is not a substitute for other conservation cost-share or assistance programs. D. Enhancement payment component: One group commented, “The enhanced payments…should not be treated as cost-share but rather as real bonuses to reward exceptional performance.” NRCS agrees with the comment. No changes were made as a result of the comment. Enhancement payments are intended as payments for exceptional conservation efforts and performance above the minimum level of treatment. Some commenters were concerned that the proposed rule did not provide for specific utilization of the 18 practices listed in the statute as enhancements. The statutory list referred to is permissive, rather than required, and includes resource conserving crop rotation, rotational grazing, and buffers, and allows the Secretary discretion to add to the list. There are certainly situations where one or more of the listed practices would provide additional environmental performance above the quality criteria for a specific resource concern. In these cases, the performance of the practice above the minimum criteria would qualify as an enhancement payment. Alternatively in other situations, some of the practices on the list are practices necessary to achieve the minimum tier requirements of meeting the quality criteria for one or more resource concerns. An activity must contribute to exceeding the minimum requirements to become eligible for an enhancement payment. For example, nutrient and pesticide management are requirements for the minimum quality criteria for water quality on operations where nutrients and pesticides are a concern. Where nutrient and pest management are not concerns, they would not be required and should not receive additional payments unless the activities would provide an additional environmental benefit. NRCS does not intend to provide a payment for an activity on an agricultural operation that does not serve the purpose of either addressing a resource concern (stewardship payment) or providing an additional environmental benefit (enhancement payment). Commenters asserted that enhancements should include all existing practices and not be limited to new practices only. Some commenters asserted that enhancements should be determined on a nationwide basis. We made no changes based on these comments. Enhancements are those activities that result in a level of resource treatment that exceeds the quality criteria in the FOTG. Participants will earn an enhancement payment for their conservation activities that exceed the quality criteria and, thus, provide additional benefits. NRCS will develop a list of approved enhancement practices and activities that provide additional environmental performance based upon local resource concerns. Commenters asserted that we should add an energy component to the list of available enhancement activities. We made no changes based on these comments. Although NRCS is not making changes to the rule, NRCS is developing enhancement activities intended to provide positive impacts on energy management. Commenters asserted that enhancement payment rates should cover the cost of implementing the enhancement activity, including management activities. Some commenters asserted that enhancement activities should be weighted according to the environmental benefit they provide. We made no changes based on these comments. Enhancement payments for practices and activities will either be based on estimated local cost, or will be commensurate with the expected net environmental benefits when utilizing an index or performance outcome scale. Commenters asserted that NRCS should add preservation of endangered species as an enhancement. We made no changes based on these comments. CSP will provide enhancements for improving wildlife habitat for a broad range of plant and animal species, including threatened and endangered species. Commenters asserted that enhancement should not be required as a condition
for participation in CSP. We made no changes based on these comments. A producer
can participate in CSP without agreeing to carry out enhancements and be
eligible to collect a stewardship and existing practice payment. However, the
enrollment categories are set to ensure that those who are not willing to
achieve a higher level of environmental performance will be placed in a lower
category than participants willing to do more. 5. Definition of agricultural operation The proposed rule defined the term “agricultural operation” as “all agricultural land, and other lands determined by the Chief, whether contiguous or noncontiguous, under the control of the participant and constituting a cohesive management unit, where the participant provides active personal management of the operation on the date of enrollment.” There was substantial concern about this definition. Some commenters were concerned that the proposed definition was too broad in scope and subject to inconsistent interpretation. They were concerned that the definition was inconsistent with farm program operation definitions. Others were concerned that, under the current definition, this program would only be viable for small farmers who own contiguous property, rather than producers who operate many different units with multiple landowners. Some commenters suggested that the definition of agricultural operation be the same as the definition in 7 CFR Part 718 for “farm” used by Farm Services Agency (FSA). They cite ease of matching commodity programs and farm records, familiarity, and other reasons for this approach. Commenters also were concerned that that the definition would not allow tenants to work with multiple landowners. Several groups supported a “one producer – one contract” approach. One group opposed more than one CSP contract per operator. Other commenters argued that the definition of agricultural operation should be revised to allow producers to obtain more than one contract during a sign-up. In this regard, commenters asserted that the term agricultural operation should be defined to allow the flexibility of separate CSP contracts by FSA farm numbers, should delete the requirement that an agricultural operation: constitute a cohesive management unit,” be defined as “contiguous acres that are part of an agricultural operation,” or be defined to exclude “other land on which food, fiber, and other agricultural products are produced.” Most producers who participated in early CSP workshops conducted by NRCS stressed a need to prevent producers from abusing the payment limitations by strategically defining agricultural operation. Concerns have also been raised that producers would reconstitute their holdings to maximize the number of contracts, and, therefore, maximize payments under CSP if the definition of agricultural operation was not sufficient to limit such reconstitution. In defining agricultural operation in the proposed rule, NRCS attempted to
balance competing concerns. If the definition allowed a producer to reconstitute
or split holdings, the producer could submit numerous CSP applications for what
is really a single cohesive production unit. If the definition were to be overly
broad, a producer’s legitimately unique operations would be inappropriately
encompassed into one “agricultural operation.” In addition, we have included new language in section 1469.5 that will allow
producers to delineate their agricultural operation. This approach will allow
producers whose land is not included in the farm program system to delineate
their agricultural operation while allowing those applicants who use the FSA
farm and tract system to delineate as a minimum one farm and allowing applicants
to aggregate farms, if desired, into a single contract as long as they meet the
definition within this interim final rule. In order to avoid a multitude of
similar contracts with common conservation management, NRCS will limit each
applicant to only one application per sign-up and one active CSP contract. This
will minimize farm reconstitutions, provide flexibility to the applicants, and
allow for a delineation of agricultural operation that is consistent with other
NRCS programs. Commenters were also suggested that if property changes ownership while a CSP contract is in effect, the new buyer should have the option of continuing the contract and the seller should be liable for any charges and penalties. We made no changes based on these comments. The interim final rule adopts provision of the proposed rule to allow a contract transfer when there is agreement to all parties of the contract. Commenters asserted that a new buyer should be allowed to continue the contract if all of the parties, including NRCS, agree that it is advantageous to do so. We have not adopted the suggestion that the buyer alone should have the option of continuing the contract because it might not be in the interest of the Government to continue the contract. Also, any amounts due the Government would be required to be paid by the contract holder. 6. State and local input into the CSP State and local issues Coordination with other programs The 2002 Farm Bill provided the funding and authorities to construct a balanced conservation portfolio that pays off for taxpayers, producers, and the environment. The commenters urged that NRCS take full advantage of this opportunity by ramping up CSP to realize its full potential, working to secure full funding for all of the programs in our conservation portfolio, and managing conservation programs in a way that balances the three components of that portfolio effectively and flexibly. NRCS appreciates this and other comments regarding the role of CSP in the USDA conservation portfolio, and will keep these ideas in mind as policy adjustments are made in future legislation and regulations. Commenters asserted that the CSP program should be coordinated with other programs, such as using common applications, common eligibility requirements, common cost-share rates, and common rules for incentives. We made no changes based on these comments. NRCS is working to streamline its conservation programs and is looking at adopting as many common aspects and provisions as each program authority allows. Commenters asserted that the producer should also be required to be in compliance with other relevant laws applicable to a farming operation. No changes were made based on this comment. Although CSP is a voluntary program, applicants are required to be in compliance with relevant federal laws applicable to a farming operation, such as the Clean Water Act and cultural resources requirements. The FOTGs commonly include resource based information particular to State and local requirements such as state-level nutrient management requirements, and various other regulations concerning odor, pesticide application, and set-backs. Section-by-Section Comments on 7 CFR Part 1469 Section 1469.1 Applicability One commenter suggested that we should drop “Nation” from the term “Tribal Nation” because not all tribes are designated as a Nation. NRCS agrees with this comment and has made the clarification. Section 1469.2 Administration In section 1469.2(f) the acronym NRCS was added to the section to avoid confusion with a Tribal Chief. Section 1469.3 Definitions For clarification, the term “activity” was added to define the aggregate of actions that are not included as part of a conservation practice, such as a measure or an on-farm demonstration, pilot, or assessment. Agriculture land Agricultural operation Active Personal Management At-Risk Species Cropland Farm Joint Operation Incidental Forestland Land Management Practice Pastured cropland Priority Natural Resource Concern Resource concern In response, NRCS has changed section 1469.5 (e)(1)(iii) to clarify that practices or activities will not be required for participation in Tier III unless they would have an ultimate conservation benefit when combined with the other conservation treatments as demonstrated by the Conservation Practice Physical Effects matrix in the FOTG and NRCS local professional judgment. Resource conserving crop rotation Soil Quality Stewardship payment Water Quality Section 1469.4 Significant resource concerns. Commenters asked that flexibility be added to the rule for the Chief to add resource concerns that are not considered national in nature but comply with the intent to consider state or local conservation priorities. This was accepted and added along with the new definition for “priority natural resource concern”. Commenters expressed fear that the resource concerns are too broad and restrictive to be easily attained and practically assessed without intensive training and without an intense field examination. NRCS is setting a specific minimum level of treatment in this rule. NRCS is emphasizing water quality and soil quality because it believes such emphasis will deliver the greatest net resource benefits from the program, as noted in the above discussion. We believe the concerns can be practically assessed through the dual verification system of an interview and a follow-up field visit with NRCS’ long history of developing and applying sound science and technologies that effectively address water quality and soil quality problems and conservation opportunities. Section 1469.5 Eligibility requirements. Also in response to comments, a general section 1469.5(a) was added to introduce the section which now provides the requirements for participant and land eligibility, and outlines the conservation requirements for the three tiers of CSP participation. 2. Eligible applicants Control By statute, a Tier I conservation security contract is for a period of 5 years and a Tier II or Tier III conservation security contract must be for not less than 5 years and no more than 10 years. NRCS must have assurance that a producer will have control over the use of the property to achieve the purposes of the CSP plan and to meet the statutory requirements. We have clarified the language in the rule to provide that NRCS will continue to accept letters as proof of control of the land as is done in EQIP and will adopt similar handbook requirements for CSP. Commenters asserted that NRCS should remove provisions requiring lands that are not under control of the operator for the entire contract to be maintained to the same level as contract acres even though they are not eligible for payment. NRCS received comments that the proposed rule requiring tenants to maintain conservation treatment on land that was not a part of their contract was unworkable. This is cited as unfair and would likely dissuade producers from participating in the program. NRCS agrees and this proposal is dropped in the interim final rule. The rule provides fair treatment for tenants, allowing a tenant's CSP contract to exclude such land entirely, or allowing the farmer or rancher to receive CSP payments on land meeting CSP standards as long as the tenant controls the land and is in the plan and contract. Applicant Commenters asserted that NRCS should give preferences to limited resource producers, but others argued that these producers should not be given any preferences. The interim final rule, 1469.6(b)(3)(ii), gives some preferences to limited resource producers by allowing limited resource producer participation to be a factor considered in developing the enrollment subcategories. Commenters asserted that to be considered as “limited resource producers”, such producers should have gross sales of not more than $250,000 and total income below the 150 percent of the poverty level. Commenters asserted that for purposes of identifying limited resource producers, references to county median household income should be dropped but rather should include native Americans on native American controlled/owned land with direct or indirect gross farm sales of less than $100,000 or $150,000 for livestock producers in each of 2 previous years using Commerce Department data, and has a total household income based on family size at or below poverty level in each of 2 previous years using Commerce Department data. Other commenters asserted that tribes should categorically be classified as limited resource producers. We made no changes based on these comments. The definition for a limited resource producer is a USDA-wide definition and there is no reason to change it for CSP. Commenters asserted that the regulations should give preferences to beginning farmers so that they would have the means to improve their land. We made no changes based on these comments. Many beginning farmers will be able to participate in CSP. However, the statutory scheme does not include eligibility preferences for ensuring that beginning farmers participate. Instead, it allows for a higher rate of cost-share assistance to install new practices for beginning farmers to give increased incentives and support for those beginning farmers who do participate. 3. Eligible land The subsections from the proposed rule remain essentially unchanged with two exceptions. One group suggested clarifying that “land, such as CRP land, excluded from enrollment in CSP, may nonetheless be considered for whether an applicant meets quality criteria. This means, for example, that a producer can enroll a buffer in CRP and use that buffer to demonstrate that the producer is meeting water quality criteria.” NRCS agrees and added subsection 1469.5(d)(2)(v). Also subsection 1469.5(d)(4), was added to clarify the requirements for delineation of the agricultural operation. Statutory limitations • land enrolled in the conservation reserve program; Commenters asserted that the list of eligible lands should be expanded to include excluded lands, such as public lands, forested lands, and lands enrolled in CRP, WRP, and GRP. We made no changes based on these comments. We have no authority to expand the list of eligible lands in contravention of the statute. By statute, a producer may not receive payments under the conservation security program and any other conservation program administered by the USDA for the same practices on the same land. Also by statute, payments may not be made for construction or maintenance of animal waste transport or treatment facilities or associated waste transport of transfer devices for animal feeding operations or, as determined by the Secretary, for the purchase or maintenance of equipment or a non-land based structure that is not integral to a land-based practice. Some commenters asserted that the regulations should not follow these provisions. We made no changes based on these comments. We have no authority to act contrary to these provisions. Commenters asserted that land used for corn and bean production should not be eligible for CSP. We made no changes based on these comments. By statute, cropland is eligible land for the CSP. Commenters asserted that only permanently protected farms should be eligible for CSP since they will never be developed and could be a permanent source of conservation. We made no changes based on these comments. Congress has not given any indication the CSP statutory provisions that the program be limited to permanently protected lands and has limited the CSP contracts to no more than 5 or ten years depending on tier. Commenters asserted that CSP payments should be made to improve stewardship rather than to take the land out of production. We made no changes based on these comments. The statutory scheme concerns payments for working productive land rather than land taken out of production. Commenters asserted that NRCS should specify a maximum allowable enrollment of forest land. Based on the comments, NRCS set size limits in the definition of “incidental forest land”, such that individual parcels that are not part of a linear conservation practice are limited in size to 10 acres or less with a combined acreage, not to exceed 10% of the total offered acres. 4. Conservation standards Many commenters were concerned that the minimum tier eligibility requirements were too strict or that farmers and ranchers should be allowed to enter the program prior to solving all soil and water resource concerns without suggestions on how these ideas would be carried out in the contracts in light of the budget dilemma. This is discussed earlier in this preamble. The authority for the establishment of these minimum performance standards is section 1238A(d)(6) of the Food Security Act, 16 U.S.C. 3838a(d)(6): "Minimum Requirements. The minimum requirements for each tier of conservation contracts . . . shall be determined and approved by the Secretary." Several commenters noted “CSP is…intended to be the first truly comprehensive conservation program. It is intended to let farmers address both the unique and the ordinary resource problems of their specific site. It is intended to encourage an integrated approach that solves multiple problems. It should encourage farming systems that prevent problems in the first place,” and exclude “quality criteria unrelated or adverse to the environment.” In response, NRCS has drafted subsection 1469.5(e)(1)(iii) to clarify that practices or activities shall not be required for participation in Tier III unless they would have an ultimate conservation benefit when combined with the other conservation treatments as demonstrated by the Conservation Practice Physical Effects matrix in the FOTG. Section 1469.6 Enrollment criteria and selection process 1. Selection and funding of watersheds The NRCS national office compiled the quantitative data for conformance with
criteria 1) and 2) using National Resource Inventory and Census of Agriculture
data. This data was aggregated to the U.S. Geological Survey’s 8-digit
Hydrologic Unit Code and arrayed within the Economic Research Service’s Farm
Production Regions according to quartile distribution. Ranked, weighted
watershed maps were produced. Watersheds were also evaluated using Criteria 4 from a national perspective in consultation with STCs regarding regional resource issues that would enhance CSP’s environmental goals. The criteria were refined from the factors listed in the proposed rule to reflect potential degradation of surface and ground water, of soil quality and grazing lands. The interim final rule has been revised to update these criteria. Preference was given to a limited number of watersheds where improving resources would assist the recovery of threatened and endangered species or add measurably to critical resource recovery efforts. NRCS is seeking additional comment on the process and proposals published in the Notice to the Federal Register from May 4, 2004, and this subsection of this rule. 2. Enrollment categories 3. Sign-up NRCS will make no changes based on these comments. In order to manage the program, NRCS will continue to offer discrete sign-up periods initially. The rule provides no limit on the length of the sign-up period and could allow NRCS to move to a year-round sign-up if experience shows it to be beneficial to program management and meet customer needs. CSP sign-up will be transparent and fully accessible on the internet. Commenters asserted that producers need at least 180 days for a sign-up. We made no changes based on these comments. Based on experience, we believe we can conduct a timely sign-up so that we establish a successful CSP in this fiscal year, which ends on September 30, 2004. The suggested 180 day sign-up would extend well beyond that date. NRCS is seeking comment on the length of sign-up in future years. Commenters opposed the provisions allowing for additional eligibility
criteria and additional contract requirements to be included in a CSP sign-up
announcement. We made no changes based on these comments. Additional
requirements in specific sign-up periods will allow NRCS to manage for
environmental performance and budget exposure. 1. Benchmark condition inventory Many commenters were supportive of the concept of an applicant-initiated screening tool and benchmark condition inventory of the agricultural operation. One commenter suggested that the benchmark condition inventory not just specify existing conservation status, but include all proposed additional conservation measures, to be called the "proposed conservation plan outline." This is done to assure that the document submitted by the applicant provides all the information necessary to permit a preliminary judgment of eligibility and document the pending conservation stewardship plan. Although not included as a regulatory requirement, NRCS is considering adopting the proposed conservation stewardship plan outline beginning in FY. 2. Conservation stewardship plan Section 1469.8 Conservation practices and activities Conservation practices and activities Some commenters suggested that producers should be allowed to develop their conservation security plans using all practices in the FOTG in their State, so they can have a full array of practices from which to choose to solve resources concerns.” Some were concerned that the Chief would be developing the nationally eligible list, and that State Conservationists would not be including the State Technical Committee and local work groups in the process. In the FY 2004 sign-up, the State Conservationist tailored the lists for each watershed following the concept of these comments. NRCS will be reviewing the practical aspects of this list creation process during the FY 2004 sign-up. Since the State Conservationist is a designee of the Chief, subsection 1469.8(a)(2) from the proposed rule was determined to be redundant and has been removed. Commenters asserted that NRCS should allow conditional approval of
conservation practices that are not included in NRCS standards. We made no
changes based on these comments. Procedures are already in place to evaluate,
and where appropriate add new conservation practices. This process is designed
to insure that new technologies can be expeditiously considered and be evaluated
for safety and effectiveness. Commenters asserted that the CSP should give producers incentive to pursue sustainable agricultural practices. We made no changes based on these comments. The CSP is designed to address these activities. This is specifically evident in the provisions concerning enrollment categories and enhancements. Commenters asserted that farmers should have soil sampling done by
agricultural professionals to be eligible for CSP. We made no changes based on
these comments. NRCS has no requirement as to who analyzes soils samples; but in
accordance with the FOTG the soil samples must be analyzed by a creditable
entity, e.g., certified professional, soils lab, or university, or by the
producer using an accredited field kit. |