[Federal Register Volume 68, Number 95 (Friday, May 16, 2003)]
[Rules and Regulations]
[Pages 26461-26478]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-12064]



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  Federal Register / Vol. 68, No. 95 / Friday, May 16, 2003 / Rules and 
Regulations  

[[Page 26461]]



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: Final rule.

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SUMMARY: This final rule sets forth the policies implementing the Farm 
and Ranch Lands 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Investment Act of 2002 repealed the Farmland Protection Program (FPP), 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both distinguish it from the repealed program and to better describe 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 or other interests in land for the purpose of 
protecting topsoil by limiting nonagricultural uses of the land. The 
final rule promulgates policy regarding the implementation of the FRPP, 
while the Request for Proposals (RFP), which will continue to be used, 
announces national fund availability and sets forth nationwide 
application procedures and ranking criteria. Conservation easements 
recorded on or following this date will be administered according to 
this final rule. Cooperative agreements signed on this date or 
following this date also will be administered according to this final 
rule.

DATES: This final rule is effective May 16, 2003.

ADDRESSES: This final rule can be accessed via the internet. Users can 
access the Natural Resources Conservation Service (NRCS) homepage at: 
http://www.nrcs.usda.gov.

FOR FURTHER INFORMATION CONTACT: Denise Coleman, Farm and Ranch Lands 
Protection Program Manager, Natural Resources Conservation Service, 
P.O. Box 2890, Washington, DC 20013-2890. Telephone: (202) 720-9476. 
Electronic mail [email protected]. Persons with disabilities who 
require alternative means for communication (Braille, large print, 
audio tape, etc.) should contact the USDA Target Center at: (202) 720-
2600 (voice and TDD).

SUPPLEMENTARY INFORMATION: 

Executive Order 12866

    This final rule has been reviewed under USDA procedures and 
Executive Order 12866 on Regulatory Planning and Review. The Office of 
Management and Budget (OMB) has determined that this final rule is not 
a significant rulemaking 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 final 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 final rule. This final 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 final rule is not a major rule as defined by Section 804 of 
the Small Business Regulatory Enforcement Fairness Act of 1996. This 
final 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.

Environmental Analysis

    An Environmental Assessment (EA) has been prepared to assist NRCS 
in determining whether this final 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 has issued a Finding of No Significant Impact (FONSI). 
Copies of the EA and FONSI may be obtained from Denise Coleman, 
Farmland Protection and Community Planning Staff, Natural Resources 
Conservation Service, P.O. Box 2890, Washington, DC 20013-2890. The 
FRPP EA and FONSI will also be available at the following Internet 
address: http://www.nrcs.usda.gov/programs/Env_Assess/FPP/FPP.html.

Paperwork Reduction Act

    Section 2702 of the Farm Security and Rural Investment Act of 2002 
provides that the promulgation of this final 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 final 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 final rule would 
preempt the State or local laws or regulations found to be in conflict. 
The provisions of this final 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 final 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

[[Page 26462]]

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.

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, and an expanded transportation 
infrastructure have accelerated the depopulation of the urban centers 
and have resulted in the conversion of farm and ranch land. 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 2.2 million acres being converted per 
year (USDA, Maintaining Farm and Forestland In Rapidly Growing Areas, 
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 of 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, Maintaining Farm and Forestland 
In Rapidly Growing Areas, 2000).
    As a result of these land use changes, there is growing national 
interest in protecting farm and ranch lands. Once developed, productive 
topsoil is effectively lost forever, placing the Nation's future food 
security at risk. Furthermore, land use devoted to agriculture provides 
other significant public benefits, including environmental quality, 
historic preservation, 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, and local governments, and non-governmental 
organizations with existing farmland protection programs to purchase 
conservation easements. NRCS is authorized by statute to purchase 
conservation easements, or other interests in land. NRCS cannot use 
FRPP funds to restore historical or archaeological resources, nor share 
in the cost of installing conservation practices.
    Under the FRPP, NRCS solicits proposals 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 uses. Although NRCS has authority to 
acquire other interests in land, the FRPP will seek to fund the 
acquisition of conservation easements.

Discussion of Comments and Changes

    The Natural Resources Conservation Service (NRCS), on behalf of the 
Commodity Credit Corporation (CCC), published a proposed rule on 
October 29, 2002 at 7 CFR 1491. NRCS received 296 timely filed letters 
containing nearly 800 comments. Respondents included the following: 1 
Congressional representative, 1 Federal agency, 5 State agencies, 5 
local governments, 59 non-governmental organizations, and 225 from 
individuals. Comments were received from California, Colorado, 
Connecticut, Delaware, Florida, Idaho, Illinois, Iowa, Kansas, 
Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota, 
Mississippi, Missouri, Montana, Nebraska, New Hampshire, New Jersey, 
New Mexico, New York, North Carolina, Oklahoma, Oregon, Pennsylvania, 
Rhode Island, South Carolina, Tennessee, Texas, Vermont, Washington, 
West Virginia, Wisconsin, Wyoming, and the District of Columbia. Some 
letters and e-mails did not indicate from which State they originated. 
Some comments pertained to a specific situation or locality and were 
not national in scope; therefore, these comments were not addressed in 
the final rule.
    The discussion that follows is organized in the same sequence as 
the proposed rule.

Subpart A--General Provisions

Section 1491.1 Applicability

    This section addresses the scope of the Farm and Ranch Lands 
Protection Program. The Farm and Ranch Lands Protection Program is 
available in all 50 States, the District of Columbia, the Commonwealth 
of Puerto Rico, Guam, the Virgin Islands of the United States, American 
Samoa, and the Commonwealth of the Northern Mariana Islands. One 
respondent asked whether this final rule governs the policy for fiscal 
year 2002 applications. This final rule is effective upon publication. 
Conservation easements recorded on/or following this date will be 
administered according to this final rule. Cooperative agreements 
signed on this date or following this date also will be administered 
according to this final rule. One respondent asked that there be a 
discussion of how the final rule differs from the Request for 
Proposals, while one respondent requested that NRCS continue to use 
national Request for Proposal announcements, as it did under the 
Farmland Protection Program. The final rule promulgates policy 
regarding the implementation of the FRPP, while the Request for 
Proposals, which will continue to be used, announces national fund 
availability and sets forth nationwide application procedures and 
ranking criteria.
    Three respondents indicated their overall support for the FRPP 
program and its proposed rule, while two respondents indicated that 
they did not support FRPP, contending that tax dollars should not be 
used on programs where the Federal government decides how private lands 
are to be used, and that a program such as FRPP invites more ``boom and 
bust'' land speculation. FRPP is a voluntary program that protects 
agricultural land from conversion to nonagricultural uses. FRPP, 
coupled with community planning and zoning, such as the use of 
agricultural districts, can help curb

[[Page 26463]]

``boom and bust'' land speculation and ensure that farm and ranch lands 
remain viable in communities across the Nation.
    Two respondents indicated their support for the program's name 
change from the Farmland Protection Program to the Farm and Ranch Lands 
Protection Program. Another respondent supported the name change as 
long as east coast farms remained competitive in acquiring FRPP funds. 
As it always has, FRPP will continue to protect both farm and ranch 
land from conversion to nonagricultural uses. The reason for the name 
change is not to shift the Program's purpose, but rather to distinguish 
it from the repealed program and to better describe the types of land 
the Program seeks to protect.
    Another respondent raised the concern that farms and ranches 
located outside of priority areas be protected. FRPP promotes 
flexibility and local decision making as it relates to parcel 
protection. Priority area designation is at the discretion of the State 
Conservationist, with advice from the State Technical Committee.

Section 1491.2 Administration

    In this section, the roles and responsibilities of NRCS were 
identified. Three respondents indicated that FRPP duplicates many 
processes already in use by various State and local governments and 
non-governmental organizations. One of these respondents further went 
on to state that the FRPP provisions ``go way beyond the necessary 
criteria needed for Federal reimbursement of the easement purchase 
price and challenge the rights of the State, County, or non-
governmental organization as Grantee.'' For this reason, the 
respondents requested that NRCS enter into Memoranda of Understandings 
with existing State and local farmland protection programs under which 
non-Federal review procedures and selection criteria would suffice for 
Federal purposes.
    The Farm Security and Rural Investment Act of 2002 states:

    The Secretary, acting through the Natural Resources Conservation 
Service, shall establish and carry out a farmland protection program 
under which the Secretary shall purchase conservation easements or 
other interests in eligible land that is subject to a pending offer 
from an eligible entity for the purpose of protecting topsoil by 
limiting nonagricultural uses of the land.

    In accordance with this statutory language, the Farm and Ranch 
Lands Protection Program is not a grant program, rather it is a land 
procurement program that acquires an actual Federal interest in the 
Property. In the case of FRPP, the interest acquired is a contingent 
right. In order to carry out the intent of the statute, NRCS has been 
active in conducting eligibility determinations, ranking parcels based 
on its own criteria, and reviewing and approving conservation 
easements.
    Moreover, even if FRPP was a grant program, memoranda of 
understandings (MOUs) or memoranda of agreements (MOAs) are not legally 
binding instruments. Therefore, the Federal government does not utilize 
MOUs or MOAs to provide Federal funds to recipients. NRCS understands 
the fact that a number of State and local farmland protection programs 
have a longer history of acquiring parcels than FRPP. Many of these 
State and local governments have well established procedures to acquire 
parcels. For this reason, NRCS has and will continue to work with 
established farmland protection programs utilizing the State Technical 
Committee. In consultation with the State Technical Committee, NRCS:
    [sbull] Issues Statewide application guidance;
    [sbull] Develops ranking criteria that meets the objectives of FRPP 
and the State and local farmland protection programs; and
    [sbull] Establishes NRCS State policy as it relates to FRPP 
easement acquisition.
    Eighteen respondents asked that NRCS address FRPP's association 
with other conservation programs administered by the United States 
Department of Agriculture (USDA). NRCS encourages landowners to utilize 
other conservation programs to protect natural resources on FRPP land. 
Landowners who enroll in FRPP are eligible to participate in USDA's 
cost share programs, including the Agricultural Management Assistance 
Program (AMA), Conservation Reserve Program (CRP), Environmental 
Quality Incentives Program (EQIP), Wildlife Habitat Incentives Program 
(WHIP), and the long-term contract options under the Wetlands Reserve 
Program (WRP) and Conservation Reserve and Enhancement Program (CREP). 
One respondent suggested that permanently protected lands, such as 
FRPP, receive priority ranking in other USDA programs. Current policy 
allows the NRCS State Conservationist to establish ranking criteria at 
the State level for other conservation programs. The NRCS State 
Conservationist has the authority to rank FRPP parcels higher than 
other parcels, if the State Conservationist deems it to be appropriate.
    Thirteen respondents asked NRCS to address, as it relates to FRPP 
implementation, the Partnership and Cooperation provision that was 
authorized in the 2002 Farm Bill. Partnerships and Cooperation, as 
authorized under the Farm Security and Rural Investment Act of 2002 
(Title XII, Subtitle E, Section 1243 (f)), offers new opportunities to 
address pressing conservation and natural resource needs. The provision 
provides authority for the Secretary of Agriculture to use resources 
provided under other conservation programs to enter into stewardship 
agreements with State and local agencies, Indian tribes, and non-
governmental organizations. Under this provision, the State 
Conservationist, with advice from the State Technical Committee, may 
designate special projects to enhance technical and financial 
assistance provided to owners, operators, and producers, and to address 
natural resource issues related to agricultural production. The U.S. 
Department of Agriculture is presently working to define the 
operational aspects of Partnerships and Cooperation. The provision is 
unique among the new Farm Bill authorities in that it builds from seven 
core programs, including the Farm and Ranch Lands Protection, Wetlands 
Reserve, Environmental Quality Incentives, Conservation Reserve, 
Wildlife Habitat Incentives, Grassland Reserve, and Conservation 
Security Programs. A number of these core programs required rule 
development or revision, many of which are in various stages of 
completion. The results of these activities will influence the overall 
design for Partnerships and Cooperation.

Section 1491.3 Definitions

    This section provides and defines the common terms used throughout 
the FRPP proposed rule.
Agricultural Uses
    Two comments were received concerning this definition. One comment 
suggests that the term ``agricultural uses'' should include ``the 
construction of on-farm structures necessary for farm operations,'' 
while the other comment suggests that agricultural uses be defined by 
the State's Purchase of Development Rights (PDR) Program, or where no 
PDR program exists, agricultural uses should be defined by the State 
agricultural use assessment program. NRCS prefers to continue to 
utilize the flexibility afforded by the proposed rule's definition, 
which allows agricultural uses to be defined at the State level; 
however, NRCS supports the latter comment of making the definition 
consistent with the PDR or State

[[Page 26464]]

agricultural use assessment programs' definitions. For this reason, the 
definition of agricultural uses has been modified in the final rule. To 
ensure that broad State definitions of agricultural uses do not 
conflict with FRPP's mandate to protect soils, NRCS has chosen to 
continue to retain the language: ``NRCS reserves the right to impose 
greater deed restrictions on the property than allowable under a State 
definition of agriculture in order to protect topsoil.''
Conservation Easement
    Comments were received from one respondent who requested that the 
term ``agricultural conservation easement'' should be used instead of 
the generic term ``conservation easement.'' NRCS has chosen to continue 
using the term ``conservation easement'' because it provides a greater 
flexibility to work with cooperating entities which may use 
conservation easements that seek to protect not only farm and ranch 
lands, but also multiple, compatible conservation values, such as open 
space, scenic, and wildlife values.
Conservation Plan
    Ten respondents requested clarification on the scope of a 
conservation plan. Several were confused because the preamble stated 
that ``all lands enrolled in FRPP must have a conservation plan 
developed based on the NRCS Field Office Technical Guide specifications 
and highly erodible land and wetland conservation provisions in 
accordance with 7 CFR part 12,'' while the proposed rule defined a 
conservation plan as a plan that covered only highly erodible cropland. 
In accordance with the Food Security Act of 1985, as amended, the 
authorizing FRPP legislation, a conservation plan under the FRPP will 
cover only highly erodible cropland. Conservation planning on other 
lands or on other resources is at the discretion of the NRCS State 
Conservationist and the cooperating entity.
    In addition to the comments requesting clarification of the scope 
of the conservation plan, nineteen respondents requested that all lands 
enrolled under FRPP have a conservation plan that addresses all natural 
resources, not only soil erosion. These resources include: water, 
wildlife, air, and plants. Three sources noted that a conservation plan 
should address all natural resources as a benefit to the United States 
taxpayer. Two respondents suggested that resource concerns be addressed 
within a specified time frame. In addition to the nineteen respondents, 
several respondents asked that specific resources or management 
activities be addressed in the conservation plan. One respondent 
requested that water quality should be specifically addressed in the 
conservation plan, while another requested water quality and wildlife 
habitat be addressed. Another respondent requested that the 
conservation plan address pest and weed control, while another 
requested that all forest land have a forest stewardship plan. Nine 
respondents requested that a conservation plan be required, but the 
respondents gave no indication as to what level or whether all the land 
should be covered by a conservation plan.
    Two respondents requested that NRCS consider only those lands with 
highly erodible soils, and that landowners never be required to have a 
higher level of planning than those mandated at the time of easement 
signature. One respondent indicated that planning only for highly 
erodible land was inadequate for their program. Based on these 
comments, NRCS has chosen an option that one respondent suggested. The 
rule will be modified to state that any higher level of conservation 
planning and implementation be at the discretion of the cooperating 
entity and the NRCS State Conservationist. By doing this, for FRPP 
purposes, farmers and ranchers would never be held to a higher erosion 
standard than at the time of easement signature; the conservation plan 
would only be required on highly erodible soil as legislatively 
mandated; yet more land and more resources may be addressed under a 
conservation plan if the NRCS State Conservationist and cooperating 
entity deem it to be appropriate.
    Other respondents requested modifications to the proposed rule's 
definition of a conservation plan to incorporate greater landowner 
involvement. Two respondents suggested modifying the definition to read 
as follows: ``A conservation plan meeting the NRCS Field Office 
Technical Guide will be developed by the landowner with NRCS 
assistance,'' while another respondent suggested the definition include 
the following statement: ``technically feasible, based on local 
resource conditions, cost effective; and not cause undue economic 
hardship on the landowner.'' These suggestions echo NRCS' current 
conservation planning policy, which takes into account the landowner's 
needs and economic situation, as well as local resource conditions. For 
this reason, as well as the intent to mirror FRPP's authorizing 
legislation's conservation plan definition, NRCS has chosen not to 
alter the proposed rule's conservation plan definition.
Eligible Land
    One respondent requested that NRCS modify its definition of 
eligible land to include lands that protect drinking water sources, 
while another respondent requested that NRCS include in its definition 
the qualifier that ``eligible lands must be under active management 
that fits the definition of agriculture used by the existing State 
Purchase of Development Rights (PDR) program, where no such program 
exists, the definition of agriculture used by the State agricultural 
use assessment program.'' Another respondent requested that NRCS 
specify to what degree non-traditional farm, ranch, and forest land are 
eligible. The purpose of FRPP is to protect agricultural lands from 
conversion to nonagricultural uses. NRCS believes that the definition 
of eligible lands, as currently defined in the statute and the final 
rule, is broad enough to allow the NRCS State Conservationist to 
protect any farm and ranch land in any geographic area or under any 
land use that the State Conservationist, with advice from the State 
Technical Committee, chooses to protect, as long as it meets the 
program's broad eligibility guidelines. For this reason, NRCS has 
chosen to retain the proposed rule's eligible land definition.
Fair Market Value
    Three respondents suggested that the definition of fair market 
value be revised. They indicated that the proposed rule's definition 
only refers to the fee simple value of a property, not the ``before'' 
and ``after'' values needed to determine the value of a conservation 
easement. NRCS agrees with amending the definition to account for how 
conservation easement values are derived. For this reason, NRCS amends 
the definition as follows:


    Fair market value 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 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. In valuing FRPP 
easements, the certified general appraiser estimates both the fair 
market value of the whole property before the easement acquisition 
and the fair market value of the remainder property after the 
easement has been imposed. The difference

[[Page 26465]]

between these two values is deemed the value of the conservation 
easement.

Farm Succession Plan
    Thirteen respondents requested that Farm Succession Plan be added 
to the final rule's list of definitions. NRCS accepts this suggestion 
and adds the definition to read as follows:

    Farm or ranch succession plan is a general plan to address the 
continuation of some type of agricultural business on the conserved 
land; the farm or ranch succession plan may include specific intra-
family succession agreements or strategies to address business asset 
transfer planning to create opportunities for beginning farmers and 
ranchers.
Historical and Archaeological Resources
    Several respondents raised questions regarding the determination of 
what FRPP considers historical and archaeological resources. Most of 
the respondents recommended or provided comments on the second bullet 
in the proposed rule regarding which properties will be considered. One 
respondent suggested that the second bullet describing parcels eligible 
for the National Register is confusing, and suggested the following 
language: ``Formally determined eligible for listing in the National 
Register of Historic Places by the Keeper of the National Register;'' 
while another respondent suggested that the second bullet be worded as 
follows: ``Be determined eligible for listing on the National Register 
of Historic Places through a written determination by a State Historic 
Preservation Officer (SHPO) or Tribal Historic Preservation Officer 
(THPO).'' Regarding the first recommendation, because only the Keeper 
of the National Register may make formal determinations of eligibility, 
NRCS does not believe that the rule needs to add this reference. 
Regarding the second recommendation, NRCS does not have the authority 
to establish a new National Register eligibility determination process 
for the FRPP program, such as using written determinations by SHPOs and 
THPOs, beyond that which is currently in effect for compliance with 
section 106 of the National Historic Preservation Act.
    In relation to the FRPP historical and archaeological definition, 
two other respondents suggested that a broader definition of historical 
and archaeological resources exists. One respondent suggested that 
where there is no formal listing in the State, refer instead to other 
inventories and have the SHPO or THPO provide an additional 
certification of significance, while another suggested that a fourth 
bullet be added: ``Identified in a congressionally authorized study of 
U.S. battlefield sites, including the July 1993 report on the Nation's 
Civil War battlefields prepared by the Civil War Sites Advisory 
Commission.'' Regarding the suggestion that NRCS establish a new 
certification of significance process, NRCS believes a separate and 
distinct evaluation process beyond the current National Register 
programs and State and tribal register programs would cause confusion. 
Additionally, NRCS believes that by keeping the focus on existing 
registers and inventories, NRCS is supporting and strengthening our 
partners' programs without adding to their current workload. As it 
relates to the use of the inventory in the Civil War Sites Advisory 
Commission's 1993 Report, NRCS acknowledges the importance of these 
properties, but also recognizes that the inventory was developed, in 
part, for use by a Department of Interior battlefield protection 
program, one that has a much narrower focus than that of the FRPP 
(protection of farm and ranch lands across the entire United States). 
If NRCS elected to use this one very specialized list, it would have to 
also consider using other specialized lists of cultural resources (i.e. 
bridges, lighthouses, dams, industrial resources) developed for other 
programs. Additionally, it is most likely that the properties in this 
battlefield inventory are already in State inventories and registers. 
Another respondent questions what it meant to be ``determined formally 
eligible on the National Register.'' NRCS believes that this language 
is clear and need not be further explained. Finally, one commenter 
suggested that the FRPP rule is more restrictive regarding 
determinations of eligibility than current historic preservation 
compliance guidelines. NRCS does not agree and does not want to 
establish a separate determination and evaluation process. This would 
undermine existing historic preservation evaluation and designation 
programs and would also risk further confusion.
Land Evaluation and Site Assessment System (LESA)
    NRCS did not receive any comments on this definition, but for 
clarification NRCS has defined what is meant by ``Federal'' for the 
purposes of FRPP. For this reason, NRCS amends the definition to read 
as follows: ``Land Evaluation and Site Assessment System (LESA) is a 
land evaluation system approved by the NRCS State Conservationist used 
to rank land for farm and ranch land protection purposes, based on soil 
potential for agriculture, as well as social and economic factors, such 
as location, access to markets, and adjacent land use. (For additional 
information see the Farmland Protection Policy Act regulation, 7 CFR 
part 658.)''
Non-Governmental Organization
    Four respondents suggested inserting the word ``and'' in the 
definition for eligible non-governmental organizations to clarify that 
non-governmental organizations must be a conservation organization and 
must be recognized by the Internal Revenue Service as tax exempt by 
virtue of being operated for religious, charitable, scientific or 
similar purposes. Despite these suggestions, NRCS has chosen to retain 
the original definition which reflects FRPP's authorizing legislation:

    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 that is 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.
Prime Farmland
    One respondent requested that the term ``prime farmland'' be 
changed to ``prime soils'' since it is the soils that NRCS is 
describing in the definition. NRCS is choosing to retain the ``prime 
farmland'' definition to make it consistent with the definition from 
which it is derived in 7 CFR part 657. Two respondents asked whether 
land that grows Christmas trees, flowers, nursery stock and grapes for 
wine are considered prime since they are not producing food, feed, and 
forage. NRCS may consider these areas prime, unique, Statewide or 
locally important in accordance with 7 CFR part 657, since these areas 
have a special combination of soil quality, location, growing season, 
and moisture supply to produce these crops.
Ranch Land
    Two respondents requested that the term ``ranch land'' be clarified 
so that it is more inclusive of many of the lands used in ranching 
across the country. Both respondents suggest that the following NRCS 
Pasture and Range Handbook definition be utilized,

    Land on which the historic climax plant community is 
predominantly grasses, grasslike plants, forbs, or shrubs. Includes

[[Page 26466]]

lands revegetated naturally or artificially when routine management 
of that vegetation is accomplished mainly through manipulation of 
grazing. Rangelands include natural grasslands, savannas, 
shrublands, most deserts, tundra, alpine communities, coastal 
marshes, and wet meadows.

NRCS believes that the aforementioned ranch land definition is too 
broad and that a broad definition of ranch land could lead to the 
protection of ranch land that does not meet the statute's intent of 
protecting prime, unique, and important soils. Moreover, such a 
definition may limit NRCS' flexibility to protect lands not included in 
this definition. Another respondent generally stated that eligibility 
criteria for prime, unique farm and ranch land should be broadened. For 
the aforementioned reasons, NRCS has chosen not to limit the enrollment 
of farm and ranch land to one single definition, but instead chooses to 
determine eligible farm and ranch lands through already established 
procedures. In determining eligible farm and ranch lands, NRCS will 
continue to use the procedures that identify important farm and ranch 
lands outlined in 7 CFR part 657. Under this rule, farm and ranch lands 
not considered prime and unique may be considered Statewide or locally 
important, if a State agency or local planning body determines the land 
to be of importance. If determined to be prime, unique, or Statewide or 
locally important, these soils are then eligible for FRPP assistance. 
NRCS believes this process provides sufficient flexibility to protect 
farm and ranch lands that may not meet the prime and unique definition, 
but at the same time assures that the Congressional intent of 
protecting land that has ``prime, unique, or other productive soil,'' 
is maintained. For this reason, NRCS chooses to retain the original 
eligibility definition and process determining prime, unique, and 
important soils.

Section 1491.4 Program Requirements

    Three respondents directly or indirectly referred to FRPP as a 
grant program and that NRCS does not need to substitute its judgment 
for that of State and local farmland protection programs. As explained 
previously, the Farm and Ranch Lands Protection Program is not a grant 
program, rather it is a program where the Federal Government acquires 
an interest in the Property for the purpose of protecting the resource. 
For this reason, NRCS has been active and will continue to be active in 
conducting eligibility determinations, ranking parcels based on its own 
criteria, and reviewing and approving conservation easements in order 
to meet the statutory requirements of the Program.
    One respondent questioned FRPP's emphasis on topsoil, stating that 
``Too much emphasis is placed on protecting topsoil and prime and 
unique farmland, more of an emphasis should be placed on protecting 
rangeland and watersheds,'' while two other respondents believed that 
requiring a pending offer is unrealistic, burdensome, and requires an 
expense on the part of the partner. As a result, land deals often fall 
through because a pending offer is required. In response to these 
comments, NRCS refers to the FRPP authorizing legislation which sets 
forth FRPP's purpose, ``protecting topsoil by limiting nonagricultural 
uses of the land.'' The statute further defines eligible land as ``farm 
and ranch land that has prime, unique or other productive soil; or 
contains historical or archaeological sources; and is subject to a 
pending offer for purchase from an eligible entity.'' In order to 
comply with its authorizing legislation, NRCS has placed a program 
emphasis on protecting prime, unique, and important farm and ranch 
land, as well as requiring a pending offer from an eligible entity. One 
respondent stated that historical and archeological resources and a 
pending offer should be factors to consider, not essential to 
eligibility. NRCS, once again refers to FRPP's authorizing legislation 
which states that ``eligible land means land on a farm or ranch that 
has prime, unique, or other productive soil; or contains historical or 
archaeological resources; and is subject to a pending offer for 
purchase from an eligible entity.'' NRCS is bound by the statute. 
Consequently, NRCS has determined that land on a farm or ranch must 
contain historical or archaeological resources or prime, unique, or 
other productive soil to be eligible. In either case, the land must 
also have a pending offer to be eligible for FRPP. One respondent 
stated that the proposed rule adequately reflects the intent of the 
statute as it relates to historical and archaeological resources, while 
one respondent questioned whether parts of a farm can be enrolled. NRCS 
will enroll all or part of a farm or ranch, so long as 50 percent of 
the farm or ranch land enrolled consists of prime, unique, or important 
soils, or contains historical and archaeological resources and is 
subject to a pending offer.
    One respondent stated that all FRPP easements should be perpetual. 
NRCS agrees with this comment; however, in some States, perpetual 
easements are prohibited. As a result, NRCS has required that ``all 
easements will be in perpetuity unless prohibited by State law.''
    Two respondents indicated their support of NRCS' criteria used to 
evaluate interested entities that wish to receive FRPP funds in 
1491.4(c)(1-4). NRCS will continue to use these criteria to evaluate 
eligible entities, and to ensure the entities have the capacity to 
hold, manage, and enforce conservation easements.
    Several respondents questioned NRCS' policy on only acquiring 
conservation easements on privately owned land. One respondent thought 
that State-owned prison farm and ranch land should be eligible for 
FRPP, while another respondent questioned whether lands temporarily 
bought in fee simple by the State or local government can be acquired 
under FRPP. With a vast majority of the Nation's farm and ranch land 
being privately owned, the demand for the protection of prime, unique, 
or important farmland on privately owned land exceeds available funds. 
As a result, NRCS will continue to place emphasis on protecting 
privately owned farm and ranch land; however, NRCS will assist public 
entities with protecting lands if the acquisition of land is temporary 
and the land will later be sold to a private land owner in fee simple. 
NRCS will not disburse Federal payment to the public entity until the 
fee simple rights are transferred to a private landowner.
    Six respondents raised concerns about the adjusted gross income 
land eligibility requirement. Two respondents argued that the adjusted 
gross income limitation should not apply to FRPP since NRCS is getting 
equal value in the land and oftentimes at a bargain sale; therefore, 
the FRPP payment should not be considered a benefit, but rather an 
equal exchange between the landowner and the United States Department 
of Agriculture. One respondent stated that the sale of land should not 
be considered in computing the adjusted gross income limitation, while 
two respondents stated that this will limit high value land often owned 
by developers or other landowners, who derive a majority of their 
income from non-farm or ranch enterprises. One respondent requested 
that the adjusted gross income limitation be subject to regional 
variation, while another requested that NRCS explain how this affects 
corporate owners. Another respondent requested that NRCS specify the 
adjusted gross income limitation requirements in the final rule, while 
another respondent indicated that this is just another burdensome step 
in the easement acquisition process. One respondent requested that the

[[Page 26467]]

cooperating entity not be held responsible for verification or auditing 
of the certification by the landowner.
    In order to avoid a conflict with any policy contained within the 
Adjusted Gross Income Limitation final rule, NRCS directs respondents 
to the Adjusted Gross Income Limitation final rule, which is currently 
being promulgated. However, to clarify some matters raised during the 
FRPP proposed rule comment period, NRCS will briefly explain the 
adjusted gross income limitation and identify how this limitation 
relates to the FRPP. Section 1604 of the Farm Security and Rural 
Investment Act of 2002 (Pub. L. 1-7-171) prohibits individuals and 
entities exceeding an average adjusted gross income limitation of $2.5 
million from receiving USDA payments, unless 75 percent or more of 
their adjusted gross income is derived from farming, ranching or 
forestry production. Landowners receiving FRPP payments would be 
subject to this adjusted gross income limitation. The proposed Adjusted 
Gross Income Limitation rule, 7 CFR part 1400.6, clarifies this income 
limitation, and sets forth the criteria to be applied in determining 
whether certain income limits have been exceeded by an individual. 
Policy on corporate ownership and land sale revenues, as well as 
administrative procedures, such as income verification, are addressed 
in 7 CFR part 1400.6. In order to comply with Section 1604 of the Farm 
Security and Rural Investment Act of 2002, NRCS will comply with the 
statute and final rule governing the adjusted gross income limitation.
    Twelve respondents raised concerns regarding NRCS' appraisal 
policy. One respondent requested that all appraisals be done in 
accordance with the Uniform Appraisal Standards for Federal Land 
Acquisitions (UASFLA) and that they be reviewed by a Federal appraiser. 
The same respondent stated UASFLA standards must be used, since the 
Uniform Standards of Professional Appraisal Practice (USPAP) does not 
address the ``before'' and ``after'' technique used to evaluate 
conservation easements. To provide cooperating entities maximum 
flexibility and reduce transaction costs, appraisals conducted for the 
FRPP shall conform to USPAP or USFLA standards. NRCS acknowledges that 
the ``before'' and ``after'' technique is an appropriate methodology to 
use in order to determine conservation easement value, and shall be 
adopted by FRPP. One respondent requested that NRCS address in the 
final rule how appraisal reports should be submitted and how these 
reports will be used. Another respondent requested that the 
reproduction of appraisal reports for NRCS use be minimized and that an 
annual meeting between NRCS and the cooperating entity would suffice, 
while another respondent suggested that providing a copy of the 
appraisal report is possible, but providing priority rating criteria is 
not. NRCS concurs with the need to streamline the appraisal submission 
process. However, due to the complexity of the appraisal review process 
and the fact that this type of administration issue is more appropriate 
for manual policy, NRCS has addressed specific appraisal review and 
process issues in its current policy manual, CPM part 519. CPM part 519 
can be accessed via the Internet at: http://policy.nrcs.usda.gov/scripts/lpsiis.dll/M/M_440_519.htm.
    Two local government respondents requested that NRCS adopt 
alternative real estate evaluation systems used by local governments, 
which reduce easement acquisition costs, rather than requiring that 
appraisals be conducted. Considering these comments, NRCS has 
determined that the adoption of alternative evaluation systems, which 
under certain circumstances were permitted in the Farmland Protection 
Program, conflicts with the terms of the FRPP authorizing legislation 
that states ``the Federal share cannot exceed 50 percent of the 
appraised fair market value of the conservation easement.'' For this 
reason, NRCS has determined that only appraisals are appropriate to 
value FRPP parcels.
    In addition, the FRPP is subject to the Department of 
Transportation regulations at 49 CFR part 24, which the USDA has 
adopted by reference in its own regulations at 7 CFR 21.1. 49 CFR part 
24 implements the Uniform Relocation Assistance and Real Property 
Policies Act of 1970 (the 1970 Act) and applies to real property 
acquisition, including the acquisition of partial interests, such as 
conservation easements. One of the main purposes of the 1970 Act is to 
ensure that owners of real property to be acquired by the Federal 
Government or through Federally-assisted acquisitions are treated 
fairly. Because the FRPP is a voluntary program, the FRPP is exempt 
from the regulations that govern Federal acquisition. However, FRPP 
must comply with the terms of the exemption that is set forth at 49 CFR 
24.101. Accordingly, cooperating entities receiving FRPP funds must 
comply with the requirements of 49 CFR 24.101(a)(2) which provides 
that: (1) Prior to making an offer for the property, the FRPP 
cooperating entity must advise the landowner that it is unable to 
acquire the property (e.g. by eminent domain) in the event negotiations 
fail to result in an amicable agreement; and (2) inform the owner of 
what the FRPP cooperating entity believes to be the fair market value 
of the property. In order to determine the fair market value of a 
property, an appraisal by a State-certified general or licensed 
appraiser must be done.
    Three respondents requested that NRCS reimburse the entity for the 
cost of appraisals, while another respondent requested that appraisals 
older than one year may be acceptable if agreed to by NRCS and the 
cooperating entity in a Memorandum of Understanding. NRCS is required 
by law not to exceed ``50 percent of the appraised fair market value of 
the conservation easement.'' As a result of this statutory requirement, 
NRCS requires an appraisal. The appraisal shall not be more than one 
year old prior to easement closure, in order to ensure that the Federal 
share does not exceed 50 percent of the appraised fair market value. 
One respondent asked that the appraiser certification be addressed, as 
well as stated that the Uniform Standard of Professional Appraisal 
Practice (USPAP) system does not utilize the ``before'' and ``after'' 
technique for partial acquisitions. NRCS believes that the ``before'' 
and ``after'' technique is the appropriate method in valuing 
conservation easements for the purpose of FRPP. The ``before'' and 
``after'' technique does not conflict with other methodologies used by 
USPAP and is therefore adopted as a recommended way to determine FRPP 
easement values. NRCS has addressed appraisal review in CPM part 519 
including administrative and technical reviews of appraisals by NRCS. 
CPM part 519 can be accessed via the Internet at: http://policy.nrcs.usda.gov/scripts/lpsiis.dll/M/M_440_519.htm.
    The same respondent suggested that the final rule insert the word 
``general'' in the appraiser description to read ``State certified 
general appraiser,'' while another respondent has asked that the 
Section 1491.4(e) be reworded as follows: ``Prior to FRPP fund 
disbursement, the value of the conservation easement must be 
appraised.'' NRCS acknowledges that ``State certified general 
appraiser'' is the correct terminology, it also agrees with the second 
suggestion which inserts the clarifying language that the value of the 
conservation easement must be appraised. As a result, NRCS has changed 
the rule accordingly.
    Six respondents provided comments on 1491.4(f), which stated that 
at the discretion of the Chief, a standard easement will be required as 
a condition

[[Page 26468]]

for program participation. Four respondents objected to the Chief 
requiring a standard easement, while two respondents suggested that 
NRCS utilize a standard conservation easement deed, but provide for the 
local entity to supply other language as needed to comply with their 
specific requirements. One respondent objected to NRCS' use of a 
standard easement template, since NRCS was not a Grantee and the 
Federal Government's right of asserting the use of a standard easement 
was questionable. Three other respondents suggested that NRCS develop a 
standard easement template in each State. One respondent further 
clarified that the standard easement template should be a part of a 
Memorandum of Understanding that is signed by the cooperating entity 
and NRCS. NRCS chooses to retain the flexibility to develop 
conservation easement deed template by retaining the proposed rule 
language, if it determines it to be appropriate in order to protect the 
interests of the United States. However, NRCS finds the current process 
in which NRCS and the Office of General Counsel review and approve 
conservation easement templates provided by the cooperating entity to 
be sufficient at this time. As it has previously done, NRCS and the 
Office of General Counsel will continue to review conservation easement 
template deeds to ensure that the easement deeds protect the Federal 
interest and uphold FRPP's policies and objectives. Where an easement 
sufficiently deviates from the agreed-to template, NRCS and OGC may 
review the easement deed.
    As it relates to specific language within the proposed rule, 
another respondent inserted that ``at the discretion of the Chief, a 
standard easement, or equivalent legal form which meets the intent of 
the 2002 Act, will be required as a condition of program 
participation.'' Some entities that partner with NRCS use other forms 
of deeds to convey the acquisition of development rights. For this 
reason, NRCS has chosen to adopt this suggestion. Section 1491.4(f) has 
been changed accordingly.
    There was one comment on the confidentiality of information related 
to the agricultural operation as set forth in 1491.4(g). The respondent 
requested that information related to the agricultural operation, as 
well as other incidental information be held in confidence by the State 
or local farmland protection program and NRCS. The respondent further 
stated that NRCS should require confidentiality from the non-
governmental organization as a condition of partnership with NRCS. 
Section 1244 of the Food Security Act of 1985, as amended, states that 
information provided to the Secretary or a contractor of the Secretary 
for the purpose of providing technical or financial assistance to an 
owner, operator, or producer with respect to any natural resources 
conservation program administered by NRCS or FSA shall not be 
considered to be public information and shall not be released to any 
person or Federal, State, local agency or Indian tribe outside the 
Department of Agriculture. The issue of requiring confidentiality from 
non-governmental organizations and other cooperating entities will be 
addressed in a regulation pertaining specifically to confidentiality, 
which is being developed by NRCS in accordance with Section 1244 of the 
Food Security Act of 1985, as amended.
    Another respondent asked about the timing of the development of the 
conservation plan. The conservation plan will be developed prior to the 
payment disbursement made by NRCS to the cooperating entity. One 
respondent requested that NRCS take the lead in monitoring conservation 
plans and make the initial determination that the landowner is not in 
compliance, after which the Grantee will be required to take necessary 
action. As it relates to monitoring the conservation plan on highly 
erodible land, the respondent's suggestion is current NRCS policy. If 
the landowner is found out of compliance with a conservation plan on 
highly erodible land or is violating wetland conservation provisions, 
NRCS will work with the landowner to assist the landowner in getting 
back into compliance. If the landowner refuses to comply with the terms 
of the conservation plan and has been afforded all the appeal and other 
administrative rights in accordance with 7 CFR part 12, NRCS will 
report the conservation plan violation to the cooperating entity. At 
such time, the cooperating entity will consider such noncompliance with 
the conservation plan to be an easement violation and the cooperating 
entity will proceed with their administrative or judicial procedures as 
it relates to easement violations.

Section 1491.5 Application Procedures

    This section articulates how interested entities apply for FRPP 
assistance. One respondent requested that NRCS require from entities a 
plan showing how the entity plans to spend FRPP money. The respondent 
also suggested that NRCS review the entity's management strategies, as 
well as their ability to manage. NRCS believes that these concerns are 
addressed during the application review and the ranking and evaluation 
of parcels as set forth in Section 1491.6. One respondent requested 
that a consistent date for annual applications be established to allow 
for coordination between the Federal and State programs. Two factors 
make the establishment of a fixed application date problematic. 
Historically, USDA waits until Congress appropriates funds through an 
appropriation law. Second, because FRPP is funded annually through CCC, 
the Office of Management and Budget must apportion the funds to NRCS, 
before NRCS can obligate the funds to eligible entities.

Section 1491.6 Ranking Considerations and Proposal Selection

    This section outlines how NRCS will rank and evaluate proposals 
from eligible entities. It also examines criteria that may be used by 
the NRCS State Conservationist to evaluate parcels. A number of 
respondents commented on this section, particularly the criteria that 
may be used by the NRCS State Conservationist.
    As it relates to overall program administration, two respondents 
requested that memoranda of understandings be signed with State and 
local programs to determine a mutually acceptable way for non-federal 
entities to review and select parcels based on FRPP criteria. The 
memoranda of understandings, between the NRCS State Conservationist and 
the State or local programs, would outline mutually acceptable criteria 
to use in evaluating FRPP proposals. Decisions on which parcels to fund 
would be made by the cooperating State or local program, not NRCS. In 
the opinion of the two respondents, it would provide the needed 
flexibility at the State level, while at the same time reduce 
duplicative efforts in evaluating parcels. One respondent requested 
that NRCS purchase properties in a geographic area and match FRPP 
dollars with State program dollars, not choosing actual parcels which 
to fund, but rather selecting specific geographic areas. A majority of 
these concerns regarding review and selection of parcels have been 
addressed in Section 1491.2 Administration. However, NRCS wishes to 
further clarify that the FRPP authorizing legislation has a specific 
purpose of protecting prime, unique, and other productive soil from 
conversion to non-agricultural uses. This purpose is not always the 
primary purpose of cooperating entities' programs. For these reasons, 
as well as the practical reason that NRCS has

[[Page 26469]]

many parcels submitted by numerous cooperating entities, making 
execution of memoranda of understandings impractical. As a result, NRCS 
has chosen to retain the current procedures of selecting and evaluating 
parcels using uniform criteria at the State level.
    Another respondent suggested that NRCS utilize a two-step process 
whereby eligible entities can be certified prior to the identification 
of eligible lands so that the cooperating entities might be poised to 
make an offer when eligible farmlands become available. This option is 
not possible under FRPP because the authorizing legislation requires 
that the entities have pending offers prior to NRCS awarding funds to 
eligible entities.
    Four respondents requested clarification on how the National and 
State criteria are used in selecting parcels. The FRPP proposed rule 
set forth the national criteria used in determining State allocations. 
The national criteria are based on national agricultural land 
conversion rates as provided by the National Resources Inventory (NRI), 
as well as information gathered from interested entities through the 
FRPP State Plan process. This latter information includes but is not 
limited, to entity history, entity acquisition strategies, anticipated 
average FRPP cost per acre, and total acres needing to be protected in 
that fiscal year. The proposed rule also stated that national criteria, 
in addition to State criteria, will be used to evaluate parcels. 
Currently, FRPP policy states that parcels will be evaluated using 
State criteria and national criteria, with no less than 50 percent of 
the weight placed on national criteria. While criteria such as the NRI 
agricultural land conversion rates cannot be used beyond the State 
level, State conservationists have the flexibility to choose the 
national criteria which they deem appropriate. NRCS believes that the 
mix of national and State criteria allows national FRPP objectives to 
be met, while at the same time providing the NRCS State Conservationist 
the necessary flexibility needed to evaluate parcels at the State 
level. One respondent suggested that NRCS adopt a committee approach in 
developing ranking criteria, such as that used by USDA's Forest Legacy 
Program, while another respondent requests that NRCS develop a process 
for obtaining public input on ranking criteria. The final rule allows 
for the NRCS State Conservationist to develop ranking criteria with the 
advice from the State Technical Committee. In a majority of States, the 
NRCS State Conservationist currently develops ranking criteria based on 
the advice of the State Technical Committee. NRCS believes this 
committee approach allows for public input to be obtained.
    Several respondents suggested on expanding FRPP ranking criteria. 
One respondent suggested that an emphasis be placed on watershed 
protection, while another suggested that agricultural economic 
viability of a farm or ranch be included as criteria. Another 
respondent suggested that FRPP criteria consider fish and wildlife 
habitat and water quality, as well as soils. One respondent questioned 
the applicability of the criteria, ``proximity to other protected 
clusters'' in areas where conservation easements are not utilized, 
while another respondent, in an area with increasing development 
pressures, suggested that NRCS consider the rate of land conversion 
relative to the remaining agriculture in the geographic area. This same 
respondent, as well as another respondent, suggested that NRCS evaluate 
parcels relative to specific geographic areas in which they were 
protecting. For example, the anticipated FRPP cost per acre or acreage 
to be protected should be considered in relation to the geographic area 
where the parcel is located. Another respondent suggested that LESA 
criteria should be modified so that sites near sewage lines, water 
lines, or other public utility lines should receive a higher ranking. 
NRCS has not changed the final rule as it relates to parcel ranking and 
evaluation because the agency believes that the State Technical 
Committee process, as well as the State Conservationist's ability to 
choose his or her own criteria to evaluate parcels, provide the NRCS 
State Conservationist the necessary flexibility to develop criteria and 
rank eligible parcels for funding.
    Nineteen respondents requested that NRCS add the following to the 
list of possible State criteria: ``History of an eligible entity's 
commitment to assisting beginning farmers and ranchers, to promoting 
opportunities in farming and ranching, and to farm and ranch succession 
and transfer planning,'' while another stressed the importance of 
funding entities who place priority on protecting parcels in zoned 
agricultural areas. To encourage that these farms and ranches remain 
agriculturally viable in the future, NRCS has added these suggestions 
for the NRCS State Conservationists to use in State ranking criteria, 
if they deem appropriate. Two respondents questioned what is meant by 
``degree of leveraging guaranteed by eligible entities.'' One of these 
respondents suggested that NRCS rephrase this criterion to read as 
follows: ``Amount of the Federal share to be contributed to the 
acquisition of the conservation easement relative to the fair market 
value of the conservation easement.'' NRCS partially accepts this 
suggestion and has rephrased the criteria accordingly.

Section 1491.7 Funding Priorities

    Several respondents requested that NRCS place a priority on a 
variety of factors when evaluating parcels. One respondent requested 
that the highest priority should be given to parcels and areas that 
protect drinking water sources. Twelve respondents requested that NRCS 
place a priority on those farms and ranches that have a comprehensive 
resource management system where all the natural resources are 
addressed on the farm or ranch, seventeen respondents requested that 
NRCS place a higher priority on applications from landowners who have 
developed farm or ranch succession or transfer plans with a preference 
for plans that will benefit beginning farmers and ranchers. One 
respondent requested that NRCS place a higher priority on lands and 
locations where parcel size, soils, markets, local farm infrastructure, 
proximity of other agriculture, and other considerations make it more 
likely that the protected lands will constitute or contribute to an 
economically viable, independent farming operation.
    NRCS has incorporated some of these comments in the final rule; 
however, as indicated previously, the State Conservationist, with 
advice from the State Technical Committee, develops criteria used to 
select parcels in accordance with the statutory objectives of FRPP. In 
addition, the selection of one set of criteria over another is at the 
discretion of the State Conservationist. For this reason, NRCS has 
chosen to include these suggested priorities, but continues to 
encourage and permit the NRCS State Conservationist with advice from 
the State Technical Committee, to determine the ranking criteria 
preference based on State natural resource conditions, anticipated 
funding, geographic priority areas, and other factors deemed to be 
important in each State.
    NRCS also received comments requesting clarification of the meaning 
of Section 1491.7. For example, one respondent requested clarification 
of what is meant by on-site and off-site conditions. Examples of what 
is meant by on-site or off-site conditions are respectively a farm that 
contains a hazardous waste site, or a ranch that neighbors a 
commercially zoned area. Where on-site or off-site conditions exist, 
NRCS may choose not to fund a

[[Page 26470]]

parcel because of the implications surrounding that acquisition. One 
respondent requested that NRCS clarify what is meant by multi-
functional benefits, while another respondent requested that historical 
and archaeological protection be added to the lists of lands that 
provide multifunctional benefits where NRCS may place a higher 
priority. NRCS concurs with the second respondent and will add 
historical and archaeological protection to the list of multi-
functional benefits. In response to the initial comment, NRCS believes 
that multi-functional benefits vary across the nation; therefore, these 
multi-functional benefits are best determined by the State 
Conservationist, with advice from the State Technical Committee. 
Another respondent asked how certain geographical areas will receive 
high priority. As it relates to multi-functional benefits in a general 
sense, NRCS believes that multi-functional benefits and geographic 
priority areas can best be determined at the State level, where local 
input is provided through the State Technical Committee on State 
ranking criteria.

Subpart B--Cooperative Agreements and Conservation Easement Deeds

Section 1491.20 Cooperative Agreements

    The section outlines the process of how NRCS enters into 
cooperative agreements with eligible entities and what constitutes a 
cooperative agreement. One respondent indicated that NRCS must provide 
oversight of non-governmental organizations participating in FRPP to 
assure FRPP obligations are met. NRCS believes that the cooperative 
agreement, the contractual document between NRCS and the cooperating 
entity, binds the entity to perform duties and tasks in accordance with 
program policy and standards. NRCS oversight of these cooperative 
agreements ensures that NRCS program policy and objectives are met. 
Other comments received on topics contained within this section were 
addressed in other sections of the rule.

Section 1491.21 Funding

    The Farm Security and Rural Investment Act of 2002 (2002 Act), 
provided policy direction for cost sharing in three areas:
    [sbull] First, it specified that the Federal share could not exceed 
50 percent of the appraised fair market value of the conservation 
easement.
    [sbull] Second, it made it possible for landowner donations to be 
included as part of the entity's share.
    [sbull] Third, it limited the amount of the donation that could be 
used as part of the entity's share to not more than 25 percent of the 
conservation easement's appraised fair market value.
    The 2002 Act did not provide guidance on the minimum cash 
contribution by the entity. As a result, the proposed rule attempted to 
set forth cash requirements by the cooperating entity. Based on these 
three premises, the agency stated in the proposed rule that 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 in cash, at least 50 percent of the conservation 
easement purchase price. In this situation, the NRCS share cannot 
exceed the entity's contribution.

    This proposal was met with a great deal of opposition primarily 
from the land trust community. Of the total 296 letters received, 214 
objected to NRCS requiring cooperating entities to provide a minimum 
cash contribution. They maintain that by proposing a minimum cash 
contribution by the entity, NRCS is discouraging bargain sales by the 
landowner. While four respondents argued that if a land owner donated 
50 percent of the easement's value and the Natural Resources 
Conservation Service (NRCS) paid 50 percent, the letter of the law 
could be met without any cash commitment from the land trust, fifty-
five other respondents suggested a contribution provided by the entity 
but in a lesser degree to what NRCS proposed, stating that the 
requirement of a cash match will significantly restrict the number of 
properties that can be protected under FRPP. Forty-one respondents 
specifically stated that a landowner should be able to donate more than 
25 percent of the appraised fair market value, and that the 25 percent 
contribution of the appraised fair market value limits the contribution 
by the landowner, while 175 respondents asked that the rules be 
rewritten to ``base the required match for an easement on the price 
paid for the property not the price it would be on the open market.'' 
In response to all of the above comments, NRCS did not intend to 
mislead readers that a landowner donation be limited to 25 percent. On 
the contrary, land donations by the landowner are readily accepted, 
since the easement acquisition cost is less for both NRCS and the 
cooperating entity. To take advantage of sizeable landowner donations, 
NRCS clarified the final rule language by inserting the ``50 percent of 
the purchase price'' option.
    In response to NRCS' proposed rule options, many within the land 
trust community countered NRCS' proposal by suggesting the elimination 
of any mention of the 25 percent of the appraised fair market value 
requirement and several respondents suggested the following or similar 
language:
    ``The entity must provide, in cash, an amount at least half of that 
provided by the NRCS.''
    The following table summarizes the FRPP and cooperating entity 
shares given the proposed rule's language and the above-mentioned 
language suggested by the land trust community. The analysis assumes 
that the appraised fair market value of the conservation easement is 
$100,000.

                                       Comparison of Cost Sharing Criteria
                                Proposed FRPP Rule and the Land Trust Suggestion
                                                    [Dollars]
----------------------------------------------------------------------------------------------------------------
                                                                    Proposed rule         Land trust suggestion
                                                             ---------------------------------------------------
                     Land owner donation                      Entity cash               Entity cash
                                                                 share      FRPP share     share      FRPP share
----------------------------------------------------------------------------------------------------------------
Zero........................................................      $50,000      $50,000      $50,000      $50,000
10,000......................................................       40,000       50,000       40,000       50,000
25,000......................................................       25,000       50,000       25,000       50,000
40,000......................................................       25,000       35,000       20,000       40,000
55,000......................................................       22,500       22,500       15,000       30,000
70,000......................................................       15,000       15,000       10,000       20,000
----------------------------------------------------------------------------------------------------------------


[[Page 26471]]

    Note that the cash shares for the cooperating entity and FRPP are 
identical from zero donation to a $25,000 (25 percent) donation level. 
At donation levels greater than $25,000 the cooperating entity 
contributions are greater with the proposed rule. In this example, if 
the landowner makes a $40,000 donation then the cash requirement is 
$5,000 greater in the proposed rule scenario as compared to the 
suggested change by the land trust community.
    After considering these comments, NRCS has decided to retain the 
same funding options albeit with some clarification. NRCS believes that 
the final rule's language supports large bargain sales by the landowner 
and requires only that in these cases, the entity match NRCS' 
contribution dollar-for-dollar. Assuming a $100,000 easement, if the 
landowner chooses to donate 70 percent of the appraised fair market 
value, the actual easement purchase price would be $30,000. In this 
case, NRCS and the cooperating entity both contribute $15,000. By 
providing the option for the entity to choose either 25 percent of the 
appraised fair market value or 50 percent of the purchase price, NRCS 
is accommodating the cooperating entities desire to take advantage of 
bargain sales and at the same time, ensuring that the Federal 
investment is secured with some contribution by the cooperating entity. 
Consequently, the final rule adopts the language of the proposed rule.
    Several respondents suggested that NRCS take into account donations 
of other lands by an entity, as a matching offer. NRCS interprets the 
statute to mean that an entity's contribution pertains specifically to 
the parcel of land, which is subject to a pending offer in which the 
Secretary is purchasing an interest. Using land as match for the 
purchase of such land is not within the statutory authority of the 
program.
    Five respondents recommended that to the extent that they are 
ordinary, necessary and reasonable, administrative costs associated 
with NRCS requirements be reimbursable with FRPP funds, or at the very 
least count towards the entity's share. In accordance with the statute 
that authorizes NRCS to cost share only the purchase of a property 
interest, NRCS does not reimburse a cooperating entity's easement costs 
associated with easement acquisitions, nor do these easement 
acquisition costs count towards an entity's share of the contribution. 
One respondent requested that NRCS insert in the final rule that 
easement administrative and transaction costs will not be paid for 
using FRPP funds. NRCS agrees with this recommendation and has inserted 
this policy into the final rule.
    One respondent requested that NRCS provide the option to the entity 
to issue landowner payments in installments. NRCS concurs with this 
recommendation. However, due to the complexity of the payment process, 
will address this issue in its policy manual, CPM part 519.

Section 1491.22 Conservation Easement Deeds

    One respondent requested a clear articulation of FRPP's goals and 
objectives in Section 1491.22(a). NRCS agrees with the respondent and 
has inserted clauses under Section 1491.22(a) to more fully describe 
the goals and objectives of FRPP. As set forth in FRPP's authorizing 
legislation, the purpose of FRPP is to purchase conservation easements 
for the purpose of protecting topsoil by limiting nonagricultural uses 
of the land. With this in mind, NRCS has inserted the following goals 
into section 1491.22: (i) To protect the topsoil from conversion to 
nonagricultural uses; and (ii) to ensure that the agricultural capacity 
of the soils remains viable for future generations.
    Several other respondents requested specifics on what is or should 
be allowed in FRPP. Two respondents stated that easements associated 
with FRPP should clearly provide for continued, active management of 
the farm, ranch and associated forest land. One respondent stated every 
conservation easement deed should require a farm succession plan. While 
NRCS encourages that these farms be actively farmed for perpetuity, the 
agency also recognizes that FRPP's authority is limited to protecting 
the soils, not ensuring that the farm or ranch be actively farmed for 
perpetuity, nor does the agency believe it is practicable to do so.
    One of these respondents also asked that NRCS consider forestry as 
an agricultural use, making it clear that the conversion of farm to 
forest does not constitute a conversion to non-agricultural use. NRCS 
agrees with this response; however, NRCS believes that the majority of 
farms and ranches accepted into the program will not be converted into 
forestland because the quality of farm and ranch land that are accepted 
into the program would make conversion to forest land economically 
infeasible. Moreover, NRCS believes that the FRPP ranking criteria 
favor parcels that will remain agriculturally viable in the future. 
NRCS acknowledges that some parcels enrolled under FRPP may be 
converted to forest land in the future. Although the agency has 
attempted to structure the program so that the primary focus of the 
program is to protect high quality farmland that will be actively 
cropped or grazed, NRCS believes that it lacks the authority to mandate 
that farms and ranches remain actively farmed in perpetuity. NRCS 
believes that its authority extends only to ensure that the topsoil 
protected under FRPP easements is not converted to nonagricultural uses 
and that the agricultural capacity of the soils remains viable for 
future generations. Under this rationale, NRCS believes that the 
conversion of farm and ranch land to forest land retains the 
agricultural viability of the soils and that if future generations 
deemed it appropriate, the forest acreage could be harvested and the 
land could be tilled or grazed.
    One respondent requested that NRCS clarify its association with 
other conservation programs. As previously discussed, NRCS encourages 
landowners to utilize other conservation programs to protect natural 
resources on FRPP land. Landowners who enroll in FRPP are eligible to 
participate in USDA's cost share programs, including the Agricultural 
Management Assistance Program (AMA), Conservation Reserve Program 
(CRP), Environmental Quality Incentives Program (EQIP), Wildlife 
Habitat Incentives Program (WHIP), and the long-term contract options 
under the Wetlands Reserve Program (WRP) and Conservation Reserve and 
Enhancement Program (CREP). However, NRCS believes that WRP 30-year and 
permanent easements, as well as CREP permanent easements which restore 
wetlands and limit agricultural uses, may undermine FRPP goals and 
objectives to protect the agricultural viability of topsoil for future 
generations. For this reason as well as the desire to maximize Federal 
dollars, NRCS has chosen to exclude WRP and CREP acreage from FRPP 
easements. For example, a landowner who wishes to enroll in both 
programs can continue to do so; however, the land under WRP easement 
must border the FRPP easement--the same acreage cannot be enrolled 
under both easements.
    One respondent questioned the language in 1491.22(c) that required 
a review of the conservation easement by NRCS and the Office of General 
Counsel. The respondent argued that there is ``no legal standing by the 
Federal government as Grantee.'' NRCS and the Office of General Counsel 
(OGC) refer once again to the statute that instructs the Secretary, 
acting through

[[Page 26472]]

NRCS, to purchase conservation easements. In interpreting the statute, 
NRCS has acquired an interest in the Property in the form of a 
contingent right. A contingent right in the conservation easement deed 
provides that all rights conveyed by the landowner under the easement 
deed shall become vested in the United States should the grantee 
abandon or attempt to terminate or extinguish the conservation 
easement. To ensure that the United States property interest is upheld 
and to ensure that the American taxpayer is acquiring legally sound 
conservation easement deeds, NRCS and OGC must review all conservation 
easement templates used by the cooperating entity. In the interest of 
time, NRCS and OGC try to negotiate standard deed templates with the 
cooperating entity. Once these standard easement templates meet OGC 
approval, the cooperating entity may use that template on all easement 
deeds acquired with FRPP funds.
    Several respondents raised issues concerning the contingent right 
paragraph that is incorporated into every conservation easement deed 
acquired with FRPP funds. Three respondents requested that NRCS allow 
for a right of appeal to be granted to eligible entities regarding a 
determination by the Secretary that the entity has failed to enforce 
the easement. NRCS' authority is to purchase an interest in land. With 
this authority, NRCS purchases a contingent right in the land. This 
contingent right is activated only in cases, where the cooperating 
entity terminates, extinguishes or fails to uphold the conservation 
easement. NRCS has determined that it needs to have this absolute right 
in order to protect the Federal Government's property interest should 
the Federal Government determine that the Grantee has attempted to 
terminate, extinguish or fail to uphold the conservation easement. 
Another respondent objected to the Secretary having sole discretion in 
the contingent right paragraph and suggested that the contingent right 
paragraph be relaxed where conservation easements are co-held with 
State or local funds within the DelMarVa Conservation Corridor. For the 
reasons mentioned above, NRCS believes that it is in the interest of 
the Federal government to retain in the final rule, the contingent 
right that was set forth in the proposed rule. One respondent indicated 
that a Federal contingent right interest would not be acceptable to 
many landowners. The Federal contingent right interest may discourage 
some landowners from participating in FRPP. However, FRPP is a 
voluntary program, and landowners are not forced to participate if they 
find the contingent right paragraph, or other conservation easement 
provisions unacceptable. One respondent recommended that should the 
cooperating entity transfer the conservation easement, the landowner 
should have the right of first refusal for reacquiring the easement 
interest. The United States' contingent right to hold the conservation 
easement negates a landowner's right of first refusal. In addition, the 
right of first refusal by a landowner undermines the purpose of placing 
a conservation easement on the land.
    Currently, NRCS signs the conservation easement deed, accepting 
NRCS' property interest in the deed of easement. One respondent 
requested that the requirement that NRCS sign the conservation easement 
deed be included in the rule, while another respondent recommended that 
NRCS require that easements be recorded and that the entity provide 
proof of recordation. NRCS concurs with these recommendations and has 
included these provisions in the final rule.
    One respondent recommended that if NRCS requires implementation of 
the conservation plan, NRCS should also provide cost-share assistance 
to the landowner. A majority of farmers and ranchers are already 
subject to highly erodible land and wetland conservation requirements 
through participation in other USDA programs. Where financial 
assistance is needed to help a producer reduce soil erosion on highly 
erodible lands, cost-share assistance through programs, such as EQIP, 
is available. Another respondent suggested that a landowner be notified 
in writing about and consulted regarding conservation measures required 
on the Property. As indicated previously, this suggestion replicates 
NRCS'' current conservation planning policy which takes into account a 
landowner's needs and economic situation, as well as local resource 
conditions.
    One respondent raised a concern about the enforcement issues 
surrounding the conservation plan and the conservation easement, 
stating ``the important matter is a commitment to conservation 
planning, not to a particular static conservation plan. Enforcement 
should be about ensuring maintenance of an evolving plan.'' NRCS 
believes that the conservation planning process is an evolving and 
interactive process; however, NRCS has decided that a landowner should 
not be required to maintain a higher standard of erosion reduction than 
the landowner originally agreed to at the time of easement signature. 
This does not mean however that the landowner is prohibited from 
achieving a higher standard of resource protection, if the landowner or 
cooperating entity deem appropriate. Another respondent recommended 
that if NRCS require an entity to enforce a conservation plan, the 
entity be required to be involved in conservation planning. NRCS has 
the responsibility to enforce the conservation plan as it relates to 
highly erodible land and wetland conservation provisions. If the 
landowner refuses to comply with these requirements and all the appeal 
rights and other waivers afforded the landowner in accordance with 7 
CFR part 17 and 7 CFR part 614 have been exhausted, NRCS will report to 
the cooperating entity that the landowner is in violation of the 
easement. At this time, it becomes the responsibility of the 
cooperating entity to enforce the terms of the conservation easement.

Section 1491.23 Easement Modifications

    Several respondents objected to or requested clarification on this 
section, which required that easement deed amendments be approved by 
NRCS. Three respondents requested that the final rule clarify who, 
within NRCS, is able to approve conservation easement modifications. 
NRCS has clarified this in the final rule by stating that the State 
Conservationist, with concurrence from the Office of General Counsel, 
shall approve or disapprove conservation easement modifications, in the 
form of deed amendments. One respondent supported NRCS approving 
easement modifications. They also suggested that NRCS establish a 
criterion that no amendment will be allowed if it would lower the net 
benefit of the easement for conservation. NRCS believes that a single 
criterion, such as lowering the net benefit of the conservation, is 
difficult to establish on a nationwide basis; therefore, NRCS has 
chosen to approve amendments on a case-by-case basis. One respondent 
asserted that the easement modification provisions are inconsistent and 
incompatible with their program and question NRCS and the Office of 
General Counsel's authority to accept or reject such modifications. It 
is not NRCS' intention to supersede the cooperating entity's decision 
to prohibit an easement amendment. However, where easement amendments 
are allowed, NRCS' response regarding easement modifications or 
amendments mirrors its response on easement review--

[[Page 26473]]

because the United States is buying an interest in the property, any 
modification or amendment shall be approved by NRCS and the Office of 
General Counsel. One respondent requested that NRCS interpret Section 
1491.23 to give a cooperating entity the discretion to distinguish 
between a major and minor amendment. If appropriate, NRCS, with advice 
from the Office of General Counsel, will review and delegate authority 
for amendment review on a case-by-case basis as it relates to minor 
amendments.

Subpart C--General Administration

Section 1491.30 Violations and Remedies

    Fifty-five respondents commented on this portion of the proposed 
rule. Fifty-two respondents recommended that section 1491.30(c) be 
reworded to allow for landowner notification prior to NRCS' entry on 
the property as it relates to conservation plan violations, while one 
respondent questioned the need to include this provision in the rule, 
but rather state it in the conservation easement deed. NRCS accepts the 
first set of recommendations and has modified the final rule provision 
to allow for landowner notification prior to NRCS entry. NRCS also 
addresses and inserts right of access provisions in all FRPP 
conservation easement deeds.
    One respondent suggested that NRCS should contact the landowner, 
but it should not be prevented from exercising its imminent violation 
rights by rules outside of the easement or in the case of an emergency; 
therefore, they suggest that the wording be changed to NRCS notifies or 
reasonably attempts to notify. As a condition of program eligibility, 
landowners agree to allow NRCS to enter the land when they sign the AD-
1026, Highly Erodible Land Conservation and Wetland Conservation 
Certification form; however, NRCS' policy is to make all reasonable 
advance notification to the landowner prior to any visit on the 
property.
    One respondent has objected to NRCS accessing the easement area 
stating that it conflicts with the rights of the Grantee. The 
respondent notes that since neither NRCS nor CCC are Grantees of the 
recorded conservation easements, neither NRCS nor CCC have 
responsibilities under law to monitor, enforce or prosecute violators 
of FRPP easements. Therefore, NRCS should not impose rules and 
regulations covering these enforcement authorities already governed by 
State legislation. NRCS's monitoring responsibility relates only to the 
conservation plan, which is required by FRPP's authorizing legislation. 
Violations related to the conservation plan and any other such 
violations that NRCS may encounter while on the farm or ranch will be 
reported to the cooperating entity. NRCS does not assume the role of 
any monitoring beyond the conservation plan compliance provision of the 
Food Security Act of 1985, as amended.
    One respondent requested that if enforcement language is required 
in the deed, the rule should contain such language. The final rule 
contains the general guidelines related to conservation plan 
compliance, while the cooperative agreement between NRCS and the 
cooperating entity will articulate any specific enforcement language as 
it relates to the conservation plan. One respondent asked whether lands 
that do not contain highly erodible soils or wetland resources need to 
be monitored by NRCS. Lands that do not contain highly erodible soils 
or wetland resources do not need to be monitored by NRCS, unless the 
State Conservationist and cooperating entity have entered into a 
cooperative agreement whereby they have agreed to assist the 
cooperating entity monitor non-highly erodible lands enrolled under 
FRPP. One respondent requested that NRCS articulate whether all 
easements prior to the publication of the final rule will be monitored. 
NRCS will monitor easements that were recorded prior to the publication 
of this final rule in accordance with the terms and conditions set 
forth in individual conservation easement deeds.
    One respondent requested that the NRCS clarify that the landowner 
be liable for any costs incurred by the United States as it relates 
specifically to the conservation plan.
    NRCS agrees with this respondents request for clarification and has 
reworded the last sentence of 1491.30(c) to read as follows: ``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 as it relates to conservation plan violations.''
    Two respondents requested that NRCS clarify section 1491.30(d) by 
adding ``related to the FRPP easement.'' NRCS agrees with this 
recommendation and has redrafted this section to read as follows: ``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 related to the FRPP easement.''
    Two respondents requested that NRCS soften the indemnification 
language. One entity requested that the section be amended for cross 
indemnification, while another entity requested that the 
indemnification language read as follows: ``(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.'' NRCS 
has chosen to retain the proposed rule's language as it relates to 
indemnification, which is similar to the second respondent's 
suggestion. In response to the first respondent's request for cross 
indemnification, NRCS does not have the authority to waive the Federal 
government's sovereign immunity.

Section 1491.31 Appeals

    One respondent has objected to NRCS affording appeals to landowners 
and cooperating entities, asserting that it conflicts with the rights 
of the Grantee. The respondent notes that since neither NRCS nor CCC 
are Grantees of the recorded conservation easements with individual 
landowners, NRCS has no responsibilities under law to monitor, enforce 
or prosecute violators of easements. Therefore, NRCS should not impose 
rules and regulations covering these enforcement authorities already 
legislated by State legislation under which they are governed.
    The Department of Agriculture Reform Act (Pub. L. 103-354; 7 U.S.C. 
6991 et seq.), requires that USDA agencies covered by this Act develop 
and implement an informal and formal appeals policy. The USDA has 
developed regulations articulating how the appeal process works when 
making decisions over a disputed agency decision or determination. 
Accordingly, NRCS provides an appeal and mediation process to agency 
program participants where decisions and determinations made by the 
agency are disputed by the program participant. Under these provisions, 
program participant can mean the cooperating entity or the landowner, 
depending on the circumstance. Appealable items include, but are not 
limited to:
    [sbull] The determination that the land is eligible;
    [sbull] The determination that the conservation plan submitted by 
the landowner to the entity and further submitted to NRCS is not 
sufficient; and
    [sbull] The determination by NRCS that the person farming the land 
under FRPP easement has violated the HELC or WC provisions.

Section 1491.32 Scheme and Device

    One respondent has objected to the NRCS scheme and device 
provisions,

[[Page 26474]]

asserting that they conflict with the rights of the Grantee. The 
respondent notes that since neither NRCS nor CCC are Grantees of the 
recorded conservation easements with individual landowners, NRCS has no 
responsibilities under law to monitor, enforce or prosecute violators 
of easements. Therefore, NRCS should not impose rules and regulations 
covering these enforcement authorities already legislated by a State 
legislation under which they are governed. To clarify any confusion 
regarding the applicability of scheme and device provisions and to 
address the respondent's concerns, NRCS has removed the term 
``landowner'' from the scheme and device paragraphs. However, NRCS has 
retained these paragraphs as drafted in the proposed rule in the event 
a cooperating entity with whom NRCS directly enters into a cooperative 
agreement commits waste, fraud, or abuse. These paragraphs have been 
edited to reflect this change in policy.

List of Subjects in 7 CFR Part 1491

    Administrative practice and procedure, Agriculture, Soil 
conservation.


0
For the reasons stated in the preamble, the Commodity Credit 
Corporation amends 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 ec.
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. 3838h-3838i.

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 May 16, 2003, 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) Ensure a conservation plan is developed in accordance with 7 
CFR part 12;
    (6) Make funding decisions and determine allocations of program 
funds;
    (7) 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;
    (8) Sign and monitor cooperative agreements for the CCC with the 
selected entity;
    (9) Monitor and ensure conservation plan compliance with highly 
erodible land and wetland provisions in accordance with 7 CFR part 12; 
and
    (10) 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 the State's Purchase of 
Development Rights (PDR) program, or where no PDR program exists, 
agricultural uses should be defined by the State agricultural use 
assessment program. (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 the property than allowable under that 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 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 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 is the document that--
    (1) Applies to highly erodible cropland;
    (2) 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;
    (3) 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, 
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, for acquiring conservation easements for the purpose of 
protecting agricultural land from conversion to non-agricultural uses.

[[Page 26475]]

    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 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. In valuing conservation easements, the appraiser 
estimates both the fair market value of the whole property before the 
easement acquisition and the fair market value of the remainder 
property after the conservation easement has been imposed. The 
difference between these two values is deemed the value of the 
conservation easement.
    Farm or Ranch Succession Plan is a general plan to address the 
continuation of some type of agricultural business on the conserved 
land; the farm or ranch succession plan may include specific intra-
family succession agreements or strategies to address business asset 
transfer planning to create opportunities for beginning farmers and 
ranchers.
    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:
    (1) Listed in the National Register of Historic Places (established 
under the National Historic Preservation Act (NHPA), 16 U.S.C. 470, et 
seq.), or
    (2) 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
    (3) 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 land 
evaluation system approved by the NRCS State Conservationist used to 
rank land for farm and ranch land protection purposes, based on soil 
potential for agriculture, as well as social and economic factors, such 
as location, access to markets, and adjacent land use. (For additional 
information see the Farmland Protection Policy Act rule at 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:
    (1) 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;
    (2) Is an organization described in section 501(c)(3) of that Code 
that is exempt from taxation under 501(a) of that Code;
    (3) Is described in section 509(a)(2) of that Code; or
    (4) 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:
    (1) 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.
    (2) 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 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

[[Page 26476]]

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 Sec.  1491.3. 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 dedicated to monitoring and easement 
stewardship; and
    (4) The availability of funds.
    (d) Eligible land must meet the definition of ``eligible land'' as 
provided in Sec.  1491.3. 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 subject to a pending 
offer, as defined in Sec.  1491.3, 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, the value of the conservation 
easement must be appraised. Appraisals shall be completed and signed by 
a State-certified or licensed general 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.
    (f) At the discretion of the Chief, a standard easement or 
equivalent legal form, which meets the intent of the 2002 Act, 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 
Proposals 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 Proposals.
    (b) To participate, an eligible entity submits a proposal 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 
Proposals.


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. 
Entities and parcels will be selected for participation based on the 
entities' responses to the Request for Proposals. Selection will be 
based on national ranking criteria set forth by the Chief in the 
Request for Proposals 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 historical 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) Amount of the Federal share to be contributed to the 
acquisition of the conservation easement, as guaranteed by the eligible 
entity;
    (ix) History of eligible entity's commitment to conservation 
planning and conservation practice implementation;
    (x) History of an eligible entity's commitment to assisting 
beginning farmers and ranchers, to promoting opportunities in farming 
and ranching, and to farm and ranch succession transfer;
    (xi) 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;
    (xii) 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
    (xiii) Eligible entity's estimated acres of unfunded proposed 
conservation easements on prime, unique, and important farm and ranch 
land.
    (2) Examples of State or local criteria, as determined by the State 
Conservationist may 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) Amount of the Federal share to be contributed to the 
acquisition of the conservation easement, as guaranteed by the eligible 
entity;
    (vii) History of an eligible entity's commitment to assisting 
beginning farmers and ranchers, to promoting opportunities in farming 
and ranching, and to farm and ranch succession transfer;
    (viii) Existence of a parcel in an agriculturally zoned area.
    (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

[[Page 26477]]

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 general 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, historical and 
archaeological, and environmental benefits.
    (h) NRCS may place a higher priority on 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 farms or ranches that have 
or will have a greater variety of natural resources protected.
    (j) NRCS may place a higher priority on farms or ranches that have 
a farm succession plan or similar plan established to encourage farm 
viability for future generations.
    (k) NRCS may place a higher priority on the national ranking 
criteria listed in Sec.  1491.6(a)(1) 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) For the entity, two cost-share options are available when 
providing its matching offer.
    (1) The entity may provide in cash at least 25 percent of the 
appraised fair market value of the conservation easement, or
    (2) The entity may provide at least 50 percent of the purchase 
price in cash, of the conservation easement. This second option may be 
preferable to an entity in the case of a large bargain sale by the 
landowner. If this option is selected, 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 and transaction 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 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

[[Page 26478]]

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.
    (g) Prior to fund disbursement, NRCS must sign the conservation 
easement, concurring with the terms of the conservation easement and 
accepting its interest in the conservation easement deed.
    (h) All conservation easement deeds acquired with FRPP funds must 
be recorded. Proof of recordation shall be provided to NRCS by the 
cooperating entity.


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 State 
Conservationist and the USDA Office of General Counsel.
    (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 
cooperating 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, upon 
notification to the landowner, reserves the right to enter upon the 
easement area at any time to monitor conservation plan implementation 
or 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 will 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 as it relates to 
conservation plan violations.
    (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 as it relates to the 
enforcement of the FRPP easement.
    (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 of the conservation easement at the time 
the easement is extinguished 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 which has submitted an FRPP 
proposal and is therefore 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.


Sec.  1491.32  Scheme or device.

    (a) If it is determined by the Secretary that a cooperating entity 
has employed a scheme or device to defeat the purposes of this part, 
any part of any program payment otherwise due or paid such a 
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 May 8, 2003.
Bruce I. Knight,
Vice President, Commodity Credit Corporation and Chief, Natural 
Resources Conservation Service.
[FR Doc. 03-12064 Filed 5-15-03; 8:45 am]
BILLING CODE 3410-16-P