[Federal Register Volume 68, Number 32 (Tuesday, February 18, 2003)]
[Proposed Rules]
[Pages 7720-7722]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-3782]


 ========================================================================
 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. 68, No. 32 / Tuesday, February 18, 2003 / 
Proposed Rules  

[[Page 7720]]



DEPARTMENT OF AGRICULTURE

Commodity Credit Corporation

Natural Resources Conservation Service

7 CFR Part 1470


Conservation Security Program

AGENCY: Commodity Credit Corporation and the Natural Resources 
Conservation Service, USDA.

ACTION: Advance notice of proposed rulemaking and request for comments.

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SUMMARY: The Conservation Security Program (CSP) is authorized by Title 
XII, Chapter 2, Subchapter A, of the Food Security Act of 1985, as 
amended by the Farm Security and Rural Investment Act of 2002. The 
Natural Resources Conservation Service (NRCS) administers CSP. Under 
CSP, NRCS is authorized to provide financial and technical assistance 
to owners and operators of agricultural operations to promote 
conservation and improvement of the quality of soil, water, air, 
energy, plant and animal life, and other conservation purposes. NRCS is 
interested in obtaining public input before developing a proposed 
regulation.
    This advance notice is intended to give the public the opportunity 
to comment on key issues that have been raised regarding the 
implementation of the program. These comments will help NRCS in the 
agency's development of a proposed rule. NRCS intends to publish the 
proposed rule in 2003 and therefore has narrowed the comment period for 
this advance notice to 30 days. The public will have another 
opportunity to provide input during the comment period for the proposed 
rule prior to NRCS publishing a final rule for the program.

DATES: Comments must be received in writing by March 20, 2003.

ADDRESSES: Send comments in writing, by mail, to Conservation 
Operations Division, Natural Resources Conservation Service, PO Box 
2890, or by e-mail to [email protected]; Attn: Conservation 
Security Program. This Advance Notice of Proposed Rulemaking may also 
be accessed via the Internet through the NRCS homepage, at http://www.nrcs.usda.gov, and by selecting Farm Bill 2002. All comments, 
including names and addresses when provided, are placed in the record 
and are available for public inspection.

FOR FURTHER INFORMATION CONTACT: Mark W. Berkland, Director, 
Conservation Operations Division, NRCS, PO Box 2890, Washington, DC 
20013-2890; telephone: (202) 720-1845; fax: (202) 720-4265; submit e-
mail to: [email protected], Attention: Conservation Security 
Program.

SUPPLEMENTARY INFORMATION: 

General Information about the Conservation Security Program

    The Farm Security and Rural Investment Act of 2002 (The 2002 Act) 
(Pub. L. 107-171) amended the Food Security Act of 1985 to authorize 
the Conservation Security Program (CSP). CSP is administered by USDA's 
Natural Resources Conservation Service (NRCS). CSP is a voluntary 
program that provides financial and technical assistance to promote the 
conservation and improvement of soil, water, air, energy, plant and 
animal life, and other conservation purposes on Tribal and private 
working lands. Working lands include cropland, grassland, prairie land, 
improved pasture, and range land, as well as forested land that is an 
incidental part of an agriculture operation.
    In keeping with principles outlined in the USDA publication, ``Food 
and Agriculture Policy--Taking Stock for the New Century'', the 
Secretary's vision for CSP's unique role within USDA conservation 
programs is:
    (1) To identify and meaningfully reward those farmers and ranchers 
meeting the very highest standards of conservation and environmental 
management on their operations;
    (2) To create powerful incentives for other producers to meet those 
same standards of conservation performance on their operations; and
    (3) To provide public benefits for generations to come.
In short, CSP should reward the best and motivate the rest.
    The intent of CSP is to support ongoing conservation stewardship of 
agricultural lands by providing assistance to producers to maintain and 
enhance natural resources. The program is available in all 50 States, 
the Caribbean Area and the Pacific Basin area. The program provides 
equitable access to benefits to all producers, regardless of size of 
operation, crops produced, or geographic location.
    NRCS is seeking public comment to help the agency develop a 
proposed rule. The public will have the opportunity to provide 
additional input during the proposed rule's comment period prior to the 
publication of a final rule.
    Under the statute, CSP is available on cropland, grassland, prairie 
land, improved pasture, and range land, as well as certain forested 
land that is an incidental part of an agriculture operation.

Background

    According to statute, an inventory will be conducted to identify 
resource concerns and determine the extent of conservation treatment 
that is being applied and maintained on their land. Authorized payments 
include a base payment determined by the treatment level, cost-share 
for applying conservation practices, maintenance payments for applied 
conservation practices, and enhanced payments for treatment that 
exceeds the minimum criteria. A three-tiered approach is used when 
offering payments.
    If a producer desires to move to a higher tier, cost-share payments 
for needed structural practices are available through the CSP at up to 
75 percent of the cost of the new practice, or up to 90 percent in the 
case of beginning farmers or ranchers. Participants may contribute to 
the cost of the new practice through in-kind sources, such as personal 
labor, use of personal equipment, donated labor or materials, and use 
of on-hand or approved used materials. Cost-shared practices are to be 
maintained for the life of the practice. All needed practices and 
management must be in place and maintained before a producer can move 
to the next tier. Similar to other United States Department of 
Agriculture (USDA) conservation programs, the 2002 Act requires that 
the Conservation Security Program (CSP) provide financial incentives to 
agricultural producers that undertake new

[[Page 7721]]

conservation efforts that meet high environmental standards. However, 
unlike other USDA conservation programs, the 2002 Act requires that CSP 
provides financial assistance for maintaining conservation. A clear 
intent of the program is to financially reward producers for 
significant environmental goods and services they provide to the public 
through their annual and ongoing conservation efforts. CSP, therefore, 
raises new and important issues that have not been confronted 
previously for traditional conservation programs.
    NRCS undertook two projects to identify and better understand those 
elements in the design of the program that would have the most 
influence on its performance. In the first project, the firm, Plexus 
Marketing Group, was retained to conduct nine focus groups to obtain 
inputs from representative agricultural and stakeholder groups 
regarding key elements of the CSP to assist NRCS in developing program 
rules. In the second project, the Soil and Water Conservation Society 
(SWCS) organized five workshops to obtain feedback on CSP and its 
implementation from producers and NRCS field staff.
    The Plexus focus groups were held as follows:
    Three (3) were conducted in various states with a representative 
cross section of groups:
November 12 Columbia, MO
November 13 Modesto, CA
November 14 Macon, GA

    Six (6) were held in Washington, DC with specific groups:
November 19 Agricultural Media Group
November 19 Livestock Group
November 20 Fruits & Vegetables Group
November 20 Crops Group
November 21 Wildlife and Sportsman Groups
November 21 Environmental Groups
    The composition of the groups were determined by the firm with 
assistance from NRCS. The firm facilitated the participants through a 
series of questions to solicit their feedback on key issues relevant to 
rulemaking for the new program.
    The five SWCS workshops were held in the following locations:

November 12 Billings, Montana (Montana, Wyoming)
November 14 Fort Morgan, Colorado (Colorado, Wyoming)
November 21 Defiance, Ohio (Ohio, Michigan, Indiana)
December 3 Greenville, Mississippi (Mississippi, Arkansas, Louisiana)
December 11 Fresno, California (California)

    Four NRCS field staff and 12 producers participated in each 
workshop. Producers were selected in an unbiased manner which assured 
that they were not exclusively conservation-oriented or farm program 
participants. Producers were interviewed to solicit their feedback on 
key issues relevant to rulemaking for the new program.

Key Issues for Comment

    The results of these two projects coupled with analyses conducted 
by NRCS have identified several key issues in rulemaking that will have 
profound effects on the performance and effectiveness with which CSP 
can be used to meet the objectives of the statute. The SWCS workshops, 
for example, identified important opportunities to simultaneously 
streamline and enhance the conservation performance of CSP. The focus 
groups, on the other hand, felt it important to do the program 
``right'' at the onset even if it meant slowing initial implementation; 
further the participants were concerned about flexibility and 
accountability. Both groups identified concerns about the potential 
budget implications of the program. One of the overarching issues 
identified was the tension between the demand for the program and the 
budget concerns.
    NRCS is currently analyzing in detail the information gathered 
through the workshops and focus groups to inform its rulemaking in 
regard to the key issues raised in the workshops, focus groups, and 
agency analyses of alternatives. Given the importance of these issues 
to the performance and effectiveness of CSP, NRCS is seeking additional 
public comment. NRCS is specifically interested in receiving public 
input regarding how CSP can be used to meet the objectives of the 
statute on the following issues:
    1. The law specifies that conservation security plans address one 
or more ``significant'' resource concerns. Resource concerns may be as 
general as soil erosion or water quality or as specific as soil erosion 
by water or ground water quality. Many concerns have no practical 
direct measurement techniques or tools. What criteria should be used to 
determine what is a resource concern and whether a resource concern is 
significant?
    2. The law requires that NRCS establish minimum requirements for 
three tiers of conservation effort. The minimum could be as specific as 
a list of minimum practices or as general as bundling of conservation 
measures that achieve a desired resource outcome. What should be the 
minimum requirements for each tier? Should NRCS establish minimum 
requirements that apply to all contracts nationally? What could some of 
these requirements be?
    3. The law requires NRCS to describe the particular practices to be 
implemented, maintained, or improved as part of the program. What 
criteria should be used to determine which practices and activities are 
eligible for payment under the program? Should specific practices or 
activities receive priority for payment under the program? To what 
extent should sets of practices and activities be accorded priority for 
payment under the program?
    4. The law restricts the maximum base payment to a percentage of 
the total contract cap (i.e. 25 percent for Tier I and 30 percent for 
Tiers II and III). What should be the balance of the base payment, 
maintenance cost-share payment and enhancement payment to reward the 
steward and attain additional conservation benefits?
    5. The law uses the extent of the agricultural operation covered by 
the contract as a primary distinction between Tiers I and II. Tier I 
covers the ``enrolled portion of the agricultural operation'', while 
Tiers II and III cover ``the entire agricultural operation.'' With the 
variety of ownership and landowner-tenant relationships which change 
over time across the country, how should ``agricultural operation'' be 
defined?
    6. The law specifies the eligible land for payment purposes as 
cropland, grassland, prairie land, and rangeland as well as forestland 
that is an incidental part of the agricultural operation. Should 
noncropped areas, such as turn rows or riparian areas, that are part of 
the agriculture operation be included for conservation treatment? 
Should farmsteads, ranch sites, barnyards, feedlots, equipment storage, 
material-handling facilities, and other such developed areas be 
considered part of the ``agricultural operation''? What criteria should 
be used to determine those areas of a farm or ranch that might 
legitimately be excluded from the ``agricultural operation''?
    7. The law specifies that NRCS make a base payment as part of a 
conservation security plan using either the 2001 national rental rate 
for a specific land use or another appropriate rate that assures 
regional equity. How should NRCS determine the base payment? If an 
alternative to the national rental rate is used, how should it be 
constructed? Should the payments be determined at the national, state 
or local levels?
    8. The law provides for an enhanced payment if an owner or operator 
does one or more of the following: (a)

[[Page 7722]]

Implements or maintains practices that exceed minimum requirements; (b) 
addresses local conservation priorities; (c) participates in on-farm 
research, demonstration, or pilot projects; (d) participates in a 
watershed or regional resource conservation plan; or (e) carries out 
assessment and evaluation activities relating to practices included in 
a conservation security plan. Enhanced payments are meant to ensure and 
optimize environmental benefits. How should enhanced payments be 
determined and calculated?
    9. The law does not limit the number of contracts held by a 
producer. Should there be a limitation on the total number of contracts 
a producer may have? If there is no limit on the number of contracts, 
should USDA set an individual payment limitation for producers with 
multiple contracts?
    10. The law requires that the regulations provide for adequate 
safeguards to protect the interests of tenants and sharecroppers, 
including provisions for sharing payments, on a fair and equitable 
basis. Concerns have been raised over the impact of CSP provisions on 
owner/operator relationships including changes in rental rates or 
changes in operators. How can NRCS ensure that payments are shared on a 
fair and equitable basis?
    11. The law requires a minimum contract length in CSP of five 
years. Many landlord-tenant relationships are short-term in nature, 
usually less than five years. Should the applicant be required to have 
control of the land for the complete CSP contract period? How should 
the program address the tension between the return to management versus 
the return to capital?
    12. The law does not prescribe a funding or acreage cap for CSP. 
USDA estimates that there is a potential applicant pool of over two 
million farms and ranches covering over 900 million potential eligible 
acres. A primary implementation concern is the program scope. In order 
for this program to accomplish the Administration's goal of maximizing 
the conservation and improvement of natural resources, it is necessary 
to prioritize CSP assistance. The Department is seeking public comments 
on ways to focus and prioritize CSP assistance. For example, if the 
program would only fund the highest-priority applications, should there 
be an open application process with all applicants competing for a 
limited number of contracts? Should applications be constrained by 
resource concern, program funding, tier level, owner-operator 
relationship, geography or other constraint?
    13. The law includes energy as a resource concern for CSP program 
purposes. The NRCS Field Office Technical Guide does not recognize 
energy as a natural resource concern and therefore no quality criteria 
or non-degradation standard exists to compare a conservation treatment 
against. NRCS is seeking comments on how energy use should be 
incorporated into the program requirements. How should the benefits be 
assessed?
    14. The law includes payment for conservation practices described 
as requiring planning, implementation, management and maintenance. A 
concern was raised as to whether the payment would be, in fact, a 
return for equity in capital or for the engagement in intensive 
management. What should the program be paying for?
    15.The law provides little guidance for monitoring quality 
assurance or specifics on identifying contract violations. The issue is 
two-fold in nature encompassing both the measurement of outcomes from a 
performance standpoint and assuring the Federal funds are spent wisely 
and that contracts are appropriately carried out. How should USDA 
ensure accountability?
NRCS will accept all other comments on general program implementation.

Regulatory Findings

Executive Order 12866

    Under Executive Order 12866 (58 FR 51735, October 4, 1993), USDA 
must determine whether the regulatory action is ``significant'' and 
therefore subject to review by the Office of Management and Budget 
(OMB) and the requirements of the Executive Order. The Order defines 
``significant regulatory action'' as one that is likely to result in a 
rule that may:
    (1) Have an annual effect on the economy of $100 million or more or 
adversely affect in a material way the economy, a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or Tribal governments or 
communities;
    (2) Create a serious inconsistency or otherwise interfere with an 
action taken or planned by another agency;
    (3) Materially alter the budgetary impact of entitlements, grants, 
user fees, or loan programs or the rights and obligations of recipients 
thereof; or
    (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
the Executive Order.
    Pursuant to the terms of Executive Order 12866, it has been 
determined that this Advanced Notice of Proposed Rulemaking is a 
``significant regulatory action'' in light of the provisions of 
paragraph (4) above as it raises novel legal or policy issues. As such, 
this action was submitted to OMB for review.

    Signed in Washington, DC, on February 6, 2003.
Bruce I. Knight,
Chief, Natural Resources Conservation Service and Vice President, 
Commodity Credit Corporation.
[FR Doc. 03-3782 Filed 2-14-03; 8:45 am]
BILLING CODE 3410-16-P