[Federal Register Volume 71, Number 144 (Thursday, July 27, 2006)]
[Rules and Regulations]
[Pages 42567-42572]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-11959]



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  Federal Register / Vol. 71, No. 144 / Thursday, July 27, 2006 / Rules 
and Regulations  

[[Page 42567]]



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: Interim Final Rule with request for comments.

-----------------------------------------------------------------------

SUMMARY: On behalf of the Commodity Credit Corporation (CCC), the 
Natural Resources Conservation Service (NRCS), hereafter referred to as 
the Agency, is amending the Interim Final Rule implementing the Farm 
and Ranch Lands Protection Program (FRPP) at 7 CFR part 1491 to clarify 
certain program policies and legal requirements. Specifically, the 
Agency is addressing policy and legal requirements in eight areas: Fair 
market value definition; program eligibility as to forest lands; the 
nature of the real property rights the United States is acquiring and 
how it will exercise those rights; compliance with Department of 
Justice (DOJ) Title Standards; exercising United States' rights; the 
implementation of Federal appraisal requirements required by the 
Uniform Relocation Assistance and Real Property Acquisitions Policies 
Act of 1970; impervious surface limitations on the easement area; and 
indemnification requirements. NRCS requests comments on this amendment. 
Cooperative agreements signed on or after the publication of this 
Interim Final Rule will be administered.
    This rule is being published as an Interim Final Rule, with request 
for comments under the authority of section 2702 of the Farm Security 
and Rural Investment Act of 2002, Pub. L. 107-17, which allows the 
promulgation of an Interim Final Rule effective upon publication. The 
Agency made a determination that publishing this Interim Final Rule is 
appropriate and necessary given the fact that this rule is making 
program changes to address and clarify existing Federal law and policy 
requirements.

DATES: This rule is effective on July 27, 2006. Comments must be 
received by September 25, 2006.

ADDRESSES: This Interim Final Rule can be accessed via the Internet at: 
http://www.nrcs.usda.gov/programs/frpp. Send comments by mail to the 
Easement Program Division, NRCS, 1400 Independence Avenue, SW., Room 
6819-S, Washington, DC 20250-1400, or fax comments to (202) 720-9689.

FOR FURTHER INFORMATION CONTACT: Robert Glennon, Farm and Ranch Lands 
Protection Program Manager, NRCS, 1400 Independence Avenue, SW., Room 
6819-S, Washington, DC 20250-1400; telephone: (202) 720-9476; e-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:

Background

    The Farm Security and Rural Investment Act of 2002, Pub. L. 107-
171, repealed the Farmland Protection Program (FPP), established by the 
Federal Agriculture Improvement and Reform Act of 1996, and authorized 
a new FPP. NRCS named the new program FRPP to both distinguish it from 
the repealed program and to better describe the types of land the 
program seeks to protect. Under FRPP, the Secretary of Agriculture, 
acting through NRCS, is authorized, on behalf of the 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. NRCS purchases conservation easements by partnering 
with eligible entities (partners) that have pending offers for the 
acquisition of conservation easements. NRCS memorializes this 
partnership relationship and obligates funding through the use of FRPP 
cooperative agreements. As explained in the preamble to the final FRPP 
rule, FRPP is a real property acquisition program, not a financial 
assistance or grants program.
    NRCS, on behalf of CCC, published final regulations for FRPP on May 
16, 2003 (68 FR 26461), which are codified at 7 CFR part 1491. Since 
that time, several issues have arisen as to the implementation of FRPP. 
Some of these issues, such as the degree to which impervious surfaces 
are allowed on FRPP easements and how much forest land is eligible for 
enrollment into FRPP, were clarified through internal policy and set 
forth in the Agency program manual. However, because of the public's 
interest in these matters, the Agency has decided to amend the final 
FRPP rule to address these policies and request the public's comments. 
In addition, questions have arisen as to the nature of the property 
rights the United States is purchasing when it funds FRPP easements and 
whether the DOJ Title Standards and Federal appraisal requirements are 
applicable to FRPP acquisitions. The Agency is taking the opportunity 
presented by the publishing of this amendment to clarify these matters 
as well.

Discussion of Changes

    Below NRCS discusses each of the amendments to 7 CFR part 1491 by 
subject area.

Subpart A--General Provisions

Definition of Fair Market Value
    NRCS is amending Sec.  1491.3 to change the definition of fair 
market value to the value of the landowner's whole property before the 
easement, and the value of the landowner's whole property after the 
easement. The current definition compares the value of the whole 
property before the easement and the remainder property after the 
easement. The current definition does not consider the difference in 
value between the property being protected by the easement and the 
remainder of the land that is not protected when it is owned by the 
same individual who owns the protected land. Although the easement may 
lower the value of the land being protected by preventing development 
for certain uses, the easement may increase the value of adjacent land. 
The demand for land adjacent to protected land may increase resulting 
in an increase to the value of the adjacent land in response to the 
increased demand.

[[Page 42568]]

    Consequently, comparing the value of the whole property before and 
after the easement is recorded is the only way to assess its fair 
market value.

Eligibility of Forest Lands

    NRCS amends Sec.  1491.4 to expand the scope of forest land which 
is eligible for enrollment under FRPP as forest lands incidental to the 
farm operation. The FRPP authorizing legislation defines eligible land 
as ``cropland, rangeland, grassland, pasture land, and forest land that 
is incidental part of the agricultural operation.'' In June 2002, NRCS 
instituted a policy to ensure that FRPP would not compete with the 
Forest Legacy Program. The 2002 policy set out in the NRCS Conservation 
Programs Manual, Part 519 defined ``incidental forest land'' as any 
land less than 50 percent of the total easement area.
    This policy unintentionally created an impediment to enrolling land 
in the Eastern States where forested acreage is an integral and 
important supplemental part of the farming operation. In the East, 
streams occur throughout cropland, and wet, stony, and rocky soils are 
randomly interspersed with prime farmland. Forest land in the East is 
also typically interspersed with cropland because of its location 
adjacent to those streams, and the fact that it has not been cleared in 
order to maintain water quality. In addition, forests on wet, stony, or 
rocky soil have not been cleared because they were not practical to 
farm. In these areas of the Nation, the incidental forest land policy 
has resulted in landowners subdividing tracts or deforesting acres 
offered for the program or ``carving out'' portions of the property 
that will not meet the definition of incidental forest land. For these 
reasons, NRCS revisited this policy to provide NRCS State 
Conservationists the flexibility to enroll lands containing more than 
50 percent forest land under certain circumstances.
    Specifically, NRCS is establishing a national limitation that not 
more than two-thirds of the easement acreage may be occupied by 
forested acreage, including sugarbush and pulpwood. NRCS' new policy 
permits NRCS to pay for forest land up to the same acreage amount as 
the nonforested, agricultural soils acreage, provided all other FRPP 
eligibility criteria are met and that such forest land is supplemental 
to the agricultural operation. NRCS has included in this Interim Final 
Rule a new subparagraph to paragraph 1491.4(d) incorporating this 
policy. Regarding management of forested acres, it is the Agency's 
practice to work with its FRPP partners to address the management of 
these forested acres.
    NRCS has also added a new definition in section 1491.3 for ``forest 
land'' in this Interim Final Rule. This definition will assist with the 
determination of the extent of acreage for which NRCS will contribute 
funding. Consistent with other NRCS conservation programs, ``forest 
land'' means a land cover/use category that is at least 10 percent 
stocked by single-stemmed woody species of any size that will be at 
least 4 meters (13 feet) tall at maturity. Also included in this 
definition is land that is bearing evidence of natural regeneration of 
tree cover (cutover forest or abandoned farmland) that is not currently 
developed for nonforest use. Ten percent stocked, when viewed from a 
vertical direction, equates to an aerial canopy cover of leaves and 
branches of 25 percent or greater. The minimum area for classification 
as forest land is 1 acre, and the area must be at least 100 feet wide. 
Exceptions may be made by the Chief for land primarily managed through 
a low-input system for food, fiber, or other agricultural products.

Real Property Interest of the United States

    Over the past several years, questions have arisen regarding 
certain legal aspects of FRPP's administration. The Agency addresses 
these matters and, where applicable, amends the FRPP regulation.
    Historically, the United States has acquired a ``contingent right'' 
in FRPP-funded easements which allows the Secretary, at his or her 
discretion, to enforce or take title to the conservation easement 
should the Secretary determine that the partner is not enforcing the 
easement or is attempting to divest itself of the easement without 
prior approval of and payment of consideration to the Secretary. Under 
FRPP, the Secretary of Agriculture is authorized ``to purchase 
conservation easements or other interests in eligible land that is 
subject to a pending offer from an eligible entity,'' which means that 
the Secretary is to purchase a presently vested real property right. To 
avoid any confusion, NRCS is clarifying the nature of the rights 
acquired under FRPP so there can be no question that these rights are 
presently vested, insurable real property rights. The Agency is doing 
this by re-characterizing its ``contingent right,'' as well as 
requiring that the United States is identified as a grantee in FRPP 
funded deeds. Both changes are discussed below.
    This rulemaking amends the FRPP final regulation to change the 
terminology from ``contingent right'' to ``rights.'' The property 
rights provision required in FRPP easements will read substantially as 
follows:

    Under this Conservation Easement, the same rights have been 
granted to the United States that have been granted to the grantee/
partner. However, the Secretary of the United States Department of 
Agriculture (the Secretary), on behalf of the United States, will 
only exercise these rights under the following circumstances: In the 
event that the grantee/partner fails to enforce any of the terms of 
this Conservation Easement, as determined in the sole discretion of 
the Secretary, the Secretary and his or her successors or assigns 
may exercise the United States' rights to enforce the terms of this 
Conservation Easement through any and all authorities available 
under Federal or State law. In the event that the grantee/partner 
attempts to terminate, transfer, or otherwise divest itself of any 
rights, title, or interests in this Conservation Easement without 
the prior consent of the Secretary and, if applicable, payment of 
consideration to the United States, then, at the option of the 
Secretary, all right, title, and interest in this Conservation 
Easement shall become vested solely in the United States of America.

    This ``rights'' provision is similar to the old ``contingent 
right'' clause. The Agency is making this change to clarify that the 
United States is a grantee under the terms of the deed consistent with 
both the statutory authority for FRPP and the DOJ Title Standards. In 
order to effectuate this change, this amendment changes the text at 
Sec. Sec.  1491.4(a), 1491.22(d), and 1491.30(b) of the FRPP rule to 
insert the requirement that the rights of the United States as a 
grantee are to be included in all FRPP-funded easements.
    An additional reason for adding the United States as a grantee is 
to ensure that the United States appears in the chain of title. Grantee 
status facilitates enforcement of these Federal rights vis a vis 
subsequent landowners, and also has the beneficial effect of preventing 
condemnation of the easements by local authorities because State and 
local governments cannot condemn Federal property.
    These changes do not alter the fundamental relationship NRCS has 
had with its FRPP partners or their primary stewardship 
responsibilities for FRPP funded easements. The clarifications noted 
above are just that--clarifications so that there is no ambiguity as to 
the rights the United States is acquiring. The Department anticipates 
and intends that its relationship with its partners will remain the 
same as it was prior to the publication of this rule. The Department 
continues to see its role as a backstop to ensure the viability of FRPP 
easements with primary stewardship and management of the easements 
squarely in the hands of the

[[Page 42569]]

partner. Finally, NRCS is considering the use of a conservation 
easement template addendum under the authority of paragraph 1491.4(f) 
that incorporates the co-grantee status of the United States and other 
FRPP policies regarding particular uses of the easement area, including 
the extent of the easement area that can have an impervious surface 
(see discussion below). NRCS believes the use of a template addendum 
may minimize the extent that NRCS will need to require modification to 
cooperating entities' standard deed provisions to conform to FRPP 
policies. NRCS solicits comments on this proposal.

Title Review

    This section discusses Federal policy regarding title review for 
Federal acquisition of real property. No amendments to the rule are 
necessary to implement this requirement because it is simply a 
statement of existing Federal law and policy. Requirements at 40 U.S.C. 
3111 state:

    Public money may not be expended to purchase land or any 
interest in land unless the Attorney General gives prior written 
approval of the sufficiency of title to the land for the purpose for 
which the Federal Government is acquiring the Property.

    This law codifies prudent business practices by fostering 
uniformity and requiring the adequacy of title acquired by the various 
departments and agencies of the Federal Government. DOJ promulgated the 
Title Standards to implement 40 U.S.C. 3111. The Attorney General has 
delegated the authority to approve title to the USDA. The Office of the 
General Counsel (OGC) reviews title for legal sufficiency on behalf of 
the USDA. Under FRPP, the United States is acquiring an interest in 
land, and the Government must comply with 40 U.S.C. 3111. Consequently, 
the legal sufficiency of title of all FRPP funded easements must be 
reviewed and approved by OGC prior to conveyance. OGC title review is 
non-delegable. The process used to approve title for FRPP-funded 
acquisitions is generally the same as other real property acquisitions 
of the Department, such as the Wetlands Reserve Program or the 
Grassland Reserve Program. FRPP conservation easements are purchased by 
partners, and these partners also review title for sufficiency prior to 
the acquisition of a conservation easement. The Agency is sensitive to 
this fact, as well as the need for timely review, given closing 
deadlines. USDA will work closely with its partners to ensure that 
title review is completed in a timely manner. The partners can 
facilitate OGC's review by ensuring that any [clouds] on title have 
been removed or subordinated as necessary, and by promptly forwarding 
title documents to NRCS for review. The Department's experience thus 
far with the sufficiency of title review by its FRPP partners has 
varied. Some partners are thorough in their title review; other 
partners are not. A review by OGC will ensure that title acquired on 
all FRPP funded easements is legally sufficient. This benefits the 
United States, as well as its partners, because adequacy of title is 
critical in ensuring the viability of the conservation easement itself.

Exercising the United States' Rights

    The FRPP partners have asked the Agency about the process it 
intends to follow when it exercises its rights under FRPP easements. To 
date, NRCS has not had to exercise its enforcement rights, nor has it 
had to take title to any FRPP-funded easements. However, the Agency 
believes that it is important to set forth a uniform, predictable 
process that will be utilized if and when the need arises to enforce or 
take sole title to an FRPP easement. Consequently, the Agency is 
amending the FRPP regulation at paragraph 1491.30(g) to set forth the 
general process the Agency will follow when exercising the United 
States' rights. Specifically, NRCS will notify the grantee/partner in 
writing, by certified mail at the last known address, prior to 
exercising its rights. NRCS also will specify in that notice the 
particular right that is being exercised and will state the specific 
event of noncompliance which caused the action. The grantee/partner 
will have up to 60 days to address the noncompliance. If NRCS 
determines that the noncompliance is not cured within the 60-day 
period, the NRCS right of enforcement will become final. In cases where 
imminent harm may occur to the conservation values being protected or 
to the easement deed itself, the Agency reserves the right to waive the 
period to cure. In these cases, NRCS will still send a written 
notification to the grantee/partner. The Agency is amending the 
definition Sec.  1491.3 to define the term ``imminent harm'' to mean 
those easement violations or threatened violations that, in the opinion 
of the Agency, would likely cause immediate and significant degradation 
to the conservation values; for example, those violations which would 
adversely impact soil structure or result in the erosion of topsoil 
beyond acceptable levels as established by NRCS.
    The general circumstances under which NRCS may exercise the United 
States' rights under FRPP easements are contained within the rights 
language itself. In exercising its rights, the United States will be 
guided by its stewardship responsibilities and the protection of the 
conservation values that the easement seeks to protect.

Appraisal

    In keeping with Federal and congressional efforts to improve the 
validity of conservation easement appraisals, the Agency is also 
addressing issues related to its appraisal policy in this rulemaking. 
As set forth at 7 CFR 1491.4, the value of the conservation easement 
must be appraised prior to FRPP fund disbursement. However, the FRPP 
final rule at 7 CFR 1491.4(e) erroneously states that such appraisals 
are to be conducted by a State-certified or licensed general appraiser. 
This rule amends that language to provide that NRCS requires that 
appraisals must be completed and signed by a State-certified general 
appraiser and must contain a disclosure statement by the appraiser. 
This change is made to clarify the requisite experience needed to 
appraise FRPP-funded easements. The Real Property Appraiser 
Qualification Criteria, published by The Appraisal Foundation, states 
that Certified General appraisers have the training and experience 
enabling them to complete a variety of complex property type 
appraisals.
    Conservation easement appraisals are complex because they involve 
using an income approach in calculating the value of the easement and 
the application of the Uniform Appraisal Standards for Federal Land 
Acquisitions in the valuation process. In addition, the size of the 
easements is larger than lots for residential housing. In contrast, 
licensed appraisers are defined as limited to appraising non-complex, 
one to four residential units having a transaction value less than 
$1,000,000, and complex one to four residential units having a 
transaction value of less than $250,000.
    It is in the public interest to require the use of Certified 
General appraisers in the valuation of FRPP easements because utilizing 
the services of licensed appraisers dramatically increases the risk of 
overpayment for acquisitions due to inaccurate appraisals.
    In addition, this rule amends the 7 CFR 1491.4(e) to provide that 
the appraisal must conform to both the Uniform Standards of 
Professional Appraisal Practices (USPAP) and the Uniform Appraisal 
Standards for Federal Land Acquisitions (UASFLA)

[[Page 42570]]

and any Supplemental Standards issued by NRCS. Requiring the use of 
both USPAP and the UASFLA is simply stating the professional standards 
for Federal appraisals.
    USPAP and UASFLA contain different guidance that must be followed 
in concert to adequately appraise property. The foregoing change 
requiring that both the practices and standards are followed was made 
in order to: Ensure that easement prices are correctly determined by 
using established methodologies; foster consistent valuations across 
the Nation; and standardize the appraisal process so that supportable, 
defensible, and documented bases exist for the purchase of each 
conservation easement by USDA. In order for USDA to ensure that its 
financial contribution towards the purchase of the conservation 
easement is accurately determined, the Agency has amended paragraph (e) 
of Sec.  1491.4 to state that the NRCS shall require specific appraisal 
instructions and appraiser and technical appraiser reviewer 
qualifications to be followed in determining the value of the 
conservation easement to be purchased.

Impervious Surface Limitations

    As set forth in FRPP's authorizing legislation, the purpose of FRPP 
is to purchase conservation easements in order to protect topsoil by 
limiting nonagricultural uses of the land. The Agency's experience in 
implementing FRPP has been that its partners allow for varying degrees 
of development on the land covered by their conservation easements. 
This is, in part, a result of differing conservation purposes between 
the Agency and its partners. For example, some partners have set their 
goal of preserving agricultural viability and, therefore, are willing 
to allow more development including outbuildings, residences, and 
utilities. In contrast, FRPP is an agricultural soils protection 
program where conversion of the soils conflicts with the clear purpose 
of the statute. The Agency, using public dollars to protect farm and 
ranch lands, has a fiduciary responsibility to ensure that the public 
receives the full benefits of the soil resource protection rights for 
which it is paying. The Agency has been largely successful in finding 
common ground with its partners even when the partner's main goal may 
be wildlife or open space protection. However, in order to ensure the 
purpose of FRPP is met and to facilitate uniform program 
implementation, NRCS has had to develop an impervious surface policy 
for FRPP easements.
    In developing the impervious limitation policy, NRCS analyzed 
information from internal reviews of conservation easements proposed by 
its partners, an external audit review, and numerous studies about the 
impacts of impervious surfaces on the Nation's waterways. NRCS further 
took into consideration the documented negative effects that impervious 
surfaces have on ground water recharge, water quality, and changes in 
hydrology that result in downstream flooding. In June 2003, NRCS issued 
the FRPP Manual (CPM Part 519) to FRPP State Managers based upon the 
above analysis. This guidance contained policy limiting the amount of 
impervious surface allowed within FRPP easements. The policy was as 
follows:

    Impervious surfaces, which includes residential buildings, 
agricultural buildings (with and without flooring), and paved areas, 
both within and outside the conservation easement's building 
envelope(s), shall not exceed two percent of the total easement 
acreage. For easements less than 50 acres, one acre of impervious 
surface area is permitted.

    Following issuance of the policy, several NRCS FRPP State managers 
and partners, particularly State Departments of Agriculture in the 
northeast, raised concerns about the impervious surface limitation. In 
response to these concerns, NRCS adjusted the 2-percent policy by 
allowing limited waivers to be granted by State Conservationists based 
upon objective criteria developed in consultation with the State 
Technical Committee. NRCS also developed a model template for the field 
to use when developing criteria to waive the 2-percent limit. In order 
to provide for flexibility at the State level, the model allows for a 
sliding scale for impervious surface limit of up to six percent if 
certain criteria are met. Farms are allowed up to six percent 
impervious surface coverage if they are located in a densely populated 
area, contain a large amount of open prime and important soil, and are 
less than 50 acres in size. The impervious surface limit applies to 
existing and new construction, but not NRCS-approved conservation 
practices.
    While this policy has been in place, NRCS' experience has been that 
these criteria have been successful in: limiting the geographic area 
where this waiver can occur, focusing on protecting farms that have a 
high ratio of protected open prime or important land versus covered 
lands; and ensuring that this waiver is instituted primarily for 
smaller, more intensive farms in specific geographic areas.
    NRCS is amending this final rule to include this impervious surface 
policy by adding a new provision at paragraph 1491.22(i) to read:

    Impervious surfaces shall not exceed two percent of the FRPP 
easement area. However, the NRCS State Conservationist may waive the 
two percent impervious surface limitation on a parcel-by-parcel 
basis, provided no more than six percent of the easement area is 
covered by impervious surfaces. To waive this limitation, the NRCS 
State Conservationist must examine, at a minimum, population 
density, the ratio of open prime and important soil versus 
impervious surfaces on the easement area, and parcel size. All FRPP 
easements must contain language limiting the amount of impervious 
surfaces within the easement area.

    For example, the typical easement in the northeast is 100 acres 
which, under this policy, would provide up to 6 acres of impervious 
surface. Likewise, in the west, a 1000 acre easement could have up to 
60 acres of impervious surface. Without this impervious surface policy, 
which provides reasonable flexibility for infrastructure while still 
protecting the bulk of agricultural soils, the Agency would have no 
flexibility to allow for impervious surfaces. The Agency is 
particularly interested in receiving comments on this policy.

Indemnification

    NRCS is amending paragraph 1491.30(e) to clarify the nature of the 
indemnification required in all FRPP funded easements. Given the fact 
that the United States is only holding title to a conservation 
easement, the United States is requiring, as is standard practice in 
the land trust community, an indemnification clause that addresses 
liability, whether arising from hazardous materials or otherwise, 
related to the property under easement. The indemnification clause 
ensures that the landowner continues to be responsible for liabilities 
arising from their property. To effectuate this clarification, 
paragraph 1491.30(e) is being amended to read as follows:

    The conservation easement must include an indemnification clause 
requiring landowners to indemnify and hold harmless the United 
States from any liability arising from or related to property 
enrolled in FRPP.

    The specific indemnification language required in FRPP easement 
will be set forth in the FRPP cooperative agreement.

Regulatory Certifications

Executive Order 12866

    This Interim 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.

[[Page 42571]]

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, this 
Interim 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 Interim Final Rule implements FRPP, 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 Interim Final Rule is not a major rule as defined by section 
804 of the Small Business Regulatory Enforcement Fairness Act of 1996. 
This Interim Final Rule will not result in an annual effect on the 
economy of $100 million 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

    In May of 2003, an Environmental Assessment (EA) was prepared to 
assist NRCS in determining whether the final rule for FRPP 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 issued a Finding of No Significant Impact 
(FONSI). That EA has been reviewed for adequacy and was found to still 
adequately reflect the environmental impacts of FRPP, as amended by 
this Interim Final Rule. Copies of the EA and FONSI may be obtained 
from Robert Glennon, FRPP, NRCS, Post Office Box 2890, Washington, DC 
20013-2890. The FRPP EA and FONSI are also 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 Interim 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 Interim 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 was to be identified, the Interim Final Rule would 
preempt the State or local laws or regulations found to be in conflict. 
The provisions of this Interim 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 Interim 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 
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 million or more by any 
State, local, or tribal government, or anyone in the private sector; 
therefore, a statement under Section 202 of the Act is not required.

List of Subjects in 7 CFR Part 1491

    Administrative practice and procedure, Agriculture, Soil 
conservation.

Text of Rule Amendments

0
For the reasons stated in the preamble, Title 7, Chapter XIV of the 
Code of Federal Regulations is amended as follows:

PART 1491--FARM AND RANCH LANDS PROTECTION PROGRAM

0
1. The authority for part 1491 continues to read as follows:

    Authority: 16 U.S.C. 3838h-3838i.

0
2. Section 1491.3 is amended by removing the definition of ``contingent 
right'' and revising the definition for the term ``fair market value,'' 
and adding the definitions for ``forest land,'' ``Imminent harm,'' and 
``United States'' rights'' to read as follows:


Sec.  1491.3  Definitions.

* * * * *
    Fair market value is ascertained through standard real property 
appraisal methods. Fair market value is the amount in cash, or in terms 
reasonably equivalent to 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 with neither acting under any compulsion 
to buy or sell, giving due consideration to all available economic uses 
of the property at the time of the appraisal. Easement price will be 
determined by completing an appraisal for market value of the whole 
property (larger parcel) before the easement (before value) and an 
appraisal for market value of the whole property (larger parcel) after 
the easement (after value) is placed. The difference between the before 
value and the after value is deemed the value of the conservation 
easement.
* * * * *
    Forest land means a land cover/use category that is at least 10 
percent stocked by single-stemmed woody species of any size that will 
be at least 4 meters (13 feet) tall at maturity. Also included is land 
bearing evidence of natural regeneration of tree cover (cut over forest 
or abandoned farmland) that is not currently developed for nonforest 
use. Ten percent stocked, when viewed from a vertical direction, 
equates to an aerial canopy cover of leaves and branches of 25 percent 
or greater. The minimum area for classification as forest land is 1 
acre, and the area must be at least 100 feet wide. Exceptions may be 
made by the Chief for land primarily managed through a low-input system 
for food, fiber, or other agricultural products.
* * * * *
    Imminent harm means those easement violations or threatened 
violations that, in the opinion of the Agency, would likely cause 
immediate and significant degradation to the conservation values; for 
example, those violations which would adversely impact soil structure 
or result in the erosion of topsoil beyond acceptable levels as 
established by NRCS.
* * * * *

[[Page 42572]]

    United States' rights means rights in real property including the 
right to enforce the terms of the conservation easement deed and take 
sole title to the conservation easement deed.
0
3. Section 1491.4 is amended by revising paragraph (a), redesignating 
paragraphs (d)(4) and (d)(5) as (d)(5) and (d)(6), adding new paragraph 
(d)(4), and revising paragraph (e) to read as follows:


Sec.  1491.4  Program Requirements.

    (a) Under FRPP, the Secretary, on behalf of CCC, shall purchase 
conservation easements, in partnership with eligible entities, from 
landowners who voluntarily wish to protect their farm and ranch lands 
from conversion to nonagricultural uses. Eligible entities submit 
applications to NRCS State Offices to partner with NRCS to acquire 
conservation easements on farm and ranch land. NRCS enters into 
cooperative agreements with selected entities and provides funds for up 
to 50 percent of the appraised market value for the easement purchase. 
In return, the entity agrees to acquire, hold, manage, and enforce the 
easement. A United States' rights clause must also be included in each 
FRPP funded easement deed for the protection of the Federal investment, 
and the United States must be named as a grantee on each FRPP funded 
easement deed.
* * * * *
    (d) * * *
    (4) For a farm to be considered eligible, the forest land of a farm 
cannot exceed two-thirds of the easement area.
* * * * *
    (e) Prior to FRPP fund disbursement, the value of the conservation 
easement must be appraised. Appraisals must be completed and signed by 
a State-certified general appraiser and must contain a disclosure 
statement by the appraiser. The appraisal must conform to the Uniform 
Standards of Professional Appraisal Practices and the Uniform Appraisal 
Standards for Federal Land Acquisitions. In addition, NRCS may require 
an eligible entity to obtain an appraisal using NRCS appraisal 
instructions in order to ensure the accuracy of the conservation 
easement appraisal upon which the NRCS contribution towards fair market 
value is based.
* * * * *

0
4. Section 1491.22 is amended by revising paragraph (d) and adding a 
new paragraph (i) to read as follows:


Sec.  1491.22  Conservation easement deeds.

* * * * *
    (d) The conservation easement deed must identify the United States 
as a grantee with rights as set forth in the deed. Among the rights 
that the United States acquires in each conservation easement is the 
right to enforce the terms of the easement under specified conditions 
and the right to assume sole title to the conservation easement should 
the grantee abandon or attempt to terminate the conservation easement.
* * * * *
    (i) Impervious surfaces shall not exceed 2 percent of the FRPP 
easement area, excluding NRCS-approved conservation practices. However, 
the NRCS State Conservationist may waive the 2 percent impervious 
surface limitation on a parcel-by-parcel basis, provided no more than 
six percent of the easement area is covered by impervious surfaces. The 
NRCS State Conservationist must consider, at a minimum, population 
density, the ratio of open prime and important soil versus impervious 
surfaces on the easement area, and parcel size when deciding whether to 
waive the two percent limitation. All FRPP easements must include 
language limiting the amount of impervious surfaces within the easement 
area.
0
5. Section 1491.30 is amended by adding a new paragraph (g) and by 
revising paragraphs (b) and (e) to read as follows:


Sec.  1491.30  Violations and remedies.

* * * * *
    (b) In the event that the grantee/partner fails to enforce any of 
the terms of the conservation easement, as determined in the sole 
discretion of the Secretary of the United States Department of 
Agriculture, the Secretary and his or her successors or assigns may 
exercise the United States' rights to enforce the terms of the 
conservation easement through any and all authorities available under 
Federal or State law. In the event that the grantee/partner attempts to 
terminate, transfer, or otherwise divest itself of any rights, title, 
or interests in the conservation easement without the prior consent of 
the Secretary and, if applicable, 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 solely in 
the United States of America.
* * * * *
    (e) The conservation easement deed must include an indemnification 
clause requiring the landowner (grantor) to indemnify and hold harmless 
the United States from any liability arising from or related to the 
property enrolled in FRPP.
* * * * *
    (g) In the event NRCS determines it must exercise the United 
States' right to enforce the terms of or take title to the conservation 
easement, NRCS will provide written notice by certified mail to the 
grantee at the grantee's last known address. The notice will set forth 
the nature of the noncompliance by the grantee and a 60-day period to 
cure. If the grantee fails to cure within the 60-day period, the United 
States will take the action specified under the notice. The United 
States reserves the right to decline to provide a period to cure if 
NRCS determines that imminent harm may result to the conservation 
easement deed or the conservation values it seeks to protect.

    Signed in Washington, DC, on July 19, 2006.
Bruce I. Knight,
Vice President, Commodity Credit Corporation and Chief, Natural 
Resources Conservation Service.
 [FR Doc. E6-11959 Filed 7-26-06; 8:45 am]
BILLING CODE 3410-16-P