[Federal Register Volume 67, Number 209 (Tuesday, October 29, 2002)]
[Proposed Rules]
[Pages 65907-65913]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-26888]


 ========================================================================
 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
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  Federal Register / Vol. 67, No. 209 / Tuesday, October 29, 2002 / 
Proposed Rules  

[[Page 65907]]



DEPARTMENT OF AGRICULTURE

Commodity Credit Corporation

7 CFR Part 1491

RIN 0578-AA37


Farm and Ranch Lands Protection Program

AGENCY: Commodity Credit Corporation, Department of Agriculture (USDA).

ACTION: Proposed rule.

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SUMMARY: This proposed rule sets forth the policies implementing the 
farmland protection program. The Farm Security and Rural Investment Act 
of 2002 repealed the Farmland Protection Program (FPP), established by 
the Federal Agriculture Improvement and Reform Act of 1996, and 
authorized a new farmland protection program. The new program will be 
called the Farm and Ranch Lands Protection Program (FRPP) to both 
distinguish it from the repealed program and to better describe the 
types of land the program seeks to protect. Under the FRPP, the 
Secretary of Agriculture, acting through the Natural Resources 
Conservation Service (NRCS), is authorized, on behalf of the Commodity 
Credit Corporation (CCC) and under its authorities, to purchase 
conservation easements for the purpose of protecting topsoil by 
limiting nonagricultural uses of the land. As set forth in this 
proposed rulemaking, NRCS proposes to continue to administer FRPP using 
the same request for application (RFA) process to announce funding 
availability that it has used since authorization of the Farmland 
Protection Program in 1996. NRCS seeks comments from the public on this 
proposed rule.

DATES: Written comments must be received on or before December 30, 
2002.

ADDRESSES: All comments concerning this proposed rule should be 
submitted to Denise Coleman, Farmland Protection and Community Planning 
Staff, Natural Resources Conservation Service, PO Box 2890, Washington, 
DC 20013-2890. Attention: FRPP Comments. FAX: (202) 720-0745. The 
Proposed Rule can also be accessed and comments submitted via Internet 
to [email protected] Attention: FRPP Comments. Users can access 
the Natural Resources Conservation Service (NRCS) homepage at: http://www.nrcs.usda.gov.

FOR FURTHER INFORMATION CONTACT: Denise Coleman, Farmland Protection 
Program Manager, Natural Resources Conservation Service; phone: (202) 
720-9476; fax: (202) 720-0745; e-mail: [email protected].

SUPPLEMENTARY INFORMATION:

Background Related to the Farm and Ranch Lands Protection Program

    Urban sprawl continues to threaten the Nation's farm and ranch 
land. Social and economic changes over the past three decades have 
influenced the rate at which land is converted to nonagricultural uses. 
Population growth, demographic changes, large lot development, 
expansion of transportation systems, and economic prosperity have 
contributed to increased agricultural land conversion rates. Increased 
population, growing affluence, expanded transportation, and cultural 
factors of ``bigger means better,'' has accelerated the depopulation of 
the urban centers and has resulted in the conversion of farmland. 
Between 1960 and 1990, metropolitan-area population grew by 50 percent 
while the acreage of developed land increased 100 percent. About 45 
percent of new construction between the years of 1994 and 1997 occurred 
in rural areas, with nearly 80 percent being land bordering urban 
areas. Overall, this translates to over 2.8 million acres being 
converted per year, with 2 million devoted to housing (USDA, 2000).
    According to the USDA National Resources Inventory (NRI), urban and 
built-up areas increased from 65.3 million acres in 1992 to 79 million 
acres in 1997, equaling an area approximately the size of Ohio. Perhaps 
more important than the overall rate of land conversion is the location 
and type of land subject to this change in land use. On average, prime 
and important farmlands are being converted at a rate two to four times 
that of other lands. Based on NRI urban and built-up data for the 
1980s, 46 percent of the land converted to urban and built-up uses 
comes from cropland and pasture, while 38 and 14 percent comes from 
forest land and range land, respectively. Much of the land being lost 
is prime, unique, or important farmland located near cities. Moreover, 
an end to farm and forest land conversion is not in sight. The National 
Home Builders Association forecasts an expansion of 1.3 to 1.5 million 
new homes per year through 2010 (USDA, 2000).
    As a result of these land use changes, there is growing national 
interest in the protection of farm and ranch land. Once developed, 
productive farmland's rich topsoil is effectively lost forever, placing 
future food security for the Nation at risk. Furthermore, land use 
devoted to agriculture provides an important contribution to 
environmental quality, history, and scenic beauty.

Overview of the Farm and Ranch Lands Protection Program

    The FRPP is a voluntary program that helps farmers and ranchers 
keep their land in agriculture. The program provides matching funds to 
State, Tribal, local governments, and non-governmental organizations 
with existing farmland protection programs to purchase conservation 
easements. Funds from FRPP cannot be used to restore historical or 
archaeological resources nor can funds be used to share in the cost of 
conservation practices.
    Under the FRPP, NRCS proposes to continue to administer the program 
using the public notice process, as it has since the Farmland 
Protection Program was authorized in 1996. Through the public notice 
process, NRCS will solicit applications from federally recognized 
Indian Tribes, States, units of local government, and non-governmental 
organizations to cooperate in the acquisition of conservation easements 
on farms and ranches for the purpose of protecting topsoil from 
conversion to nonagricultural use. Although NRCS has authority to 
acquire other interests in land, the RFA will seek to fund the 
acquisition of conservation easements.
    To participate, entities with existing agricultural land protection 
programs submit to the local NRCS State Office applications requesting 
FRPP funds to purchase conservation easements that restrict the 
conversion of farm and ranch land to nonagricultural uses. Entities 
eligible to participate in the FRPP include:

[[Page 65908]]

    [sbull] Any agency of any State or local government or federally 
recognized Indian Tribe (including a farmland protection board or land 
resource council established under State law); or
    [sbull] Any organization that:
    [sbull] Is organized principally for one or more of the following 
conservation purposes: the preservation of land for recreation, open 
space, historically important land areas and structures, and natural 
wildlife habitat;
    [sbull] Is operated exclusively for charitable, religious, or 
educational purpose, with no part of its net earnings paid to any 
private shareholder or individual and no substantial part of its 
activities influencing legislation or intervening in any political 
campaign for or against a public office candidate; or
    [sbull] Normally receives more than one-third of its support in 
each taxable year from any combination of gifts, grants, contributions, 
or membership fees, and normally receives not more than one-third of 
its support in each tax year from the sum of gross investment income.
    To be eligible for FRPP, the land proposed for a conservation 
easement must:
    [sbull] Contain prime, unique, or other productive soil as defined 
by the Farmland Protection Policy Act of 1981, as amended (7 U.S.C. 
4201 et seq.); or
    [sbull] Contain historical or archaeological resources; and
    [sbull] Be subject to a pending offer from an eligible entity; and
    [sbull] Be privately owned.
    Aside from demonstrating land and entity eligibility, entities 
wishing to receive FRPP funds must also demonstrate:
    [sbull] A commitment to long-term conservation of agricultural 
lands;
    [sbull] A capability to acquire, manage, and enforce easements;
    [sbull] Staff capacity that will be dedicated to monitoring and 
easement stewardship; and
    [sbull] The availability of funds to acquire and manage 
conservation easements.
    Selection will be based on national criteria as determined by the 
NRCS Chief, set forth in the RFA, and additional State criteria as 
determined by the appropriate State Conservationist. Examples of 
national criteria may include:
    [sbull] Acreage of prime, unique, and important farm and ranch land 
to be protected;
    [sbull] Total acres of land to be protected with the requested 
award;
    [sbull] Acreage of prime, unique, and important farm and ranch land 
identified in the National Resources Inventory as converted to 
nonagricultural uses;
    [sbull] Total acres needing protection;
    [sbull] Number or acreage of historic and archaeological resources 
to be protected on farm or ranch lands;
    [sbull] Anticipated average FRPP cost per acre;
    [sbull] Rate of land conversion (e.g., local land-use conversion 
rates);
    [sbull] Degree of leveraging guaranteed by eligible entities;
    [sbull] History of eligible entity's commitment to conservation 
planning and conservation practice implementation;
    [sbull] Eligible entity's history of acquiring, managing, holding, 
and enforcing conservation easements. This could include annual 
farmland protection expenditures, monetary donations received, 
accomplishments, and staffing levels;
    [sbull] A description of the eligible entity's farmland protection 
strategy and how the FRPP application submitted by the entity 
corresponds to the entity's strategic plan; and
    [sbull] Eligible entity's total estimated acres of unfunded 
conservation easements on prime, unique, and important farm and ranch 
land.
    Examples of State criteria developed by the State Conservationist 
may include:
    [sbull] Proximity of the parcel to other protected clusters;
    [sbull] Proximity of the parcel to other agricultural operations 
and infrastructure;
    [sbull] Parcel size;
    [sbull] Type of land use;
    [sbull] Maximum FRPP cost expended per acre;
    [sbull] Environmental, cultural, and social benefits;
    [sbull] Degree of leveraging by the entity; and
    [sbull] Other criteria as determined by the State Conservationist.
    Criteria used to evaluate applications will be available to the 
public through the NRCS State Conservationist. Pending offers must be 
for acquiring an easement in perpetuity except where State law 
prohibits a permanent easement. Once an entity is selected for funding, 
NRCS, on the behalf of CCC, enters into a cooperative agreement with 
the entity, thereby obligating money for the easement acquisition. The 
selected entity works with the landowner; processes the easement 
acquisition; holds, manages, and enforces the easement. Landowners 
retain all rights to use the property for agriculture. A Federal 
contingent right interest in the property must be included in each 
easement deed for the protection of the Federal investment. In 
addition, all lands enrolled in FRPP must have a conservation plan 
developed based on the NRCS Field Office Technical Guide (FOTG) 
specifications and highly erodible and wetland conservation provisions, 
in accordance with 7 CFR part 12.
    The Federal share for any easement acquisition is limited to a 
maximum of 50 percent of the appraised fair market value of the 
conservation easement. As part of its share of the cost of purchasing a 
conservation easement an eligible entity may include a charitable 
donation by the landowner of not more than 25 percent of the appraised 
fair market value of the conservation easement. Where the easement 
purchase price is less than the appraised fair market value, an entity 
may choose to provide 50 percent of the purchase price of the 
conservation easement. If the 50 percent of the purchase price option 
is chosen, the NRCS share will not exceed the entity's contribution.

Regulatory Certifications

Executive Order 12866

    This proposed rule has been reviewed under USDA procedures and 
Executive Order 12866 on Regulatory Planning and Review. The Office of 
Management and Budget (OMB) has been determined that this proposed rule 
is not a significant rule making action. Therefore, no benefit cost 
assessment of potential impacts is necessary.

Regulatory Flexibility Act

    Pursuant to 5 U.S.C 605(c) of the Regulatory Flexibility Act, it 
has been determined that this proposed rule will not have a significant 
economic impact on a substantial number of small entities as defined by 
that Act. Therefore, a regulatory flexibility analysis is not required 
for this proposed rule. This proposed rule implements the Farm and 
Ranch Lands Protection Program, which involves the voluntary 
acquisition of interests in property by NRCS in partnership with State, 
local, and Tribal governments and nonprofit entities.

Small Business Regulatory Enforcement Fairness Act of 1996

    This proposed rule is not a major rule as defined by Section 804 of 
the Small Business Regulatory Enforcement Fairness Act of 1996. This 
proposed rule will not result in annual effect on the economy of 
$100,000,000 or more, a major increase in costs or prices, or 
significant adverse effects on competition, employment, investment, 
productivity, innovation, or the ability of U.S.-based companies to 
compete in domestic and export markets.

[[Page 65909]]

Environmental Analysis

    A draft Environmental Assessment (EA) has been prepared to assist 
NRCS in determining whether this proposed rule would have a significant 
impact on the quality of the human environment such that an 
Environmental Impact Statement (EIS) should be prepared. Based on the 
results of the draft EA, NRCS proposes issuing a finding of no 
significant impact (FONSI) before a final rule is published. Copies of 
the draft EA and FONSI may be obtained from Denise Coleman, Farmland 
Protection and Community Planning Staff, Natural Resources Conservation 
Service, PO Box 2890, Washington, DC 20013-2890. The FRPP draft EA and 
FONSI will also be available at the following Internet address: http://www.nrcs.usda.gov/programs/Env_Assess/FPP/FPP.html.
    Written comments on the draft EA and FONSI should be sent to Denise 
Coleman, Farmland Protection and Community Planning Staff, Natural 
Resources Conservation Service, PO Box 2890, Washington, DC 20013-2890.

Paperwork Reduction Act

    Section 2702 of the Farm Security and Rural Investment Act of 2002 
provides that the promulgation of this proposed rule is carried out 
without regard to Chapter 35 of Title 44, United States Code (commonly 
known as the Paperwork Reduction Act).

Executive Order 12988, Civil Justice Reform

    This proposed rule has been reviewed in accordance with Executive 
Order 12988. NRCS has not identified any State or local laws or 
regulations that are in conflict with this regulation or that would 
impede full implementation of this rule. Nevertheless, in the event 
that such a conflict were to be identified, the proposed rule would 
preempt the State or local laws or regulations found to be in conflict. 
The provisions of this proposed rule are not retroactive. Before an 
action may be brought in a Federal court of competent jurisdiction, the 
administrative appeal rights afforded persons at 7 CFR part 614 must be 
exhausted.

Executive Order 13132, Federalism

    This proposed rule has been reviewed in accordance with the 
requirements of Executive Order 13132, Federalism. NRCS has determined 
that the rule conforms to the federalism principles set forth in the 
Executive Order; would not impose any compliance cost 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.

Unfunded Mandates Reform Act of 1995

    Pursuant to Title II of the Unfunded Mandates Reform Act of 1995, 2 
U.S.C. 1531-1538, NRCS has assessed the effects of this rulemaking 
action of State, local, and Tribal governments, and the public. This 
action does not compel the expenditure of $100,000,000 or more by any 
State, local, or Tribal government, or anyone in the private sector; 
therefore, a statement under section 202 of the Act is not required.

List of Subjects in 7 CFR Part 1491

    Administrative practice and procedure, Agriculture, Soil 
conservation.

    For the reasons stated in the preamble, the Commodity Credit 
Corporation proposes to amend Chapter XIV by adding a new part 1491 as 
set forth below:

PART 1491--FARM AND RANCH LANDS PROTECTION PROGRAM

Subpart A--General Provisions
Sec.
1491.1 Applicability.
1491.2 Administration.
1491.3 Definitions.
1491.4 Program requirements.
1491.5 Application procedures.
1491.6 Ranking considerations and proposal selection.
1491.7 Funding priorities.
Subpart B--Cooperative Agreements and Conservation Easement Deeds
1491.20 Cooperative agreements.
1491.21 Funding.
1491.22 Conservation easement deeds.
1491.23 Easement modifications.
Subpart C--General Administration
1491.30 Violations and remedies.
1491.31 Appeals.
1491.32 Scheme or device.

    Authority: 16 U.S.C. 383lh, 383li.

Subpart A--General Provisions


Sec.  1491.1  Applicability.

    (a) The regulations in this part set forth policies, procedures, 
and requirements for program implementation of the Farm and Ranch Lands 
Protection Program as administered by the Natural Resources 
Conservation Service (NRCS). FRPP cooperative agreements and easements 
signed on or after the effective date of the final regulation will be 
administered according to 7 CFR part 1491.
    (b) The NRCS Chief may implement FRPP in any of the 50 States, the 
District of Columbia, the Commonwealth of Puerto Rico, Guam, the Virgin 
Islands of the United States, American Samoa, and the Commonwealth of 
the Northern Mariana Islands.


Sec.  1491.2  Administration.

    (a) The regulations in this part will be administered under the 
general supervision and direction of the NRCS Chief.
    (b) NRCS shall:
    (1) Provide overall program management and implementation 
leadership for FRPP;
    (2) Develop, maintain, and ensure that policies, guidelines, and 
procedures are carried out to meet program goals and objectives;
    (3) Ensure that the FRPP share of the cost of an easement or other 
deed restrictions in eligible land shall not exceed 50 percent of the 
appraised fair market value of the conservation easement;
    (4) Determine land and entity eligibility;
    (5) Make funding decisions and determine allocations of program 
funds;
    (6) Coordinate with the Office of the General Counsel (OGC) to 
ensure the legal sufficiency of the cooperative agreement and the 
easement deed or other legal instrument;
    (7) Sign and monitor cooperative agreements for the CCC with the 
selected entity;
    (8) Monitor and ensure conservation plan compliance with highly 
erodible land and wetland provisions in accordance with 7 CFR part 12; 
and
    (9) Provide leadership for establishing, implementing, and 
overseeing administrative processes for easements, easement payments, 
and administrative and financial performance reporting.
    (c) NRCS may enter into cooperative agreements with eligible 
entities to assist NRCS with implementation of this Part.


Sec.  1491.3  Definitions.

    The following definitions may be applicable to this part:
    Agricultural uses are defined by State law. (If the agency finds 
that a State definition of agriculture is so broad that an included use 
could lead to the degradation of soils, NRCS reserves the right to 
impose greater deed restrictions on property than allowable under a 
State definition of agriculture in order to protect topsoil.)
    Chief means the Chief of NRCS, USDA.
    Commodity Credit Corporation (CCC) is a Government-owned and 
operated entity that was created to stabilize, support, and protect 
farm income and

[[Page 65910]]

prices. CCC is managed by a Board of Directors, subject to the general 
supervision and direction of the Secretary of Agriculture, who is an 
ex-officio director and chairperson of the Board. CCC provides the 
funding for FRPP, and NRCS administers the FRPP on its behalf.
    Conservation Easement means a voluntary, legally recorded 
restriction, in the form of a deed, on the use of property, in order to 
protect resources such as agricultural lands, historic structures, open 
space, and wildlife habitat.
    Conservation Plan means the document that--
    [sbull] Applies to highly erodible cropland;
    [sbull] Describes the conservation system applicable to the highly 
erodible cropland and describes the decisions of the person with 
respect to location, land use, tillage systems, and conservation 
treatment measures and schedules;
    [sbull] Is approved by the local soil conservation district in 
consultation with the local committees established under Section 8 
(b)(5) of the Soil Conservation and Domestic Allotment Act (16 U.S.C. 
5909h(b)(5)) and the Secretary, or by the Secretary.
    Contingent right is an interest in land held by the United States, 
which the United States may exercise under specific circumstances in 
order to enforce the terms of the conservation easement or hold title 
to the easement.
    Eligible entities means federally recognized Indian Tribes, States, 
units of local government, and certain non-governmental organizations 
(see definition below), which have a farmland protection program that 
purchases agricultural conservation easements for the purpose of 
protecting topsoil by limiting conversion to non-agricultural uses of 
the land. Additionally, to be eligible for FRPP, the entity must have 
pending offers (see definition below), for the acquiring conservation 
easements for the purpose of protecting agricultural land from 
conversion to nonagricultural uses.
    Eligible land is privately owned land on a farm or ranch that has 
prime, unique, statewide, or locally important soil, or contains 
historical or archaeological resources, and is subject to a pending 
offer by an eligible entity. Eligible land includes cropland, 
rangeland, grassland, and pasture land, as well as forest land that is 
an incidental part of an agricultural operation. Other incidental land 
that would not otherwise be eligible, but when considered as part of a 
pending offer, may be considered eligible, if inclusion of such land 
would significantly augment protection of the associated farm or ranch 
land.
    Fair market value of the conservation easement is ascertained 
through standard real property appraisal methods. Fair market value is 
the amount in cash, for which in all probability the property would 
have sold on the effective date of the appraisal, after a reasonable 
exposure of time on the open competitive market, from a willing and 
reasonably knowledgeable seller to a willing and reasonably 
knowledgeable buyer. Neither the seller nor the buyer act under any 
compulsion to buy or sell, giving due consideration to all available 
economic uses of the property at the time of the appraisal.
    Field Office Technical Guide (FOTG) is the official document for 
NRCS guidelines, criteria, and standards for planning and applying 
conservation treatments and conservation management systems. The FOTG 
contains detailed information on the conservation of soil, water, air, 
plant, and animal resources applicable to the local area for which it 
is prepared.
    Historical and archaeological resources must be:
    [sbull] Listed in the National Register of Historic Places 
(established under the National Historic Preservation Act (NHPA), 16 
U.S.C. 470, et seq.), or
    [sbull] Formally determined eligible for listing in the National 
Register of Historic Places (by the State Historic Preservation Officer 
(SHPO) or Tribal Historic Preservation Officer (THPO) and the Keeper of 
the National Register in accordance with Section 106 of the NHPA), or
    [sbull] Formally listed in the State or Tribal Register of Historic 
Places of the SHPO (designated under section 101 (b)(1)(B) of the NHPA) 
or the THPO (designated under section 101(d)(1)(C) of the NHPA).
    Land Evaluation and Site Assessment System (LESA) is the Federal 
land evaluation system used to rank land, based on soil potential for 
agriculture, as well as social and economic factors, such as location, 
access to market, and adjacent land use. (For additional information 
see the Farmland Protection Policy Act Rule (7 CFR part 658).
    Landowner means a person, persons, estate, corporation, or other 
business or nonprofit entity having fee title ownership of farm or 
ranch land.
    Natural Resources Conservation Service is an agency of the U.S. 
Department of Agriculture.
    Non-governmental organization, is defined as any organization that:
    [sbull] Is organized for, and at all times since the formation of 
the organization, has been operated principally for one or more of the 
conservation purposes specified in clause (i), (ii), (iii), or (iv) of 
section 170(h)(4)(A) of the Internal Revenue code of 1986;
    [sbull] Is an organization described in section 501(c)(3) of that 
code that is exempt from taxation under 501(a) of that code;
    [sbull] Is described in section 509(a)(2) of that code; or
    [sbull] Is described in section 509(a)(3) of that code and is 
controlled by an organization described in section 509(a)(2) of that 
code.
    Other interests in land include any right in real property 
recognized by State law, including fee title. FRPP funds will only be 
used to purchase other interests in land with prior approval from the 
Chief.
    Other productive soils are soils that are contained on farm or 
ranch land that is identified as farmland of statewide or local 
importance and is used for the production of food, feed, fiber, forage, 
or oilseed crops. The appropriate State or local government agency 
determines statewide or locally important farmland with concurrence 
from the State Conservationist. Generally, these farmlands produce high 
yields of crops when treated and managed according to acceptable 
farming methods. In some states and localities, farmlands of statewide 
and local importance may include tracts of land that have been 
designated for agriculture by State law or local ordinance. 7 CFR part 
657, sets forth the process for designating soils as statewide or 
locally important.
    Pending offer is a written bid, contract, or option extended to a 
landowner by an eligible entity to acquire a conservation easement 
before the legal title to these rights has been conveyed for the 
purpose of limiting non-agricultural uses of the land.
    Prime and unique farmland are defined separately, as follows:
    [sbull] Prime farmland is land that has the best combination of 
physical and chemical characteristics for producing food, feed, fiber, 
forage, oilseed, and other agricultural crops with minimum inputs of 
fuel, fertilizer, pesticides, and labor, without intolerable soil 
erosion, as determined by the Secretary.
    [sbull] Unique farmland is land other than prime farmland that is 
used for the production of specific high-value food and fiber crops, as 
determined by the Secretary. It has the special combination of soil 
quality, location, growing season, and moisture supply needed to 
economically produce sustained high quality or high yields of specific 
crops when treated and managed according to acceptable farming methods. 
Examples

[[Page 65911]]

of such crops include citrus, tree nuts, olives, cranberries, fruits, 
and vegetables. Additional information on the definition of prime, 
unique, or other productive soil can be found in 7 CFR part 657 and 7 
CFR part 658.
    Secretary is the Secretary of the U. S. Department of Agriculture.
    State Technical Committee means a committee established by the 
Secretary of the U.S. Department of Agriculture in a State pursuant to 
16 U.S.C. 3861 and 7 CFR part 610, subpart C.
    State Conservationist means the NRCS employee authorized to direct 
and supervise NRCS activities in a State, the Caribbean Area (Puerto 
Rico and the Virgin Islands), or the Pacific Basin Area (Guam, American 
Samoa, and the Commonwealth of the Northern Mariana Islands).


Sec.  1491.4  Program requirements.

    (a) Under the FRPP, the Secretary, on behalf of CCC, shall purchase 
conservation easements, in partnership with eligible entities, from 
landowners who voluntarily wish to protect their farm and ranch lands 
from conversion to nonagricultural uses. Eligible entities submit 
applications to NRCS State Offices to partner with NRCS to acquire 
conservation easements on farm and ranch land. NRCS enters into 
cooperative agreements with selected entities and provides funds for up 
to 50 percent of the appraised market value for the easement purchase. 
In return, the entity agrees to acquire, hold, manage, and enforce the 
easement. A Federal contingent right interest in the property must be 
included in each easement deed for the protection of the Federal 
investment.
    (b) The term of all easements will be in perpetuity unless 
prohibited by State law.
    (c) To be eligible to receive FRPP funding, an entity must meet the 
definition of ``eligible entity'' as listed in the ``Definitions'' 
section of this proposed rule. In addition, eligible entities wishing 
to receive FRPP funds must also demonstrate:
    (1) A commitment to long-term conservation of agricultural lands;
    (2) A capability to acquire, manage, and enforce easements;
    (3) Sufficient number of staff that will be dedicated to monitoring 
and easement stewardship; and
    (4) The availability of funds.
    (d) Eligible land must meet the definition of ``eligible land'' as 
provided herein. In addition:
    (1) Entire farms or ranches may be enrolled in FRPP.
    (2) Farms must contain at least 50 percent of prime, unique, 
statewide, or locally important soil, unless otherwise determined by 
the State Conservationist, or contain historical or archaeological 
resources.
    (3) Eligible lands are farm and ranch lands that must be subject to 
a pending offer, as defined in the ``Definitions'' section of this 
proposed rule, for purchase of a conservation easement.
    (4) Eligible land must be privately owned. NRCS will not enroll 
land in FRPP that is owned in fee title by an agency of the United 
States or State or local government, or land that is already subject to 
an easement or deed restriction that limits the conversion of the land 
to nonagricultural use, unless otherwise determined by the Secretary.
    (5) Eligible land must be owned by landowners who certify that they 
do not exceed the adjusted gross income limitation eligibility 
requirements set forth in Section 1604 of the Farm Security and Rural 
Investment Act of 2002.
    (e) Prior to FRPP fund disbursement, all parcels must have an 
appraisal. Appraisals shall be completed and signed by a State-
certified or licensed appraiser and shall contain a disclosure 
statement by the appraiser. The appraisal shall conform to either the 
Uniform Standards of Professional Appraisal Practices or the Uniform 
Appraisal Standards for Federal Land Acquisitions; or, with NRCS 
National Office approval, be valued using an alternative real estate 
evaluation system used by the State government in expending State 
funds. Where an alternative real estate evaluation system is used, 
parcels will be given equal priority as those having current 
appraisals.
    (f) At the discretion of the Chief, a standard easement will be 
required as a condition for program participation.
    (g) The landowner shall be responsible for complying with the 
Highly Erodible Land and Wetland Conservation provisions of the Food 
Security Act of 1985, as amended, and 7 CFR part 12.


Sec.  1491.5  Application procedures.

    (a) When funds are available, NRCS publishes a Request for 
Applications in the Federal Register or, at the discretion of the 
Chief, uses another process to solicit applications from eligible 
entities to cooperate in the acquisition of conservation easements on 
farms and ranches. Information required in the application will be set 
forth in the Request for Applications.
    (b) To participate, an eligible entity submits an application to 
NRCS for the acquisition of conservation easements on eligible farm or 
ranch land, on which the entity already has pending offers. An entity's 
application contains a request to fund one or more parcels. All 
applications must be submitted to the appropriate NRCS State 
Conservationist by the specified date, as indicated in the Request for 
Applications.


Sec.  1491.6  Ranking considerations and proposal selection.

    (a) Once the NRCS State Conservationist has assessed entity 
eligibility and land eligibility, the State Conservationist shall use 
National and State criteria to evaluate the land and rank parcels, 
contained within the entity's application. Entities and parcels will be 
selected for participation based on the entities' responses to the 
Request for Applications. Selection will be based on national ranking 
criteria set forth by the Chief in the Request for Applications and 
state criteria as determined by the State Conservationist, with advice 
from the State Technical Committee.
    (1) Examples of national criteria may include:
    (i) Acreage of prime, unique, and important farm and ranch land to 
be protected;
    (ii) Total acres of land to be protected with the requested award;
    (iii) Acreage of prime, unique, and important farm and ranch land 
identified in the National Resources Inventory as converted to 
nonagricultural uses;
    (iv) Total acres needing protection;
    (v) Number or acreage of historic and archaeological resources to 
be protected on farm or ranch lands;
    (vi) Anticipated average FRPP cost per acre;
    (vii) Rate of land conversion (e.g., local land use conversion 
rates);
    (viii) Degree of leveraging guaranteed by eligible entities;
    (ix) History of eligible entity's commitment to conservation 
planning and conservation practice implementation;
    (x) Eligible entity's history of acquiring, managing, holding, and 
enforcing conservation easements. This could include annual farmland 
protection expenditures, monetary donations received, accomplishments, 
and staffing levels;
    (xi) A description of the eligible entity's farmland protection 
strategy and how the FRPP application submitted by the entity 
corresponds to the entity's strategic plan; and
    (xii) Eligible entity's estimated acres of unfunded conservation 
easements on prime, unique, and important farm and ranch land.

[[Page 65912]]

    (2) Examples of State or local criteria determined by the State 
Conservationist include:
    (i) Proximity of parcel to other protected clusters;
    (ii) Proximity of parcel to other agricultural operations and 
infrastructure;
    (iii) Parcel size;
    (iv) Type of land use;
    (v) Maximum FRPP cost expended per acre;
    (vi) Degree of leveraging by the entity;
    (b) State ranking criteria will be developed on a State-by-State 
basis. Prior to proposal submission, interested entities should contact 
the State Conservationist located in their State for a full listing of 
applicable National and State ranking criteria.
    (c) The NRCS State Conservationist may seek advice from the State 
Technical Committee (established pursuant to 16 U.S.C. 3861) in 
evaluating the merits of the applications.


Sec.  1491.7  Funding priorities.

    (a) NRCS will only consider funding the acquisition of eligible 
land in the Program if the agricultural viability of the land can be 
demonstrated. For example, the land must be of sufficient size and have 
boundaries that allow for efficient management of the area. The land 
must also have access to markets for its products and a support 
infrastructure appropriate for agricultural production.
    (b) NRCS may not fund the acquisition of eligible lands if NRCS 
determines that the protection provided by the FRPP would not be 
effective because of on-site or off-site conditions.
    (c) NRCS will place a higher priority on easements acquired by 
entities that have extensive experience in managing and enforcing 
easements.
    (d) During the application period, pending offers having appraisals 
completed and signed by State-certified appraisers within the preceding 
one year shall receive higher funding priority by the NRCS State 
Conservationist. Before funding is released for easement acquisition, 
the cooperating entity must provide NRCS with a copy of the certified 
appraisal.
    (e) NRCS may place a higher priority on lands and locations that 
help create a large tract of protected area for viable agricultural 
production and that are under increasing urban development pressure(s).
    (f) NRCS may place a higher priority on lands and locations that 
link to other Federal, Tribal, or State governments or non-governmental 
organization efforts with complementary farmland protection objectives 
(e.g., open space, watershed and wildlife habitat protection).
    (g) NRCS may place a higher priority on lands that provide 
multifunctional benefits including social, economic, and environmental 
benefits.
    (h) A higher priority may be given to certain geographic regions 
where the enrollment of particular lands may help achieve National, 
State, and regional goals and objectives, or enhance existing 
government or private conservation projects.
    (i) NRCS may place a higher priority on the national ranking 
criteria listed herein than State criteria, if the NRCS Chief deems 
appropriate.

Subpart B--Cooperative Agreements and Conservation Easement Deeds


Sec.  1491.20  Cooperative agreements.

    (a) NRCS, on behalf of CCC, enters into a cooperative agreement 
with those entities selected for funding awards. Once a proposal is 
selected by the State Conservationist, the entity must work with the 
appropriate State Conservationist to finalize and sign the cooperative 
agreement incorporating all necessary FRPP requirements. The 
cooperative agreement addresses:
    (1) The interests in land to be acquired, including the form of the 
easements to be used and terms and conditions;
    (2) The management and enforcement of the rights acquired;
    (3) The role of NRCS;
    (4) The responsibilities of the easement manager on lands acquired 
with the assistance of FRPP; and
    (5) Other requirements deemed necessary by NRCS to protect the 
interests of the United States.
    (b) The cooperative agreement will also include an attachment 
listing the parcels accepted by the State Conservationist, landowners' 
names, addresses, location map(s), and other relevant information. An 
example of a cooperative agreement may be obtained from the State 
Conservationist.


Sec.  1491.21  Funding.

    (a) The State Conservationist, in coordination with the cooperating 
entity, shall determine the NRCS share of the cost of purchasing a 
conservation easement.
    (b) Under the FRPP, NRCS may provide up to 50 percent of the 
appraised fair market value of the conservation easement. Entities are 
required to supplement the NRCS share of the cost of the conservation 
easement.
    (c) Landowner donations up to 25 percent of the appraised fair 
market value of the conservation easement may be considered part of the 
entity's matching offer.
    (d) The entity must provide, in cash, at least 25 percent of the 
appraised fair market value of the conservation easement. When 
providing its share of the cost of the conservation easement, an entity 
may:
    (1) Provide in cash, at least 25 percent of the appraised fair 
market value of the conservation easement, when accompanied by a 
landowner donation; or
    (2) Provide at least 50 percent of the purchase price, in cash, of 
the conservation easement. In this situation, the NRCS share cannot 
exceed the entity's contribution.
    (e) FRPP funds may not be used for expenditures such as appraisals, 
surveys, title insurance, legal fees, costs of easement monitoring, and 
other related administrative costs incurred by the entity.
    (f) If the State Conservationist determines that the purchase of 
two or more conservation easements are comparable in achieving FRPP 
goals, the State Conservationist shall not assign a higher priority to 
any one of these conservation easements based on lesser cost to FRPP.


Sec.  1491.22  Conservation easement deeds.

    (a) Under FRPP, a landowner grants an easement to an eligible 
entity with which NRCS has entered into an FRPP cooperative agreement. 
The easement shall require that the easement area be maintained in 
accordance with FRPP goals and objectives for the term of the easement.
    (b) Pending offers by an eligible entity must be for acquiring an 
easement in perpetuity, except where State law prohibits a permanent 
easement.
    (c) The conveyance document or conservation easement deed used by 
the eligible entity may be reviewed and approved by the NRCS National 
Office and Office of the General Counsel (OGC) before being recorded.
    (d) Since title to the easement is held by an entity other than the 
United States, the conveyance document must contain a ``contingent 
right'' clause that provides that all rights conveyed by the landowner 
under the document will become vested in the United States should the 
eligible entity (i.e., the grantee[s]) abandon or attempt to terminate 
the conservation easement. In addition, the contingent right also 
provides, in part, that the Secretary takes title to the easement, if 
the eligible entity fails to uphold the easement or attempts to 
transfer the easement

[[Page 65913]]

without first securing the consent of the Secretary.
    (e) As a condition for participation, a conservation plan will be 
developed by NRCS in consultation with the landowner and implemented 
according to the NRCS Field Office Technical Guide and approved by the 
local conservation district. The conservation plan will be developed 
and managed in accordance with the Food Security Act of 1985, as 
amended, 7 CFR part 12 or subsequent regulations, and other 
requirements as determined by the State Conservationist. To ensure 
compliance with this conservation plan, the easement will grant to the 
United States, through NRCS, its successors or assigns, a right of 
access to the easement area.
    (f) The cooperating entity shall acquire, hold, manage and enforce 
the easement. The cooperating entity may have the option to enter into 
an agreement with governmental or private organizations to carry out 
easement stewardship responsibilities if approved by NRCS.


Sec.  1491.23  Easement modifications.

    (a) After an easement has been recorded, no amendments to the 
easement will be made without prior approval by NRCS.
    (b) Easement modifications will be approved only when easement is 
duly prepared and recorded in conformity with standard real estate 
practices, including requirements for title approval, subordination of 
liens, and recordation, and when the amendment is consistent with the 
purposes of the conservation easement.

Subpart C--General Administration


Sec.  1491.30  Violations and remedies.

    (a) In the event of a violation of the terms of the easement, the 
entity shall notify the landowner. The landowner may be given 
reasonable notice and, where appropriate, an opportunity to voluntarily 
correct the violation in accordance with the terms of the conservation 
easement.
    (b) In the event that the cooperating entity fails to enforce any 
of the terms of the easement as determined in the sole discretion of 
the Secretary, the Secretary and his or her successors and assigns 
shall have the right to enforce the terms of the easement through any 
and all authorities available under Federal or State law. In the event 
that the cooperating entity attempts to terminate, transfer, or 
otherwise divest itself of any rights, title, or interests of the 
easement or extinguish the easement or without the prior consent of the 
Secretary and payment of consideration to the United States, then, at 
the option of the Secretary, all right, title, and interest in the 
conservation easement shall become vested in the United States of 
America.
    (c) Notwithstanding paragraph (a) of this section, NRCS reserves 
the right to enter upon the easement area at any time to remedy 
deficiencies or easement violations, as it relates to the conservation 
plan. The entry may be made at the discretion of NRCS when the actions 
are deemed necessary to protect highly erodible soils and wetland 
resources. The landowner shall be liable for any costs incurred by the 
United States as a result of the landowner's negligence or failure to 
comply with the easement requirements.
    (d) The United States shall be entitled to recover any and all 
administrative and legal costs, including attorney's fees or expenses, 
associated with any enforcement or remedial action.
    (e) The conservation easement shall include an indemnification 
clause requiring landowners to indemnify, defend, and hold harmless the 
United States from any liability resulting from the negligent acts of 
the landowner.
    (f) In instances where an easement is terminated or extinguished, 
NRCS will collect CCC's share of the conservation easement based on the 
appraised fair market value at the time the easement is violated or 
terminated. CCC's share shall be in proportion to its percentage of 
original investment.


Sec.  1491.31  Appeals.

    (a) A person or cooperating entity participating in FRPP may obtain 
a review of any administrative determination concerning eligibility for 
participation utilizing the administrative appeal regulations provided 
in 7 CFR part 614.
    (b) Before a person may seek judicial review of any action taken 
under this part, the person must exhaust all administrative appeal 
procedures set forth in paragraph (a) of this section, and for the 
purposes of judicial review, no decision shall be a final agency action 
except a decision of the U. S. Department of Agriculture under these 
provisions.
    (c) Any appraisals, market analyses, or supporting documentation 
that may be used by the NRCS to determine property value are considered 
confidential information, and shall be disclosed only as determined by 
the cooperating entity and NRCS in accordance with applicable law.


Sec.  1491.32  Scheme or device.

    (a) If it is determined by the Secretary that a landowner or 
cooperating entity have employed a scheme or device to defeat the 
purposes of this part, any part of any program payment otherwise due or 
paid such landowner or cooperating entity during the applicable period 
may be withheld or be required to be refunded with interest thereon, as 
determined appropriate by CCC.
    (b) A scheme or device includes, but is not limited to, coercion, 
fraud, misrepresentation, depriving any other person or entity of 
payments for easements for the purpose of obtaining a payment to which 
a person would otherwise not be entitled.

    Signed in Washington, DC, on October 16, 2002.
Bruce I. Knight,
Vice President, Commodity Credit Corporation and Chief, Natural 
Resources Conservation Service.
[FR Doc. 02-26888 Filed 10-28-02; 8:45 am]
BILLING CODE 3410-16-P